In April 2024, we reported here on the NSW Land and Environment Court's decision in Goldmate Property Luddenham No. 1 Pty Ltd v Transport for NSW [2024] NSWLEC 39 (LEC Decision).

On 9 December 2024, the NSW Court of Appeal has allowed an appeal commenced by the dispossessed landowner (Goldmate Property Luddenham No. 1 Pty Ltd, or Goldmate), setting aside the original decision and remitting the matter back to the Land and Environment Court for redetermination: Goldmate Property Luddenham No 1 Pty Ltd v Transport for New South Wales [2024] NSWCA 292 (NSWCA Decision).

Key takeaway point

In our April article, we concluded that as a result of the LEC Decision "there are no "clear rules" for characterising the relevant public purpose". As a result of the Court of Appeal's decision, there is a reversion to the approach of determining the "public purpose" which is to be disregarded for the purpose of determining market value, with reference to the relevant acquiring authority's legislative powers.

We anticipate this will lead to greater clarity for both acquiring authorities and dispossessed landowners in determining what constitutes the public purpose for the purpose of the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act).

Summary of facts and LEC Decision

We have set out the background facts and conclusion of the primary judge in our earlier post. In summary:

• In November 2020, Goldmate had purchased a 31.79ha parcel of land on Luddenham Road, Luddenham (the Parent Parcel) for $33,056,500.
• Until 1 October 2020, the Parent Parcel was zoned RU2 Rural Landscape under the Penrith Local Environment Plan 2012, after which time it was mostly rezoned to ENT Enterprise under the State Environmental Planning Policy (Western Sydney Aerotropolis) 2020 (Aerotropolis SEPP).
• On 19 March 2021, TfNSW issued a PAN to Goldmate which provided that part of the Parent Parcel (to become known as Lot 7) would be acquired "for the purposes of the Roads Act … in connection with the construction, operation and maintenance of the M12 Motorway"
• On 30 June 2021, TfNSW published an acquisition notice in the NSW Government Gazette and compulsorily acquired Lot 7, leaving Lot 2 in the ownership of Goldmate.

Her Honour Justice Duggan found that:

• The "public purpose" was not isolated to the construction, operation and maintenance of the M12, as TfNSW had contended.
• Instead, the "public purpose" was as part of the broader delivery of the Western Sydney Airport (WSA).

As a result of this characterisation of the public purpose, the zoning of the land pursuant to the Aerotropolis SEPP was disregarded in determining market value. The market value of Lot 7 was determined on the basis that only the underlying zoning, being the RU2 zoning (far less valuable than the ENT zoning). The Land and Environment Court awarded a market value of $9,523,500, far less than the $55,437,200 sought by Goldmate.

Grounds of appeal

The two grounds of appeal were, in summary:

1. That the primary judge had committed a legal error in her Honour's interpretation of s56(1)(a) of the Just Terms Act in finding that the public purpose for which the Land (being Lot 7) was acquired for the purposes of that section could be other than the purpose identified in the notice of acquisition, which nominated the Roads Act 1993 (NSW) as the source of TfNSW’s power to acquire the Land; and
2. That the primary judge committed a legal error by asking the wrong legal question when assessing the injurious affection to the Residue Land.

Ground 2 did not arise in any meaningful sense, so this article will focus on ground 1.

Ground 1: the identification of the "public purpose"

An appeal to the Court of Appeal can, as a rule, only be on a question of law. The relevant question of law was defined by Adamson JA (who gave the lead judgment) as

whether the identification of the public purpose of the acquiring authority (in this case, the respondent) within the meaning of s 56(1)(a) of the Act is:

1. to be determined solely by reference to the statute which authorises the acquiring authority to acquire the subject land (as the appellant contended); or,
2. a question of fact to be determined, if need be, by the primary judge (as the respondent contended).

The competing arguments

In summary, Goldmate argued:

• Although the description of the purpose for which Lot 7 was being acquired under the PAN is not determinative of the TfNSW purpose, the purpose for which Lot 7 was acquired must fall within the power to acquire property under the Roads Act 1993;
• The only purpose by which TfNSW is authorised to acquire land is under s177 of the Roads Act 1993, which expressly provides land can only be acquired "for any of the purposes of the Act";
• The only relevant source of power is TfNSW's power in s71 of the Roads Act 1993 to "carry out road work on any public road for which it is the roads authority and on any other land under its control";
• Therefore, the purpose for which Lot 7 was acquired could be no wider than this purpose under the Roads Act 1993 - namely, it could be no broader than for the construction, operation and maintenance of the M12.

