Mathew Massasso t/as Five Dock Pharmacy v Sydney Metro - [2023] NSWLEC 115

Land and Environment Court

New South Wales

Medium Neutral Citation: Mathew Massasso t/as Five Dock Pharmacy v Sydney Metro [2023] NSWLEC 115
Hearing dates: 17 to 21 and 24 to 28 July 2023
Decision date: 30 October 2023
Jurisdiction: Class 3
Before: Moore J
Decision:
See directions at [689]

Catchwords:
COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for loss of profit rent allegedly lost for the remainder of the term of the lease renewal options – consideration of market rent – no difference between passing rent and market rent established – profit rent claim fails
COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for relocation of retail pharmacy business – substantial demolition and construction/reconstruction and structural alterations to relocation premises – whether structural alteration costs appropriate to be borne by Applicant and reimbursed by acquiring authority – costs of demolition and construction/reconstruction appropriate to be regarded as landlord’s costs – claim rejected
COMPENSATION – claim for cost of buying out existing tenants in order to render demolition and construction/reconstruction activities possible – cost of buying out existing tenants appropriate to be regarded as landlord’s expenses – claim for reimbursement of cost of buying out existing tenants rejected
COMPENSATION – claim for costs of fit-out of new premises – new premises fitted-out not only in compliance with regulatory requirements but also to best contemporary pharmacy practice – were costs of fit-out reasonably incurred and thus compensable – costs of fit-out reasonably incurred – Applicant entitled to reimbursement for costs of fit-out
COMPENSATION – claim for differential in rental between that paid at the acquired premises and that paid at the relocation premises – rent at relocation premises higher than that at acquired premises - claim based on full term of lease assuming exercise of multiple renewal options - relocation premises larger than acquired premises rate per square metre at relocation premises lower than that at acquired premises – rent comparison appropriate on rate per square metre – no basis for claim – differential rent claim rejected
COMPENSATION – claim for reimbursement for double rental paid at the acquired premises and that paid at the relocation premises – claim based on time including time for demolition and construction/reconstruction works – not appropriate to order reimbursement for rent paid during period whilst landlord’s works were being undertaken – appropriate to allow nominal three-month rent-free period for fit-out works as provided for in the lease– claim for reimbursement of double rental rejected
COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for temporary business losses – losses said to arise as a consequence of this favourably located new premises – whether loss occasioned by ongoing gradual decline of business – claim not established.
COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for long-term loss of profit as a consequence of non-establishment of proposed nearby medical Centre – site of proposed medical Centre also resumed for public purpose – assumptions underpinning claim of increased business from medical centre not established – claim rejected – claim rejected
COSTS – claims arising from compulsory acquisition of leasehold interest in retail premises – although significantly unsuccessful, Applicant's case not completely unarguable or hopeless – appropriate acquiring authority pays costs of Applicant on ordinary basis

Legislation Cited:
Civil Procedure Act 2005
Health Practitioner Regulation 2016 (NSW)
Land Acquisition (Just Terms Compensation) Act 1991
Uniform Civil Procedure Rules 2005

Cases Cited:
Alexandria Landfill Pty Ltd v Transport for NSW [2020] NSWCA 165
Banno v Commonwealth of Australia (1993) 45 FCR 32
Briginshaw v Briginshaw (1938) 60 CLR 336
Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404
Croghan v Blacktown City Council [2019] NSWCA 248
El Boustani v Minister for Administering Environmental Planning and Assessment Act 1979 [2014] NSWCA 33
Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328
George D Angus Pty Ltd v Health Administration Corporation [2013] NSWLEC 212
G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20
Home Care Services (NSW) v Albury City Council (2003)136 LGERA 117; [2003] NSWLEC 214
Hoyts and Spencer (1919) 27 CLR 133
Hua V Hurstville [2010] NSWLEC 61
James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296
Konduru v Roads v Maritime Services (2017) 224 LGERA 262; [2017] NSWLEC 36
McBaron v Roads and Traffic Authority (NSW) (1995) 87 LGERA 238
McDonald v Roads and Traffic Authority of New South Wales [2009] NSWLEC 105
Minister for Army v Parbury Henty & Co (1945) 70 CLR 459; [1945] HCA 52
Peter Croke Holdings Pty Ltd (1998) LGERA 108
Roads & Traffic Authority of NSW v McDonald [2010] NSWCA 236
Qasabian Family Investments Pty Ltd v Roads and Maritime Services; Fishing Station Pty Ltd v Roads and Maritime Services [2017] NSWLEC 73
RTA v Perry & Anor (2001) 52 NSWLR 222; [2001] NSWCA 251
Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391
Roads and Maritime Services v United Petroleum Pty Ltd [2019] NSWCA 41

Category: Principal judgment
Parties: Mathew Massasso t/as Five Dock Pharmacy (Applicant)
Sydney Metro (Respondent)
Representation:
Counsel:
I Hemmings SC/N Eastman and E Dunlop, barristers (Applicant)
G Sirtes SC/C Norton, barristers (Respondent)
Solicitors:
Thompson Cooper Lawyers (Applicant)
Bick & Steele (Respondent)

File Number(s): 362945 of 2021
Publication restriction: No

JUDGMENT

Introduction
The site and Shop 1
Mr Massasso’s claims
The summary of the competing opening positions
Representation
A necessary general observation
The hearing
Sydney Metro’s concessions
The evidence
Relevant statutory provisions
Introduction
The Land Acquisition Act.
The relevant pharmacy location framework

The site view
Relocation claims generally
The burden of proof in compulsory acquisition compensation cases
Mr Massasso’s evidence
Introduction
Mr Massasso’s affidavit evidence
Mr Massasso’s oral evidence

The terms of the lease for 104 Great North Road
The relocation costs claim
Introduction
The background contextual lay evidence
Introduction
Mr Rupolo’s evidence
A summary of Mr Rupolo’s affidavit evidence
Mr Rupolo’s oral evidence
Mr Megna’s evidence
A summary of Mr Megna’s affidavit evidence
Mr Megna’s oral evidence (in cross-examination)
Mr Megna’s re-examination
Consideration

The acquisition, fitout and leasing of 104 Great North Road
Introduction
The elements of the works undertaken at 104 Great North Road
Ms Massasso’s evidence
Introduction
Ms Massasso’s affidavit evidence
Ms Massasso’s oral evidence
The expert evidence concerning the fitout
Introduction
Ms Stybowski’s evidence
Mr Mihulka’s evidence

The closing submissions for Mr Massasso
Introduction
The factual matters relevant to the claim
Criteria for the new premises
The regulatory and best practice regimes for pharmacies
The relocation application process
Operational requirements
The approach to s59(1)(c) in the authorities
The Applicant’s primary proposition on relocation
The items in the quantity surveyors’ joint report
Item 1 “Demolition for Proposed Extension”
Item 2: Structural Repairs
Item 3: In-ground stormwater drainage
(xii) Item 4: New works to the retained portion of the existing building
(xiii) Item 5.1: Consult Room
(xix) Item 5.2: Access for WC and DAA servery
Item 6: New Building Works for Ground Floor Extension
Item 7: External Works – Secure Parking and Delivery Area

Sydney Metro’s closing submissions on the relocation costs claim
Introduction
The major works
The pharmacy relocation evidence
The Quantity Surveying Exercise and the Construction Claims
Item 1: Demolition for proposed extension (demolish existing roof structure and cladding, new first floor extension; new lower roof) ($46,777).
Items 2, 3, 4, 6 and 7: Various structural and services works ($729,446) – general comments
Item 3 – In-ground stormwater drainage
Item 4 – New works to retained portion of existing building and Item 6 – New building works for ground floor extension
Item 7 – External works – secure parking and delivery area
Claimability of item 5.1 – consulting room ($36,123)
Claimability of item 5.2 – accessible toilet and DAA [dose administration aid] servery ($52,206).
Claimability of Item 13 – General relocation costs including the vaccine fridge ($11,706).

Consideration
Introduction
What were properly landlord’s works or what were tenant’s fit-out costs?
Compensation for the fit-out of the reconstructed premises
Summary of the outcomes from the joint quantity surveyors’ schedule

The buyout of the existing tenants at 104 Great North Road
The rent differential claim
Introduction
The submissions for Mr Massasso
The legal validity of the claim
The basis for Mr Massasso’s claim
The submissions for Mr Massasso
Sydney Metro’s submissions
Consideration

The double rent reimbursement claim
Introduction
The basis for Mr Massasso’s claim
The submissions for Mr Massasso
Sydney Metro’s position
Consideration
Consideration

The profit rent claim
Introduction
The pleaded claim
Sydney Metro's position
The evidence
The submissions
Introduction
The submissions for Mr Massasso
The submissions for Sydney Metro
The reply submissions for Mr Massasso

Consideration

The business loss claims – general legal issues
The business loss claims – expert evidence issues
Introduction
Objections to Ms Carroll’s written evidence
Mr Holland’s reliance on Ms Carroll's evidence

The temporary business loss claim
Introduction
The expert evidence
Introduction – the pharmacy business evidence
The forensic accounting evidence
Introduction
Points of agreement
Points of disagreement

The submissions for Mr Massasso
Sydney Metro’s submissions on temporary business loss
Proposition a): did Five Dock Pharmacy underperform during the sample period?
Proposition b): Is the relocation the only possible explanation for any loss of revenue?
Calculating the loss – the iscount rate

Consideration

The permanent business loss claim
Introduction
The lay evidence
The expert evidence on potential script capture
Introduction

The submissions for Mr Massasso
The establishment of the medical centre
Evidence concerning script capture from the medical centre
Discount rates
Conclusion on the permanent business loss claim.

Sydney Metro’s submissions on the long-term business loss claim
Introduction
Ms Carroll’s evidence
General matters relating to Mr Holland’s evidence
Sydney Metro’s general submissions

Consideration

Disturbance
Costs
Conclusions
Directions
Annexure A

JUDGMENT

Introduction

These proceedings arise from the acquisition of land at Five Dock for the purposes of the Sydney Metro West Project being undertaken by Sydney Metro. The acquisition occurred on 19 March 2021.
The land which was acquired is described as Lots X and Y in Deposited Plan 414325. The address of the land the subject of the acquisition was known as 157 Great North Road, Five Dock, NSW (the site). At the date of acquisition, the site contained two retail shops at ground level, and a first-floor office. One of the retail shops (Shop 1) was leased to Mr Matthew Massasso who operated a retail pharmacy business known as Five Dock Pharmacy.
The lease to Mr Massasso was extinguished upon the date of acquisition. As a result of the extinguishment of his leasehold interest, Mr Massasso appealed against the determination of compensation payable to him under the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act).
The total claim made by Mr Massasso was for $7,188.078. The vast majority of the total claim made by Mr Massasso ($6,434,625) was claimed as disturbance arising under s 59(1)(c) of the Land Acquisition Act. Specifically, the disturbance related to the financial costs said to be reasonably incurred in connection with the relocation of Mr Massasso’s business to new business premises. The new business premises are situated across the main road in the Five Dock shopping strip at 104 Great North Road, Five Dock. The new business premises were purchased by Mr Massasso’s wife, Ms Susan Massasso, who subsequently leased the new premises to him.
A small component of these costs in the sum of $4,753 was alternatively claimed under s 59(1)(f) of the Land Acquisition Act.
In addition to the relocation claim, there was a claim for market value in the sum of $224,000 under s 55(a) of the Land Acquisition Act. There was also a claim made by Mr Massasso for legal costs and disbursements (including consultants and valuation costs) in the sum of $529,453.
Sydney Metro denied most of the claims made by Mr Massasso. Sydney Metro admitted a total amount of $974,478.

