Roads and Maritime Services v United Petroleum Pty Ltd

Solicitors: Corrs Chambers Westgarth (Appellant) Thomson Geer (Respondent) File Number(s): 2018/159409 Decision under appeal Court or tribunal: Land and Environment Court Jurisdiction: Class 3 Citation: [2018] NSWLEC 35; [2018] NSWLEC 64 Date of Decision: 27 April 2018 Before: Robson J File Number(s): 2016/160710

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

headnote [This headnote is not to be read as part of the judgment] The respondent operated a service station and restaurant business on a parcel of land on the Pacific Highway between Woolgoolga and Ballina. The land was owned by related parties which had an oral lease with the respondent, terminable on one month's notice. The appellant compulsorily acquired the land in August 2015. The respondent was unable to relocate its business. The respondent sought compensation in the Land and Environment Court for loss attributable to disturbance under s 59(f) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ("Just Terms Act"). On 27 April 2018, the respondent was awarded (a) $2 million as the capitalised sum for the loss of the business and (b) $83,000 for the additional rental paid to the acquiring authority for continuing possession in the period between compulsory acquisition and vacant possession, being rent additional to that previously paid to the lessors. The key issues on appeal were: (1) whether the respondent was entitled under s 59(f) to compensation for its loss of ongoing business profits; (2) whether the respondent was entitled under s 59(f) to compensation for the increased rental paid to the appellant; and (3) the appropriate costs orders. The Court (Basten JA, Macfarlan JA, Payne JA, Sackville AJA, and Preston CJ of LEC) allowed the appeal and held: In relation to question (1): (per curiam):

1. The scope of any loss attributable to disturbance, compensable under s 59(f), is limited to a direct and natural consequence of the acquisition and does not cover loss of the kind addressed under other paragraphs of s 59, but not otherwise claimable: [13]-[14], [72], [73], [96], [160].
2. Loss of future income from a business carried on under a lease terminable on one month's notice is not a loss attributable to disturbance because it is not reasonably incurred as a direct and natural consequence of the acquisition, but of the tenure held by the respondent: [22], [26], [72], [73], [116]-[118], [161]. Minister for Public Works v Thistlethwayte [1954] AC 475; Geita Sebea v The Territory of Papua (1941) 67 CLR 544 at 559; [1941] HCA 37, considered. (Basten JA, Macfarlan JA, Payne JA and Sackville AJA):
3. Whether the term "any other financial costs" in s 59(f) extends to the loss of future income or profits from a business may be doubted: [17], [37], [72], [76], [96]. El Boustani v Minister for Administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33; 199 LGERA 198; doubted. (Preston CJ of LEC): The term "any other financial costs" in s 59(f) is capable of extending to financial losses, such as loss of income or profits: [138], [142], [163]. (Basten JA, Macfarlan JA and Payne JA):
4. The claim for loss of business in circumstances where the respondent's interest in the land was of no value was an attempt to re-characterise loss that was previously recognised in the assessment of the market value of the land: [21]-[27], [49], [72], [73]. The Minister v The New South Wales Aerated Water and Confectionery Company Limited (1916) 22 CLR 56; [1916] HCA 48; Spencer v The Commonwealth (1907) 5 CLR 418; [1907] HCA 82, applied; Sydney Water Corporation v Caruso [2009] NSWCA 391; 170 LGERA 298; Moloney v Roads and Maritime Services [2018] NSWCA 252; Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority of New South Wales [2006] NSWCA 314, considered; Health Administration Corporation v George D Angus Pty Ltd (2014) 88 NSWLR 752; [2014] NSWCA 352, not followed. In relation to question (2): (per curiam):
5. Compensation for an increase in rental during the period between compulsory acquisition and vacant possession under s 59(f) should not be awarded, as the loss is not a direct and natural consequence of the acquisition and such recovery would be inconsistent with s 34 of the Act: [63], [72], [73], [79], [167]. Roads and Traffic Authority of NSW v McDonald [2010] NSWCA 236; 175 LGERA 276, distinguished. In relation to question (3): (Basten JA, Macfarlan JA, Payne JA, Sackville AJA and Preston CJ of LEC)
6. As a claimant for compensation acting reasonably would ordinarily be entitled to costs, the respondent should retain the costs of the trial. The costs should follow the event of the appeal: [67]-[70], [72], [73], [122]-[123], [166]. Dillon v Gosford City Council [2011] NSWCA 328; 184 LGERA 179, applied.

Judgment

1. BASTEN JA: In August 2015 the appellant, Roads and Maritime Services, compulsorily acquired a parcel of land for the purposes of the Pacific Highway upgrade between Woolgoolga and Ballina. The land was owned by two special purpose companies and leased to a third, related company, which operated a service station and restaurant business known as the Harwood Roadhouse.
2. The owners of the fee simple estate were offered (and accepted) compensation in an amount in excess of $3 million. [1] The present appeal involves an assessment of the compensation payable to the company, United Petroleum Pty Ltd ("United"), which operated the Roadhouse. United accepted that it had no claim for compensation for the market value of its interest in the land, which was a tenancy terminable on one month's notice. Rather, it claimed compensation for "loss attributable to disturbance", due to the loss of its business calculated as a capital sum based on maintainable earnings for an indefinite period. That claim was accepted by the primary judge, Robson J, in the Land and Environment Court. As calculated from the date of vacant possession, the amount awarded was a little under $2 million. The first issue on the appeal was a challenge to the award of compensation for disturbance.
3. The second issue concerned an award of some $83,000, being the difference between the rent which United would have paid to the owners of the land, but for the acquisition, and the higher sum paid to the appellant for continued occupation of the land from the date of the compulsory acquisition to the date on which the appellant obtained vacant possession.
4. For the reasons set out below, the appellant should succeed with respect to both issues. Accordingly, the orders made in the Land and Environment Court on 27 April 2018 should be set aside and the claim by United for compensation should be dismissed.

