Olde English Tiles Australia Pty Ltd v Transport for New South Wales

Court of Appeal (NSW)|2022-05-27|Before: Ward P, Gleeson JA, Mitchelmore JA, Preston CJ

Background circumstances

For the purposes of this appeal, the background circumstances prior to the acquisition may be stated succinctly. The appellant operated a business of manufacturing and selling a range of tiles and mosaics for both retail and commercial purposes at the premises known as 182-186 Parramatta Road, Annandale. Mr and Mrs Gaudioso, the registered proprietors of the land, were the sole directors and shareholders of the appellant and controlled the company. The company occupied the land in accordance with a bare licence; there was not, at the date of acquisition, and appears never to have been, a lease conferring possession on the appellant. It occupied the land at the pleasure of the Gaudiosos.

Reasoning of trial judge

The reasoning of the trial judge may also be summarised briefly. The key conclusions, which were identified as the subjects of challenge in the notice of appeal, should be set out.
The first passage, challenged in ground 1 of the notice of appeal read as follows: "65 The right of occupation enjoyed by the Applicant was a personal right and does not constitute a right, power or privilege over, or in connection with, the Acquired Land. The submissions of the Respondent are accepted, what the Applicant enjoyed was a bare [licence] or permission to occupy the land and it did not have ownership in the sense of the right being alienable or transferable nor did it have power or control over, or in connection with, the Acquired Land."
Applying authorities of this Court which were undoubtedly binding on her, the trial judge then stated (challenged by ground 2 in the notice of appeal): "79 As was observed at [158] of [Dial A Dump] it was the terms of the permission that dictate whether a person's right, power or privilege is one that is 'over, or in connection with', the Acquired Land. In this case, the evidence is of a very loose arrangement between two separate legal entities where the individuals which make up those two entities is fundamental to the continuance of such arrangement. What was conferred was a permission to occupy conferring no right, power or privilege that was over, or in connection with, the Acquired Land. Accordingly, the Applicant has no relevant compensable interest in the Acquired Land."
As the trial judge correctly noted, the foregoing findings were sufficient to dispose of the application. However, she took the further step of considering whether the right, power or privilege asserted by the appellant was "capable of alienation by way of sale or transfer". On the basis that that was a condition which the appellant needed to satisfy, the trial judge concluded that it was not satisfied: "84 Accordingly, I find that the Applicant held a right to occupy the land in the nature of a bare [licence]. Its right to occupation was of a personal nature and did not confer [on] the Applicant any rights, powers or privileges over, or in connection with, the Acquired Land. Further, that bare [licence] was not capable of alienation, the Applicant, therefore, had nothing that was divested, extinguished or diminished by the Acquisition Notice as referred to in s 37 of the [Land Acquisition Act]."
Although the notice of appeal challenged the finding that the right of occupation was not alienable (ground 3), that challenge was not pressed at the hearing of the appeal. Rather, the appellant contended that alienability was not an essential element of a compensable interest in land for the purposes of the Land Acquisition Act.
There is little reason to doubt that the findings of the trial judge faithfully applied principles established by this Court. Indeed they are principles which this Court would also apply if not comfortably satisfied that they were wrong and that it was appropriate for the Court now to depart from them. Because the appellant expressly challenged the correctness of those decisions, it is appropriate to have regard to the principles underlying the construction of the Land Acquisition Act, being the only basis upon which such a challenge could properly be mounted. Thereafter, it will be appropriate to have regard to the stream of authority to consider whether any error has been identified which warrants reconsideration of the earlier decisions.
While the registered owners of the land obtained compensation for the market value of the land, being an amount which might allow them to obtain alternative premises and relocate the business which had operated on the acquired land, because they did not operate the business, they did not obtain the costs of relocation of the business. There is no challenge to that decision.