The site and Shop 1

The site was on the western side of Great North Road in the commercial centre of Five Dock. To the south on the same side of the road is a public open space and thoroughfare known as Fred Kelly Place. Fred Kelly Place is a closed road that has been converted into a mall. There was one shop (occupied by Westpac Bank at the time of acquisition) separating Fred Kelly Place from the site.
Fred Kelly Place runs east-west between Great North Road and East Street. At the western end of Fred Kelly Place is a complex containing, amongst other facilities, a Coles supermarket and an underground car park. East Street is accessible by walking to the north from the Coles Supermarket entrance.
There is a signalled pedestrian crossing across Great North Road at Fred Kelly Place, and the Five Dock Post Office faces Fred Kelly Place across the pedestrian crossing.
As at the date of acquisition, the registered proprietor of the site was Ms Geraldine Rizzo. The site comprised two street-level retail shops (with Shop 1 the more southern of the two) and also a first-floor commercial tenancy leased to a design and construction company. The gross lettable area of Shop 1 was 114.2m².
In 2000, Mr Massasso had purchased a pharmacy business operating in Shop 2, (a business which became Five Dock Pharmacy) and the leasehold interest was subsequently transferred to him. In 2002, following discussions with the owners (Ms Rizzo and her late husband), Mr Massasso moved Five Dock Pharmacy from Shop 2 into Shop 1 and entered into a long term lease and options for renewal arrangement for that shop.
The lease of Shop 1 that existed at the date of acquisition was entered into in 2019 between Mr Massasso and Ms Rizzo (Shop 1 Lease). The necessity for the 2019 lease arose as a consequence of Mr Massasso forgetting to exercise his option to renew the 2002 long-term lease (it having been for a period of five years with multiple five year options). This new lease commenced on 15 September 2019 and ran for a period of five years (to 14 September 2024), with four options to renew each for a further period of five years (that is, ultimately extending potentially to September 2044).
The rent payable under the Shop 1 Lease was $84,232.15 per annum (excluding GST). This amount was payable by monthly instalments of $7,019 (excluding GST) together with a 33.3% share of outgoings for the site.
As at the date of acquisition, the net passing rent was equivalent to $86,759 per annum (excluding GST) and the share of outgoings was $15,800 per annum. Therefore, the gross passing rent was equivalent to $102,559 per annum, or $898/m² of gross lettable area.
The Shop 1 Lease provided for fixed annual increases of 3% of rent payable including for the option periods (if the option periods were exercised). The new Shop 1 Lease was negotiated between Mr Massasso and Ms Rizzo’s son, Mr Joe Rizzo. Mr Joe Rizzo is a real estate agent (Exhibit C, Evidence Book, page 411 to 412).
At the time of entering into the Shop 1 Lease, the fit-out of Five Dock Pharmacy comprised:

A floor to ceiling glass frontage to Five Dock Road with signage and sliding door;

Shelving for retail pharmaceutical products;

A dispensary of about 8m²;

A rear storeroom and a further storage area under the stairs to the upper unit;

Rear stair access to a parking area for 3-4 cars at the rear of the pharmacy, accessible by vehicle from East Street (although the Shop 1 Lease did not include any dedicated car space).

The Five Dock Pharmacy did not include a consulting room, with the consequence that the pharmacy was unable to offer vaccination services.
There were three other pharmacies located on Great North Road in 2019, including at 125 Great North Road (about 100m south of Shop 1); Chemist Warehouse at 89-91 Great North Road (about 200m south of Shop 1); and a medical centre pharmacy also owned by Mr Massasso at 150 Great North Road (about 300m north of Shop 1).

Mr Massasso’s claims

Mr Massasso’s compensation claim is made on a number of separate bases. These are:

a claim for profit rent compensation on the basis that the rent to which he would have been entitled in the long-term for Shop 1 under the new lease and the options (on the assumption that the options would be exercised) was less than the market rent that would have applied to those premises. As a consequence, Mr Massasso claims that he should be compensated for the difference between the passing rent and the market rent over the entirety of the remaining available period of the Shop 1 lease until 2044 on the basis of a profit rent foregone;

the cost of renovation and fit-out arising from the relocation of his business from Shop 1 to its new premises at 104 Great North Road, Five Dock. Extensive additions and alterations to the ground level of the building to fit it out for pharmacy use are claimed by Mr Massasso under this element of his claim. It is to be noted that, although, during the course of the carrying out of the additions and alterations, an upper floor was added to the premises, Mr Massasso expressly disavows any claim for any costs associated with the construction of that additional level to the building;

a claim for the monies expended by him in buying out the existing tenancies at 104 Great North Road as expenses reasonably incurred in enabling him to have access to vacant premises in order to carry out additions and alterations within the permitted statutory time period for his business relocation;

a claim for the difference between the higher rent being paid at the new premises and that paid at Shop 1 for the entirety of the period of his lease at the new premises (including the various options for renewal of that lease) over the whole of the period until the expiry of those options;

a claim for the double rental paid by Mr Massasso for the period after the expiry of the rent free allowed in his lease at 104 Great North Road and the date when he ceased paying rent at Shop 1;

a claim for short-term business losses arising from what is said to be the downturn in his business, in the short term, occasioned by its relocation from Shop 1 to his new premises at 104 Great North Road; and

finally, a claim for long-term business loss as a consequence of Sydney Metro acquiring premises in East Street (in the vicinity of the Coles supermarket at the western end of Fred Kelly Place) where development consent had been granted by the City of Canada Bay Council (the Council) for the establishment of a medical centre – a development which did not proceed as a necessary consequence of Sydney Metro’s acquisition of that land. As a consequence of this, Mr Massasso claims compensation for what he says is the long-term business loss that arises because he is unable to harvest the script business (and associated other retail pharmacy business) that would have been generated for Five Dock Pharmacy had that medical centre been constructed and become operational.

The summary of the competing opening positions

The written opening submissions for Sydney Metro set out, in tabular form, the opening positions of the parties on the various aspects of the claim advanced on behalf of Mr Massasso. A copy of that table is reproduced below:

Head of compensation

Applicant’s claim

Respondent’s position

s 55(a)

Market value

$244,000

Nil

s 59(1)(a)

Legal costs (plus disbursements for consultants and valuation costs)

$529,453

TBC

s 59(1)(c)

Physical relocation costs

$1,731,914

$864,000.64

s 59(1)(c)

Rent differential

$2,506,813

Nil

s 59(1)(c)

Tenant buy-out

$401,033

Nil

s 59(1)(c)

Double rental

$200,893

Nil, or no more than $118,652

s 59(1)(c)

Temporary business loss

$305,219

Nil

s 59(1)(c)

Permanent business loss on relocation (medical centre)

$1,284,000

Nil

s 59(1)(c) or (f)

Make good costs

$4,753

Nil

TOTAL

$7,188,078

Up to $982,652.64 plus legal costs and valuation fees TBC

It will be necessary to consider and determine each of the contested elements set out in the above table. To the extent that any of those elements result in my determination that Mr Massasso is entitled to compensation for that element in a specific amount, that amount is nominated as the outcome of that element of my consideration.
On the other hand, if an element of the above table can only presently result in a determination of issues that form the basis for calculation of some entitlement to compensation (as will be seen to be the position concerning the compensation for the fit-out of the new pharmacy), I have made a determination which will provide a proper basis for the relevant experts to undertake additional work to derive the dollar value to be applied in the making of the necessary orders to formalise the outcome of that element of Mr Massasso’s claim.

Representation

Mr Massasso was represented by I Hemmings SC and N Eastman and E Dunlop, barristers. Sydney Metro was represented by G Sirtes SC and C Norton, barristers.

A necessary general observation

During the course of oral closing submissions on behalf of Sydney Metro, Mr Sirtes proposed that I should not accept that Mr Massasso had, himself, actually paid for all of the elements that were the subject of his claim where those elements were said to represent expenditure by him for the various outcomes in his claim. It is unnecessary to address this submission at any length. It is sufficient to note that, during Mr Hemmings’ closing oral submissions in reply, he addressed this submission head on, taking me to various elements in the Evidence Book and/or the Supplementary Evidence Book that recorded relevant expenditure items in Mr Massasso's accounting records. It is sufficient to note that I am satisfied that this element of Sydney Metro's submissions is one without foundation.

The hearing

The hearing occupied the 10 working days between Monday 17 July and Friday 28 July with a site inspection being undertaken on the morning of the second day.

Sydney Metro’s concessions

During the course of the hearing, Sydney Metro made three concessions that are appropriate to be noted. The first was that, to the extent to which any regulatory changes might have occurred since Mr Massasso fitted out his former pharmacy and which now required an increase in allocation of space (for example increased widths of circulation spaces in order to meet current accessibility circulation requirements), this was to be regarded as necessary to be undertaken as part of the compensable fitout costs for the purposes of his relocation.
Second, although originally not accepted by Sydney Metro as a compensable relocation fitout cost, provision of an accessible toilet as part of the cost of the fitout at the relocation premises at 104 Great North Road was accepted by Sydney Metro to be a compensable cost.
Finally, Mr Massasso had claimed the sum of $4,753 as make-good costs. When I enquired of Mr Hemmings where I would find an explanation for the basis of these costs, I was taken to Appendix 6 of the Statement of Evidence prepared by Mr Connaire, a quantity surveyor. My enquiry, Mr Hemmings’ response and the subsequent exchange between us concerning how matters of the detailed elements of this claim might be established are recorded in the transcript of 27 July 2023, at page 449, line 45 to page 450, line 38. It is not necessary to set out the terms of this exchange. On 28 July 2023, Mr Sirtes advised that Sydney Metro would no longer oppose this element of Mr Massasso's claim. It is appropriate to note the terms in which this concession was made (Transcript 28 July 2023, page 477, lines 20 to 30):

SIRTES: Your Honour, can I raise an issue of agreement between the parties that takes an issue off the table for your Honour; which is that relatively small sum of staffing costs of $4,753?
HIS HONOUR: Yes.
SIRTES: Make good costs it's been. Make good. I just indicate to your Honour that there is no admission by Sydney Metro that that matter has been properly established or proven, but it is such a small amount in the context of the case that we're not going to trouble the Court with quibbling over it.

The evidence

Mr Massasso deposed an affidavit dated 30 August 2023. Mr Massasso was required for cross-examination. Exhibit MDM-1 was annexed to his affidavit and tendered as part of Exhibit C.
The following lay witnesses provided affidavit evidence for Mr Massasso, each of whom were required for cross-examination:

Mr D. Cordaro (Affidavit dated 26 August 2022);

Ms S. Massasso (Affidavit dated 26 August 2022);

Mr M. Megna (Affidavit dated 26 August 2022); and

Mr J. Rupolo (Affidavit dated 26 August 2022).

Several expert witnesses prepared individual Statements of Evidence for the purposes of these proceedings. These statements were later tendered as part of Exhibit C. The following expert witnesses were relied upon in Mr Massasso’s case, each of whom were required for cross-examination concerning their respective findings:

Ms M. Stybowski (Pharmacy relocation expert) (Statement of Evidence dated 26 August 2022);

Ms N. Carroll (Pharmacy business expert) (Statement of Evidence dated 9 September 2022);

Mr N. Connaire (Quantity surveyor) (Statement of Evidence dated 9 February 2023);

Mr C. Holland (Forensic accountant) (Statement of Evidence dated 10 February 2023); and

Mr M. Dyson (Valuation expert) (Statement of Evidence dated 9 March 2023).

Mr M. Szczerbick, an architect, also deposed an affidavit in Mr Massasso’s case. It was dated 30 August 2022. Mr Szczerbick was not required for cross-examination.
In response to the evidence put on for Mr Massasso, the following expert witnesses were called by Sydney Metro, each of whom were required for cross-examination concerning their respective findings:

Mr S. Mihulka (Pharmacy relocation expert) (Statement of Evidence dated 1 December 2022);

Mr F. Sirianni (Pharmacy business expert) (Statement of Evidence dated 6 December 2022);

Mr I. Tucker (Quantity surveyor) (Statement of Evidence dated 17 February 2023);

Mr A. Giliberti (Forensic accountant) (Statement of Evidence dated 17 February 2023); and

Mr D. Lunney (Valuation expert) (Statement of Evidence dated 24 March 2023).