Statutory scheme

1. In the Land and Environment Court, Robson J upheld United's claim for compensation for disturbance based on a construction of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ("Just Terms Act"), s 59(f), which the judge considered himself bound to adopt based on the reasoning of this Court in Health Administration Corporation v George D Angus Pty Ltd. [2] The appellant's primary contention was that the decision in George D Angus did not require that outcome. In the alternative, the appellant submitted that George D Angus was wrong and should not be followed. In anticipation of the latter submission, a five judge bench was constituted. It is convenient to consider first the proper construction of the Just Terms Act, before turning to authority.
2. The relevant provisions are contained within Pt 3, Div 4 of the Just Terms Act. Three sections are of primary importance. Section 54 creates an entitlement to just compensation; s 55 identifies six matters to which regard must be had in determining the amount of compensation to which a person is entitled with respect to an acquisition of land, those being the exclusive matters to which regard may be had. Sections 54 and 55 provide the basis for the calculation of compensation: as in force in August 2015 (the date of the compulsory acquisition) they relevantly provided: [3] 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. … 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) solatium, (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.
3. The first five matters identified in s 55 are the subject of further definition in ss 56-60 respectively. Because the claims by United were based solely on par (d), it is sufficient to turn to the further definition of that matter in s 59 which, in August 2015, read as follows: [4] 59 Loss attributable to disturbance 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 reasonably incurred by those persons in connection with the compulsory acquisition 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.
4. The drafting of this provision is economical, without the use of internal defined terms. Thus, par (a) speaks of legal costs incurred by "the persons entitled to compensation in connection with the compulsory acquisition of the land". Paragraphs (b)-(e) simply refer to "those persons", but the reference is to those persons more fully described in par (a). Each paragraph speaks of costs or fees "reasonably incurred" and, except par (f), the party incurring the costs or fees is identified by reference to "those persons" as described in par (a). The first question of construction is whether the class of persons incurring the "other financial costs" referred to in par (f) includes persons other than those entitled to compensation in connection with the acquisition of the land. The existence of such a broader class is unlikely given the breadth of the definition of "owner" and the definition of "interest" in land. The term "interest" in land extends to any legal or equitable estate or interest in the land or any easement, right, charge, power or privilege over, or in connection with, the land. [5] 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.
5. There is a further respect in which par (f) differs from each of the preceding paragraphs. Thus, each of pars (a)-(e) refers to specifically identified costs or fees; by contrast, par (f) involves no such element of precision, referring rather to "any other financial costs". As will be seen shortly, there has been a tendency in the discussion of the scope of this paragraph to read that phrase in isolation and give it the broadest possible interpretation consistent with dictionary definitions of the individual words. That approach disregards four different forms of constraint imposed by the context and structure of the section.
6. The first constraint has already been noted, namely the possibility that there is a temporal element involved, fixed by the extent of the interest in land which is disturbed by the compulsory acquisition.
7. The second constraint may be found in the need to identify financial costs "relating to the actual use of the land", namely that use to which the land was put at the date of the compulsory acquisition. Residential, agricultural or commercial uses are common examples of actual uses of land and suggest that in this sense the term "land" refers to an area of the earth, rather than a bundle of legal rights.
8. The third constraint arises from the need to identify a cost flowing as "a direct and natural consequence" of the acquisition. This phrase, although coming at the end of the paragraph, clearly qualifies, not the actual use of the land, but rather the incurring of the financial costs. The qualifier will be significant in some cases (though not in the present case) because it is to be distinguished from loss caused by the carrying out of the public purpose for which the land is acquired. [6]
9. The fourth form of constraint derives from the use of the phrase "any other" to identify the relevant financial costs. The proper construction of this phrase turns on the structure of the section. Thus, it is significant that the section does not commence by referring to "any financial costs, including those identified in pars (a)-(e)"; rather, it is an exclusive definition which commences with five specific categories and concludes with a general category. It would be erroneous to construe par (f) as including any financial cost not specified in pars (a)-(e); to adopt that approach would be to disregard the careful limitations imposed by the specific provisions. For example, pars (c)-(e) envisage that financial costs may be incurred in the relocation of the persons entitled to compensation, if, for example, they resided on the property on the date of the compulsory acquisition. It may be reasonable for those persons to acquire an alternative place to live, but one which will cost more than the market value of the land compulsorily acquired. Obtaining the alternative accommodation may involve legal fees, mortgage costs and stamp duty payments, all of which may vary depending on the value of the land to be purchased. The effect of pars (c)-(e) is to permit the recovery of financial costs if reasonably incurred, even though the purchase price may exceed the amount awarded by way of compensation for the market value of the land compulsorily acquired. However, compensable stamp duty is limited to that which would have been incurred on the purchase of land of equivalent value to the land compulsorily acquired: s 59(d). Similarly, the compensable cost of obtaining a fresh mortgage will be limited to that which would have been incurred in connection with the execution of a new mortgage to secure the repayment of the balance owing in respect of the discharged mortgage: s 59(e). It would subvert the purpose of those carefully crafted provisions to allow additional amounts to be paid by way of stamp duty or mortgage fees simply because they fell within the language of par (f), read in isolation from the earlier paragraphs.
10. In order to be sure that a construction of par (f) does not subvert the limitations contained within the earlier paragraphs, it may be necessary to identify those limitations with a degree of precision. For example, par (f) should not be understood as permitting recovery of financial costs of relocating persons beyond those recoverable pursuant to par (c). The costs of relocating persons may, for example, in the case of residential premises, include the costs of furniture removal and storage whilst alternative premises are acquired, and other incidental costs of relocation. There is no apparent reason for limiting "the relocation of those persons" to the relocation of the individuals concerned, or their immediate belongings; the phrase is apt to include the relocation of business operations conducted on the acquired land. A question then arises as to whether the interruption to the operation of the business, resulting in reduced revenue, whether temporarily or permanently, constitutes a financial cost reasonably incurred in connection with the relocation of the business operated on the acquired land by the person entitled to compensation. However, such amounts as may be recovered under par (c), would not be recoverable under par (f).

