A recent decision of the New South Wales Land and Environment
Court in Parfett v Roads and Maritime Services 
NSWLEC 1182 (5 September 2014) highlights the complexity of
claiming compensation for the compulsory acquisition of income
producing land, particularly rural land, under the Land
Acquisition (Just Terms Compensation) Act 1991 (NSW) (the
On 14 December 2012 the Roads and Maritime Service
(RMS) compulsorily acquired 6.953 hectares of Mr
Parfett's 148.943 hectare rural landholding known as
"Springlawn" for the widening of the Mid Western Highway.
Springlawn was used primarily for the "growing out and
fattening of cattle".
Prior to the hearing, most heads of claim including land value,
were settled. The only issues remaining for determination were
Business disturbance for loss of profit - $39,847, and
Foregone capital growth - $90,099.
Loss of profit v "special value"
The area of land compulsorily acquired amounted to 4.67% of the
property, which the Court accepted reduced the carrying capacity
and productivity of the property. Mr Parfett sought to claim
compensation for disturbance for the loss of profit caused as a
The Court considered that an alternative claim for "special
value" was more appropriate. The rationale was that whilst
income generated by a property is a component of determining its
market value, the income generated by Mr Parfett was "over and
above the level of income expected to be derived by other persons
utilising the land to its highest and best use" because Mr
Parfett's other farm holdings "effectively
guaranteed" the supply of steers to the property.
By accepting that the land had a special value, the usual basis
for determining market value, being what a reasonable prudent
purchaser would pay, became "what would the dispossessed
owner, as a potential purchaser, be prepared to pay for the
acquired land rather than not obtain it".
The Court awarded the sum of $30,171 to Mr Parfett as the
special value to him of the acquired land. Interestingly, the Court
noted that had it decided to determine this aspect of compensation
on the basis of disturbance for loss of profit, it would have
awarded the same amount.
Foregone capital growth
It was claimed that as a direct result of the compulsory
acquisition Mr Parfett lost the right to an operating return for
the acquired land and any future capital growth.
The Court dismissed this claim on the basis that:
market value takes into account the likelihood or otherwise of
capital appreciation in the future, so allowing this claim would
amount to "double dipping", and
under the Act, disturbance claims are limited to those relating
to the "actual use of the land", and capital growth
cannot be described as such.
Claiming compensation under the Act for the compulsory
acquisition of land is notoriously complex. Where commercial
interests, and particularly rural interests, are involved, the
range of potential claims can be substantial and do not always fit
neatly within the heads of claim the Act provides for.
The decision in Parfett demonstrates that it is
necessary to consider whether there is any special value attributed
to the particular business operations of the owner, rather than
limiting an assessment to loss of profit. Whilst, in this case, the
Court determined that compensation under either head would have
been the same, that is not always the case.
Whilst foregone capital growth was dismissed as a basis for
compensation, it is an example of the range of issues that need to
be considered when formulating a claim.
Although this is a NSW decision it is possible that it will have
application in other States for assessing compensation for the
compulsory acquisition of rural land.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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