Statutory scheme

The appellant's case that it had a compensable interest in the acquired land rested on a specific phrase in the definition of "interest" in land. However, to address that case, it is necessary, as the appellant recognised, to have regard to the scheme of the legislation. There are a number of sections, not all directly engaged, to which it is necessary to refer.
Part 1 of the Land Acquisition Act relevantly contains the objects of the Act and critical definitions. It is convenient to delay reference to the definitions until the operative provisions have been set out. The primary objects may be identified here: 3 Objects of Act (1) The objects of this Act are - (a) to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition, and (b) to ensure compensation on just terms for the owners of land that is acquired by an authority of the State when the land is not available for public sale ….
Part 2 deals with acquisition of land by compulsory process. It provides that an authority may not acquire land unless it has given the owners of the land written notice of its intention to do so: s 11(1). Those to whom notice must be given are identified in s 12(1): 12. Owners to be given notice (1) A proposed acquisition notice need only be given to all the owners of the land who - (a) have a registered interest in the land, or (b) are in lawful occupation of the land, or (c) have, to the actual knowledge of the authority of the State, an interest in the land. The appellant was in lawful occupation at the relevant time and received a proposed acquisition notice.
Acquisition is provided for in Pt 2, Div 2 and is effected by publication of a notice in the Government Gazette describing the land being acquired: s 19. The effect of such a notice is set out in s 20: 20 Effect of acquisition notice (1) On the date of publication in the Gazette of an acquisition notice, the land described in the notice is, by force of this Act - (a) vested in the authority of the State acquiring the land, and (b) freed and discharged from all estates, interests, trusts, restrictions, dedications, reservations, easements, rights, charges, rates and contracts in, over or in connection with the land. (1A) Subsection (1) is subject to any express provision of an Act that authorises the acquisition of land by compulsory process but preserves the operation of any trusts, restrictions, dedications, reservations, declarations, setting apart of or other matters relating to the land concerned. (2) If - (a) the acquisition notice excepted an easement from acquisition, and (b) immediately before the vesting, the benefit of a restriction as to user was annexed to the easement, then (unless otherwise specified in the acquisition notice) the restriction continues to have effect as if the acquisition had not taken place. Note. Examples of express provisions of Acts to which section 20(1A) refers are section 17AB(4)(b) of the Fisheries and Oyster Farms Act 1935, section 15(4C)(b) of the Forestry Act 1916, section 186(3) of the Local Government Act 1993 and section 146(2C)(b) of the National Parks and Wildlife Act 1974. As will be noted shortly, the language of s 20(1)(b) differs from the definition of "interest" in land.
In certain circumstances, an owner may initiate acquisition of land but, pursuant to s 22, the process is only available to a person who has a fee simple estate in the land or "a person who has become entitled to exercise a power of sale of the land". A person entitled to exercise a power of sale is a person having an interest in the land.
There is provision in s 34(1) for a former owner to occupy land until compensation is paid: 34 Former owner's right to occupy land until compensation paid etc (1) A person who was in lawful occupation of land immediately before it was compulsorily acquired under this Act and to whom compensation is payable under this Act is entitled to remain in occupation until - (a) the compensation is duly paid to the person, or (b) the authority of the State makes (in accordance with any other provision of this Act) an advance payment of not less than 90 per cent of the amount of compensation offered by the authority, or … whichever first occurs.
Compensation is provided for in Pt 3, which sets out the entitlement to compensation, relevantly in s 37: 37 Right to compensation if land compulsorily acquired An owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part by the authority of the State which acquired the land. The entitlement, it may be noted, is vested in an "owner of an interest in land".
The entitlement to just compensation is provided by s 54(1): 54 Entitlement to just compensation (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land.
Section 55 lists the matters to be taken into account in assessing compensation, and requires that the assessment is to be undertaken having regard "only" to the matters listed. Although the parties did not address the operation of s 55, nor the potentially available heads of compensation, the basis on which compensation may be payable has been considered in a number of earlier authorities in this Court to which attention must be paid in addressing the appellant's submissions. Section 55 and the relevant provision dealing with disturbance, being s 59(1), read as follows: 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division) - (a) the market value of the land on the date of its acquisition, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) the disadvantage resulting from relocation, (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. … 59 Loss attributable to disturbance (1) In this Act - loss attributable to disturbance of land means any of the following - (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land), (c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs), (d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired), (e) financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage), (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.
Finally, it is appropriate to note the terms of s 62 dealing with specific examples of rights in and powers over land: 62 Special provision relating to acquisition of easements or rights, tunnels etc (1) If the land compulsorily acquired under this Act consists only of an easement, or right to use land, under the surface for the construction and maintenance of works (such as a tunnel, pipe or conduit for the conveyance of water, sewage or electrical cables), compensation is not payable except for actual damage done in the construction of the work or caused by the work. (2) If land under the surface is compulsorily acquired under this Act for the purpose of constructing a tunnel, compensation is not payable (subject to subsection (1)) unless - (a) the surface of the overlying soil is disturbed, or (b) the support of that surface is destroyed or injuriously affected by the construction of the tunnel, or (c) any mines or underground working in or adjacent to the land are thereby rendered unworkable or are injuriously affected. (3) If the land compulsorily acquired under this Act consists of or includes an easement or right to use the surface of any land for the construction and maintenance of works (such as canals, drainage, stormwater channels, electrical cables, openings or ventilators), the easement or right is (unless the acquisition notice otherwise provides) taken to include a power, from time to time, to enter the land for the purpose of inspection and for carrying out of any additions, renewals or repairs. Compensation under this Part is payable accordingly.
Against this background, it is convenient to turn to the relevant definitions in s 4: 4 Definitions (1) In this Act - acquisition of land means an acquisition of land or of any interest in land. … interest in land means - (a) a legal or equitable estate or interest in the land, or (b) an easement, right, charge, power or privilege over, or in connection with, the land. land includes any interest in land. … owner of land means any person who has an interest in the land.