Each expert witness, with the exception of Mr M. Szcerbick, engaged with their relevant counterpart expert witness and prepared a joint expert report outlining issues of dispute that were relevant to their respective disciplines. The following disciplines were the subject of joint expert reports that were prepared and later tendered as part of Exhibit C:

Pharmacy relocation (Ms M. Stybowski and Mr M. Mihulka) (Joint Expert Report dated 20 January 2023);

Pharmacy business (Ms N. Carroll and Mr F. Sirianni) (Joint Expert Report dated 22 December 2022);

Quantity surveying (Mr N. Connaire and Mr I. Tucker) (Joint Expert Report dated 18 April 2023);

Forensic accounting (Mr C. Holland and Mr A. Giliberti) (Joint Expert Report dated 18 March 2023); and

Valuation (Mr M. Dyson and Mr D. Lunney) (Joint Expert Report dated 21 April 2023).

The relevant expert evidence is later addressed in the appropriate section of this judgment.
Objection was taken by Sydney Metro to the admissibility of several documents referenced by Ms Carroll and sought to be incorporated as foundations for the opinions and conclusions which she set out in her expert report. It will later be necessary to address those objections and my reasons for my upholding significant elements of them and rejecting, as a consequence, significant portions of Ms Carroll's evidence.

Relevant statutory provisions

Introduction

Three provisions of the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act) are engaged for consideration. In addition, various regulatory requirements setting out the restrictions that governed the options available to Mr Massasso in his selection of a location for, and timing of relocation to, the new pharmacy are also relevant. With respect to these relocation criteria, it is not necessary to set out the elements of each of these regulatory instruments. It is sufficient to note that there is no dispute as to their effect in Mr Massasso’s circumstances.

The Land Acquisition Act.

The first provision of the Land Acquisition Act to be noted is s 4(1). That section contains the definition of an “interest in land”, a definition which makes it clear that Mr Massasso‘s leasehold interest in the site of his former pharmacy is an interest giving rise to a claim for compensation under the Land Acquisition Act. This definition is in the following terms:

4   Definitions
(1)    In this Act—
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.

The next relevant provision of the Land Acquisition Act is s 56(1), the provision which sets out the nature of the hypothetical transaction requiring to be considered in determining what compensation is to be paid to Mr Massasso for the acquisition of his leasehold interest in the site of the former pharmacy. This provision is in the following terms:

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.

In this regard, it is to be noted that there is no dispute between the parties as to the public purpose which is required to be disregarded (the public purpose being the construction of the Sydney Metro – particularly here relevant, the proposed Five Dock Station to be constructed to serve that metro line). There is also no dispute between the parties as to the date when Mr Massasso first became aware of the intention to carry out the public purpose. That occurred on 21 October 2019, when two representatives of Sydney Metro called on him at the former pharmacy to notify him of the intention to acquire the property within which his former pharmacy was located and to acquire his leasehold interest in that property.
The third element of the Land Acquisition Act engaged is s 59(1), this being the provision which allows for a range of elements of compensation (if applicable) to be claimed from the acquiring authority as compensation elements arising from a compensable compulsory acquisition of an interest in the land. As can be seen from the earlier set out table summarising the matters in dispute between the parties, Mr Massasso’s claims made pursuant to s 59(1) of the Land Acquisition Act are primarily advanced under s 59(1)(c). The relevant elements of s 59(1) are:

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)   …
(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)    …
(e)   …
(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 relevant pharmacy location framework

The relevant criteria governing (and limiting) the scope of Mr Massasso's ability to select a location for the new pharmacy are contained in the following statutory instruments:

National Health Act 1953

National Health (Australian Community Pharmacy Authority Rules) Determination 2018

It is not necessary to set out the detail of these statutory requirements.

The site view

The site view took place on 18 July 2023. Notes of the site view were settled by the parties’ legal representatives and subsequently tendered. The site view notes are reproduced below:

The parties met at the front of 104 Great North Road.
From that location and by reference to the document provided by the Applicant, Mr Hemmings pointed out the comparable transaction properties that were visible standing at the front of the premises. They were:
Starting from the north the “chiropractor” premises at 108A Great North Road. It was noted that the depiction on the plans prepared by the Respondent of the chiropractor site is wrong. The red outline appears to show the whole of the property whereas that property only has a GLA of 38m².
Next it was to point out the approximate location of the acquired premises (157 Great North Road) and the previous location of the Westpac premises immediately to the south. Those two premises (as well as other adjoining properties to the west and north) have been demolished and the site was a construction site.
Attention was then drawn to the location of Fred Kelly Place and the location of Coles Supermarket at its western end.
The property at 147 Great North Road was then identified noting that it has four different tenancies. The relevant comparable leasehold tenancy at Shop 4 is a café on the southern side of Fred Kelly Place, towards the western end.
Next, attention was drawn to Liquorland at 145 Great North Road.
Next attention was drawn to the premises immediately to the south of the relocated premises being 102 Great North Road. Those premises are referred to in the evidence as “Made in Italy” but are currently undergoing fit out for a Guzman Y Gomez restaurant.
The location of 109 Great North Road (referred to as the accountant) was then pointed out though not visible from the standing point at the front of the relocated premises.
The location of the two pharmacies to the south of Garfield Street (along the western side of Great North Road) were also pointed out.
The parties then commenced their walk around the locality.
First, the parties went north to the chiropractor (108A Great North Road) and viewed that property from the footpath. It was confirmed that the relevant leasehold tenancy was only the front half of the property and that it did not have access to the rear.
The parties then walked south to view 102 Great North Road.
The parties then continued south and walked down the walkway to the Council carpark (being the carpark off Waterview Street). The parties stopped at the end of the walkway and Mr Norton drew the Court’s attention to the location of the carpark.
The parties then returned to Great North Road and walked south to a location generally opposite 109 Great North Road. It was noted that although having previously been a Flight Centre there was now an accountant (who could be seen to be occupying the first floor) and a jewellery store on the ground floor.
Attention was once again drawn to the location of the two pharmacies on the Western side of Great North Road to the south of Garfield Street.
The parties then returned north on the eastern side of Great North Road and crossed at the pedestrian crossing (on the northern side of Garfield Street). The parties proceeded north to 145 Great North Road (Liquorland). The Court viewed Liquorland from the front and Mr Lunney identified that the property went all the way through to the rear laneway beside Coles Supermarket.
The parties then walked up Fred Kelly Place and viewed the café – known as Bar Piccolino – at Tenancy 4, 147 Great North Road.
The parties then continued up the pedestrian way past the north facing entry to Coles Supermarket and into East Street. The general location of the proposed medical centre at 2 East Street (now within the construction site for Metro) was pointed out.
The parties then returned to Fred Kelly Place and walked down the pedestrian pathway behind the café and to the rear of Liquorland. The Court was invited to note the entry door at the rear of Liquorland.
The parties then returned to Fred Kelly Place. Mr Hemmings invited the Court to note that the Council had plans in relation to the Westpac building – and its location was again pointed out – for it to form part of an expanded Fred Kelly Place.
The Court was invited to note the visibility of the awning to the relocated premises – 104 Great North Road – from Fred Kelly Place.
The view then concluded.

Relocation claims generally

I have earlier set out the terms of s 59(1)(c) of the Land Acquisition Act. This provision is the foundation upon which most of the elements of Mr Massasso’s claim that were in dispute at the commencement of the proceedings has as its statutory foundation. The necessary broad understanding of how claims pursuant to this provision should be approached was addressed by Tobias JA in the oft cited passage of Roads & Traffic Authority of NSW v McDonald [2010] NSWCA 236 at [143]. This paragraph is in the following terms:

143.   In summary, I am of the following views:
(a)   As was acknowledged by the RTA, in each of s 59(c) and (f), the word “reasonably” governs the word “incurred” and not the expression “financial costs”. The issue that arises under each subparagraph is whether the relevant costs are “reasonably incurred”: it is not a question as to whether those costs are reasonable in themselves; nor does the Just Terms Act contemplate some overarching test of reasonableness in respect of compensation otherwise properly assessed having regard to “all relevant matters” in Part 3;
(b)   Given that it was not in dispute that upon vacating the residence on the acquired land when required by the RTA the respondent had no option but to rent premises pending the construction of her new residence upon the residue land, the only relevant question was whether the incurring of the financial costs in the form of rent was itself reasonable. The incurring of rent may not have been reasonable if, for instance, the respondent already owned an alternative residence which she and her partner could have occupied pending the construction of her new residence upon the residue land or if she had rented an expensive penthouse overlooking Sydney Harbour at an exorbitant rent. In such cases it could legitimately be said that the rent claimed was not “reasonably incurred”;
(c)   The factors to which Talbot J referred in Horton could not as a matter of law bear upon the reasonableness of the respondent incurring the rent claimed as a consequence of leasing temporary premises in which to reside having been forced out of her home by the compulsory acquisition;
(d)   Accordingly, the primary judge erred in relying upon Talbot J’s approach to the question of the rental claim in that case and applying it to the present case. His Honour seems to have applied a general test of reasonableness that does not accord with either the plain text of s 59(c) or (f) or the statutory objective of ensuring just compensation for the separate head of loss attributable to disturbance.

As discussed in the above passage, the approach to be taken to claims advanced pursuant to s 59(1)(c) is to consider, at the relevant level of generality, whether the amount claimed was reasonably incurred by the dispossessed interest owner as part of the costs of relocation of that owner. If that test is satisfied, then it will be relevant to move to determining if the quantum of the costs claimed is extravagant or excessive. Each of the relevant elements of Mr Massasso’s claim advanced in reliance on this statutory provision is to be considered in this fashion.

The burden of proof in compulsory acquisition compensation cases

Whilst there are occasions when there will be what can be regarded as a presumption in favour of the dispossessed owner, this presumption is a limited one arising in narrow and specific circumstances. When there is what can be regarded as an unresolvable equality of evidence, Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391 acts as a precedent to tip the balance in favour of the dispossessed owner on that point. Similarly, there is a line of authority commencing with the decision of Wilcox J in Banno v Commonwealth of Australia (1993) 45 FCR 32 that can be regarded as creating a presumption in favour of a dispossessed owner getting costs in compulsory acquisition compensation proceedings, even if unsuccessful, provided that the applicant's case is one which was efficiently advanced and not occasioning unnecessary expense; and not so fanciful as to be unmaintainable on any arguable basis.
None of this, however, takes away the broad requirement that any compensation applicant bears the onus of proof of establishing the basis for the claim advanced (or if there are multiple different elements in a claim, of each of those different elements), before the validity of the claim, or the validity of the discrete part of the claim, can be regarded as established (RTA v Perry & Anor (2001) 52 NSWLR 222; [2001] NSWCA 251, at [67], per Handley JA with whom Powell and Hodgson JJA agreed).
For reasons later explained concerning some of the elements of Mr Massasso’s claim, he has been unable to establish, on the balance of probabilities and to the necessary degree of satisfaction appropriate in the circumstances (Brigenshaw v Brigenshaw (1938) 60 CLR 336) – thus resulting in that element of his claim being rejected.

Mr Massasso’s evidence

Introduction

Much of what requires to be determined concerning the activities undertaken by Mr Massasso and Ms Massasso requires to be understood and assessed on the basis of Mr Massasso’s affidavit evidence and the evidence which he gave in cross-examination and, subsequently, the submissions made as to how I should approach that evidence and draw conclusions from it. As a consequence, it is appropriate to summarise both Mr Massasso’s affidavit evidence and his oral evidence in some detail.

