G Capital Corporation Pty Ltd v Roads and Maritime Services

[2019] NSWCA 234

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	G Capital Corporation Pty Ltd v Roads and Maritime Services [2019] NSWCA 234
Hearing dates:	15 August 2019
Decision date:	24 September 2019
Before:	Meagher JA at [1]; Gleeson JA at [32]; McCallum JA at [33]
Decision:	1. Grant leave to the applicants to appeal from the order made on 14 February 2019 answering Question 1 in the negative. 2. Refuse leave to the applicants to appeal from the order made on 14 February 2019 answering Question 2 in the negative. 3. Applicants file within 7 days a notice of appeal in the form of the draft in the White Book, confined to proposed ground 1. 4. Appeal dismissed. 5. Applicants/appellants pay the respondent’s costs of the applications for leave to appeal and appeals.
Catchwords:	LAND LAW – compulsory acquisition of land – compensation – where applicants entered into contracts for sale of relevant land – where land compulsorily acquired before settlement of those contracts – where applicants objected to amount of compensation for market value – where applicants’ primary compensation claim for unpaid purchase price as loss attributable to disturbance under Land Acquisition (Just Terms Compensation) Act 1991 (NSW), s 59(1)(f) – where questions directed to whether applicants entitled to any compensation for that loss determined separately – whether there was “actual use of land” by applicants
Legislation Cited:	Land Acquisition (Just Terms Compensation) Act 1991 (NSW), Pt 3, ss 54, 55, 59 Land and Environment Court Act 1979 (NSW), s 57
Cases Cited:	Almona Pty Ltd v Roads and Traffic Authority of New South Wales [2008] NSWLEC 112; (2008) 160 LGERA 375 Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) [2012] NSWCA 404; (2012) 191 LGERA 267 Council of the City of Newcastle v Royal Newcastle Hospital (1956-1957) 96 CLR 493; [1957] HCA 15 Council of the City of Newcastle v Royal Newcastle Hospital (1958-1959) 100 CLR 1 El Boustani v Minister administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33; (2014) 199 LGERA 198 Fletcher v Manton (1940) 64 CLR 37; [1940] HCA 32 Gertos Holdings Pty Limited v Roads and Maritime Services; G Capital Corporation Pty Ltd v Roads and Maritime Services; Marsden Developments v Roads and Maritime Services [2018] NSWLEC 166 Hazcorp Pty Limited v The Roads and Traffic Authority of New South Wales [2006] NSWLEC 661 Health Administration Corporation v George D Angus Pty Ltd (2014) 88 NSWLR 752; [2014] NSWCA 352 Lysaght v Edwards (1876) 2 Ch D 499 Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314 Roads and Maritime Services v Allandale Blue Metal Pty Ltd [2016] NSWCA 7; (2016) 212 LGERA 307 Roads and Maritime Services v United Petroleum Pty Ltd [2019] NSWCA 41; (2019) 236 LGERA 389 Roads and Traffic Authority of New South Wales v McDonald (2010) 79 NSWLR 155; [2010] NSWCA 236 Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66
Category:	Principal judgment
Parties:	G Capital Corporation Pty Ltd (First Applicant) Gertos Holdings Pty Ltd (Second Applicant) Marsden Developments Pty Ltd (Third Applicant) Roads and Maritime Services (Respondent)
Representation:	Counsel: P Tomasetti SC / J Johnson (Applicants) R Lancaster SC / M Astill (Respondent)   Solicitors: Ristevski & Associates (Applicants) Norton Rose Fulbright (Respondent)
File Number(s):	2019/79194
Publication restriction:	N/A
Decision under appeal	Court or tribunal: Land and Environment Court of New South Wales Jurisdiction: Class 3 Citation: [2019] NSWLEC 12 Date of Decision: 14 February 2019 Before: Pain J File Number(s): 2018/207357; 2018/207345; 2018/207366

headnote

[This headnote is not to be read as part of the decision]

On 9 February 2018, Roads and Maritime Services (RMS) compulsorily acquired properties of each of the applicants for the WestConnex Stage 3 M4/M5 Link project. At that time, each property was the subject of a contract for sale exchanged on 28 June 2016 which provided for settlement on 28 June 2018. The consideration payable under those contracts was $56.5 million.

