The NSW Court of Appeal has overturned the Goldmate decision in a significant course correction for landowners affected by compulsory acquisitions in the Western Sydney Aerotropolis. In a unanimous judgment, the decision found the notion of a "composite" public purpose to be "legal erroneous", thereby undermining such a purpose from forming the basis of the notional disregard required when determining the market value of land. In practical terms, the recent Aerotropolis rezonings have now clearly been held not to form part of the public purpose to be disregarded in the determination of "market value" for the M12 road acquisitions. 

[Disclaimer: Colin Biggers and Paisley acted for the Appellant, Goldmate Property Luddenham No. 1 Pty Ltd]

Following a hearing held on 27 November 2024, the Court of Appeal has quickly published its judgment overturning the Goldmate Land and Environment Court (LEC) decision in less than two weeks: Goldmate Property Luddenham No 1 Pty Ltd v Transport for New South Wales [2024] NSWCA 292. The bench was constituted by Justices Gleeson, Adamson, and Preston CJ of the LEC. 

The decision will be welcomed by landowners in the Western Sydney Aerotropolis currently before the LEC in other litigation against acquiring authorities, as well as other landowners in that region negotiating with acquiring authorities. 

The Court of Appeal has ended the basis for the recent Aerotropolis rezonings being notionally disregarded in the determination of "market value" for acquired land, which should lead to fairer outcomes for landowners. The decision confirms that the public purpose of a land acquisition must fall within the purpose for which the particular acquiring authority has power to acquire land. In this case, the acquiring authority was Transport for NSW. The power to acquire land was under the Roads Act 1993, and the relevant purpose under it was "to carry out road work". 

There is extensive analysis in the judgment on the key provisions in the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act), the power to acquire land under the Roads Act 1993, and the key cases to date dealing with the statutory disregard under section 56(1)(a) of the Just Terms Act. 

The Court of Appeal has ordered that the determination by Justice Duggan be set aside, and the proceedings be remitted to the Land and Environment Court for determination according to law. 

[Disclaimer: Colin Biggers and Paisley acted for the landowner] 

In our 2024 review article, we wrote that the Land and Environment Court decision in Goldmate Property Luddenham No. 1 Pty Ltd v Transport for NSW [2024] NSWLEC 39 (primary judgment) had attracted considerable interest given it was the first of many cases involving acquisitions of land in the Western Sydney Aerotropolis, and how the statutory disregard in section 56(1)(a) of the Just Terms Act was to be applied given the planning changes in the Aerotropolis area that occurred in late 2020. In essence, that provision requires the disregard of any increase or decrease caused by the public purpose, or the proposal to carry out the public purpose, as at the acquisition date (statutory disregard).

The facts in the Goldmate case were that Transport for NSW (TfNSW) acquired 46% of a parcel land under the Roads Act 1993 for the M12 Motorway (which is currently midway through construction) in June 2021. Approximately 8 months before the acquisition, the Aerotropolis SEPP commenced, which rezoned vast swathes of land in the vicinity of the Western Sydney Airport for various uses including agribusiness, enterprise, environment, recreation and mixed use. Goldmate's land was one of many parcels rezoned from a rural use to an 'Enterprise' use. 

The main implication of the primary judgment was that the public purpose of the TfNSW acquisition had been characterised expansively as a "composite purpose" whereby multiple government authorities had acted "in concert" to achieve a public purpose that was not limited to the scope of influence of a particular acquiring authority (who in this case, was Transport for NSW). The public purpose adopted in the primary judgment was as follows:

[51]    "Having regard to the evidence that there was a unified goal that characterised the actions subsequent to the announcement of the construction of the [Western Sydney Airport (WSA)], that goal was to facilitate the operations of the WSA and to facilitate commercial, industrial and employment uses around the WSA to leverage the economic opportunities provided by the WSA. This was the public purpose (Public Purpose)."

Partial acquisitions of land often use the "before and after" valuation approach to determine the amount of compensation payable by an acquiring authority. Because of the broad characterisation of the public purpose, the effect of the rezoning under the Aerotropolis SEPP (i.e. the Enterprise zoning) was disregarded by the primary judge in the "before" valuation of the Goldmate land. Instead, a hypothetical rural zoning was used. The Enterprise zoning was however taken into account in the "after" valuation of the residue land. This meant that the difference between the "before" and "after" valuations was less than what would otherwise have been the case. 

Goldmate's main ground of appeal concerned how the primary judge had interpreted the statutory disregard in characterising the public purpose of the TfNSW acquisition. Goldmate argued that: 

• the public purpose of the acquisition needed to align with TfNSW's power to acquire land, which only existed under the Roads Act 1993; and 

• the public purpose adopted by the primary judge went beyond the purposes of Roads Act 1993, which did not authorise the acquisition of land to facilitate and leverage land uses around the Western Sydney Airport.

In support of the main ground, Goldmate focused on the text, context, and purpose of the Just Terms Act. Further, in oral submissions, Mr Bret Walker SC (senior counsel for Goldmate) advanced the proposition that there would be a hypothetical ultra vires if TfNSW had actually sought to acquire the Goldmate land on the same terms as the public purpose that had ultimately been adopted in the primary judgment. 

