The much-anticipated judgment in the case of Desane Properties and the State of New South Wales has been handed down, with the residential developer victorious in its battle to maintain ownership of a prime development site in Sydney’s Rozelle.
The NSW Supreme Court found in favour of the ASX-listed property developer Desane, with Justice Hammerschlag finding that the intentions of the government’s Rail and Maritime Services authority are “ill-defined” and “may never be realised”.
Desane chairman Professor John Sheehan welcomed the Supreme Court’s judgment.
“From day one, Desane questioned the true purpose of RMS’ proposed acquisition of our Rozelle property,” Professor Sheehan said.
Desane has been fighting a compulsory acquisition of its site at 68-72 Lilyfield Road since 2016.
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The government flagged the strategic acquisitions of sites in Rozelle for Westconnex infrastructure in early 2016, commencing negotiations to acquire Desane’s site in August 2016. An offer of purchase was made in March 2017 for $21,489,259.
Desane has always maintained its property was worth $100 million-plus based on the site’s development potential. The developer lodged a proposal in 2014 for the rezoning of the property to permit the development of a mixed-use precinct.
Desane’s proposal comprised 200 apartments, retail, commercial space and a 90-place childcare centre.
The NSW government argued that the site on which Desane’s Lilyfield Road property sits was required to be used for the construction of the Rozelle Interchange which it expected to be an “engineering endeavour of exceptional complexity”.
In mid-2017 the developer requested that the Roads and Maritime Services consider a temporary leasing arrangement rather than the permanent acquisition of the property which the government declined.
A nine-day Supreme Court trial, presided over by Justice Hammerschlag, concluded in March 2018.
Desane argue that the compulsory acquisition was invalid because it did not comply with the Just Terms Act as the government did not properly identify the public purpose for which the property is set to be acquired.
The court agreed, concluding that the proposed acquisition notice had no effect for failure to state the public purpose. Justice Hammerschlag did not provide a determination on whether the Rail and Maritime Service had acted with improper purpose.
Professor Sheehan said that the state government was looking to offset major cost overruns on its WestConnex plans by acquiring future development sites for value capture.
"I refer to Darryl Kerrigan in the movie The Castle," Professor Sheehan said.
"The court basically threw out the case."