Mr Massasso’s affidavit evidence

I set out below a summary of Mr Massasso’s affidavit evidence. That summary is the following terms:

Mr Massasso graduated with a Bachelor of Pharmacy from the University of Sydney in 1995, after which he began working for a pharmacy in Ryde to obtain his registration as a pharmacist. He commenced his first pharmacist in charge role at W H Soul Pattinson in Five Dock in 1996.
In 2000, Ming Pharmacy at 157A Great North Road was purchased by Mr Massasso. It was subject to a lease that was transferred to him, and Carmelo and Geraldina Rizzo were the landlords of the whole building which also contained 157 Great North Road. At the time of purchase, the lease had 3 years to run, with a 5 year option to renew.
In 2002, Carmelo Rizzo informed Mr Massasso that he wanted to renovate both premises. Discussions between the two resulted in:
•   Mr Massaso agreeing to move the pharmacy to 157 Great North Road;
•   He would carry out a new fit-out to enable its use as a pharmacy;
•   He would obtain the necessary development approvals from the Council;
•   He would obtain approval from the Pharmacy Council (NSW) to relocate;
•   A new lease would be entered into with a term of 7 years with a 5 year option.
Mr Massasso approached Mr Rizzo again in 2007, around 2 years before the expiry of the lease, and negotiated a new lease term for a 5 year period with two 5 year options.
Before the expiration of the next lease term he negotiated with Joe Rizzo, Carmelo Rizzo’s son. This resulted in a new lease with an initial 5 year fixed term, with three 5 year options. Mr Massaso recalled that during these negotiations his primary focus was ensuring added option years to give him long term security, while Mr Rizzo’s focus was on the amount of rent being discussed.
Around 15 September 2014, Mr Massasso signed a lease agreement for Shop 1 of 157Great North Road, commencing the same day and expiring on 14 September 2019 with options to renew for an additional 20 years. The rent was $72,659.40 per year excluding GST.
In 2017, he became aware that a medical centre was being proposed for 2 East Street, Five Dock, which was the building adjacent to the rear of the pharmacy. This prompted regular discussions with Daniel Cordaro, a director of the company seeking to develop the centre. In 2018, the medical centre received development approval from the Council and he understood that they were ready to proceed with construction. Mr Massasso was aware that a building adjacent to the pharmacy was being acquired by the council to expand Fred Kelly Place. This reinforced the strength of the pharmacy’s location, as it would be in sight of the Coles supermarket and have direct access from the proposed medical centre.
A new lease was entered into in September 2019. At the time of the execution of that lease the premises were already fitted out as a pharmacy including the following:
•   A floor to ceiling glass façade facing Great North Road with signage saying “Five Dock Pharmacy”
•   A single entry sliding glass door on the southern side facing the shop;
•   A number of rows of shelving for retail pharmaceutical products;
•   A dispensary of approximately 8m cubed;
•   A rear store room and storage area under the stairs at the front of the premises;
•   Rear stair access to parking at the rear of the pharmacy
At this time there were three other pharmacies located on Great North Road. In addition to Pharmacy for Less and Chemist Warehouse, there was also a small medical centre pharmacy at 150 Great North Road, which Mr Massasso purchased in 2018.
Notice of the Acquisition
Prior to October 2019, Mr Massasso was aware of rumours about the location of a new Metro station in Five Dock. There had been similar rumours in the past which did not come to fruition.
At the time of lease renegotiation in 2019, though aware of rumours, he was of the view that it would be “commercially unsound” to change his business operation on their basis.
On 21 October 2019, two Metro representatives attended the pharmacy to advise that the property would be compulsorily acquired.
The first correspondence Mr Massasso received from Metro was dated 4 November 2019.
Outline of the steps taken to find a relocation site
Mr Massasso immediately rang his wife, Susan, who was in New Zealand for work, and they quickly decided to relocate the pharmacy. The reasons for doing so were:
•   He intended to continue being a pharmacist trading as Five Dock Pharmacy;
•   He intended to continue employing the staff of the pharmacy;
•   He loved the work, having spent 20 years as a well known member of the Five Dock business community;
•   It was a commercially profitable and established business and Mr Massasso did not wish to start again in a completely different location;
•   He was aware of the requirements of the Australian Community Pharmacy Authority and the Pharmacy Council of NSW regarding locational requirements for pharmacies, and the strict nature of relocation requirements; and
•   He cames from a family of pharmacists, with both his father and grandfather having been in the profession and he wanted to maintain the potentiality for one of his sons to take over the business at some point in the future.
Mr Massasso also had his own requirements for relocation including:
•   Premises compliant with all of the locational rules and relocation requirements of the Australian Community Pharmacy Authority;
•   Having as close a place as possible to 157 Great North Road with the ability replicate the business as closely like-for-like as possible, to maintain the business he had built over the past 2 decades.
•   Premises suitable for a pharmacy, that maintained the vibe of a community pharmacy on the local high street; and
•   Being on Great North Road between Garfield St and the Post Office, and not too close to the existing pharmacies or too far from the commercial centre of Five Dock.
From his long association with the area, he was aware it was possible to negotiate with some known landlords in the area regardless of whether properties were marketed for lease or sale.
He knew he would need legal advice to ensure that at each step he did the right thing in the context of legal entitlement to compensation.
Mr Massasso took a number of initial steps as soon as he was made aware of the acquisition. One of the first was contacting local real estate agents who managed nearby commercial properties. Mr Massasso identified four possibilities for the relocation of Five Dock Pharmacy:
(a)   102 Great North Road
(b)   104 Great North Road
(c)   135 Great North Road
(d)   137 Great North Road
On 22 October 2019, he contacted property owner Michael Megna. He knew Mr Megna’s family owned tenanted commercial properties at 135 and 137 Great North Road. There was a phone call between the two discussing Mr Massasso’s need for relocation and with him asking for dates that the existing leases would finish.
The same day Mr Megna messaged him advising that the end dates of the leases were 30 June 2022 and 30 June 2021 for 135 Great North Road and 137 Great North Road respectively. Mr Massasso requested copies of the lease agreements and received them on 25 October 2019 and 28 November 2019.
On 22 October 2019, Mr Massasso phoned Fausto Biviano, the owner of 104 Great North Road, a property which had gone to market a few years earlier but did not sell.
The discussion between the two was about the length of leases for the existing tenants. Mr Biviano described the leases as short, saying they were constructed that way so it would be easier to sell. When asked he would be interested in selling, Mr Biviano said he would be but the La Cava’s who owned in partnership might not. Later that day there was a text exchange between Mr Biviano and Mr Massasso.
Mr Massasso then assembled a legal team. He first discussed the matter with Mr Kulukovski of Thompson Cooper Lawyers later in the day after Sydney Metro in formed him of the impending acquisition. The discussion was regarding the process of acquisition and what was lawful and reasonable compensation in relation to relocating.
On 24 October 2019 a meeting was held which included three representatives from Metro, Mr and Ms Massasso, Mr Kulukovski and Ms Jenna Rich, a Senior Associate from his firm. During the meeting Mr Massasso said words to the effect of (Paragraph 35):
“I have been a pharmacist all my life and I come from a family of pharmacists. I’ve had my Pharmacy in Five Dock for almost 20 years, have a lease for another 25 years, and the most important thing for me is to save my business.”
Regarding a freehold option the following conversation occurred between Mr Massasso and Lloyd Williams a Metro representative:
Mr Massasso: Has Sydney Metro ever been involved in moving a pharmacy before? Do you understand how strict the regulations are to move a pharmacy? You can only move once every five years and you have to be within a kilometre?
Mr Williams: Yes, we’ve done one. We had to relocate Chemist Warehouse from Pitt Street in the city as part of that project and that involved relocating to a new premises which had an existing tenant who needed to be bought out. For you we want to keep all options on the table. This can include purchasing a property or buying out tenants to facilitate the continuation of your business.
Following the completion of the meeting, Mr and Ms Massasso had a discussion to the following effect:
Mr Massasso: So if Metro have previously allowed a pharmacy relocation and allowed a tenant to be bought out to help Chemist Warehouse relocate from Pitt Street, and they say all options are on the table, we should really try and see if we can buy 104 and strike a similar lease.
Susan Massasso: Yes, like we’ve talked about before, I buy and you can rent it. We just have to be sure that we get some legal and financial advice on it all.
Mr Massasso: I agree, maybe I’ll ring Marcello now.
Susan Massasso: Yes, but I will do it, give me your phone.
Ms Massasso then called Marcello Biviano to begin the negotiations.
At this point Mr Massasso still sought to explore every reasonable opportunity and keep his options open in the best interest of his business.
He met with Mr Megna and the existing tenant of 135 Great North Road on 31 October 2019. Over the following days Mr Massasso discussed all possible options with local real estate agents.
In late October/early November, there were ongoing discussions about Ms Massasso’s potential purchase of 104 Great North Road. On 4 November 2019, Mr Massasso received a message from Marcello Biviano containing a photo of a signed contract of sale for the property.
Once the property was purchased, Mr Massasso still had to convince the two existing tenants to end their leases and therefore still had to keep his options open.
On 5 November 2019, Mr Massasso emailed Mr Megna confirming their discussions of the potential lease of 135 Great North Road. The proposed terms included a maximum lease period of 10 years and a demolition clause. The agreement was conditional on Mr Massasso being able to obtain vacant possession from the existing tenants.
Each of the options regarding 135 Great North Road meant that a long-term tenancy as he had at 157 Great North Road would not be possible, which caused Mr Massasso to pause negotiations with Mr Megna.
Mr Massasso also kept negotiations open regarding 102 Great North Road. On 8 November 2019, he was informed that the owner was seeking rent of $3,135 per week and insisted on a 10 year demolition clause. Again the demolition clause was a problem for his security of tenure.
On 16 December 2019, after buying out the tenants of 104 Great North Road Mr Massasso sent correspondence to Mr Rupolo confirming he was no longer interested in leasing 102.
Another early step taken was to engage Pharmacium, a pharmacy consulting company, to assist with the management of the relocation. This was done to ensure the relocation was compliant with all legislative requirements, codes, and standards, and that all licensing and accreditation was maintained.
It was also important to Mr Massasso maintain his accreditation under the Quality Care Pharmacy Program (QCPP), which he had obtained while at 157 Great North Road. This informed his decisions regarding suitability of potential premises and fit out requirements.
Agreement with Ms Massasso
Ms Massasso purchased 104 Great North Road on 4 November 2019. Around this time it was apparent to Mr Massasso that the best way to put his business in a like-for-like position was to move the pharmacy to 104 Great North Road as it was diagonally across the road from the original premises.
His lawyers advised that steps should be taken to ensure the arrangement was on commercial terms. As a result of that decision expert opinion was sought on the market and conditions of a leasehold agreement at 104 Great North Road.
The following valuations were obtained:
(a)   A report by Access Valuation Pty Ltd dated 24 April 2020, using a direct comparisons approach concluded the market rental value to be $192,000 (excluding GST);
(b)   A report by Cushman and Wakefield Valuations Pty Ltd dated 27 April 2020, using a direct comparisons approach concluded the market rental value to be $176,000 (excluding GST);
(c)   A letter from PRB Real Estate in Five Dock dated 4 May 2020 estimated an ‘achievable rental price’ of $202,400; and
(d)   A letter from Adam Scappatura of Time Reality received on 5 May 2020 estimated the market rental to be between $197,824 and $207,715 based on comparable rentals and the market.
Mr and Ms Massasso engaged separate lawyers to advise them with respect to the lease of 104 Great North Road. Mr Massasso engaged John Chidiac of Sanford Legal while Ms Massasso engaged Peter Clinch of Clinch Long Woodbridge and there was a meeting on 15 May 2020 to discuss the valuation reports and reach an agreement about rent.
Consequently Mr Massasso considered he had taken all the necessary steps to ensure market rent and the terms of agreement had been subject to independent legal and valuation advice to ensure all terms were reasonable and on a proper commercial basis.
Mr Massasso read the NSW Government Finance Services and Innovation Guidelines titled “Determination of Compensation following the acquisition of a business” which reassured him as to what was reasonable.
He subsequently received a report from Colliers International dated 1 October 2020 which Sydney Metro had obtained which said that the business could sustain an occupancy rate of 7%. It noted that the business had a gross turnover of $3,000,000 per annum and that reasonable rent for the pharmacy would be $210,000 per annum. The report made Mr Massasso feel the agreed rent was very reasonable.
Tenant Buy Outs
Part of relocating to 104 Great North Road would involve agreements to have the two existing tenants move out, in order to allow carrying out of works relocation before what would otherwise be the expiry of their leases.
Given what was said by Lloyd Williams at the meeting with Metro, Mr Massasso was confident that the steps he took were reasonable and acceptable by Metro.
On 6 November 2019, two days after Ms Massasso purchased the property, Mr Massasso reached an agreement with Linting Huang regarding the transfer of her lease of shop 1/104Great North Road. He also corresponded with Barry Green, the partner of Linting Huang. On 29 November 2019 a draft agreement was exchanged. An issue with clause 4 was amended to allow Ms Huang to occupy the premises rent free until vacation of possession and Mr Massasso would pay the rent that she would otherwise have paid. On 2 December 2019, Mr Massasso issued an amended agreement and, on 4 December 2019, the agreement was finalised and signed.
On 6 November 2019, Mr Massasso also began negotiation with Stella Contos and Jim Antoun, the tenants of shop 2 at 104 Great North Road. On 8 November 2019, he enquired of Mr Biviano about the amount of rent paid by Ms Contos and, on 13 November 2019, he requested a copy of past water, council rates and electricity notices. On 11 November 2019, Ms Contos contacted Mr Massasso seeking an offer for an amount to vacate the premises in writing and an agreement was reached in early December 2019. A finalised agreement was signed by Mr and Ms Massasso, Jim Antoun and Stella Contos dated 10 December 2019.
Department of Health and Council approvals
Mr Massasso required approval from Canada Bay Council for the fit-out work as well as approval from the Department of Health and Pharmacy Council in order to relocate. The Department of Health would required that there be an executed lease before any application for relocation would be considered.
Regarding the development application, Mr Massasso sought advice from Milestone, expert town planners who regularly dealt with similar matters. A development application was submitted on 22 April 2020 seeking consent for the construction of a two-storey addition to the rear of the building, including partial demolition of the existing premises for fit-out, with parking and signage. The estimated cost for the work was $1,115,000.

