Applicant v Respondent

For Provans Timber Pty Ltd, Provans Timber and Hardware Pty Ltd and Provans Timber (Joinery) Pty Ltd

For the Secretary to the Department of Economic Development, Jobs, Transport and Resources

1 These two proceedings arise from the compulsory acquisition by the Linking Melbourne Authority ('LMA') of land owned by Provans Timber Pty Ltd ('Timber') at 62 - 64 and 88 - 92 Alexandra Parade, Clifton Hill ('Land').

2 By notice of acquisition published in the Government Gazette on 16 October 2014 ('Notice of Acquisition'), LMA compulsorily acquired all interests in the Land. The Land was acquired for the purposes of the East West Link, a controversial road project that was subsequently abandoned.

3 The compulsory acquisition of the Land took place under the Land Acquisition and Compensation Act 1986 ('LAC Act'), which provides for compensation to be paid to persons who have an interest in the acquired land that is divested or diminished by the compulsory acquisition. Compensation is assessed by reference to a number of factors, including the market value of the acquired land and losses attributable to disturbance, which may include the costs of relocation to other land or premises.

4 At the time of its acquisition, the Land was occupied by Provans Timber and Hardware Pty Ltd ('Hardware'), which operated a longstanding and well known hardware business from the Land ('the business'). A second company, Provans Timber (Joinery) Pty Ltd ('Joinery'), was also said to be carrying on some kind of business on the Land, principally related to the provision of staff to Hardware.[1]

5 At all relevant times, Timber, Hardware and Joinery were companies in the Provans Group, the umbrella for the businesses of the Rosenberg family. The Rosenberg family had operated the hardware business from the Land for several decades. The sole shareholder of Timber was Barry Rosenberg and its directors were Barry Rosenberg and his wife, Sara Rosenberg; the shareholders of Hardware were Barry Rosenberg and Sara Rosenberg and its sole director was Barry Rosenberg; the shareholders of Joinery were Barry Rosenberg and Sara Rosenberg and Barry Rosenberg was again the sole director. I shall refer to Timber, Hardware and Joinery collectively as 'the claimants', 'the Provans Group' or simply as 'Provans' depending on the context. This reflects the various ways in which the claimants referred to themselves or were referred to in the evidence.

6 As will be seen, the Authority was unclear from time to time about whether it was dealing with 'Provans' as a single entity or with its several components, although it was at all relevant times aware that Timber, Hardware and Joinery claimed to have separate interests in the Land.

7 The Minister is the successor in law to LMA. For convenience, I shall refer to both LMA and the Minister as 'the Authority' unless the context demands otherwise.

8 The Authority is the respondent in proceeding S CI 2016 4339 and the applicant in proceeding S CI 2017 3392.

9 Proceeding S CI 2016 4339 ('principal proceeding') is a claim by Timber to be paid the balance of compensation for the market value of the Land that it alleges remains unpaid by the Authority. The only parties to the principal proceeding are Timber and the Authority.

10 The second proceeding, S CI 2017 3392 ('subsidiary proceeding'), was commenced by the Authority against Hardware and Joinery as respondents in order that they be included in the dispute as to whether compensation remains unpaid for the acquisition of the Land. Hardware and Joinery claim to have been paid - and to be entitled to retain - compensation for relocation costs that the Authority contends was paid to Timber for the Provans Group (as a whole) on the basis that the payment of compensation for relocation costs was contingent upon acceptance of compensation for the market value of the Land based on its existing use, not its highest and best use.

11 The market value of the Land at the date of the acquisition assessed on the basis of its highest and best use was agreed at $12.2 million on 17 February 2016 by the four valuers engaged by the parties at that time. The market value of the Land continues to be agreed at $12.2 million.[2]

12 The Authority has paid compensation for the compulsory acquisition of the Land in a number of tranches:

(a) on 19 December 2014, following an offer made on 24 October 2014, the Authority made an advance of $8,693,310; and

(b) on 10 May 2016, following a further offer made on 6 April 2016, the Authority made a further advance of $3,784,000.

13 The Authority contends that neither Hardware nor Joinery is entitled to any compensation under the LAC Act because Timber, as the registered proprietor of the Land, has been compensated for the market value of the Land based on its highest and best use, which is different from the actual use of the Land on the acquisition date. The Authority, having made advances totalling the amount agreed as market value of the Land based on its highest and best use, says that no further amounts are payable to Timber for the market value of the Land. The claimants say that the Authority is bound by an offer of $2.871 million made to Hardware and Joinery for relocation expenses in 2014 and that the amount of $2.871 million therefore remains outstanding for the market value of the Land. They say that Timber is entitled to compensation for the market value of the Land based on its highest and best use and that Hardware is entitled to compensation for relocation expenses.

14 The dispute in both proceedings arises from an offer of compensation made by the Authority on 24 October 2014 ('Initial Offer'), which was in a single document addressed to the directors of each of Timber, Hardware and Joinery. The Initial Offer was expressed to be for the market value of the Land in the sum of $5.675 million and for relocation costs of $2.871 million. It also included amounts for solatium and expenses that are not presently relevant. The 'market value' of $5.675 million was assessed on the basis of the existing use of the Land[3] and did not reflect the highest and best use of the Land, which was for residential redevelopment. As will be seen, in this case the existing use did not reflect the market value of the Land for the purposes of the LAC Act.

15 Although contained in a single document and addressed to the directors of each of the claimants, the Initial Offer contained the following table providing a breakdown of what was offered:

Provan's Timber and Hardware & Provan's Timber (Joinery)

Provan's Timber & Provan's Timber and Hardware & Provan's Timber (Joinery)

16 The claimants responded to the Initial Offer on 17 December 2015 by accepting the offer for relocation expenses but by refusing the offer for the market value of the Land. Hardware and Joinery claim to have accepted the offer for relocation expenses, while Timber claims to have rejected the offer for the market value of the Land.

17 The Authority contends that the Initial Offer was made to the Provans Group as a single entity and that the elements or components of the Initial Offer were not capable of separate acceptance or rejection by individual entities in the Provans Group.

18 On 6 April 2016, the Authority made a revised offer ('Revised Offer') that was expressed in the alternative: an offer of $12.2 million for the market value of the Land (based on its highest and best use) and nothing for relocation costs; or an offer of $5.675 million for the market value of the Land (its existing use value) and relocation costs of $2.871 million.

19 On 21 June 2016, Timber purported to accept the Authority's offer of $12.2 million for the market value of the Land. The Authority paid to Timber the amount of $12.2 million less the amount advanced pursuant to the Initial Offer for relocation expenses. Timber says that the Authority is and was obliged from the time of its acceptance of the Revised Offer to pay Timber the whole of the $12.2 million. It claims the difference of $2.871 million.[4]

20 Timber therefore submits that in the principal proceeding the Court should order the Authority to pay Timber the sum of $2.871 million plus interest at the penalty interest rate from 16 October 2014 (the Acquisition Date) until 21 June 2016 (excluding periods where Timber sought extensions of time in which to respond) and from 21 June 2016 until payment at the penalty interest rate plus 5%.

21 Hardware contends that it is entitled to retain the $2.871 million for relocation costs (Joinery makes no claim for that amount) and both Hardware and Joinery submit that the subsidiary proceeding should be dismissed with no orders other than an order for costs in their favour.

22 The Authority contends that it has paid Timber the agreed market value of the Land at the acquisition date and that it has nothing further to pay. It contends that Hardware and Joinery are not entitled to any compensation as they had no compensable interest in the Land. Moreover, the Provans Group has no entitlement to compensation for relocation costs as market value compensation has been paid for the Land based on its highest and best use, which was not the existing use of the Land at the acquisition date, and the business would have had to relocate in order to achieve this value.

23 For the reasons that follow, in the principal proceeding, the Authority will be ordered to pay Timber the sum of $2.871 million plus interest, and the subsidiary proceeding will be dismissed.

24 There are two relevant Acts: the LAC Act and the Valuation of Land Act 1960 ('Valuation of Land Act'). The first relevantly sets out the processes and procedures to be followed in a compulsory acquisition and the measure of compensation to be paid to persons whose interest in the acquired land is divested or diminished; the second contains requirements applicable to the valuation of land for statutory purposes.

25 The LAC Act provides for land that is to be compulsorily acquired by an Authority to be reserved by or under a planning instrument for a public purpose[5] and for a notice of intention to acquire to be served on each person who has an interest in the land.[6] An Authority may acquire an interest in land by causing a notice declaring that interest to be acquired to be published in the Government Gazette.[7] The effect of the notice of acquisition is to vest the interest described in the notice in the Authority.[8]

26 Section 30 of the LAC Act confers a right to compensation on a person who immediately before the publication of a notice of acquisition had an interest in the land that is divested or diminished by the acquisition.

(1) After the notice of acquisition has been published in the Government Gazette the Authority must make an offer in writing to each claimant of whose entitlement to compensation it is aware.

(2) An offer under this section must be made -

(a) within fourteen days after the date of acquisition; or

(b) within such further period as -

(i) may be agreed upon in writing between the Authority and the claimant; or

(ii) the Minister administering the special Act may certify.

(3) The offer must set out the amount that the Authority, on the information available to it, has assessed as a fair and reasonable estimate of the amount of compensation payable to the claimant under this Act on the assumption that the claimant held the interest in respect of which the offer is made.

(4) An offer under this section must be accompanied by -

(a) a copy of the certificate of valuation to which the Authority has had regard in making its offer; and

(b) a statement explaining the difference between its offer and the valuation referred to in paragraph (a) if these differ; and

(c) a statement in the prescribed form setting out the principal rights and obligations of persons whose interests in land have been acquired under this Act.

(5) In making its offer the Authority must have regard to a valuation of the land carried out by the Valuer-General or a person who holds the qualifications or experience specified under section 13DA(2) of the Valuation of Land Act 1960.

(6) A valuation under subsection (5) may be made in respect of the specific interest acquired or in respect of the freehold interest in the land whichever appears to the Authority to be appropriate in the circumstances.

(7) If an offer of compensation is made under this section in respect of an acquired interest and immediately prior to the date of acquisition -

(a) the interest was affected by another interest in the land; or

(b) rates, taxes or other charges were charged upon the land in which the interest subsists -

the Authority may reduce the amount of its offer by an amount equal to the amount that it considers is necessary to provide for that other interest or to pay those rates, taxes or other charges.

(8) To the extent that an amount of compensation offered under this section, or any part thereof, is not disputed, the amount offered is binding upon the Authority unless the Authority can demonstrate that the information contained in the offer and relied upon by the Authority in making the offer was incorrect.

28 Section 33 then requires a response by a claimant. This involves the service on the Authority of either a 'notice of acceptance' or a 'notice of claim'.

29 Section 35 sets out the form of a notice of claim as follows:

(1) A notice of claim served on the Authority under section 33(1)(b) must -

(a) be in the prescribed form; and

(b) state the amount of compensation to which the claimant claims to be entitled under this Act; and

(c) if the claimant accepts the amount of compensation offered in respect of the acquisition by the Authority but claims to be entitled to a further amount of compensation in respect of that acquisition under this Act, state -

(i) that the claimant accepts the amount of compensation offered; and

(ii) the amount of further compensation to which the claimant claims to be entitled; and

(d) state the interest which the claimant had in the acquired land immediately before the date of acquisition and, in the case of an interest which did not come into existence until on or after the date of acquisition, the details of that interest; and

(e) give details of the claimant's entitlement to that interest; and

(f) if the claimant disputes the valuation to which the Authority had regard in making its offer, be accompanied by -

(i) a copy of the certificate of valuation of a person who holds the qualifications or experience specified under section 13DA(2) of the Valuation of Land Act 1960 upon which the claim is based; and

(ii) a statement setting out the method and basis of that valuation.

(2) A notice of claim may specify any further matter which the claimant regards as being subject to negotiation.

30 Section 36 provides for the Authority to reply to the claim as follows:

(1) Subject to section 106(1), the Authority must, before the expiration of three months after the date of service upon it of a notice of a claim under section 33, serve upon the claimant a statement in writing replying to the notice of claim.

(2) The Authority may in that statement -

(a) admit the claim as to whole or to part; or

(b) offer to vary the amount of the compensation previously proposed in relation to the claimant's interest; or

(c) reject the claim and repeat its offer under section 31.

(3) If the claimant has provided the Authority with a certificate of valuation and the information required in section 35(f), the Authority, if it has not already done so, must forward to the claimant with its statement of reply a statement setting out the method and basis of its valuation.

(4) The Authority is liable to satisfy the claim to the extent that it admits the claim.

(5) If the Authority fails to reply to the notice of claim within the time prescribed in subsection (1), it is to be taken to have rejected the claim and repeated its offer and the claim becomes a disputed claim for the purposes of this Act.

(6) Subject to section 106(1), if the Authority offers to increase or vary the compensation previously offered, the claimant must within two months after the date of service of this revised offer -

(a) accept the offer; or

(b) reject the offer.

(7) A revised offer under subsection (6) may leave specified matters to be determined by negotiation.

(8) If the claimant accepts a revised offer under subsection (6), the claimant may accept this in part leaving specified matters to be determined by negotiation.

(9) To the extent that the claimant rejects the revised offer of the Authority, or the Authority rejects the claim by the claimant, the claim becomes a disputed claim for the purposes of this Act.

31 Part 4 of the LAC Act deals with the measure of compensation payable upon a compulsory acquisition. Section 41 sets out the general principles on which compensation is to be based, relevantly, as follows:

41 General principles on which compensation is to be based

(1) Except as otherwise provided in this Part, in assessing the amount of compensation payable to a claimant in respect of an interest in land which is acquired under this Act, regard must be had to the following factors -

(a) the market value of the interest on the date of acquisition;

(b) any special value to the claimant on the date of acquisition;

(c) any loss attributable to severance;

(d) any loss attributable to disturbance;

(e) the enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the implementation of the purpose for which the land was acquired;

(f) any legal, valuation and other professional expenses necessarily incurred by the claimant by reason of the acquisition of the interest.

(2) If the market value of an interest in land is assessed on the basis that the land had potential to be used for a purpose other than the purpose for which it was used on the date of acquisition, compensation must not be allowed for -

(a) ...

(b) any loss attributable to disturbance that would necessarily have been incurred in realising that potential.

...

(6) If the claimant's interest in the acquired land was liable to expire or to be determined, the assessment of compensation payable under this Part in respect of that interest must take account of any reasonable prospect of renewal or continuation of the interest.

32 'Loss attributable to disturbance' is defined, relevantly, as any pecuniary loss suffered by the claimant as the natural, direct and reasonable consequence of the fact that an interest of the claimant in the land has been divested or diminished, being a pecuniary loss for which provision is not otherwise made by the LAC Act.[9]

33 'Market value', in relation to any interest in land on a particular date, means the amount of money that would have been paid for that interest if it had been sold on that date by a willing but not anxious seller to a willing but not anxious purchaser.[10]

34 The definition of market value reflects the test elaborated by Isaacs J in Spencer v The Commonwealth:[11]

To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.

35 The Valuation of Land Act also has something to say about determining the value of land based on its highest and best use. Section 5A(3) requires a person (including a tribunal or a court) who is required to value land to take into account, where relevant:

(a) the use to which such land is being put at the relevant time, the highest and best use to which the land might reasonably be expected to be put at the relevant time and to any potential use;

36 In compulsory acquisition cases, the Court must thus consider the hypothetical highest and best use of the land in the circumstances at the date of acquisition but also the potential future use of that land insofar as the evidence demonstrates that that potential affects the market value of the land.[12]

37 In ISPT Pty Ltd v Melbourne City Council,[13] the Court of Appeal endorsed the following statement in respect of highest and best use:[14]

Highest and best use represents the most profitable potential use to which land can be put having regard to both planning and like controls and the circumstances of the land. It is to be distinguished from the present use of land; although the present use might also be the highest and best use. When land is sold, the market values the land at its highest and best use: as buyers will not be constrained to continue the existing use; and the seller will seek to achieve the highest price for the land. This is why highest and best use is relevant in assessing value, whether improved value or site value.

38 Ordinarily, the first step in the valuation of land will be to ascertain the highest and best use both presently open and potentially open in the foreseeable future.[15] Land may have a potential which fundamentally informs its value even if the potential use is not currently lawful under planning controls or is currently impractical. In the event that the potential requires the implementation under a planning scheme of regulatory change or the construction of public services such as a main sewer, urban water supply or road link, it will be necessary for the valuer to take into account the risks and contingencies affecting the realisation of the potential which gives the land its market value.[16]

39 At the date of acquisition, the Land was in a Residential 1 Zone. Two amendments to the Yarra Planning Scheme had been prepared by the responsible authority, one of which - Amendment C179 - placed the Land in a Residential Growth Zone. The schedule to the proposed Residential Growth Zone nominated a mandatory maximum building height limit of 13.5 metres on the basis that the proposed zone was intended to accommodate more housing than the General Residential Zone and to provide for apartment scale development of up to four storeys. The development plans used by the valuers retained by Provans contemplated the construction of 112 apartments on the larger of the two sites comprising the Land, and 29 apartments on the smaller site. It is common ground that the Land had to be valued on the basis that it was capable in the short term of this form of relatively intensive residential development. As a result, its highest and best use value was significantly higher than its existing use value.

40 The East West Link Project ('EWL Project') was first proposed in early 2012. It involved the extension of the Eastern Freeway along Alexandra Parade to join the Tullamarine Freeway in Flemington. From May 2012, the Authority began geotechnical drilling along Alexandra Parade in anticipation of the construction of the link. In August 2012, Ms Piera Murone of Pitcher Partners ('PP') provided the Authority with indicative valuations of the relevant businesses on Alexandra Parade based on the destruction of those businesses. Hardware's business was one of the five businesses that were the subject of Ms Murone's report.

41 On 15 July 2013, the Authority formally advised the Provans Group that the Land would likely be required for the construction of the EWL Project and, on 16 July 2013, the 'Reference Design' for the EWL Project was released showing the properties likely to be required for compulsory acquisition, including the Land.

42 On 19 December 2013, the EWL Project was declared for the purposes of the Major Transport Projects Facilitation Act 2009.

43 In his statement tendered in evidence, Mr McQuilton, Manager Property Projects at the LMA, explained the Authority's approach to the compulsory acquisition of land for the purposes of the EWL Project in general terms as follows:

On or about October 2013, LMA concluded that the time to secure physical possession of the land required for the EWL project was ambitious. We anticipated a 12 month period from service of 'notices of intention to acquire' to possession. This timeframe was particularly challenging for businesses on Alexandra Parade as they would need to relocate within a relatively short timeframe if they were to continue to trade.

