Can Leasing Properties to Tenants Constitute a Use of Land

27 NOV 2019


Can leasing properties to tenants constitute a use of land for the purposes of compensation under the Just Terms Act? 


The Applicants owned 3 properties in Annandale which were acquired by Roads and Maritime Services in May 2018 to facilitate the WestConnex Stage 3 M4/M5 Link project.

The properties were the subject of a contract for sale due to settle in June 2018 for the amount of $56.5 million.

The Valuer-General determined the amount of compensation payable in respect of the acquisition to be $33.1 million. The Applicants objected to that amount, arguing that the market value of their land was not relevant to the determination of compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (“the Act”) and that they were owed compensation for the unpaid purchase price due under the contracts for sale as a loss attribute to disturbance within the meaning of section 59(1)(f) of the Act.

The Applicants applied to have the following questions determined separately by the Land and Environment Court (“the LEC”):

1. Whether there was any “actual use of land” by the Applicants that would entitle them to any compensation under section 59(1)(f) of the Act; and

2. Whether, on the basis of the contracts for sale, the compensation to be paid to the Applicants in respect of their interests in the acquired land was said to be confined to the calculation of compensation having regard only to matters arising under sections 55(d) and 59(1)(f) of the Act?

Justice Pepper of the LEC decided both questions in the negative. Importantly, Justice Pepper found that there was no “actual use of land” at the relevant time by the Applicants because the properties were leased out to commercial tenants.

The Applicants sought leave to appeal against the decision of Justice Pepper in the Court of Appeal.

Findings of the Court of Appeal

In relation to question 1, the Court of Appeal (Meagher JA, Gleeson and McCallum JJA agreeing) granted leave to the Applicants to appeal against the decision of Justice Pepper, but found that there was no actual use or enjoyment of the land or any part of it by the Applicants for the purposes of section 59(1)(f) of the Act. In this regard, the Court of Appeal held that the leasing of the land to the tenants had conferred exclusive rights of occupation on the tenants. The fact of spending money on the land for the benefit of the tenants or the entry of employees or agents of the Applicants onto the land for the purposes of conducting inspections or carrying out obligations under the lease did not constitute use or enjoyment for the purposes of the Act.

In relation to question 2, the Court of Appeal refused leave to appeal against Justice Pepper’s findings in relation to the question on the basis the formulation of the question required the Court to determine the whole of each Applicant’s claim for compensation without regard to all of the relevant matters of section 55 of the Act, including the market value of the land.

The Court made orders dismissing the appeal against Justice Pepper’s decision in the LEC and for the Applicants to pay the Respondent’s costs of that appeal.

For further information on these planning and environmental law updates, please contact Adam Seton on or (02) 4626 5077 and David Baird on or (02) 4626 5077.


The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication. 

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