Compensation for disturbance in New South Wales: value vs cost

Purpose - The purpose of this paper is to explore compensation for compulsorily acquired businesses in the pre-statutory value to the owner regime compared to the post-statutory cost and loss to the owner regime. Design/methodology/approach - The study involved researching decisions of the NSW Land and Environment Court and appellate courts in the pre- and post-statutory regimes. It also involved the identification of value to owner compensation in pre-statutory decisions and comparison with costs and loss to owner compensation in post-statutory decisions. Findings - The study found that the few post-statutory decisions on disturbance compensation for compulsorily acquired businesses appear inconsistent with the provisions of the statute; however, the value vs cost debate has not yet been fully tested in the courts. Research limitations/implications - The research is limited by the number and types of cases brought before the primary court and the number and types of cases then brought before the appellate courts. Practical implications - With recent decisions in the post-statutory regime adopting a more clinical interpretation of the Act concerning other heads of claim for disturbance, future cases before the courts may be expected to have a greater focus on the value vs cost issue for compensation claims for compulsorily acquired businesses. Social implications - Compensation based on a clinical interpretation of cost or loss arising from the compulsory acquisition of a business in the post-statutory regime may result in inequitable compensation to the acquired party, failing the primary provision of the Act to justly compensate for the acquisition. Originality/value - While conceptual differences between cost and value were considered and distinguished long ago in the valuation discipline in Australia and overseas, this is the first time they have emerged in the legal discipline in Australia through specific statutory wording.