Zhu v Treasurer of New South Wales

The High Court of Australia considered an appeal by Mr Zhu against the Treasurer of New South Wales concerning the validity of a compulsory acquisition of land. Mr Zhu sought to challenge the acquisition, arguing that the Treasurer had not acted in good faith in exercising the power of compulsory acquisition under the *Land Acquisition (Just Terms Compensation) Act 1991* (NSW). The core of the dispute lay in whether the Treasurer's stated purpose for acquiring the land was the true purpose, or if it was a pretext for an ulterior motive.

The central legal question before the High Court was whether the evidence established that the Treasurer had acted in bad faith in acquiring Mr Zhu's land. This required the Court to determine the proper test for establishing bad faith in the exercise of statutory powers, particularly in the context of compulsory land acquisition, and to assess whether the evidence presented by Mr Zhu met that test. The Court also had to consider the scope of judicial review in relation to the exercise of such powers.

The High Court, by majority, held that the evidence did not support a finding of bad faith. The Court affirmed that the onus was on Mr Zhu to prove bad faith, and that mere suspicion or conjecture was insufficient. The judges reasoned that the Treasurer's stated purpose for the acquisition, which was to facilitate a public work, was a legitimate purpose under the relevant legislation. While there may have been other considerations or potential benefits that influenced the decision, these did not, in themselves, demonstrate that the stated purpose was not genuinely held or was a mere sham. The Court applied the principle that a decision-maker's stated purpose will generally be accepted unless there is clear evidence to the contrary, such as proof that the stated purpose was not the real purpose or that the decision was made for an entirely different, improper reason. The appeal was dismissed.