Compensation for continuing operation of business

1. The primary judge found that the compulsory acquisition terminated the business operation conducted by United on the land acquired. There was no relocation. Accordingly, the question for determination was whether United could be compensated under s 59(f) for the loss of an opportunity to continue to operate its business on the land which had been acquired. There are three reasons why that question should not be answered favourably to United.
2. First, the ordinary meaning of "financial costs reasonably incurred … relating to the actual use of the land", is not apt to describe the loss of an opportunity to continue to use the land. While there may be financial costs incurred in terminating a business operation, the loss of the opportunity to continue the business operation is not aptly described as a "financial cost" relating to the actual use of the land at the date of acquisition.
3. Secondly, the direct and natural consequence of the acquisition of the interest in the land was to prevent the continuation of the business on that land; the acquisition did not cause the owner to "reasonably incur" the termination of the business; rather, in ordinary parlance, the acquisition caused the owner to suffer a loss of revenue. The loss of revenue may have caused the business owner to take other steps, but the loss of revenue itself was not aptly described as a "financial cost"; however, the cost of taking other steps, such as the cost of relocating the business, readily fell within the language of par (f).
4. Thirdly, and by way of expansion of the last point, the kinds of financial costs covered by pars (a)-(e) are all costs incidental to the loss of the land; they assume the loss of the land for which market value will have been paid pursuant to other provisions in s 55, assuming that the owner's interest in the land had a compensable value.
5. This reasoning may be supported by reference to the history of the language used in dealing with claims for compensation following compulsory acquisition of land. As has been noted on a number of occasions, care must be taken in seeking to apply earlier case law to a new statutory regime. [7] Nevertheless, the Just Terms Act adopts language which was familiar in the earlier case law to describe certain kinds of compensation. Thus, in Minister for Public Works v Thistlethwayte [8] Lord Tucker identified the assessment of compensation as involving the determination of the value of the land, "to which must be added in appropriate cases further sums for disturbance, severance, special value to the owner and the like."
6. The point of distinction between disturbance and market value may be readily explained, both in relation to land used and operated for commercial purposes by the owner and land the subject of a lease where the lessee uses the land for commercial purposes. Assuming in each case that the actual use is the best economic use available, the market value of the land may be calculated by capitalising annual maintainable earnings at an appropriate discount rate. (This was the exercise undertaken by the valuers in the present case.) Where the land is put to a commercial use by a lessee, "the lessee would be entitled to an amount to represent the value of the lease to him for the balance of the term … as his share of the full value of the land," as explained by Williams J in Geita Sebea v The Territory of Papua. [9] In that case, the lessee was the government and hence the value of the lease was deducted from the compensation payable by the acquiring authority to the owner.
7. 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 ("Aerated Water") [10] 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. [11] 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". [12]
8. 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.
9. The respondent contended that Aerated Water had no relevance, for two broad reasons. First, it was concerned with the value of the lessee's interest in the land and was not concerned with a claim for disturbance. Secondly, it concerned land resumed under the Public Works Act 1900 (NSW) which provided a different regime for compensation from that now available under the Just Terms Act.
10. Both points of distinction may be accepted; nevertheless, the case remains a statement of principles which continue to operate under the current legislative regime. Those principles are threefold. First, Aerated Water confirmed, in relation to the valuation of a leasehold interest, the principles for valuation of a fee simple estate established in Spencer v The Commonwealth. [13] It is not in doubt that the principle for the assessment of the market value of the land, now contained in ss 55(a) and 56 of the Just Terms Act, reflects the approach adopted in Spencer v The Commonwealth. Further, it is not in doubt that the assessment of market value applies to each interest in land which is compensable under the Act.
11. Secondly, Aerated Water established the principle that what is to be valued depends upon the nature and circumstances of the interest in question and the term of the interest. As explained by Griffith CJ: [14] "All matters which would be so taken into consideration by an intending purchaser, and which relate solely to the situation and condition of the land and the improvements upon it, and the right of ownership and enjoyment which the purchaser would acquire in respect of them, are, in my opinion, elements to be taken into consideration in estimating the value of the tenant's actual interest. The element of hope or expectation of non-disturbance arising from the physical condition of the land is not a hope of a separate and distinct interest to accrue after the expiration of the term, but an element in the value of the actual term itself." Thus, the personal relationship between the tenant and the lessor, which might have provided a basis for a renewal of the lease at the expiration of the term, was not a factor to which regard could be had in assessing the value of the current interest of the lessee. On the other hand, the possibility of renewal was a factor which could be taken into account, based on the circumstances of the lease and the land, which might in any event allow a "sitting tenant" to obtain a price for the remainder of a lease beyond a simple calculation of the potential profits over the remainder of the term.
12. The third principle is that 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.
13. Furthermore, there would be an inconsistency between an assessment of the market value of the land based on capitalisation of earnings and the separate capitalisation of those earnings as an element of disturbance. Whilst disturbance is a separate head of compensation from compensation for the market value of the land acquired, it is a form of compensation for a distinct loss, not for the same loss recharacterised.

