The Eddie Arnott Corporation Pty Ltd v Sydney Metro (No 4)

[2025] NSWLEC 103

Land and Environment Court

New South Wales

Medium Neutral Citation:

The Eddie Arnott Corporation Pty Ltd v Sydney Metro (No 4) [2025] NSWLEC 103

Hearing dates:

3-6 March and 15 April 2025

Date of orders:

15 September 2025

Decision date:

15 September 2025

Jurisdiction:

Class 3

Before:

Pritchard J

Decision:

The Court orders that compensation under Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act) for the compulsory acquisition of the freehold interest of The Eddie Arnott Corporation Pty Limited (ACN 118 151 170) in Lot 7 in Strata Plan 65054, known as Shop 1A, 5 Hunter Street, Sydney, is in the amount of $1,102,000.00 plus statutory interest payable under ss 49 and 50 of the Just Terms Act.

Catchwords:

COMPULSORY ACQUISITION OF LAND — compensation — freehold claim and leasehold claim — market value — special value — disturbance — joint occupancy

Legislation Cited:

Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ss 66, 54-59

Interpretation Act 1987 (NSW) s 30

Real Property Act 1990 (NSW) ss 41, 42, 53

Retail Leases Act 1994 (NSW) s 16

Cases Cited:

Alexandria Landfill Pty Ltd v Transport for NSW (2020) 103 NSWLR 479; (2020) 243 LGERA 102; [2020] NSWCA 165

Attard & Ors v Transport for NSW [2014] NSWLEC 44

Azkanaad Pty Ltd v Galanos Bros Pty Ltd [2008] NSWCA 185

Barkat v Roads and Maritime Services [2019] NSWCA 240

Baxton v Kara [1982] 1 NSWLR 604

Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29

Bradshaw & Anor v Pawley [1980] 1 WLR 10

Chan v Cresdon Pty Ltd (1989) 268 CLR 242; [1989] HCA 63

Chaudry v Liverpool City Council [2008] NSWLEC 251

City of Parramatta Council v Sydney Metro [2024] NSWLEC 23

Commonwealth v Milledge (1953) 90 CLR 157

Croghan v Blacktown City Council (2019) NSWLR 757; [2019] NSWCA 248

De Battista v Transport for New South Wales [2014] NSWLEC 39

Denshire v Roads and Maritime Services (2017) 229 LGERA 118; [2017] NSWLEC 181

Dial a Dump Industries v RMS (2017) 94 NSWLR 554; [2017] NSWCA 73

Dibb v Transport for NSW [2024] NSWCA 157

Dillion v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328

Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111; [1995] 1 All ER 846

El Boustani v The Minister administering the Environmental Planning and Assessment Act 1979 (2014) 199 LGERA 198; [2014] NSWCA 33

G Capital Corporation Pty Ltd v Roads and Maritime Services (2019) 100 NSWLR 771; [2019] NSWCA 234

Hayes v Gunbola Pty Ltd (1986) 4 BPR 9247

Hoy v Coffs Harbour City Council [2014] NSWLEC 1217

Hua v Hurstville City Council [2010] NSWLEC 61

Jackmain (a pseudonym) v The Queen (2020) 102 NSWLR 847; [2020] NSWCCA 150

Kemp v Lumeah Investments [1983] 3 BPR 97175

Kostas & Anor v HIA Insurance Services Pty Ltd and Another (2010) 241 CLR 390; [2010] HCA 32

Leitz Leeholme Stud Pty Ltd v Robinson [1977] 2 NSWLR 544

Marroun v Roads and Maritime Services [2012] NSWLEC 199

Marshall v Snowy RiverShire Council (1994) 7 BPR 14,447

Monti v Roads and Maritime Services (No 4) [2019] NSWLEC 11

Morley v Perpetual Trustee Co Ltd [1968] 2 NSWLR 372

Olde English Tiles Australia Pty Ltd v Transport for New South Wales [2021] NSWLEC 90

Olde English Tiles v RMS (2022) 108 NSWLR 503; [2022] NSWCA 108

Roads & Traffic Authority of New South Wales v Blacktown City Council [2007] 1 NSWCA 20

Roads and Maritime Services (NSW) v United Petroleum Pty Ltd (2019) 99 NSWLR 279; [2019] NSWCA 41

Roads and Traffic Authority (NSW) v McDonald (2010) 79 NSWLR 155; (2010) 175 LGERA 276; [2010] NSWCA 236

Rocco Fraietta v Roads and Maritime Services [2017] NSWLEC 11

Sandhurst Trustees Limited v Roads and Traffic Authority of NSW [2006] NSWLEC 243

Spencer v Commonwealth (1907) 5 CLR 418

Sydney Metro v C&P Automotive Engineers (2024) 115 NSWLR 122; [2024] NSWCA 186

Sydney Metro v G&J Drivas (2024) 113 NSWLR 429; (2024) 258 LGERA 197; [2024] NSWCA 5

The Eddie Arnott Corporation Pty Ltd v Sydney Metro [2025] NSWLEC 12

The Eddie Arnott Corporation Pty Ltd v Sydney Metro (No 2) [2025] NSWLEC 17

The Eddie Arnott Corporation Pty Ltd v Sydney Metro (No 3) [2025] NSWLEC 18

The Trustee for Whitcurt Unit Trust v Transport for NSW [2021] NSWLEC 82

Transport for NSW v Eureka Operations Pty Ltd [2022] NSWCA 56

Watson v Anor v Delaney & Anor [1991] 22 NSWLR 358

Texts Cited:

Butt’s Land Law (7th Ed, Lawbook Co)

Meagher, Gummow & Lehane, Equity: Doctrines and Remedies (5th ed)

Category:

Principal judgment

Parties:

The Eddie Arnott Corporation Pty Ltd (Applicant)
Sydney Metro (First respondent)
Imad Arnaout (Second respondent)

Representation:

Counsel:
A Hemmings and C Novak (First respondent)

Solicitors:
Ashurst (First respondent)

I Arnaout appeared in person (Applicant and second respondent)

File Number(s):

2023/58530

Publication restriction:

Nil

JUDGMENT

The participation of the applicant and the second respondent in the proceedings

Issues

Outcome

Relevant factual background

The acquisition

The applicant and the second respondent

The public purpose

The acquired land

Parent site and parent building: 5 Hunter Street

Location

Relevant planning controls

Relevant legislation and legal principles

Just Terms Act

Retail Leases Act 1994 (NSW)

Real Property Act 1990 (NSW)

Evidence

The evidence of the applicant and the second respondent

Sydney Metro’s evidence

The evidence of Dr Arnaout

Sydney Metro’s submissions in relation to the evidence of Dr Arnaout

Conclusions in relation to the evidence of Dr Arnaout

The claim of joint occupancy: “me and myself and I”

Applicant’s freehold claim

Market value of the applicant’s claim in relation to a freehold interest in Lot 7

Relevant principles

Applicant’s freehold claim for market value

Characteristics of the acquired land

Comparable sales evidence

Highest and best use of the acquired land at the acquisition date

Capitalisation of net rentals methodology

Comparable rentals adopted by the Court

Outgoings for Lot 7 adopted by the Court

Lease period adopted by the Court

Comparable sales adopted by the Court

Court adjustments to comparable rentals FR4 and FR6

Court adjustments to comparable sale FR4

Court calculations of the market value of Lot 7

Applicant’s claim for special value in relation to a freehold interest in Lot 7

Relevant principles

Applicant’s freehold claim for special value

Conclusion in relation to the applicant’s freehold claim for special value

Disturbance losses in relation to the applicant’s freehold claim

Relevant principles

Applicant’s general claim for disturbance loss

Section 59(1)(a): legal costs reasonably incurred

Section 59(1)(b): valuation fees of a qualified valuer reasonably incurred

Section 59(1)(c): financial costs reasonably incurred in connection with the relocation

Section 59(1)(d): stamp duty costs reasonably incurred

Section 59(1)(f): any other financial costs reasonably incurred

Dr Arnaout’s leasehold claim

Whether Dr Arnaout, the second respondent, had a compensable interest in land

Market value of Dr Arnaout’s claim in relation to a leasehold interest in Lot 7

Dr Arnaout’s claim for special value in relation to a leasehold interest in Lot 7

Dr Arnaout’s claim for disturbance in relation to a leasehold interest in Lot 7

Second respondent’s general claim for disturbance loss

Section 59(1)(a): legal costs reasonably incurred

Section 59(1)(b): valuation costs reasonably incurred

Section 59(1)(c): financial costs reasonably incurred in connection with relocation

Section 59(1)(f): other financial costs reasonably incurred - claim for “rental difference”

Conclusions

Orders

JUDGMENT

1. By Class 3 application filed on 21 February 2023, the applicant, The Eddie Arnott Corporation Pty Ltd (ACN 118 151 170) (the applicant), brought proceedings pursuant to s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act) objecting to the amount of compensation offered by Sydney Metro (the first respondent) for the compulsory acquisition of its freehold interest in land comprising Lot 7 in Strata Plan 65054, known as Shop 1A, 5 Hunter Street, Sydney (the acquired land) (the freehold claim). The date of acquisition was 2 September 2022 (the acquisition date).

2. The acquired land, known as Shop 1A, 5 Hunter Street, was in the lower ground level of what was known as the Hunter Connection, and had been used for the purpose of a dental practice by the second respondent, Dr Arnaout. The acquired land formed part of the “Hunter Arcade” retail arcade. The parent building at 5 Hunter Street included a retail stratum (Strata Plan 65054) known as the Hunter Arcade, and an office tower stratum (Strata Plan 71068). The parent building had a primary frontage along the southern alignment of Hunter Street, a secondary frontage along the eastern alignment of George Street, and a tertiary frontage to De Mestre Place. Wynyard railway station is situated to the west of the parent building and was accessed via a pedestrian tunnel beneath George Street.

3. In the period leading up to and of the hearing, as well as following the hearing, I have been considerably assisted by Acting Commissioner Kempthorne. This judgment is, of course, my own as judicial valuer.

The participation of the applicant and the second respondent in the proceedings

4. The applicant sought the following orders in the Class 3 application in relation to the freehold claim:

1. Compensation order regarding Freehold interest in the land including stamp duty.

2. Compensation order regarding City Dental Practice Business relocation on a “like for like” basis.

3. Compensation orders regarding respective Losses Attributable to Disturbances.

4. Compensation order regarding Freehold special value.

5. Annexed to the Class 3 application were, amongst others, the following documents:

1. a schedule of losses attributable to disturbance in the amount of $715,405.79 (with the amount for several items identified as “to be advised”); and

2. a copy of an unregistered lease agreement between the applicant and Dr Imad Arnaout in relation to the acquired land, executed on 22 August 2022, being 11 days prior to the date of acquisition, executed between the applicant and himself as second respondent on 22 August 2022 and purporting to commence on the earlier date of 18 July 2021 (the 2022 lease).

6. On 21 July 2023, the applicant filed in the freehold claim “Points of Claim and Updated Schedule of Losses Attributable to Disturbances”, seeking compensation in the amount of $7,473,977.79 (said to be plus GST whenever applicable/required), comprising:

1. Market value (s 55(a)):   $2,150,000.00

2. Special value (s 55(b)):   $4,501,000.00

3. Disturbance (s 55(d)):   $822,977.79 Plus GST whenever applicable/required (with the quantum for several items “to be confirmed”).

7. On 29 November 2024, the Court made orders pursuant to s 25(2) of the Land and Environment Court Act 1979 (NSW) (LEC Act) joining Dr Imad Arnaout as second respondent to the proceedings in relation to his claimed leasehold interest in the acquired land (the leasehold claim), and made orders in relation to the pleadings in the freehold claim, amended pleadings in relation to the leasehold claim, and lay evidence and expert evidence to be relied upon by the applicant and the second respondent in the proceedings.

8. On 16 December 2024, the applicant filed a document titled “The Applicant’s Amended Points of Claim for the Freehold Interest” (the amended points of claim (freehold)), seeking compensation in the amount of $6,046,494.27 (said to be plus GST whenever applicable/required) comprising:

1. Market value (s 55(a)):   $2,150,000.00

2. Special value (s 55(b)):   $3,561,000.00

3. Disturbance (s 55(d)):   $335,494.27 (with the quantum for several items “TBA”).

9. Also on 16 December 2024, the second respondent filed a document titled “Dr Arnaout’s Joinder Points of Claim – City Dental Practice Leasehold” (points of claim (leasehold)). The claimed interest in land is the unregistered 2022 lease.

