The developer of the long-dormant Balmain Leagues Club site is seeking $97 million in compensation from the state government over an abandoned compulsory acquisition of the land for a temporary construction site for the Western Harbour Tunnel.
The compensation claim includes costs associated with a fire that tore through the property in May 2022 while the land was occupied by Transport for NSW.
Demolition of the old Balmain Leagues Club on Victoria RoadCredit: Edwina Pickles
Chinese developer Heworth, via a subsidiary, filed proceedings last year against Transport for NSW in the Land and Environment Court.
It is seeking an order that the transport agency pay it $97.2 million in compensation, including more than $48 million to cover construction costs said to have increased while its redevelopment project was paused, and $68,000 in costs related to the fire.
The compensation figure sought by the developer can be revealed after the court released key documents in the dispute.
In a defence document filed in court, dated July 15, Transport for NSW denies the developer is entitled to compensation in the amount claimed.
Transport for NSW compulsorily acquired a lease of the land in October 2021 as a construction site for the $7.4 billion Western Harbour Tunnel between Cammeray and Birchgrove. The term of the lease was a maximum of seven years, but Transport for NSW was able to terminate it with one month’s notice.
It rescinded the acquisition months later in July 2022.
Under NSW laws covering compensation when compulsory land acquisitions are rescinded, landowners are entitled to be compensated “for any financial costs or any damage actually incurred or suffered ... as a direct consequence of a compulsory acquisition and its rescission”.
Transport for NSW disputes that delayed development of the land and costs associated with the fire amount to financial costs or damage incurred as a direct result of the lease acquisition and rescission.
It says in its defence document that “the fire was treated as suspicious by Fire and Rescue NSW” in 2022, and points to news reporting at the time.
The state government’s multibillion-dollar infrastructure program has led to mounting compensation bills for compulsorily acquired land, including around the new Western Sydney Airport and metro stations.
Heworth said it first became aware of the proposed acquisition of its site in March 2018, and it was “unable to progress the development” in the face of uncertainty about whether it could proceed.
“By at least 20 January 2020, it was publicly known in the market that the lease over the land was proposed to be acquired which created negative market sentiment in relation to the development,” the developer said in a court document outlining its claim.
“As a consequence, it was unfeasible to commence marketing the development for pre-sale.”
The site has been vacant since 2010. Heworth’s latest, and controversial, plan for the site is a $285 million mixed-use development including 227 apartments – of which 59 are affordable housing units – spanning three towers between 14 and 16 storeys.
It had won approval for a smaller development.
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