LMA sought to minimise the disruption to businesses. We were particularly concerned to avoid situations where businesses could not relocate in time before physical possession of the land was required. LMA also sought to minimise business loss claims in the nature of loss of profits and/or cessation of business claims, where businesses were forced to close temporarily or permanently because of insufficient time to locate and move to alternative premises. Affected business interests sometimes complained, as in this case, that they could not afford to finance relocation of their operations from their own funds. Therefore, to address these issues LMA sought to engage with affected business interests on a voluntary basis prior to the formal process of acquisition under the Act. We did that in this case. Ms Glynn had extensive discussions with representatives of the Claimants.

44 According to Mr McQuilton, the Authority took steps to identify the nature of affected businesses and retain consultants to assess their viability and the cost of relocating them to suitable alternative premises. This often gave rise to extensive discussions to prepare for the process of relocation, as occurred in this case. Affected businesses were given the option to commence early investigations into possible compensation entitlements to enable them to better plan for the possible relocation of the business and the Authority agreed to pay the professional expenses incurred by businesses and landowners if they wished to participate in that process. The Authority gathered the necessary information to enable it to be in a position upon acquisition to make an offer of compensation to the relevant businesses in order to provide them with the ability to seek an advance of compensation and access the funding required to relocate. To this end, it was necessary for the Authority to engage business relocation advisers to advise on the costs of relocation, accountants to advise on potential claims for loss of profits and business viability and the Valuer General Victoria ('VGV') to provide assessments of the market value of interests in the land to be compulsorily acquired.

45 In this case, between mid-2013 and August 2014, Mr Rosenberg, Mr Gregory Heverin, the General Manager of the Provans Group, and its financial controller, Mr Robert Proctor, met and communicated regularly with representatives of and consultants retained by the Authority, notably, Ms Nicole Glynn, the Authority's land acquisition consultant, Ms Piera Murone, the Authority's accounting advisor and business valuation specialist, and Mr Gab Aghion of Business Relocation Management ('BRM'), the Authority's relocation consultant. As is apparent from the description of events set out below, discussions centred on the relocation of the business to new premises, specifically, to buildings owned by the Rosenberg family at the corner of Alexandra Parade and Hoddle Street, Clifton Hill ('replacement premises'). The business in fact relocated to the replacement premises in September 2015.

46 On 15 July 2013, the Authority advised Mr Rosenberg in writing that the Land had been identified as likely to be required for the EWL Project. The letter included a map of the EWL Project corridor to illustrate the likely need for the Land. It advised, however, that the design had not yet been finalised and that it might be amended following consultation over the ensuing months. The Authority stated that while its letter was not a formal notice of acquisition, it would be in a position to advise if a formal property acquisition was to occur by early to mid-2014.

47 The following day, Ms Glynn had two telephone discussions with Mr Heverin. Mr Heverin informed Ms Glynn that the business conducted upon the Land had operated for 110 years and that 'Provans' owned three additional properties on the corner of Hoddle Street and Alexandra Parade - the proposed replacement premises. Ms Glynn has deposed that, based on her discussions with Mr Heverin at this time, she believed Timber to be the owner/occupier of the Land.

48 Ms Glynn's file note of the first discussion records that Mr Heverin advised her that it would be impossible for Provans to find land of a sufficient size to relocate to in the inner city, but that the proposed replacement premises might provide a solution. In the second telephone conversation, Ms Glynn advised Mr Heverin that the (then) current reference design for the EWL Project did not require the acquisition of any land east of the shot tower and that the proposed replacement premises were not on the likely acquisition list.

49 On 15 August 2013, Aitken Partners ('AP') on behalf of the Provans Group, responded to the Authority's letter of 15 July 2013 to advise that Timber was the registered proprietor of the Land and that Hardware conducted a retail hardware and timber business from the Land. AP's letter stated that Timber and Hardware were considering their position in light of the likely acquisition of the Land 'and business' including, most significantly, the possible relocation of the business. AP advised that any relocation of the business would involve many months of detailed planning and implementation. AP's letter continued:

We are instructed that our clients are aware of three adjoining properties situated at 168-174 and 176 Alexander [sic] Parade and 477 Hoddle Street, Clifton Hill, which may be suitable for possible relocation of its hardware business. To date our clients have made no enquiries as to any planning, engineering and like issues that may arise in relation to this building and whether it would be available and suitable as premises to relocate its business. However a threshold issue is whether any of the three properties are to be acquired or otherwise affected by the East West Link Project or the construction of that project. This would include whether access to any of the three properties will be impeded during the course of the construction works ... In view of the timeframes that our client is now likely to be faced with in respect of any possible relocation of its business, we request your urgent advice as to whether any of the three properties are to be acquired by reason of or otherwise affected by the construction of the East West Link.

50 On 23 August 2013, a meeting was convened between representatives of the Authority and Mr Rosenberg and Provans' systems manager, Mr Paul Calleya. The purpose of the meeting was to discuss the content of the Authority's letter of 15 July 2013 and explain the reference design and the planning and acquisition processes, as well as to gain a better understanding of the business and its needs in respect of its relocation.

51 Ms Glynn's notes of the meeting on 23 August 2013 are in evidence and their content is not disputed by Mr Rosenberg. They record that Mr Rosenberg was anxious to commence the formal acquisition process, but it was explained to him that the Authority was unable to do so before the planning process was complete. Mr Rosenberg was advised that, following completion of the planning process, the Authority would commence the formal acquisition process for all properties required by the final design. The service of a 'notice of intention to acquire' under the LAC Act was expected to occur in around mid-2014. The Authority would engage an accountant, a relocation consultant and a valuer in order to make an offer of compensation. The Authority would obtain a business valuation and a relocation assessment and, on the basis that the cost to relocate did not exceed the value of the business, an offer to relocate would be made. The relocation assessment would be based on an estimated cost to relocate to 'reasonably suitable' premises or, if the replacement property had already been secured, the assessment would be based on the cost to relocate to that property. The Authority's valuer would assess the unaffected market value of the Land, disregarding the impact of the EWL Project. This valuation would be based on the business as a going concern, where additional compensation would be paid for relocation and loss of profits et cetera, or, alternatively, on the basis of the highest and best use of the Land, in which case compensation for relocation costs would not be payable.

52 This was the first indication that the Authority, at least, regarded the question of compensation as raising alternative ways of valuing the Land, depending on whether relocation costs were paid. However, the focus remained on keeping the business alive by assisting the business to relocate.

53 The meeting notes record that Mr Rosenberg was anxious to commence the process as it would be difficult to find sufficient land to which to relocate. He wanted to commence his search and planning straight away and wanted to know how much the Authority would be offering him. If the offer did not completely cover the costs of relocation, he would consider closing the business, as he did not want to go down the path of relocation by committing himself to a property without knowing what compensation would be paid.

54 Prior to the close of the meeting, Mr Rosenberg said that there was a lease between Timber and Hardware and that Hardware paid rent to Timber, although he was sure it was well below market rent. Ms Glynn requested a copy of the lease.

55 Approximately one month later, on 20 September 2013, there was a further meeting between representatives of the Authority and Provans. Mr Rosenberg and Mr Heverin raised concerns over the impact of the EWL Project design and construction works on the replacement premises, and Mr Rosenberg said he would like to commence the acquisition process immediately. Ms Glynn said that the 'government' would consider 'requests to purchase' on grounds of financial and personal hardship, and that the Authority would be prepared to seek approval to commence early negotiations to purchase the Land. This would allow the Authority to commence its own investigations and to meet Provans' costs.

56 There was a further meeting on 25 October 2013 between Ms Glynn, Mr Rosenberg, Mr Heverin and Provans' architect, Mr Mark Dixon. The meeting was at the site of the potential replacement premises on the corner of Hoddle Street and Alexandra Parade. Issues concerning access to those premises were discussed.

57 On 28 October 2013, Mr Heverin wrote to Mr Ken Mathers, Chief Executive Officer of LMA, informing him that Provans was investigating the feasibility of relocating the business to the corner of Alexandra Parade and Hoddle Street, and setting out a number of concerns. Mr Heverin sought the opportunity to discuss the issues in more detail. One of the issues was 'general consideration of existing "Provan's" business and relocation due to the Linking Melbourne Project'.

58 On 6 November 2013, there was a further meeting between Ms Glynn and Messrs Rosenberg and Heverin. Ms Glynn advised that the Authority would commence its investigations and make an offer, but that this process would take a reasonable period of time. Ms Glynn did not expect to settle the matter before the commencement of the formal acquisition process in July/August 2014, although she hoped an offer would be made before this time so that Provans would have a 'ballpark figure' of what the Authority was prepared to offer. This would provide a level of comfort or a minimum level of compensation.

59 In this meeting, Ms Glynn referred to company searches that she had undertaken, stating that she needed to know exactly who occupied the Land and the terms of any occupation. Mr Rosenberg said there was a lease in place prepared by his solicitors. Ms Glynn again asked Mr Rosenberg for a copy of the lease.

60 On 11 November 2013, the Authority replied to Mr Heverin's letter of 28 October to seek agreement to conduct early investigations into the possible relocation of the business. The Authority's letter stated:

Acknowledging the size of Provans Timber and Hardware and the challenges that Provans will face in securing a suitable replacement property and relocating its business successfully, LMA is able to engage in business relocation investigations with Provans now, rather than waiting until July/August 2014 which would be normal practice.

61 However, the Authority was told that Provans wanted to wait until the question of the suitability of the proposed replacement premises had been resolved.

62 On 29 April 2014, Ms Glynn and her colleague, Mr Wilmott, met with Messrs Rosenberg and Heverin, and with Provans' lawyers, Andrew Blogg and Sebastian Greenway of AP. Ms Glynn advised that the Land would be required 12 months after the service of notices of intention to acquire, most likely by July/August 2015. As a result, the Authority wanted to commence early investigations with affected businesses in order to be in a position to make offers as soon as possible after the service of the notices of intention to acquire. This would involve the Authority engaging a valuer to assess the market value of the Land, an accountant to assess the value of the business and to estimate loss of profits, and a relocation consultant to assess the cost of relocating to another property. This information would be used to consider the basis on which to assess compensation and formulate an offer.

63 In this context, Ms Glynn told Messrs Rosenberg, Heverin, Blogg and Greenway that if the highest and best use of the Land was found to be for an alternative use, an assessment of market value on that basis would be compared to an assessment of market value on an 'in use' basis plus an allowance for relocation expenses or business value. If the highest and best use valuation was higher, an offer would be made on that basis. That would, however, exclude any allowance for relocation costs or business value. If the combination of an 'in use' market value plus an allowance for relocation expenses (or business value) was the higher sum, the offer would be made on that basis.

64 Ms Glynn has deposed that none of the Provans attendees expressed any objection to or disagreement with this proposal.

65 It was therefore agreed that the Authority would conduct early investigations regarding the possible relocation of the business. Ms Glynn again asked for details of all parties with an interest in the Land and an explanation of the relationship between the parties, and for copies of any leases that might exist for the Land.

66 On 5 May 2014, the Authority wrote to AP confirming Provans' agreement to the commencement of early investigations and setting out the steps that the Authority would undertake with respect to the assessment of compensation. Documentation was requested. The Authority's letter stated:

Having received your client's approval to commence early investigations in our meeting on 29 April 2014, LMA will now:

1. Instruct the Valuer-General Victoria to obtain a certified and check valuation of the unaffected market value of your client's property. If there is a lease pertaining to the property, then a leasehold valuation will also be requested. It would be appreciated if you would provide copies of any leases for the property;
2. Engage an accountant to assess the value of the business operating from the property, and loss of profits (if any) which may be incurred during the relocation and re-establishment of the business. To assist this assessment can you please provide:

1. Documents that establish any other interests in the subject property that LMA may be required to acquire; 2. An outline as to the relationship between the entities, particularly freehold and leasehold interests, should they differ; and

1. Financial documents (tax returns and profit and loss statements) for the past three financial years, for the occupant(s) of the property.
2. Engage a relocation consultant to assess the cost to relocate to your client's potential replacement property. To assist in this assessment, any additional design/site layout work which has been completed by your client would be appreciated together with any quotations already received for proposed works, such as racking.

67 It is plain that at this stage, the relocation of the business was being treated as a priority by both the Authority and Provans. Messrs Rosenberg and Heverin met with the Authority's consultants, Mr Aghion of BRM and Ms Murone of PP, to discuss relocation costs. Provans was, in effect, making a demand for compensation for the costs of relocating the business.

68 On 3 June 2014, the Authority again sought a copy of any lease documentation for the Land. In response, on 11 June 2014, AP wrote to the Authority advising that there was no formal lease documentation. However, AP advised that Hardware paid rent of $32,400 per annum to Timber. In addition, Hardware was responsible for the payment of all outgoings associated with the Land, including council rates and land tax, which totalled $87,018 in the (then) current financial year.

69 On 30 June 2014, the Minister for Planning approved the EWL Project pursuant to s 77 of the Major Transport Projects Facilitation Act 2009. On 30 July 2014, the Minister designated the land required for the EWL Project.

70 According to Mr Heverin, on 24 July 2014, Ms Glynn advised him that she had to have a 'lump sum offer' on the table by the end of August.

71 On 6 August 2014, the Authority served a Notice of Intention to Acquire addressed to Timber, Hardware, Joinery, Westpac Banking Corporation (as mortgagee) and 'all other parties holding an interest in [the Land]'. The Notice of Intention to Acquire was sent under separate covering letters to the directors of Timber, the director of Hardware, and the director of Joinery.

72 On 11 August 2014, Mr Heverin spoke to Ms Glynn about the proposed replacement premises, informing her that the family dispute about them had resolved but that there remained differences to be dealt with regarding administrator's fees. Mr Heverin emphasised that the timing of the compensation payment was important as it would assist in meeting some of the relocation expenses.

73 On 13 August 2014, Ms Glynn prepared a document for internal use headed 'Offer Summary' ('first Offer Summary') containing a sum to be offered for the impact of the acquisition of the business. The proposed offer was expressed to be subject to revision to include the value of the Land following receipt of a site contamination assessment and market valuation. In other words, the first Offer Summary proposed that an offer of compensation be made for relocation costs but not, at that stage, for the loss of the Land. The proposed offer was directed to making funds available to Provans to relocate, and thereby to preserve, the business.

74 By way of background, the first Offer Summary recorded a significant number of matters relating to Provans' business operations, the relocation of the business and the redevelopment of the proposed replacement premises, including the following:

• Provans, a hardware and timber business (operating under the Home Timber and Hardware brand) has operated in Alexandra Parade for 113 years and been in the Rosenberg family since 1966. The business has 28 full time employees + casual support staff, in addition Mr Rosenberg (Director) and Greg Heverin (General Manager who is employed as a consultant) and is open for business 6 days a week.

• Concerned at the size of the business and the difficulty it would have relocating to a replacement site within 12 months of project approval, LMA obtained the agreement of Provans to commence early investigations...

• Provans have secured three adjoining commercial buildings (through a related entity) at 168-174 and 176-182 Alexandra Parade and 477 Hoddle Street, Clifton Hill. Following receipt of the City of Yarra's intention to grant a planning permit, Provans agreed to LMA engaging its consultants to commence assessments.

• Significant works are required at the replacement property to accommodate Provans.
• In May 2015 LMA engaged the services of Pitchers and BRM to assess the value of the business, estimate the cost to destruct the business and the cost to relocate to the replacement property.

• Provans have incurred numerous consultancy costs to date in obtaining a planning permit for the replacement property and preparing its submission and presentation to the Assessment Committee in an effort to reduce the impact of the EWL on its replacement property.
• On 14 July 2014, Aitken Partners submitted quotations totalling $241,780 seeking approval to engage the consultants required to assess and determine the works required to the replacement property to accommodate the Provans business...
• LMA has provided feedback in relation to the reasonableness of the fees ... to provide a level of comfort in progressing matters. Provans have advised that they do not have a surplus of funds to pay relocation expenses and will be using a draft account to meet interim fees. Provans are anxious to receive an offer of compensation as soon as possible.

• On 29 July 2014 Pitchers assessed the value of the business at $4M-$4.4M, with the estimated cost to destruct at $5.3M-$5.7M.

• On 7 August 2014, BRM finalised its relocation estimate assessing the total cost to relocate to 168-174 and 176-182 Alexandra Parade and 477 Hoddle Street, Clifton Hill at $2.9M-$3.2M.

75 Under the heading, 'Offer Discussion' the first Offer Summary stated:

Our expert reports received to date currently support an assessment of compensation on the basis of business relocation.

Ultimately, LMA will base its initial offer on the higher of the following two options:

Option 1

Highest and best use for land (short-term development) - no additional compensation for the business (plus RTP's)

Option 2

Existing Use valuation + relocation expenses at $2,871,279 (excluding GST)

In the interim, to provide Provans with a level of comfort and the ability to claim an advance of compensation to pay expenses as they are incurred, LMA would like to make an offer based on BRM's [the Authority's business relocation consultant] estimated relocation costs.

76 It can be seen that Ms Glynn was concerned to respond to Provans' expressed intention and to support the relocation of the business. Approval was therefore sought to make an interim offer for the amount of the estimated relocation costs (along with some legal expenses), subject to certain conditions, including that should the market value of the Land based on its highest and best use exceed the combined value of the existing use value and relocation expenses, then the offer for the impact to business would be removed from any subsequent offer.

77 The first Offer Summary contains a handwritten annotation: 'Not Approved. DMcQ wants to obtain legal advice as to which offer is to be made and how to treat entities'.

78 Mr McQuilton gave evidence that he understood that the purpose of the proposed offer was to facilitate the relocation of the business, as Provans could not finance the relocation from its own funds. He was unsure whether an offer should be made on the basis that all the Provans entities be treated as owner/occupier of the Land and asked Ms Glynn to get legal advice as to how the offer should be made.

79 Mr McQuilton gave evidence that he and Ms Glynn resolved to meet with representatives of Provans with a view to agreeing an approach to compensation. They would identify to whom an offer should be made and how to treat the relationship between the claimants, and identify the basis for the offer. Practically, he and Ms Glynn were seeking to have the claimants elect whether the claim would be based on the highest and best use of the Land or based on an 'in use' valuation. In the former case, the claimants would not be entitled to compensation for any disturbance loss.

80 On 15 August 2014, AP provided the information requested in the Notice of Intention to Acquire, stating that AP was not aware of any person having an interest in the Land apart from the directors of Timber, Hardware and Joinery.

81 By email dated 26 August 2014, Ms Glynn sought a meeting to discuss 'the way forward' in relation to anticipated offers and claims for compensation. The email confirmed Ms Glynn's understanding that there were several interests in the Land, including Timber as proprietor, Hardware as an occupier and Joinery as an occupier. Ms Glynn's email continued:

As discussed, I wish to arrange a meeting with legal advisers and representatives of both Linking Melbourne Authority (LMA) and your clients in order to discuss issues associated with the manner in which compensation should be assessed in relation to the interests of each of those named above.

LMA recognises that [Hardware] (and no doubt [Joinery]) is currently taken [sic] steps to relocate its business to new premises.