The Valuer General determined the market value of the three properties at the date of acquisition to be $33.1 million. The applicants objected to that amount, maintaining that the market value of their land on that date was not relevant to the determination of compensation to which each was entitled under Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act), s 54. Instead, the applicants’ claims for compensation were directed to the unpaid purchase price due under the contracts for sale, framed as a “loss attributable to disturbance” within s 59(1)(f).

The applicants successfully applied to have the question whether each was entitled to compensation determined in that manner decided separately. The questions formulated in the Land and Environment Court were:

1. Whether there was any “actual use of land” by the applicants that would entitle them to any compensation under Just Terms Act, s 59(1)(f); and

2. Whether, on the basis of the contracts for sale, the compensation to be paid to the applicants in respect of their interests in the acquired land was said to be confined to calculation of compensation having regard only to matters arising under Just Terms Act, ss 55(d) and 59(1)(f)?

The primary judge answered each question in the negative. Crucially, in relation to Question 1, the primary judge found that, at the time of acquisition, there was no “actual use of land” by the applicants because the properties were the subject of leases to retail and commercial tenants. The applicants sought leave to appeal from those orders.

Held (Meagher JA, Gleeson and McCallum JJA agreeing), granting leave to appeal in relation to Question 1, and dismissing that appeal, and refusing leave to appeal in relation to Question 2:

As to Question 1:

(i) The question should be understood as being whether there was any “actual use of land” that “could” entitle the applicants to compensation under s 59(1)(f). So construed it has utility to the parties, justifying a grant of leave to appeal: [8], [13], [14].

(ii) There was no actual use of the land, or any area of it, by the applicants. They did not themselves occupy the land or conduct any business activities on or from it. In leasing the land and receiving rental income in return, each conferred exclusive rights of occupation to its respective tenants. The spending of money on the land for the benefit of the tenants, or the entry of the applicants’ agents for the purpose of performing obligations under the lease agreements, does not constitute actual use of the land. The applicants did not identify any business activity of which “holding” the land formed a part, and their general rights and responsibilities under the leases or contracts for sale could not describe any use of the land or any area of it: [17], [26], [27], [28].

Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66; Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) [2012] NSWCA 404; (2012) 191 LGERA 267; Roads and Maritime Services v Allandale Blue Metal Pty Ltd [2016] NSWCA 7; (2016) 212 LGERA 307; Roads and Traffic Authority of New South Wales v McDonald (2010) 79 NSWLR 155; [2010] NSWCA 236; Hazcorp Pty Limited v The Roads and Traffic Authority of New South Wales [2006] NSWLEC 661 discussed.

Almona Pty Ltd v Roads and Traffic Authorityof New South Wales [2008] NSWLEC 112; (2008) 160 LGERA 375; Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259; Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314; Roads and Maritime Services v United Petroleum Pty Ltd [2019] NSWCA 41; (2019) 236 LGERA 389 also referred to.

As to Question 2:

(iii) Leave to appeal in relation to this question should be refused. As formulated, the question requires the Court to determine the whole of each applicants’ claim for compensation without regard to all of the relevant matters in s 55, those matters including the “market value” of the land: [10], [30].

Judgment

1. MEAGHER JA: This is the concurrent hearing of applications for leave to appeal and appeals, if leave be granted, from an interlocutory decision of a judge of the Land and Environment Court (Pain J) deciding two separate questions: G Capital Corporation Pty Ltd; Gertos Holdings Pty Ltd; Marsden Developments Ltd v Roads and Maritime Services [2019] NSWLEC 12. The underlying three proceedings concern the determination of the compensation to which each of the applicants is entitled under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act), following the compulsory acquisition by the respondent (RMS) of their land for the purpose of providing mid-tunnel access for the WestConnex Stage 3 M4/M5 Link project.

The claim for compensation and separate questions

2. At the date of acquisition on 9 February 2018, the three adjacent properties in Parramatta Road, Annandale were the subject of leases to retail and commercial tenants, whose business activities on the premises included a gymnasium, a golf sporting goods store and an accountant’s office. A car park in one of the properties was also licensed to one of the tenants. When acquired, each property was the subject of a contract for sale exchanged on 28 June 2016 which provided for settlement two years later on 28 June 2018. The total consideration payable under the three contracts (including a deposit of $50,000 payable under each) was $56.5 million. By a separate deed to which the three applicants and their vendors were parties, it was agreed that completion “of each of the contracts… [was] dependent upon each of the contracts settling simultaneously”.

