Durham Holdings Pty Ltd v State of NSW

Durham Holdings Pty Ltd (Durham) sought to recover from the State of New South Wales (NSW) compensation for the resumption of land under the *Public Works Act 1900* (NSW). The dispute concerned the valuation of the resumed land, specifically whether the "potential for development" of the land should be taken into account when assessing compensation. Durham argued that the land had significant development potential, which should be reflected in the compensation awarded. NSW contended that the land was to be valued as it was at the time of resumption, without regard to speculative future development. The case was heard in the High Court of Australia.

The central legal issue before the High Court was the proper method for valuing land resumed under the *Public Works Act 1900* (NSW), particularly concerning the inclusion of potential development value in the compensation assessment. The court was required to determine whether the Act mandated a valuation based on the land's existing use or whether it permitted consideration of its potential for future development, even if that potential was not immediately realisable or authorised by existing planning controls.

The High Court, in a joint judgment delivered by Kirby and Callinan JJ, held that compensation for resumed land should be assessed by reference to its market value at the date of resumption. This market value is to be determined by considering all factors that a hypothetical prudent purchaser would take into account, including any potential for development that enhances the land's value, provided that potential is not merely speculative and is capable of being realised. The court affirmed the principle that compensation should place the dispossessed owner in the same financial position as if the resumption had not occurred, which includes accounting for any inherent potential of the land that contributes to its market worth. The appeal was dismissed.