Appellant's submissions

The focus of the appellant's submissions was on the definition of "interest", and in particular par (b). The appellant asserted that its interest in land was a "privilege over, or in connection with, the land".
Four aspects of that assertion should be noted. First, although the appellant identified the term "privilege" as properly describing the nature of its interest in land, it did not particularise the attributes or characteristics which were said to constitute the privilege. Rather, it relied on the Macquarie Dictionary, definition (3) of "privilege", as "a prerogative, advantage or opportunity enjoyed by anyone in a favoured position (as distinct from a right)". [8] However, that definition provided no assistance in identifying the relevant attributes or characteristics which might constitute the appellant's "privilege" in the present case.
Secondly, the use of the Macquarie Dictionary was selective: the first two limbs of the definition were not adopted. If part of a definition is to be rejected as inapposite or irrelevant, it is important to identify why that is so, apart from the fact that one part suits the case of the party relying on it and the other parts do not. In principle, that can only be done by reference to the statutory context. As is often the case, the dictionary fell short of providing useful assistance. [9]
Thirdly, it follows from the last point that the term "privilege", used in the statute to define an interest in land, may be expected to have a legal meaning which is not to be found in a dictionary providing examples of ordinary usage. As Hohfeld explained a century ago, the term "privilege" is a jural concept: the terms "privilege" and "no-right" were identified by Hohfeld as jural correlatives signifying "one's freedom from the right or claim of another". [10] (He identified "privilege" and "duty" as jural opposites.)
Fourthly, even focusing on the statute, it is by no means clear that the meaning of "privilege" is to be found in a single word in the statutory definition. It is necessary also to consider the relational terms, "over, or in connection with" the land. In that part of the definition, the reference to "the land" should be understood as a reference to a physical feature of the surface of the Earth having particular spatial boundaries. A person may be lawfully present on particular land without having anything which might be described as an interest over or in connection with the land.
In addressing the nature of its interest, the appellant sought to distinguish between two tasks, namely, first, the identification of the interest, and, secondly, the assessment of compensation for deprivation of the interest. The appellant conceded that the result of the former exercise may be relevant to the second exercise, but nevertheless the exercises remained separate. There are, however, practical reasons to doubt whether that is a helpful approach in the context of the legislation. Thus, in Dial a Dump, Leeming JA noted that the appellant did not enjoy "a valuable contractual right". [11] He continued: "It was not a contractual right, because its possession of the land came about by reason of permission or sufferance of either or both of the owner or lessee of the land. It was not a valuable right, because the right was terminable without notice at any stage."
Thus, the permission or sufferance which allowed the appellant in that case to occupy the premises may have been a "privilege" within the ordinary meaning of that term, but not a privilege "over or in connection with" the land for the purposes of the Land Acquisition Act. Seen from a different perspective, the liability to termination at will without notice prevented the applicant having a relevant interest in land. The same analysis can be applied to the present case. Senior counsel for the appellant agreed that he needed to demonstrate that this analysis was clearly wrong. [12] However, there is reason to think that, while not definitive, the contextual approach engaged by identifying a compensable interest is helpful. While the appellant conceded that it held no interest having a market value, there is a question, to which it will be necessary to return, as to whether any other compensation is available where the interest is said to have no market value. One conclusion based on this concession is that there is no compensable interest.

Proper construction of "interest" in land

First, it is significant that the guarantee provided by s 3(1)(a) is of compensation "not less than the market value of the land". In the present case, it is conceded that the appellant's interest has no market value. There will of course be cases (perhaps most cases) in which the sum of the amounts available after taking into account the matters identified in s 55 will exceed the market value of the land. Nevertheless, it is at least an implicit assumption of the guarantee contained in s 3(1)(a) that the compensable interest has some market value.
Secondly, the statute uses the language of 'ownership' consistently in relation to acquired land. The appellant submitted that (i) that factor was neutral, as the Act defined "owner" of land to mean any person who "has an interest in the land", and (ii), even if the language of ownership gave colour to that which was owned, it was inappropriate to treat that terminology as a constraint on the otherwise broad language of the definition of "interest".
Thirdly, and a factor of more substance, is the effect given to the acquisition. Section 37 refers to "an interest in land which is divested, extinguished or diminished by an acquisition notice". Thus, the acquiring authority does not necessarily obtain the interest of the prior owner: that interest might merely be extinguished. Section 37, which confers a right of compensation, is not in the same language as s 20, which describes the effects of the acquisition notice. Section 20 (set out at [23] above) describes the effects on "the land described in the notice", which may be a specific interest in land or the fee simple of land identified by reference to cadastral boundaries. In any event, that from which the land is "freed and discharged", according to s 20(1)(b), is an expansive list, not limited to the terms used in the definition of "interest" in s 4, although it includes the term "interests". The subjects of discharge include "trusts, restrictions, dedications, reservations" and "rates and contracts", none of which terms appear in the definition of "interest". On the other hand, s 20(1) does not refer to "power or privilege", language which appears in the definition of "interest".
These provisions must be read together so as to work harmoniously. On one view, the terms "power" and "privilege" appear to stand without reference to a source. Each may be found in an easement, a charge, a trust or a contract. In other words, each is capable of referring to a legally recognised concept which will, in appropriate circumstances, be enforceable. A power of sale may be found in a mortgage or in a trust. If there were powers or privileges which were not divested, extinguished or diminished by the notice of acquisition, there would be, on one view, a lacuna in the operation of s 20. On that approach, the phrase "power or privilege" should be understood, when referring to such a thing "over, or in connection with" land, as something to be found in a legally enforceable instrument or other enforceable arrangement.
The alternative reading must be that someone can own an interest in land which is not legally enforceable and need not be extinguished by a notice of acquisition because it could not, in any event, be enforced against the acquiring authority. But if it is not something which is extinguished by the acquisition notice, it is not an interest for which compensation must be paid pursuant to s 37.
It follows that the definition of "interest" in land refers to a legally enforceable interest of the kind discharged under s 20. This reading is consistent with the general law understanding that there are personal interests which may arise between individuals and are enforceable in, or in connection with, property. It is a reading which is consistent with the legal language of ownership of an interest in land.
Although the appellant contended that an interest in land could be identified without regard to the provisions for assessment of compensation, that is to ignore the primary object of the statute and to deny the importance of reading the statute as a coherent whole.
The primary purpose, as noted, is to guarantee compensation assessed as the market value of the land. Other matters referred to in s 55 are by way of addition to that amount. Each of the matters set out in s 59(1) involves costs or fees reasonably incurred by, as described in par (a), "the persons entitled to compensation in connection with the compulsory acquisition of the land". In subsequent paragraphs, the persons are identified by the shortened phrase of "those persons". Thus, in relation to the costs of relocation which may be recovered under par (c), such costs are those incurred by persons entitled to compensation. Where a business has no interest with a market value, or any other value, the fact that the business happens to require relocation following compulsory acquisition should not be understood as giving it a freestanding right to recover the costs of relocation. Nor can it claim stamp duty payable because it, or someone on its behalf, purchases land on which to recommence the business.
Read coherently, the holder of a bare licence or permission to occupy land, terminable at will by the owner, has no foundation or interest on which to build a claim for compensation for losses attributable to disturbance under s 59.
It is convenient next to turn to the case law, which uniformly supports this conclusion.