TfNSW defended the appeal and argued that no error of law arose on the main ground, and that the primary judge's finding on the public purpose was a finding of fact that was open to her. Those findings were described by TfNSW's senior counsel in oral submissions as "clear and unsurprising". 

The main ground was unanimously upheld. The primary judge's characterisation of the public purpose was held to be "legally erroneous" at [77] (per Adamson JA) and at [94] and [109] (per Preston CJ of LEC).

The lead judgment was written by Adamson JA. Her Honour pellucidly set out the steps required to be undertaken at [71] in the assessment of market value under s 56(1)(a) of the Act, these being:

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).

Steps 2 and 3 were the focus of the appeal, with the Court finding at [73]:

"As to step (2), the respondent’s power to acquire the land derives from s 177 of the Roads Act. The only purpose in the Roads Act which was identified as supporting the acquisition was s 71: namely, to carry out road work. There is a distinction between power and purpose; however, the respondent’s power to acquire land is constrained by the purpose of the acquisition. The respondent could not point to any source of power to acquire land for any broader purpose than that for which the Roads Act provided. Thus, its purpose in acquiring the land, being the sole statutory purpose authorised, was to carry out road work for the M12 (step (3))."

Preston CJ of LEC added further reasons at [82] - [111] which Gleeson JA agreed with, which provided textual and contextual analysis in support of the narrower public purpose contended by Goldmate. His Honour commented at [84] that: 

"There are numerous textual and contextual indicators supporting this focus on the particular acquisition of the land by the particular acquiring authority exercising the power under the particular law authorising acquisition of land by compulsory process by that authority."

His Honour emphasised the need for there to be an alignment between the acquiring authority's power to acquire land and the public purpose of the acquisition. At [92], His Honour stated: 

"…the relevant public purpose in s 56(1)(a) is a purpose for which the particular acquiring authority is authorised by law to acquire the land. Such a purpose not only authorises the acquisition of the land by compulsory process, it also limits the width of the expression in s 56(1)(a) of 'the public purpose for which the land was acquired'." (emphasis added).

At [94], Preston CJ of LEC was clear in dismissing any basis for a "composite purpose" being formulated, finding that this is not something that is permitted by the Just Terms Act. His Honour stated: 

[94]:     Contrary to the primary judge’s finding at [25], 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. The primary judge’s findings that bundled together purposes of different authorities of the State and the NSW Government to form a composite purpose of the NSW Government were in error on a question of law. These findings include those in [41], [42] and [52]. These findings impermissibly formulate a rolled-up purpose of the NSW Government that extends far beyond the purpose for which the land was stated in the proposed acquisition notice and the notice of acquisition of land to be, and was authorised by the Roads Act to be, acquired by compulsory process by the acquiring authority of TfNSW, which was for the purposes of the Roads Act. (emphasis added).

In reaching its decision, the Court of Appeal undertook an extensive review of the relevant case law, focusing in particular on the High Court in Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority (2008) 233 CLR 259, which was described as "the leading case". 

Analysis followed on the other relevant cases, and each was found to sit harmoniously with the narrower public purpose contended for by Goldmate: R & R Fazzolari Pty Ltd v Parramatta City Council (2009) 237 CLR 603; Roads and Traffic Authority v Perry (2001) 52 NSWLR 222; Barkat v Roads and Maritime Services [2019] NSWCA 240; Sydney Metro v G & J Drivas Pty Ltd (2024) 113 NSWLR 429; and Coffs Harbour City Council v Noubia Pty Ltd (2024) 258 LGERA 351. 

The Court of Appeal's decision might on one view be considered unremarkable in that no previous authorities were directly challenged or overturned. However, the reality is that acquiring authorities in the Aerotropolis area have been applying the Goldmate LEC decision to value land at its pre-rezoning value. ABC News have even reported that some acquisitions had been delayed so as to take advantage of the Goldmate LEC decision.

In the course of preparing for the hearing, Goldmate's legal team undertook an extensive analysis of decisions under the Just Terms Act in order to ascertain whether there was any previous judgment of the Court where the purpose of acquisition had ever been determined as something outside the power of the acquiring authority. No such cases were located, with the Goldmate decision being the first of its kind. This submission was ultimately made in the appeal, and was unchallenged by TfNSW. 

The Court of Appeal's decision will  have significant implications for landowners within the Western Sydney Aerotropolis, and will no doubt be welcomed by most of those owners - some of whom are currently engaged in litigation against acquiring authorities. Other impacted landowners are currently in pre-acquisition negotiations with acquiring authorities who have sought to apply the Goldmate LEC decision. 

We consider the decision to be an important course correction in how the statutory disregard operates when determining the market value of acquired land. Looking beyond the Aerotropolis, the decision will be relevant for future acquisitions that coincide with broader land use changes. 

The final compensation determination for Goldmate will be determined upon remitter to the NSW Land and Environment Court.