Even where a landowner fails to beat the Valuer-General’s determination, the Court may still award them costs.

Background

This lesson is from the Court’s latest costs judgment in UPG 72 Pty Ltd v Blacktown City Council (No 2) [2025] NSWLEC 77.

This decision follows a long-running Class 3 dispute over the compulsory acquisition of land in Riverstone. UPG owned land designated for trunk drainage and green and golden bell frog (GGBF) habitat. It challenged the Valuer-General’s compensation determination of $2.49 million, seeking over $7 million. The Council argued that nothing was payable at all, asserting that any loss in value was offset by “betterment” to adjoining land.

In April, the Court determined the compensation payable to UPG was just over $1.2 million – well below the Valuer-General’s offer and far below what UPG sought, but above the $0 offered by the Council.

That left the issue of costs.

Application regarding Costs by Council

The Council asked the Court to split costs – that is, to pay UPG’s costs up to the hearing, but for each side to bear their own costs from the hearing onwards. Their argument was that by the time expert joint reports had been exchanged, it was obvious UPG’s case was weak. Council was of the view that UPG should have reassessed and settled.

UPG said otherwise. They said that the evidence was contestable, the zoning and drainage issues were still live, and its case was neither vexatious nor exaggerated.

The Court’s Reasoning

The Court dismissed the Council’s costs application, holding that UPG acted reasonably throughout. Even though UPG failed to better the statutory offer and recovered far less than it claimed, the Court found:

1. The core issues (public purpose, zoning, betterment) remained genuinely contestable even after joint reports.
2. UPG conducted the litigation efficiently and was entitled to test the adequacy of the compensation.
3. The Council ran a “nil compensation” case and lost, which gave UPG a measure of success.

The Court reaffirmed that in compulsory acquisition, costs don’t automatically follow the event. Instead, the key question is whether the dispossessed landowner acted reasonably. Here, UPG had a right to a hearing, raised valid issues, and improved on the Council’s position. That was enough.

The Council was ordered to pay UPG’s costs, including the costs of its costs application.

Key Takeaways

1. Costs are discretionary – the focus is on fairness, reasonableness, and proportionality.
2. Valuer-General outcomes are relevant but not determinative – not beating the statutory offer may be a factor but doesn’t authomatically mean the applicant has to pay their own way.
3. Joint expert reports don’t end the case – if key issues remain genuinely in dispute after conclaves, parties are not acting unreasonably in proceeding to hearing.
4. Running a “nil compensation” case is risky – if a local council insists nothing is payable and loses, it may end up on the hook for costs, even where the final award is modest.

Conclusion

This judgment is a reminder that costs in compulsory acquisition proceedings don’t turn on who gets the bigger number. What matters is who acted fairly, who brought reasonable claims, and whether the case was properly conducted.

For landowners, it affirms that you can test a valuation – and still recover costs – even if you fall short of the Valuer-General’s figure.

For local councils, it highlights the risks of taking an all-or-nothing position and expecting the Court to penalise applicants who simply seek to be heard.

Further reading

You can access the full judgment below.