WRITTEN BY Alice Menyhart
The first step for a local council in undertaking enforcement action under the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) or Local Government Act 1993 (LG Act) commonly involves issuing an order. We often see correspondence from a person who has received an order which foreshadows that a claim for compensation may be made under s.8.19 of the EPA Act or s.181 of the LG Act if the order is not revoked. This Essential Guide aims to assist Council staff in understanding when compensation may be awarded to a person to whom an order is given.
Section 181 of the LG Act states that:
Section 8.19 of the EPA Act has similar terms, as follows:
There are therefore three key criteria which must be met for the Court’s power to award compensation to be engaged:
Where these three criteria are met the Court still retains discretion as to whether or not to make an order awarding compensation.
Compensable costs
The costs that can be awarded as compensation under s.8.19 of the EPA and s.181 of the LG Act are limited to those arising as a consequence of the order. The onus lies with the claimant to prove that the compensation claimed arose from the giving of the order. Any compensation is intended to cover actual losses incurred, such as costs related to investigative work or reinstatement work carried out under the order, and are not in the nature of damages for unreasonable conduct.[1] Compensation has also been found not to include expenses arising from litigation challenging or seeking review of the order,[2] such as Court fees[3] although the Land and Environment Court may separately make orders for the payment of costs of Court proceedings.[4]
Unsubstantiated or unreasonable
There is little case law on s 8.19 of the EPA Act. However, in considering claims made under s.181 of the LG Act, the Court has found that whether an order is unsubstantiated requires consideration of the circumstances which triggered the giving of the order and whether this aligns with the circumstances specified in the Act in which an order of that type can be given.[5] Both the EPA Act and the LG Act set out ‘when’ an order can be given. If the circumstances when the order can be given did not exist when it was issued, then the giving of the order may be ‘unsubstantiated’. It is for this reason that a claim for compensation would often be considered after the Court has first considered the validity and/or merits of an order in Class 1 proceedings.
The fact that an order was ‘unsubstantiated’ may be a ground for review of an order in Class 1 proceedings.[6] For example, in Cachia v The Hills Shire Council,[7] the Council gave an order for Mr Cachia to remove and replace stormwater guttering around his dwelling under item 12 of s.124 of the LG Act, being the power to direct such things as are necessary to control the flow of surface water across land. Such an order could be given where ‘other land or a building on the land or other land is being damaged or is likely to be damaged’. The evidence was that the order was given to minimise a hazard to pedestrians, and not due to the risk of damage to any building. The parties resolved the matter by consent orders, agreeing that the order be revoked. Cachia then sought an order that the Council pay compensation to him under s.181 of the LG Act. The Court found that the circumstances in which the order could be given were not present at the time the order was given and the order was ‘unsubstantiated’. In considering what compensation was payable, the Court found that the following were expenses incurred as a consequence of the order:
The test of when the giving of an order may be “unreasonable” is likely to be broader than when it is ‘unsubstantiated’, and could potentially encompass procedural or substantive unreasonableness.
Where a claim is made in connection with an order which is also the subject of proceedings before the Court then the claim needs to be made no later than 28 days after the appeal is determined. If there are no such proceedings then proceedings seeking an order for compensation can be brought within three months after the date of the order.
An application for compensation must be brought in (or transferred to) Class 3 of the Land and Environment Court’s jurisdiction.[8]
It is important that council enforcement officers are aware that the recipient of an order can seek compensation from the council where an order is given and is unsubstantiated or unreasonable. However, this risk can be minimised by enforcement officers carefully considering when to give an order, including whether the circumstances are met for the giving of the type of order proposed, the appropriate terms of the order and allowing a reasonable time for compliance. These matters can also be informed by seeking information and records under the investigation powers afforded to local councils[9] and the consideration of representations from the person to whom the order is proposed to be given. The consideration of such matters should be reflected in the reasons for the order.
For further information about, or assistance with orders or claims for compensation arising from the giving of an order, please contact Alice Menyhart, Accredited Specialist in Planning and Environmental Law, and Legal Director of the BAL Planning, Environment & Local Government Team.
This guide is current as of 16 September 2025. The content contained in this guide is not legal advice. Readers should contact us and receive our specific advice on the particular situation that concerns them.
[1] Wherry v Sisters of Charity [2000] NSWLEC 252; Styles v Wollondilly Shire Council [2001] NSWLEC 18.
[2] D’Arcy v Campbelltown City Council [2003] NSWLEC 164 [6]; Gardiner v Hornsby Shire Council [2000] NSWLEC 37 [18].
[3] Cachia v The Hills Shire Council [2010] NSWLEC 136[57].
[4] See, for example, rule 3.7(3) of the Land and Environment Court Rules 2007.
[5] Gardiner v Hornsby Shire Council [2000] NSWLEC 37 [4], Cachia v The Hills Shire Council [2010] NSWLEC 136[34].
[6] Maroun Holdings Pty Ltd v Kiama Municipal Council [2020] NSWLEC 1013.
[7] Cachia v The Hills Shire Council [2010] NSWLEC 136.
[8] Land and Environment Court Act 1979 s 19(d) and (g); D’Arcy v Campbelltown City Council [2003] NSWLEC 164 [7].
[9] See Division 9.2 EPA Act; s.192 LG Act.