Key Takeaways
- The NSW Land and Environment Court has confirmed that a claimant for compensation for compulsorily acquired land is not automatically disentitled to an order for costs if it was awarded less than it sought during the proceedings or was unsuccessful in an argument that was reasonably pursued in the course of its claim.
Background
In May 2022, Sydney Metro (the Respondent) issued Telado Pty Ltd (Telado) and CFT No.8 Pty Ltd (CFT 8) (together, the Applicants) with Proposed Acquisition Notices in respect of 28 O’Connell Street, Sydney (28 O’Connell) and 48 Hunter Street, Sydney (48 Hunter) (together, the Acquired Land). Telado was the freehold owner of 48 Hunter and CFT 8 was the freehold owner of 28 O’Connell.
On 2 September 2022, Sydney Metro compulsorily acquired the Acquired Land by notice in the NSW Government Gazette (Date of Acquisition).
The Respondent offered CFT 8 compensation in the sum of $128,082,003 and Telado in the sum of $49,582,003 pursuant to s 42(1) of the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act).
CFT 8 claimed $320,235,616 in market value compensation in the proceedings and Telado claimed $110,964,384.
The main issues in dispute in the proceedings were:
1. Having regard to the principle of statutory disregard in accordance with s 56(1)(a) of the Just Terms Act:
- whether the highest and best use (HABU) of the Acquired Land was an amalgamated redevelopment with 33 Bligh Street, Sydney (33 Bligh St) (Amalgamation Scenario), or
- if the acquisition of 33 Bligh St could not be disregarded, whether the hypothetical purchaser would consider 33 Bligh to be available for amalgamation at the Date of Acquisition;
2. If the HABU was the Amalgamation Scenario, what was the market value of the Acquired Land;
3. If the HABU was the use of the land as at the Date of Acquisition, what was the market value of the Acquired Land.
In Telado Pty Ltd; CFT No. 8 Pty Ltd v Sydney Metro [2025] NSWLEC 42 , the Court ordered compensation pursuant to pt 3 div 4 of the Just Terms Act in the sum of $146,815,085.65 for CFT 8 and $4,315,085.65 for Telado, plus statutory interest. Duggan J also reserved her decision in relation to costs.
The full judgment can be found at the following link: Telado Pty Ltd; CFT No. 8 Pty Ltd v Sydney Metro [2025] NSWLEC 42.
Costs in Compulsory Acquisition Cases
The Court’s discretionary power to award costs is conferred under s 98(1) of the Civil Procedure Act 2005 (NSW) and is only constrained by the limitation that such discretion must be exercised judicially.
The purpose of an award of costs in compulsory acquisition litigation is to compensate the dispossessed party for expenditure it has incurred in the course of that litigation.
There is a general principle that a dispossessed owner who has had their land compulsorily acquired is entitled to an order for its costs (Dillon v Gosford City Council (2011) 284 ALR 619 per Basten JA at [70]-[71] (Dillon)).
In Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267 (Brock), Tobias AJA noted at [92]-[98] that the discretion to order costs hinges on a question of whether a claimant has acted reasonably in pursuing the proceedings and have not conducted those proceedings in a manner which gave rise to unnecessary delay or expense.
Per Talbot J in Pastrello v Roads and Traffic Authority of NSW (2000) 110 LGERA 223 (Pastrello), “there needs to be a strong justification for awarding costs against an applicant where the effect of making that order is to erode the benefit of the just compensation recovered as a consequence of the Court’s determination. It is only in special cases that the Court will deprive the owner of the full benefit of the compensation which is determined as fair and just in the circumstances of the case.”
Submissions
The Applicants submitted that they should be awarded their costs of the proceedings because, in order to displace the generally accepted entitlement to costs, it would be necessary for the Court to find that the Applicants had acted unreasonably in maintaining or in the conduct of that part of their case relating to the Amalgamation Scenario.
The Applicants also contended that, even though they were “unsuccessful” in their argument in relation to the Amalgamation Scenario, they were successful in objecting to the amount of compensation offered by the Respondent because each Applicant was awarded compensation well in excess of the offer of compensation as determined by the Valuer-General.
The Respondent’s primary submission was that whilst the Applicant was entitled to part of its costs, it should not be entitled to the part of its costs that related to the “unsuccessful” Amalgamation Scenario argument. Duggan J did not accept that the Applicants’ pursuit of the Amalgamation Scenario was a “frolic”, as was contended by the Respondent. Her Honour was not satisfied that the lack of success on the Amalgamation Scenario was sufficient to displace the usual practice relating to costs in Class 3 proceedings, confirming that such proceedings are not “ordinary litigation” and that an applicant was entitled to access the Court to present an arguable and organised case. Her Honour did not consider that the Applicants acted unreasonably in the way identified by Dillon and Brock by advancing the Amalgamation Scenario.
Decision of Land and Environment Court
Finding in favour of the Applicants, Duggan J ordered the Respondent is to pay the Applicants’ costs of the proceedings and the Applicants’ costs in relation to the hearing on costs.
The full costs judgment can be found at the following link: Telado Pty Ltd; CFT No. 8 Pty Ltd v Sydney Metro (No 2) [2025] NSWLEC 124.
Beatty Hughes and Associates acted for the Applicants.