As part of the development application, the following documents were submitted to council:
(a)   An Acoustic Assessment by Renzo Town and Associates, dated 1 April 2020;
(b)   Architectural plans;
(c)   A cost summary report;
(d)   A disability access report by Access-I Pty ltd., dated 9 April 2020;
(e)   A fire safety engineering assessment by Code Performance, dated 15 April 2020;
(f)   Mechanical ventilation plans;
(g)   An owner’s consent letter, dated 5 April 2020;
(h)   A schedule of colours, materials and finishes;
(i)   An assessment of State Environmental Planning Policy No. 64 – Advertising and Signage by Milestone (AUST) Pty Ltd, dated April 2020;
(j)   A stormwater drainage plan;
(k)   A structural engineering design certificate for alterations and additions by Birzulis Associates Pty Ltd, dated 14 April 2020;
(l)   A survey plan;
(m)   A traffic and parking assessment by McLaren Traffic Engineering, dated 17 April 2020; and
(n)   A waste management plan by Milestone (Aust) Pty Ltd, dated April 2020.
On 15 June 2020, the Council approved the Development Application.
Whilst waiting for approval, Mr Massasso engaged the services of Mark Szczerbicki, a local architect. He relied on advice from Mr Szczerbicki to ensure the pharmacy would comply with all applicable codes and standards and that Mr Massasso complied with all his legal obligations. He was conscious of his legal obligations as a pharmacist, employer and occupant of commercial retail premises. Mr Szczerbicki oversaw the works carried out by contractors engaged to do so at 104 Great North Road.
Mr Massasso obtained signage advice from Signwave and engaged interior fit-outs.
On 16 June 2020, he received a letter from the Pharmacy Guild of Australia dated 15 June 2020 addressed to Mr Tim O’Connor of Sydney Metro outlining the necessary requirements for the relocation of the pharmacy. He also received a letter from the Pharmaceutical Society of Australia dated 14 August 2020 outlining the complexities of relocating a community pharmacy.
Clinch Long Woodbridge provided legal assistance with Mr Massasso’s application to the Department of Health and the Pharmacy Council for the relocation of Five Dock Pharmacy. On 5 February 2021, he received an email regarding the application - including a list of the necessary information he had to provide.
On 4 March 2021, he received a further email attaching the relevant applications and requesting floor plans of the pharmacy’s professional services rooms. These plans were provided in reply on 11 March 2021. Images of the pharmacy’s entry and exit were also provided as part of the application.
On 20 April 2021, an email was received referring to previous correspondence with the Pharmacy Council confirming the conditional approval of the relocation, subject to completion of an inspection. The Pharmacy Council also issued notice of the required inspection.
Relocation
After being informed of the acquisition, uncertainty remained because Metro initially only indicated verbally that possession was required by “mid 2021”. He was later informed that the date would be 30 June 2021. The physical fit-out works commenced on 17 August 2020 and concluded 18 May 2021.
Mr Massasso had planned to make the physical relocation period as short as possible to prevent disruption to staff and customers. His pharmacy approval number did not permit him to operate from two locations requiring him to ensure that business could open at the new premises the day after closing at the original premises.
The relocation process involved all available staff and security contractors throughout the night. Each medication was packed as per the Pharmacium plan to ensure compliance with the Poisons and Therapeutic Goods Regulation 2008.
In the period preceding the relocation date, it was suggested by Metro that Mr Massasso vacate the premises with no “make good” requirement however as per his obligations under the Poisons and Therapeutic Goods Regulation, Mr Massasso would not have been able to do this.
The process of physical relocation was drawn out and complicated, causing Mr Massasso time away from his family, his business, the community, patients and added pressure on staff, who had no choice but to go through the process with Mr Massasso.
The process occurred in the midst of the Covid-19 Pandemic and the pressures of being frontline workers took a toll. Mr Massasso was proud of ensuring the survival of his business and the support from his customers. He suggested that Metro dragged out the process by questioning his decisions and making disingenuous comments about alternative relocation options.
The costs of relocation were significant. The costs incurred with respect to the upper level have not been included in his claim. All the costs incurred have been based on advice as to what was reasonably necessary to relocate.
Mr Massasso has kept track of all the extra rent, and legal and consultant fees he paid as a result of relocating.
New operations at 104 Great North Road
On 19 May 2021, Mr Massasso began operating from the new premises. Though he attempted to maintain the same look and feel as a community pharmacy, with similar retail space, staffing, stock, patient health outcomes and functionality, the challenge was maintain his customer base, QCPP accreditation and business performance.
QCPP accreditation, which Mr Massasso has possessed since 2002, was important for maintain like-for-like operations. Following relocation Mr Massasso was subject to re-assessment.
A key obligation is to maintain secure premises. At 104 Great North Road, the premises were built to the boundary with a single front public entrance and single back entrance with two security doors. This was to ensure compliance with section 12 of the Health Practitioner Regulation (NSW) 2016.
Between 19 May 2021 to 31 December 2021, Mr Massasso was able to see how his business was affected by the relocation, as no significant Metro works commenced in Five Dock until the beginning of 2022.
A key indicator of performance in the industry is script numbers and script revenue. NostraData was engaged to provide data as to the performance of shopping strip pharmacies between 1 June 2021 and 31 December 2021. Mr Massasso’s script numbers have remained steady compared to the same period in the previous year.
The data shows that Five Dock Pharmacy only experienced 0.25% growth in script volume, with a 9.64% decline in script value in that period. Contrastingly NostraData reported that similar shopping strip pharmacies experienced an average growth of 4.40% in script volume and 7.44% in script value in that period.
A letter from the Pharmacy Guild of Australia dated 3 June 2022 shows that pharmacies had experienced an average growth in script volume of 3.05% and average growth in dispensary turnover of 6.4% in the period from 1 June 2021 to 31 December 2021.
This indicates that while Mr Massasso was able to maintain script numbers, his business suffered financially due to the relocation, as there is no reason why Five Dock Pharmacy would not have achieved similar growth if it was still at 157 Great North Road.
Since being advised of the acquisition, Mr Massasso did all that he reasonably could have to save his business professionally and financially. In his view, he took all the necessary steps to achieve that. Whilst the new pharmacy is slightly larger, the increased size did not result in revenue growth. Mr Massasso took advice at every step and made decisions having regard to that advice.

Mr Massasso’s oral evidence

Mr Sirtes cross-examined Mr Massasso on the third day of the hearing, 19 July 2023. It is appropriate to address this evidence primarily through questions and answers taken from his evidence. Mr Sirtes asked Mr Massasso about the discussion that he had had with Joe Rizzo in July 2019 concerning the option to renew. This exchange was in the following terms (Transcript, 19 July 2023, page 90, line 8 to 23, line 41 to 48):

SIRTES: Is Mr Rizzo someone who you’re still familiar with?
WITNESS MASSASSO: Joe, yes.
SIRTES: I take it he’s around and you see him at Five Dock?
WITNESS MASSASSO: I see Joe regularly, yes.
SIRTES: If we fast forward by five years, you say in paragraph 12 that you    realised in or about July 2019 that you had forgotten to exercise the option,    correct?
WITNESS MASSASSO: Correct. We had both forgotten.
SIRTES: When you say “both”, it was up to you to exercise the option, correct?
WITNESS MASSASSO: Yes, it was up to me but he was also equally worried that I was going to go.
SIRTES: Without just unnecessarily adding to the question I asked you, it was    your obligation to exercise the option if that’s what you wished to do, correct?
WITNESS MASSASSO: Sorry, can you just repeat it?
…
SIRTES: You set out a conversation in paragraph 12 that you say occurred in    about July 2019 where you say to Mr Rizzo, “Joe, we have all forgotten to    exercise the option”?
WITNESS MASSASSO: Yes, correct.
SIRTES: The truth was that the party that had forgotten to exercise the option,    was you?
WITNESS MASSASSO: Yes, legally, yes.

Mr Sirtes questioned Mr Massasso about the first time that he was notified that his pharmacy was going to be compulsorily acquired. Mr Massasso confirmed that on Monday, 21 October 2019, two Sydney Metro representatives attended his pharmacy in person and advised him that his pharmacy was going to be compulsorily acquired (Transcript, 19 July 2023, page 92, line 22 to 26).
Mr Massasso conceded that when he was verbally put on notice by the two Sydney Metro representatives that his pharmacy was going to be compulsorily acquired by Sydney Metro, he was made aware that the acquisition and, subsequently, the relocation of his business, would not occur until around mid-2021 (Transcript, 19 July 2023, page 92, line 28 to 30).
Mr Sirtes asked Mr Massasso about the initial steps that he took in response to finding out that his pharmacy was going to be acquired at some later date in mid-2021 (Transcript, 19 July 2023, page 93, line 25 to page 94, line 13):

SIRTES: At paragraph 26 of your affidavit you say that as a consequence of your intention to relocate, you took a number of initial steps almost as soon as you were aware of the acquisition, one of which was contacting local real estate agents in the Five Dock area; do you recall doing that?
WITNESS MASSASSO: Yes.
SIRTES: You say that you engaged in some discussions with some of the owners and agents of nearby commercial properties--
WITNESS MASSASSO: Yes.
SIRTES: --and through that process, you say that you identified four potential options and you set those options out (a) through to (d)?
WITNESS MASSASSO: Yes.
SIRTES: When you say you identified in that paragraph four options--
WITNESS MASSASSO: Yes.
SIRTES: --were they options to purchase or were they options to lease or a combination of both?
WITNESS MASSASSO: First lease and, and some were on - probably a combination of both is the best answer, but first it was finding out the leases. So I, I asked the owners that I knew for their leases firstly so I could ascertain that and then some had short leases. In particular, 104 had short leases. He was interested in - more interested in selling.
SIRTES: You were content at that point to either purchase or lease, whichever suited your purposes better; is that the case?
WITNESS MASSASSO: That is not the case. I was hoping to move my pharmacy and have the same tenure I’d built up over all this time, and purchase wasn’t an option. Having another, another lump of money in Five Dock wasn’t my first option.
SIRTES: Whether you say purchase was not your first option, within days of having a discussion with Sydney Metro representatives at the meeting at your solicitor’s office, you were already on the phone to Fausto Biviano exploring whether or not you could buy 104 Great North Road from him, weren’t you?
WITNESS MASSASSO: My wife was on the phone but, yes, we contacted Fausto, yes.
SIRTES: That happened, as I said, within a very short space of time--
WITNESS MASSASSO: Yes.