Prior authority under the Just Terms Act

1. For reasons which will be explained, the reasoning set out above is not consistent with that adopted by this Court in George D Angus. However, the primary submission for the appellant was that George D Angus was distinguishable. In the alternative, the appellant submitted that George D Angus was wrongly decided and ought not be followed. To address these contentions it is necessary to give some brief details of the claim in George D Angus.
2. One Dr Angus provided gynaecological and obstetric services at two hospitals in Wagga Wagga. He did so from premises at Yabtree Street, Wagga Wagga, the land being owned by a company of which the sole director and shareholder was Dr Angus' wife. The services were provided through a separate service company (George D Angus Pty Ltd) which held an interest in the land by way of a statutory tenancy pursuant to s 127(1) of the Conveyancing Act 1919 (NSW), being an interest determinable at will by either party upon giving one month's notice in writing.
3. The land (that is, the interests of the owner of the fee simple and those of the tenant) was acquired by the Health Administration Corporation. A claim for the market value of the fee simple was made by the registered proprietor and settled. The service company made no claim for market value but claimed the costs of relocation to separate premises at Peter Street, Wagga Wagga, from where it provided gynaecological services only through Dr Angus. It made a claim for loss of profits due to the fact that Dr Angus considered it necessary to cease providing obstetric services from the Peter Street location, which was more distant from the hospitals. His service company claimed compensation for the resulting loss of income over the period of a little under two years during which the company operated from the Peter Street address. At the end of that period, Dr Angus relocated to Newcastle. Further claims with respect to his practice in Newcastle were rejected and were not the subject of the appeal to this Court. An amount of some $16,000 was allowed for the costs of relocation from Yabtree Street to Peter Street.
4. The dispute concerned the claim for some $1.5 million with respect to the loss of profits incurred during the period the company provided services from the Peter Street property. The claim was not brought as a financial cost in connection with the relocation of the business pursuant to s 59(c) of the Just Terms Act, but rather as "any other" financial cost relating to the actual use of the land, pursuant to s 59(f). That claim was upheld in the Land and Environment Court. [15] An appeal by the acquiring authority was dismissed.
5. The present appellant sought to distinguish George D Angus on two bases. It submitted first, that the loss of profits was an ascertainable sum, as distinct from a loss calculated by reference to capitalised maintainable earnings. However, the method of determining the amount of the loss has no bearing on the point of statutory construction. The second point of distinction was that George D Angus involved the relocation of the business of the service company, whereas the present case involved the termination of the business. However, that distinction is unacceptable for two reasons. The first reason is that the claim in George D Angus was for the loss due to the termination of the obstetric services formerly provided by Dr Angus from the compulsorily acquired premises; that business was not relocated to the new Peter Street premises. Secondly, the claim was not a claim for the financial costs of relocation, but rather a claim under s 59(f).
6. On the other hand, the interest of the claimant in each case is identical, namely a claim based on the actual use of the premises which were compulsorily acquired even though the interest in the land, being terminable at will, had no market value. Neither the reasoning, nor the result, in George D Angus is consistent with the construction of the Just Terms Act adopted above. It is necessary, therefore, to explain why the reasoning upheld in this Court in George D Angus should not be followed. [16]
7. The first and fourth steps in the reasoning were related. The first step involved the rejection of a submission that compensation for lost or foregone profits might be available as "a special value of the land" to the owner of the relevant interest in the land at the date of acquisition, pursuant to s 55(b) of the Act. [17] That reasoning, which may be accepted, was that the Just Terms Act distinguished between the market value of the land (including its special value for the dispossessed owner) and separate heads of compensation which included loss attributable to disturbance of land. However, the significance of that finding was that unless loss of profits could be recovered as a form of "disturbance" they appeared to be unrecoverable under the Just Terms Act. Thus, the fourth step in the reasoning in George D Angus involved the following proposition: "[63] … Given that the pre-Just Terms Act authorities relied upon by the appellant permitted the recovery of disturbance losses such as loss of trade or production during the period of relocation, it would be odd in the extreme if such losses could no longer be recovered because no expenditure was involved."
8. It will be necessary to return to the question of the pre-Act authorities, but it may be noted that, to the extent that they refer to loss of trade or production "during the period of relocation" they did not apply in relation to the facts of George D Angus, unless, consistently with the appellant's first point of distinction in the present case, the "period of relocation" extended for more than 18 months, whilst the claimant provided services from the Peter Street premises in Wagga Wagga.
9. The second step in the reasoning in George D Angus addressed a semantic issue which, indeed, appeared to be the primary focus of the dispute in that case both in the Land and Environment Court and in this Court. The issue was whether the phrase "financial costs" in s 59(f) was apt to include loss of profits, or was limited to sums of expenditure.
10. The basis for treating the term "other financial costs" as apt to include loss of profits was not entirely persuasive, but it is sufficient for present purposes to accept the conclusion. The reasoning is unpersuasive because it focused on a dictionary definition of the term "cost" and a reference to "financial loss" in s 61(b) of the Act. As this Court has remarked on many occasions, the use of dictionary definitions is rarely determinative of the meaning of a term in a statute where there is doubt as to its scope, the particular word having, as is usually the case, a range of possible meanings. [18] Usually the statutory context will provide better guidance. In particular, to understand the scope and operation of s 59(f) what has to be construed is the composite expression, "any other financial costs reasonably incurred … relating to the actual use of the land". As noted above, the "other" indicates that "financial costs" must be addressed by reference to the context provided by the earlier paragraphs of the definition.
11. The argument based on s 61 requires consideration of the terms of that provision: 61 Special provision relating to market value assessed on potential of land 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 forgone in realising that potential, and (b) any financial loss that would necessarily have been incurred in realising that potential.
12. It has been held in a number of cases that the element of potential compensation which is excluded by s 61 falls within "any loss attributable to disturbance" under s 55(d) and thus within s 59. In other words, where the compensation paid under s 55(a) for the market value of the land is assessed on the basis of a higher value than that reflected by its current use, loss attributable to disturbance will not be payable in addition to the higher market value. [19] In order to align these provisions, the phrase "any financial loss" in s 61(b) has been treated as equivalent to "financial costs" in s 59 and, in particular, in s 59(f). That approach was adopted by this Court in Sydney Water Corporation v Caruso. [20]
13. A preferable reading is that "loss" in s 61 picks up the references to "loss" in (relevantly) s 55(d), being "any loss attributable to disturbance". What is covered by "loss attributable to disturbance" is defined in the paragraphs of s 59, and not by reference to the language of s 61(b), which neither expands, restricts, nor illuminates the scope of s 59. This approach does not require the inference that there is some inconsistency in the terminology, as between s 59 and s 61, which needs to be resolved. (Adopting this approach would have made no difference to the dispositive reasoning or the result in Caruso.)