10. Dr Arnaout, the second respondent and sole director of the applicant, claims compensation in the amount of $1,294,003.23 (plus GST whenever applicable/required), comprising:

1. Special value (s 55(b)): $436,800.00

2. Disturbance (s 55(c)): $857,203.28

11. Dr Arnaout, in closing submissions titled “Applicant’s and Second Respondent’s Closing Submissions” filed on 14 March 2025 after the conclusion of the hearing (the applicant and the second respondent's closing submissions), increased the amount of compensation the applicant and the second respondent seek, the applicant to an amount of $6,051,252.56 and the second respondent to an amount of $1,337,505.23.

12. The procedural history is set out in my earlier interlocutory decisions: The Eddie Arnott Corporation Pty Ltd v Sydney Metro [2025] NSWLEC 12, The Eddie Arnott Corporation Pty Ltd v Sydney Metro(No 2) [2025] NSWLEC 17, and The Eddie Arnott Corporation Pty Ltd v Sydney Metro (No 3) [2025] NSWLEC 18. In summary, the procedural history is as follows.

13. At a second pretrial mention on 25 February 2025, Dr Arnaout appeared for the applicant and the second respondent (himself), and replied to a question from the Court as to whether their expert town planner Mr Haskew and expert valuer Mr Sanidas would be made available for cross-examination at the hearing. Dr Arnaout confirmed that they would not be made available, notwithstanding that their reports had been filed and served.

14. Also at the second pretrial mention, the Court made rulings in relation to the objections of the first respondent, Sydney Metro, to the affidavit of Dr Imad Arnaout filed on 18 February 2025 (the 18 February 2025 affidavit). That evidence concerned the negotiation process pursuant to s 10A of the Just Terms Act for acquisition by agreement before the initiation of the compulsory acquisition process. I did not allow that material to be admitted into evidence. ^[1]

    1. The Eddie Arnott Corporation Pty Ltd v Sydney Metro [2025] NSWLEC 12 (Pritchard J).

15. On 28 February 2025, the applicant and the second respondent filed and served a notice of motion seeking to vacate the hearing listed to commence on 3 March 2025 (the notice of motion). I determined to refuse the application to vacate the hearing. My reasons were published in The Eddie Arnott Corporation Pty Ltd v Sydney Metro (No 2). ^[2]

    2. [2025] NSWLEC 17 (Pritchard J).

16. At the commencement of the hearing on 3 March 2025, the applicant sought to rely upon the report of David Haskew, town planner, dated 2 April 2024 (the Haskew report) in support of its freehold claim. The applicant and the second respondent sought to rely upon the report of John Sanidas, valuer, dated 13 June 2024 (the Sanidas report) in support of their respective freehold and leasehold claims. Sydney Metro objected to the admission of the two reports in circumstances in which neither expert would be made available for cross-examination and their evidence would not be capable of being tested. Also, neither expert had been made available for joint conferencing.

17. On 4 March 2025, the second day of the hearing, I delivered an ex tempore judgment declining to admit the Haskew report and the Sanidas report into evidence in circumstances in which the experts were not made available for cross-examination and had not participated in joint conferencing: The Eddie Arnott Corporation Pty Ltd v Sydney Metro (No 3). ^[3]

    3. [2025] NSWLEC 18 (Pritchard J).

18. The applicant filed and served the following evidence upon which it sought to rely at the substantive hearing:

1. affidavit of Dr Imad Arnaout dated 5 August 2024 (the 5 August 2024 affidavit) which was 605 pages in length;

2. expert valuation report of John Sanidas dated 13 June 2024; and

3. expert planning report of David Haskew dated 2 April 2024.

19. As indicated above, I declined to admit the reports of Mr Sanidas and Mr Haskew into evidence.

20. The second respondent, Dr Arnaout, filed and served the following evidence upon which he sought to rely at the substantive hearing:

1. a document titled "Lay Evidence for City Dental Practice Leasehold Filed Under Joinder Related Orders" dated 24 January 2025, and which was 19 pages in length; and

2. a document titled "Expert valuation Evidence for City Dental Business Leasehold Interest Filed Under Joinder Related Orders" dated 24 January 2025, which annexed the valuation report of Mr Sanidas dated 13 June 2024.

21. The applicant and the second respondent filed and served the 18 February 2025 affidavit of Dr Arnaout in which Dr Arnaout said: “this is a concise and updated version of my previous Affidavit, and as such it is to be read instead of my preceding Affidavits, please.” The 18 February 2025 affidavit was 630 pages in length, with three pages of annexures. As indicated above at [14], on 27 February 2025, I declined to admit this affidavit into evidence: The Eddie Arnott Corporation Pty Ltd v Sydney Metro. ^[4]

    4. [2025] NSWLEC 12.

22. Neither the applicant nor the second respondent participated in the preparation of the Court Book, Tender Bundle or Evidence Book. The Court Book, Tender Bundle and Evidence Book were prepared by Sydney Metro with a copy of each provided to Dr Arnaout. Dr Arnaout attended Court without copies of these documents as he said they were “too heavy”. The result was that Dr Arnaout was at times unable to follow proceedings, and Sydney Metro had to provide copies of relevant documents to him.

23. Dr Arnaout did not give evidence in chief. He was required for cross-examination on the third day of the hearing on 5 March 2025.

24. Throughout the preparation of the matter and at the hearing, Dr Arnaout changed his submissions in relation to the comparable sales and comparable leases upon which the applicant and the second respondent relied. At the pre-trial mention on 17 February 2025 and before I declined to admit the report of Mr Sanidas, in relation to the freehold claim the parties relied on the comparable sales the subject of expert evidence from the valuers, Mr Sanidas and Ben Masters for Sydney Metro. As at 17 February 2025, the parties relied on the following three common comparable sales:

25. As at 17 February 2025, the applicant also relied upon the following six comparable sales:

26. At all relevant times, the eight comparable sales relied upon by Sydney Metro were as set out below at [106]-[107].

27. At the mention on 17 February 2025, Dr Arnaout changed his position in relation to whether the Court should conduct a site inspection of the comparable sales relied upon by the applicant. His final submission was that there should not be a site inspection:

HER HONOUR: You consider that it would be‑‑

ARNAOUT: And relevant.

HER HONOUR: Relevant for the Court to conduct a view of the comparable sales relied upon by each of the parties.

ARNAOUT: Yes, please.

…

HER HONOUR: …  If I make an order that there be a view, you must understand that it needs to be conducted with a minimum of comment by any of the parties.  I'm just taken to each of the comparable sales, and then they can be referred to by the experts in their evidence.  I don't need any evidence at all ‑ I wouldn't, if I make a direction that there be a view – [accept] any evidence on the inspection.  Do you understand that?

ARNAOUT: I do.

HER HONOUR: So you make a submission that there be a view during the hearing?

ARNAOUT: I need to get a legal advice on this.

…

HER HONOUR: No, what is the normal practice of the Court when there is a view, is one of the parties ‑ I assume Sydney Metro ‑ would prepare a schedule of order of the properties to be visited, and a timetable to ensure that matters proceed efficiently.  And that the Court gets taken to each of those comparable properties.  Ms Hemmings prepares ‑ you don't think it would be useful?

ARNAOUT: No, not really …

…

ARNAOUT: I accept if these comparable properties are within this Wynyard Station CBD locality, and nowhere else.  Otherwise, it would confuse the Court‑‑

HER HONOUR: No, I'm not taking your selective view of properties.  If I take a view, I will be taken to each of the comparable properties relied upon by each of the experts.

ARNAOUT: Yes, please.

…

HER HONOUR: Do you seek to have the Court take a view?

ARNAOUT: No.

…

HER HONOUR: … I won't take evidence on the view you will be able to make your written opening submissions no longer than ten pages in length, you will be able to make a short opening address, and it will be recording in the transcript.  But the Court does not hear evidence outside the courtroom.

ARNAOUT: Thank you.  Thank you, your Honour, thank you.  I ‑ now I can give you an informed reply, and it's a very simple reply:  no, I'd like it ‑ I'd like not to do so, please.

HER HONOUR: Very well.  That's your submission, it wouldn't be useful.

ARNAOUT: Yes …

28. At the next pre-trial mention on 25 February 2025, Dr Arnaout changed his position in relation to a site inspection and requested that the Court conduct an inspection of the “interconnected subway linking Wynyard Station to various [sites] - like, to Hunter Arcade and the Hunter Connection]”, but not of the comparable sales:

ARNAOUT: Your Honour, just a quick note. Last time, this Honourable Court mentioned site inspections.

HER HONOUR: Yes, that’s not happening.

ARNAOUT: Yes, I’m aware of that, your Honour, but there is one particular kind request about a different site inspection which is to do with - because you mentioned the commissioners, and I can’t remember the name, but you mentioned commissioner - if it is possible for this honourable Court to site inspect the interconnected subway linking Wynyard Station to various - like, to Hunter Arcade and the Hunter Connection, please, because now, Wynyard Place is all operational and Hunter Arcade is not there anymore, and it’s closed. So if this honourable Court could help make a site inspection of this particular arcade, because I’ll be bringing with me some materials about this particular subway system if I may

29. At a listing on 27 February 2025, Sydney Metro agreed to a site inspection of Wynyard station as proposed by Dr Arnaout on 25 February 2025, provided that Dr Arnaout did not purport to give valuation evidence on the inspection.

30. On the first day of the hearing on 3 March 2025, an inspection of the site of the acquired land and its surrounds was undertaken in the company of Dr Arnaout, the first respondent’s representatives, and Mr Masters. The Court was shown the entrance to Hunter Connection at the end of Hunter Arcade where the escalators that went down to the basement level of Hunter Connection had previously been located. The Court was also shown the Hunter Street construction site where another entrance to access the acquired land had been located. The Court walked to George Street and Mr Masters identified where the George Street entrance to Hunter Arcade had previously been situated. The Court finally attended Tenko Mori Ramen House in Wynyard station where another entrance to Hunter Arcade had previously been located.

31. At the hearing on 5 March 2025 and after I had declined to admit the evidence of Mr Sanidas, Dr Arnaout sought to provide a list of comparable sales for the freehold claim and comparable leases for the leasehold claim:

APPLICANT: Thank you, your Honour, for providing me with this chance. For the same reasons mentioned by Ms Hemmings, the applicant would like to provide to this honourable Court a list of comparable sales for the leasehold ‑ for the freehold and comparables for the freehold. The reason for the leasehold and for the freehold, they are the same reason primarily because of the - Mr [Sanidas’] report not being allowed to be used as evidence based on the - on your judgments and the reasons in your honourable - your Honour’s judgments.

32. I did not allow Dr Arnaout’s list of comparable sales and comparable leases to be admitted into evidence as they were not the subject of expert evidence. Dr Arnaout then sought to put “one particular sale that’s very important” before the Court being the “shop right across from the applicant’s shop”:

APPLICANT: As I mentioned, the applicant and the second respondents are endeavouring to make this case as close as possible to being a just, quick and cheap resolution. That’s why my, my only request, humble request, from this honourable Court instead of providing comparable sales, I just want to put one particular - which I mentioned earlier, one particular sale that’s very important and that the shop right across from the applicant’s shop. If that can happen, then I won’t be relying on the other comparable sales which I was planning to submit to this honourable Court according to equal opportunity

33. At the hearing on 6 March 2025, during his cross-examination of Mr Masters, Dr Arnaout made a submission in relation to “Shop 1A, is lot 8, which is the sushi shop” which appeared to be a comparable sale selected by Dr Arnaout:

APPLICANT: Just to save everyone's time, I'm not going to follow that path because these folios are not on the lower level connected directory with Sydney Metro, sorry, with Wynyard Station. The only point I'd like to mention is that the only shop that's comparable and the closest shop to the applicant's lot at lot 7, Shop 1A, is lot 8, which is the sushi shop …

34. Finally, the applicant submitted in the applicant and the second respondent's closing submissions that “the best comparable sale for a particular property is the property itself then the one next to it then the closest then the next and so forth”. The applicant sought by way of submission to introduce new evidence of comparable sales. This included:

1. “The Sushi Shop at Hunter Arcade/Lot 8”, “The 2 nail shops at Hunter Arcade / Lot 2 and Lot 3”, and “the Siam Orchid Thai Massage shop” which had received a “development application approval for a dental clinic on 2 June 2021”. These comparable sales appeared to have been selected by Dr Arnaout without reference to any relevant expert.