LMA's representatives wish to discuss the manner in which valuations should be undertaken both in relation to the freehold interest and also the interests of the occupiers, particularly in circumstances where the occupiers pay rent of approximately $30,000 per annum for the present premises.

82 A meeting duly took place on 17 September 2014 between Mr McQuilton and Ms Glynn of the Authority, the Victorian Government Land Monitor, Mr David Brahe and Ms Celene Ramanathan of the Authority's solicitors Russell Kennedy ('RK'), Mr Andrew Blogg of AP and Messrs Rosenberg and Heverin.

83 Ms Ramanathan of RK made a detailed file note of the 17 September meeting. The RK file note records that Mr Blogg (AP) confirmed the structure and roles of the Provans companies as follows:

(1) Timber owns the land. The sole shareholder of Timber is Barry Rosenberg and the directors are Barry Rosenberg and Sara Rosenberg;

(2) Hardware leases the land and pays rent of $32,000 per annum, although there is no formal lease. The shareholders of Hardware are Barry Rosenberg and Sara Rosenberg and the sole director is Barry Rosenberg; and

(3) Joinery hires Hardware's employees. The shareholders of Joinery are Barry Rosenberg and Sara Rosenberg and the sole director is Barry Rosenberg.

84 The RK file note further records that Mr Brahe (RK) identified for those present three ways to value the Land:

(1) based on its highest and best use, which would involve the Authority denying any claim for compensation for clearing the land or for relocating the business, as the highest and best use was different from the (then) current use;

(2) based on its existing use, with the Authority to pay relocation costs; and

(3) on the basis that all three claimants were treated as one and the property was treated as owner-occupied, in which case compensation would 'presumably' result in an assessment based on the existing use and relocation costs.

85 Mr Brahe told the meeting that the Authority had received confirmation that the highest and best use of the Land was for residential development, being a medium rise building of three to four levels. This would require the existing building to be demolished and remove any requirement for the Authority to pay relocation costs. The RK file note records, '[Andrew Blogg] disagreed and formed the view that a claim could be made for the highest and best use with a deduction for the costs to demolish the improvements but also a claim for relocation costs. [Mr Brahe] indicated that this will result in an overpayment of compensation'.

86 The RK file note records that there was then a lengthy discussion about steps being taken to establish what the relocation costs would be. Mr Heverin confirmed that the plan was to relocate the business unless there was good reason not to.

87 On 24 September 2014, RK wrote to AP setting out the Authority's understanding of what occurred at the meeting on 17 September, including who had an interest in the Land and what those interests were. RK's letter confirmed that the Authority did not expect to receive a claim from Timber for the value of the Land based on its highest and best use and a claim from Hardware for relocation costs or in relation to the benefit of profit rent. RK's letter continued:

As was discussed at the meeting, it is our view that if the market value of the property were to be assessed at its highest and best use (that is for residential development) it would be necessary for the land to be cleared to enable the property to be developed for its highest and best use thus removing (for the purposes of assessing compensation payable by LMA) the concept of the costs of relocation of the business enterprises conducted upon the property.

At the present time, it seems to us that an appropriate approach to this matter would be as follows ―

• [Timber] be paid for the market value of the land acquired, that value to be assessed on the basis of a continuing use of the property for its current use.
• • It be agreed that [Hardware] make no claim for the value of its interest in the property.
• [Hardware] be paid compensation based upon the reasonable cost of relocation of that business to reasonably comparable premises. The relocation costs to be assessed having regard to that required to place the company in a similar operation condition to that which it now enjoys. This proposal is however, subject to the costs of relocation not being far greater than the value of the business conducted by [Hardware] as a going concern.

• An allowance for costs (of advisors) in relation to relocation.

• An allowance for expenses associated with the acquisition.

88 On 10 October 2014, AP responded to RK's letter of 24 September 2014, seeking to reserve the Provans' rights in relation to the manner in which compensation would be assessed. AP's letter warned, however, that if the 'in use' value of the Land was arrived at on the basis of the current rather than the market rent, Hardware would reserve its right to make a claim in relation to profit rent. The letter confirmed that Hardware was seeking to relocate the business to the replacement premises and stressed, 'our clients are understandably concerned about the time constraints relating to the relocating and establishing of its business at [the replacement premises].' AP's letter requested that an offer be made as close to, if not in conjunction with, the Notice of Acquisition.

89 AP's letter confirmed that the manner in which compensation was assessed by the Authority was entirely a matter for it, but added:

Nevertheless in this instance there may be some utility in providing a breakdown as to how compensation offered to our clients is calculated by LMA'.

90 This letter from AP sent a clear message that the business was to be relocated and that funds were required for that purpose. Insofar as an 'in use' land value was to be used to assess compensation, that value had to reflect market rent, not the actual (peppercorn) rent paid by Hardware to Timber.

91 Notably, Provans declined to express a view on the proposal to pay compensation for the Land based on its existing use value and relocation costs.

92 On 15 October 2014, RK provided legal advice to the Authority about the form of offer that should be made. RK had been provided with four options by Ms Glynn, reflecting discussions as to whether the Land should be valued on a highest and best use basis, or on an existing use basis, which would also involve compensation for relocation costs. RK (David Brahe) advised that, 'at the present time, having regard to the various options Nicole [Glynn] has drafted, option 2 is the one to address. This option contemplates assessing compensation on the basis that Provan's will in fact relocate. If it transpires that Provan's decide at some time in the near future that it is not economically in its interests to relocate its business, the issue of the amount of compensation to be offered can be reconsidered.' The letter continued:

It is my view, therefore, that, having regard to the advice that LMA has received from its advisors, the offer of compensation should, at this stage, be in the sum of $8,706,279 made up as follows -

93 There followed a table with items for market value based on existing use, solatium, relocation expenses and professional expenses, with a dollar amount next to each item. RK's letter concluded:

In making its first offer of compensation, I confirm our discussions to the effect that the offer should make it clear as to its components and the appropriate member of the Provan's group to which a particular item of compensation applies.

94 On 16 October 2014, a Notice of Acquisition of the Land was published in the Government Gazette identifying the interests acquired to include Timber's estate in fee simple and the interests of Hardware and Joinery respectively as occupiers. The Notice of Acquisition was sent to the claimants under a single covering letter addressed to the director or directors of each of them dated 22 October 2014.

95 On the same day, Ms Glynn prepared a further 'Offer Summary' for internal use and approval ('second Offer Summary'). It recorded that, due to the related nature of the Provans companies and RK's advice dated 15 October 2014, Ms Glynn proposed that one offer be made to Timber, Hardware and Joinery for their combined interests in the Land. As recommended by RK, the Authority would clearly outline the components of the offer and who they related to.

96 The background in the second Offer Summary contained the same detail as in the first Offer Summary, with an addition concerning BRM's estimate of relocation costs:

This sum increases to a range of $4.4M - $4.9M if including landlord works and fitout works considered necessary by the tenant, but not 'like for like' by BRM.

97 The second Offer Summary dealt with compensation for both the impact of the compulsory acquisition on the business and the value of the Land. It contained details derived from the consultants' reports of the business value, the cost of business destruction and, importantly, the business relocation assessment carried out by BRM. It also contained a table setting out the valuations of the Land provided by VGV and a check valuer. Each assessed the value of the Land at both its highest and best use and as a going concern (that is, based on existing use). The VGV assessment based on the highest and best use of the Land was $11,375,000, while the existing use value was $5,675,000.

98 The second Offer Summary contained a further table setting out four options for the assessment of compensation: compensation assessed on the basis of the highest and best use of the Land (Option 1); compensation assessed on the basis of the existing use of the Land plus relocation costs (Option 2); compensation assessed on the basis of existing use plus more generous relocation costs (Option 2B); and compensation assessed on the basis of the existing use plus compensation for the destruction of the business (Option 3). In relation to the options, the second Offer Summary stated:

Whilst the highest and best use (short term development) valuation assessment for the site is greater than the combined assessments for existing use valuation + relocation expenses, our legal adviser (David Brahe of Russell Kennedy) is of the view that at the present time, having considered all the options within the spreadsheet, LMA should base its offer of compensation, in the first instance on Option 2 - existing use value and relocation...

99 There followed yet another table with items and dollar amounts which were substantially the same as in the Table in the Initial Offer, and the Provans entity to which the items related.

100 The second Offer Summary therefore recommended an offer of a combined total amount of $8,706,000 for all interests, subject to certain conditions. The sum to be offered included an allowance to relocate the business to a replacement property. A claim for loss of profits would be considered upon receipt.

101 This time, the recommendation was approved by Mr McQuilton.

102 On 17 October 2014, VGV sent an email to Ms Glynn querying the request for a valuation of the Land based on its existing use. On 20 October 2014, RK wrote to VGV explaining why a certificate of valuation based on the existing use of the Land was required. As part of the background, RK stated that Provans had indicated an intention to relocate the business to the replacement premises, noting in parentheses that a firm decision to that effect had not yet been made. Compensation would be determined on the basis of either the relocation of the business to the alternative premises or, if Provans did not relocate, on the basis of the destruction of the business. RK's letter continued:

Upon an assumption that Provan's intend to confirm that its intention to relocate its business, it would be inappropriate to pay Provan's compensation based upon both the highest and best use value of the subject land and, in addition, the costs of relocation of the business to alternative premises.

At the present time, for the purposes of its offer, LMA is assuming that Provan's will confirm its intention to relocate its business to the alternative premises. On this basis, I think that the appropriate assessment of compensation is based on the following -

• the 'in use' value of the subject lands (that is its use on a continuing basis as a timber yard and like business).
• the cost of relocating the business to alternative premises (which would include consequential losses).

If, on the other hand, at some later date, Provan's take the view that the business cannot profitably be relocated, it would then be necessary to consider making an offer of compensation based upon the highest and best use of the subject land.

(b) the Authority would be liable to pay compensation for the destruction of the business if the business was not relocated.

104 Implicit in this understanding is that one of the Provans entities had an interest in the Land of a kind giving rise to an obligation in the Authority to pay compensation for either relocation costs or losses arising from business destruction. It also reflects a misunderstanding that the offer that was proposed to be made could simply be withdrawn if the business did not in fact relocate.

105 On 22 October 2014, RK provided further legal advice to the Authority regarding the options for the payment of compensation to the claimants identified by Ms Glynn. RK's advice recorded that Ms Glynn was concerned that an offer based on the highest and best use of the Land should be made because it was over $2,000,000 more than the proposed offer based on an 'in use' valuation plus relocation costs. RK confirmed its advice that the latter option should be adopted. This was because it was 'inevitable' that losses associated with a relocation would be greater than the estimates provided and that, in particular, loss of profits during the move and construction works at the replacement premises might well be greater than estimated. RK's advice continued:

I think that a sensible outcome is to adopt the following procedure, namely -

• make the statutory offer in accordance with the provisions of s 31 of the [LAC Act] based upon Option 2 as I have previously recommended. However, this offer would be one unlikely to be accepted.

• make a 'without prejudice' offer through the solicitors acting on behalf of all Provan [sic] interests based on Nicole's Option 1 [highest and best use Land value]. This offer (subject to the interest of any mortgagee) would be for all Provan [sic] interests in the subject land and would be subject to execution by all the Provan [sic] entities of a Deed of Release and Indemnity. This 'without prejudice' offer should be expressed to be open for acceptance for a period of 30 days from the date of the offer (or such other reasonable period as LMA may decide upon).

The 'without prejudice' offer may be useful to LMA in the future should the matters become disputed within the meaning of the Act.

106 The RK advice attached a draft letter containing a 'without prejudice' offer. It was never used.

107 On 24 October 2014, Ms Glynn prepared and forwarded a memo to Mr Ken Mathers, the Chief Executive Officer of LMA, to inform him of the offer of compensation to be made in the amount of $8,706,000 based on the existing use valuation provided by VGV of $5.675 million and a relocation estimate prepared by BRM of $2.871 million, as well as allowances for solatium and professional expenses. The memo stated:

It should be noted that the offer is a conservative first offer, and the total compensation payable in this matter is expected to well exceed this sum.

108 The memo was marked as 'noted' and signed by Mr Mathers on that day.

109 On 24 October 2014, the Authority made the Initial Offer of compensation to all of the claimants pursuant to s 31 of the LAC Act.

110 The Initial Offer was expressed as a single offer addressed to the directors of each of the claimants. It is the source of much of the controversy in these proceedings. For that reason, it is necessary to recite in full some of its more important parts:

Offer of Compensation

Linking Melbourne Authority (LMA) has obtained independent advice as to the value of all three companies' interests in the property and, based on this advice, LMA offers a total sum of $8,706,000 (less monies paid) as compensation for the compulsory acquisition of the companies' interests in the property.

This offer is made pursuant to section 31 of the [LAC Act] and is the amount of compensation LMA has assessed as being the amount payable to the companies, based on information currently available to LMA.

The offer is comprised of several components and attributed to a specific interest as follows:

111 The Initial Offer contained the Table that has been reproduced in paragraph 15 above. The Table identifies types and amounts of compensation as 'applying' to one or more of Timber, Hardware and Joinery.

112 The Initial Offer was expressed to be made subject to a number of conditions including, relevantly, the following:

1. 1. The sum offered is for the compulsory acquisition of the companies' interests in the whole of the property and for all loss or damage which may be sustained as a natural and direct consequence of the acquisition, including any impact to businesses, and is made in full and final settlement of all claims that the companies may have.
2. The sum offered includes an allowance to relocate [Hardware] and [Joinery] from the property to the replacement property at 168-174 and 176-182 Alexandra Parade and 477 Hoddle Street, Clifton Hill.

1. If the offer is accepted, the companies will be required to release and indemnify LMA from any further claims arising from the acquisition. In the event that LMA is required to pay compensation for any further interest in the property, LMA may require reimbursement of the compensation paid. The companies will be required to sign a Release and Indemnity agreement at settlement to this effect.

113 The Initial Offer was signed by Mr Greg Holland, Director of Property Services. It was accompanied by three certificates of valuation issued by VGV, each recording Timber as the sole proprietor of the Land and describing the interests in the Land being assessed as '[a]ll interest in the land'. The first valuation certificate records that the valuation was based upon the 'in use' value of the Land as a timber yard and like business and assesses compensation at $5.675 million. The second certificate refers to the lessee/occupier as Hardware and assesses compensation as 'nil'. Likewise, the third certificate, which refers to the lessee/occupier as Joinery, assesses the amount of compensation as 'nil'.

114 The Initial Offer also attached a 'Form 10', being a pro forma statement that the recipient could accept the offer in full, accept the offer in part or reject the offer.[17] Also attached was a partially completed Response to Offer (Form 11) that referred to the person accepting the offer as Timber, Hardware and Joinery and recorded that the offer was for $8.706 million. Form 11 provides, among other things, for notice to be given of acceptance of the offer in part and for a claim to be made for further compensation.

115 On 30 October 2014, AP requested an advance of the sum offered. The Authority wrote to AP setting out the terms of the advance, to which there was no response. On 19 December 2014, the Authority advanced the sum of $8,693,310 by means of two cheques payable to Timber, one for $6,343,310 and one for $2,350,000.[18] The funds were deposited in accounts in the name of Timber.

116 According to Provans, the funds advanced pursuant to the Initial Offer were allocated and accounted for as to the sum of $2.871 million as a non-interest bearing loan from Hardware to Timber repayable by Timber to Hardware.

117 The advance of $8,693,310 was made before there had been any formal response to the Initial Offer from the claimants.

118 There was a significant delay in the claimants' response to the Initial Offer. In the interim, the EWL Project was abandoned, following a change of government.

119 In March 2015, the Authority wrote to AP giving the occupier claimants the opportunity to remain in occupation and to have the Land re-conveyed to Timber. On 1 September, AP informed the Authority that 'Provans' did not wish to take up the option to have the Land returned.

120 In September 2015, the hardware business was physically relocated to the replacement premises on the corner of Hoddle Street and Alexandra Parade and commenced trading. The replacement premises were by then owned by another company controlled by Mr and Mrs Rosenberg, Lysteron Pty Ltd. Mr Rosenberg gave evidence that Hardware incurred costs of over $5 million in relocating the business to the replacement premises. At the time of the relocation, Lysteron did not have the funds to undertake any refurbishment of the premises and, because of the urgency of the need to relocate the business, it was decided that 'Provans' would fund the relocation and cover the refurbishment costs. In return, Hardware entered into a lease with Lysteron commencing on 1 August 2015 for an initial ten year period, with two five year options. This time, Hardware would pay market rent.

121 On 17 December 2015, following a number of requests for extensions of time (which were agreed to by the Authority) and more than a year after the Initial Offer was made, the claimants jointly delivered to the Authority a Form 11 'Response to Offer', along with a certificate of valuation for the Land based on its highest and best use for the amount of $12.7 million. In the interests of clarity, I shall refer to the claimants' Response to Offer as the 'Response to the Initial Offer'.

122 Like the Initial Offer itself, the Response to the Initial Offer was a single document for all claimants. However, it set out in point form responses 'to the several components in the [Initial Offer] by the persons to whom each such offer was made'. Timber purported to respond in relation to market value and solatium; Hardware and Joinery purported to respond in relation to relocation expenses; Timber, Hardware and Joinery purported to respond in relation to legal and other expenses, submission expenses and valuation fees. In addition, Timber made a claim for a number of matters in relation to the replacement property (stamp duty, registration fees, legal and conveyancing expenses, agent's fees and so forth) and Timber, Hardware and Joinery made a claim for interest pursuant to the LAC Act.

123 The important parts of the Response to the Initial Offer were as follows:

[Timber] claims the sum of $12,700,000 for market value in response to item 1 of the offer of compensation plus costs associated with a replacement property in response to item 7 of the offer of compensation.

[Hardware] and [Joinery] accept item 3 of the offer of compensation for the Relocation Expenses in the sum of $2,871,000 offered by the Authority.

Each of [Timber], [Hardware] and [Joinery] accept the offer made for submission expenses of $20,000 and claim legal valuation and other professional expenses and interest pursuant to the [LAC Act].

The Claimants dispute the value of the land by the Authority and attached is a copy of the certificate of valuation which has been provided by a Valuer in respect of his valuation of the land together with a statement advising how that valuation is calculated.

125 Mr Rosenberg signed a statutory declaration at the end of the Response to the Initial Offer. He is described in the signature clause as a director of each of the claimants.

126 The Authority contends that it was not open to the claimants to respond in this way as the Initial Offer was made as a single offer to all three Provans entities and was not capable of disaggregation.

127 Despite the disagreement about how the Initial Offer was to be construed, two months after the Response to the Initial Offer, on 17 February 2016, the valuers retained by the Authority and the valuers retained by Provans held a joint conference at which they agreed that the market value of the Land as at the acquisition date was $12.2 million based on its highest and best use for residential development.