Case law

The principle articulated above is consistent with the reasoning of the High Court in The Minister v The New South Wales Aerated Water and Confectionery Company Ltd. [13] The resumption in that case was governed by s 117 of the Public Works Act 1900 (NSW) which required a jury to assess "the value of such lands, estate or interest" at the time the notice of resumption was given. The lessee company was held to have an entitlement to the value of the unexpired term of its lease, but no entitlement based on an expectation that the lease would be extended because the lessor held the bulk of the shares issued by the lessee. As explained by Griffith CJ, the relationship between the lessor and the lessee was not a matter "depending upon the nature and circumstances" of the land itself and was therefore not to be taken into account in valuing the unexpired term of the lease. [14]
The earliest of the cases in this Court which addressed the terms of the Land Acquisition Act was Hornsby Council. The land in question was Crown land reserved from sale and lease for the purpose of public recreation. Although, by statute, the Council had "control" of certain public reserves, as Mason P observed, that described a responsibility or a statutory governmental function, and was "entirely outside the field of rights occupied by the group comprising the definition of 'interest'". [15]
Meagher JA reasoned in similar terms. Noting a submission with respect to par (b) of the definition of "interest" in s 4, to the effect that the words "were extraordinarily wide and should be interpreted literally", Meagher JA responded: [16] "However, this could not possibly be correct. In a sense every member of the public has a 'right' over the land in question: he can go on it and have a picnic. But it was hardly intended that he could claim compensation on a resumption. If it were, the machinery of notifying holders of 'interests' would extend to infinity. Some limitation must be placed on the words. Whilst the rights which fall within par (b) must be wider than the rights which fall within par (a), I feel that they must be limited to jura in re aliena, proprietary or quasi-proprietary rights less than a fully-fledged estate, that is, easements, charges, profits à prendre, profits à rendre, licences coupled with interests, etc."
Powell JA agreed with both Mason P and Meagher JA. [17]
Before turning to more recent authorities which have applied the reasoning in Hornsby Council, it is convenient to refer to the decision of a five-judge bench of this Court in Leichhardt Council v Roads & Traffic Authority of NSW. [18] The case considered whether "community land" held by a council, and not available for sale by the council, had a discounted market value taking into account the restriction on sale or disposal. As Spigelman CJ observed, s 56(1) of the Land Acquisition Act provides "an objective test to which considerations entirely personal to the owner are not material". [19] He therefore held, other members of the Court agreeing: "43 In my opinion, the statutory prohibition on sale of community land is a consideration which affects the land by reason only of the identity of the person who happens to own it. The process of classification and the concomitant restraint on alienation are not characteristics of the land that are capable of constituting an element of the hypothetical sale for which s 56(1) provides."
As the Chief Justice further noted, the definition of market value hypothesised a sale on the basis of "the statutory hypothesis… that the land is able to be sold". [20]
In 2015 this Court considered whether the rights of a purchaser under an uncompleted contract for the sale of land constituted an "interest" in land for the purposes of the Land Acquisition Act: Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd. [21]
Emmett JA identified the nature of the purchaser's interest by reference to "four equities", although noting that the extent to which they might be enforceable depended upon the time at which enquiry was made: "104 The purchaser's interest comprises four separate rights or 'equities'. [22] First, the purchaser has an interest in the land that is enforceable against third parties and that can take priority over holders of competing interests. Second, the purchaser has an equitable right that the vendor exercise due care to preserve and maintain the land pending completion. Third, the purchaser has an equitable right to the rents and profits received by the vendor between the agreed date for completion and the actual date of completion (but the vendor has that right during the period between the date of contract and the agreed date for completion). Fourth, the purchaser has an equitable lien for repayment of the purchase price in the event of non-conveyance by the vendor. Of those four rights, the first and last are in rem rights over the land the subject of the contract. The vendor also has four such rights: to receive rents before completion, to retain damages recoverable against others for wrongs to the vendor's land before completion, to receive the purchase money on completion, and, in default, to enforce a lien for the purchase money. [23] "
Golden Mile thus provides illustrations of the kinds of interest, recognised in law, which may fall within and give work to, par (b) in the definition of "interest" in land without resort to non-legal usage.
More specifically in addressing the scope of par (b) in the definition, Emmett JA repeated the reasoning of Meagher JA in Hornsby Council and concluded: [24] "Nonetheless, the breadth of the definition of 'interest' is such as to cover the rights of a purchaser in an uncompleted contract for the sale of land, even if it cannot yet be said that the purchaser would be entitled to a decree of specific performance."
In 2017, the Court gave judgment in Dial A Dump, the reasoning in which is challenged by the appellant. Dial A Dump Industries carried out activities on land at St Peters in Sydney which had been acquired for the purposes of the WestConnex motorway. The registered owner of the land was Alexandria Landfill Pty Ltd; a lease of part of the land had been executed in favour of Boiling Pty Ltd, although the lease was not registered. Dial A Dump asserted a compensable interest in the land the subject of the lease to Boiling, as it had permission to use and occupy the land to operate a waste business which included separation of waste, recycling and use in landfill. In the Land and Environment Court, Preston CJ of LEC determined that Dial A Dump had no interest in land for the purposes of the Land Acquisition Act. That decision was upheld on appeal. The primary reasons were given by Beazley P who addressed par (b) of the definition of "interest" in land, commencing with the separate reasons of Mason P and Meagher JA in Hornsby Council. [25] The President also noted the caution identified by Brownie AJA in Minister for Education and Training v Tanner, [26] to the effect that the language used by Meagher JA in Hornsby Council was properly understood as illustrative of the scope of par (b) and not a substitute for the words of the statute. In Tanner, a further right was identified as capable of constituting an interest within the definition, namely the common law right of an owner of land adjoining a highway to have access to the highway, which was accepted to be "a right over or in connection with the public road adjoining his or her land". [27]
There can, of course, be no suggestion that Meagher JA in Hornsby Council was intending, or should be taken as proposing, language in substitution for the statute. However, the value in identifying possible interests which fell within par (b), expanded upon in Golden Mile, lies in giving content to the language of the definition, so as to avoid the accusation that a restrictive approach to the statutory language may give particular terms no work to do.
In Dial A Dump, after a careful analysis of the authorities, the President accepted that the scope of par (b) "is not as confined as was found in Hornsby Council". [28] It is clear that, whatever element of confinement the President had in mind, they did not affect the present considerations. She continued, identifying two requirements in the legislation, namely: "The first requirement is that the 'power or privilege' must be 'over, or in connection with, the land'. The second requirement is that there must be an 'owner' of the power or privilege such as to be entitled to compensation: see s 37."
