Relocation Costs and s 59(c) and (f) of the Just Terms Act
77In Roads and Traffic Authority of New South Wales v Peak [2007] NSWCA 66 the Court of Appeal distinguished between costs claimable under s 59(c) of the Just Terms Act that may be described as relocation costs, and those claimable under s 59(f) of that Act that refer to costs relating to the actual use of the acquired land. As the Court of Appeal opined in Peak, relocation costs cannot necessarily be claimed interchangeably between ss 59(c) and (f), otherwise one of the provisions would be superfluous in function (at [100]).
78Turning first to s 59(c) of the Just Terms Act, as was noted by Biscoe J in McDonald v Roads and Traffic Authority (NSW) [2009] NSWLEC 105; (2009) 169 LGERA 352, the word "relocation" in s 59(c) of the Just Terms Act is one of wide compass (at [107]-[109], this reasoning was not disturbed on appeal: McDonald (NSWCA)):
107 The word "relocation" in s 59(c) has a wide meaning. This is indicated by Minister for Army v Parbury Henty & Co [1945] HCA 52; (1945) 70 CLR 459 at 507 (notwithstanding that the case was decided under different resumption legislation) per Dixon J who held that disturbance costs include costs that a claimant:
"reasonably incurs in removing his furniture and goods including tenants' fixtures and the expenses in setting up in new premises for the purposes of carrying on his business. Nor is it denied that the expenses may include the net cost of installing fixtures, both those removed and, where reasonably necessary, newly acquired fittings. The residual value which would remain to him must of course be taken into account".
Williams J said (at 514) that the claimants were entitled to compensation:
"not only for the value of the proprietary interests so acquired, but also for what can be compendiously called expenses of removal into premises at least as commodious and congenial taking a broad view of the matter, as those of which they were dispossessed".
108 The width of the meaning of "relocation" in s 59(c) is also indicated by the decision in Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW (1998) 101 LGERA 30. Bignold J allowed as s 59(c) relocation costs, the costs of a dispossessed tenant in relocating and re-establishing a business on another site. They included the cost of obtaining development consent, the cost of site preparation including drainage, kerb and guttering, and removal of pergolas; the cost of additional advertising to promote the new location; the cost of reprinting business stationery; the cost of management time involved with re-establishing contacts; and the cost of electricity connection.
109 Similarly, in Home Care Services (NSW) v Albury City Council [2003] NSWLEC 214, 136 LGERA 117 at [18] Bignold J held that "the amount of compensation recoverable pursuant to s 59(c) in the present case includes all of the relocation costs incurred by the Claimant in re-establishing its business premises in the Swift Street premises". The relocation costs that his Honour allowed included fit-out costs.
79In McDonald the applicant vacated the acquired land upon which her residence was located and moved to rented premises pending the construction of the replacement residence on the residue land. The cost of connecting services (water, power and telephone), the provision of road access and rental costs formed the bulk of the applicant's disturbance claim. At first instance, Biscoe J held that post-acquisition rental costs were not compensable. This was reversed on appeal, the Court of Appeal determining that such costs were reasonably incurred pursuant to, in that case, either s 59(c) or (f) of the Just Terms Act.
80Justice Biscoe's remarks in McDonald were adopted by Pain J in Hua v Hurstville City Council [2010] NSWLEC 61 (at [58]). In that case, after reviewing the authorities, her Honour awarded compensation under s 59(c) of the Act for the relocation of a bakery business operating upon the acquired land, stating that "the preferable view" was that the costs of re-establishing the business elsewhere, whether described as relocation or reinstatement costs, were claimable under s 59(c).
81For present purposes, what emerges from the cases above (and those they analyse) is that, first, it is the reasonableness of the incursion of the costs that constrains any claim under s 59(c) of the Act, rather than the costs themselves (McDonald (NSWCA) at [38]). And second, that the costs "incurred" refer to costs whenever incurred, as determined on the balance of probabilities, and not costs that have already been incurred (McDonald (NSWCA) at [46]). That is to say, future costs fall within the ambit of the provision.
