Tepko Pty Limited and Ors v Water Board S36/2000

Tepko Pty Limited and others (the appellants) brought proceedings against the Water Board (the respondent) concerning the respondent's acquisition of land under the *Water Board (Land Acquisition) Act 1989* (NSW). The dispute centred on the compensation payable to the appellants for the compulsory acquisition of their land, which was subject to a development application that had been refused by the local council. The appellants contended that the compensation awarded was inadequate, arguing that the refusal of the development application should not have been taken into account in assessing the market value of the land. The matter proceeded to the High Court of Australia.

The High Court was required to determine whether the compensation awarded for the compulsory acquisition of the land was just and equitable, specifically in relation to the valuation of the land. The central legal issue was how the refusal of a development application, prior to the acquisition, should be treated when assessing the market value of land under the relevant acquisition legislation. The appellants argued that the refusal was an irrelevant consideration for valuation purposes, while the respondent maintained that it was a material factor affecting the land's market value.

The Court ultimately held that the refusal of the development application was a relevant factor in determining the market value of the land at the time of acquisition. The reasoning was that market value is determined by what a willing but not anxious purchaser would pay for the land, taking into account all factors that would influence such a purchaser. The refusal of a development application, by significantly limiting the potential uses of the land, would undoubtedly affect a prudent purchaser's assessment of its value. Therefore, the compensation awarded, which reflected this diminished value, was considered just and equitable. The appeal was dismissed.