The President then stated: "157 Dial A Dump did not have any power 'over or in connection with the land'. 'Power' involves an ability to control or direct. There was no evidence that Dial A Dump had any such power and indeed the evidence was to the contrary. Dial A Dump had no power to control or direct the grant of leases or licences over the land. That power remained in ALF [Alexandria Landfill] and in Boiling subject to the terms of its lease. Dial A Dump's function was to conduct two particular businesses on behalf of the owners of those businesses. It could thus determine how the businesses were carried on, but it could not otherwise control or direct what went on on the land, except 'on behalf of the Alexandria landfill group' as recorded in the minutes of 30 June 2008. 158 It is arguable that a permission to use land could constitute a 'privilege in, over or in connection with land' within the meaning of par (b) of the definition of 'interest in land'. Whether that could be so would depend on the terms of the permission. Dial A Dump's permission to be on the land was for the purposes of the businesses that it was carrying on for ALF and Boiling. It was, on his Honour's finding, a permission personal to it. ALF and Boiling at all times had control of Lot 2, as owner, lessee and pursuant to their obligations as the holders of the environmental protection licences. Dial A Dump, at the most, had no more than the rights of an agent or a licensee to be on the property for the purposes of carrying on the business. I do not consider that that right gave it an interest in land as defined."
McColl JA agreed with the President in relation to this reasoning, as did Leeming JA subject to some further observations with respect to the definition of "interest" in land. Having rejected the contentions that (pursuant to par (a) of the definition) Dial A Dump had a legal interest in land by reason of its exclusive possession of the site or an equitable interest in land because the relationship between it and the registered owner and lessee were capable of supporting equitable remedies, Leeming JA turned to par (b). He noted what was, in effect, a challenge to the reasoning in Hornsby Council: "Right, power or privilege? 179 In support of the third way in which an interest was asserted, based on there being a right, power or privilege relating to the land, Dial A Dump pointed to its claimed possession and the activities it was said to be carrying out on the land. It submitted that there was no requirement to find a proprietary or quasi-proprietary interest in the land, contrary to what had been held in Hornsby Council v Roads and Traffic Authority of New South Wales (1997) 41 NSWLR 151 at 155."
After noting a submission based on the decision of the Queensland Court of Appeal in Sorrento Medical Service v Chief Executive, Department of Main Roads, [29] Leeming JA continued: "181 But it is not necessary, in order to resolve this appeal, finally to determine this point. There was no error of law in finding that Dial A Dump did not enjoy a valuable contractual right. It was not a contractual right, because its possession of the land came about by reason of permission or sufferance of either or both of the owner or lessee of the land. It was not a valuable right, because the right was terminable without notice at any stage. Dial A Dump made no response, nor could a response be made, to the submission that such rights which Dial a Dump enjoyed were terminable at will by act of the sole director and shareholder of its parent company ALF. It is therefore unnecessary to seek to resolve such conflict as exists between the decisions of this Court and of the Queensland Court of Appeal."
The pithy analysis in this last passage is applicable in the analogous circumstances of the present case. The appellant's submission that it was clearly wrong should not be accepted: on the contrary, no reason was identified to doubt its correctness.
Before leaving the authorities, it is convenient to note the reasoning of a second five-judge bench of this Court in Roads and Maritime Services v United Petroleum Pty Ltd. [30] United Petroleum carried on a service station business on land acquired for the purpose of upgrading the Pacific Highway. It made a claim for disturbance under s 59(f), which was the focus of the reasoning in that case. I stated: "8 … It is not in doubt that United had a relevant interest in land which was acquired. However, United's claim for compensation extended to its inability to use the land for its business operations over a period beyond its terminable interest in the land at the date of the compulsory acquisition."
That reasoning continued: "21 There was no authority relied upon by United which involved compensation for the acquisition of land used for commercial purposes in which some additional amount had been allowed on account of 'disturbance' to reflect the loss of a commercial business operation being conducted on the land. Rather, the capacity of the land to support a profitable commercial operation has always been understood to be reflected in the market value of the land, which is compensable as such. Furthermore, the market value of an interest in land is limited to the value of the legal interest vested in the claimant which was terminated by the compulsory acquisition. Thus, in The Minister v The New South Wales Aerated Water and Confectionery Company Limited … the High Court rejected the proposition that a lessee could recover more than the value ascertainable by reference to the existing lease based on a hope or expectation of the lease being extended or renewed. An expectation of renewal based on the relationship between the parties involved a personal matter which was to be excluded from the valuation of the interest. As explained by Isaacs J, '[t]he exclusion must be because, being personal, it necessarily is not inherent in or bound up with the interest taken so as to run with it in the hands of a purchaser'. 22 United did not seek to deny the proposition that its leasehold, terminable at will by the lessor, had no market value. Rather, it sought to avoid the conclusion that the land had no commercial value for it by claiming the full commercial value of the business operation undertaken by it on the land. However, as a matter of principle that which may be described as the basis of calculation of market value of an interest in land cannot be recharacterised as a form of consequential loss, known as disturbance, so as to be fully recoverable, in circumstances where the interest in land is so attenuated as not to enjoy any relevant market value."
Macfarlan and Payne JJA agreed with this reasoning. Sackville AJA wrote separately, but to similar effect in addressing the claim under s 59(f) [31] : "109 The present case is not concerned with the value of United Petroleum's tenancy at will. As has been explained, the tenancy at will had no value at the date of acquisition because it was terminable on one month's notice. The present appeal turns on the interpretation of a statutory provision that allows compensation for certain financial costs incurred by United Petroleum. That exercise is to be undertaken independently of the valuation of United Petroleum's interest in the land and must be conducted by reference to the statutory language. … 112 In the present case the interest acquired by RMS was United Petroleum's tenancy at will terminable on one month's notice. The fact that United Petroleum's lessor was unlikely in the foreseeable future to give notice terminating the lease is to be ignored for the purposes of assessing compensation, unless legislation provides otherwise. … 116 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 its business is a 'direct and natural consequence' of the acquisition of its interest in the land on which the business was conducted. 117 It is one thing to say (as RMS conceded) 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 its 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. No doubt United Petroleum took into account in conducting and investing in the business the likelihood that the lessor, a related company, would choose not to terminate the lease, at least in the short term. But that likelihood is irrelevant to the question of whether United Petroleum's loss was a direct and natural consequence of RMS' acquisition of the tenancy at will."
Preston CJ of LEC by similar reasoning found that the loss of future profits from the business that had been conducted on the acquired land was not a "direct and natural consequence" of the acquisition. [32]
Consistently with the reasoning in these cases, it may be said that the appellant had a permissive occupancy, terminable at will by the registered owners of the land. It was, concededly, not an interest with a market value. Nor was it an interest which gave rise to any right to compensation for "loss attributable to disturbance". In particular, the claim for loss of profits appears to be directly inconsistent with the ruling in United Petroleum. As Payne JA stated: "77 … Assuming that what was being valued was the highest and best use of the acquired land, I fail to see as a matter of principle why the market value of the acquired land, correctly identified, would not include the capacity of that land to generate a profit in the future… That is, the right to potential profits from market gardening after the date of the acquisition would be encapsulated in the market value of the acquired land. As I explained in Moloney v Roads and Maritime Services (2018) 98 NSWLR 651; [2018] NSWCA 252 at [97]-[100], in those circumstances there is no room for any separate 'disturbance' claim."
These authorities establish that a permissive occupancy, terminable at will by the registered owner of the land, and dependent for its continuation on the personal relationship between the occupier and the owner, is not a relevant (compensable) interest in land for the purposes of the Land Acquisition Act. This review of the case-law reveals no basis to conclude that either the outcomes or the reasoning is incorrect.

