The NSW Court of Appeal has held in Sydney Metro v Expandamesh Pty Ltd [2023] NSWCA 200 that the subsidence caused by Sydney’s Metro substratum construction works was not considered to have ‘disturbed’ the overlying soil for the purposes of the cl 2(1)(a) sch 6B of the Transport Administration Act 1988 (NSW).

Key takeaways

• Subsidence of 1.5mm in the context of the land the subject of these proceedings was objectively trivial and of no practical significance, so did not ‘disturb’ the overlying soil and, as a result, no compensation was payable.
• Whether or not a particular level of subsidence is non-trivial will depend on the particular factual context including the use to which the subject land is put and the sensitivity of that use to that level of subsidence.

Background and issues

Landowners are typically precluded from recovering compensation for substratum acquisitions by virtue of cl 2(1)(a) except in specific circumstances. Cl 2(1)(a) provides:

(1)   If land under the surface is compulsorily acquired under the Land Acquisition (Just Terms Compensation) Act 1991 for the purpose of underground rail facilities, compensation is not payable under that Act unless—

(a)   the surface of the overlying soil is disturbed, or

(b)   the support of that surface is destroyed or injuriously affected by the construction of those facilities, or

(c)    any mines or underground working in or adjacent to the land are thereby rendered unworkable or are injuriously affected.

The Land and Environment Court determined in 2022 that Expandamesh Pty Ltd was entitled to $20,000 in compensation from Sydney Metro. Sydney Metro had acquired the substratum beneath land owned by Expandamesh for the purposes of constructing two underground tunnels for the Sydney Metro City and Southwest Project. This was on the basis that cl 2(1)(a) had been satisfied (Expandamesh had argued before the primary judge that sub-cl (b) had also been satisfied, but his Honour disagreed).

1.5mm of soil subsidence was recorded by monitoring pins nearby the site following tunnel construction works. Expandamesh argued that this decreased the market value of their land and for this claim to succeed, it had to be established that the surface of the overlying soil had been ‘disturbed’.

The relevant question for the Court of Appeal was whether this “modest degree of subsidence” was sufficient to satisfy cl 2(1)(a) and allow Expandamesh to access compensation. That is, whether a soil subsidence of 1.5mm (or modestly greater) amounted to the soil having been “disturbed”.

Decision

Justices Leeming and Griffiths, with Justice Simpson agreeing, held that the normal meaning of the word ‘disturbed’ must be applied when interpreting cl 2(1)(a). That meaning had inherent in it a degree of qualification so as to exclude an effect that is “objectively trivial and of no practical significance” (at [63]).

The Court also considered the application of the de minimis principle, which is the principle that the law does not concern itself with trifling matters. The Court found that subsidence that was imperceptible to the occupiers and that causes no damage would seem to be a de minimis impact.

Therefore, no compensation was payable to Expandamesh for Sydney Metro’s acquisition of the substratum of its land or the impacts of the underground rail project on that land.

Implications of the decision

The first instance decision in this litigation gave rise to the potential for more landowners affected by substratum acquisitions to make claims for compensation, even if the recorded impact on that land by virtue of the rail works beneath it was only minor. However, the Court of Appeal’s decision places a heavier restriction on potential claims of that kind.

Any claim brought by a landowner in respect of a substratum acquisition will need to establish that a “disturbance” of their overlying soil was of a sufficient degree, having regard to the use of the land and its sensitivity to disturbance, as to exceed the sort of minimal impacts described in Expandamesh’s case.

For more background on this matter, please see our previous article in relation to the first instance Land and Environment Court decision in Expandamesh Pty Ltd v Sydney Metro (No 3) [2022] NSWLEC 137.

Timothy Allen, Zara Horton

30 August 2023

This material has been produced by Beatty Hughes & Associates for the purposes of providing general information and does not constitute legal advice.