Background
The Owners Corporation of Strata Plan 67754 owns the common property of a retail arcade at 109 Pitt Street, Sydney. That common property benefited from a right of footway over the adjoining Hunter Connection, permitting pedestrian passage during specified weekday hours. Sydney Metro compulsorily acquired and extinguished the easement on 3 February 2023 for the Sydney Metro West project and construction of Hunter Street Station. The physical connection between the properties was severed the following month.
The Owners Corporation claimed $11.55 million as the easement’s market value, principally by estimating reduced rental income for the arcade’s individual shop lots after the loss of pedestrian traffic. It alternatively sought compensation for injurious affection to those lots. Twenty-two lot owners were joined as respondents but filed submitting appearances, did not advance their own claims, and were not represented before the Court. Sydney Metro contended that the easement had no market value, although the parties agreed on disturbance compensation.
The Court’s Holding
The Court determined the easement’s market value under s 55(a) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) at $20,000. It rejected the Owners Corporation’s attempt to value its acquired interest by reference to the lot owners’ rental losses. The Owners Corporation was legally distinct from the lot owners and could not claim those losses as their agent. The hypothetical transaction was between the two neighbouring owners corporations, and the valuation could not assume that extinguishing the legal right of footway necessarily meant blocking physical access, particularly where that assumption arose from the acquisition’s public purpose.
The alternative claim under s 55(f) also failed. The individual lots were not “other land” of the Owners Corporation, whose interest in the easement had been acquired, and no claim by the lot owners themselves was before the Court. Their joinder under s 25(2) of the Land and Environment Court Act 1979 (NSW) did not compel the Court to determine compensation for unasserted claims.
The Court awarded total compensation of $162,124.10 plus statutory interest: $20,000 for market value, $110,424.10 for legal-cost disturbance under s 59(1)(a), and $31,700 for valuation-fee disturbance under s 59(1)(b). Costs were reserved.
Key Takeaways
- An owners corporation cannot value its acquired easement by treating losses allegedly suffered by individual lot owners as its own.
- Injurious-affection compensation under s 55(f) requires the “other land” to belong to the person whose interest was acquired; individual strata lots did not qualify as other land of the Owners Corporation.
- Joining lot owners under s 25(2) did not create compensation claims for them or oblige the Court to adjudicate claims they had not advanced.
Why It Matters
The decision illustrates how the separate legal interests of an owners corporation and individual lot owners can sharply limit compensation following the compulsory acquisition of a right benefiting strata common property. Economic harm to businesses or lots does not automatically establish the market value of the owners corporation’s acquired interest.
It also underscores that statutory joinder is not a substitute for pleading and prosecuting a compensation claim, and that valuation assumptions must disregard effects caused by the public purpose of the acquisition.