14. Careful attention to the actual language of the various provisions suggests that neither dictionary definitions nor s 61(b) provide relevant assistance to the meaning of s 59(f).
15. The third step in the reasoning in George D Angus appeared in the following passage: "[62] Finally, contrary to the submission of the appellant, the primary judge's construction of s 59(f) does not involve compensating an owner for business losses or forgone profits by capitalising them. That is not how the primary judge assessed the respondent's losses under this head and it would have been inappropriate for him to have assessed them otherwise than in the manner he adopted by estimating income and subtracting estimated expenditure for the relevant period."
16. It was not necessary to assess the lost profits by capitalising them in circumstances where they accrued over a closed period which had been completed. However, it is by no means clear that the Court was saying that no compensation could be awarded otherwise than for a closed period which had been completed. In any event, that step in the reasoning was not based on any particular understanding of the operation of s 59(f).
17. It remains to consider one aspect of the fourth step in the reasoning, namely the proposition that "pre-Just Terms Act authorities" permitted recovery of disturbance for loss of trade or production during the period of relocation. That may well be so, although it assumes, as the appellant noted, that relocation occurred. However, the Court's attention was not drawn to any case in which an amount was awarded for loss of profits with respect to the operation of a business beyond the period of the owner's interest in the land. For reasons already expressed, that approach would be inconsistent with the approach to compensation for the compulsory acquisition of land as explained in Aerated Water. That issue was separately addressed in George D Angus as the second issue.
18. The reasoning in Aerated Waters was distinguished in George D Angus, on the basis that it dealt with a lease which was to expire at the end of a fixed term, as compared with a tenancy at will, being the interest in land at issue in George D Angus. However, a lease which is to expire at a fixed time is not relevantly different in kind from a tenancy at will, for at termination it becomes a tenancy at will, unless possession is recovered. In fact, the tenancy in Aerated Water was more secure (for the balance of the term) than that in George D Angus: they were not distinguishable on this basis. [21]
19. The second basis upon which Aerated Water was distinguished may be found in the following passage in George D Angus: "[69] The appellant's argument proceeds on the assumption that the terms and limitations of the respondent's interest in the Yabtree Street land govern, as a matter of law, the question of whether the respondent reasonably incurred a loss of income and/or profits as a direct and natural consequence of the acquisition. Herein lies the fallacy of its contention. Those terms and limitations were relevant to the assessment of the market value of the interest acquired but not to the assessment of any loss attributable to post-acquisition disturbance."
20. The error in this passage lies in reading "any other financial costs … relating to the actual use of the land" as equivalent to the loss of any profit which might flow from the continued operation of the business on the basis that the business would have continued for an indeterminate period regardless of the absence of any secure interest in land. That approach was justified on the ground that the interest in land was irrelevant - it "mattered not for the purpose of s 59(f)." [22] That was because "the fact that it [the interest in land] 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." [23] Thus the final limb of the definition of "loss attributable to disturbance of land" was identified as giving rise to a right of compensation divorced from the interest in land which had been acquired.
21. This approach was erroneous because it sought to read the relevant words in par (f) out of their statutory context. As already noted, adopting a purposive or contextual approach supports the conclusion that the costs associated with the termination of the actual use of the land are properly limited to such costs as those of relocation of the business to other premises.
22. The logical consequences of the alternative approach were not addressed in George D Angus, but should not be overlooked. In most, if not all, cases of compulsory acquisition of interests in land, the compulsory acquisition will terminate the actual use of the land by the prior owner. If that owner's use was private, for example residential, alternative accommodation would need to be obtained, at a financial cost. The cost of new premises, whether purchased or rented, is not reimbursed as a loss for disturbance of the acquired land or otherwise: it is covered to the extent of compensation for the market value of the compulsorily acquired land. If, on the other hand, the prior use was commercial, the prior owner's interest is again compensated by receiving the market value of its interest in the land. There is no additional compensation for termination of the cash flow from the prior use. Rather, the best available financial return for the commercial use of the land will form the basis of its market value. It will be compensable as such. As explained in Moloney v Roads and Maritime Services [24] "[t]he market value of the acquired land included the capacity of that land to generate a profit in the future, whether by growing sugar cane or doing anything else."
23. There is a danger in treating the different matters identified in s 55 as capable of giving rise to "overlapping claims". This is not a necessary construction of the legislation. The better view may be that each provision provides an independent basis for a relevant award of compensation, but should be read as exclusive in its terms and not as overlapping with other bases of claim. This may be important in order to avoid misapplication of limitations on compensation. Thus, it would be inconsistent with the statutory scheme if a particular head of loss could be recoverable as market value of the land or under another head in s 55. If that were possible, the limitation on the compensation payable for market value set out in s 56(2) might be capable of avoidance by manipulation of the heads of claim.
24. Spigelman CJ stated in Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority of New South Wales [25] that he would not "approach the interpretation of s 55 on the assumption that each of the component parts and specifically s 55(c), was intended to operate to the exclusion of each other." That caution may be accepted; nevertheless, on careful consideration the assumption may be justified and allow a coherent and straightforward operation to the statute. That is not to deny that valuation methodology (including use of a "before and after" comparison) may not roll more than one head of compensable loss into a single calculation.
25. It is also possible that a claim may be capable of characterisation under more than one provision, depending upon the circumstances. However, it would not be consistent with the evident purpose of the legislation for the full market value of commercial land to be assessed by reference to its potential commercial profitability where there was a single owner of the fee simple estate, but for the same compensation to be awarded twice in circumstances where there was a division of legal interests between a landlord and a tenant, where the tenant carried on the relevant business by way of actual use of the land. That is not to say that the tenant will not obtain separate compensation for the acquisition of its interest in the land; it is, however, to say that the tenant will only be compensated for the loss of its interest in the land and not for the loss of its future business expectations which would depend upon an interest it did not hold at the date of the compulsory acquisition.
26. This approach is also consistent with the carefully calibrated paragraphs of s 59. For example, it would not be consistent with the statutory scheme to allow a prior owner which had relocated its business to nearby premises to recover limited costs of relocation, but to allow a prior owner which had been unable to find alternative premises to recover the lost profits of the business which was terminated in circumstances where its interest in land had no market value.
27. The approach adopted above depends upon reading s 59 as a whole and having regard to its statutory context and its apparent purpose. To the extent that George D Angus involved reading the words in s 59(f) in isolation from its statutory context it reached an erroneous result. It should not be followed. The primary judge was therefore in error in allowing any amount for the termination of the business.

