Promenade Investments Pty Limited v State of New South Wales

Promenade Investments Pty Limited sought special leave to appeal to the High Court of Australia from a decision concerning the compulsory acquisition of its leasehold interest in land at Luna Park, Sydney, by the State of New South Wales. The dispute centred on the valuation of the leasehold interest at the time of acquisition. Promenade Investments argued that the compensation awarded was insufficient, contending that the valuation should have taken into account the potential for commercial development that was thwarted by events following a preliminary government approval.

The primary legal issues before the High Court were whether the valuation of the acquired leasehold interest should have been assessed by reference to the potential for commercial development, and if so, how that potential should be quantified. Specifically, the court was asked to consider the application of the principles established in *Pointe Gourde* and *Trocette House* to the facts of this case. Promenade Investments argued that the *Pointe Gourde* principle required ignoring the resumption scheme, which commenced after a favourable cabinet decision in November 1988, and that the *Trocette House* principle allowed for compensation for the chance of a combined development that would have benefited both the leaseholder and the landlord.

Promenade Investments contended that the arbitrator erred in not applying these principles jointly. They argued that following the cabinet's "in principle" agreement in November 1988, events, including public opposition, led to the acquisition of their lease and the demise of their development aspirations. They submitted that the *Pointe Gourde* principle dictated that the valuation should revert to the point immediately before the resumption scheme commenced, which they identified as after the November 1988 decision. Furthermore, they argued that the *Trocette House* principle applied because the combined interests of Promenade Investments and the landlord would have yielded a greater value through commercial development than their individual interests, and compensation should be awarded for this possibility. The court considered whether these principles could be applied cumulatively to increase the compensation payable.