The relevance of subsequent amendments

This conclusion is fortified by the reasoning in Probuild that it would be a "strong thing" for this Court to overturn earlier authority in circumstances where the Act had been the subject of substantial subsequent amendment, without any variation to the effect of that authority.
There have been some quite limited amendments to the Land Acquisition Act since Hornsby Council, such as amendments dealing with native title, [33] and changes to s 59 with respect to valuation fees. [34] More importantly, the Land Acquisition (Just Terms Compensation) Amendment Act 2016 (NSW) made substantive amendments, including (i) the omission from s 4 of the definition of "solatium" and the insertion of "disadvantage resulting from relocation", with concomitant changes to ss 55 and 60; (ii) changes to the minimum period of negotiation for acquisition by agreement (inserting s 10A); (iii) changes to the minimum period of notice under s 13; (iv) new provisions for dealing with hardship applications (s 27A); (v) an amendment to s 34, dealing with a former owner's right to occupy land until compensation is paid; (vi) procedural changes to the role of the Valuer General in assessing compensation; (vii) amendment of s 56 to make provision for the market value of the land where there is no general market for the land; (viii) inserting a new detailed mechanism for disposing of land not required for the acquired purpose (s 71A); and (ix) a new Sch 1A to allow for indexed changes to the maximum amount allowed by way of compensation in respect of disadvantage resulting from relocation.
The 2016 amendments were substantive and material changes to the Land Acquisition Act. In making provision for compensation for disadvantage resulting from relocation, they had a direct effect on circumstances in which such compensation was available, but no change allowed for some broader set of interests to engage the right to compensation for relocation. This legislation clearly engaged the principles stated in Probuild, militating against departure from the earlier decision of this Court in Hornsby Council, were that otherwise being considered.
There have been other less significant subsequent amendments. [35] Finally, there was a variation subsequent to the decision of this Court in Dial A Dump, which addressed part of the definition in s 4 of "authority of the State". [36] That amendment, taken alone, might not have engaged the Probuild principle. However, Dial A Dump expressly engaged with and applied the construction of "interest" in land adopted in Hornsby Council. While it recognised that there might be interests beyond those which had so far been identified, it did not challenge the conclusion that what was required was an interest of the kind recognised by law "over or in connection with" land, as explained in Tanner. It is therefore sufficient to rely upon the amendments, which were of substance, made by the 2016 Amendment Act as engaging the relevant principle of statutory interpretation.