Claim for adjustment of rental

1. Although, pursuant to s 20(1) of the Just Terms Act, the relevant interests in land vested in the authority upon publication of the acquisition notice, the Act nevertheless provides for the former owner to remain in occupation in certain circumstances: 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, … … (2) Any such person is entitled to remain in occupation of any building that is the person's principal place of residence, or the person's place of business, for 3 months after it is compulsorily acquired, even though the person has ceased to be entitled to remain in occupation under subsection (1). …. (3) The terms on which a person remains in occupation of land that has been compulsorily acquired under this Act are, in the absence of agreement, such reasonable terms as are determined by the authority of the State (including terms as to the rental to be paid and the restrictions on the use of the land). The Residential Tenancies Act 2010 does not apply to that continued occupation. (4) Any such unpaid rent or other money due to the authority of the State may be set off against the compensation payable under this Act.
2. The respondent was permitted to stay in occupation of the premises on the acquired land for a period of 223 days. Continued occupation was permitted on the basis that an occupation fee was paid to the appellant. The fee exceeded the rent which had been paid by the respondent to its landlords by an amount of $372 per day. The total payment to the authority therefore exceeded the rent which would have been payable under its former lease by $82,956. The trial judge awarded compensation to be paid by the authority to the respondent in that amount. The head of compensation was loss for disturbance of land, within s 59(f).
3. The appellant challenged that finding on the basis that the payment to the authority was not the direct and natural consequence of the acquisition of the terminable interest in the land, but rather the consequence of the decision of the respondent to remain in occupation at the agreed fee. The appellant further contended that s 34 was inconsistent with such a conclusion, in that it only permitted continued occupation by a person to whom compensation was payable under the Act and further provided that unpaid rent or occupation fees could be set off against the compensation payable: s 34(1) and (4). A coherent construction of the legislation therefore prevented recovery of the amount of the occupation fee as compensation for the compulsory acquisition.
4. For each of the reasons given by the appellant, together with the construction of s 59(f) set out above, the authority's argument should be accepted and the decision of the primary judge on this issue set aside.
5. The approach adopted by the primary judge, namely that the additional rent payable by way of occupation fee was recoverable as compensation, relied on the reasoning of this Court in Roads and Traffic Authority of NSW v McDonald. [26]
6. The facts in McDonald did not support its application in the present case. The RTA had acquired part of a rural property owned by Ms McDonald, on which stood her residence and a shed. She had remained in her residence for a period of months, paying an occupation fee pursuant to s 34 of the Just Terms Act. She intended, reasonably, to relocate her residence to the residue land after the works on the acquired land were completed. She was therefore required to leave the land for a period of some months whilst the construction works were undertaken. Her claim for disturbance relevantly related to the rent she incurred after vacating her residence; it did not relate to the occupation fee paid to the RTA.
7. In McDonald, the primary judge had found that the rental payments were not recoverable pursuant to either s 59(c) or 59(f). The primary basis of the claim was that, pursuant to s 59(c), the rental payments were financial costs reasonably incurred in connection with the "relocation" of the person entitled to compensation. The relevant passages in the reasoning in this Court were as follows: "[112] At [120] of his reasons, the primary judge appears to have disallowed the claim for rental on three grounds. The first is that a claim for rent for the period after the respondent had vacated the acquired land did not fall within either s 59(c) or (f). The second was that the terms of s 34(3) indicated an intention that post-acquisition rental was not compensable. The third was that it would be unreasonable to allow the costs attributable to the payment of rent for the reasons referred to by Talbot J in Horton v Wyong Shire Council (No 2) [2005] NSWLEC 45 at [19]. The respondent challenged the correctness of each of these grounds. [113] In its submissions, the RTA did not seek to uphold the first of the grounds apparently relied upon by the primary judge in rejecting the rental claim. Talbot J in Horton accepted (at [18]) that such a claim fell within s 59(c), although ultimately he rejected it on the basis that it was not reasonable that the claimants in that case be reimbursed for the rental payments that they were required to make after they vacated the acquired land and pending the acquisition by them of an alternative residence. [114] In my view there may be some question as to whether in truth the financial costs representing rental paid or payable pending relocation from one residence to a new residence is a cost incurred in connection with that relocation within the meaning of s 59(c). But even if it does not fall within that provision, in my view it clearly falls within the terms of s 59(f) as being a cost incurred as a direct and natural consequence of the acquisition and which related to the actual use of the land, namely, for the purpose of a residence. Accordingly, I would reject the first ground upon which his Honour relied to deny the respondent's rental claim. … [116] Section 34(3) falls within Part 2 of the Just Terms Act which is headed "Acquisition of land by compulsory process". In contrast, s 59 falls within Part 3, which is headed "Compensation for acquisition of land". Further, s 34(3) empowers the relevant authority of the State to charge a rental where the dispossessed owner remains in occupation of the land that has been compulsorily acquired under the Act. It neither deals nor purports to deal with the assessment of compensation, which is confined to Part 3 of the Just Terms Act. [117] Quite clearly, rental paid pursuant to s 34(3) would not be recoverable under s 59(c) as that provision proceeds on the basis that the dispossessed owner remains in occupation of the acquired land with the consequence that that person has yet to relocate. It is no doubt for that reason that in the present case the respondent only sought to claim rent paid or payable by her subsequent to her vacating the residence upon the acquired land. I would therefore reject the second ground apparently relied upon by the primary judge in rejecting the rental claim."
8. McDonald was, relevantly for present purposes, authority for the proposition that s 34(3) did not indicate a statutory intention that post-acquisition rental was not compensable, in circumstances where it was paid to a third party, rather than the acquiring authority. That may be so, but it does not speak to this case, where the only payments for which compensation was sought were payments under s 34 by way of occupation fee to the acquiring authority. In short, the very claim which is relied upon in the present case was eschewed by the claimant in McDonald. There is at least an inference that such a payment cannot be the subject of a compensation claim because, if unpaid, it may be set off against the compensation payable.
9. It is not necessary to consider whether McDonald was correctly decided on its facts; it is sufficient to note that it provides no authority for the proposition that an occupation fee payable under s 34 is recoverable as loss attributable to the disturbance of the land, pursuant to s 59(f). It is true that the fees paid by United related to the actual use of the land at the date of acquisition, in that they were a condition of the tenant continuing that use. However, the cost to United was the direct and natural consequence of the acquisition, not of the tenant's interest, but of the fee simple estate. Section 59(f) should be understood to refer to costs incurred as a direct and natural consequence of the acquisition of the claimant's interest in land. Furthermore, even if the provision covered consequences to a tenant of the acquisition of its landlord's interests in the land, the cost, although causally related to that event, was a direct and natural consequence of the decision of the tenant to stay in occupation for the agreed occupation fee. This conclusion is consistent with the inference to be drawn from s 34(4).
10. It follows that the appellant's submissions in this regard should be accepted. The appeal with respect to the award of compensation for the rental payments must be allowed and the award set aside.

Costs

1. There remains a question as to the costs of the proceedings, both in the Land and Environment Court and in this Court.
2. The trial judge awarded costs in favour of United in relation to the proceedings in the Land and Environment Court. The appellant submitted that if it were successful on the appeal, United, having now failed on all the claims litigated below, should pay the appellant's costs of the trial. United submitted that, even if it failed to uphold the judgment below in its favour, its conduct in seeking compensation in excess of that offered by the appellant had been reasonable and accordingly it should retain its costs order below.
3. So far as the principles governing costs in the Land and Environment Court in proceedings under the Just Terms Act were concerned, the parties were in agreement that the Court had an unfettered discretion, which was properly exercised in accordance with the approach adopted in Dillon v Gosford City Council. [27] Accordingly, and as a general principle, "a claimant for compensation in respect of a compulsory acquisition should usually be entitled to recover the costs of the proceedings, having acted reasonably in pursuing the proceedings and not having conducted them in a manner which gives rise to unnecessary delay or expense." [28] Nevertheless, the final outcome remains a relevant consideration, particularly where a claimant has raised a number of issues capable of substantially affecting the compensation awarded, but has failed on all the major points. On the other hand, it is also a relevant consideration that the appellant was successful at trial on two major aspects of its claim, based on principles derived from decisions of this Court. In these circumstances, the appellant's claim for costs of the trial should be rejected. United, although having ultimately been entirely unsuccessful, should retain its costs of the trial, having acted reasonably in pursuing the proceedings at that stage. Order (4) in the Land and Environment Court (awarding costs to United) should stand: [2018] NSWLEC 64 at [19].
4. With respect to the costs of the appeal, in the event that it was successful, the appellant sought costs. Whilst acknowledging the general principle that costs follow the event in this Court, United nevertheless submitted that it was entitled to an order for costs regardless of the outcome. The justification for United's position was that if the appellant were successful, it would have achieved an outcome on an issue of principle which was important to the operation of its public functions, a result which was of no interest to United, beyond the present case.
5. It is not uncommon for a public authority which stands to benefit on an appeal from the resolution of a principle having general application, and which requires leave to appeal, to be required as a condition of leave to pay the costs of the other party in any event. However, in the present case, leave was not required and it was not open to impose such a condition. Further, the respondent was an arm of a large business operation pursuing its commercial interests, with access to appropriate legal advice. There is no sufficient reason why the usual principle should not apply, namely that costs follow the event.
6. The respondent should pay the appellant's costs in this Court.

