Compulsory Acquisitions and Market Value Compensation in NSW

Infrastructure projects in NSW can give rise to a number of legal issues concerning the compulsory acquisition process.

The recent case of G&J Drivas Pty Ltd v Sydney Metro (2023) was heard in NSW’s Land & Environment Court.

The case involved the calculation of compensation in respect of the market value of land acquired.

The applicants (G&J Drivas et al) owned a substantial property in Parramatta’s CBD. This was acquired for the Sydney West Project (referred to as the Public Purpose). Because of the acquisition the applicants had to abandon the development of a 25 storey tower.

No physical work had been undertaken but progress had been made on issues such as marketing and engaging architects.

But for the Public Purpose the development would have progressed and it was argued that the value should be $200m at the date of acquisition rather than $119m

Sydney Metro argued that the impact of non-physical activity on market value, as opposed to physical works, should be disregarded. However, the Court found in favour of the applicants.

Disputes such as this can arise as to whether the compensation is on ‘just terms’ for the owners.

The case provides some insights as to how the Land & Environment Court addresses compensation matters where land would have had a higher value had the Public Purpose not intervened.

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