Disturbance loss in NSW compulsory acquisition

Compulsory acquisition can cause financial loss beyond the value of the interest taken. A household may need removal and storage services. A business may need to move equipment, operate temporarily from another site or incur other costs tied to its existing use of the land.

The Land Acquisition (Just Terms Compensation) Act 1991 (NSW) does not compensate disruption in the abstract. Section 59 defines “loss attributable to disturbance” through six specific categories. Each category has its own language, and recent NSW Court of Appeal decisions require those limits to be applied closely.

This article concerns section 59 financial loss. It does not address the separate, non-financial head of disadvantage resulting from relocation under section 60, which is discussed in disadvantage resulting from relocation in NSW acquisitions.

The six disturbance categories

Section 55(d) makes disturbance one of the statutory compensation heads. Under section 59(1), loss attributable to disturbance means any of the following:

1. Legal costs: legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition.
2. Valuation fees: fees of a qualified valuer reasonably incurred in connection with the compulsory acquisition, excluding fees calculated by reference to the value of the land as assessed by the valuer.
3. Relocation costs: the category quoted below, which turns on costs incurred in connection with relocating the persons entitled to compensation.
4. Stamp duty: costs reasonably incurred, or that might reasonably be incurred, in purchasing land for relocation, capped by reference to land of equivalent value to the acquired land.
5. Mortgage costs: costs reasonably incurred, or that might reasonably be incurred, in discharging a mortgage and executing a new mortgage resulting from relocation. They are capped at the amount that would be incurred if the new mortgage secured only the balance owing under the discharged mortgage.
6. Other financial costs: any other financial costs reasonably incurred, or that might reasonably be incurred, relating to the actual use of the land, as a direct and natural consequence of the acquisition.

These are defined categories within a tightly drawn provision. Paragraph (f) is not a general power to compensate every financial effect of acquisition, and it cannot be used to avoid a limit Parliament placed in an earlier paragraph.

Section 59(1)(c) defines the relocation category as:

“financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs)”

Each claimed cost must be placed within the statutory definition

For each item, ask:

1. Claimant and category: who incurred the cost, and which paragraph of section 59 applies?
2. Existing use: how did the claimant use the acquired land? This is particularly important for paragraph (f).
3. Causation: what connects the cost to the acquisition, rather than to the broader public project or a separate commercial decision?
4. Reasonableness: were the scope, amount, alternatives and timing proportionate?
5. Overlap: has the same loss already been reflected in another disturbance paragraph, market value or reinstatement?
6. Proof: do the engagement, quote, invoice, calculation, payment record and causal explanation establish the claim?

A spreadsheet total is not enough if it does not show why each item satisfies the relevant paragraph.

Paragraph (f) is confined by its context and structure

The leading authorities treat section 59 as a structured and limited definition.

In Roads and Maritime Services v United Petroleum Pty Ltd (2019) 99 NSWLR 279; [2019] NSWCA 41 at [9], Basten JA said that reading “any other financial costs” in isolation disregarded “four different forms of constraint imposed by the context and structure of the section”. Macfarlan JA agreed at [72]. Payne JA agreed at [73], subject to the qualification concerning overlap between the statutory heads explained at [74]–[75].

In the same case, Sackville AJA concluded at [118] that, because one month’s notice was required to end the tenancy, “only the loss of one month’s profits” could fairly be characterised as a direct and natural consequence of the acquisition. Preston CJ of the Land and Environment Court said at [130] that the phrases in paragraph (f) must be read “together as a composite clause”, and explained at [160]–[161] why the perpetual-profits award could not stand.

The decision construed paragraph (f) in the setting of a tenancy at will terminable on one month’s notice. It does not establish that business loss can never be compensable. The claimant must prove a financial cost within the statutory language, connected to the actual use of the acquired land and caused in the required way. Paragraph (f) cannot recreate the value of an interest the claimant did not hold. Paragraph (f) has not been amended since that decision.

Stamp duty and mortgage costs stay within their paragraphs

In Sydney Metro v G & J Drivas Pty Ltd (2024) 113 NSWLR 429; [2024] NSWCA 5, Kirk JA (Payne JA agreeing at [1]; Griffiths AJA agreeing at [125]) applied Basten JA’s formulation in United Petroleum at [14] that paragraph (f) must not be construed to “subvert the limitations contained within the earlier paragraphs”: Drivas at [109]. The specific treatment and caps in paragraphs (d) and (e) confine stamp duty and mortgage costs to the circumstances and extent those paragraphs permit: [110]–[120].

A special-leave application from part of the judgment was refused with costs by the High Court on 6 June 2024: G & J Drivas Pty Ltd v Sydney Metro [2024] HCASL 162. The decision addressed replacement-property duty and mortgage costs; it does not determine whether a differently characterised expense satisfies another paragraph.