3. On 22 June 2018, the Valuer General determined the market value of the three properties at the acquisition date to be $33.1 million, and the amount of compensation to be offered to each applicant as:

1. G Capital Corporation – $14.2 million as compensation for market value and $675,942 as compensation for loss attributable to disturbance under Just Terms Act, s 59(1)(a), (b);

2. Gertos Holdings – $4.985 million as compensation for market value and $269,492 as compensation for loss attributable to disturbance under s 59(1)(a), (b);

3. Marsden Developments – $6 million as compensation for market value and $348,142 as compensation for loss attributable to disturbance under s 59(1)(a), (b).

4. The applicants objected to these amounts, maintaining that the market value of their land on the date of acquisition was not relevant to the determination of the compensation to which each was entitled under Just Terms Act, s 54. Their primary claims related to the amount of the unpaid purchase price due under the contracts for sale, in each case as a “loss attributable to disturbance” within s 59(1)(f). The amounts claimed for that disturbance loss (excluding, in each case, the deposit already received) were: G Capital Corporation – $27.45 million; Gertos Holdings – $22.95 million; and Marsden Developments – $5.95 million.

5. Contending that otherwise “the time and expense involved and incurred in the investigation of the ‘market value’ of the [land] would be wasted”, the applicants applied to have the question whether each was entitled to compensation determined as claimed decided separately and before any other issues in its proceedings. The Court (Moore J) acceded to that application: Gertos Holdings Pty Limited v Roads and Maritime Services; G Capital Corporation Pty Ltd v Roads and Maritime Services; Marsden Developments v Roads and Maritime Services [2018] NSWLEC 166; and ordered that the following questions be determined separately:

1. Whether there was any “actual use of land” by any of the Applicants that would entitle any of them to any compensation under s 59(1)(f) of the Just Terms Act?

2. Whether, on the basis of the contracts for sale of the Properties, the compensation to be paid to the Applicants in respect of their interests in the land acquired is to be confined to calculation of compensation having regard only to matters arising under s 55(d) and s 59(1)(f) of the Just Terms Act?

6. The primary judge answered each of these questions in the negative. The applicants seek leave to appeal from those orders under Land and Environment Court Act 1979 (NSW), s 57(1) which limits appeals to this Court to challenges on a question of law. Because the orders were interlocutory, leave to appeal is required: s 57(4)(d).

The relevant statutory provisions

7. The provisions of the Just Terms Act potentially relevant to the determination of those questions are:

4 Definitions

…

interest in land means:

(a)  a legal or equitable estate or interest in the land, or

(b)  an easement, right, charge, power or privilege over, or in connection with, the land.

land includes any interest in land.

owner of land means any person who has an interest in the land.

...

20 Effect of acquisition notice

(1)  On the date of publication in the Gazette of an acquisition notice, the land described in the notice is, by force of this Act:

(a)  vested in the authority of the State acquiring the land, and

(b)  freed and discharged from all estates, interests, trusts, restrictions, dedications, reservations, easements, rights, charges, rates and contracts in, over or in connection with the land.

…

54 Entitlement to just compensation

(1)  The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land.

…

55 Relevant matters to be considered in determining amount of compensation

In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division):

(a)  the market value of the land on the date of its acquisition,

(b)  any special value of the land to the person on the date of its acquisition,

(c)  any loss attributable to severance,

(d)  any loss attributable to disturbance,

(e)  the disadvantage resulting from relocation,

(f)  any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

56 Market value

(1)  In this Act:

market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid):

(a)  any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and

(b)  any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and

(c)  any increase in the value of the land caused by its use in a manner or for a purpose contrary to law.

…

57 Special value

In this Act:

special value of land means the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person’s use of the land.

...

59 Loss attributable to disturbance

(1)  In this Act:

loss attributable to disturbance of land means any of the following:

(a)  legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land,

(b)  valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land),

(c)  financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs),

(d)  stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired),

(e)  financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage),

(f)  any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.

The decision of the primary judge and the application for leave to appeal

8. In answering Question 1 in the negative, the primary judge held that the applicants had not established any “actual use of the land” (Judgment [52]). In this Court, RMS takes the position that leave to appeal should be granted in relation to this question, construed narrowly and in the manner adopted by the primary judge; and specifically by treating “would” as if it read “could”, so as not to require findings as to whether each of the other elements in s 59(1)(f) was satisfied in order to justify the conclusion that each applicant “would” be entitled to compensation for loss “attributable to disturbance” under that paragraph.