Conclusions

The appeal must be dismissed for three broad reasons.
First, the submission that the approach to the definition of "interest" in land accepted in earlier judgments of this Court is wrong should be rejected. The proposition that words such as "privilege" may be extracted from the statutory context and given their ordinary English usage should be rejected. The definition of "interest" in land encompasses a wide range of interests, but they are all in, over or in connection with land; they do not include interests which are dependent upon the personal relationship between the occupier and the owner. The distinction between personal and proprietary interests has long been recognised in the general law. Whilst the statutory definition should not be given any narrow or constrained reading, the statutory context is not consistent with a reading which encompasses an obligation to compensate for interests based on personal relationships. Accordingly, the Court cannot be comfortably satisfied that the earlier authorities were wrongly decided; rather, the general approach adopted in those cases is correct.
Secondly, the purpose of the legislation, namely to provide compensation where a government authority compulsorily acquires land for public purposes, as has been held in a number of recent decisions of this Court, does not encompass providing compensation for a permissive occupancy terminable at will. Although these decisions have turned on the provisions relating to the assessment of compensation, they are coherent with and reflect the approach taken to the definition of "interest" in land.
Thirdly, the fact that the Parliament has legislated to make substantial amendments to the Land Acquisition Act in 2016 without overturning, or making amendments inconsistent with, the earlier decisions of this Court is a factor militating strongly against this Court overturning any earlier decisions as to the scope and operation of the Land Acquisition Act.

Orders

The Court should make the following orders: 1. Dismiss the appeal from the judgment of the Land and Environment Court delivered on 27 August 2021. 2. Order that the appellant pay the respondent's costs in this Court.
PRESTON CJ of LEC: I agree with Basten AJA that the appeal should be dismissed with costs for the reasons he gives.

Endnotes

Gaudioso v Transport for New South Wales [2021] NSWLEC 91.
[2021] NSWLEC 90.
(2017) 94 NSWLR 554; [2017] NSWCA 73 (Beazley P, McColl and Leeming JJA).
(1997) 41 NSWLR 151 (Mason P, Meagher and Powell JJA).
Gett v Tabet [2009] NSWCA 76; (2009) 254 ALR 504 at [301].
(2018) 264 CLR 1; [2018] HCA 4 (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ).
Probuild at [52] (Gageler J).
Appellant's written submissions, 1 April 2022, pars 54-55.
Roads and Maritime Services v United Petroleum Pty Ltd (2019) 99 NSWLR 279; [2019] NSWCA 41 ("United Petroleum") at [37] and cases referred to in fn 18 thereto.
WN Hohfeld and WW Cook, Fundamental legal conceptions as applied in judicial reasoning (Yale Univ Press, 1923), pp 5-7.
Dial A Dump at [181].
CA Tcpt, 27/05/22, p 26(29).
(1916) 22 CLR 56; [1916] HCA 48.
Aerated Water at 63-64.
Hornsby Council, at 152G-153B.
Hornsby Council at 155B-C.
Hornsby Council, at 157.
[2006] NSWCA 353; (2006) 149 LGERA 439 (Spigelman CJ, Beazley, Bryson, Basten JJA and Campbell J).
Leichhardt Council at [42].
Leichhardt Council at [44].
(2015) 89 NSWLR 237; [2015] NSWCA 100 (Emmett JA; Macfarlan and Gleeson JJA agreeing).
JD Heydon, MJ Leeming, PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th ed, LexisNexis Butterworths, 2015) at [6-055] (and see citations therein).
Ibid.
Golden Mile at [107].
Dial A Dump at [140]-[143].
[2003] NSWCA 164; (2003)128 LGERA 281 (Brownie AJA; Beazley and Santow JJA agreeing).
Tanner at [15].
Dial A Dump at [156].
[2007] 2 Qd R 373; [2007] QCA 73.
(2019) 99 NSWLR 279; [2019] NSWCA 41 (Basten, Macfarlan, Payne JJA, Sackville AJA, Preston CJ of LEC).
The paragraphs in s 59 were in the same terms before they became part of s 59(1).
United Petroleum at [161].
Native Title (New South Wales) Amendment Act 1998 (NSW).
Regulatory Reform and Other Legislative Repeals Act 2015 (NSW), Sch 1.14.
See Crown Land Legislation Amendment Act 2017 (NSW), Sch 4.44; Statute Law (Miscellaneous Provisions) Act 2017 (NSW), Sch 2.22.
Local Government Amendment (Regional Joint Organisations) Act 2017 (NSW), Sch 2.15.

