Early acquisition due to hardship in NSW

Early acquisition due to hardship is a confined statutory pathway. It may allow an eligible owner to require acquisition before the acquiring authority would otherwise proceed, but only where the land is legally designated for acquisition and the acquiring authority forms the statutory opinion that the hardship requirements are satisfied. If the authority decides not to acquire, an independent reviewer may overturn that decision. It is different from disadvantage resulting from relocation, which is a separate head of compensation after an acquisition requires a person to move from their principal residence. Our overview of hardship acquisition sets out the pathway in brief.

The land must be “designated”

The definition in section 21 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) is narrower than a general expectation that land may be needed for a project. The land must fall within one of two statutory gateways:

• the subject of a qualifying written notice that the authority gave, in connection with a development or building application, to the council or other person dealing with that application. The notice must state that the authority will acquire the land at a future time or that its proposal requires future acquisition. A letter sent only to the owner does not, by itself, meet this gateway; or
• reserved by an environmental planning instrument for use exclusively for a purpose in section 3.14(1)(c) of the Environmental Planning and Assessment Act 1979 (NSW), the current provision corresponding to former section 26(1)(c), as in force immediately before its repeal, with the acquiring authority specified. Section 21(3) defines when a reservation is exclusive, including where other purposes are stated but do not constitute a reasonable use of the land. Section 3.15 of the Environmental Planning and Assessment Act 1979 (NSW) confirms the link: an instrument that reserves land exclusively for a section 3.14(1)(c) purpose must name the authority that would acquire it under the hardship provisions, and section 21 decides whether a reservation is exclusive.

A corridor study, media release or informal project discussion may be important evidence, but it does not necessarily satisfy section 21.

Only an eligible owner can use the pathway

Section 22 limits the pathway to a person who holds the fee simple or has become entitled to exercise a power of sale. It excludes an authority of the State, a public company and a subsidiary of a public company.

If there is more than one owner, section 23(3) requires all owners to give the notice. It is enough for one of them to suffer hardship.

Both limbs of hardship must be proved

Section 24(1) makes the decision-maker explicit:

“An authority of the State is not required to acquire land under this Division unless it is of the opinion that the owner will suffer hardship (within the meaning of this section) if there is any delay in the acquisition of the land under this Act.”

The authority’s opinion must address the statutory definition, not an open-ended view of fairness. Section 24(2) provides:

“An owner of land suffers hardship if—

(a) the owner is unable to sell the land, or is unable to sell the land at its market value, because of the designation of the land for acquisition for a public purpose, and

(b) it has become necessary for the owner to sell all or any part of the land without delay—

(i) for pressing personal, domestic or social reasons, or

(ii) in order to avoid the loss of (or a substantial reduction in) the owner’s income.”

Both section 24(2)(a) and the applicable urgency condition must be established. For a corporate owner, section 24(3) qualifies the second limb:

“However, if the owner of the land is a corporation to which this Division applies, the corporation does not suffer hardship unless it has become necessary for the corporation to sell all or any part of the land without delay—

(a) for pressing personal, domestic or social reasons of an individual who holds at least 20 per cent of the shares in the corporation, or

(b) in order to avoid the loss of (or a substantial reduction in) the income of such an individual.”

Evidence for the first part may include:

• the planning instrument, reservation map or qualifying authority notice;
• a valuation addressing market value without and with the designation;
• a selling agent’s written opinion about saleability;
• campaign records, enquiries, offers and buyer feedback; and
• a chronology separating the effect of the designation from general market conditions or property-specific defects.

Evidence for the second part will depend on the circumstances. Financial records and loan correspondence may establish urgency or income risk. Medical, care, employment, relocation and family material may explain why a sale is needed now. Sensitive material should be confined to what is relevant and handled securely.

The 90-day period starts when the notice is given

The owner starts the statutory process by giving the acquiring authority the prescribed or approved written notice under section 23. Section 23(2) provides:

“The authority of the State must (subject to this Division) acquire the land within 90 days after the owner gives that authority notice under this section (or such longer period as that authority and the owner may agree on in writing).”

The period starts when the owner gives the notice. A later statement by the authority that it has accepted the application does not postpone commencement. The words “subject to this Division” matter, including the authority-opinion requirement in section 24(1) and the designation-lifting mechanism in section 27.