82The Minister argued the El Boustanis' claim for relocation costs should fail because the acquisition was only a partial acquisition because their home was not acquired and, as a consequence, the relocation and reinstatement of their business did not engage s 59(c).
83In my opinion, and contrary to the Minister's assertion, to the extent that these foreshadowed costs would be reasonably incurred (and subject to the limitation contained in s 61), the disputed disturbance items flow from the necessity of the El Boustanis to relocate, albeit from the residue land, in order to re-establish their business. That their residence was not acquired does not preclude compensation for such costs.
84In the present case, the evidence demonstrates that the relocation costs are referable to the cost of re-establishing the horticultural business elsewhere. As the El Boustanis deposed in their affidavits (Mr Elias Boustani swore three affidavits on 17 June, 10 August, and 22 November 2011, respectively and Mrs Guita El Boustani swore four affidavits on 17 January, 10 August, 16 and 22 November 2011, respectively), confirmed in their oral evidence, and as was evident during the site visit, these relocation costs are necessary to re-establish their intensive plant agricultural business. The business cannot be re-established on the residue land given the size of the remaining area and the lack of access to water (the town water being inadequate in this regard).
85These relocation costs would, moreover, include the cost of replacing essential equipment (Hua at [59]) such as, for example, clean soil and grow bags in which the tomatoes are propagated, and fit out costs (McDonald per Biscoe J at [107]-[108] and the authorities cited thereat).
86That the claimed relocation costs could include the purchase of land upon which a residential dwelling was located, also ought not, in light of the intensive nature of the horticultural enterprise in which the El Boustanis were engaged prior to the resumption, matter. As Mrs El Boustani said in cross-examination (T73.38-74.07):
A. Yes. I prefer it with a home. If it's close I would've stayed in my home, but I prefer it with a home because like the ideal situation why we like this business is because my kids stay at home, we can work as late as we want, we can pick up the kids, they stay at home, I can work in my backyard.
Q. Absolutely, so there's actually, if we were to work out what the four things are that you want and what has been working in your mind when you've been looking for a replacement property, there are four things. You want it to be permissible, so you can carry out your farm--
A. Uh-huh.
Q. --you want to be able to put on the same amount of igloos?
A. Yes.
Q. You've got to be able to afford it, it's got to be in your price range--
A. Yes.
Q. --and you want it to have a family home on it?
A. If it was empty but close by, that's all right, maybe later on we put a home on it, like when we have enough money, but if it's far, I'd like it to be, to have a home, if it's going to be far.
87Compensation under the Just Terms Act should strive to be, at the risk of being trite, 'just'. So much so is provided by the override contained in s 54 of the Act. If a corollary of the acquisition is to force the El Boustanis to fundamentally alter the manner in which they conduct their business, by, for example, curtailing the hours of cultivation in order to attend to their family (and thus, it may be inferred, curtail their productivity), or to incur extra costs travelling between their home and the land upon which their horticultural business has been re-established, this would not, in my view, amount to 'just' compensation. While the object of compensation payable under the Just Terms Act is not to accommodate the convenience of the dispossessed party, provided the relocation costs, including the costs of relocating to a property with an established home in order to re-establish the family business, are reasonably incurred by the El Boustanis, then s 59(c) permits compensation in respect of these costs.
88Even if I am wrong, and s 59(c) is not applicable, or is insufficiently comprehensive to capture all of the costs of re-establishing the El Boustanis' family business elsewhere, s 59(f) nevertheless, in my view, applies and would do so.
89Section 59(f) has been compendiously described as "a catch-all provision" (McDonald per Biscoe J at [110]) of wide import (Fitzpatrick Investments Pty Limited v Blacktown City Council (No 2) [2000] NSWLEC 139; (2000) 108 LGERA 417 at [20]). Of course, the costs must be reasonably incurred and must also relate to the actual use of the land as a direct and natural consequence of the acquisition (Fitzpatrick (No 2) at [20] and McDonald per Biscoe J at [110]).