Mr Massasso was asked further questions by My Sirtes regarding the exchange of text messages with Mr Fausto Biviano about the prospect of purchasing 104 Great North Road (Transcript, 19 June 2023, page 96, line 16 to page 97, line 16):

SIRTES: You say in your affidavit that you then exchange some text messages?
WITNESS MASSASSO: Yes. This is the notice to produce.
SIRTES: This is the very same day as the conversation, correct? 22 October?
WITNESS MASSASSO: Yes, the day after the acquisition, yep.
SIRTES: Would it be a fair suggestion to put to you that you situated the conversation on 22 October in your affidavit based upon the date on the text message?
WITNESS MASSASSO: Yes, I'm having - yes, I think that's - I'm having conversations and I'm - yes.
SIRTES: The first message at 6.54pm was recording that you'd spoken to Ms Massasso, "I seriously wanted to offer to buy the Great North property if you would consider, and what price would you accept?", and he then responds as he does talking about the Lekava interests, and things are left at that point. Now, again, in relation to that text exchange, there's not a mention in any text message exchanges that you had with that gentleman of wanting to lease those premises, correct?
WITNESS MASSASSO: On those text exchanges? No.
SIRTES: You haven't included any other text messages in your affidavit evidence that concerns leasing those premises, correct?
WITNESS MASSASSO: If it's not in my affidavit, no.
SIRTES: What your affidavit, can I put to you, makes plain is that your principal interest, in fact the only interest, if I put it that way, in relation to 104 Great North Road was to buy those premises from the Biviano and Lekava families?
WITNESS MASSASSO: No, I don't agree. I went--
SIRTES: Certainly there is absolutely nothing in your evidence or in any of the documents that suggests any intention for you to strike a lease with him in relation to those two shops?
WITNESS MASSASSO: Can you just repeat the question, sorry?
SIRTES: There's no document or anything else you've revealed in your affidavit evidence that suggests an interest by you to strike a deal with Mr Biviano in leasing those shops?
WITNESS MASSASSO: No, not in my affidavit.
SIRTES: And the reason, can I suggest, that you asked Mr Biviano about the leases is because your principal interest was to buy the building, and what you wanted to know was how long those tenants could potentially be there for?
WITNESS MASSASSO: My principal interest was to move the shop with a lease, and if I couldn't do that - in, in early stage of negotiations, I'm finding out what he would - this is the second day, the day after acquisition. So, I'm quizzing him on the different options that I have; not committing to anything because this is the first day. So, my principal concern to buy the premises on the, the, the day after, I'm searching all options, and it is an option, but I'm also concerned to try and replicate my lease, my 25-year lease, and relocate my pharmacy. That's my priority throughout all this.

Mr Sirtes put the following propositions to Mr Massasso in relation to him potentially striking a long-term lease with Ms Massasso after her intended purchase of 104 Great North Road (Transcript, 19 June 2023, page 102, line 45 to page 103, line 28).

SIRTES: It says that you said to Mrs Massasso that "all options are on the table" and "we should really try and see if we can buy 104 and strike a similar lease". Am I correct in understanding that what you're suggesting by that conversation with your wife is that you would buy this building and then you would see if, as between you and the purchaser - which would either by you or your wife, or you and your wife - would be able to strike a lease with effectively yourself?
WITNESS MASSASSO: I'm talking - yes, but I'm talking to my lawyers about the options or how - what makes sense, and the accountant. But effectively, I'm talking to her about me returning me - returning myself to a lease of 25 years the best I could.
SIRTES: I'm just trying to understand, you say that you've said to Mrs Massasso, "We should really try and see if we can buy 104", and that’s self-evident--
WITNESS MASSASSO: Yes.
SIRTES: --but the words, "and strike a similar lease". Are you talking about striking a lease with Mrs Massasso or yourself or who?
WITNESS MASSASSO: For my wife to strike a lease with myself.
SIRTES: Do you seriously suggest to his Honour that you would need to enter into some kind of tough bargaining position with Mrs Massasso if you in fact bought the building?
WITNESS MASSASSO: Say that again, sorry?
SIRTES: Are you suggesting, through that conversation that you say you had between yourself and Mrs Massasso, that you anticipated there was going to be some kind of tense bargaining position in order to strike a long term lease over the building?
WITNESS MASSASSO: I was talking to my wife about striking a lease, about replacing my 25 year lease. I don't know about the bargaining at that stage. I don't think - I was looking at the term of the lease is what I was - the striking the term of the lease, if that makes sense. The amount or anything else, I - we were talking to the solicitors, we were talking to the accountant, seeing what options, where the money is. But the lease effectively is between my wife and myself.

Although somewhat lengthy, it is appropriate to set out in full the following exchange between Mr Sirtes and Mr Massasso in relation to the tenant buy out claim (Transcript, 19 June, page 115, line 9 to page 117, line 18):

SIRTES: I just want to return to the topic of what I'll call the tenant buyout. You approached the tenant buyout presumably on the basis that if the tenants were amenable to the notion of leaving their respective tenancies earlier than they otherwise would need to, then it was a matter of negotiating to pay them some kind of break fee in order to hasten their early departure, correct?
WITNESS MASSASSO: Yes, but I wasn't doing it by myself. I checked with the lawyers first.
SIRTES: I understand that but the question I asked you, I'm talking about whether you were doing it with yourself or a group of other people, the way you approached this understanding that if they were amenable at all to the notion of leaving early, you were going to have to pay them some money?
WITNESS MASSASSO: Yes, I was going to pay them money but the moneys - yes, I was going to pay them money but I did that in consultation with my lawyers.
SIRTES: The amount of money, if I can just deal with that, did you have a budget, an overall budget for how much you were prepared to pay?
WITNESS MASSASSO: No. No budget. I was - I would say I'm pretty used to doing commercial deals. Obviously, you know, having experience and with, you know, an accountant and accountant with 20 or 30 years' experience, I had - I would - no, but I didn't have a budget, no.
SIRTES: When you say you were pretty used to doing commercial deals, you were first and foremost a pharmacist, weren't you?
WITNESS MASSASSO: Yes.
SIRTES: What was the other sphere in which you were doing commercial deals? Was it as a pharmacist or in other business activities?
WITNESS MASSASSO: As a pharmacy and I would buy property myself in my name. And, and I - you know, my pharmacy.
SIRTES: In terms of just returning to this notion of budget, you had not formed in your own mind an amount of money that was, for example, a maximum that you would be prepared to pay these tenants? Is that what you tell his Honour?
WITNESS MASSASSO: I would never say I didn't have a maximum. I just didn't have a budget. I needed - it's a - no, I didn't, I didn't set a budget but there was no way I was going to not consider the commercial terms that was put in front of me.
SIRTES: In terms of the amounts that each of the respective tenants on each side of that dividing wall were paying, their rent was roughly comparable, wasn't it? That's what they were paying the landlord?

SIRTES: …. That the criticisms we make are the following; first of all when Ms Carroll was asked about the 12.9 figure that she had used she said it was a combination of two things. One was the starting point was the average of those four pharmacies and then extrapolating as it were in relation to the Rose report I said to her that if his Honour was not entitled to consider the Rose report because it had been rejected would that mean that those four figures represented nothing more than the average of those four pharmacies, it had no further significance than that? She accepted that proposition, it follows logically.
So then we are driven to what one does with an average derived from - which has two problems with it. One is the range of the sample which is four, the second is the location of the samples. Your Honour recalls that one was in Inverell, two were in Dromana and one was Paynesville. My friend re‑examined Ms Carroll on the basis of the fact that there was a number of doctors by reference those five or six there was some user numbers but the fact remains it's a very small cohort and two are in the same small town.
Although one can debate I guess up hill and down dale whether the Mornington Peninsular is considered to be rural or whether it's something different but it's still a relatively small town and then you have Inverell; again, very hard to see how one is going to derive much, particularly when we don't know is it a one-horse town, has it got more than one pharmacy, what's the competition, a whole range of factors are going to intrude.
Then we have the third issue which your Honour raised which is an aligned issue arising from the small cohort which is what do you do when you've got three which are on one side of the ledger as it were and one which is statistically skewing the average and so we would say for a range of reasons it is what can best be described as a highly curated small cohort that one has no concept of being statistically representative of anything and thereby intrinsically unreliable.

General matters relating to Mr Holland’s evidence

At the commencement of the submissions for Sydney Metro concerning the permanent business loss claim, Mr Sirtes said (Transcript 28 July 2023, page 504, lines 9 to 11):

Because of the evidential rulings that your Honour made in relation to certain parts of the evidence, it impacts upon what stays in Mr Holland's report and what is effectively knocked out as a derivative consequence.

Following from this, Mr Norton, junior counsel for Sydney Metro, took me through, in some detail, the matters in Mr Holland's evidence, which Sydney Metro proposed I should conclude were infected and not to be relied upon as a consequence of Mr Holland's reliance of the material from Ms Carroll which had been rejected.
Mr Norton indicated to me that what he proposed to outline was in supplementation to (372) of Sydney Metro's written closing submissions. This paragraph of Sydney Metro's written closing submissions not only addressed matters relating to the sources relied upon for Mr Holland's evidence (material which had been rejected after objection) but also addressed other aspects of Mr Holland's evidence. It is not necessary to reproduce these latter elements, but it is appropriate to reproduce the direct criticisms made of Mr Holland's evidence – criticisms made on the basis of his reliance upon Ms Carroll's material. These elements of Sydney Metro's (372) are in the following terms:

Mr Holland’s assumptions
372.   The basis upon which Mr Holland calculates the loss of revenue is the following assumptions regarding revenue sources, with the relevant paragraphs in his report identified:
a) the sales value per prescription is $33.79, therefore the new Medical Centre would have generated revenue from prescriptions of approximately $126,545 per doctor per year ([186]-[187]). As noted, this is now to be founded solely upon the data from the four pharmacies on EB 2313.
b)   Assumptions at par [188] regarding number of scripts per patient, number of customers, number of customers who would purchase retail items, and the value of an average retail basket. All of these figures are drawn from p 8 of the Pharmacy Alliance report (EB 2316) which has been rejected by the Court. Accordingly there is no evidence to support any of these assumptions, or the conclusions at [189]-[190].
c)   Pars [191]-[192] rely on the reports of Rose Health and Corporate Services regarding additional script sales for each doctor. Both those reports have been rejected, therefore there is no evidence to support those figures.
d)   Par [193] refers to the figures in the Carroll Report in relation to the generation of script revenue, and increased script trade, which is a reference to figures on p 1863, par 2.4. Ms Carroll acknowledged that these are entirely derived from the rejected Rose Health report, therefore the Court has no evidence to support these figures.
e)   This means that there is no evidence whatsoever to substantiate the table at [194], and either end of the ranges there adopted, and the ultimate figures relied on by Mr Holland in relation to additional annual total revenue per doctor, or for 7 doctors in [197]-[198]. Additionally, Mr Giliberti notes that the retail figures Mr Holland uses based on the foregoing assumptions do not match the pattern of spending of current customers of FDP. If FDP data is used, the appropriate input is that retail revenue would be 16% of total pharmacy sales.
f)   That table appears to assume that 100% of scripts from the medical centre will be captured by FDP. There is no evidentiary basis for that assumption – Mr Sirianni gives a range of 20% to 75% as a capture rate. Mr Giliberti notes there is no reliable conclusion that can be drawn on capture rate. Mr Holland claimed that his calculations does make an allowance for capture rate to deal with issues such as competing pharmacies, and existing clients but it is not at all clear whether this has in fact been done; and Mr Holland conceded that he has no insight into the existing customer base of FDP in order to properly address this issue. Unless the Court is satisfied as to how Mr Holland has appropriately addressed the issue of capture rate, it cannot have confidence in his figures.

