Consequential losses following a taking of land – what is actually recoverable?

When land in Western Australia is compulsorily acquired, compensation is payable to the dispossessed landowner (and potentially also other interest holders) in accordance with section 241 of the Land Administration Act 1997 (WA) (LA Act).

Section 241 of the LA Act contemplates that in addition to receiving compensation for the value of the taken interest in land, a claimant may be entitled to recover compensation for other related items of loss or damage that arise as a consequence of the taking.  These other items of loss or damage are often described as being “consequential losses”.

Section 241(6) of the LA Act sets out the recognised “consequential losses” that are recoverable upon a compulsory taking of land in Western Australia.  Notably, the term “consequential losses” does not actually appear in section 241(6) of the LA Act (or anywhere else in the LA Act) and it is effectively a term used to broadly describe those recoverable items that are unrelated to the valuation of land.

Section 241(6) of the LA Act provides that in determining the amount of compensation that is payable, regard is to be had to the loss or damage, if any, sustained by the claimant by reason of:

1. Removal expenses;
2. Disruption and reinstatement of a business;
3. The halting of building works in progress at the date when the interest is taken and the consequential termination of building contracts;
4. Architect’s fees or quantity surveyor’s fees actually incurred by the claimant in respect of proposed buildings or improvements which cannot be commenced or continued in consequence of the taking of the interest; or
5. Any other facts which the acquiring authority, the court or the State Administrative Tribunal considers it just to take into account in the circumstances of the case.

It can be observed that the scope of recoverable “consequential losses” under section 241(6) of the LA Act is actually rather narrow, in the sense that the provision only recognises limited classes of potential losses.  For example, in the case of a taking of vacant land, it would be entirely possible that no limbs of section 241(6) of the LA Act would apply on the facts.  Limbs (c) and (d) rarely apply at all, as they both relate to the particular scenario where proposed works cannot be completed due to a taking and would be irrelevant in most cases.

Whilst limb (e) may appear at face value to be a catch-all provision that would enable recovery of a broad scope of “consequential losses”, the case law makes clear that limb (e) only allows recovery in relation to losses of a similar type and nature to those classes of loss listed in limbs (a) to (d) (see Konawalow & Felber v  Minister for Works [1961] WAR 40 at 41, dealing with the statutory predecessor to section 241(6) of the LA Act).  Another important case law principle is that section 241(6) of the LA Act only allows recovery in relation to losses that have actually been incurred, so it does not allow recovery in respect of potential future losses (see Lenz Nominees Pty Ltd v The Commissioner of Main Roads [2012] WASC 6 at paragraph [423]).

Interestingly, the Court of Appeal in the recent decision of DBW Reynolds Pty Ltd as trustee for The DBW Reynolds Family Trust v Public Transport Authority [2025] WASCA 43 found (see paragraph [375]) that a loss of a business opportunity could potentially be a loss that has been “sustained” for the purposes of section 241(6) of the LA Act and therefore recoverable as compensation.  Any such loss having been sustained would however have to be clearly established on the evidence.

Whilst the scope of recoverable “consequential losses” under section 241(6) of the LA Act is rather narrow, it is important to understand that other types of “consequential losses” may potentially be recoverable under section 241(7) of the LA Act in the case of a partial taking of land (that is where only part of an overall landholding has been compulsorily acquired).  Section 241(7) of the LA Act allows compensation to be paid in relation to severance damage (where damage is caused by the severing of taken land from adjoining land that is still owned by the claimant) and injurious affection (where the taking reduces the value of adjoining land still owned by the claimant).  If a consequential loss can be characterised as being severance damage or injurious affection, then it will be recoverable.

By way of an example, if 20% of a lot is compulsorily acquired for the purpose of a road widening, then the dispossessed landowner might suffer damage if it is the case that the taking has reduced the development potential of the remaining 80% of the landholding, because that balance land is no longer large enough for potential redevelopment.  This is a form of damage that is unrelated to the value of the taken land but that still arises as a consequence of a compulsory taking.  Such a loss is recoverable under section 241(7) of the LA Act.  The point is that if consequential losses do not fall within the scope of section 241(6) of the LA Act, if they can otherwise be characterised as severance damage or injurious affection, then they may be recoverable under section 241(7) of the LA Act.

Such an approach was recently endorsed by the Supreme Court in Instant Products Group Pty Ltd v Commissioner of Main Roads [2025] WASC 205.  In that case, which involved a partial taking of land, the claimant sought to recover costs associated with having to redesign a proposed development (as a consequence of the partial taking) pursuant to section 241(6) of the LA Act.  The Supreme Court in that decision (at paragraph [165]) found that the claimed losses were not within the scope of section 241(6) of the LA Act, but were instead in the nature of a claim for compensation for injurious affection under section 241(7) of the LA Act.

Key takeaways

The important point for a potential claimant to understand is that section 241 of the LA Act only allows recover of compensation for particular types of “consequential losses” and does not always allow for the full compensation of every type of loss or damage actually suffered.  There are many examples of claimants unsuccessfully litigating claims for contended losses that are not actually within the scope of section 241 of the LA Act.  It is therefore important for a potential claimant to ensure that any “consequential losses” that they propose to claim have a proper legal foundation under one of the limbs of section 241 of the LA Act.

If you have any questions about “consequential losses” or about land compensation matters more generally, please contact Lavan’s Planning, Environment and Land Compensation Team.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.