Section 23(4) provides:

“An authority of the State is not required to acquire (under this Division) more land than it requires for the public purpose for which the land was designated or more interests in the land than it requires for that purpose.”

Section 25 requires land that must be acquired under the Division to be acquired by compulsory process, while preserving acquisition by agreement within the required period. Under section 25(3), the pre-acquisition procedures in Division 1 of Part 2 do not apply. Before acquisition becomes required, the authority may avoid that obligation by lifting the designation in the manner specified by section 27.

A refusal or failure to acquire may be reviewed

Section 27A provides for independent review of a decision not to acquire because the land is not designated, the owner will not suffer hardship, or the authority is not otherwise required to acquire. The owner applies to the Secretary named in section 27A(1), who refers the application to a reviewer appointed by the Minister and not associated with either side. The reviewer is to endeavour to decide within 28 days after the referral. The reviewer’s decision is final, and the authority must give effect to it. Section 27A(2) states:

“An application for the review of any such decision is to be made within 28 days after the owner of the land is notified of the decision by the authority of the State.”

Failure to respond is not the statutory deeming event. Section 27A(6) provides:

“If the authority of the State fails to acquire land under this Division within 90 days after the owner of the land gives a notice to the authority under this Division to acquire the land, the authority is taken, for the purposes only of an application for review under this section, to have made a decision not to acquire the land.”

The deeming is expressly confined to an application for review. Record the notice’s date and method of service, any written extension and any notified decision.

Section 26 changes the compensation analysis

Section 26 provides:

“The special value of land, any loss attributable to severance or disturbance and disadvantage resulting from relocation (as referred to in Part 3) need not be taken into account in connection with an acquisition of land under this Division, despite anything to the contrary in that Part.”

In Hoy v Coffs Harbour City Council [2016] NSWCA 257, Bathurst CJ held at [54] that section 26 “confers a discretion on the Valuer-General in determining compensation under s 47” to take those matters into account, a conclusion based on the words “need not”. Simpson JA agreed at [62] and Payne JA at [63].

Bathurst CJ also said at [59]: “I do not think the power to compensate for legal costs extends to costs incurred in establishing hardship.” Bathurst CJ reasoned at [59]–[60] that the entitlement to compensation arises only once the authority becomes bound to acquire. The 2016 amendment replaced “solatium” with “disadvantage resulting from relocation”, but retained the operative “need not be taken into account” formulation on which that discretionary construction rests.

Council of the City of Ryde v Azizi [2019] NSWSC 1605 was a first-instance Supreme Court judicial-review decision, not a merits valuation appeal. At [146]–[148], Payne J applied Bathurst CJ’s reasoning in Hoy at [59]–[60] and accepted that it was a legal error to include under section 59(1)(a) legal costs incurred before the preconditions in section 24(2) had been established. At [148], Payne J said: “I am bound by Hoy to conclude that including at least this amount incurred in establishing the claim to hardship in the Determinations was a legal error.”

Owners should therefore obtain written clarity about responsibility for application-stage costs rather than assume those costs will form part of statutory disturbance compensation. Our article on legal and valuation costs in compulsory acquisition explains which costs are generally recoverable.

A government review may change the hardship process

The NSW Government is reviewing the Land Acquisition (Just Terms Compensation) Act 1991 (NSW). The Department of Planning, Housing and Infrastructure’s discussion paper, open for comment from 22 March to 3 May 2024, canvassed options for hardship applications. They included a deadline for the authority to decide an application, a deadline to complete the acquisition once hardship is accepted or established on review, minimum information requirements, and payment of the legal costs of a successful hardship application. The Department’s review page, last updated on 19 November 2025, says final recommendations “are expected to be considered by Government in 2026”. These are options only. Until Parliament amends the Act, the rules in this article apply.

Settle the threshold issues before giving notice

The file should contain:

• current title, details of every owner and the instrument or notice creating the designation;
• the completed statutory notice, proof of service and any written extension of the 90-day period;
• independent valuation and selling-agent evidence connecting the designation to the inability to sell, or to sell at market value;
• evidence of the pressing need to sell, supported by a dated chronology of sale attempts, urgency and authority responses; and
• separate records of application-stage, acquisition and valuation costs, together with the dates relevant to any independent review.

The volume of material is secondary. It must connect the inability to sell, or to sell at market value, to the designation and separately establish why sale without delay has become necessary.

See our compulsory acquisition practice and just-terms compensation guide.