Mr Sirtes, after Mr Norton had concluded his detailed submissions, said (Transcript 28 July 2023, page 507, lines 1 to 4):

So we would say in summary the consequence of your Honour's rulings as to evidence is that there is zero evidentiary basis for Mr Holland's calculations save for that one figure of potentially an extra 1267,000 of script revenue based only on those four pharmacies.

It is necessary, next, for me to set out the detail of the further submissions made about the evidence in this regard.
During Mr Holland's questioning by Mr Sirtes, he was asked a series of questions about the decline in performance of Five Dock Pharmacy and how it should be regarded in the context of the business loss claim – where, on the information available, there had been a decline in the business performance of Five Dock Pharmacy from a date well prior to the date when Sydney Metro's intention to acquire the pharmacies then location was revealed. It is appropriate, in this context, to quote a short extract from this evidence. It is in the following terms (Transcript 24 July 2023, page 289, line 44 to page 290, line 5):

SIRTES: Are you saying to his Honour that the historical trend of a business's operation is irrelevant to determining its future performance?
WITNESS HOLLAND: No. I'll withdraw the answer I said previously to the extent I implied that. Of course it's not irrelevant. It's indicative only. All sorts of things could have happened to the business afterwards that make it - that would have made it different to how it historically performed and I should say, incidentally, that the decline that Mr Giliberti talks about, is not a marked decline. It's a few per cent either way. The number of prescriptions hovers around 70-something thousand, in the low 70,000s in the previous five years. It's not a decline in massive terms so I feel that that point is not really germane to what we're trying to calculate.

Mr Holland subsequently explained why, in light of the variations in the script numbers processed by Five Dock Pharmacy, there should be an assumption that the business would have achieved in increase in script turnover but for the acquisition. Mr Sirtes questioned Mr Holland about this in the context of what had been a five-year (from 2015) business pattern for Five Dock Pharmacy. This evidence was in the following terms (Transcript 24 July 2023, page 291, lines 7 to 35):

WITNESS HOLLAND: Well table 5 is the same as what's there. I was really trying to - and table 5 gives it in more detail if we want to look at it and in fact that the, the paragraph here has an extra year on the front of it which just accentuates my point. It's simply that over the years if we go back as far as 2015 the Five Dock Pharmacy every year it had between in roughly 71,000 prescriptions and 74,000 prescriptions. Some years are slightly better, some years are slightly worse. There was no - there's no major decline as is it seems attempted to be painted here.
SIRTES: Putting aside descriptions such as major decline do you accept that there was a trend of decline, whether it was major or minor, would you accept there was a trend of decline over the five year period?
WITNESS HOLLAND: I haven't tried to put a trend line to it but that's probably right.
SIRTES: And so for is this the case, if we accept that there was a trend of decline for the five years leading up to the relocation do you say that because of the relocation the business should have enjoyed not just a decline but something like a plus 4% increase--
WITNESS HOLLAND: Well--
SIRTES: --in script sale? Is that what - sorry but for the relocation, it should have enjoyed not just a negative, it should have enjoyed a positive increase by something like in excess of 4%?
WITNESS HOLLAND: On the basis that that's what similar pharmacies in the market experience then yes.

Sydney Metro’s general submissions

Sydney Metro’s position was that:

If the assumptions are correct, the amount claimed is not compensable as a matter of law. It is not a loss, but a hypothetical flow-on loss arising from a different compulsory acquisition.

Even if a claim is available as a matter of law; the evidence does not support the cascade of assumptions which must favour the applicant.

If the court finds otherwise, some adjustments may need to made to the figures used to quantify loss.

Of the above list, I have earlier explained why I do not need to address the broad legal propositions advanced by Sydney Metro as to why business loss claims are not ones which may validly give rise to a compensation entitlement. It is not, here, necessary for me to consider such matters further.
Whatever the correct legal position with respect to business loss claims, it was submitted for Sydney Metro that the evidence concerning:

when and how Mr Cordaro’s proposed medical centre would have been developed; and

how the medical centre would have benefited Five Dock Pharmacy as a result of what would have been the co-location of the two businesses but for the compulsory acquisition of each of them for the public purpose

was, taken as a whole, based on speculation and did not provide any valid basis to support Mr Massasso’s permanent business loss claim.

According to Mr Cordaro’s evidence:

Cordaro P/L is concerned with property investment and was developing the property at East Street.

The plans for such development involved demolishing the existing building and constructing a new building.

When Metro advised of the proposed acquisition:

No building contract has been signed

There was no written plan timetabling construction

Financing had not been secured

Some work had been done towards obtaining a construction certificate

While the lease with Porters Corporation had been signed, Mr Cordaro would not be doing anything further regarding proposal, that would be done by the tenants.

There was no evidence of any doctors having been secured. The lease with Porters only concerned occupation of the premises. At the date the project was abandoned due to the Metro proposal, there was considerable uncertainty about the status of the medical centre, with Mr Cordaro’s evidence providing little clarity regarding timeframes.
This claim is founded upon a proposed development at some time in the future and the hope that a tenant would operate a medical centre as the owner was not intending to operate such a centre. There has been no evidence called from anyone directly involved in the future centre – only the earlier evidence from Mr Cordaro who was a property investor not proposing to take any active role in the future centre.
Mr Sirtes advanced a proposition in the alternative that, if I were to accept that compensation was available for the permanent business loss claim under s 59(1)(c), the base factual assumptions regarding the medical centre had not been established. He submitted (Respondent’s Closing Submissions, paragraphs 370):

370. In short – this claim is founded not upon the loss of an existing and certain income stream. It is founded upon the evidence of the director of a property investment company [Mr Cordaro] which proposes to build a building at some time in the future, and hopes that a tenant will operate a medical centre, although has no interest in that centre and so cannot give any evidence as to any progress other than the fact of signing an agreement to lease. There has been no attempt to call evidence from anyone connected with the medical centre to provide more firm foundation to the claim.

In this context, Mr Sirtes submitted that Mr Massasso had not discharged his onus to demonstrate that Five Dock Pharmacy would have suffered a loss of profits. He advanced this proposition in the following terms (Respondent’s Closing Submissions, paragraph 375):

375. Overall, however, this is a speculative claim based upon a range of variables, built on assumption upon assumption, in respect of which the Court would not be persuaded that the Applicant has not satisfied its onus of proof. It is, in truth, a loss of opportunity claim in relation to a hypothetical medical centre that has never been built, may never have been constructed irrespective of the Sydney Metro, may have taken a significant period of time to become fully functional and, even then, may not have contributed much to FDP’s existing business. And even though a medical centre has recently opened just south of FDP, no attempt has been made to demonstrate the positive impact (if any) on FDP revenue from the opening of this centre, as opposed to the conjectural centre with attributes, script volume and capture rates all assumed rather than established. The claim is an overreach and should be rejected.

Sydney Metro proposed that I should find that the base factual assumptions regarding establishment the medical centre have not been made out. Mr Holland’s calculation of lost profits was based the projection that Five Dock Pharmacy’s profits would more than double the historical EBITDA reported in any of the 2016-2020 financial years.
It was submitted that this was a speculative claim based on a range of variables and assumptions and I would not be persuaded that Mr Massasso had satisfied his onus of proof. It was a loss of opportunity claim in relation to a medical centre that has not been built and may never have been, irrespective of the Sydney Metro project and even if it had it may not have greatly contributed to Five Dock Pharmacy’s business.
Sydney Metro submitted that the claim is an overreach and should be rejected.

Consideration

As I have earlier set out several times, the decision of the Court of Appeal in Perry made it clear that the onus falls on the claimant in compensation cases such as these to establish, on the balance of probabilities, all necessary elements to provide a proper foundation for such a claim (or, as here, an element amongst multiple claims).
I have concluded that it is appropriate, on the basis of the elements of the evidence of Ms Carroll and Mr Siriani that I should accept, taking Mr Massasso’s case at its highest for this purpose, that 12.9 scripts per prescriber per day is a broad general proposition is an appropriate starting point for the evidence from the forensic accountants. Again, taking Mr Massasso’s case at its highest, the forensic accounting evidence would, if it had a proper what I might call “operational foundation in fact” relating to Mr Cordaro’s proposed medical centre would provide a basis for calculating the profits which might, hypothetically, have accrued to Mr Massasso if all of the myriad hypothetical factual foundations underpinning the counterfactual existence and operation of such a centre had been made out.
Unfortunately for this element of Mr Massasso’s claim, I cannot be satisfied that all of the foundational underpinnings advanced through the evidence of Mr Cordaro as to the coming into existence of, or future staffing prospects for, the proposed medical centre and the proposed operational level of that medical centre if it came into existence can be regarded as anything more than speculative.
For the purposes of determining whether the prospect of the proposed medical centre is to be regarded as a “house to be built upon the rock” or a “house to be built upon the sand”, the only firm foundation able to be demonstrated by Mr Cordaro was the fact that he had a development consent from the Council that would permit the construction of the building within which the medical centre was proposed to be established.
Mr Cordaro had signed no contract with a builder; was unable to provide any (let alone adequate) evidence as to his ability to finance the construction of the medical centre; had no contract in place for any guaranteed provision of doctors to staff the centre; and no detail on what basis such staffing would operate. These matters, to the extent Mr Cordaro’s evidence was relied upon, as was submitted for Sydney Metro, are purely speculation on Mr Cordaro’s part and do not provide a proper evidentiary foundation upon which to adopt the business and accounting evidence to establish any future business loss for Mr Massasso.
Unless there is a proper evidentiary foundation to assume the existence and operation of Mr Cordaro’s medical centre, anything said to arise from its hypothesised existence and operation merely become further elements of a structure built upon the sand and not upon the rock.
Mr Massasso’s permanent business loss claim must, therefore, also be rejected.

Disturbance

At the conclusion of the scheduled hearings, I was advised that the parties remained in dispute about the quantum to which Mr Massasso was entitled to be reimbursed legal fees and valuation fees pursuant to s 59(1)(a) and (b) of the Land Acquisition Act. A supplementary hearing was, therefore, scheduled for the Friday of the following week to address this issue.
Prior to that hearing, my Associate was advised that the parties had reached agreement on this item. The emailed advice from Mr Massasso’s legal representatives advising of this was, relevantly, in the following terms:

I can confirm that the parties have now reached an agreement as to s.59(1)(a) and (b) costs in the sum of $493,588.
This reflects the amount claimed for s.59(1)(a) and (b) costs in the Amended Points of Claim of $529,453 exclusive of GST less the sum of $35,865.

This outcome will, therefore, need be incorporated in the orders to give effect to my findings set out in this judgment.