128 On 6 April 2016, pursuant to s 36 of the LAC Act, RK forwarded to AP the Authority's statutory reply to the Response to the Initial Offer. The Authority's reply was in the form of the Revised Offer.

129 This time, the Authority's offer was made on alternative bases: the first option ('primary offer') was based upon the highest and best use of the Land; the second option was an offer based upon the 'in use' value of the Land. The second option included an amount for relocation costs; the primary offer did not.

130 The primary offer was the market value of the Land assessed at $12.2 million on the basis of its highest and best use for residential development along with further amounts for solatium, submission expenses and for costs and expenses contemplated by s 41(1)(f) of the LAC Act. The alternative offer was made in case the claimants persisted with a claim for relocation expenses. In relation to the alternative offer, the Revised Offer explained:

The Authority agrees that relocation expenses incurred by the Claimants may amount to the sum of $2,871,000 but say that the Claimants cannot recover compensation based upon the highest and best use of the subject land ... and at the same time make a claim for relocation expenses.

On the basis that the Claimants persist with a claim for relocation expenses the Authority makes the following offer of compensation in the sum of $8,836,000 made up as follows ―

There followed a table setting out market value assessed on the basis of existing use ($5.675 million) plus relocation expenses ($2.871 million), along with amounts for solatium, submission expenses and for other costs and expenses.

131 In making the Revised Offer, the Authority referred to the 'agreement between the parties that all Claimants be treated as one.'

132 On 15 April 2016, AP requested, on behalf of only Timber (not Hardware or Joinery), a further advance in the amount of $6,655,000 based on the primary offer of $12,490,000 less the amount of the advance already made to Timber pursuant to the Initial Offer for the value of the Land. AP's letter stated:

Significantly, the advance of $2,871,000 reflecting the offer in relation to relocation expenses was made to and accepted by [Hardware] and [Joinery] and is therefore binding on the Authority pursuant to s 31(8) of the [LAC Act]. This advance was not made to [Timber].

133 On 18 April 2016, RK responded on behalf of the Authority, stating that the further advance payable to the claimants was $3,784,000. This amount was calculated on the basis that the $2,871,000 previously advanced for relocation expenses was not to be disregarded when deducting what had already been advanced following the Initial Offer, as was suggested by AP.

134 AP responded to RK on 29 April 2016. AP confirmed that the market value of the Land was agreed at $12.2 million, stating that this related to Timber's interest in the Land and that the request for an advance related to that interest, taking into account advances previously made to Timber. AP's letter continued:

As you know, the [Initial Offer] was careful to distinguish between the amounts assessed as compensation in favour of and payable to [Timber] and amounts assessed as compensation and payable to either [Hardware] or [Joinery].

The Response to Offer served by our client on 17 December 2015 similarly responded discreetly [sic] in relation to each offer made to each company. In particular, the Response to Offer included a separate response on behalf of [Timber] in relation to its claim for market value.

...

Neither [Hardware nor Joinery] disputed the 'nil' offer made to them for market value in the Response to Offer.

135 AP disputed that there had been any agreement that 'all claimants be treated as one' and asserted that the course of communications and, in particular, the formal process for the Initial Offer and Response to the Initial Offer had been very much to the contrary. AP put the Authority on notice that, unless the sum of $6,655,000 was paid within the stipulated timeframe, the Authority would be required to pay interest on the unpaid amount at a rate of 5 percent per annum higher than the rate determined under s 52 of the LAC Act.

136 On 10 May 2016, RK delivered to AP a bank cheque in the sum of $3,784,000 by way of further advance.

137 On 31 May 2016, RK responded to AP's letter of 29 April 2016. RK's letter stated that the Authority might have been mistaken in its assumption that there was an agreement that 'all claimants be treated as one'. The Initial Offer was made on the understanding that the Provans Group would be relocating and the compensation offered by the Authority reflected the market value of the existing use of the Land and all claims that could be made by the Provans Group as a whole. It was on that basis, and on that basis alone, that an allowance was made for disturbance to the business interests of the Provans Group.

138 RK's letter went on to state that, regardless of what was in the formal offer (that is, the Initial Offer), given the nature of Hardware's interest in the Land, Hardware was not entitled to claim relocation costs in its own right. Hardware had an interest in the Land no better than that of a tenant at will and there was therefore no causal connection between Hardware's loss and the compulsory acquisition of the Land. Timber, if it was a separate entity as asserted, could at any time have exercised its right to terminate the tenancy, leaving the tenant (Hardware) in exactly the same position as under the compulsory acquisition. RK's letter continued:

If the Authority had proceeded on the basis that each entity was to be treated separately then no offer for relocation costs would have been made at all to [Hardware] because that entity has not demonstrated a basis upon which to make a claim of that type or in that amount given the nature of its interest in the land. The original offer was made on what may have been a mistaken assumption that the companies would be treated as one entity and that the entity would move its existing business to a new location.

It is regrettable that the table might be read as treating the entity separately. That said, rather than the table being conclusive evidence of the Authority treating the entities separately, the form and content of the original offer is no more than a manifestation of and a compounding of a possible error made by the Authority in formalising its position.

139 RK's letter went on to assert that the Authority was confident, having reviewed the material, that the information contained in the Initial Offer and relied upon by the Authority in making that offer may have been incorrect. As a result, the Authority was not bound by the terms of the Initial Offer. The Authority recognised Timber's entitlement to market value assessed on the basis of the highest and best use of the Land, and taking into account the Hardware's tenure in the Land. It therefore offered Timber $12,490,000 and Hardware nothing.

140 On 21 June 2016, pursuant to s 36(6) of the LAC Act, AP forwarded to the Authority the claimants' response to the Revised Offer ('Response to the Revised Offer').

141 The Response to the Revised Offer commenced by stating that the Authority's assertion of an agreement between the parties that all claimants be treated as one was factually incorrect. At no time had there been any agreement that 'all claimants be treated as one' and both the Initial Offer and the Form 11 (the Response to the Initial Offer) dealt individually with claims made by each of the claimants. As a result of the Response to the Initial Offer, the only 'disputed claims' as between an individual claimant and the Authority were the claim by Timber for the market value of the Land ($12.7 million), solatium ($350,000), legal expenses (to be advised) and professional expenses pursuant to s 41(1)(f) of the LAC Act. The legal and professional expenses were claimed jointly with Hardware and Joinery.

142 The Response to the Revised Offer agreed the market value of the Land at $12.2 million and claimed stamp duty, registration fees, legal and conveyancing expenses and agent's fees in locating a replacement property, as well as compensation for any capital gains tax ('CGT') payable by reason of the loss of the CGT free status of the Land.

143 As to the alternative offer in the Revised Offer, the Response to the Revised Offer stated as follows:

The premise of the alternative offer by way of reply is false. It assumes an agreement that the Claimants be treated as one. There is not and never was any such agreement.

The alternative offer is irrelevant.

144 On 25 October 2016, Timber referred the 'disputed claims' to the Supreme Court. The 'disputed claims' include the amount that Timber says remains outstanding on the agreed compensation for the market value of the Land. As discussed, that amount corresponds with the amount that Hardware and Timber say was offered to them and accepted by them for relocation expenses.

145 There are a number of matters that are not in dispute.

146 It is not now asserted that Joinery has an entitlement to compensation, even though it had an interest in the Land as an occupier. Hardware alone paid the relocation costs.

147 The parties have, in substance, agreed the amounts of compensation in issue, or potentially in issue, for relocation costs and for the market value of the Land.

148 Although the market value of the Land is technically 'disputed', the valuers engaged by the parties have arrived at an agreed value. At the direction of the Court, a conference of valuers was held on 19 June 2018, following an exchange of valuation reports. On 3 July 2018, the Authority's land valuation experts - Mr Rodney Stephen, Mr Nicolas Haines and Mr Marcus Willison - and those retained by Provans - Mr Nicholas Moore and Mr Brian Dudakov - prepared a joint statement setting out areas of agreement and disagreement.

149 The principal area of agreement was the market value of the Land based on its highest and best use, being the underlying residential development value. This value was agreed at $12.2 million. For the purpose of the task the Court has to undertake of assessing the market value of Timber's interest in the Land, that expert opinion and agreement is sufficient.

150 Although there was considerable evidence at trial about the relocation costs and extensive cross-examination of the Provans' witnesses on the costs of relocating the business to the replacement premises, the Authority's relocation specialist, BRM, estimated the recoverable relocation costs as at least $2.871 million and the claimants have not disputed this amount (although they say that they in fact spent a great deal more on the relocation of the business to the replacement premises).

151 It is not disputed that there was no formal lease between Timber and Hardware, and it was not asserted that there was any other form of agreement governing Hardware's occupancy of the Land relating to anything other than the payment of annual rent and outgoings by Hardware. It is tolerably clear, therefore, that Hardware occupied the Land as a tenant at will and I so find.

152 The matters in dispute between the parties are as follows.

153 The Authority submits that the Initial Offer was a single indivisible offer made to all three claimants that was not capable of partial acceptance by Hardware. If this is not the case, the Authority says that is not bound by the Initial Offer because the Initial Offer contained information upon which the Authority relied that was 'incorrect'.

154 The Authority submits more generally that Hardware, having only an ephemeral interest in the Land as a tenant at will, is not entitled to compensation for the relocation costs because they are not the natural, direct and reasonable consequence of the divestment of Hardware's interest in the Land. Alternatively, the Authority submits that if Timber is compensated for the market value of the Land on the basis of its highest and best use rather than on the basis of its existing use, no compensation is payable for relocation costs, as it would have been necessary to relocate the business in order to realise the highest and best use of the Land for residential development.

155 The claimants submit that in making the Initial Offer, the Authority made an offer of $2.871 million to Hardware and Joinery for losses attributable to disturbance. Hardware and Joinery did not dispute this amount in the Response to the Initial Offer and, by reason of s 31(8) of the LAC Act, the Authority is bound by its offer of compensation for that amount. In addition, Timber is entitled to be compensated for the market value of the Land assessed on the basis of its highest and best use.

156 The claimants submit generally that the relocation costs are losses attributable to disturbance suffered by Hardware and that Hardware's entitlement to compensation for these losses is not inconsistent with Timber's claim to be entitled to compensation for the Land based on its highest and best use.

157 Section 31(8) binds the Authority in respect of any amount offered in an initial offer made to the extent that the amount or any part thereof is 'not disputed' unless the Authority can demonstrate that the information contained in the offer and relied upon by the Authority was incorrect.

158 Hardware and Joinery have accepted the offer made for relocation costs in the Initial Offer. The Authority says this part of 'the' (singular) offer was not capable of being accepted in isolation because acceptance was conditioned upon acceptance of the rest of the Initial Offer, in particular, the part pertaining to the value of the Land based on its existing use. Accordingly, the offer for relocation costs is not 'not disputed' and s 31(8) does not apply. Alternatively, so the Authority says, the amount offered for relocation costs is not binding on the Authority because information contained in the Initial Offer and relied upon by the Authority in making the offer was incorrect.

159 The threshold question, then, is whether the Authority is bound by any offer made to Hardware to compensate it for the relocation costs. This invites consideration of the terms of the Initial Offer, which the Authority says was not capable of being accepted only as to relocation costs.

160 The Authority submits that the terms of the Initial Offer did not allow the occupier claimants - Hardware and Joinery - to accept the compensation offered for disturbance loss but allow the proprietor claimant - Timber - to dispute the compensation offered for the market value of the Land. The Authority submits that, by its terms, the Initial Offer was a single offer made to all three claimants and that it was only capable of acceptance by all three claimants jointly and only as to all of its parts. It was a single indivisible offer made to all claimants.

161 The claimants submit that the Initial Offer was in fact three separate offers: an offer to each of them that was capable of acceptance in relation to what was offered to that particular claimant. Construed in the light of the provisions of the LAC Act and Land Acquisition and Compensation Regulations 2010, which require an offer of compensation to be made to every person having an interest in acquired land and for offers of compensation to be accepted in part, the Initial Offer was an offer to pay particular amounts of compensation to particular entities to compensate them for the acquisition of a particular interest in the Land. As a result, the Initial Offer was capable of acceptance by a particular interest holder in respect of a particular interest and a particular item of compensation. The claimants submit that it was no part of the terms of the Initial Offer that it could only be accepted by all three claimants, and nor was it part of the terms of the Initial Offer that acceptance of any one component of the offer was conditional upon acceptance of another component or part. To the contrary, as well as breaking up the offer into component parts and specifying the person or persons to whom each part applied, the Initial Offer attached the Form 10 which expressly provided for the recipients of the offer to accept the offer in part.

162 According to the Authority, the many references to the 'companies' in the Initial Offer and, importantly, the requirement that all of them release the Authority 'if the offer is accepted', demonstrates that the Initial Offer was a single offer that was not capable of being accepted in the way contended for by the claimants, that is, separately and in respect of different components. The Authority points to what it says are indicia in the text of the Initial Offer of its single and indivisible character:

• the offer was addressed to all three claimants;
• the offer was for an amount representing the total sum of the claimants' interests;
• the offer was made up of components, not separate offers, a component being a constituent part of a single offer;
• Condition 1 made it clear that the offer was for the claimants' interests in the whole of the property;
• Condition 2 referred to 'the sum' offered as a single sum, including the allowance for relocation;
• Condition 8 required an indemnity and release to be provided by all of the claimants;
• the language of Condition 11, in referring to 'this offer', reinforces that it was a joint offer;
• the valuation certificate for Timber's interest referred to the property as a going concern and stated that the offer was based on an 'in use' value for the Land as a timber yard and like business.

163 The requirement for an indemnity and release to be given by all the claimants ('the indemnity condition') was submitted to be particularly significant. The indemnity condition is in the following form:

(8) If the offer is accepted, the companies will be required to release and indemnify LMA from any further claims arising from the acquisition. In the event that LMA is required to pay compensation for any further interest in the property, LMA may require reimbursement of the compensation paid. The companies will be required to sign a Release and Indemnity agreement at settlement to this effect.

164 The indemnity condition foreshadows a requirement that the claimants release and indemnify the Authority from any other claims whatsoever '[i]f the offer is accepted'. The offer that may be accepted is expressed to be a single offer and the 'companies' are to indemnify the Authority from further claims. In fact, no release and indemnity was provided to or executed by the claimants. The indemnity condition was never given effect.

165 As counsel for the claimants submitted, there are a number of difficulties with the Authority's reliance on these indicia in the text of the Initial Offer. The LAC Act requires the Authority to make an offer to each person asserting an interest in the acquired land, a requirement that is reflected in the Table, which attributes amounts of compensation to the different claimants for different forms of loss. On its face, the Initial Offer contains an offer to pay the 'relocation expenses' of Hardware and Joinery in the sum of $2.871 million. The Table expressly identifies the component parts of the Initial Offer as well as the entity to which each component is, if not offered, then attributed. Condition 2 refers to an allowance to relocate the businesses of Hardware and Joinery reflecting the fact that at the time the Initial Offer was made, the Authority understood Hardware and Joinery to have an interest in the Land as occupiers and Hardware to be conducting the business on the Land.

166 The Initial Offer was a statutory offer and must be construed in the statutory context in which it was made. The Initial Offer was expressed to be an offer of compensation for the purposes of s 31 of the LAC Act. Section 31(1) required the Authority to make an offer in writing to each claimant of whose entitlement to compensation it was aware. At the time of making the Initial Offer, the Authority was aware that each of Timber, Hardware and Joinery claimed an entitlement to some form of compensation because of the compulsory taking of the Land. In these circumstances, the Authority was obliged to make an offer in writing to each of Timber, Hardware and Joinery. However, it purported to do so by way of a 'joint' offer.

167 Further, the offer made pursuant to s 31(1) of the LAC Act was required to set out the amount or amounts that the Authority assessed as fair and reasonable (having regard to the different factors for compensation listed in s 41(1)), based on the information then available to the Authority and on the assumption that the claimants held the interests in respect of which the offer was made. Again, the Authority purported to comply with this requirement by making a single offer to all three of the claimants containing offers of amounts of compensation for the relevant factors for compensation identified in s 41(1) that it says had to be accepted in whole or rejected in whole.

168 The Initial Offer must be construed objectively in the light of the legislative requirements. Given the requirement under the LAC Act to make an offer to each claimant of whose entitlement to compensation the Authority was aware, the offer attributed to Hardware and Joinery for relocation costs must be taken to be a separate offer made to them in respect of the loss they suffered as a result of having to relocate the business. It flows from this conclusion that, as the claimants submitted, the Initial Offer must be construed as separate offers made to each of complainants in respect of the loss that they suffered as a consequence of the compulsory acquisition of the Land.

169 The existence and form of the indemnity condition does not gainsay this conclusion. To the extent that a claimant accepts a component of the offer made to it, it gives the indemnity and release in relation to that component of that offer.

170 Furthermore, even if it were accepted that the Initial Offer was a single indivisible offer made jointly to the claimants, the LAC Act expressly provides for the partial acceptance of offers, as is reflected in the Form 10 that was attached to the Initial Offer. An offer made pursuant to s 31 of the LAC Act, as stated in the accompanying Form 10, is generally capable of acceptance in whole or in part. The Authority did not depart from the language of the prescribed form in making the Initial Offer.

171 In my view, the submission that the Initial Offer was a single offer made to the complainants jointly that could not be disaggregated to allow separate acceptance of different components cannot be accepted having regard to its language and the statutory context within which it was made. By the inclusion of the Table, the Initial Offer is quite specific as to its parts and as to the persons to whom the component parts are offered. Furthermore, the Authority does not contend that it was not open to the claimants to accept some of the components and not others - it was plainly open to them, for example, to accept the offers for legal, valuation and submission expenses, but reject the offers for the other components. Similarly, it cannot be the case that it was not open to Timber to accept the amount offered for solatium when the other two interest holders - Hardware and Joinery - were given a valuation of nil in the certificates of valuation attached to the Initial Offer and solatium was therefore irrelevant to them. In fact, the Authority's true position is that only the offers for the value of the Land and for relocation costs were interdependent and incapable of separate acceptance or rejection. This is not reflected in the text of the Initial Offer and is not consistent with the statutory scheme for the assessment of compensation.

172 The Authority submits that in construing the Initial Offer, it is necessary for the Court to consider both the wording of the offer itself and the objective facts that were in existence at the time the Initial Offer was made and at the time the offer was accepted. Those objective facts fall into two categories: the statutory context and matters known to the parties. The Authority says that in making the Initial Offer, it made it plain that the offer of compensation for relocation costs was premised on agreement about the basis upon which the market value of the Land would be assessed.

173 The Authority submits that the objective facts as between the parties overwhelmingly demonstrate that the claimants knew that the Authority intended its offer for relocation costs to be an offer that was not open for acceptance if Timber made a claim for the market value of the Land based on its highest and best use for residential development. It was understood, so the Authority says, that the Initial Offer would include an allowance for disturbance loss only because the offer for land value was made on an 'in use' basis. The Authority points to numerous instances when it advised the claimants that an entitlement to compensation for disturbance loss would only arise if the market value of the Land was assessed on an 'in use' basis.