Orders

1. The Court should make the following orders: 1. Allow the appeal. 2. Set aside the judgment in the Land and Environment Court, and orders (1), (2) and (3) made and entered on 27 April 2018. 3. In place thereof, order that the application brought by United Petroleum Pty Ltd in the Land and Environment Court be dismissed. 4. Order that the respondent pay the appellant's costs of the appeal.
2. MACFARLAN JA: I agree with Basten JA.
3. PAYNE JA: I have read the decision of Basten JA in draft. I agree with the orders his Honour proposes and, subject to one possible qualification, his Honour's reasons.
4. That possible qualification arises in relation to the question of whether the different matters in s 55 of the Just Terms Act are capable of giving rise to "overlapping claims", which is dealt with by Basten JA at [50]. On that topic, I adhere to what I said in Melino v Roads and Maritime Services [2018] NSWCA 251 at [71]-[73] and [75]-[76]. The practical difference in the approach I there set out with what Basten JA suggests at [52]-[53], with which I agree, may only be semantic; the essence of the point I was making in Melino was that a claim may be capable of characterisation under more than one provision in s 55, depending on the circumstances.
5. I have also read the decision of Sackville AJA in draft. I also agree with his Honour's separate reasons and, for reasons which I will briefly explain, I do not perceive any inconsistency between those reasons and those of Basten JA.
6. Like Sackville AJA [29] I harbour significant doubts about whether "financial costs" within the meaning of s 59(c) and "other financial costs" within the meaning of s 59(f) extend to the loss of income or profits. In joining with his Honour's conclusion on this topic, I emphasise the remarks at [96].
7. It may be that the approach to s 59 in earlier cases, especially El Boustani (CA), was the result of inadequate attention being paid to identifying the market value of the acquired land in that case. What was relevantly in issue in El Boustani was a claim by the landowners for lost profits for four years into the future from the operation of an existing market garden on the acquired land, styled as a "disturbance" claim. It will be recalled that the highest and best use of the acquired land in that case was "its existing use of intensive horticulture": at [12]. 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, including by conducting a market garden. 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] NSWCA 252 at [97]-[100], in those circumstances there is no room for any separate "disturbance" claim.
8. I agree with Sackville AJA that resolution of these issues should await a case where El Boustani is directly challenged.
9. SACKVILLE AJA: I agree with the orders proposed by Basten JA. I agree with his Honour's reasons for setting aside the award of compensation for rental payments. I prefer to state my own reasons on other issues.

Grounds of appeal

1. The primary Judge awarded compensation to the respondent (United Petroleum) for loss attributable to disturbance pursuant to ss 55(d) and 59(f) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act). The loss came about, on the primary Judge's findings, because United Petroleum's interest in the land was compulsorily acquired by the appellant (RMS). By reason of the acquisition United Petroleum had to terminate the business which it conducted on the land. United Petroleum could not relocate the business to another site [30] and thus lost (so his Honour found) the stream of profits it would otherwise have derived from the business.
2. The primary Judge awarded compensation to United Petroleum for its loss of future profits. His Honour assessed the compensation by reference to the capitalised value of a perpetual stream of profits without regard to the fact that United Petroleum had only a "weak tenancy". [31] United Petroleum's interest in the land was limited to a tenancy at will terminable on one month's notice. [32]
3. Grounds 1 and 2 of United Petroleum's Notice of Appeal are as follows: "1 The primary judge erred on a question of law in finding that 'lost profits can, and in the circumstances do, constitute costs reasonably incurred' within the meaning of [the Just Terms Act] (see, in particular, [Primary Judgment] at [230] and [327] and Order 1(a) made on 27 April 2018). 2 The primary judge should have found that: (a) United Petroleum's claim for alleged lost or foregone future profits did not constitute a compensable claim for loss attributable to disturbance as 'any other financial costs reasonably incurred (or that might reasonably be incurred)' within the meaning of section 59(1)(f) of the Just Terms Act; or further or in the alternative: (b) having regard to the nature of United Petroleum's interest in land (being an oral lease for a tenancy terminable on one month's notice) compensation for loss attributable to disturbance under section 59(1)(f) was limited to lost or foregone future profits for a period of one month after the date of acquisition."
4. Order 1 made by the primary Judge, referred to in Ground 1 of the Notice of Appeal, determined compensation under the Just Terms Act in the sum of $2,050,360, including: "(a) $1,967,404 for lost profits from the date of vacant possession pursuant to s 59(1)(f)."