2. “Category A sales data”, including further references to various properties not in evidence, such as “Circular Quay shop”, “Burger shops at number 2 Bridge Street Region Arcade”, and “Shope H6 (Lot 22) 7-13 Hunter Street”, which document appeared to have been drafted by Dr Arnaout.

3. “Category B sale data” which was submitted to be “Direct Sale Comparisons from page 22 of the 1^st JSA Valuation Report”. This appeared to be a reference to the comparable sales from the Sanidas report which I had previously excluded as evidence in the proceedings.

4. “Direct Sale Comparisons from page 22 of the 1^st JSA Valuation Report filed with the Applicant’s Class 3 Claim Application” which also sought to reintroduce evidence of Mr Sanidas which had been excluded.

35. At the conclusion of the fourth day of the hearing on 6 March 2025 (which had been listed as the final day), it was agreed by Dr Arnaout and Sydney Metro that the matter be listed for a further half day on 15 April 2025 for the purpose of oral submissions in closing. I made orders and directions in relation to the filing and service of written submissions ahead of the final hearing date. The following exchange is recorded in the transcript:

HER HONOUR: So I will make the following directions. The applicant and second respondent to file and serve written closing submissions by Friday 14 March 2025. The first respondent to file and serve written closing submissions by Friday [21] March 2025. Applicant and second respondent to file and serve written closing submissions by Friday [28] March 2025. The matter listed on Tuesday 15 April 2025 for half a day … for short oral address. That means there will be an expectation that the parties will cooperate to ensure that the matter is completed within half a day.

HEMMINGS: Please the Court.

APPLICANT: Your Honour, just a final thing for the housekeeping. My reply, what number of pages?

HER HONOUR: Yes, that would normally be ten pages. Often a reply is--

APPLICANT: For each?

HER HONOUR: No, for both.

APPLICANT: For both, okay. All right, thank you.

HER HONOUR: Very well. The Court thanks all parties for their assistance. We'll adjourn.

ADJOURNED TO TUESDAY 15 APRIL 2025

36. On 7 March 2025, my chambers emailed Dr Arnaout copies of each of my judgments referred to at [12] above, and the directions made in Court on 6 March 2025, namely:

1. The applicant and second respondent to file and serve closing submissions of 50 pages in total for both claims by Friday, 14 March 2025.

2. The first respondent to file and serve closing submissions of 50 pages in total for both claims by Friday, 21 March 2025.

3. The applicant and second respondent to file and serve submissions in reply of 10 pages in total for both claims by Friday, 28 March 2025.

4. The matter be listed for part heard hearing on Tuesday, 15 April 2025.

37. On the same day, Dr Arnaout replied confirming receipt.

38. On 14 March 2025, Dr Arnaout filed the applicant and the second respondent's closing submissions of 50 pages plus 16 pages of annexures.

39. On 21 March 2025, Sydney Metro filed a document titled “First respondent’s outline of closing submissions” of 49 pages plus an 11 page schedule.

40. On 28 March 2025, Dr Arnaout filed a folder containing a document titled “The Applicant’s and Second Respondent’s Submissions in Reply” and annexures A to E8. The document was 22 pages in length (excluding annexures), single-sided, with small spacing and narrow margins, meaning that some text appeared to have been cut off on the right-hand margin. I rejected the filing of this document and granted leave to the applicant and the second respondent to file and serve submissions in reply in accordance with order (3) made on 6 March 2025 by Wednesday, 2 April 2025 at 4pm. That is, that the submissions in reply be 10 pages in total for both claims.

41. On 3 April 2025, Dr Arnaout filed a document in reply titled “The Applicant’s and Second Respondent’s Submissions in Reply” of 18 pages plus 19 pages of annexures which included undated photographs and diagrams of unknown provenance with commentary, screen shots of emails, copies of correspondence, and extracts from bank statements (the applicant and the second respondent’s submissions in reply dated 3 April 2025).

42. Dr Arnaout did not attend Court on 15 April 2025 for closing submissions. My chambers asked registry to telephone Dr Arnaout using the telephone number on the Court file. Registry advised my chambers that there was no answer, and that a voicemail had been left. Chambers also sent an email to Dr Arnaout at 10:13am on 15 April 2025, confirming the time and location of the listing for closing submissions.

Issues

43. In relation to the applicant’s freehold claim:

1. the market value of the acquired land as at the acquisition date (2 September 2022) pursuant to s 55(a) and s 56 of the Just Terms Act;

2. whether the applicant has made out a claim for special value, including properly identifying quantum, pursuant to s 55(b) and s 57 of the Just Terms Act;

3. insofar as the claim is for losses attributable to disturbance pursuant to s 55(d) and s 59(1) of the Just Terms Act:

1. the quantum of compensation pursuant to s 59(1)(a) and (b); and

2. whether the applicant is entitled to claim compensation at all under s 59(1)(c) to (f), and if so its quantum.

44. In relation to the second respondent’s leasehold claim:

1. a threshold issue as to whether the second respondent, Dr Arnaout, had a compensable interest in land within the meaning of the Just Terms Act. In the event that he did not have a compensable interest in land, then that finding would be dispositive of all claims advanced by him under s 55 of the Act;

2. if I be wrong in relation to the threshold issue, the market value of the Dr Arnaout’s leasehold claim;

3. again if I be wrong in relation to the threshold issue, whether Dr Arnaout has made out a claim for special value, including identifying quantum, pursuant to s 55(b) and s 57 of the Just Terms Act; and

4. again if I be wrong in relation to the threshold issue, insofar as the claim is for losses attributable to disturbance pursuant to ss 55(d) and 59(1) of the Just Terms Act, whether Dr Arnaout is entitled to claim compensation at all under s 59(1)(a), (c) or (f), and if so in what quantum.

45. In determining those issues, the Court is required to consider a claim of “joint occupancy”. The applicant and the second respondent in effect assert that the applicant (as corporate trustee) occupied Lot 7, the acquired land, as its “management office”, jointly with Dr Arnaout’s dental surgery. Findings in this regard are relevant to the Court’s consideration of:

1. the applicant’s entitlement to special value, financial costs in connection with relocation, and stamp duty costs in connection with relocation; and

2. the second respondent’s entitlement to special value.

46. It will also arise to determine Dr Arnaout’s reliability as a witness.

47. I will then address the claim of joint occupancy before turning to consider each of the applicant’s freehold claim and the second respondent’s leasehold claim.

Outcome

48. In relation to the joint occupancy claim, I am not satisfied, on the balance of probabilities that the applicant and the second respondent have established the claim; that is, either that the applicant is entitled to special value, financial costs in connection with relocation and stamp duty costs in connection with relocation, or that the second respondent is entitled to special value.

49. In relation to the applicant’s freehold claim, I have determined that the applicant is entitled to compensation in the amount of $1,070,000.00 for the market value of the acquired land plus statutory interest payable under ss 49 and 50 of the Just Terms Act.

50. I have not accepted the applicant’s claim for special value in relation to its freehold interest in the acquired land.

51. Whilst I find that the applicant’s claim for advice sought from three different law firms is excessive, I am satisfied that the applicant has obtained at various points in time some advice in connection with the compulsory acquisition of its land, and have determined to allow the applicant an amount of $10,000 for legal costs pursuant to s 59(1)(a) of the Just Terms Act.

52. I have determined to allow the applicant an amount of $22,000 for valuation fees pursuant to s 59(1)(b) of the Just Terms Act.

Relevant factual background

53. The following background is derived from the Sydney Metro’s statement of facts, and my own perusal of the underlying documents.

The acquisition

54. By letter dated 30 July 2021, Sydney Metro provided to the applicant notice of its intention to acquire the acquired land.

55. On 11 May 2022, the Sydney Metro issued a proposed acquisition notice (the PAN) to the applicant in respect of the freehold interest in the acquired land pursuant to s 11 of the Just Terms Act.

56. On 2 September 2022, by notice published in NSW Government Gazette No 405, Sydney Metro compulsorily acquired the whole of the acquired land in accordance with the Just Terms Act, as authorised by s 38C and cl 11 of sch 1 to the Transport Administration Act 1988 (NSW).

57. On 21 November 2022, the Valuer General of NSW issued a property valuation report for the applicant's freehold interest in the acquired land. Section 5.1 of the Valuer General’s property valuation report stated that the acquired land was “understood to be owner occupied and has therefore been assessed on the basis of Vacant Possession”.

58. On 21 November 2022, the Valuer General determined compensation for the applicant’s freehold interest in the acquired land pursuant to s 41 of the Just Terms Act in the amount of $1,350,934.66, comprising:

1. Market value (s 55(a)):   $1,000,000.00

2. Disturbance (s 55(d)):   $350,934.66

59. On 30 November 2022, Sydney Metro offered the applicant the sum of $1,350,934.66 pursuant to s 42 of the Just Terms Act in relation to the applicant’s freehold interest in the acquired land.

The applicant and the second respondent

60. The applicant is a corporate trustee. The second respondent Dr Arnaout is the sole director/secretary of the applicant. The second respondent operates a business registered with Australian Business Number (ABN) 12 963 259 763.

61. In 2006, the applicant became the registered proprietor of the freehold interest in the acquired land.

62. On 22 August 2022, the second respondent entered into the 2022 lease with the applicant for Lot 7.

63. The 2022 lease as executed provided for the following:

1. the permitted use of the acquired land was dental surgery with or without medical, pharmaceutical and allied health business/es;

2. the 2022 lease commencement was backdated to 18 July 2021;

3. the term of the 2022 lease was for five years with an option to renew for a period of five years;

4. the commencing rent was $41,600 per annum gross;

5. there was provision for annual rental increases of 0.5% on the anniversary of the 2022 lease commencement date;

6. Clause 10.7 provided in relation to licences, concessions and possession as follows:

10.7   The lessee can sub-let, grant a licence or concession, share or part with the possession of the whole or any part of the property or mortgage or otherwise charge or encumber the lessee’s estate or interest in this lease only with the written consent of the lessor which can be refused in the lessor’s absolute discretion.

7. Clause 12.3 provided in relation to “When does this lease end?” as follows:

12.3    When this lease ends, unless the lessee becomes a lessee of the property under a new lease the lessee must –

12.3.1   return the property to the lessor in the state and condition that this lease requires the lessee to keep it in (including any obligation to decorate under clause 7.3.3); and

12.3.2   have removed any goods (unless otherwise directed by the lessor to the extent that the lessor has any security interest) and anything that the lessee fixed to the property and have made good any damage caused by the removal.

Anything not removed becomes the property of the lessor who can keep it or remove and dispose of it and charge to the lessee the cost of removal, making good and disposal.

The public purpose

64. Sydney Metro compulsorily acquired the acquired land for the purpose of the Sydney Metro West Project (the project). The project will link Sydney CBD with Westmead.

The acquired land

65. As previously noted, the acquired land was located on the lower ground floor of the retail arcade known as "Hunter Arcade".

66. The acquired land was the whole of Lot 7 in SP65054. The acquired land had a freehold stratum area of 36m². The diagram below is an extract of Strata Plan 65054 which identifies the lower ground floor level of the retail arcade and the location of Lot 7, the acquired land, on that lower ground floor level:

67. The acquired land had a unit entitlement of 33 units (or 3.33%) out of a total unit entitlement for Strata Plan 65054 of 1000 units.

68. As at the acquisition date, the acquired land was fitted out as a dental surgery and was serviced with air conditioning and water.

69. Prior to the acquisition date, the acquired land had been used for the purposes of a dental business by the second respondent, Dr Arnaout.