174 Ms Glynn gave evidence that she did not intend the Initial Offer to be capable of partial acceptance and that she only provided a breakdown of the Initial Offer identifying the individual claimants because AP had requested a breakdown in its letter of 10 October 2014. When she prepared the Initial Offer, she did not anticipate that the claimants would seek to accept the offer for relocation costs and make a claim for market value based on the highest and best use of the Land. Mr McQuilton also gave evidence that he intended that the Initial Offer be a single document (offer) put on a joint basis to (all) the claimants.

175 The claimants submit that the subjective intentions of the Authority's representatives are not relevant to the construction of the Initial Offer, which is to proceed by reference to its terms alone.

176 In Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd,[19] the High Court of Australia (French CJ, Nettle and Gordon JJ) described the principles applicable to determining the meaning of terms of a commercial contract as follows:[20]

In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable business person would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

177 More recently, in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd,[21] again in the context of a commercial contract, the plurality of the High Court emphasised that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract.[22]

178 The Initial Offer was a statutory offer made pursuant to the LAC Act. It was not a conventional commercial contract. It was made pursuant to a statutory obligation imposed on an agency authorised to compulsorily acquire land for public purposes to set out and make an offer of amounts that it assessed to be 'a fair and reasonable estimate' of the amount of compensation payable to each claimant of whose entitlement to compensation it was aware and in the context of the procedures for making and responding to offers and claims set out in the LAC Act. These are plainly matters outside the four corners of the offer document itself that must influence its construction.

179 Moreover, the Initial Offer is not free of ambiguity or susceptible of only one meaning. Although I have found it to contain separate offers to the three separate claimants, its written terms also contain some signposts pointing to it being a single offer made to all three claimants jointly. It is, in short, a mongrel of an offer.

180 It does not, however, follow that the intentions of Ms Glynn and Mr McQuilton are relevant to the construction of the Initial Offer, even if they were communicated to the claimants. The intentions of those representing the Authority cannot affect the meaning of the Initial Offer in circumstances where those intentions were not consistent with the scheme for the assessment of compensation in the LAC Act. Furthermore, there is a conflict between the form of the Initial Offer and the Authority's asserted resolve and intention to make an offer for relocation costs only on the basis of acceptance of an 'in use' assessment of the value of the Land. The Initial Offer was broken into components and it attributed different components to different entities in the Provans Group. It said nothing about one component or offer being available only on the acceptance of another. It said nothing about the Provans entities being treated 'as one'.

181 The claimants did not accept and did not indicate acceptance of the Authority's view that the market value compensation should be limited to an 'in use' assessment. Although the decision taken by the Authority to make an offer for relocation costs was generated by its willingness to accommodate Provans by ensuring that funds for relocation became available, the offer for the market value of the Land based its 'in use' value was unusual, if not controversial, in light of the legislative requirements and not something that claimants would readily accept or agree to. Indeed, Ms Glynn had to persuade VGV to provide certificates of valuation on an 'in use' basis. Mr Haines, who prepared the valuation report supporting the certificates of valuation also struggled with the concept. Ultimately, he arrived at an 'in use' value simply by treating market rent as a yield to produce a valuation that in no way reflected what a willing but not anxious purchaser would have paid for the Land.

182 It is true that Ms Glynn and Mr Brahe of RK repeatedly warned Provans and its advisors that the Authority did not expect to receive a claim for market value based on the highest and best use of the Land if relocation costs were paid. However, that does not denote acceptance of or agreement to that proposition by Provans. To the contrary. The fact that it was necessary to repeat the warning several times indicates that Provans did not signal its agreement to that course of action.

183 Ultimately, Provans left it to the Authority to decide how to formulate the Initial Offer. The Authority believed that the offer to the claimants could be made on one of two bases, which were mutually exclusive. Ms Glynn gave evidence that she preferred to make an offer on the 'highest and best use' basis with nothing for relocation expenses, having formed the view that this would provide a higher amount of compensation. Mr McQuilton gave evidence that he believed that market value based on existing use plus relocation costs would provide the highest compensation to Provans.[23] The Authority took legal advice on its options and followed that advice by making an offer that included an offer of relocation costs and contained a breakdown identifying the different Provans entities to which different amounts of compensation were attributable.

184 I do not accept that the Authority only broke the Initial Offer into component parts applicable to the different Provans' entities because it was requested to do so by AB on behalf of Provans. The Authority was advised by RK prior to making the Initial Offer that the offer should not be a collective offer. RK (Mr Brahe) wrote:

In making its first offer of compensation, I confirm our discussions to the effect that the offer should make it clear as to its components and the appropriate member of the Provan's group to which a particular item of compensation applies.

185 The Authority was advised to offer 'payment of relocation expenses for the business, Provans Timber and Hardware Pty Ltd', and it did so. That offer, on its face, was capable of being accepted by Hardware.

186 In my view, the form of the Initial Offer did not preclude Hardware from accepting the offer for relocation costs. The Authority made an offer to Hardware for its relocation costs and Hardware accepted that offer. The amount offered for relocation costs was 'not disputed' for the purposes of s 31(8) of the LAC Act.

187 In the alternative, the Authority submits that the offer for relocation costs in the Initial Offer was 'disputed' by Timber's claim for market value in the amount of $12.7 million in the Response to the Initial Offer. The Initial Offer was made to all of the claimants on a common methodological basis, being an 'in use' basis. Insofar as the claimants wished to be compensated for the Land on a 'highest and best use' basis, they impliedly disputed the Authority's offer in relation to those heads of compensation that were premised on the acceptance of an assessment of the value of the Land on an 'in use' basis ― namely, the Authority's offers for market value and disturbance loss.

188 Again, this argument assumes that the Initial Offer was a single indivisible offer to all three claimants, a proposition that I have rejected. I do not accept that the offer of relocation costs remained or became 'disputed' for the purpose of s 31(8) when Timber made its claim for the market value of the Land in the Response to Initial Offer.

189 Although the Authority's primary submission is that the first part of s 31(8) is not engaged because the Initial Offer for market value and disturbance loss was not 'not disputed' (these components of the offer were not validly accepted and therefore remained in dispute), it submits, in the alternative, that the second part of s 31(8) is engaged, in that 'information' contained in the Initial Offer and relied upon by the Authority in making the Initial Offer was 'incorrect'.

190 The incorrect information upon which the Authority relies relates primarily to its adoption of an 'in use' assessment of Timber's entitlement to compensation for the Land. The Authority also relies on what is submits was a mischaracterisation by the claimants of their respective interests in the Land and its own mistaken understanding that the claimants agreed to being treated 'as one' for the purposes of the Initial Offer.

191 In considering these submissions, it must be borne in mind that the Initial Offer in fact comprised an offer to each of the claimants and that the offer that the Authority says that it is not bound by is the offer for relocation costs made to and accepted by Hardware.

192 The claimants submit no incorrect information was relied upon or infected any part of the offer for relocation costs that was made to Hardware. It was known and anticipated that Hardware was intending to relocate, the costs of relocating were assessed and it was always intended that Hardware would be offered its relocation costs. If there was any incorrect information, it was a belief that the market value of the Land could be assessed and should be assessed on an 'in use' basis rather than on the highest and best use of the Land. That mistaken belief may have infected the offer made to Timber but not the offer made to Hardware. Furthermore, if there was a mistake in relation to the offer made to Timber, then the Authority had the opportunity to deal with it when it came to make its reply.

193 There is force to this submission. When removed from the muddle of a 'combined' offer that purportedly qualified the entitlement to relocation costs by reference to how the market value of the Land would be assessed, the offer for relocation costs was based on relatively straightforward facts and circumstances. The Authority retained Mr Aghion of BRM to report on what it would cost to relocate the business to the replacement premises and it adopted the figure at the bottom of the range of value identified by Mr Aghion. There is no suggestion that Mr Aghion's estimate was incorrect or in any way flawed. Although the offer was made to both Hardware and Joinery and accepted by both of them, the expenses were incurred by Hardware only and Joinery makes no claim in respect of them.

194 The offer for relocation costs assumed that the occupier complainants were entitled to such compensation. The Authority submits that the Initial Offer was based on incorrect information about the claimants' respective interests in the Land. Mr McQuilton gave evidence that at the time of making the Initial Offer, he assumed that Hardware's interest in the Land was something more than a monthly tenancy. He said that had he known it was merely a monthly tenancy, he would not have authorised the making of an offer of compensation for relocation costs. Likewise, he would not have made any allowance for relocation costs had he known that Timber would make a claim for the market value of the Land based on its highest and best use.

195 The Authority says that on or about 6 August 2014, it sought information regarding the claimants' and any other interests in the Land. In response, on or about 15 August 2014, each of the claimants asserted an interest in the Land. The Authority now says that this was incorrect, both as to the existence of an 'interest' in the Land and as to the nature of the interest. Joinery did not have any interest at all and Hardware did not have an interest in the form of a lease. Had the Authority known that Hardware's interest in the Land was a mere monthly tenancy or a tenancy at will, the Authority would not have made an offer of compensation for relocation costs.

196 According to the claimants, however, the evidence unequivocally demonstrates that prior to making the Initial Offer, the Authority was well aware of the precise role and interest held by each of them as separate corporations, each engaged in distinct spheres of commercial activity. The evidence discloses that prior to preparing the first Offer Summary in August 2014, Ms Glynn had obtained company searches for each claimant, had received details of the role of each claimant company from Ms Murone (who had been given the financial accounts of each of the claimant companies) and knew that Timber owned the Land, that the Land was not owner-occupied and that Hardware operated the business and paid rent and outgoings on the Land. Ms Glynn also knew that there was no formal lease.

197 In his evidence, Mr Rosenberg confirmed that the three claimants were separate and distinct entities. He confirmed that Hardware paid rent to Timber prior to and after 2011. He agreed that while initially he thought there was a lease, AB subsequently advised the Authority, prior to any offer being made, that there was no lease.

198 At the time that it formulated and made the Initial Offer, the Authority had a reasonable level of knowledge about the terms of Hardware's occupancy of the Land. It knew that there was no formal lease between Timber and Hardware and was apprised of the broad terms of the arrangement between them: that Hardware paid Timber a non-market rent of $32,400 per annum and covered outgoings. The Authority also knew that Hardware had conducted the business from the Land for a very long time. Insofar as the precise nature of Hardware's interest in the Land was an issue, the Authority could have taken steps to better inform itself about that (and, indeed, about the interest of Joinery). It would seem, however, that the Authority decided that the most convenient way to deal with uncertainties of this kind was to treat the Provans entities as one. The Authority commenced its negotiations with Provans and proceeded to make the Initial Offer on the basis that 'Provans' had an entitlement to relocation costs and, by extension, that the occupiers had an interest in the Land giving rise to such an entitlement.

199 This assumption was effectively endorsed by Provans in its vigorous pursuit of relocation costs. The entitlement and pressing need to be compensated for the costs of relocating the business was the starting point for its discussions with the Authority and drove the negotiations through to the making of the Initial Offer.

200 However, I am not persuaded that the Authority was misinformed about Hardware's interest in the Land such that it proceeded on a mistaken assumption about the nature of its obligations when it made the Initial Offer. The Authority knew that Hardware occupied the Land pursuant to an informal lease arrangement. It knew, in effect, that Hardware was a tenant at will. The offer made to Hardware in the Initial Offer did not contain information that was incorrect in this regard.

201 Nor am I persuaded that the offer of an 'in use' value for the Land involved 'information' that was 'incorrect'. The Initial Offer contains no 'information' that states, expressly or impliedly, that the relocation expenses come with an 'in use' value of the Land and not otherwise, or that one component cannot be accepted without the other. Nothing 'contained in the offer' in that respect was 'incorrect'. The Authority made a deliberate decision to value the Land on an 'in use' basis in order, so it was thought, to align land value with the offer for disturbance losses and thereby prevent 'double dipping'. The Authority had legal advice supporting this course of action. It proceeded in the full knowledge of what it was doing.

202 In my view, the fact that the Initial Offer was predicated on the value of the Land being assessed on the basis of its existing use does not mean that the Initial Offer as a whole, or the offer for relocation costs considered independently, contained information that was incorrect. If the Authority was mistaken about its ability to make an offer based on the 'in use' value of the Land, it made the offer for relocation costs specifically and the Initial Offer generally on an flawed conceptual basis, not an incorrect factual basis.

203 In any event, the offer for the 'in use' value of the Land was made to Timber. The offer that is said by the claimants to be not 'not disputed' is the offer of relocation costs, which I have concluded was made to Hardware. The Authority's case is that the offer of relocation costs formed part of the matrix of interdependent components in the Initial Offer and that acceptance of the offer for relocation costs was contingent upon acceptance of all of its components (or, at least, the component for market value). On this basis, the 'incorrect' 'information' comprising the adoption of an 'in use' market value for the Land would infect each element or component of the Initial Offer, including the offer of relocation costs. However, for the reasons given, I do not accept that the Initial Offer can be characterised in this way.

204 The final basis upon which the Authority contends that the Initial Offer contained incorrect information is its own misunderstanding that the complainants agreed to be treated 'as one' for the purposes of the Initial Offer.

205 Both Mr McQuilton and Ms Glynn gave evidence that they operated on the basis of such a misunderstanding and that the Initial Offer was made on that basis. If this amounts to 'incorrect' 'information', then it will infect the offer made to Hardware for relocation costs.

206 It is plain from the chronology of events set out above that the starting point for the discussions between the Authority and Provans about the impact of the EWL Project on Provans was that the relocation of the business would be a priority. The way in which the Initial Offer was formulated reflected a desire to minimise disruption to the business and to facilitate its proposed relocation to the replacement premises. It was a response to what was, in effect, a request for relocation costs by Provans. In the circumstances, it was unsurprising that Ms Glynn's discussions with Messrs Rosenberg and Heverin focussed on the suitability of the replacement premises and the costs of the relocation. Those discussions appeared to proceed without express consideration being given to which of the Provans entities was entitled to such compensation.

207 However, is also the case that the Authority repeatedly stated to Provans that it would not offer compensation for relocation costs and for market value based on the highest and best use of the Land, indicating that the form of the offer remained un-agreed and unresolved. There remained uncertainty as to how the initial offer would be formulated, and therefore about the entity or entities to whom it would be addressed. Ms Glynn attended a meeting with Provans on 17 September 2014 in which Mr Blogg of AP stated a claim for market value at highest and best use could be made as well as a claim for relocation costs. Ms Glynn gave evidence that she left that meeting with an understanding the Authority would be making a joint offer, but accepted that Mr Blogg did not express agreement with what had been said on behalf of the Authority and had reserved his client's rights.

208 Moreover, before making the Initial Offer, the Authority actively considered and sought advice as to whether it could treat all three entities as one, and was advised by its solicitors not to do so.

209 The Authority's legal adviser, Mr Brahe, did not give evidence. However, the contemporaneous documents show that he advised the Authority that in order to comply with the LAC Act, it was necessary to identify separately each component of the offer and the entity to whom the component was being offered. There is no evidence of advice given by Mr Brahe (or anyone else) that acceptance of part of the offer was or should be understood to be conditional on the acceptance of the other part, or that the offer could only be accepted by all three companies. The Authority had legal advice that it could make a global 'without prejudice' offer to all three companies. Mr Brahe recommended that the Authority make two offers: a 'without prejudice' global, lump sum offer; and a statutory offer which identified its various components and the entity to which the component applied.

210 Mr McQuilton agreed that the Initial Offer signed by Mr Holland was based on and gave effect to Mr Brahe's legal advice. He confirmed that the Table that went to the Valuer-General for approval expressly broke up each component that was to be offered and identified the interest that it applied to, and he agreed that it indicated that the relocation expenses of $2.871 million were for Hardware. The Table was, of course, reproduced in the Initial Offer.

211 In my view, the evidence does not demonstrate an understanding by the Authority that the claimants had agreed that the Initial Offer would be made on a consolidated basis and that they would be treated as a single entity. Insofar as Ms Glynn or Mr McQuilton had that understanding, it was not a reasonable understanding in the circumstances and, importantly, it was not reflected in the course of events leading to the making of the Initial Offer.

212 The claimants make the further submission that, in any event, no incorrect information of the kind alleged actuated the decision-makers in making the Initial Offer because the decision-makers were neither Mr McQuilton nor Ms Glynn. In light of my conclusion that the Initial Offer was not based on incorrect information, it is unnecessary to consider this question.

213 For the reasons I have given, the offer of relocation costs in the Initial Offer was not based on any incorrect information and was therefore binding on the Authority pursuant to s 31(8) of the LAC Act. Hardware is entitled to the relocation costs.

214 In case I am wrong about this, and the offer to Hardware is not binding, I propose to consider whether Hardware is entitled to relocation costs under the LAC Act on the basis that they are disputed by the Authority. This consideration will take place in the context that Timber is entitled to compensation for the market value of the Land based on its highest and best use.

215 Loss attributable to disturbance is recoverable by a claimant provided that it is pecuniary in nature and occurs as the natural, direct and reasonable consequence of divestment of the claimant's interest in the acquired land.[24] It is not in dispute that relocation costs may be the natural, direct and reasonable consequence of the divestment of a tenant's interest in land.

216 However, the Authority submits that Hardware is not eligible for compensation for the costs of relocating the business for the following reasons:

(a) Hardware's interest in the Land was of an ephemeral kind such that any loss suffered was not the 'natural, direct and reasonable consequence' of the divestment of its interest in the Land;

(b) Hardware would have moved to the replacement premises anyway;

(c) it is inconsistent to compensate Timber for the loss of the Land valued at its highest and best use for residential development and to compensate Hardware for its relocation costs when Hardware would have been required to relocate in order to realise the value of the Land for residential development. This engages s 41(2) of the LAC Act;

(d) there is authority that the Court should follow that in some circumstances members of a corporate group should be combined when assessing entitlements to compensation for the compulsory divestment of land; and

(e) there is no evidence that Hardware spent $2.871 million relocating to the replacement premises.

217 The Authority submits that where a claimant holds a monthly tenancy terminable at will, its interest in the land is ephemeral and relocation expenses cannot be the consequence of the divestment of that interest. Alternatively, if they can be, they are not the 'natural, direct and reasonable' consequence of the divestment of that interest. Given the nature of Hardware's interest in the Land, it could have no expectation of receiving relocation costs if it was required to relocate.

218 According to the Authority, the proposition can be tested in this way. It was open to the Authority to acquire only the freehold interest in the Land and, upon acquiring that freehold interest, it could have simply terminated Hardware's occupancy on the ground that Hardware had no legal or equitable entitlement to ongoing occupancy of the Land. In that circumstance, Hardware would have no entitlement to relocation costs or costs that resulted from closing the business. Likewise, if Timber's interest in the Land had been sold to a residential developer, the residential developer would have had no obligation to Hardware.

