Written by In Sydney Metro v G & J Drivas Pty Ltd [2024] NSWCA 5, the owners of a prime development site in the Parramatta CBD had plans to develop a 25-storey commercial tower, a smaller four-storey retail space, and a shared retail podium. Development consent had been granted, and the project was moving forward. In early 2019, however, they discovered that their development site could be acquired for the construction of the Sydney Metro West.
At first, they slowed progress by delaying detailed design work and reconsidering future steps. But when Sydney Metro confirmed the acquisition in late 2019, they stopped work entirely. Seventeen months later, in March 2021, the land was officially acquired. When the time came for compensation, they argued that their decision to halt development—made in response to the impending acquisition—had lowered the land’s value, and they sought compensation for that lost potential. Initially, the Land and Environment Court agreed, assessing compensation based on what the site would have been worth if the owners had continued developing it. But Sydney Metro appealed, and the NSW Court of Appeal saw things differently. The Court ruled that the decrease in value was not caused by the Sydney Metro project itself but by the landowners’ own decisions. Since those decisions were independent choices, not direct effects of the public purpose for which the land was acquired, the lost value could not be factored into compensation.
This decision reinforces a crucial principle in NSW’s compulsory acquisition framework that compensation is based on the land’s actual market value at the time of acquisition, not on a hypothetical version of what it could have been. The ruling prevents landowners from receiving compensation for value that was never realised, ensuring that public funds are not used to pay for missed opportunities rather than actual losses. If landowners hesitate and delay investment, they may find themselves with a lower compensation payout when the acquisition finally occurs.