Costs

It is to be noted that, in compulsory acquisition compensation proceedings, costs do not follow the event, as might otherwise be expected, as r 42.1 of the Uniform Civil Procedure Rules 2005 (UCPR) does not apply in such proceedings (UCPR r 1.5, Sch 1). Costs are in the discretion of the Court (s 98(1) of the Civil Procedure Act 2005).

In Banno v Commonwealth of Australia (1993) 45 FCR 32 (Banno), Wilcox J observed, at 51, concerning compensation claims made by dispossessed owners of property which has been compulsorily acquired for a public purpose:

But this is not ordinary litigation. The relationship between the parties giving rise to the litigation did not arise out of their mutual desire; it arose because of a unilateral decision of the Commonwealth to acquire the applicants' land in order to satisfy a perceived public need. The acquisition left the applicants in the position of either accepting the Commonwealth's assessment of the proper compensation or of having the Court rule on its adequacy.

His Honour's conclusion in those proceedings was that compulsory acquisition of private real property, when subject to curial proceedings to determine the quantum of compensation to be paid to the dispossessed owner, will usually be followed by a costs order in favour of the dispossessed owner. This has been adopted as applicable in this jurisdiction for compensation litigation pursuant to the Land Acquisition Act by the Court of Appeal in Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 (Dillon), per Basten JA at [70] to [72].
Even in circumstances where the result is a mixed one, where a dispossessed owner does not achieve complete success, but only succeeds on some elements, nonetheless, it is appropriate to make a costs order in favour of the dispossessed owner (Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404) per Tobias AJA at [95] to [98].
Although, conventionally in Class 3 compensation proceedings, costs are only awarded to a dispossessed owner if that owner obtains a compensation result which is greater than that which had been originally determined by the Valuer General or proposed in the proceedings by the acquiring authority, that is not the universal position. I am given a broad discretion by s 98(1)(a) of the Civil Procedure Act 2005 to determine how costs of these proceedings should fall.
In these proceedings, it could not be said that the propositions advanced on behalf of Mr Massasso were so entirely lacking in merit as to be fanciful, means that there is no basis upon which I could conclude that the litigation was commenced and continued on his behalf in any unreasonable fashion nor at unnecessary expense.
As a consequence, I am satisfied that, despite the overall result of the proceedings being that Mr Massasso may not have obtained compensation greater than that determined by the Valuer General, I am nonetheless satisfied that it would be appropriate to order that Sydney Metro pay Mr Massasso’s costs of these proceedings.
I can see no basis why any question of costs apportionment should arise (although this is possible - James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296) given that the case mounted for Mr Massasso on all his claims was not fanciful and did raise a number of matters of some novelty in this class of the Court’s jurisdiction.
I have also turned, on a contingent basis, to what might be the costs outcome in this jurisdiction should there have been any potentially relevant offer of compromise (whether on a Calderbank offer or UCPR r 42.15 basis being irrelevant) made which might potentially impact on costs outcomes.
Although applying to the specific circumstances, the position taken in a recent case in the Court of Appeal (Croghan v Blacktown City Council [2019] NSWCA 248) resulted in the dispossessed owner - acting reasonably in all circumstances - still having a costs order in his favour for the costs of the hearing in the first instance despite rejecting a higher offer of compromise.
It strikes me that, given the nature of the contest before me, that this should also, prima facie, be the position arising if there are one or more offers of compromise in play here. I therefore propose to order that Mr Massasso have his costs of the proceedings.

Conclusions

I have reached the following conclusions concerning Mr Massasso’s claims:

His profit rent claim is not made out;

His claim for compensation for relocation to 104 Great North Road is made out but only to the extent of the cost of the complete fitout costs of his new pharmacy;

His claim for the cost of the demolition and construction/reconstruction and structural and related works at 104 Great North Road are for works which Mr Massasso had no entitlement (or obligation or power) to undertake pursuant to the lease which he had from Ms Massasso for 104 Great North Road. Indeed, clause 7.6 of his lease from Ms Massasso forbids him from doing such structural work on his own behalf. These works (and the time for them to be effected) are to be attributed to Ms Massasso. This element of his claim is rejected;

The costs of obtaining vacant possession of 104 Great North Road negotiated by Mr Massasso (whether done in his capacity as a co-owner of the premises or as agent for Ms Massasso not requiring determination) were expenses properly required to be met by Ms Massasso as the landlord to provide vacant possession to her of 104 Great North Road in order for her to undertake the demolition and construction/reconstruction structural and related works at 104 Great North Road prior to the fit-out by Mr Massasso of those premises to operate as a pharmacy. The costs of these tenancy buyouts are not compensable as a consequence of Mr Massasso’s relocation from the old pharmacy;

Mr Massasso has not established a valid claim for any temporary business loss. This claim is, therefore, rejected;

Mr Massasso has not established any valid claim for any permanent business loss. This claim is, therefore, rejected;

His claim for compensation for the rental differential between the acquired site and the ongoing rent at 104 Great North Road is rejected; and

Under all the circumstances, Sydney Metro should pay Mr Massasso’s costs of the proceedings.

Directions

I give the following directions:

The Respondent is to provide my Associate and the legal representatives of the Applicant draft orders incorporating compensation to the Applicant for all agreed items and for all items in the quantity surveyors’ joint expert report table other than items 1, 2, 3, 4, 6 and 7 (together with any necessary interest) and an order that the Respondent is to pay the Applicant's costs as agreed or assessed. The draft orders are also to provide that the exhibits are returned;

The orders are to be provided to my Associate and the legal representatives of the Applicant by 12 noon on Tuesday 31 October;

If the legal representatives of the Applicant wish to contest the accuracy of the mathematical calculations – and only the accuracy of the mathematical calculations – in the Respondent's draft orders, the Applicant's legal representatives are to advise my Associate and the Respondent's legal representatives of this by 3:30 PM on Tuesday 31 October;

If there is a dispute concerning the mathematical calculations, the matter will be relisted at 9:15 AM on 1 November to permit resolution of any such dispute; and

If there is no dispute concerning the mathematical calculations in the Respondent's proposed orders, I will make those orders in chambers and will not set the matter down for mention on 1 November.

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Annexure A

Decision last updated: 30 October 2023

Medium Neutral Citation:	Mathew Massasso t/as Five Dock Pharmacy v Sydney Metro [2023] NSWLEC 115
Hearing dates:	17 to 21 and 24 to 28 July 2023
Decision date:	30 October 2023
Jurisdiction:	Class 3
Before:	Moore J
Decision:	See directions at [689]
Catchwords:	COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for loss of profit rent allegedly lost for the remainder of the term of the lease renewal options – consideration of market rent – no difference between passing rent and market rent established – profit rent claim fails COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for relocation of retail pharmacy business – substantial demolition and construction/reconstruction and structural alterations to relocation premises – whether structural alteration costs appropriate to be borne by Applicant and reimbursed by acquiring authority – costs of demolition and construction/reconstruction appropriate to be regarded as landlord’s costs – claim rejected COMPENSATION – claim for cost of buying out existing tenants in order to render demolition and construction/reconstruction activities possible – cost of buying out existing tenants appropriate to be regarded as landlord’s expenses – claim for reimbursement of cost of buying out existing tenants rejected COMPENSATION – claim for costs of fit-out of new premises – new premises fitted-out not only in compliance with regulatory requirements but also to best contemporary pharmacy practice – were costs of fit-out reasonably incurred and thus compensable – costs of fit-out reasonably incurred – Applicant entitled to reimbursement for costs of fit-out COMPENSATION – claim for differential in rental between that paid at the acquired premises and that paid at the relocation premises – rent at relocation premises higher than that at acquired premises - claim based on full term of lease assuming exercise of multiple renewal options - relocation premises larger than acquired premises rate per square metre at relocation premises lower than that at acquired premises – rent comparison appropriate on rate per square metre – no basis for claim – differential rent claim rejected COMPENSATION – claim for reimbursement for double rental paid at the acquired premises and that paid at the relocation premises – claim based on time including time for demolition and construction/reconstruction works – not appropriate to order reimbursement for rent paid during period whilst landlord’s works were being undertaken – appropriate to allow nominal three-month rent-free period for fit-out works as provided for in the lease– claim for reimbursement of double rental rejected COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for temporary business losses – losses said to arise as a consequence of this favourably located new premises – whether loss occasioned by ongoing gradual decline of business – claim not established. COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for long-term loss of profit as a consequence of non-establishment of proposed nearby medical Centre – site of proposed medical Centre also resumed for public purpose – assumptions underpinning claim of increased business from medical centre not established – claim rejected – claim rejected COSTS – claims arising from compulsory acquisition of leasehold interest in retail premises – although significantly unsuccessful, Applicant's case not completely unarguable or hopeless – appropriate acquiring authority pays costs of Applicant on ordinary basis
Legislation Cited:	Civil Procedure Act 2005 Health Practitioner Regulation 2016 (NSW) Land Acquisition (Just Terms Compensation) Act 1991 Uniform Civil Procedure Rules 2005
Cases Cited:	Alexandria Landfill Pty Ltd v Transport for NSW [2020] NSWCA 165 Banno v Commonwealth of Australia (1993) 45 FCR 32 Briginshaw v Briginshaw (1938) 60 CLR 336 Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404 Croghan v Blacktown City Council [2019] NSWCA 248 El Boustani v Minister for Administering Environmental Planning and Assessment Act 1979 [2014] NSWCA 33 Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 George D Angus Pty Ltd v Health Administration Corporation [2013] NSWLEC 212 G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20 Home Care Services (NSW) v Albury City Council (2003)136 LGERA 117; [2003] NSWLEC 214 Hoyts and Spencer (1919) 27 CLR 133 Hua V Hurstville [2010] NSWLEC 61 James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 Konduru v Roads v Maritime Services (2017) 224 LGERA 262; [2017] NSWLEC 36 McBaron v Roads and Traffic Authority (NSW) (1995) 87 LGERA 238 McDonald v Roads and Traffic Authority of New South Wales [2009] NSWLEC 105 Minister for Army v Parbury Henty & Co (1945) 70 CLR 459; [1945] HCA 52 Peter Croke Holdings Pty Ltd (1998) LGERA 108 Roads & Traffic Authority of NSW v McDonald [2010] NSWCA 236 Qasabian Family Investments Pty Ltd v Roads and Maritime Services; Fishing Station Pty Ltd v Roads and Maritime Services [2017] NSWLEC 73 RTA v Perry & Anor (2001) 52 NSWLR 222; [2001] NSWCA 251 Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391 Roads and Maritime Services v United Petroleum Pty Ltd [2019] NSWCA 41
Category:	Principal judgment
Parties:	Mathew Massasso t/as Five Dock Pharmacy (Applicant) Sydney Metro (Respondent)
Representation:	Counsel: I Hemmings SC/N Eastman and E Dunlop, barristers (Applicant) G Sirtes SC/C Norton, barristers (Respondent) Solicitors: Thompson Cooper Lawyers (Applicant) Bick & Steele (Respondent)
File Number(s):	362945 of 2021
Publication restriction:	No

Head of compensation	Applicant’s claim	Respondent’s position
s 55(a) Market value	$244,000	Nil
s 59(1)(a) Legal costs (plus disbursements for consultants and valuation costs)	$529,453	TBC
s 59(1)(c) Physical relocation costs	$1,731,914	$864,000.64
s 59(1)(c) Rent differential	$2,506,813	Nil
s 59(1)(c) Tenant buy-out	$401,033	Nil
s 59(1)(c) Double rental	$200,893	Nil, or no more than $118,652
s 59(1)(c) Temporary business loss	$305,219	Nil
s 59(1)(c) Permanent business loss on relocation (medical centre)	$1,284,000	Nil
s 59(1)(c) or (f) Make good costs	$4,753	Nil
TOTAL	$7,188,078	Up to $982,652.64 plus legal costs and valuation fees TBC