9. Her Honour gave two reasons for answering Question 2 in the negative. First, there was no “actual use of the land” to which any “financial costs reasonably incurred” could relevantly relate (Judgment [66]). Secondly, accepting that the loss claimed was capable of answering the description “other financial costs” (Judgment [62]-[64]), the applicants had not established that each purchaser would have had the financial ability to pay the balance of the purchase price due on completion, and accordingly not proved that the claimed loss was the direct consequence of the compulsory acquisition (Judgment [67], [86]-[91]).

10. RMS opposes any grant of leave in respect of Question 2, contending that as formulated that question requires the Court to determine the whole of each applicants’ claim for compensation in a particular way, and having regard to only one of the matters in s 55. It is submitted that to do so would be to proceed contrary to the express terms of ss 54 and 55 which require the Court to have “regard to all relevant matters” under Just Terms Act, Pt 3, in determining the amount that will “justly compensate the person for the acquisition of the land” (s 54(1)), those “relevant” matters in this case including the “market value” of the land, as well as any “special value” it may have to the applicants.

11. If leave was granted in relation to Question 2, RMS submits that it was correctly answered in view of the negative answer to Question 1. As well as supporting the primary judge’s reasons for answering that question in the negative, RMS by its notice of contention submits that the unpaid purchase price under each contract was not within the concept of “any other financial costs” in s 59(1)(f). This contention requires consideration of the meaning of that expression and, in turn, this Court’s earlier decisions in El Boustani v Minister administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33; (2014) 199 LGERA 198; and Health Administration Corporation v George D Angus Pty Ltd (2014) 88 NSWLR 752; [2014] NSWCA 352 which concerned disturbance claims for loss of income or profits, resulting either from the forced relocation of the business conducted on the acquired land, or the closing of such a business which could not be relocated. The correctness of those cases in that respect was left open by this Court’s recent decision in Roads and Maritime Services v United Petroleum Pty Ltd [2019] NSWCA 41; (2019) 236 LGERA 389.

8. For the reasons which follow, leave to appeal should be granted in relation to Question 1, and refused in relation to Question 2. The appeal from the answer to Question 1 should be dismissed, making clear that answer is directed only to the issue whether there was any “actual use of land” by the applicants within s 59(1)(f).

Question 1

13. It is convenient at this point to consider the form of the first question and its utility in resolving the issues between the parties. In its terms this question is not limited to an enquiry as to whether there was any “actual use of land” capable of resulting in the incurring of “other financial costs” within s 59(1)(f). However, if it is understood as the parties apparently intended, and as it was in fact dealt with by the primary judge, it is only concerned with whether there was “any use of land” which “could” entitle the applicants to the compensation sought as within s 59(1)(f). Understood in this way, it does not take into account the other matters required for para (f) to be satisfied, namely that those “financial costs” be reasonably incurred, relate to the actual use of the land and be incurred “as a direct and natural consequence of the acquisition”. Relevantly in the present context, this question does not address the necessary characteristic of the “financial costs” that they bear, or at least the incurring of them bears, a relationship to the “actual use of the land” which has been disturbed, in the sense of brought to an end, by the compulsory acquisition. None of these requirements was addressed by the primary judge in considering Question 1.

14. Nonetheless, the question so understood had and continues to have utility to the parties because if answered in the negative, it follows that the primary way in which the applicants currently put their compensation claim must be rejected. For that reason leave to appeal should be granted in relation to Question 1.

15. Before the primary judge, the applicants contended that their “actual use” of the acquired land in each case was not as a “passive investor” but as active and engaged landlords attending to tasks including “property inspections, liaising with tenants to discuss building issues, maintaining common areas, rent collection, payment of property outgoings and expenses, repair and maintenance of the Properties and arranging for fire safety upgrades” (Judgment [20], [39]).

16. The primary judge concluded that the applicants had not established any “actual use of the land”: Judgment [52]. In addressing the applicants’ evidence concerning the nature of the leased properties and the management and other activities undertaken, her Honour found at Judgment [51]:

… the Properties were fully leased by several tenants on commercial terms, the Applicants having held the Properties for up to 18 years. Further … the leases … are conventional leases of small commercial premises conferring no special rights to the landlord (the Applicants) such as the ability to operate their own business from the premises. The Applicants did not occupy any part of the Properties or conduct their business affairs there. That the Applicants or their representatives could access common areas such as an entrance hall is immaterial.

