Compensation for disturbance in New South Wales: value vs cost

Publication Date10 April 2019
Date10 April 2019
AuthorDavid Parker
SubjectProperty management & built environment,Real estate & property,Property valuation & finance
Compensation for disturbance in
New South Wales: value vs cost
David Parker
University of South Australia, Adelaide, Australia
Purpose The purpose of this paper is to explore compensation for compulsorily acquired businesses in the
pre-statutory value to the owner regime compared to the post-statutory cost and loss to the owner regime.
Design/methodology/approach The study involved researching decisions of the NSW Land and
Environment Court and appellate courts in the pre- and post-statutory regimes. It also involved the
identification of value to owner compensation in pre-statutory decisions and comparison with costs and loss
to owner compensation in post-statutory decisions.
Findings The study found that the few post-statutory decisions on disturbance compensation for
compulsorily acquired businesses appear inconsistent with the provisions of the statute; however, the value
vs cost debate has not yet been fully tested in the courts.
Research limitations/implications The research is limited by the number and types of cases brought
before the primary court and the number and types of cases then brought before the appellate courts.
Practical implications With recent decisions in the post-statutory regime adopting a more clinical
interpretation of the Act concerning other heads of claim for disturbance, future cases before the courts may
be expected to have a greater focus on the value vs cost issue for compensation claims for compulsorily
acquired businesses.
Social implications Compensation based on a clinical interpretation of cost or loss arising from the
compulsory acquisition of a business in the post-statutory regime may result in inequitable compensation to
the acquired party, failing the primary provision of the Act to justly compensate for the acquisition.
Originality/value While conceptual differences between cost and value were considered and
distinguished long ago in the valuation discipline in Australia and overseas, this is the first time they
have emerged in the legal discipline in Australia through specific statutory wording.
Keywords Cost, Loss, Compulsory acquisition, Disturbance compensation, Land Acquisition Act 1991,
Value to owner
Paper type Technical paper
1. Introduction
Australia is in the midst of an infrastructure boom with the development and provision of
infrastructure being a key Government policy for not only the Commonwealth Government
but also for most of the State Governments. At the Commonwealth Government level, the
2017 Federal Budget provided an additional A$20bn in capital spending for infrastructure
on top of the A$50bn announced in the previous year (Norington, 2017).
At the State level, infrastructure spending was also at massive levels according to the
New South Wales Government 20162017 Budget including a focus on road and rail
infrastructure with a A$73.3bn capital works program over four years including A$44.6bn
in 20162017 alone (Rostron, 2017) and major projects ranging from the A$2.7bn Sydney
Metro rail project to A$19m for the Sydney Opera House renewal program (NSW
Government, 2017), with the extent of compulsory acquisition of private land and interests
by Government in New South Wales over the next four years likely to be unprecedented in
the history of Australia. This will place enormous pressure on the various acquiring
authorities and an intense focus on the specific wording of the New South Wales legislation
governing compulsory acquisition and compensation payable.
From a New South Wales perspective, which has much in common with other Australian
States, before the introduction of the Land Acquisition (Just Terms Compensation) Act 1991
(the Act), compensation for disturbance was traditionally made by common law which may
be contended to have been generous in favor of the dispossessed.
Journal of Property Investment &
Vol. 37 No. 3, 2019
pp. 311-322
© Emerald PublishingLimited
DOI 10.1108/JPIF-01-2019-0005
Received 21 January 2019
Accepted 22 January 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
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