Parent site and parent building: 5 Hunter Street

70. The land commonly known as 5 Hunter Street, Sydney, was identified as Lot 1 in DP 701166 (the parent site), and had a site area of between 741.6m² and 747.8m². The aerial photograph below, extracted from the report of Sydney Metro’s town planning expert Mr Stuart McDonald, dated 29 August 2024 (the McDonald report), shows the location of the parent site:

71. The parent site had been subdivided into two stratum lots, lot 1 and 2 in DP 1024157. Lot 1 in DP 1024157 was further subdivided by the registration of Strata Plan 65054. Lot 2 in DP 1024157 was further subdivided by the registration of Strata Plan 71068.

72. As at the acquisition date, the parent site comprised two strata plans:

1. Strata Plan 65054, the retail arcade commonly referred to as “Hunter Arcade” which consisted of 14 lots.

2. Strata Plan 71068, a 13 storey office tower which consisted of 62 strata lots and was commonly referred to as “Leda House”.

73. The image below shows the subdivision of Strata Plan 65054 and Strata Plan 71068, looking from the Hunter Street elevation, extracted from the report of Sydney Metro’s valuer Ben Masters, dated 4 October 2024 in relation to the applicant’s freehold claim (the Masters freehold report):

74. At the acquisition date, there was a building on the parent site which is estimated to have been constructed between 1973 and 1980 (the parent building).

75. The parent building had a gross floor area (GFA) estimated to be between 9,860.3m² and 9,945.78m² and a floor space ratio (FSR) of 13.3:1.

76. Sydney Metro was unable to identify any document that specifically calculates the GFA of the parent building in accordance with the definition of GFA under the Sydney Local Environmental Plan 2012 (SLEP 2012).

77. The parent building was demolished for the purposes of the project.

Location

78. The parent building had a frontage along the southern side of Hunter Street and the eastern alignment of George Street. It was located within the Sydney CBD core precinct, in proximity of Wynard railway station. Development surrounding the parent building included commercial and mixed use buildings.

Relevant planning controls

79. As at the acquisition date, there were numerous State and local planning controls and policies which applied to the acquired land, including

1. SLEP 2012; and

2. Sydney Development Control Plan 2012.

80. As at the acquisition date, under SLEP 2012, the parent site was:

1. zoned B8 Metropolitan Centre;

2. identified on the Height of Buildings Map as:

1. partly having a permissible maximum building height of 235m; and

2. partly within “Area 3”.

81. Pursuant to cl 4.3 of SLEP 2012, the parent site had a permissible maximum 235m height limit over the northern part of the land. The southern part of the land, including the George Street frontage, had no numerical height limit. The southern part of the land permissible maximum height was determined by the sun access plans that extend over the parent site. On sites less than 1,000m², the permissible maximum building height was limited to 55m or less.

82. The parent site was within the “Tower Cluster Area” to which the tower cluster provisions of SLEP 2012 applied.

83. The SLEP 2012 Locality and Site Identification Map, overlaid with an outline of the parent site, extracted from the McDonald report, is shown below:

84. In accordance with cl 4.4 of SLEP 2012, the parent site had a base FSR of 8:1, and pursuant to cll 6.3 and 6.4 of SLEP 2012 an additional FSR of up to 6:1 for “accommodation floor space”. This end of journey floor space cannot be more than the amount of floor space that can be achieved by applying a FSR of 0.3:1 to the building.

Relevant legislation and legal principles

Just Terms Act

85. Section 4 of the Just Terms Act provides the following definition of “interest in land”:

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.

86. In Division 1 “Entitlement to compensation” of Part 3 (Compensation for acquisition of land), s 37 provides as follows in relation to right to compensation if land compulsorily acquired:

37 Right to compensation if land compulsorily acquired

An owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part by the authority of the State which acquired the land.

87. Within Division 4 “Determination of amount of compensation”, s 54 provides in relation to entitlement to just compensation:

54 Entitlement to just compensation

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

(2) If the compensation that is payable under this Part to a person from whom native title rights and interests in relation to land have been acquired does not amount to compensation on just terms within the meaning of the Commonwealth Native Title Act, the person concerned is entitled to such additional compensation as is necessary to ensure that the compensation is paid on that basis.

88. Sections 49 and 50 provide in relation to interest on compensation and the rate of interest on compensation:

49   Interest on compensation

(1)  Interest is payable (subject to subsection (2)) on any amount of compensation under this Part from the date the land is acquired until the payment is made. Any such interest becomes part of the amount of compensation payable.

(2)  Interest under this section is not so payable on any amount of compensation paid into a trust account under this Part or into the Consolidated Fund by the authority of the State. However, money earned from the investment of any such trust account becomes part of the compensation concerned.

50   Rate of interest on compensation

(1)  The rate of interest payable on any payment of compensation under this Part is such rate as the Treasurer may from time to time determine by notification published in the Gazette.

(2)  Different rates of interest may be determined under this section.

(3)  The Treasurer is to have regard to the rates of interest paid by banks when determining rates of interest under this section.

(4)  Rates of interest determined under this section apply even though the compensation is payable under an order of a court.

89. Section 55 specifies the relevant matters to be considered in determining the amount of compensation to which a person is entitled:

55 Relevant matters to be considered in determining amount of compensation

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

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

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

(c) any loss attributable to severance,

(d) any loss attributable to disturbance,

(e) the disadvantage resulting from relocation,

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

Note—

See also the Electricity Supply Act 1995, section 44(4) and the Energy and Utilities Administration Act 1987, section 15(4).

90. Section 56 provides as follows in relation to the assessment of the market value of land:

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.

(2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition.

(3) If—

(a) the land is used for a particular purpose and there is no general market for land used for that purpose, and

(b) the owner genuinely proposes to continue after the acquisition to use other land for that purpose,

the market value of the land is taken, for the purpose of paying compensation, to be the reasonable cost to the owner of equivalent reinstatement in some other location. That cost is to be reduced by any costs for which compensation is payable for loss attributable to disturbance and by any likely improvement in the owner’s financial position because of the relocation.

91. Section 57 provides as follows in relation to the special value of land:

57 Special value

In this Act—

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

92. Section 59 provides in relation to loss attributable to disturbance of land:

59 Loss attributable to disturbance

(1) In this Act—

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

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

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

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

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

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

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

(2) Subject to the regulations, a reference in this section to a qualified valuer is a reference to a person who—

(a) has membership of the Australian Valuers Institute (other than associate or student membership), or

(b) has membership of the Australian Property Institute (other than student or provisional membership), acquired in connection with his or her occupation as a valuer, or

(c) has membership of the Royal Institution of Chartered Surveyors as a chartered valuer, or

(d) is of a class prescribed by the regulations.

93. Section 60 provides in relation to compensation in respect of disadvantage resulting from relocation:

60 Disadvantage resulting from relocation

(1) In this Act—

disadvantage resulting from relocation means non-financial disadvantage resulting from the necessity of the person entitled to compensation to relocate the person’s principal place of residence as a result of the acquisition.

(2) The maximum amount of compensation in respect of the disadvantage resulting from relocation is $75,000.

Note—

Schedule 1A provides for the amendment of this section to enable the maximum amount of compensation to be increased by regulation and for the automatic indexation of the maximum amount in line with inflation.

94. In Division 5 “Objections and appeals to Land and Environment Court”, s 66 provides in relation to objections against the amount of compensation offered by the authority of the State:

66 Objection against amount of compensation offered

(1) A person who has claimed compensation under this Part may, within 90 days after receiving a compensation notice, lodge with the Land and Environment Court an objection to the amount of compensation offered by the authority of the State.

(2) If any such objection is duly lodged, the Land and Environment Court is to hear and dispose of the person’s claim for compensation.

(3) A person who does not lodge an objection within the 90-day period and who is taken to have accepted the offer of compensation under section 45 may nevertheless lodge an objection under this section, but the Land and Environment Court is not to hear and dispose of the person’s claim for compensation unless satisfied that there is good cause for the person’s failure to lodge the objection within that period.

(4) If the Land and Environment Court decides that the amount of compensation payable (without the addition of interest) does not exceed by more than 10% the amount of compensation offered by the authority of the State, the Court may cancel or reduce the amount of interest that has accrued under this Act in respect of the compensation since the institution of the proceedings.

Retail Leases Act 1994 (NSW)

95. As at the date of acquisition, s 16 of the Retail Leases Act provided in relation to retail shop leases that must be registered:

16 Certain leases must be registered

(1) If a retail shop lease is for a term of more than 3 years or if the parties to the lease have agreed that the lease is to be registered, the lessor must lodge the lease for registration in accordance with the Real Property Act 1900 within 3 months after the lease is returned to the lessor or the lessor’s lawyer or agent following its execution by the lessee.

Maximum penalty—50 penalty units.

(2) The 3-month period within which a lease must be lodged for registration is to be extended for any delay attributable to—

(a) the need to obtain any consent from a head lessor or mortgagee (being delay not due to any failure by the lessor to make reasonable efforts to obtain consent), or

(b) requirements arising under the Real Property Act 1900 that are beyond the control of the lessor.

(3) For the purposes of this section, the term of a retail shop lease includes any term for which the lease may be extended or renewed at the option of the lessee.

Note.

For example, a retail shop lease is for a term of more than 3 years if it is for a term of 1 year with an option to renew for a further term of greater than 2 years.

(4) This section does not affect the operation of the Real Property Act 1900.

Real Property Act 1990 (NSW)

96. As at the date of acquisition, s 41 of the Real Property Act provided in relation to dealings not effectual until recorded in the Register:

41 Dealings not effectual until recorded in Register

(1) No dealing, until registered in the manner provided by this Act, shall be effectual to pass any estate or interest in any land under the provisions of this Act, or to render such land liable as security for the payment of money, but upon the registration of any dealing in the manner provided by this Act, the estate or interest specified in such dealing shall pass, or as the case may be the land shall become liable as security in manner and subject to the covenants, conditions, and contingencies set forth and specified in such dealing, or by this Act declared to be implied in instruments of a like nature.

(2) (Repealed)

97. Section 42(1)(d)(i) provided in relation to the paramountcy of the estate of a registered proprietor relevantly as follows:

42 Estate of registered proprietor paramount

(1) Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except—

(d) a tenancy whereunder the tenant is in possession or entitled to immediate possession, and an agreement or option for the acquisition by such a tenant of a further term to commence at the expiration of such a tenancy, of which in either case the registered proprietor before he or she became registered as proprietor had notice against which he or she was not protected—

Provided that—

(i) The term for which the tenancy was created does not exceed three years, and

…

98. Section 53 provided in relation to the execution of leases as follows:

53 Land under the provisions of this Act—how leased

(1) When any land under the provisions of this Act is intended to be leased or demised for a life or lives or for any term of years exceeding three years, the proprietor shall execute a lease in the approved form.

(2) (Repealed)

(3) A right for or covenant by the lessee to purchase the land therein described may be stipulated in such instrument, and in case the lessee shall pay the purchase money stipulated and otherwise observe the lessee’s covenants expressed and implied in such instrument, the lessor shall be bound to execute a transfer of the said land to such lessee.

(4) A lease of land which is subject to a mortgage, charge or covenant charge is not valid or binding on the mortgagee, chargee or covenant chargee unless the mortgagee, chargee or covenant chargee has consented to the lease before it is registered.

(5) Subsection (1) does not apply in relation to land the subject of a social housing tenancy agreement within the meaning of the Residential Tenancies Act 2010.

Evidence

The evidence of the applicant and the second respondent

99. The evidence sought to be relied on by the applicant and the second respondent and which was admitted into evidence is summarised at [18]-[25] above.

Sydney Metro’s evidence

100. Sydney Metro relied on the following expert reports:

1. the McDonald report (town planning);

2. the Masters freehold report (valuation); and

3. the Masters leasehold report (valuation).

101. The Evidence Book prepared by Sydney Metro filed on 26 February 2025 included the following additional documents relied upon by the applicant and the second respondent:

1. the 5 August 2024 affidavit of Dr Imad Arnaout;

2. lay evidence for City Dental Practice Leasehold (with annexures) dated 24 January 2025; and

3. “Expert Valuation Evidence for City Dental Business Leasehold Interest Filed Under Joinder Related Orders” dated 24 January 2025 (adduced by the second respondent).

