In Goldmate Property Luddenham No 1 Pty Ltd v Transport for New South Wales [2024] NSWCA 292, the New South Wales Court of Appeal clarified the meaning of the “public purpose” in compulsory land acquisitions. It overturned the Land and Environment Court’s (LEC) broader interpretation, stressing that the “public purpose” must be strictly tied to the statutory powers of the acquiring authority.

Key Points

- Authority Specific Focus: The public purpose is confined to the specific authority’s statutory acquisition powers. A roads authority, for example, cannot rely on broader State-wide economic or planning objectives beyond constructing, operating, and maintaining roads.

- No “Rolled Up” Public Purpose: Section 56(1)(a) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act), does not allow combining multiple government or inter-agency objectives into a single “composite” public purpose.

- Immediate Use of the Land: Section 56(1)(a) directs attention only to the immediate purpose of the acquiring authority in acquiring the land. Broader State aspirations, such as facilitating economic opportunities around a new airport, are irrelevant if the authority lacks statutory power to pursue them.

- Causation Still Critical: Even with a narrower purpose, a rezoning or similar planning change might still be disregarded if shown to be caused by the identified public purpose. This issue remains open on remitter.

Background and Facts

Transport for NSW (TfNSW) acquired part of a property owned by Goldmate Property Luddenham No 1 Pty Ltd near the Western Sydney Airport (WSA) site under the Roads Act 1993 (NSW) (Roads Act) to facilitate the construction of the M12 motorway. TfNSW’s statutory power allowed for acquisition of land “for any of the purposes” of that Act, which in turn authorised TfNSW to build, operate and maintain roads including the M12. However, the acquisition took place against a broader backdrop of State Government infrastructure planning to support economic development around the new WSA.

In the LEC, the primary judge held that the “public purpose” included not only the immediate road project but also the broader rezoning and infrastructure goals connected to facilitating commercial and industrial opportunities near the WSA. At [51] of her judgment, the primary judge described the public purpose as:

…a unified goal…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.

By framing it in these expansive terms, the primary judge set aside any increase in value resulting from the government’s infrastructure and planning initiatives related to the WSA. Consequently, her Honour disregarded the rezoning of the land from Rural (under the Penrith Local Environmental Plan 2010) to predominantly Enterprise (under the State Environmental Planning Policy (Western Sydney Aerotropolis) 2020 (Aerotropolis SEPP). As a result, the landowner was compensated based on the land’s original rural zoning value of $9 million, despite having purchased the property in 2020 at its upzoned value of $33 million.

On appeal, Goldmate, the landowner, contended that this reading of the “public purpose” was too expansive and not anchored to TfNSW’s statutory power to acquire land under the Roads Act.

The key dispute was whether the public purpose should be confined to what the authority could lawfully do – here, build, operate, and maintain the M12 –or whether it could include broader regional economic development goals.

Statutory Provisions

Section 56(1)(a) of the Just Terms Act provides that (emphasis added):

Market value of land means the amount that would have been paid for the land if it had been sold at the date of acquisition by a willing but not anxious seller to a willing but not anxious buyer, disregarding…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.

Section 4(1) defines “public purpose” as “any purpose for which land may by law be acquired by compulsory process under this Act”.

Court of Appeal Analysis

The Court of Appeal (Adamson JA with Gleeson JA and Preston CJ of the LEC agreeing) allowed the appeal, holding that the public purpose must be confined to the purpose the acquiring authority is actually authorised by law to pursue. In other words, the purpose is not just any related or overarching government objective; it must fit within the statutory powers that enable the particular authority to acquire the land.

Adamson JA explained that the public purpose must fall within the public purpose or purposes for which the acquiring authority has power to acquire land. Simply put, if the Roads Act only authorises land acquisition for road projects, then the relevant public purpose cannot expand or incorporate broader developmental or economic ambitions outside the scope of that Act.

Preston CJ agreed, noting that the text, context, and legislative framework of the Just Terms Act all point toward identifying the immediate statutory authority’s purpose – in this case, carrying out of the M12 project – rather than folding in overarching state projects or economic development goals. The Chief Judge explained that TfNSW, lacking power to facilitate WSA operations or promote employment uses around it, could not stretch the public purpose to include such goals. His Honour accepted building and maintaining a road facilitates travel, but held this does not itself become a vehicle for broader economic development.

The Four-Step Test

In clarifying its approach, the Court of Appeal effectively set out a four-step process to apply s 56(1)(a):

1. Identify the acquiring authority: Determine which entity acquired the land and consider the legislative framework under which it operates.

2. Identify the statutory source of power: Consider the specific Act under which the acquiring authority may acquire land. The public purpose must fall within the scope of that empowering legislation.

3. Identify the authority’s public purpose for acquisition: Constrain the public purpose to one that the acquiring authority is empowered by law to pursue. As Preston CJ of the LEC observed above, and the Court of Appeal said previously in Sydney Metro v G & J Drivas Pty Ltd [2024] NSWCA 5 at [37], “attention is directed to what the authority is going to use the land for”.

4. Assess alterations in value caused by that public purpose: Once the correct public purpose is identified, decide what (if any) increases or decreases in land value had been caused by carrying out or proposing to carry out that identified public purpose. Only these changes are disregarded under s 56(1)(a).

What’s Next?

Unless special leave is sought and granted by the High Court of Australia, the proceedings will remitted to the LEC for reassessment. The LEC, in applying s 56(1)(a), must:

1. Determine the Correct Public Purpose (Step 3): Restrict it to what TfNSW is authorised to do under the Roads Act (building, operating, maintaining the M12).

2. Apply the Causation Analysis (Step 4): Assess if the Aerotropolis SEPP upzoning was directly caused by the M12 project.

A similar outcome – disregarding the upzoning – remains possible. If the LEC finds the M12 caused the rezoning, s 56(1)(a) still requires the Court to disregard that uplift. This aligns with Barkat v Roads and Maritime Services [2019] NSWCA 240, where rezoning caused by a road project (WestConnex) was disregarded. The main battleground on remitter will now shift to causation.

Practical Effect

This clarified approach ensures that the “public purpose” subject to the s 56(1)(a) disregard remains closely tethered to the acquisition powers of the acquiring authority. An authority empowered only to build a road cannot invoke a wider government strategy to reduce compensation by attributing value changes to a larger, multi-layered development plan. Instead, the inquiry focuses squarely on what the authority is statutorily empowered to do and the direct impacts of that specific project.

The Court noted that different authorities have broader acquisition powers (e.g., local councils or the corporation under the Environmental Planning and Assessment Act 1979). However, even those entities cannot blend multiple government objectives into a single public purpose – the focus must be on their immediate statutory functions.

Finally, regardless of the authority, the spotlight moves to causation: if a narrower purpose (e.g. trunk drainage infrastructure or a motorway) caused a rezoning, the rezoning must still be disregarded, preserving a similar result to the primary judge’s original approach.