Amendments 09 August 2022 - Headnote - corrected formatting DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 August 2022

Crown Land Legislation Amendment Act 2017(NSW)

Local Government Amendment (Regional Joint Organisations) Act 2017(NSW)

Public Works Act 1900(NSW)

Statute Law (Miscellaneous Provisions) Act 2017(NSW)

Regulatory Reform and Other Legislative Repeals Act 2015(NSW)

Land Acquisition (Just Terms Compensation) Amendment Act 2016(NSW)

Native Title (New South Wales) Amendment Act 1998(NSW)

See Crown Land Legislation Amendment Act 2017(NSW)

Remedies (5th ed, LexisNexis Butterworths, 2015) WN Hohfeld, Fundamental legal conceptions as applied in judicial reasoning (Yale University Press, 1923) Category: Principal judgment Parties: Olde English Tiles Australia Pty Ltd (Appellant) Transport for New South Wales (Respondent) Representation: Counsel: I Hemmings SC / L Nurpuri (Appellant) R Lancaster SC / A Hemmings (Respondent) Solicitors: Mills Oakley Lawyers (Appellant) Herbert Smith Freehills (Respondent) File Number(s): 2021/273007 Publication restriction: Nil Decision under appeal Court or tribunal: Land and Environment Court Jurisdiction: Class 3 Citation: [2021] NSWLEC 90 Date of Decision: 27 August 2021 Before: Duggan J File Number(s): 2018/288532

HEADNOTE [This headnote is not to be read as part of the judgment] On 9 February 2018, Roads and Maritime Services compulsorily acquired a parcel of land on Parramatta Road, Camperdown. The registered owners of the land were Mr Antonino and Mrs Carmel Gaudioso. Mr and Mrs Gaudioso were also the sole directors and shareholders of Olde English Tiles Australia Pty Ltd ("Olde English Tiles"). Olde English Tiles occupied premises on the land under a bare licence. Offers of compensation were made to Mr and Mrs Gaudioso and to Olde English Tiles pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ("Land Acquisition Act"). Both challenged the adequacy of the offers by separate proceedings heard together in the Land and Environment Court. On 27 August 2021, Duggan J handed down judgment in each matter. Mr and Mrs Gaudioso were awarded compensation by reference to the market value of the acquired land, legal costs and valuation fees. Olde English Tiles did not claim that its right of occupancy had any market value; rather it claimed compensation for loss attributable to disturbance. The primary judge dismissed its claim on the basis that it did not have a compensable interest in the acquired land because its licence was terminable at will by the registered owners. On appeal, Olde English Tiles challenged the finding that it had no compensable interest under the Land Acquisition Act. The primary issue was whether it had a "privilege over, or in connection with, the land" within the meaning of the definition of "interest" in land under s 4 of the Land Acquisition Act. Held (per Basten AJA; Ward P, Gleeson and Mitchelmore JJA, and Preston CJ of LEC agreeing) dismissing the appeal: (1) The definition of "interest" in land in s 4 must be construed in its statutory context. A primary object of the Land Acquisition Act is to guarantee compensation at "not less than the market value of the land", which assumes that a compensable interest has market value. Secondly, the Land Acquisition Act uses the language of 'ownership' in relation to acquired land. Thirdly, the source of a "privilege over, or in connection with, land" must be in a legally enforceable instrument or arrangement for it to be divested, extinguished or diminished by the acquisition. If the privilege is not legally enforceable and is not extinguished by acquisition, it is not a compensable interest. Fourthly, the right to obtain compensation for loss attributable to disturbance is contingent upon the holder having a right to receive compensation for the market value of the interest: [38]-[46]. Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss 3, 20, 37, 55, 59, considered. (2) The finding that a bare licence terminable at will is not an interest in land under the Land Acquisition Act is consistent with existing authorities. The reasoning in those cases was not clearly wrong but rather correct in principle: they should not be overruled: [48]-[70]. Hornsby Council v Roads and Traffic Authority of New South Wales (1997) 41 NSWLR 151; Dial A Dump Industries Pty Ltd v Roads and Maritime Services (2017) 94 NSWLR 554; [2017] NSWCA 73 considered. (3) The Land Acquisition Act identifies interests in land for the purpose of providing for payment of compensation upon compulsory acquisition. A finding that a right of occupancy terminable at will is not an interest in land for the purposes of the Act is consistent with cases finding that such interests are not compensable. The Minister v The New South Wales Aerated Water and Confectionery Company Ltd (1916) 22 CLR 56; [1916] HCA 48; Leichhardt Council v Roads and Traffic Authority of New South Wales [2006] NSWCA 353; (2003) 149 LGERA 149; Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd (2015) 89 NSWLR 237; [2015] NSWCA 100; Roads and Maritime Services v United Petroleum Pty Ltd (2019) 99 NSWLR 279; [2019] NSWCA 41, considered. (4) The earlier authorities should not, in any event, be overturned because the Land Acquisition Act has been the subject of substantial subsequent amendment, without any change to the effect of the authorities: [71]-[74]. Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4, applied. Land Acquisition (Just Terms Compensation) Amendment Act 2016 (NSW); Local Government Amendment (Regional Joint Organisations) Act 2017 (NSW), considered.

(2003) 128 LGERA 281

(2003) 149 LGERA 149

(2006) 149 LGERA 439

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