What has happened?
In Beningna Pty Ltd v Liverpool City Council [2026] NSWLEC 36, Justice Pain held that a mortgagee could pursue its own claim for compensation for compulsorily acquired land, even though the landowner had been deemed to accept the Valuer-General's offer by not responding to it.
Context
Liverpool City Council compulsorily acquired flood-prone land containing an existing stormwater detention basin. The landowner did not respond to the offer of compensation and was therefore deemed to have accepted it. The mortgagee, whose loan exceeded the offer, lodged its own objection and appealed to the Court.
The Council argued that the mortgagee's claim could rise no higher than the amount the landowner had accepted, relying on s 65 of the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act), which deals with land subject to a mortgage.
The decision
No cap. The Court held that a mortgagee is an "owner" with an interest in land under the Just Terms Act, with its own right to claim compensation and to appeal. Nothing in the Act makes one interest holder's response, or failure to respond, binding on another. This was the first time the Court had considered the issue.
Valuation findings. The Court also decided a series of valuation issues, including that:
the existing detention basin could not be disregarded as part of the public purpose of the acquisition;
part of the land should be valued as residential (at $840/m²) and part as constrained land (at $70/m²), having regard to the cut and fill needed to make land flood-free; and
the Council could not set off rent and clean-up costs incurred by the landowner against the mortgagee's compensation.
The parties were left to calculate the final figure in accordance with the findings.
How will this affect you?
Lenders with security over land being acquired should lodge their own claim for compensation rather than relying on the landowner.
A landowner's failure to respond to an offer will not necessarily limit what other interest holders can recover.
For constrained or flood-prone land, the assumptions about what a hypothetical purchaser could do with the land, including earthworks, can make a large difference to market value.
Further information
For further information please contact Darren Bick, Director, on +61 416 167 556 or darren.bick@bicksteele.com.au.