219 Compensable loss attributable to disturbance must be caused by the divestment of the interest in the acquired land. Section 40 of the LAC Act relevantly provides:

Loss attributable to disturbance means any pecuniary loss suffered by a claimant as the natural, direct and reasonable consequence of -

...

(b) the fact that an interest of the claimant in that land has been divested or diminished, being a pecuniary loss for which provision is not otherwise made in this Part [Part 4 - Measure of Compensation].

220 In Halwood Corporation Ltd v Roads Corporation[25] and Melbourne City Link Authority v Teford Pty Ltd,[26] Batt JA (first as a judge of the Trial Division and then as a Justice of Appeal) authoritatively set out the approach to be adopted when construing and applying the words 'the natural, direct and reasonable consequence'.

221 In Halwood, Batt J considered the meaning of the expression in the context of s 98 of the Planning and Environment Act 1987, which gives a right to compensation for financial loss where, among other things, land is reserved for a public purpose under a planning scheme. Batt J referred to definitions in the Shorter Oxford English Dictionary to conclude that 'natural' meant arising according to the usual course of things;[27] 'direct' meant without intervening agency or immediate;[28] and 'reasonable' meant not going beyond the limit assigned by reason or not extravagant or excessive.[29] The three adjectives in combination connoted a very close and limited connection between the event giving rise to compensation and the financial loss suffered.[30] In particular, the word 'direct' stood out as being eloquent of the immediacy required between the event (in that case, the imposition of the reservation) and the financial loss suffered.[31]

222 In Teford, the Court of Appeal considered the meaning of those words in the context of the LAC Act. Batt JA (with whom Tadgell and Chernov JJA agreed) referred to the view that he expressed in Halwood, and emphasised his conclusion that the three adjectives in combination connoted a very close and limited connection between the event and the financial loss suffered.[32] In considering whether a purchase of replacement land was the 'direct' consequence of the compulsory acquisition, Batt JA rejected as a 'direct' consequence the purchase of replacement land that had its genesis in the compulsory acquisition but where the compulsory acquisition was 'no more than a necessary condition' for the purchase of the land, which involved 'the independent act of the [claimant] in making, at its choice, an additional investment'.[33]

223 More recently, in Secretary to the Department of Economic Development, Jobs, Transport & Resources v Manor Lakes (Werribee) Pty Ltd,[34] the Court of Appeal endorsed what was said in Teford:[35]

We would respectfully agree with the view that in relative terms the combination of the words involved in the phrase 'natural, direct and reasonable consequence' connotes a very close and limited causal connection.

224 It is therefore necessary for Hardware to establish that the relocation costs were the natural, direct and reasonable consequence of the compulsory acquisition of the Land in the sense that there was 'a very close and limited connection' between the divestment of Hardware's leasehold interest in the Land and its incurring costs to relocate the business to the replacement premises. The compulsory acquisition of the Land must be more than merely the genesis of or a necessary condition for the incurring of the relocation costs.

225 Hardware's interest in the Land was a tenancy terminable at will. This interest was so attenuated as to not have any market value: the value of Hardware's leasehold interest was given by the Authority's valuer as 'nil' and Hardware did not dispute this valuation. Hardware had no ongoing legal entitlement to occupy the Land - it did so only with the consent of Timber, which was and would be freely given for so long as their interests were aligned. On one view, the real detriment to Hardware was caused by the Authority taking away Timber's interest in the Land, resulting in the constructive withdrawal of consent to Hardware's occupation of the Land.

226 The New South Wales Court of Appeal considered causation in the context of a lease terminable at will in Roads and Maritime Services v United Petroleum Pty Ltd,[36] holding that the respondent ('United'), which operated a business as a tenant at will on land owned by a related corporation, was not entitled to compensation for loss of profits upon the divestment of its interest in a compulsory acquisition of the land because the causal connexion was not established.

227 Section 59(f) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ('Just Terms Act') provides that 'loss attributable to disturbance' means, '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'.[37] The causation requirement is relevantly very similar to the causation requirement for loss attributable to disturbance in the LAC Act.

228 In holding that United had no entitlement to compensation for loss of profits, Basten JA referred to the decision of the High Court in The Minister v The New South Wales Aerated Water and Confectionary Company Limited.[38] While acknowledging it was concerned with the value of the lessee's interest in the land and not with a claim for disturbance, and that it involved a different statutory regime, he confirmed that it remained a statement of principles that continued to apply, at least in New South Wales. In this context, Basten JA said:[39]

it would be inconsistent with the reasoning in Aerated Water to allow the tenant compensation for disturbance based on the assumption that the interest in land had value beyond the termination of the lease, being a value not reflected in the market value of the lease. What would then be compensated would not be disturbance of the tenant's interest in land but disturbance of the continued operation of the business, unsupported by an interest in land. That would not fit the description of 'loss attributable to disturbance of land', as defined in s 59.

229 In other words, United was not entitled to be compensated for profits it would have made beyond the term of the lease because it was not in any case entitled to remain in occupation of the land.

230 Sackville JA reasoned to the same result differently. After noting that the compound expression 'direct and natural consequence of the acquisition' operated as a limitation on what would otherwise be the scope of s 59(f), he said:[40]

United Petroleum's interest at the date of the acquisition was terminable on one month's notice. The lessor was entitled to give that notice at any time. In these circumstances, it cannot be said that United Petroleum's long-term loss of profits by reason of the closure of the business is a 'direct and natural consequence' of the acquisition of its interest in the land on which the business was conducted.

It is one thing to say ... that the closure of the business was a direct and natural consequence of the compulsory acquisition. It is quite another to say that United Petroleum's loss of profits from the business was a direct and natural consequence of the compulsory acquisition. The principal cause of United Petroleum's loss of profits was the decision to conduct a business intended to operate in the long term under a lease which could be terminated at any time on very short notice.

231 Preston CJ of LEC also held that the causation requirement was not met because the forgoing of profits was a consequence of United's decision to conduct its business under a tenancy at will terminable on one month's notice.[41]

232 Both Basten JA and Sackville JA stated[42] that their reasoning was inconsistent with the reasoning in George D Angus Pty Ltd v Health Administration Corporation[43]. Preston CJ also stated that the construction of s 59(f) in that case 'should be revisited and revised' and that a different construction was to be preferred.[44]

233 In George D Angus, the New South Wales Court of Appeal dismissed an appeal from a decision to grant compensation for loss of income/profits to a business that occupied the acquired land as a tenant at will. Tobias AJA (with whom Emmett and Leeming JJA agreed) said:[45]

In the present case, as the respondent's tenancy was terminable on one month's written notice, it had no market value. But the fact that it was compulsorily acquired thereby converted the relevant interest into an entitlement to claim compensation in accordance with, relevantly, Pt 3 Div 4 of the Just Terms Act: see s 37. That acquisition gave rise to loss attributable to disturbance where that loss related to the actual use of the land and was reasonably incurred as a direct and natural consequence of the acquisition. That consequence was triggered by the compulsory extinguishment of an interest in the land as defined: the nature of that interest mattered not for the purpose of s 59(f). Its work was done when it was acquired and its only relevance was its influence on its market value as at the date of acquisition.

234 While in George D Angus the court held that the ephemeral nature of the leasehold interest was not relevant to disturbance loss, in United Petroleum the same court (differently constituted) held that the nature of the interest did matter for the purpose of establishing the requisite causal connection and that a tenancy terminable at will was insufficient to entitle the holder of the leasehold interest to compensation for disturbance loss in the form of lost profits.

235 In both United Petroleum and George D Angus, what needed to be causally related to the divestment of the interest in question were events that occurred after the divestment, during a period when the claimant would have had no legal entitlement to occupy the land pursuant to its tenancy at will. Its tenancy would have expired. Here, the need to relocate arose immediately upon the divestment of Hardware's interest in the Land, that is, upon the service of the Notice of Acquisition. Although Hardware was given some time to vacate the Land, it was required to take steps to do so straight away. As a result, Hardware's claim for relocation costs was not a claim for losses arising after its leasehold interest would have expired. Hardware had an interest in the Land when it was required to relocate. Unlike in United Petroleum, compensation paid to Hardware for relocation costs is for disturbance of Hardware's interest in the Land, not for disturbance of the continued operation of the business unsupported by an interest in the Land. Nor could it be fairly said that the relocation costs were a function of Hardware's decision 'to conduct a business intended to operate in the long term under a lease which could be terminated at any time on very short notice'.[46] It was not the limited term of the Lease that generated the need to incur relocation costs but the acquisition of the Land.

236 Furthermore, the LAC Act contains a provision that was enacted in response to the decision in Aerated Water to recognise that the interest in land may continue beyond the existing term of the lease. Section s 41(6) provides:

If the claimant's interest in the acquired land was liable to expire or to be determined, the assessment of compensation payable under this Part in respect of that interest must take account of any reasonable prospect of renewal or continuation of the interest.

237 Section 41(6) applies to interests in land that are liable to 'expire' or 'be determined' - quintessentially, leasehold interests. The assessment of compensation under Part 4 of the LAC Act in respect of such an interest must take account of 'any reasonable prospect of renewal or continuation of the interest'. Compensation under Part 4 includes compensation for loss attributable to disturbance. Section 41(6) therefore requires the likelihood of Hardware remaining on the Land for the foreseeable future to be taken into consideration when assessing the compensation payable arising from the compulsory acquisition of the Land, including for disturbance loss.

238 According to the claimants, the reference in s 41(6) to the 'continuation' of the interest, applied to the facts of this case, establishes that Hardware should be regarded as the holder of an interest in the form of an occupancy for as long as it wished to remain on the Land. It was tenant at will for over fifty years and the reasonable prospect of the continuation of its occupancy was overwhelming. The evidence was that, absent the compulsory acquisition of the Land, Hardware would not have moved and would have been permitted to conduct its business on the Land for as long as it wished. Furthermore, it could and would have paid rent, including market rent based on the highest and best use value of the Land, if Timber had so required.

239 The Authority concedes that the first part of s 41(6) is engaged if Hardware was occupying the Land pursuant to a tenancy terminable at will. Hardware had an interest in the Land that was liable to be determined within the meaning of s 41(6) of the LAC Act. The Authority submits, however, that Hardware did not have a reasonable prospect of the continuation of its interest in the Land in circumstances where the owner of the freehold - Timber - sought compensation for the loss of the Land assessed on the basis of vacant possession.

240 The Authority submits that the purpose of s 41(6) is to ensure that compensation is based on real market circumstances, rather than on purely theoretical circumstances. As a result of Aerated Water, the position was that any prospect of the renewal of a lease was irrelevant. Section 41(6) was intended to remedy the unfairness that this caused by requiring regard to be had to the actual circumstances of the interest in question. According to the Authority, the matter must therefore be considered by reference to the reasonable prospect of the continuation of Hardware's leasehold interest in the market, which turns on what the hypothetical purchaser of the Land would do. If the hypothetical purchaser bought the Land as an investment for a long term hardware store and the tenant had a monthly tenancy terminable at will, there would be a reasonable prospect of the continuation of that interest. However, if the hypothetical purchaser intended to use the Land for residential development, that prospect would not exist. In the context of this case, where the highest and best use of the Land was for a purpose that was incompatible with the continuation of a hardware business, there was no reasonable prospect of the continuation of the use. As a consequence, so the Authority contends, s 41(6) does not advance Hardware's position.

241 For their part, the claimants submit that the starting point in applying s 41(6) is to recognise the interest of the particular tenant. The LAC Act sets out a causal link for compensable loss based upon the individual claimant and its circumstances. In determining whether relocation expenses can be recovered, the starting point is the claimant's particular interest in the land. It is therefore necessary to consider the particular circumstances that pertain to the tenancy, including relationships that bear on whether or not there is a reasonable prospect of its continuation. In this case, Hardware had had an interest in the Land for over 50 years and shared a common purpose with Timber, which was to secure the ongoing success of the business.

242 I accept the claimants' submission that s 41(6) requires the interest of the claimant to be considered in its context, that is, the context in which it actually exists as an interest in land. Whether there is a 'reasonable prospect' of the continuation of the interest depends both on the nature of the interest and on the surrounding circumstances. In this case, Hardware's occupancy depended on a number of factors: Timber's good will; Timber retaining its interest in the Land as landlord; and, in the future, Timber foregoing the opportunity to realise the potential of the Land. That does not, however, require Hardware's tenancy to be viewed through the eyes of the hypothetical purchaser of the Land. That is the paradigm for the assessment of the market value of the Land; it is not the paradigm within which losses attributable to disturbance must be assessed. The evidence was that, absent the compulsory acquisition of the Land, Timber would have permitted Hardware to continue to operate the business on the Land beyond the date of acquisition. While I have some doubts about how long this would have persisted given the significant uplift in land value resulting from its rezoning, I am satisfied that it would have continued beyond the acquisition date. That is enough for the compulsory acquisition of Hardware's leasehold interest in the Land to be the 'natural, direct and reasonable' cause of Hardware's need to relocate the business and thereby incur relocation costs. The imperative to relocate occurred during the term of Hardware's leasehold interest in the Land or during its very likely continuation absent the compulsory acquisition, namely, upon or very shortly after the service of the Notice of Acquisition.

243 The Authority further submits that the relocation expenses are not the natural, direct and reasonable consequence of the acquisition and therefore not losses attributable to disturbance because Provans would have relocated to the replacement premises anyway, that is, absent the compulsory acquisition of the Land. In fact, so the Authority says, Provans was intending to relocate to the replacement premises well before it received any communication from the Authority concerning the EWL Project.

244 In support of this proposition, which Provans denies, the Authority says that the first communication that Provans received from the Authority regarding the possible acquisition of the Land was in July 2013 but it started to plan for the relocation of the business in 'roughly early to mid-2012'. The Authority submits that these plans were extensive, involving:

(a) several telephone conversations with the architect, Mr Dixon, regarding the possible move;

(b) retaining Mr Dixon to attend the Lysteron site;

(c) instructing Mr Dixon to prepare plans of the Lysteron site (specifically, for the wool store area); and

(d) requesting Mr Dixon to issue an invoice to Lysteron for his work.

245 Mr Dixon rendered additional invoices on 14 March 2013 and 17 July 2013 for work that he undertook for the relocation of the business in 2013, the work being described in similar terms to the 2012 invoice rendered to Lysteron. In addition, the Authority points to evidence of Mr Heverin, who accepted in cross-examination that, all other things being equal, it made sense that a hardware business would move from a residentially zoned site to a commercially zoned site.

246 All of this, so the Authority contends, means that the Court should receive evidence of the claimants' intention that Hardware intended to continue to occupy the Land indefinitely with caution. In other words, the Authority submits that the Court should not accept the assertion that the claimants would not have relocated but for the acquisition.

247 I observe that on the causal analysis above, it was not necessary to find that, but for the divestment of its interest, Hardware intended to occupy the Land 'indefinitely'. It was necessary to be satisfied that the divestment of Hardware's interest in the Land was the natural, direct and reasonable cause of Hardware incurring the relocation costs. I have so found. Hardware occupied the Land at the time of its acquisition and the acquisition, involving the divestment of Hardware's interest and that of Timber, meant that it either had to close the business or move to new premises.

248 In any event, I reject the proposition that Hardware was set to move to the replacement premises regardless of the EWL Project. Messrs Heverin and Rosenberg only started to look for new premises once they were on notice of the prospect of the East West Link proceeding. Mr Rosenberg did not have control of the replacement premises until February 2014. Mr Rosenberg also gave evidence that if Hardware had not moved to the replacement premises, they would most likely have been developed into units. I accept that evidence.

249 For the reasons given, I am satisfied that the relocation costs were the natural, direct and reasonable consequence of the compulsory acquisition of the Land and the divestment of Hardware's leasehold interest.

250 The Authority submits that the Court should not award compensation for relocation costs at the same time as market value based on the highest and best use of the Land because Hardware's disturbance loss claim for $2.871 million based on the existing use of the Land for a hardware store is inconsistent with Timber's market value claim for $12.2 million based on the Land's highest and best use for residential development.

251 In Commonwealth v Milledge,[47] Dixon CJ and Kitto J said the following in relation to the availability of compensation for disturbance loss where land is valued for compensation purposes on the basis of a more profitable use from its actual use: [48]

Disturbance ... is relevant only to the assessment of the difference between, on the one hand, the value of the land to a hypothetical purchaser for the kind of use to which the owner was putting it at the date of resumption and, on the other hand, the value of the land to the actual owner himself for the precise use to which he was putting it at that date. It follows that if in the first instance the land is valued on the basis of its suitability for some more profitable form of use, there can be no justification for making an addition to the value so ascertained because of disturbance. There would be an obvious inconsistency in doing so.

252 Compensation for loss attributable to disturbance is now, of course, provided for by statute and the terms of the LAC Act govern its availability. Section 41(2) applies where the market value of an interest in land is assessed on the basis that the land had the potential to be used for a purpose other than the purpose for which it was used on the date of acquisition. In this circumstance, compensation must not be allowed for, relevantly, 'any loss attributable to disturbance that would necessarily have been incurred in realising that potential'.

253 The Court of Appeal considered the operation of s 41(2) in Manor Lakes, where it said: [49]

The apparent purpose of s 41(2) is to prevent double recovery of compensation. If a claimant recovers compensation on the basis of market value assessed by reference to the potential of the land to be used for a purpose other than the existing use, it would be logically inconsistent to allow claims for loss attributable to disturbance arising out of that existing use.

254 In this case, the market value of the Land is to be assessed based on its suitability for a (much) more profitable use than as a hardware business. As the Authority points out, the hardware business would need to relocate in order to realise the value of the Land for residential development. However, the claims for compensation made by Timber and Hardware are separate claims, and the claimants contend that they are to be treated separately under the LAC Act, so no inconsistency can arise.

255 The issue raised by the Authority is whether s 41(2) is to be construed so as to apply to different claimants, in this case, to Timber in the chapeau and to Hardware in paragraph (b).

256 The Authority submitted that as the chapeau to s 41(2) does not conclude with the words 'in respect of that interest', the section as a whole is not confined to a particular interest (or, more precisely, to a particular claimant). Hence, if the market value of the freehold interest is assessed on the basis that the land has the potential to be used for a purpose other than the purpose for which it is being used on the date of acquisition, then compensation must not be allowed for any loss attributable to disturbance suffered by any other person - the lessee - that would necessarily be incurred in realising the potential of the land.

257 This would mean that an unrelated tenant who was forced to relocate because the land was compulsory acquired would not be entitled to relocation costs if the landowner received compensation for the land based on a higher use.