90In McDonald Biscoe J summarised the three requirements for financial costs to fall within s 59(f) as follows, which I gratefully adopt (at [110], undisturbed on appeal):
110 ...There are three requirements for financial costs to fall within s 59(f). First, they must be reasonably incurred or might reasonably be incurred. Secondly, they must relate to the actual use, as distinct from the potential use, of the "land", which means the acquired land and not residue land: MIR Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314 at [88]; Roads and Traffic Authority of New South Wales v Peak [2007] NSWCA 66 at [56], [59], [66], [67]. However, if the actual use of the residue land is so intimately connected with the actual use of the acquired land so that use of the one is dependant on use of the other, that is sufficient to bring the actual use of residue land within s 59(f): Peak at [71]; McBaron v Roads and Traffic Authority of New South Wales (1995) 87 LGERA 238 (Talbot J), approved in Peak at [71]. Thirdly, they must arise as a "direct and natural consequence of the acquisition". Those words direct attention to the nature or degree of the required causal relationship: Almona Pty Ltd v Roads and Traffic Authority (NSW) [2008] NSWLEC 112, 160 LGERA 375 at [60] (Jagot J). It is not necessarily the same as the applicant's wishes in relation to the building of a new residence: Peak at [74].
91In Peak the Court of Appeal held that the costs associated with the relocation of a residence from one location on the residue land to another, in circumstances where the remainder of the land had been acquired for the purpose of the construction of a highway, were compensable. The relocation costs included the cost of the connection of services (telephone, water and electricity), a bridge over the gully and the relocation of an access road, fences and furniture. The respondents operated a cattle stud farm over the whole of the land. The Court held that because the use of the residence was an "intimate part" of the use of the acquired land and the residue land for the purpose of the respondents' cattle breeding business, the costs were recoverable (at [90]).
92In my opinion, the evidence demonstrates the requisite "intimate" nexus between the residue land and the acquired land. As Mrs El Boustani described, the presence of the residence on the property was an integral part of the manner by which they conducted their horticultural business.
93Furthermore, and subject to the resolution of whether the El Boustanis could have continued to use the land for the purpose of intensive horticulture past 16 June 2012, the evidence demonstrates that the remaining costs relate to the actual use of the acquired land as an intensive horticultural business and are costs that would be reasonably incurred, particularly given the fact that it is a small scale family business that is sought to be relocated.
94In Hua Pain J adopted, for the purposes of s 59(f), the test derived from Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111 at 128-131 (at [32] and [64]) and asked the following five questions in determining whether relocation costs were compensable:
(a)can the business be relocated;
(b)does the claimant intend to move;
(c)would a reasonable person in the position of the claimant in the prevailing circumstances relocate;
(d)is it feasible and practicable to relocate within a reasonable time of vacating the resumed land; and
(e)will the cost of relocating be less than the cost of extinguishment?
95The first four questions are readily answerable when regard is had to the evidence of the El Boustanis, both written and oral. The El Boustanis have made an effort to purchase a new property in order to relocate their business. There is no reason why this cannot be achieved. The only possible impediment preventing the El Boustanis from relocating is the inability to obtain finance because the acquisition has meant that they do not have an income stream.
96As to the fifth question, even if the extinguishment value of the business was less than the cost of relocation, this is, of itself, no bar to recovery (Hua at [69]). Courts have recognised the necessity for latitude in the case of a family business where relocation costs significantly exceed extinguishment costs (Hua at [70]). I agree with the El Boustanis that any argument that their claim for relocation costs should be limited to the extinguishment value of the business finds scant support in the language of s 59(f) given that the reasonableness touchstone in that provision relates to the incurring of costs and not the costs themselves.