In Dibb v Transport for New South Wales [2024] NSWCA 157, an appeal and cross-appeal confined to questions of law, Stern JA (Payne JA agreeing at [1]; Kirk JA agreeing at [2]) applied Drivas. At [169], her Honour said the earlier approach to compensating the stamp duty under paragraph (f) “was found to be incorrect by this Court in Drivas (CA)”. The Court allowed the cross-appeal and deleted the award: [168]–[171].

The case concerned duty on a replacement property which, by common ground, was not purchased for “relocation”. It does not enlarge or contract paragraph (d) where its own conditions are met.

This distinction matters when replacement land is being considered. The claim should identify whether the purchase is for relocation, apply the equivalent-value cap in paragraph (d), and keep duty and mortgage calculations out of the residual paragraph.

Relocation is not a guarantee of like-for-like premises

In Sydney Metro v C & P Automotive Engineers Pty Ltd (2024) 115 NSWLR 122; [2024] NSWCA 186, Payne JA (Meagher JA agreeing at [1]; Kirk JA agreeing at [154]) considered a tenant’s claim under section 59(1)(c).

At [93], Payne JA said: “I am prepared to assume, without deciding,” that reasonably incurred setup or fit-out costs may fall within paragraph (c). That was deliberately not decided. The Court did decide that the provision does not pay for constructing new fixtures belonging to the new landlord merely because comparable fixtures had been available under the acquired lease: [94]–[116]. The lost right to use the former landlord’s fixtures had already been reflected in the market value of the lease, and additional market rent at replacement premises was not recoverable as disturbance: [124]–[152].

The holding is tied to the lease, the ownership of the fixtures and the market-value award in that case. The current paragraph (c) retains the wording considered by the Court. It can extend to the reasonably incurred costs of moving the claimant’s furniture, goods and tenant’s fixtures, and installing those moved items: [93]. It does not promise premises with the same physical characteristics, establish a general entitlement to setup costs, or transfer to a tenant the cost of replacing property the tenant had no right to move.

Evidence remains decisive

The appellate principles determine the legal boundaries, but the result in a particular claim depends on proof.

The Eddie Arnott Corporation Pty Ltd v Sydney Metro (No 4) [2025] NSWLEC 103 is a first-instance Land and Environment Court compensation decision, not an appellate statement of principle. Pritchard J held that retaining three firms for legal advice was “excessive” and allowed $10,000 for acquisition-related legal costs at [211]. Her Honour allowed $22,000 for valuation fees at [214]. A wider, general disturbance claim also failed. Her Honour noted at [198] that the claimant had neither identified the paragraph of section 59(1) on which it relied nor quantified the claim, and disallowed it at [204] as unsubstantiated and unquantified.

A first-instance decision can be varied or set aside on appeal, so check its status before relying on it. As at 30 September 2026, NSW Caselaw had published no Court of Appeal judgment in this matter. It is used here only to illustrate proof and reasonableness; the Court of Appeal authorities above remain controlling.

Building a disturbance schedule

Prepare the schedule while costs are being considered; do not wait until they have been incurred. Include:

Field	Purpose
Item	describe the cost precisely
Claimant	identify the person or entity that incurred it
Disturbance paragraph	state the statutory category relied on
Amount	separate paid, committed and estimated amounts
Date	show when the cost arose or is expected
Existing use	explain how the item relates to the actual use of the acquired land
Causal link	explain why it results from the acquisition
Reasonableness	record alternatives, quotes and mitigation
Evidence	link invoices, reports, contracts and payment records
Overlap check	identify any related market-value, reinstatement or other claim

For a business relocation, the supporting file may include the lease, asset register, premises plans, relocation and temporary-site quotes, replacement-site searches, fit-out scopes, trading records and a chronology of operational decisions. For a residential or investment property, it may include removal and storage invoices, replacement-property searches, duty calculations, mortgage documents and evidence of the equivalent-value cap.

The schedule should expose, rather than conceal, the familiar weaknesses in a disturbance claim: reliance on paragraph (f) as a catch-all, lost revenue without a qualifying financial cost, duplication with market value or reinstatement, and a lump sum unsupported by proof of amount, cause and reasonableness. Acquisition-related professional costs should also remain separate from the costs of Court proceedings.

A government review of the Act is under way

The NSW Government, led by the Department of Planning, Housing and Infrastructure, is reviewing the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) and the whole-of-government approach to property acquisition. Public consultation on a discussion paper closed on 3 May 2024. The Department’s land acquisition review page, last updated on 19 November 2025, says final recommendations are expected to be considered by Government in 2026.

A review is not a change in the law. As at 30 September 2026, the Act had not been amended since 5 July 2024, and section 59 reads as set out above. Any change to the disturbance categories would need amending legislation, so check the current version of the Act before relying on this summary.

For professional costs, see legal and valuation costs in NSW compulsory acquisition. For the wider framework, see just terms compensation in NSW, our overview of land acquisition and compensation and our compulsory acquisition practice.