102. Sydney Metro also prepared a Court Book filed on 26 February 2025 which included, relevantly:

1. the Class 3 application filed on 21 February 2023;

2. the applicant’s amended points of claim (freehold) dated 16 December 2024;

3. the second respondent’s points of claim (leasehold) dated 16 December 2024;

4. Sydney Metro’s amended points of defence (freehold) dated 23 December 2024;

5. Sydney Metro’s points of defence (leasehold) dated 23 December 2024;

6. Sydney Metro’s objections to evidence dated 14 February 2025;

7. Sydney Metro’s amended table of comparable sales dated 14 February 2025 and Sydney Metro’s amended table of comparable sales – leasehold interest dated 18 February 2025 (together, Sydney Metro’s tables of comparables).

103. The Tender Bundle filed by Sydney Metro on 7 February 2025 included the following categories of documents:

1. ASIC and Australian Business Register searches and documents, and title searches;

2. acquisition correspondence and notices;

3. environmental planning instruments and related documents;

4. sale and rental documents; and

5. notices to produce issued to the applicant and the second respondent dated 3 February 2025 (the notices to produce).

104. Sydney Metro also relied on documents provided by Dr Arnaout on 4 March 2025 in response to the notices to produce dated 3 February 2025, which became Exhibit J in the proceedings (Exhibit J).

105. Sydney Metro had previously accepted that the applicant was entitled to recover some of the legal costs and valuation fees claimed under s 59(1)(a) to (b) of the Just Terms Act, subject to receiving sufficient evidence that those costs had been reasonably incurred. However, in light of the deficiencies in the evidence put before the Court, Sydney Metro only accepted a claim of $22,000 for valuation fees (noting that the position was is “in itself a concession given the evidence”).

106. Sydney Metro also sought to rely on its tables of comparables. The tables of comparables in relation to the applicant’s freehold claim were as follows:

107. Sydney Metro’s table of comparables in relation to the second respondent’s leasehold claim were as follows:

The evidence of Dr Arnaout

Sydney Metro’s submissions in relation to the evidence of Dr Arnaout

108. Sydney Metro submitted that there were significant difficulties with the evidence of Dr Arnaout. At best, Dr Arnaout in his evidence in cross-examination “sought to obfuscate the factual foundation relevant to the Court’s assessment of the claims”. Indeed, Dr Arnaout gave “unclear and apparently inconsistent evidence on matters central to the claims”.

109. Further, Sydney Metro submitted, Dr Arnaout, on behalf of the applicant and himself as second respondent, had a “propensity to make serious, baseless allegations both in the course of being cross-examined and also in oral and written submissions before the Court”. The applicant and the second respondent also filed and served bank records some of which Dr Arnaout subsequently accepted in cross-examination had either been interfered with or in respect of which he could not say how they had been prepared.

110. The “well documented” evidence that Dr Arnaout deposed to as having existed, and referred to over 442 times in the 5 August 2024 affidavit, including references in paragraphs ultimately rejected by the Court, was subsequently said to be contained in the bundle of documents filed on 4 March 2025, being Exhibit J. Sydney Metro submitted that a critical analysis of Exhibit J would lead the Court to conclude that the existence of “well documented” evidence was a “fiction”.

111. Further, Sydney Metro submitted that in cross-examination Dr Arnaout was initially unable to answer a simple question relating to the address of a property in North Sydney that he said had been recently purchased. The reason given was that he was “not good with addresses and numbers”, and that he would have to “refer to [his] paperwork”. This begs the question, it was submitted, as to how Dr Arnaout was able to swear the 5 August 2024 affidavit “asserting various financial states of affairs in the absence of documents being before him if he is in fact ‘not good with numbers’ as he claims.”

112. In the absence of corroborating documentary evidence, Sydney Metro submitted that the Court should treat Dr Arnaout’s evidence and his asserted beliefs in the existence of various states of affairs with a degree of circumspection.

Conclusions in relation to the evidence of Dr Arnaout

113. For the following reasons, I have found Dr Arnaout to be an unreliable witness, both in the proceedings in which he appeared for the applicant and in the proceedings in which he appeared for himself as second respondent.

114. He did not make his experts available for joint conferencing or cross-examination, but sought himself to give evidence both from the bar table and in the witness box in relation to matters which ought properly to have been the subject of expert evidence.

115. During the hearing, from the bar table and in the witness box and after I directed him that the Court would not consider “any further evidence from the bar table or in a[n] affidavit in relation to the s 10A process”, on the first day of the hearing on 3 March 2025, Dr Arnaout referred to matters which were the subject of negotiation of acquisition by agreement, pursuant to s 10A of the Just Terms Act before the initiation of the compulsory acquisition process, and hence irrelevant to the matters for determination by the Court (emphasis added):

APPLICANT: Yes. Because I was reiterating what happened in s 10A and I'm saying - I was saying that there was no legal representation for most of it - of the s 10A, only the last two months when Sydney Metro caused an - a unilateral breakdown in the negotiation process and cancelled two appointments, or at least one appointment locked in--

…

COMMISSIONER: So prior to you moving out of lot 7 or at the time you were moving, what did you remove from the premises?

A. Is it time?

COMMISSIONER: Yes.

A. I removed the removable chattels, everything that I could remove. I had an agreement with Mr Apple(?) who was my, my, acquisition manager. He told me that we're going to pay for all of the fixed equipment, but you can dismantle some of them.

HEMMINGS: Commissioner, I object to this. This is without prejudice negotiations during the 10A.

…

APPLICANT: Commissioner, I'm referring to a valuation that's happened already and there are offers, not during the proceedings because I'm not meant to talk about this, there were offers from Sydney Metro during section 10A--

116. Dr Arnaout made numerous gratuitous and at times offensive references to Sydney Metro’s counsel. These included unsupported and serious comments about her professional conduct, including comments concerning the formulation of questions during cross-examination and unsubstantiated allegations that she had removed an image from the Masters’ report and misled the Court (emphasis added).

HEMMINGS: 27 Willis Street, Lansvale?

A. Yes. I have to reiterate that there is a confusion in the way the question is asked because it's ill-informed question on all the information—

HER HONOUR: You can't speak to counsel like that

…

HEMMINGS: So, in other words, this big picture never to sell, buy and hold property investment strategy is, in other more conventional terms, probably called a property investment strategy?

A. It would be if you, if you mentioned it that way, but it's buy and hold never to sell property investment property, property investment for my own businesses, which I've said already four times already, but you seem to omit that.

…

HEMMINGS: Which out of those photographs is the office which was occupied at the acquisition date by‑‑

A. It is‑‑

HEMMINGS: ‑‑by the Eddie Arnott Corporation?

A. It is the photograph that’s still in here but the remaining photograph of the same room that you have removed it to ask me this question. I’m glad you left one of them. It’s image 20.

HEMMINGS: The side room?

A. Yeah, that Mr Masters was instructed to remove the remaining of - pictures of.

HEMMINGS: Please, Dr Arnaout.

A. You’re misleading the Court another time.

HEMMINGS: No, I’m not misleading the Court.

A. Yes, you are. Yes, you are.

117. Dr Arnaout frequently interrupted Sydney Metro’s counsel whilst she was in the course of making a submission, and despite direction from the Court to refrain from doing so. On the first day of the hearing on 3 March 2025, for instance, the following exchanges occurred between Dr Arnaout and counsel:

HEMMINGS: --just for the record, so we press all of the objections which are in the schedule, and effectively they're either relating to s 10A matters, they relate to without prejudice negotiations, or they make allegations against Sydney Metro and, particularly, their conduct during the 10A process, which is not only an irrelevant consideration but improper when there's no evidence to support it.

APPLICANT: Objection.

HER HONOUR: You don't get to object. It's Ms Hemmings' opportunity to address the Court. You had an uninterrupted opportunity to address the Court on your motion application. It is now Ms Hemmings'--

APPLICANT: Thank your Honour. I'll wait for my turn.

…

HEMMINGS: … There is a central issue of dispute between the applicant and the first respondent, and that is the applicant's assertion that market value is to be determined on a like-for-like replacement basis, and that's firmly rejected by the first respondent and we deal with--

APPLICANT: Objection, your Honour.

HER HONOUR: Ms Hemmings is making her opening submissions.

…

HEMMINGS: … Despite allegations repeated today in opening submissions, there is no evidence that the lease which is attached to the class 3 application was provided to Sydney Metro or to the valuer general prior to the acquisition date.

APPLICANT: Objection, your Honour.

HER HONOUR: That is a submission, Dr Arnaout, which Sydney Metro is entitled to make having regard to the evidence. If you can, in due course, take the Court to evidence which contradicts what Ms Hemmings has said, you will have the opportunity in due course. This is Ms Hemmings’ opening.

…

HEMMINGS: … an invoice for a downloadable form from the Law Society isn’t evidence of a lease giving forth an interest in land.

APPLICANT: Objection, your Honour.

118. Dr Arnaout made repeated references to well documented evidence and facts, without taking the Court to any material in relation to such evidence and facts, including referring to “well documented regular rental payments I was regularly making over the whole duration of the 16 years … to the company” ^[5] . In particular, he referred numerous times to well documented evidence to support:

1. a lease between the applicant and the second respondent;

2. rental payments from the second respondent to the applicant; and

3. the payment of invoices for legal costs and other disbursements.

   5. Page 196 [502]: Tab A1 EB.

119. However, Dr Arnaout provided little, if any, reliable documentary evidence in relation to these matters.

120. On a number of occasions, Dr Arnaout disregarded rulings made by the Court. For instance, he continued to make submissions and give evidence concerning matters which were the subject of negotiation of acquisition by agreement pursuant to s 10A of the Just Terms Act, despite the Court’s direction not to do so. Dr Arnaout included comparable sales in the applicant and the second respondent’s closing submissions, despite the Court’s direction on the third day of the hearing on 5 March 2025 that his comparable sales would not be included in evidence, and my decision excluding the applicant and the second respondent’s expert valuation report in The Eddie Arnott Corporation Pty Ltd v Sydney Metro (No 3). Dr Arnaout interrupted Sydney Metro’s counsel despite direction from the Court to refrain from doing so. Likewise the applicant and the second respondent’s closing submissions referred to comparable sales which had been excluded from evidence. ^[6]

     6. See [29.iv] (page 6), [169] (page 23), [175], [319] (page 44) of the applicant and the second respondent’s closing submissions, and [74] on pages 15 and 16 of the applicant and the second respondent’s closing submissions in reply.

121. In the applicant and the second respondent’s closing submissions, there were numerous notations of TBA (to be advised). ^[7] The Court was not advised of the matters the subject of those notations.

     7. See [304.II.E], [304.II.F], [304.II.G], [304.II.H], [304.II.I], [304.II.J], [304.II.K], [304.II.M], [304.II.N], and [342.E] of the applicant and the second respondent’s closing submissions.

122. The Court, as judicial valuer, is left in a position where it is unable to attach little, if any, weight to Dr Arnaout’s evidence in the absence of corroborating documentary evidence. Dr Arnaout was given the opportunity by the Court and Sydney Metro to be heard, but declined to give evidence in a manner that abided by the Court’s directions, rulings and admonitions.

The claim of joint occupancy: “me and myself and I”

123. There next arises first for the Court to determine the claim of “joint occupancy”. The claim of joint occupancy is relevant to my consideration of:

1. the applicant's entitlement to special value, financial costs in connection with relocation, and stamp duty costs in connection with relocation; and

2. the second respondent's entitlement to special value.

124. In effect, the applicant and the second respondent assert that the applicant (as corporate trustee) occupied Lot 7 as its “management office” jointly with that of Dr Arnaout's dental surgery pursuant to an agreement between the applicant and the second respondent whereby the applicant occupied a small part of Lot 7 to conduct its business affairs, whist the second respondent, Dr Arnaout, conducted his dental practice.

125. Dr Arnaout referred to this joint occupancy arrangement during the hearing variously as:

1. the well documented joint occupancy;

2. the well documented joint occupancy model;

3. the joint occupancy agreement;

4. the joint occupancy leasehold; and

5. the shared occupancy model.

126. Neither the applicant nor the second respondent provided any documentary evidence of a lease during the period of 16 years which the applicant owned Lot 7 (apart from the 2022 lease signed on 22 August 2022). Likewise, neither the applicant nor the second respondent provided any documentary evidence of regular rental amounts paid by the second respondent to the applicant during the period of 16 years (apart from the purported hand notated bank statements attached to the applicant and the second respondent’s closing submissions in reply dated 3 April 2025 which in the main I ruled to be inadmissible). Dr Arnaout did not provide any documentary evidence in relation to the space said to have been occupied by the applicant occupied in Lot 7 under the variously referred to (joint) (shared) occupancy (model) (agreement) (leasehold).