In summary, TfNSW argued:

• That the reference in s56(1)(a) to the "public purpose for which the land was acquired" rather than, for example, the public purpose of the acquiring authority leaves open the possibility that there could be more than one acquiring authority for different parcels of land, which together comprise a single public purpose;
• One acquisition might serve a number of public purposes, in this case both the construction and operation of the M12 and the State's purpose in furthering the commercial, employment and industrial uses of the land surrounding Western Sydney Airport.

NSWCA findings

Adamson JA gave the lead judgment.

Her Honour set out that the proper construction of s56(1)(a), particularly when read in light of the High Court case of Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority (2008) 233 CLR 259 (Walker Corporation), requires the following four steps to be undertaken:

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 (1) 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 (2) 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 (3) above (any such increase or decrease is to be disregarded).

Stepping through steps (1) to (3) above, Her Honour found:

1. TfNSW is the acquiring authority;
2. TfNSW's power to acquire the land derives from s177 of the Roads Act, and the only purpose in the Roads Act which was identified as supporting the acquisition was s71 - namely, to carry out road work.
3. As TfNSW could not point to any source of power to acquire land for any broader purpose, its purpose in acquiring the land was to carry out road works for the M12.

Her Honour noted that the generality with which an acquiring authority's public purpose in making the acquisition can be articulated depends on the terms of the empowering legislation. In Walker Corporation, the acquiring authority was empowered to act for purposes which included wider objects - including "to promote, co-ordinate, manage, undertake and secure the orderly and economic development and use of the foreshore area, including the provision of infrastructure". TfNSW's purpose in the present case had no such breadth, but with reference to the Roads Act 1993 was for the carrying out of road work.

Her Honour concluded at [77] that:

"The primary judge’s finding of fact as to the purpose of the acquisition of the land for the M12 was legally erroneous. Her Honour’s enquiry as to the wider background of the acquisition was irrelevant because the respondent’s purpose, for the purposes of s 56(1)(a) of the Act, was constrained by the terms of the Roads Act and could not amount to a public purpose as that term is defined in s 4 of the Act. Thus, her Honour erred in steps (2), (3) (and, therefore, (4)) above."

Accordingly, the appeal was upheld. The matter is now to be sent back to the Land and Environment Court for determination of step (4), and the assessment of compensation in accordance with the Court of Appeal's reasoning as to the correct application of the s 56(1)(a) disregard.

Additional reasoning from Preston CJ of the LEC

Chief Justice Preston, sitting on the Court of Appeal, agreed with the orders of Adamson JA and generally the reasoning advanced. His Honour wished to add to those reasons some "textual and contextual indicators that support" Goldmate's narrower construction.

His Honour listed a number of both textual and contextual indicators by identifying particular parts of the Just Terms Act, and then particular language in the Just Terms Act, which supports the conclusion that "the relevant public purpose in s56(1)(a) is a purpose for which the particular acquiring authority is authorise by law to acquire land… The public purpose in the expression in s56(1)(a) cannot include a purpose for which an authority of the State other than the acquiring authority is authorised to acquire land by compulsory process, but instead only includes a purpose for which the acquiring authority is authorise to acquire land"

His Honour went on to provide some further useful guiding principles in identifying the relevant public purpose for which the land has been acquired at [94-95]:

"…the phrase in s 56(1)(a) does not permit a finding of “a composite purpose”, involving the bundling together of not only the public purpose for which the acquiring authority acquired the land but also other public purposes of other authorities of the State that did not acquire the land or of the NSW Government itself.

[95]… The definition of the public purpose for which the land was acquired under s 56(1)(a) directs attention only to the immediate purpose of the acquiring authority in acquiring the land and not to an overarching, “coordinated goal or purpose” of the NSW Government."

If you would like assistance in relation to land use and acquisition law, please contact our Environment & Planning partner, Tom White, or special counsel, Alex Beale.