17. In this Court, the applicants described that “actual use” at the time of acquisition as being that they:

(a) were leasing and receiving rental income from the land;

(b) holding the land pending any investment opportunities;

(c) were spending money on the land;

(d) were employing staff to inspect and go onto the land for maintenance purposes as part of the leasehold responsibility to tenants;

(e) had rights of access to and responsibilities for the state of common areas and building maintenance;

(f) had rights and obligations under the contracts of sale of the properties pending settlement in June 2018.

18. The reference in para (f) above to the applicants’ obligations under the contracts for sale presumably takes account of the position under the general law, unless altered by the terms of those contracts, that before completion, as between the vendor and purchaser, the vendor remains liable for any wilful damage it causes to the property or for any loss or damage due to its failure to take reasonable care: see Lysaght v Edwards (1876) 2 Ch D 499 at 507; Fletcher v Manton (1940) 64 CLR 37 at 45, 48; [1940] HCA 32. The form of the contracts for sale used as between the applicants and vendors does not by clause 10.1.4 or Special Condition 16 purport to alter that position. It followed that to the extent the applicants had obligations under the leases with respect to the condition of the properties, each would also satisfy its obligations to its purchaser by exercising reasonable care in the performance of its obligations as lessor. Unsurprisingly, it was not suggested that the existence of the contracts for sale had affected in any way the activities of the applicants undertaken on or in relation to the land, or any area of the land. This accorded with the submission made to the primary judge that the entry into those contracts “did not interrupt the historical actual use of each property by each applicant” which involved “actively managing [the] respective properties pursuing the maximum return from investment possible”.

19. As to the “actual use” of land to which s 59(1)(f) refers, in Almona Pty Ltd v Roads and Traffic Authorityof New South Wales [2008] NSWLEC 112 at [60]; (2008) 160 LGERA 375, Jagot J correctly observed that it is the use by the dispossessed owner at the time of the compulsory acquisition, and not a use of the land by the acquiring authority. Furthermore it was earlier held by this Court that the reference to “actual” use emphasises that the use must exist in fact at the time of acquisition, rather than be a proposed future or potential use: Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 at [26]-[27] (Brownie AJA, Stein JA and Ipp AJA agreeing); applied in Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314 at [88]. More recently, in United Petroleum at [11], Basten JA (Macfarlan and Payne JJA relevantly agreeing) observed as to the expression “actual use of the land”:

The second constraint may be found in the need to identify financial costs “relating to the actual use of the land”, namely that use to which the land was put at the date of the compulsory acquisition. Residential, agricultural or commercial uses are common examples of actual uses of land and suggest that in this sense the term “land” refers to an area of the earth, rather than a bundle of legal rights.

20. As was said in a different context in relation to the use of land in Council of the City of Newcastle v Royal Newcastle Hospital (1956-1957) 96 CLR 493 at 499 (Williams J); [1957] HCA 15, ordinarily that use will involve “some activity on or in relation to it”; and may in turn be described by reference to the particular activity undertaken or the purpose of that activity, as is the case with the examples of use given by Basten JA in United Petroleum. And, as was recognised by the Privy Council in Council of the City of Newcastle v Royal Newcastle Hospital (1958-1959) 100 CLR 1 at 3-4, the activity or its purpose may not necessarily involve any physical presence on or occupation of the land. There, the land was used “by keeping it in its virgin state for its own special purposes”, those purposes including the provision of “quiet and serene surroundings for [hospital] patients” and the prevention of building on land so that it acts as a “barrier against the approach of factories and houses”.

21. It is instructive at this point to consider cases in this Court in which compensation has been allowed for disturbance loss within s 59(1)(f). First, there are the cases in which costs have been reasonably incurred in replicating, replacing or substituting for the benefit of the lost use. In each, the acquired land, or an area of it, was being used or enjoyed for a specific purpose which was beneficial to the owner of the land.

22. For example, the acquired land in Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66 at [67], [93], [94] was used as a buffer to a residence on residue land in order to reduce noise and glare and to provide privacy, making it necessary on the loss of use of that land to relocate the residence on the residue land from one position to another so as to make it once again inhabitable. And in Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) [2012] NSWCA 404 at [57]; (2012) 191 LGERA 267, the acquired land was being used to provide easy and direct stock access to free river water, making it reasonably necessary following acquisition that an electric pumping system be installed on the residue land in order to allow access to that free river water to continue.