127. Sydney Metro submitted that the position advanced by the applicant and the second respondent in relation to joint occupancy appeared to involve the following steps:

1. the applicant (as corporate trustee) entered into a lease with the second respondent granting Dr Arnaout the exclusive use of the premises; and

2. Dr Arnaout, pursuant to cl 10.7 of the 2022 lease, with the consent of the lessor and the lessee, “shared occupancy of the leasehold” with the applicant.

128. Sydney Metro submitted that:

1. the Court would not make a finding of “joint occupancy” on the basis of the evidence;

2. in the alternative, if the Court were to find that there was some form of incidental occupancy, it was so minor as to be de minimis, and would be disregarded; and

3. the nature of the alleged joint occupancy was at best a licence terminable at will.

129. I find that the evidence in relation to the question of joint occupancy was mostly in the nature of mere assertion by Dr Arnaout, and at its highest as stated at paragraph [186(n)-(p)] of the 5 August 2024 affidavit as follows:

n. The consent of the Lessor to the lessee, pursuant to the Terms including Clause 10.7 of the Lease, as the Lessor Consent.

o. The consent of the Lesse [sic] to create this Shared Occupancy with the Applicant pursuant to the Terms including Clause 10.7 of the Lease, as the Lesse [sic] Consent.

p. The Shared Occupancy of the Leasehold between Dr. Imad Arnaout and the Applicant based on the Lessor Consent, and the Lesse [sic] Consent pursuant to the Terms including Clause 10.7 of the lease executed on 22/8/2022 between The Eddie Arnott Corporation Pty Ltd and Dr. Imad Arnaout in relation to the Property at Shop 1A, Lower Ground, Hunter Arcade, 5 Hunter Street, Sydney NSW 2000, also known as Lot 7, as the Shared Occupancy of the Leasehold.

130. I find that the evidence of the applicant and the second respondent in relation to the question of joint occupancy was, at best, inconclusive. There was no documentary evidence recording the terms on which the applicant was permitted to occupy the acquired land for a period of 16 years, or at all. As elicited in cross-examination, Dr Arnaout said that “it was a verbal consent between me and myself and I” (emphasis added). There was also a conflict between Dr Arnaout’s reliance on cl 10.7 of the 2022 lease, as well as statements by Dr Arnaout that the applicant had been “financially inactive over the last sixteen years, and as such has been using the Trust Tax File Number for its role as Trustee, as per yearly communication with the Australian Taxation Office.” That position in relation to financial inactivity was repeated several times in the course of cross-examination. Notwithstanding that oral evidence, the applicant and the second respondent persisted in their closing submissions in asserting that the applicant occupied the acquired land for purposes which included “preparing all the documents related to the applicant's BAS's and Tax Returns over a sixteen years period.”

131. In relation to the joint occupancy claim, the area said to have been occupied by the applicant was variously described by Dr Arnaout, including as a “large office”. Ultimately, however, his evidence was that the “large office” was a “shared office” and, at its highest, involved:

1. the use of a couple of shelves in a shared filing cabinet;

2. the use of “two deep shelves” in a shared storage cabinet;

3. a small desk area with computer (and hard drives and digital files attached to the computer); and

4. a space underneath the desk area in which a box storing documents was also located.

132. The effect of Dr Arnaout’s evidence ultimately was that any joint occupancy was de minimis. ^[8] The minimal nature of the use of the premises by the applicant was highlighted in Dr Arnaout’s oral evidence as follows:

     8. See the 5 August 2024 affidavit at [1086], [1091(h)], [1481(B)] and [1491]-[1492].

Q. How much of the acquired lot was attributable to the joint occupants?

A. The joint occupants took a very, very, like a very, very small percentage because even the desk was shared between both of us, and these two locations for the cabinets were shared as well. So the amount of the shared property for the dental practice is most of it. It's just got the desk where it has the computer for the company and their documents shared like in their cabins there.

Q. So the joint occupancy, what proportion in your mind would the joint occupancy occupy, for want of a better description--

A. Yes.

Q. --in the acquired lot, please?

A. I can't put a percentage on it, but I can say that it is minimal compared to the dental surgery. But it was occupancy and that's what it was. I'm trying to relay the same picture there is to describe it how it was without overemphasizing any particular situation.

…

Q. Is it 1%, is it 5%, is it 2%?

A. I really can't put a figure because it needs a qualified person to put a figure, but I can say it's minimal.

….

Q. Did you differentiate in your tax returns--

A. Yes.

Q. --what percentage of lot 7 was in joint occupants?

A. Yes. In my tax return, to make it easier, I have got incentives for allowing the company, and those incentives were the company paying overheads like for the body corporate and all of these overheads that you really usually are for the tenants to pay. So the company was making these payments in exchange for having the offers, if I may say. That's how my accountant recommended at the time, it's been going on for 16 years.

Q. So it's been going on for 16 years but there's no percentage split in your tax returns?

A. When it comes to the actual overheads, the company paid all of the overheads. And I put my tax return for my own surgery, which was completely different with a different accountant than the Eddie Arnott Corporation's tax return in trust for the trust, because the Eddie Arnott Corporation is financially inactive.

133. I cannot find there to have been some form of agreement for the applicant to occupy the acquired land jointly with the second respondent for a period of 16 years, or at all. Any permission to do so, if it existed, was purely personal, and terminable at will. That is not an interest upon which a claim for special value or for loss attributable to disturbance can be advanced. ^[9]

     9. Olde English Tiles v RMS (2022) 108 NSWLR 503; [2022] NSWCA 108 (Olde English Tiles) at [46] (Basten JA).

134. For the following reasons, I am not satisfied, on the balance of probabilities, that the applicant occupied or otherwise used the acquired land as a property investor:

1. First, the applicant was a corporate trustee which holds investment property on behalf of a trust.

2. Second, at all times between the incorporation of the applicant on 2 February 2006 and the acquisition date on 2 September 2022, the principal place of business of the applicant was the residential address of Dr Arnaout, being 27 Willis Street, Lansvale NSW 2166. So far as a property investor may be described as conducting business, Dr Arnaout's evidence was that this occurred at 27 Willis Street:

Q. I asked you what is the business which is undertaken by the applicant at 2 Willis Street Lansdale [27 Willis Street, Lansvale]?

A. Exactly what we've been informing the ATO, Australian Taxation Office that this is the type of business that this particular company is for, which is the buy and hold, never to sell, property investments, short form, property investment.

1. The bare assertion by Dr Arnaout as to the payment of rent is contradicted by other evidence. For example, whilst Dr Arnaout made various assertions in relation to the existence of earlier leases and conduct, the evidence was silent in relation to the 2022 lease. At its highest, Dr Arnaout’s evidence was that “well documented leasehold rental payments to the Applicant landlord” and that the payments of which “were regularly deposited into the Company’s bank account as opposed to only having respective ledgers entries.” ^[73] These statements appear to relate to an earlier period in time (rather than 11 days prior to the acquisition date), and there is a conflict between that evidence and later statements by Dr Arnaout that the applicant had “been financially inactive over the last sixteen years, and as such has been using the Trust Tax File Number for its role as Trustee, as per yearly communication with the Australian Taxation Office.” ^[74] The assertion of financial inactivity was repeated several times in the course of cross-examination.

   73. The 5 August 2024 affidavit at 3.

   74. The 5 August 2024 affidavit at 295 [825].

2. There was no documentary evidence which established the payment of any rent in accordance with the 2022 lease. The existence of a partial trust tax return for the financial year 1 July 2021 to 30 June 2022 did not constitute evidence of payment of rent under the (backdated) 2022 lease. That is so for three reasons:

1. the 2022 lease did not exist during the financial year 1 July 2021 to 30 June 2022 and any payments made during that period were not made under that lease;

2. on the evidence of Dr Arnaout, there was a lease prior to the 2022 lease, and therefore any rental payments during the financial year 1 July 2021 to 30 June 2022 would have been made pursuant to that earlier lease. Given that no documentary evidence of any earlier lease was provided, it may be that rental payments were made pursuant to an informal permission to occupy, lease terminable at will, or similar, however that is insufficient to establish on the balance of probabilities the payment of any rent in accordance with the 2022 lease;

3. the quantum of gross rent ($49,119.00) identified in the extract from the 2022 tax return (for the financial year 1 July 2021 to 30 June 2022) is a different amount from the initial stated rent of $41,600 under the 2022 lease.

3. The failure to produce any documents evidencing the payment of rent in response to the notices to produce issued by Sydney Metro supports a finding, on the balance of probabilities, that there was no payment of rent under the 2022 lease. In Azkanaad Pty Ltd v Galanos Bros Pty Ltd ^[75] (Azkanaad) Handley AJA at [73] took into account a failure to produce financial records under a notice to produce in deciding that he would have refused to make an order for specific performance. ^[76] In this case, Sydney Metro issued the notices to produce to the applicant and the second respondent seeking financial and other records which might have shed light on whether the requirements for specific performance would be satisfied. In relation to the applicant, records prepared “by or for the Applicant” and also “by or for ‘the Trust’” were the subject of a notice to produce. ^[77] In relation to the second respondent, records were requested which included annual financial statements and tax returns for two financial years both prior to and post the acquisition, in addition to "copies of any receipt of bank statements showing rent paid by the Second Respondent to the Applicant for the Lot from 1 July 2019 to the Date of Acquisition”. It was not until the second day of the hearing that there was production of documents purported to be in compliance with the notices to produce. During the course of the hearing, the notices to produce were called upon, and Dr Arnaout, on behalf of the applicant and the second respondent, stated that the volume of documents filed on 4 March 2025 (which ultimately became Exhibit J) was in answer to the two notices. Having perused the documents admitted as Exhibit J, I am satisfied that the material was largely non-responsive to the notices to produce. Notwithstanding the applicant and the second respondent’s complaints about the timing of the notices to produce, evidence of such payments could have been readily provided if they existed. So much is evident in the acceptance by Dr Arnaout in cross-examination that the bank account records would be accessible online. The transcript records the following questions and answers:

   75. [2008] NSWCA 185.

   76. It is correct, however, that the majority (Hodgson and Ipp JJA) decided the case on the basis that there was no binding agreement for lease, and therefore Handley AJA’s comments on specific performance were strictly obiter.

   77. See in particular items 1-8, and 14.

Q. You told me earlier in an answer that The Eddie Arnott Corporation has multiple bank accounts?

A. Yes.

Q. You said before the break that the documents of The Eddie Arnott Corporation are now at your home?

A. Some of them are. Some of them are still in retriever( as said) but I just got what - in storage. I retrieved whatever I thought they were the right ones.

Q. Your bank account records would be accessible online, that’s correct?

A. Yes.

4. Further, the evidence of the business arrangements between the applicant and the second respondent is capable of supporting an inference that there was no payment of rent. When asked about the existence of leases prior to that executed on 22 August 2022, Dr Arnaout’s evidence was to the effect that “they were but formalities with the focus being upon the financial structuring and tax as between the applicant and second respondent”. The transcript records the following:

Q. In the class 3 application, but there's no leases prior to that?

A. No, no, there was always leases right from the beginning. That's what I mentioned earlier, right from the beginning, but, but there were just the formality leases because it was me and myself. But there was always leases because that's how the structure worked and this is the financial advice that I had from the people, financial advisors who, who structured this for me. They said everything has to be done right and that's what we did, like two separate accounts, everything is separate, had to be separate for the tax department and that's how it was.