258 The rationale for this, so the Authority contends, is that there should be no double recovery, even if the interests are separate interests. The LAC Act contemplates that where there are different interests in land, there will be adjustments to the compensation payable to one interest as a consequence of the compensation that is assessed in relation to another interest. In this context, the words of s 41(2) are totally consistent with the section applying to all interests.

259 I observe that the expression 'double recovery' as used by the Authority does not mean the same person recovering twice in respect of the same interest. It is not what is conventionally understood by 'double dipping'. It means different persons receiving compensation where there may be some overlap in the basis for the receipt of compensation.

260 The Authority relies on the New South Wales decision in Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of New South Wales,[50] where Bignold J considered a similar issue in relation to the equivalent provision in the Just Terms Act, holding that the section operates to bar inconsistent claims whether they are made by a single interest holder or by different interest holders, one being the owner and the other being the lessee.

261 Section 61 of the Just Terms Act takes the following form:

If the market value of land is assessed on the basis that the land had potential to be used for a purpose other than that for which it is currently used, compensation is not payable in respect of:

(a) any financial advantage that would necessarily have been foregone in realising that potential; and

(b) any financial loss that would necessarily have been incurred in realising that potential.

262 In Peter Croke, the acquired land was being used for a mobile home business. The first applicant was the registered proprietor of the land and the second applicant was the 'lessee and occupier' of the land. The first applicant held the majority of shares in the second applicant. The second applicant had occupied the land for twenty years prior to the compulsory acquisition but its occupancy was not recorded in any written agreement. The first applicant claimed loss of market value for the compulsory acquisition of its estate in fee simple, while the second applicant claimed compensation for relocation costs and loss of profits as disturbance losses. Bignold J found that the second applicant had the requisite interest in the land as an 'occupier' and that the tenancy was probably a periodic tenancy from year to year or, at the very least, a statutory tenancy at will. However, he held that the two claimants could not make what he considered to be inconsistent claims:[51]

In my judgment, if the first applicant's claim to compensation which is founded on the entitlement to the 'market value' of the land ... were to lead to an assessment of compensation on the basis of a higher and more valuable use of the acquired land than on the basis of its existing use (being the use made by the second applicant, as lessee or tenant, in the conduct of its business) and that assessment on the basis of the higher use was predicated upon the termination of the second applicant's tenancy of the land and the cessation of the conducting of its business thereon, the second applicant would not be entitled to compensation of 'loss attributable to disturbance'.

263 Bignold J considered that the intended effect of s 61 would not be defeated or displaced by virtue of the fact that, in assessing market value based on a higher potential use, the financial advantage that was necessarily foregone or the financial loss that was necessarily incurred was borne by the second applicant rather than by the first applicant.[52] This did not deny that each claimant having an interest in the land was entitled to have his or her claim for compensation separately determined.

264 The Authority relies on Peter Croke as authority for the proposition that the prohibition against inconsistent claims embedded in s 41(2) is not confined to one interest in land but may apply to interests in land held by different persons. The chapeau in s 41(2) is worded in the same way as the chapeau in s 61 of the Just Terms Act. If the assessment of the market value of an interest in land is carried out on the specified basis, compensation must not be allowed for certain items. Those items are set out in the subsections and are not confined to the same interest holder.

265 Furthermore, so the Authority says, Bignold J made the useful observation that his interpretation of s 61 did not visit an injustice on the parties before him because of their 'close relationship'. In this case, the Provans entities are all controlled by the Rosenberg family and are highly interrelated, and there is no unfairness in construing s 41(2) so as to apply to the separate interests of Timber and Hardware.

266 The claimants submit that s 41(2) must be construed consistently with the scheme of the LAC Act, which gives each person with an interest in the land that is divested or diminished by the compulsory acquisition a statutory right to compensation. The LAC Act provides for the making of separate offers to each person of whose interest the Authority is aware and it provides for the individual assessment of compensation in respect of each claimant in accordance with Part 4 of the LAC Act. Loss attributable to disturbance is a separate and distinct head of compensation under s 41(1) of the LAC Act, being compensation for loss sustained by the individual claimant for which provision is not otherwise made. A claim for relocation costs by a tenant is entirely separate from the compensation paid to the registered proprietor for the value of the land.

267 The claimants submit that this is consistent with the common law cases that preceded the enactment of the LAC Act: each person with an interest in land has a 'separate and independent claim to compensation for the value of the interest which is taken from him by the acquisition of the land';[53] and each person is entitled to an assessment of the value of his or her interest independently of the assessment of the value of other interests in the land or of the total value of the land.[54]

268 The claimants further submit that the observations of the Court of Appeal in Manor Lakes concerning 'double recovery' are entirely consistent with s 41(2) engaging with the disturbance loss of the same claimant, because two separate claimants (one seeking market value and one seeking disturbance loss) could not be said to have received 'double recovery' if both claims were to succeed. Section 41(2) applies to a single claimant who is entitled to compensation for market value and who seeks to 'have it both ways' by seizing both the benefit of the theoretical use and the other items based on the actual use of the land.

269 I accept the claimants' submissions. This construction is consistent with the words of s 41(2), read in the context of ss 40 and 41 and the provisions for the assessment of compensation in the LAC Act more generally. The chapeau to s 41(2) refers to 'an interest in land' being assessed for a purpose other than for which the land was used. It does not expressly say that compensation for the matters in paras (a) and (b) must not be allowed 'in respect of that interest'. However, para (a) concerns 'special value', which means the value of any pecuniary advantage, in addition to market value, to a claimant which is incidental to his or her ownership or occupation of that land. In other words, the claimant for whom the land has special value is the same claimant who is entitled to market value in the chapeau. In both cases it is the owner of the freehold estate in the land. It is therefore unnecessary for the words 'in respect of that interest' to be inserted in the chapeau for the purposes of para (a) in order to clarify that the person in para (a) is the same as the person in para (b).

270 That it should be inferred that para (b) also applies to the same claimant is reinforced by the language of s 41(1), which refers to the payment of compensation to 'a claimant' in respect of 'an interest' in land. In assessing the compensation payable to that claimant, regard must be had to a number of factors, including the market value of 'the interest', any special value to 'the claimant', the enhancement or depreciation of the value of 'the interest' of 'the claimant', and so on. Even where there is an effect on other land, the interest in question is the interest of the particular claimant: the definition of 'loss attributable to severance' refers to 'any other interest of the claimant in the acquired land' and to 'any interest of the claimant to other land used in conjunction with the acquired land'. Section 41 deals with the entitlement to compensation of a claimant in respect of that claimant's interest in the land that has been compulsorily acquired, unless otherwise specified. This reflects the more general position, repeatedly referred to in this judgment, that the LAC Act provides for separate offers to be made to each person of whose interest the Authority is aware and for the individual assessment of compensation in respect of each claimant in accordance with Part 4 of the LAC Act.

271 The provision considered in Peter Croke and its statutory context is different from s 41(2) and its particular statutory context. Furthermore, Peter Croke has not received endorsement on this point. It was held to have been wrongly decided in Attard v Transport for New South Wales,[55] where Biscoe J said: [56]

Peter Croke has been considered in two Court of Appeal decisions but not in relation to this point.

No earlier authority supports the decision in Peter Croke, which extends the decision in Horn. In my view, Horn is distinguishable in principle from a case such as Peter Croke or the Camilleri Partnership business claim because the inconsistency on which the Horn decision was based was between one entity, the owner of the land, being paid market value compensation based on a higher potential use which could only be achieved voluntarily by relocating, and the owner also being paid the cost of relocation. There is no such inconsistency in a case such as Peter Croke or the Camilleri Partnership where a tenant claims relocation costs without the market value of its interest in the land being assessed on the higher potential use.

...

I'm driven to the conclusion that, with respect, Peter Croke was wrongly decided on this point and that the error is sufficiently clear that it should not be followed.

272 While the Authority submitted that Peter Croke had been followed in a number of Supreme Court judgments in New South Wales, listing no less than ten such decisions, the claimants point out that none of these cases treated more than one claimant 'as one'. Indeed, in several of the cases referred to, there is only one claimant. Others concerned disturbance loss claims made by joint owners.[57]

273 Ultimately, the meaning of the provision is to be found in the words used by the legislature. In my view, for the reasons given, s 41(2) of the LAC Act does not preclude Hardware from obtaining compensation for loss attributable to disturbance in circumstances where Timber obtains compensation for the market value of the Land based on its highest and best use.

274 It is true that the LAC Act recognises that there may be a multiplicity of different interests in land and that the existence of one interest may affect the value of another. In the normal course, the existence of a leasehold interest will affect the market value of land, either positively or negatively, depending on the term of the lease and what the hypothetical buyer would choose to do with the land in order to realise its value based on its highest and best use. In this case, if Hardware had a leasehold interest entitling it to remain on the Land for any substantial period of time, this would be taken into account in assessing the market value of the Land. It would reduce the amount that the hypothetical purchaser would be prepared to pay for the Land.

275 None of the parties has asked the Court to reduce the compensation payable to Timber for the market value of the Land and none of the valuers has undertaken the exercise that might have permitted the Court to do so.

276 In any event, as I have endeavoured to explain, Hardware's entitlement to relocation costs does not depend on it establishing a right to occupy the Land 'indefinitely' or for any substantial period of time. Its right to be compensated arose on the acquisition of the Land, which gave rise to the need to relocate the business.

277 In case I am wrong about this, and Hardware's entitlement to recover relocation costs is predicated on an ongoing right to occupy the Land, I turn to consider the manner in which the expert evidence dealt with the question of inconsistency raised by the Authority.

278 The claimants make a novel submission in relation to potential inconsistency of the kind alleged. They say that the evidence clearly establishes that it would not have been necessary for Hardware to vacate the Land in order for Timber to achieve the agreed market value of $12.2 million, because Hardware could afford to pay rent commensurate with a reasonable market return on land valued at $12.2 million.

279 The expert valuers retained by Provans, Mr Moore and Mr Dudakov ('Provans valuers'), explained that, based on the value of the business and allowing for the payment of an annual rental of $671,000 (representing a yield of 5.5 per cent on a land value of $12.2 million), the business could continue to operate on the Land until such time in the future as the value of the Land for redevelopment exceeded its 'enterprise value'. Based on annual rent of $671,000, that point would be reached only when the value of the Land for redevelopment increased by 30 percent, that is, to $16 million, and then, only if the value of the business in the meantime remained static or fell.

280 The foundation for this exercise is an indicative enterprise valuation of the business as at 4 December 2014 prepared by Ferrier Hodgson, which assessed the value of the business in the range of $6.4 million to $7.4 million, with a midpoint of $6.9 million.[58] This gave it future maintainable earnings (EBITDA) of $1,240,000 for the 2014 financial year.

281 The Authority submits that the Court should not accept the opinion of the Provans valuers because their reports do not disclose a logical and rational approach to the task of expressing a valuation opinion. More fundamentally, the Authority submits that the Provans valuers did not provide independent expert advice, but effectively acted as advocates for Provans.

282 In late 2015, Mr Moore and Mr Dudakov valued Timber's interest in the Land at $12.7 million and provided a certificate of valuation in this amount for the purposes of the claimants' Response to the Initial Offer. That valuation was based on comparable sales and assumed vacant possession of the Land.

283 On 20 November 2015, after this valuation had been finalised and in the context of the Authority contending that only 'in use' market value compensation plus relocation expenses were recoverable, AP wrote to Mr Moore with some questions in relation to the 'bringing forward' of relocation costs that would not have to have been incurred until a later date in the absence of the compulsory acquisition. The letter continued:

I also note your advice that in your view if Provans could afford to stay at the acquired properties and pay commercial rent (based upon the reasonable rate of [return] reflected in the value of the properties) then again, there would be no need for Provans to have incurred the relocation costs for the Provans Group, at least in the short term.

284 Mr Moore was asked to consider what return (in the form of commercial rent) would be required on the Land if it had a value of $12.7 million and to provide advice as to when Provans would have to have commenced incurring relocation costs had it decided to redevelop the Land for residential purposes.

285 On 27 November 2015, Mr Moore replied by email stating:

Absent of the acquisition, Provans could have remained on the site until it became financially unviable. In other words, their business was sufficiently profitable to pay a commercial rent commensurate with an expected rate of return. As a consequence of the acquisition and in order to mitigate any business losses, they purchased a property in the immediate proximity. Having regard to this incontrovertible fact, we strongly recommend pursuing the full costs associated with the move including all fit-out costs. Had there been an opportunity to lease or buy a fitted-out hardware store nearby, they would have done it. The fact is, there wasn't.

286 Mr Moore and Mr Dudakov attended the valuers' conference on 17 February 2016. At the conference, the 'in use' valuation prepared for the Authority by Messrs Haines and Stephen and the two competing valuations of Timber's interest in the Land based on its highest and best use of $12.7 million and $11.375 million were discussed. The valuers agreed that the market value of Timber's interest in the Land at the relevant date was $12.2 million. The valuation proceeded on the basis of vacant possession on the basis that the occupier was a related entity, giving Timber flexibility as to what it could do with the Land.

287 Following agreement upon the value of the freehold at $12.2 million, on 29 June 2017, Mr Moore calculated the rent that would be payable in order for the owner of the Land to achieve an acceptable rate of return at that level of value. He determined that rent of $671,000 per annum would provide the required yield, adopting a rate of 5.5 percent.

288 At trial, there was considerable confusion about what 'enterprise value' was for the purposes of the claimants' case. Although the claimants now say that the enterprise valuation is simply a way of demonstrating that there is no inconsistency for the purposes of s 41(2) of the LAC Act if relocation costs are paid as well as market value based on the Land's highest and best use for residential development, Mr Moore described it in terms of an 'alternative' highest and best use. In his report of 17 April 2018 prepared for Timber, Mr Moore said the following under the heading 'highest and best use':

Subsequent to our valuation report, I was provided with a draft copy of the Ferrier Hodgson Business Valuation on 20 November 2015.

Based on my review of the Ferrier Hodgson Business Valuation together with the sales evidence researched and after substituting the rent assessed by Mr Hay with my assessed return on investment, I am now of the opinion that the highest and best use of the property as at the relevant date would have been as a 'going concern'. That is, at the relevant date, if the owners were of a mind to sell, I am of the view that the highest price would be achieved by combining the real estate together with the business as a going concern. The combined value of the components exceeds the value of the real estate if sold for redevelopment in isolation.

289 Likewise, in the joint statement prepared by the valuers on 3 July 2018, the opinions of the Provans valuers regarding the application of this methodology are recorded as follows:

...

Dudakov/Moore: As noted above, the properties [sic] owners and occupiers are related and could continue in occupation for as long as they deem appropriate.

...

Dudakov/Moore: Have been provided with accounting advice from Mr Greg Meredith of Ferrier Hodgson which assesses an Indicative Enterprise Value of $3.8 million after factoring in an annual rental for the real estate of $671,000. The latter figure reflects a reasonable rate of return on an assessed real estate value of $12.2 Million. For the reasons elaborated on at Point 13 we do not agree that it is necessary to assume a lease term in the context of determining the Highest and Best Use as part of an enterprise.

...

Moore/Dudakov: Highest and Best Use in the context of assessing the Enterprise Value is determined by reference to the properties' Highest and Best Use which in this instance is the underlying residential redevelopment value.

[13.] Purchaser profile - Highest and Best Use

...

Moore/Dudakov: Based on the advice of Mr Meredith, the business enterprise on the subject properties was returning future maintainable earnings of $688,500 per annum after allowing for an annual rental of $671,000. As such we consider that the current owner or like-minded organisation would continue to operate the business on the site until such time in the future that it was no longer commercially viable to do so. That is to say, at some time in the future the properties' value for redevelopment will exceed its enterprise value. However, based on the figures provided, this would mean that at some time in the future the value for redevelopment would have had to increase by approximately 30% [ie from $12.2 million to $16 million] or alternatively the profits from the business enterprise declined to the point that it is no longer commercially viable to operate from the sites.

290 In his evidence, Mr Dudakov explained that he and Mr Moore had undertaken a valuation of the Land assessed on its highest and best use for residential development and then considered whether a potential purchaser at that value would include Timber or Hardware on the basis that Hardware's occupation could provide a reasonable return on the Land at that value.

291 The Authority was critical of the process undertaken by the Provans valuers, in particular as to the change of opinion about the highest and best use of the Land, moving from residential development premised on vacant possession to residential development with continuing occupation by the business. The Authority submits that this change of opinion occurred in unsatisfactory circumstances after AP had relayed its advice to the effect that the claimants could not make a claim for relocation costs if they sought compensation for market value based on residential development. The Authority submits that Mr Moore's email on 25 November 2015 to AP strongly recommending pursuing the full costs associated with the move was incompatible with the expert witness Code of Conduct, and his reference to the 'incontrovertible fact' that there was no other opportunity to lease or buy a fitted-out hardware store nearby and that this option would have been used if available was well beyond his area of expertise as a valuer.

292 I agree that the approach taken by the Provans valuers was unorthodox and that some of Mr Moore's opinions about the prospects of relocating the business were not based on his expertise. Furthermore, Mr Dudakov supported the 'enterprise value' approach by referring to valuation guidelines which were inapplicable to the task of determining market value under the LAC Act.

293 More importantly, however, there are a number of conceptual problems with the approach advanced by the Provans valuers that stem from its hybrid nature.

294 For the purposes of assessing market value, the approach is not confined, as it must be under the LAC Act, to Timber's interest in the Land, but combines interests. Mr Moore conceded in cross-examination that it was not a market valuation of Timber's interest in the Land. He confirmed that the only market valuation of Timber's interest in the Land was the one he carried out in August 2015, when he valued the Land at $12.7 million.

295 The claimants have not suffered any loss associated with the 'enterprise value' of the business. Hardware did not claim any loss for the market value of its interest in the Land and, as a matter of fact, the business was not divested or diminished by the compulsory acquisition of the Land and no claim has been made for loss of profits. At no stage in the process of offer and response required in Part 3 of the LAC Act did the claimants claim an entitlement to compensation for the enterprise value of the business.

296 Ferrier Hodgson's valuation of the business, upon which the 'enterprise' valuation rests, was based on Hardware having relatively long term security of tenure, which is not the basis upon which the Provans valuers assessed market value of the Land. The market value of Timber's interest based on an assessment of the highest and best use of the Land for residential development assumes vacant possession or at least possession within a short timeframe.

297 Finally, the premise upon which 'enterprise value' is based, namely, Hardware's ability to pay rental of $671,000 per annum, is utterly divorced from commercial reality. The yield of $671,000 per annum is almost double the market rent for premises suitable for a hardware business. In the hypothetical sale of Timber's interest, there would be no continuation of a hardware store on the Land. The market rent that could be charged for premises suitable for a hardware business would produce a capital value that was substantially less than the value of the Land as a residential development site.

