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The on-costs of replacing compulsorily acquired property.



Landowners whose property is compulsorily acquired are compensated for the market value of that property.  That allows them to buy another property to replace what was taken from them.

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In addition, if they need to relocate, they can claim compensation for  stamp duty costs on the purchase of a replacement property.  They can also claim “any other financial costs reasonably incurred … relating to the actual use of the land, as a direct and natural consequence of the acquisition”.

The Land and Environment Court has laid down some guidelines about what a landowner needs to prove in order to sustain those kinds of claims.

In Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259, the Court of Appeal decided that stamp duty could be recovered where a property developer needed to purchase other subdivisional property to replace a land bank that had been compulsorily acquired.

In Sebastian Cannavo and Alfia Jennifer Busa v Roads and Traffic Authority of New South Wales [2004] NSWLEC 570  the applicants held the land as an investment with a vague and unstructured hope that they might develop the land in due course.   There was no evidence that they had acquired the land for development or subdivision.  It was not trading stock held in the course of any business enterprise.  In that case, the financial costs associated with purchase of another property could not be said to relate to the actual use of the resumed land.

In Bezzina Developers Pty Ltd v Leichhardt Municipal Council [2006] NSWLEC 175,  there was no direct evidence demonstrating that a replacement site could be used in the same way as the subject land.  Furthermore, there was nothing to show that the market value of the resumed land was reflected in the price for a replacement.  A claim for transfer duty  could not be justified as a financial cost relating to the actual use of the land.

Most recently, in G. Suonaf Holdings Pty Ltd v Roads and Maritime Services [2016] NSWLEC 116, a claim was made for stamp duty  and other financial costs on the purchase of a residential property to replace a rented house.  The claim for duty was disallowed because the owner had not proved that it either occupied the premises or used it in the course of a business or that it intended to purchase a replacement property.  The claim for other financial costs also failed because the landowner didn’t show how the acquired land was actually used or that the replacement property was purchased as a result of the acquisition.

Claims for duty and other on-costs will not succeed unless the claimant shows that it will occupy the replacement property or that it is in the business of property development.


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