5. The evidence of the financial circumstances of Dr Arnaout is also capable of supporting an inference that there was no payment of rent. An inference that there was in fact no payment of rent under the 2022 lease at any time prior to the hearing can be drawn in circumstances in which:

1. the 2022 lease was executed on 22 August 2022, being post the notified date for the end of the PAN period on 18 August 2022, and 11 days prior to the acquisition date;

2. the terms of the 2022 lease required the first month’s instalment of rent to be paid by the commencement date, and each later month’s instalment of rent to be paid in advance. There was no evidence that these terms were complied with;

3. the oral evidence given by Dr Arnaout suggested an approach in which he treated the interests of the applicant corporate trustee and himself as one and the same, with a focus upon financial planning and tax and the creation and enforcement of legal agreements only to the extent that Dr Arnaout thought it convenient to his interests. This is reflected in the approach taken to another investment property owned by the applicant, Unit 4, 575 Woodville Road, Guildford. That property (or at least a part thereof) was rented by Dr Arnaout for a “nominal fee” payable to the applicant, but with no lease agreement in place;

4. the evidence suggested that the dental business was in some financial difficulty (and I infer may not have had a capacity to pay rent), including:

1. that Hunter Arcade was affected by the acquisition and development of Wynyard Place Arcade by the developer Brookfield, including the closure of the Hunter Arcade’s access point to and from Wynyard station “for well over a year”, and by Covid-19;

2. Dr Arnaout’s oral evidence that he had not been putting in tax returns “for a while for my personal tax returns. The reason is, since we closed the dental surgery, there was no income”;

3. that Dr Arnaout’s practice manager Ms Echkintana sometimes made payments from her personal bank account and loaned Dr Arnaout money (“sometimes over $100,000”) to “pay off things”. Some of the bank statements in Exhibit J included payments made from the personal account of Ms Echkintana; and

4. that Dr Arnaout failed to produce financial statements or tax returns sought under items 1 and 2 of the notices to produce dated 3 February 2025 which would have revealed his capacity to pay rent in accordance with the 2022 lease.

247. Sydney Metro submitted that evidence of an inability to pay rent may lead the Court to conclude that a party, here Dr Arnaout, was not ready, willing and able to comply with the terms of the 2022 lease and therefore specific performance should not be granted. ^[78] I draw the inference in light of the matters set out in [246] immediately above that Dr Arnaout was not ready, willing and able to comply with the terms of the lease. Another factor which suggests that specific performance would not be granted includes the failure to register the 2022 lease. That arises to be understood in the broader context that the applicant in its 16 odd years of ownership of Lot 7 had never registered a lease on title.

     78. Azkanaad at [67]-[68] (Hodgson JA) and at [71]-[74] (Handley JA).

248. In the applicant and the second respondent’s closing submissions, Dr Arnaout submitted that he has an interest in land for the purpose of the Just Terms Act by reason of holding a lease which was enforceable under the Retail Leases Act and common law principles. With respect to Dr Arnaout’s reliance on “common law principles”, Sydney Metro submitted that this did not advance his case because in order to establish a common law tenancy, there needs to be agreement for a future lease, entry into occupation, and payment of rent (such payment being calculated as a proportionate amount of a yearly rent, namely the quantum of rent paid for a month must relate to a yearly sum). ^[79] As set out in the reasons already given, I have concluded that there was no evidence sufficient to prove, on the balance of probabilities, payment of rent under the 2022 lease. Further, if there was a common law tenancy or implied tenancy, then the scope of interest would at best be a tenancy at will determinable on one month’s notice. ^[80]

     79. Chan v Cresdon at 248 (Mason CJ, Brennan, Deane, and McHugh JJ); Leitz Leeholme Stud Pty Ltd v Robinson [1977] 2 NSWLR 544 at 547B-C (Glass JA, Hope JA agreeing at 544F-G); Butt’s Land Law (7th Ed, Lawbook Co) at [7.260].

     80. Because the term of the agreement is limited by reason of s 127 of the Conveyancing Act 1919.

249. For the reasons given, notwithstanding the voluminous affidavit evidence and the evidence of Dr Arnaout from the bar table and in the witness box, I am not satisfied, on the balance of probabilities, that the unregistered lease executed on 22 August 2022 would be specifically enforceable so as to confer on Dr Arnaout an equitable interest in land for the purposes of the Just Terms Act. That is sufficient to dispose of all claims advanced by him under s 55 of the Act.

250. Having determined that Dr Arnaout has failed to establish any relevant equitable interest in Lot 7, I need not consider the second respondent’s claims for market value of a leasehold claim, for special value in relation to a leasehold interest and for disturbance in relation to a leasehold interest. In case I be wrong in relation to the question of an equitable interest in Lot 7, I will consider each of the claims briefly.

Market value of Dr Arnaout’s claim in relation to a leasehold interest in Lot 7

251. Ultimately, Dr Arnaout did not appear to advance a claim for the market value of his purported leasehold interest in Lot 7 under s 55(a) and s 56 of the Just Terms Act. Rather, the claim appears to have been under s 59(1)(f), variously described as for “rental difference” and “market rent difference”. I address this claim under s 59(1)(f) later in these reasons for judgment.

252. Nevertheless, Mr Masters assessed the market value of the leasehold interest on the assumption that it constitutes an interest in land for the purposes of the Just Terms Act. Mr Masters’ opinion, on this assumption, was that the market value of the leasehold claim would be $32,933. The valuation methodology in relation to the leasehold claim adopted by Mr Masters was to calculate the net present value (NPV) of the difference between market rent and passing rent on a monthly basis for the remaining lease term. When cross-examined by Dr Arnaout, Mr Masters explained that he had not taken into account the option under the lease, including because there was a market rent review clause which would apply upon the exercise of the option so that there would be no difference between a market rent and passing rent so as to produce a profit rent.

253. If I have erred in finding that Dr Arnaout has failed to establish an equitable interest in Lot 7, then I would be satisfied as to the soundness of the valuation methodology adopted by Mr Masters in relation to the leasehold claim.

Dr Arnaout’s claim for special value in relation to a leasehold interest in Lot 7

254. The essence of Dr Arnaout’s special value claim appears to be that there was a special value to him of Lot 7 incidental to his use of the land as a dental practice for a continuous period of 16 years. ^[81] He also referred to “long-term benefits of the Dental Business to the Financial Structure”. I am unable to assess any such claim as it was unclear whether this was relied upon by Dr Arnaout to support his claim for special value, and if so, how.

     81. The second respondent's special value claim is identified in paragraphs [39]-[43], [47] (below subparagraph (N)), and [48]-[50] of the second respondent’s points of claim (leasehold).

255. It was not in dispute that Dr Arnaout used Lot 7 as a dental surgery as at the acquisition date. However, Sydney Metro's position was that, assuming that the unregistered lease was an interest in land for the purpose of the Just Terms Act, (which, I have held, it was not), there was no financial value of any advantage, in addition to market value, which was incidental to Dr Arnaout’s use of the land under the leasehold interest.

256. If I be wrong and the unregistered lease was capable of constituting an interest in land within the meaning of the Just Terms Act, I would not be satisfied that Dr Arnaout’s claim for special value satisfies a number of elements of the special value head of compensation in ss 55(b) and 57 for the following reasons.

257. First, it appears that the identified advantage claimed by Dr Arnaout was a historical use of Lot 7 to operate the dental business for a period of 16 years prior to the acquisition date. I am not satisfied that a claim based on the duration of occupation constitutes special value within the meaning of s 57 which defines special value as the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person’s use of the land. Dr Arnaout did not identify any special attribute of the land which would not be captured in the market value of the leasehold interest (if I had determined the 2022 lease to be a (compensable) interest in land for the purposes of the Just Terms Act).

258. Second, the interest in land claimed by Dr Arnaout, being an unregistered lease, was executed 11 days prior to the acquisition date. I do not consider, as submitted by Sydney Metro, that there would be a sufficient connection between any advantage incidental to Dr Arnaout’s use of Lot 7 such as would satisfy the requirements of special value. Any advantage would relate to a past period (said to be 16 years prior to acquisition), whereas the claimed leasehold interest (assuming the unregistered lease were specifically enforceable so as to constitute an equitable interest in land) would only have commenced on the date of execution, 11 days prior to the date of acquisition. Any loss of the future use of the leasehold by the dental business post-acquisition would be captured in the market value of that interest in land. Accordingly, there would be no advantage in addition to market value.

259. Third, the apparent advantage claimed by Dr Arnaout was not the subject of expert evidence. It appears, as submitted by Sydney Metro, that Dr Arnaout devised a methodology whereby he used “certain quotations for marketing, website optimisation etc to come up with a special value figure”. Dr Arnaout explained the justification for this methodology as follows: “there has been two and a half year - well over two-and-a-half years of non-operation of City Dental practice…” That is, the compensation sought would arise by reason of the decision of Dr Arnaout not to relocate, and instead to close the dental business, and by the subsequent effluxion of time. That was, I find, a choice made by Dr Arnaout and non-compensable as special value.

Dr Arnaout’s claim for disturbance in relation to a leasehold interest in Lot 7

260. The applicant and the second respondent's closing written submissions appear to address Dr Arnaout’s claim for disturbance at [217]-[265], [290]-[307] (and also [76]-[157]). Again, my consideration of Dr Arnaout’s disturbance claim assumes that I am satisfied that the unregistered 2022 lease was capable of constituting an equitable interest in Lot 7.

Second respondent’s general claim for disturbance loss

261. As noted above at [196] in relation to disturbance, Sydney Metro annexed to its written closing submissions the first respondent’s disturbance schedules which included “Schedule 2 – Table of Disturbance (Second Respondent Leasehold)”.

262. In addition to specific claims for loss attributable to disturbance under s 59(1)(f), Dr Arnaout also made a general, non-particularised claim for disturbance loss under s 55(d) of the Just Terms Act for:

1. $139,535.92 – “Items listed in Sydney Metro’s expert Report prepared by Colliers”;

2. $1,235 – Autoclave Service and Calibration;

3. $880 – Xray inspection by private certifier;

4. $13,547 – temporary storage;

5. $27,840 – Cost of replacing outdated dental materials; and

6. $50,000 – Fully optimised SEO website.

263. In relation to these items the subject of his general claim for loss attributable to disturbance, Dr Arnaout did not identify the paragraph in s 59(1) upon which he relied. Nor did he provide any evidence sufficient to establish on the balance of probabilities his entitlement to any of these claims.

Section 59(1)(a): legal costs reasonably incurred

264. The second respondent claimed legal costs, identified as being “Stacks Law Firm/Cost incurred during s10A as a direct result of Sydney Metro project” in the amount of $5,000. No evidence sufficient to prove that these costs were reasonably incurred by him for legal services, in addition to those provided to the applicant. This appears to be because the claim was a duplicate of that advanced by the applicant in respect of which I have allowed an amount of $10,000.00.

Section 59(1)(b): valuation costs reasonably incurred

265. The second respondent claimed an unquantified amount “TBA” for “Expert Quantity Surveying Report”. ^[82]

     82. The applicant and the second respondent’s closing submissions at page 40 [302].

266. He provided no evidence that he incurred the costs of engaging a quantity surveyor, or that he engaged a quantity surveyor at all. Further, any fees of a quantity surveyor are not compensable under s 59(1)(b) as they would not be the fees of a qualified valuer.

Section 59(1)(c): financial costs reasonably incurred in connection with relocation

267. The applicant and the second respondent's closing written submissions appear to address Dr Arnaout’s claim for relocation costs pursuant to s 59(1)(c) of the Just Terms Act at [81]-[157], [217]-[237], [290]-[292], [302]-[304].

267. It appears that Dr Arnaout seeks compensation under s 59(1)(c) of the Just Terms Act for the following:

1. items in the QS report - $296,198.08;

2. items listed in Sydney Metro's expert report prepared by Colliers - $139,535.92;

3. autoclave service and calibration - $1235;

4. x-ray inspection by private certifier/EPA Requirement - $880;

5. temporary storage - $13,547; and

6. replacing outdated dental materials etc $27,840.

269. I find none of these items to be compensable under s 59(1)(c) for the following reasons.

270. First, as at the acquisition date, the dental business was extinguished. Dr Arnaout’s statement in his affidavit dated 28 February 2025 in relation to the “closure of the dental business leasehold upon compulsory acquisition” and “closure of the business upon relocation” was put to Dr Arnaout in cross-examination, and he accepted that the dental practice closed at that time. As the dental practice business had been extinguished, there was no relocation within s 59(1)(c).

271. Second, the fit out of Lot 7 was evidently affixed to the lot and common property prior to the execution of the 2022 lease. In the ordinary case, fixtures run with the land for the benefit of the freehold owner, unless subject to an exception: C&P Automotive at [60], [62] referring to the decision of the High Court in TEC Desert Pty Ltd v Commissioner of State Revenue (Western Australia). ^[83] In any event, even if Dr Arnaout were able to prove that he owned the fixtures, that would not assist because the majority of the fit out of Lot 7 by its nature as a fixture, designed for specific premises, could not practically be “relocated”.