298 I am not persuaded that expert opinion concerning the 'enterprise value' of the Land is of any assistance in this case. It is artificial and confusing. It is also unnecessary, as the LAC Act deals with the kind of inconsistency referred to by the Authority on its own terms. It gives each person with an interest in the land that is divested or diminished by the compulsory acquisition a statutory right to compensation. It provides for separate offers to be made to each person of whose interest the Authority is aware and for the individual assessment of compensation in respect of each claimant in accordance with Part 4 of the LAC Act. Loss attributable to disturbance is a separate and distinct head of compensation under s 41(1) of the LAC Act, being compensation for loss sustained by the individual claimant for which provision is not otherwise made. It is therefore possible and permissible for compensation to be paid to different interest holders in circumstances where their entitlements do not perfectly align.

299 In the usual course, the existence of a leasehold interest of any substance will be reflected in the market value of the land. The entitlements of the owner claimant and the tenant claimant will be broadly aligned in that the existence of the lease will affect the land value. In this case, for the reasons given, it is unnecessary for Hardware to establish a leasehold interest of any durability in order to qualify for relocation costs and it is unlikely that its 'ephemeral' leasehold interest would affect the market value of the Land. Because of the arrangements in the LAC Act, Hardware's entitlement to relocation costs is not limited by reason of any inconsistency with the basis upon which the market value of the Land is assessed.

300 The Authority submits that if s 41(2) of the Act is construed so as to apply only to individual claimants, the claimants should nonetheless be treated as one claimant because they are members of a 'corporate group' such that their interests in the Land are not divisible or separable.

301 The corporate structure of the Provans Group is set out in the business valuation report of Ferrier Hodgson. The Authority relies on it and Mr Heverin's evidence for the following propositions:

(a) Mr Rosenberg was the controlling mind of all of the claimants;

(b) the claimants' intentions reflected Mr Rosenberg's intentions; and

(c) Mr Rosenberg conducted the business of the claimants for the benefit of himself and his family.

302 The Authority also relies on Ms Glynn's observations that from her interactions with the representatives of the claimants, Mr Rosenberg controlled the claimants and directed their affairs for the benefit of the Rosenberg family. Mr Heverin agreed that this was the case and with the observation of Mr McQuilton that through the control of Mr Rosenberg there appeared to be a commonality of interest between the various companies in the Provans Group, their purpose being the operation of the business from the Land and subsequently from the Lysteron site. Furthermore, so the Authority says, the claimants' valuation evidence constituted a concession in relation to this issue. The valuation evidence conflated all three entities as a single entity, highlighting the intertwined nature of the claimants' business.

303 In DHN Food Distributors Ltd v Tower Hamlet's London Borough Council,[59] the House of Lords combined the interests of a parent and its subsidiary in the context of the assessment of compensation following a compulsory acquisition. The business was owned by DHN and the land upon which the business was operated was owned by a wholly owned subsidiary, Bronze. The Council acquired land owned by Bronze on which DHN operated its cash and carry warehouse. The Council submitted that while Bronze was entitled to compensation for loss of market value, DHN was not entitled to disturbance loss because it did not have any interest in the land, either legal or equitable. DHN was a licensee only. Section 20 of the Compulsory Purchase Act 1965 (UK) provided that if a person had no greater interest than a tenant from year to year in the land, then that person was only entitled to compensation for that lesser interest. Lord Denning MR observed: [60]

Seeing that a licensee can be turned out on short notice, the compensation payable to DHN would be negligible.

304 Lord Denning further observed that where a parent company owns all the shares of the subsidiaries, it can control their every movement. The subsidiaries are bound 'hand and foot' to the parent company and must do what the parent company says. He continued: [61]

So here. This group is virtually the same as a partnership in which all the three companies are partners. They should not be treated separately so as to be defeated on a technical point. They should not be deprived of the compensation which should justly be payable for disturbance. The three companies should, for present purposes, be treated as one and the parent company, DHN, should be treated as that one.

305 Lord Justice Goff upheld the appeal on the basis that DHN had an equitable interest in the land under a resulting trust. For his Lordship, the case was one which required the realities of the situation to be looked at to pierce the corporate veil.[62] The remaining member of the House of Lords, Lord Justice Shaw, held that DHN and Bronze had an identity and community of interest.

306 The claimants submit that there is no basis for lifting the corporate veil and treating the occupiers as the same entity as Timber. Their interests were separate and divisible, as the Authority knew. The LAC Act does not provide for or permit such an approach and it is not supported by Australian authority. The claimants refer to the following remarks of Sheehan J and Parker AC in Tolson v Roads and Traffic Authority of New South Wales:[63]

DHN was not followed in Buckinghamshire County Council v The Secretary of State for the Environment, Transport and the Region, nor in Woolfson v Strathclyde Regional Council. ...

In Pioneer Concrete Services Ltd v Yelnah Pty Ltd (Pioneer), Young J noted that DHN had been followed in some English cases, but thought that a significant factor influencing its application was whether the company 'was a wholly owned subsidiary receiving no fees, making no profits or losses and merely a conduit pipe for transactions within the group'. His Honour thought DHN should be confined to its own facts and stated:

... it is only if the court can see that there is in fact or in law a partnership between companies in a group or alternatively where there is a mere sham or façade that one lifts the veil. The principle does not apply in the instant case where it would appear that there was a good commercial purpose for having separate companies in the group performing different functions even though the ultimate controllers would very naturally lapse into speaking of the whole group as 'us'.

In Mario Piraino Pty Ltd v Roads Corporation (No 2), Gobbo J considered that DHN was an illustration of a case where a parent can mount a claim for compensation for its own loss, even though the business to which the loss was related was conducted on land owned by the subsidiary. His Honour observed that DHN had not been specifically applied in Australia, had been distinguished in Pioneer, and, although acknowledging that the precise relationship of the companies was not the subject of evidence in that case, declined to follow it. ...

The respondent also referred the court to Halloran and Sealark Pty Ltd v Shoalhaven City Council, and to James Hardie v Putt, both of which decisions refused to follow DHN. In both cases the court was not satisfied that the facts justified a lifting of the corporate veil, with the latter emphasising that it is only appropriate to take such a course of action when the circumstances indicate the company is a sham or façade. ...

I yield to the weight of authority, and decline to apply DHN in the present circumstances...

307 The claimants submit that no different conclusion should be reached in this case. There is no suggestion that the existence of the separate entities in the Provans Group was a façade or a sham. Each entity had a separate role within the group and its own distinct interest in the Land. There was no suggestion that there was any inappropriate intermingling of funds and, with the exception of the issue as to the appropriate accounting for the $2.871 million received from the Authority as between Timber and Hardware, the evidence, including the evidence of the Authority's expert accountant, was that the separate financial reports for each entity were beyond reproach. The ultimate beneficial ownership of the entities is not identical and there is no basis or capacity to treat their interests in the property as one.

308 I accept this submission. I do so for the same reason that I rejected the Authority's submissions above as to why Hardware was not entitled to compensation for relocation costs. The applicable statutory scheme deals with individual interests in land and provides compensation for the divestment or diminishment of individual interests. Properly construed, the LAC Act provides for each person with an interest in land that is divested or diminished by the compulsory acquisition of the land to have their interest separately treated. Section 30 gives to each person who had an interest in land that was divested or diminished by the compulsory acquisition a claim for compensation. Section 31 is directed to individual claimants and individual interests and contemplates that separate offers be made to each claimant. Section 41(1) refers to compensation payable to 'a claimant' in respect of 'an interest in land' and specifies the matters to which regard must be had in assessing compensation. In substance, it requires and provides that compensation is to be assessed on a claimant by claimant basis.

309 The LAC Act contains no legislative cap on compensation which might otherwise require an aggregated assessment of compensation, payable to different interest holders who hold interests in the same land. Each claimant is entitled to full compensation for their interest. Each interest is to be assessed in accordance with Part 4 of the Act. There is nothing in the text of the LAC Act that provides for or suggests that multiple interest holders in a parcel of land have a single claim or that their claims are to be treated as one.

310 Furthermore, s 5A(3) of the Valuation of Land Act requires the interest in land of an individual claimant to be valued in accordance with the highest and best use of that interest. It is no part of valuing the freehold interest to inquire as to the combined value of the freehold and the leasehold interests other than where there is a marriage value argument.

311 Accordingly, it was not permissible under the LAC Act, let alone required, to lift the corporate veil and treat the claimants as one.

Did Hardware incur relocation costs of $2.871 million?

312 The Authority submits that the Court has no probative evidence as to any actual loss suffered by Hardware relating to relocation costs. Mr Heverin gave evidence that Hardware incurred more than $5 million in expenses in relation to the relocation. However, the claimants only claim $2.871 million and did not lead any specific evidence to assist the Court to determine whether that amount was an appropriate figure. Moreover, the $5 million figure included a range of items pertaining to improvements to the replacement premises such as replacing the roof, installing a lift for a mezzanine floor, construction of the mezzanine floor and so on.

313 The Authority submits that the asserted relocation costs were in fact incurred for the benefit of Lysteron. In circumstances where Hardware pays market rent for a long term lease from Lysteron, the substantial costs of refurbishing the replacement premises were incurred for the benefit of Lysteron as landlord and not for Hardware as tenant. Mr Rosenberg accepted in cross-examination that Hardware is paying market rent for its occupation of the Lysteron site and that the refurbishment costs paid by Hardware were for the benefit of Lysteron as well as Hardware. In this context, the Authority points to the fact that Mr Heverin directed Mr Dixon the architect to render his first invoice on Lysteron in 2012. The claimants do not proffer any explanation as to why it was appropriate for Lysteron to pay that invoice but not for subsequent costs associated with the refurbishment of the Lysteron site. The Authority asks the Court to infer that as all of the companies are controlled by Mr Rosenberg, he elected to have the costs paid by Hardware because it suited his purposes.

314 The claimants say that though the relocation costs were in fact more than $4 million, Hardware took the position that if it were offered $2.871 million it would accept that amount and it does not propose to reopen the quantum of relocation costs. It cost $5.4 million to relocate the business to the replacement premises, which was primarily spent refurbishing and making the premises suitable for relocation. Of these costs, $4 million was accounted for as Hardware's expenses and the balance attributed to landlord's improvements by Lysteron. An independent quantity surveyor was asked to assess how much of the renovations were tenant's fixtures and fittings and how much were the landlord's. That formed the basis for the approximately $4 million in the accounts of Hardware as the portion that was properly the costs paid by Hardware.

315 The position adopted by the Authority at trial that the claimants must prove the quantum of the relocation costs is novel and, arguably, disingenuous, having regard to the long course of the dealings between the Authority and the claimants in relation to the relocation of the business. That course of conduct included the following:

(a) In 2013, the Authority advised the claimants that it would retain an accountant, a relocation consultant and a valuer in order to make an initial offer of compensation. It advised the claimants that its relocation assessment would be based on an estimated cost to relocate to reasonably suitable premises or, if a replacement property was already secured, the costs of relocation;

(b) on about 30 May 2014, the Authority retained a business relocation manager (Mr Aghion of BRM) to provide a costs estimate of any building and fit out works that BRM deemed necessary to accommodate the business and physically relocate the business to the new site. The Authority advised BRM that the Land was owned by Timber and 'owner occupied or leased to a related company';

(c) BRM provided its assessment of fit out and relocation costs to the Authority. It advised that 'substantial works [were] required to set up the facility for Provan's requirements'. It advised that the business was likely to incur total relocation costs in the order of $4,414,941 (excluding GST) and recommended that the Authority approve payment of fit out and relocation costs within the range of $2,871,279 to $3,158,407 (excluding GST);

(d) the Authority was advised by its solicitors that it was 'inevitable that the losses associated with the relocation are likely to be greater than the estimates provided';

(e) the Authority was informed that there were a number of issues regarding the feasibility of relocating the business to the proposed replacement premises and that the relocation required specific design plans and raised specific access issues. The Authority was advised and noted that relocation would be complex and labour intensive, and therefore costly;

(f) Provans gave the Authority a list of relocation tasks and its own consultant provided a list of recommended relocation managers for the Authority to 'review/vet'. No objection was made by the Authority to the proposed tasks or appointment of a relocation manager to manage the relocation of the business;

(g) the Authority was advised that the architect used by Provans, Mr Mark Dixon, would be engaged to prepare site and layout plans for the relocated business and was aware of the need to alter buildings and undertake works. No objection was taken by the Authority;

(h) tender submissions were sought for the relocation of the business. Kane Construction provided a tender submission for 'relocation of the Premises for Provans Home Timber and Hardware' in the amount of $3,903,069, which Hardware accepted;

(i) the occupiers (Hardware and Joinery) relocated the business to the replacement premises and entered into a long term lease with Lysteron; and

(j) Hardware actually incurred relocation costs of more than $5 million.

316 It is plain that the Authority followed - and implicitly endorsed - the process undertaken by Hardware for relocating the business. Moreover, the figure of $2.871 million for relocation costs was taken from the bottom end of the range identified by the Authority's own relocation consultant, Mr Aghion. The Authority made an offer for that amount.

317 I am satisfied to the requisite standard that Hardware incurred relocation costs of (at least) $2.871 million as a result of having to relocate the business from the Land.

318 The market value of the Land as at the acquisition date based on its highest and best use for residential development was agreed by the valuers as $12.2 million.

320 Timber is entitled to compensation for the market value of the Land in the amount of $12.2 million.

321 Hardware accepted an offer made pursuant to s 31 of the LAC Act for its relocation costs. That offer was binding. Hardware was, in any event, entitled to be compensated for relocation costs resulting from the divestment of its interest in the Land, irrespective of how the offer was made to Timber for the market value of the Land.

322 Hardware has received compensation for its relocation costs. It seeks nothing further.

323 Timber is entitled to be compensated for the market value of the Land assessed on its highest and best use. That value is $12.2 million.

324 The Authority has made advances to Timber, but $2.871 million remains outstanding.

325 In the principal proceeding, the Authority will be ordered to pay Timber the sum of $2.871 million plus interest to be determined.

[1] The materials variously use the spelling 'Provan's' and 'Provans'. Nothing turns on the difference and for convenience, I adopt the latter spelling.

[2] Including by an additional valuer engaged by the Authority on 28 May 2018, Mr Mark Willison.

[3] Also referred to as being assessed on an 'in use' or 'going concern' basis.

[4] Evidently, $9.329 million is not the total amount advanced by the Authority, but the amount that Timber says was advanced to it.

[5] Land Acquisition and Compensation Act 1986 s 5(1) ('LAC Act').

[9] LAC Act s 40 (definition of 'loss attributable to disturbance').

[10] Ibid s 40 (definition of 'market value').

[12] Secretary to the Department of Economic Development, Jobs, Transport and Resources v Manor Lakes (Werribee) Pty Ltd [2017] VSCA 114 [35] ('Manor Lakes').

[13] [2008] VSCA 180; (2008) 20 VR 447.

[14] Ibid 459 [41] quoting ISPT Pty Ltd v Melbourne City Council [2007] VCAT 652 [62].

[15] Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources (1988) 65 LGRA 410, 415.

[16] Manor Lakes [2017] VSCA 114 [40].

[17] As required by the LAC Act to accompany the 'initial offer of compensation'.

[18] Hardware had facilities with Westpac of $2.35 million secured over the Land. When the freehold was compulsorily acquired, Westpac required $2.35 million to be placed on term deposit as security.

[19] [2015] HCA 37; (2015) 256 CLR 104.

[21] [2017] HCA 12; (2017) 91 ALJR 486.

[23] Mr McQuilton gave evidence that at the time of making the Initial Offer, he expected that compensation for the existing use value of the Land coupled with disturbance losses incurred in the relocation of the business would in all probability exceed compensation for market value of the Land calculated on a highest and best use basis. He anticipated that the claimants would assert a loss arising from the partial or permanent cessation of the business. He decided that the Initial Offer should be made on an existing use basis because the claimants had repeatedly expressed concern about their ability to relocate the business on time, the suitability of the replacement property due to the uncertainty of the EWL Project design and the unknown impact of construction works at that location.

[25] (1995) 89 LGERA 280 ('Halwood').

[26] [2001] VSCA 54; (2001) 113 LGERA 102 ('Teford').

[27] Halwood (1995) 89 LGERA 280, 303.

[32] Teford [2001] VSCA 54; (2001) 113 LGERA 102, 112 [24].

[33] Ibid [28] (emphasis in original).

[34] (2017) 224 LGERA 195 ('Manor Lakes').

[36] [2019] NSWCA 41 ('United Petroleum').

[37] It must be noted that s 59(c) of the Just Terms Act contains quite a different formulation in relation to relocation costs:

financial costs reasonably incurred in connection with the relocation of [the persons entitled to compensation in connection with the compulsory acquisition of the land] ...

[38] [1916] HCA 48; (1916) 22 CLR 56 ('Aerated Water').

[39] United Petroleum [2019] NSWCA 41 [26].

[42] United Petroleum [2019] NSWCA 41 [54], [119].

[43] [2014] NSWCA 352 ('George D Angus').

[45] George D Angus [2014] NSWCA 352 [70].

[46] United Petroleum [2019] NSWCA 41 [116].

[47] [1953] HCA 6; (1953) 90 CLR 157.

[49] Manor Lakes (2017) 224 LGERA 195, 215 [90].

[50] (1998) 101 LGERA 30 ('Peter Croke').

[53] Rosenboum v Minister for Public Works [1965] HCA 65; (1965) 114 CLR 424, 425.

[54] SJR Investments Co Pty Ltd v Housing Commission of Victoria [1971] VicRp 24; [1971] VR 211, 214.

[55] [2014] NSWLEC 44; (2014) 205 LGERA 396.

[57] See, e.g. Woodbury v Wyong Shire Council [2006] NSWLEC 48, [83]-[88]; Konstantino v Roads and Traffic Authority of New South Wales [2006] NSWLEC 248, [102]; Nasser v Roads and Traffic Authority of New South Wales (No 3) [2006] NSWLEC 562; (2006) 149 LGERA 289, [24]; Sydney Water Corporation v Caruso [2009] NSWCA 391, [184]-[188].

[58] There was no real dispute as to the value of the business. Ferrier Hodgson's valuation methodology was the same as the methodology adopted by Ms Murone. In mid-2014, with the benefit of financial and other information from the Provans parties, including as to the respective roles of the three companies, and knowing that there was no lease in favour of Timber, Ms Murone prepared a valuation of the business adopting the same business valuation methodology as Ferrier Hodgson (capitalisation of EBITDA) but with a multiple of 4.5 to 5. This valuation report assumed a rent of $340,125 per annum and assessed the value of the business as a going concern at $3.69 million to $4.1 million. Likewise, Mr Moore's approach to deriving a market rent of $671,000 was simply the obverse of the calculation adopted by Mr Haines when he capitalised rent to arrive at his 'in use' value.

[59] [1976] 1 WLR 852.

[63] [2012] NSWLEC 170 [197]-[200] (citations and emphasis omitted) .