Posted on August 7, 2012 by Megan Hawley 1
Determining market value of land zoned for a public purpose
A recent case has succinctly set out the steps to be followed to determine the market value of land zoned for a public purpose, and the compensation payable for the acquisition of that land under the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act).The case of Davies v Sydney Water Corporation [2012] NSWLEC 130 involved the acquisition of land by Sydney Water. The land was zoned Special Uses 5(a) ‘Trunk Drainage’ under the relevant local environmental plan.
Under s55 of the Just Terms Act the market value of the land on the date of its acquisition is a relevant matter to be considered when determining the amount of compensation to
which a person is entitled.
Market value is defined in s56 of the Just Terms Act as follows:
“56 Market value
(1) In this Act:
market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not
anxious buyer, disregarding (for the purpose of determining the amount that would have been paid):
(a) 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 …”.
Craig J followed a three step approach to determine the increase or decrease in the value of the land caused by the carrying out of the public purpose for which the land was acquired. This approach has been endorsed by the Court of Appeal in Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No 2) [2006] NSWCA 386.
Those three steps are as follows:
- Identify the zoning of the land at the date of acquisition;
- Determine whether the imposition or retention of that zoning was part of the carrying out of the public purpose or part of the proposal to carry out the public purpose for which the land was acquired; and
- If it is, that zoning is notionally set aside and the market value is determined by considering how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose.
The first step is clearly straight forward. However, the second and third steps may involve complex planning evidence regarding the history of the zoning of the relevant land and neighbouring land.
The underlying zoning of the land can have a significant effect on the market value of the land, and compensation payable.
Leave a comment
in focus comments policy
LTL welcomes your feedback and comments on our posts. all comments, however, will be moderated and we reserve the right not to publish any comment for any reason.
LTL in focus is primarily designed for public sector and development professionals dealing in the fields of planning, environment and government. you may, therefore, wish to consult your organisation’s social media policy before you post any comments. it should go without saying that we expect all comments to maintain a level of respect and professional courtesy.
Please note we are unable to provide specific legal advice via these comments. If you wish to engage us to provide legal advice on a matter, please contact our office directly.
In making a comment you are required to provide your email address, this will not be published on the site. if the moderator chooses to publish your comment, the name you provide will be published with your comment – it is your choice whether you provide your full name or just your first name. if you provide your full name, we may seek to verify your identity prior to publication of your first comment. If you wish your comment to be directed only to the author or moderator please make that clear – marking it NFP or Not For Publication is the easiest way. thank you for your support and happy reading – matthew mcnamara, ceo.