     83. (2010) 241 CLR 576; [2010] HCA 49.

272. Third, whilst Dr Arnaout may have owned fixtures and had an entitlement pursuant to cl 12.3 of the 2022 lease to remove them at the end of the lease, that does not change the position that, as at the date of acquisition, those fixtures formed part of the real property, and legal title vested in the lessor, here, the applicant. Clause 12.3 provided that at the end of the lease: “Anything not removed becomes the property of the lessor who can keep it or remove and dispose of it and charge to the lessee the cost of removal, making good and disposal.”

273. Fourth, on the assumption that the fit out was owned by Dr Arnaout, either it was capable of being relocated in which case that should have occurred and it would be unreasonable to claim the costs of a new fit out and fixtures, or it was neither feasible nor practicable to relocate the fit out in which case it was not available to be relocated and therefore is not compensable under s 59(1)(c). ^[84] As Payne JA said in C & P Automotive at [72]:

There is nothing in the text of s 59(1)(c) that permits compensation to be paid for financial costs of replacing assets available for use as an incident of a lease of leased premises if those assets are not available to be moved by the lessee…

84. See also C & P Automotive at [110]: “relocation requires something to be relocated. In the case of a business, that includes the assets of the business. That includes chattels belonging to the business and tenant's fixtures.” Also at [115].

274. I find that Dr Arnaout’s claim for the costs of a new fit out would not be in relation to costs reasonably incurred. Dr Arnaout’s evidence was that as at 2012, the value of the fit-out was $8,960:

Q. That was, you had the total cost, and then you have the closing value after depreciation at

$8,960 in 2012?

A. Yes. That's what it was.

Q. Do you have a depreciation worksheet as at the acquisition date?

A. See, these are very old.

Q. I asked a question. Do you have a depreciation worksheet as at the acquisition date?

A. This is what I've got now at this moment.

Q. So you didn't do any depreciation in your tax returns at any time after 2012?

A. I haven't putting been putting tax returns for a while for my personal tax returns. The reason is, since we closed the dental surgery, there was no income, so that particular--

Q. This was 2012.

A. Yeah, this is long time ago.

Q. This was - you haven't got a depreciation sheet since 2012. The acquisition was 2022. So ten years later. You don't have any depreciation worksheets?

A. Short answer, no, I don't have at the moment, but I have mentioned that over the years I have been investing. It wasn't done all at once, so it's been continuously improving, the decoration and infrastructure and everything.

275. The applicant and the second respondent submitted that the decision of the Court of Appeal in C&P Automotive should not be followed on the basis that it amounts to a “retroactive application” of a “new legal standard” to an acquisition which occurred at an earlier point in time and should only apply prospectively. I reject that submission for the following reasons:

1. It misconceives the nature of judicial decision making and appears to apply the presumption that legislative amendments do not affect accrued rights or liabilities. However, that presumption is presently inapplicable as there has been no material legislative amendment to the Just Terms Act in the period between the acquisition date and the present. ^[85] There is no material difference between the version of the Just Terms Act considered in C&P Automotive and that which applies in these proceedings.

2. The Court's decision is declaratory of what the law was and is, and does not effect a legislative change to the provisions which were in force at the date of acquisition. ^[86] A finding that a previous decision or line of authority was incorrectly decided does not constitute a retrospective application of a different legal test. Judicial decisions cannot be limited in their operation so as to only operate prospectively. ^[87]

   85. The only amendment being the insertion of a notation at the end of s 55: Energy Legislation Amendment (Clean Energy Future) Act 2024 (NSW), Schedule 5, item 5.3.

   86. Although it may be considered to be “in substance acting legislatively”: Jackmain (a pseudonym) v The Queen (2020) 102 NSWLR 847; [2020] NSWCCA 150 at [161] (Leeming JA).

   87. As was held by the High Court in Ha v New South Wales (1997) 189 CLR 465; [2017] HCA 34 per Brennan CJ, McHugh, Gummow, and Kirby JJ at 503-504 (footnotes omitted):

276. In relation to the remainder of the applicant and the second respondent’s closing submissions concerning Dr Arnaout’s claim for relocation costs pursuant to s 59(1)(c), I find as follows.

1. Contrary to [127], the decision of Pain J in Whitcurt did not address “arguments against retroactivity”, as suggested.

2. As to [119], the reference to s 61 of the Just Terms Act (special provision relating to market value assessed on potential of land) is unclear, and does not appear to relate to the proposition advanced. In any event, the expression “financial loss” in s 61 does not control the interpretation of s 59(1)(c). ^[88]

3. As to [135]-[143], again the reference to s 61 of the Just Terms Act is unclear. To the extent that it is suggested that in El Boustani v The Minister administering the Environmental Planning and Assessment Act 1979 ^[89] (El Boustani) the Court of Appeal “addressed the issue of whether relocation costs could be adjusted retroactively based on a different case's ruling” and that the Court “rejected the retroactive application”, such suggestion is plainly erroneous. As Sydney Metro accepted at a level of generality, financial costs reasonably incurred for relocation may be claimed. However, there is no absolute entitlement to relocation costs because land has been acquired. The claim must be within the scope of the Just Terms Act which limits the entitlement to compensation to persons who have a relevant compensable interest in land.

4. As to [152]-[153], [155]-[156], [192], Dr Arnaout has not demonstrated how “unique factors… such as long-term investment, community impact, and specialized operational needs” are financial costs reasonably incurred with the relocation of a person, even one entitled to compensation which I have determined that Dr Arnaout is not.

Section 59(1)(f): other financial costs reasonably incurred - claim for “rental difference”

88. RMS v United at [97] (Basten JA, MacFarlan JA agreeing, Payne JA agreeing (subject to one qualification) at [73]).

89. (2014) 199 LGERA 198; [2014] NSWCA 33 (Beazley P, Gleeson JA and Preston CJ of LEC).

277. In closing submissions, Dr Arnaout (at [293]-[294] and [304(II)]) maintained his claim pursuant to s 59(1)(f) for what he described as “rental difference”, seeking compensation in an amount of $352,076.

278. The basis of this claim is unclear. It was unsupported by expert evidence, and appears to be reliant upon a formula devised by Dr Arnaout with little, if any, relationship with the facts of the case. Whilst not entirely clear, it appears to be a claim for the cost of renting new CBD premises on a “like for like basis”. ^[90] Section 59(1)(f) provides as a loss attributable to disturbance “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”. I am not satisfied as a matter of statutory construction, or on any sufficient evidence, that the cost of new rental premises is a financial cost within the meaning of s 59(1)(f). As was held by Basten JA in RMS v United ^[91] at [49]: ^[92]

The cost of new premises, whether purchased or rented, is not reimbursed as a loss for disturbance of the acquired land or otherwise: it is covered to the extent of compensation for the market value of the compulsorily acquired land. If, on the other hand, the prior use was commercial, the prior owner's interest is again compensated by receiving the market value of its interest in the land. There is no additional compensation for termination of the cash flow from the prior use. Rather, the best available financial return for the commercial use of the land will form the basis of its market value. It will be compensable as such.

90. The applicant and the second respondent’s closing submissions at [293](C)-(E)].

91. (2019) 99 NSWLR 279; (2019) 236 LGERA 389; [2019] NSWCA 41.

92. See also C&P Automotive at [147]-[151] (Meagher, Payne, Kirk JJA).

Conclusions

279. In the events that have transpired, the applicant approached the Court for a determination of compensation, and put in issue whether another legal person, namely the second respondent, had an interest in land by reason of the unregistered 2022 lease. Both the applicant and the second respondent have claimed significant amounts of compensation, often without providing any sufficient evidence, or any evidence at all, and at times in relation to same items.

280. I have determined that the applicant has no entitlement to compensation for special value, or for relocation costs or stamp duty costs as loss attributable to disturbance. The “Owner Occupier Financial Structure” upon which Dr Arnaout relied for the purpose of his separate claim was, as Sydney Metro submitted, primarily a personal relationship, rather than one that related to property. The structure, Sydney Metro submitted, was not dissimilar to that which was described as the “common purpose” in Olde English Tiles Australia Pty Ltd v Transport for New South Wales ^[93] , and which Duggan J at first instance found gave rise to a personal right, not a proprietary one. ^[94]

     93. [2021] NSWLEC 90 (Court at first instance) (Duggan J).

     94. At [65] (Duggan J).

281. Dr Arnaout has failed to provide sufficient evidence capable of satisfying the Court on the balance of probabilities that he is an owner of a compensable interest in land for the purposes of the Just Terms Act. ^[95]

     95. Olde English Tiles Australia Pty Ltd v Transport for New South Wales at [85] (Duggan J).

282. In all the circumstances, I have determined that the applicant is entitled to compensation in the amount of $1,070,000.00 for market value (ss 55(a), 56), and $10,000.00 for legal costs and $22,000.00 for valuation fees (ss 55(d), 59(1)(a), (b)). This amounts to total compensation in the amount of $1,102,000.00.

Orders

283. The Court orders that compensation under Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act) for the compulsory acquisition of the freehold interest of The Eddie Arnott Corporation Pty Limited (ACN 118 151 170) in Lot 7 in Strata Plan 65054, known as Shop 1A, 5 Hunter Street, Sydney, is in the amount of $1,102,000.00 plus statutory interest payable under ss 49 and 50 of the Just Terms Act.

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Endnotes

HCA 48 (Griffith CJ, Barton, Isaacs, Gavan Duffy, Rich JJ) referred to in Roads and Maritime Services v Allandale Blue Metal Pty Ltd (2016) 212 LGERA 307; [2016] NSWCA 7 at [24] (Basten JA, Ward JA agreeing) and Leichhardt Council v Roads and Traffic Authority (NSW) (2006) 149 LGERA 439; [2006] NSWCA 353 at [42] (Spigelman CJ, Beazley, Bryson and Basten JJA and Campbell J agreeing).

(E)], [313].

at [55] (White J), at [153] (Preston CJ of LEC); Chan v Cresdon Pty Ltd (1989) 268 CLR 242 at 248; [1989] HCA 63 (Mason CJ, Brennan, Deane, and McHugh JJ); Marshall v Snowy River Shire Council (1994) 7 BPR 14,447 at 14,449 (Kirby P, Meagher and Powell JJA agreeing).

“The Court was invited, if it should come to that conclusion, to overrule the franchise cases prospectively, leaving the authority of those cases unaffected for a period of 12 months. This Court has no power to overrule cases prospectively. A hallmark of the judicial process has long been the making of binding declarations of rights and obligations arising from the operation of the law upon past events or conduct. The adjudication of existing rights and obligations as distinct from the creation of rights and obligations distinguishes the judicial power from non-judicial power. Prospective overruling is thus inconsistent with judicial power on the simple ground that the new regime that would be ushered in when the overruling took effect would alter existing rights and obligations. If an earlier case is erroneous and it is necessary to overrule it, it would be a perversion of judicial power to maintain in force that which is acknowledged not to be the law. This would be especially so where, as here, non- compliance with a properly impugned statute exposes a person to criminal prosecution.”

The position was more recently explained by Edelman J in Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29 at [95]-[96], referring to Ha v New South Wales:

“[95] … Plainly courts do create new rights and obligations as a matter of legal effect by recognising rights or obligations that are different from a previously settled understanding or a previously settled recognition. Less obvious, but nonetheless still involving a creation of new rights and obligations by a court order, is when a party is exposed to a liability, such as to make discovery or to account, and a judicial order creates the duty to do so.

[96] The point instead being made in the quoted passage from Ha v New South Wales is that when the legal effect of a judicial decision is to create a substantive right or obligation, a court achieves this by reasoning of legal principle that is "fundamentally different from the enactment of new statutory provisions" because it is explicitly or implicitly based upon an assumption that the right or obligation was "at all relevant times legally correct and an authentic legal rule". In that sense, an obligation to which the order gives effect will be based on a legal duty or liability that is held to have been "existing" at the time of the relevant event as a matter of legal principle.”

Decision last updated: 15 September 2025