23. Similarly, in Roads and Maritime Services v Allandale Blue Metal Pty Ltd [2016] NSWCA 7 at [47]-[52]; (2016) 212 LGERA 307, the acquired land was being used to provide access from a cottage and stockyards on one side of the residue land to a quarry and grazing lands on the other, making it necessary on the acquisition of the strip of land in the middle to construct new stockyards and a cottage on the quarry side of the residue land because the occupant of the cottage oversaw both the operations of the quarry and a grazing business. Roads and Traffic Authority of New South Wales v McDonald (2010) 79 NSWLR 155; [2010] NSWCA 236 was another case involving a partial acquisition of land. There the acquired land included a principal residence so that its acquisition made reasonably necessary the construction of a new residence on the residue land, resulting in the incurring of rental costs as loss attributable to disturbance whilst that residence was being constructed (at [114]).

24. Secondly, there are the cases referred to in [11] above in which, in addition to relocation costs, compensation was recovered for profits lost during the period that a business conducted on the acquired land was relocated and re-established (El Boustani at [14], [15], [17], [146]); or for the profits lost where part of a medical practice conducted on the acquired land was forced to close, and could not be relocated (George D Angus at [18]-[20], [26], [63]).

25. Thirdly, in Blacktown Council v Fitzpatrick Investments, the legal and other transactional costs incurred in replacing the acquired land were held to constitute disturbance loss within s 59(1)(f) where that land was held with other land “for the purpose of development by way of residential subdivision”, making it necessary for the continuation of that business that the acquired land be replaced (at [23], [28], [34]). See also Hazcorp Pty Limited v The Roads and Traffic Authority of New South Wales [2006] NSWLEC 661 at [97] where Jagot J applied this reasoning to land held to form part of the developer/owner’s “stock-in-trade”, making it necessary that it be replaced in order for “its business of residential subdivision” to continue.

26. Turning to the actual uses contended for by the applicants which are listed in [17] above, none of the actions or activities in paras (a) to (d) describes an actual use or enjoyment of the land or any area of it by the applicants. They did not themselves occupy the land or conduct any business activities on or from it. As to para (a), in leasing the land and receiving rental income in return, each conferred exclusive rights of occupation on its respective tenants; and the evidence does not suggest that any area of the land was exempted from the tenancies for use by any of the applicants. As to paras (c) and (d), the spending of money on the land for the benefit of the tenants does not describe any use or enjoyment of any area of it by the applicants. Nor does the fact that employees or agents of the applicants may have entered parts of the land for the purpose of conducting inspections or to perform obligations under the lease agreements constitute such use or enjoyment.

27. As to para (b) the applicants do not identify any business activity of which “holding” the land formed a part. The actual uses of the land contended for by the applicants do not, as the primary judge observed at Judgment [47], involve any of the three properties being held as part of a “land bank” in a business which involved residential subdivision; and the applicants did not make such a case in this Court. Nor could they in circumstances where they had already contracted to sell the land at the time of its acquisition; and it could not be contended that in entering into those contracts, each applicant was in some way using the land.

28. Finally, paras (e) and (f) describe in general terms rights or responsibilities of the applicants under the leases or contracts for sale. Neither describes any use of the acquired land or any area of it by the applicants.

29. The primary judge correctly concluded that there was no “actual use of land” by any of the applicants that could entitle them to compensation under s 59(1)(f). Question 1, understood as it was dealt with by the primary judge, was correctly answered in the negative.

Question 2

30. It follows that Question 2 would also be answered in the negative. However for the reasons contended for by RMS, leave to appeal from the answer to that question should be refused. As formulated, the question requires the Court to determine the whole of each applicants’ claim for compensation without regard to all of the relevant matters in s 55, those matters including the “market value” of the land.

Conclusion

31. The following orders should be made:

1. Grant leave to the applicants to appeal from the order made on 14 February 2019 answering Question 1 in the negative.

2. Refuse leave to the applicants to appeal from the order made on 14 February 2019 answering Question 2 in the negative.

3. Applicants file within 7 days a notice of appeal in the form of the draft in the White Book, confined to proposed ground 1.

4. Appeal dismissed.

5. Applicants/appellants pay the respondent’s costs of the applications for leave to appeal and appeals.

32. GLEESON JA: I agree with Meagher JA.

33. McCALLUM JA: I agree with Meagher JA.

**********

Decision last updated: 24 September 2019