Just Terms Act

1. Basten JA has set out the relevant provisions of the Just Terms Act. I repeat the terms of the legislation only so far as necessary to explain my reasoning.
2. An owner of an interest in land extinguished by an acquisition notice is entitled to be paid compensation in accordance with Part 3 of the Just Terms Act (s 37). The amount of compensation to which the person is entitled is: "such amount as having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land" (s 54(1)).
3. In determining the amount of compensation regard must be had exclusively to the six matters specified in s 55. [33] These matters include "any loss attributable to disturbance" (s 55(d)). That expression is defined to mean any of the six matters listed in s 59, [34] including the following: "(c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs), … (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."
4. In order to satisfy s 59(f) United Petroleum had to show that there were "other financial costs": (i) that had been reasonably incurred (or might be reasonably incurred); (ii) that related to "the actual use of the land"; and (iii) that had been incurred (or might be reasonably incurred) "as a direct and natural consequence of the acquisition".
5. Some of the matters which the Just Terms Act specifies must be taken into account in assessing the amount of compensation payable to a person whose land has been compulsorily acquired have nothing to do with the market value of the land. This reflects the legislative purpose of providing compensation in accordance with specific statutory criteria that do not depend on the value of the interest in land compulsorily acquired (although in particular cases there can be some overlap). [35] In the present case, for example, there is no dispute that the market value of United Petroleum's tenancy at will at the date of acquisition was nil. But the fact that United Petroleum's interest in the land was valueless did not prevent it claiming compensation for "loss attributable to disturbance" (s 55(d)), provided that it could satisfy one of the categories of loss identified in s 59. For example, United Petroleum was not precluded from claiming legal costs pursuant to ss 55(d) and 59(a) of the Just Terms Act [36] if it could show that it had reasonably incurred legal costs in connection with the compulsory acquisition of the land. [37] Similarly, it is common ground that United Petroleum was not precluded by the limited nature of its interest in the land from claiming "other financial costs" pursuant to s 59(f) provided that it could satisfy the requirements set out in that paragraph.

Construction of s 59(f)

1. RMS accepted that the business carried on by United Petroleum was an "actual use of the land" and that its business was extinguished as a "direct and natural consequence of the acquisition". The dispute, as framed by RMS in its submissions, is whether unrealised projected profits in perpetuity are financial costs reasonably incurred (or might reasonably be incurred), for the purposes of s 59(f) of the Just Terms Act.

Section 59(f) read in context

1. RMS's written submissions concentrated on what was said to be the inconsistency between the conclusions of the primary Judge and the decision of the High Court in Minister v New South Wales Aerated Water and Confectionary Company Ltd [38] (Aerated Water). However Mr Lancaster SC, who appeared with Mr Astill for RMS, also submitted that the expression "other financial costs" in s 59(f) of the Just Terms Act is limited to "actual expenses". On this argument, compensation is only available under s 59(f) where the relevant person has incurred or might incur a liability to pay money (or the equivalent) to another person as a direct and natural consequence of the acquisition. If accepted, the argument would be an answer to United Petroleum's claim under s 59(f) to be compensated for the loss of profits due to the forced closure of the business it conducted on the land.
2. As Payne JA observed in Melino: [39] "The Just Terms Act should be approached on the basis that the [claimant's] right to compensation should not be subject to limitations or qualifications not found in the terms of the statute". To determine whether a claimant is entitled to a particular form of compensation requires close attention to the "natural and ordinary meaning of the words of the legislation". [40]
3. The definition of "loss attributable to disturbance" in s 59 of the Just Terms Act identifies five categories of "costs" and one of "fees". Of the five categories preceding s 59(f), four clearly refer to and are limited to actual outgoings or liabilities incurred or to be incurred by the relevant person. Thus s 59(a), (b) and (d) identify, respectively, "legal costs", "valuation fees" and "stamp duty costs" as categories of compensable loss. Section 59(e) refers to "financial costs" but is limited to costs incurred in relation to the discharge or execution of mortgages resulting from "the relocation". Such costs are clearly outgoings or liabilities incurred or to be incurred by the relevant person as a result of the need to relocate.
4. Section 59(c) of the Just Terms Act is expressed more generally than s 59(e) in that the former allows compensation to be paid for "financial costs reasonably incurred in connection with the relocation of those persons". Despite the wider language, when s 59(c) is construed in context there is considerable force in the argument that it allows compensation only for liabilities or outgoings incurred by the person entitled to compensation. The argument receives support from the example of "financial costs" given in parentheses, namely "legal costs but not including stamp duty or mortgage costs". This reading also aligns the meaning of "financial costs" in s 59(c) with its clear meaning in s 59(e).
5. The construction of s 59(c) of the Just Terms Act has a strong bearing on the interpretation of s 59(f). There is little doubt that if s 59(f) is read in isolation it is capable of a wide application. The loss of a stream of profits from a business forced to close down because the land on which the business is conducted has been compulsorily acquired can plausibly be described as a "financial cost". As Preston CJ of the LEC noted in George D Angus Pty Ltd v Health Administration Corporation, [41] a decision upheld by this Court, [42] the word "costs" is not necessarily restricted to actual expenditure or liabilities but can include unrealised losses and loss of profits. Similarly as a matter of English usage a person suffering such losses can be said to have "incurred" them. [43]
6. However, s 59(f) of the Just Terms Act is not to be read in isolation. As the High Court has pointed out, the starting point for the ascertainment of the meaning of a statutory provision is the text of the statute, but regard must be had to the provision's context and purpose. If considerations of context and purpose suggest that the ordinary meaning of the provision is not consistent with the statutory purpose, that meaning must be rejected. [44] Thus s 59(f) must be construed in the context of the legislation as a whole and, in particular, having regard to the definition of "loss attributable to disturbance" in s 59, of which s 59(f) forms part.
7. If on its proper construction s 59(c) of the Just Terms Act provides compensation only for actual outgoings or liabilities incurred by the relevant person, it follows that none of the five paragraphs in s 59 preceding s 59(f) contemplates compensation for loss of income or profits derived from the acquired land. In construing s 59(f) it is necessary to bear in mind that Parliament is unlikely to have intended the same expression ("financial costs") to be given a different meaning in different paragraphs of the one section. Therefore if s 59(c) is limited to outgoings or liabilities incurred or to be incurred by the person entitled to compensation, it would seem that s 59(f) cannot be construed to provide compensation for loss of income or profits. That conclusion (assuming the interpretation of s 59(c) referred to above) is reinforced by the reference in s 59(f) to "any other financial costs", which clearly envisages costs of a similar kind to those in s 59(a)-(e). [45] The words "any other" provide a very powerful indication that s 59(f) is intended to be subject to the same limitations as to subject matter as s 59(c) and (e): that is s 59(f) is intended to be confined to actual outgoings or liabilities incurred or to be incurred as a direct and natural consequence of the compulsory acquisition.
8. On the assumption I have made as to the meaning of s 59(c) and (e), the reference in s 61(b) to "any financial loss" does not detract from a construction of s 59(f) that limits its scope to actual outgoings or liabilities incurred by the person entitled to compensation. Section 61 is directed to the specific case where the market value of land is assessed on the basis that the land had potential to be used for a purpose other than for which it was used at the date of acquisition. Section 61 is designed to prevent overcompensation where the value of the land reflects a potential for redevelopment or a higher and better use, but realisation of the potential would require the owner to incur "financial loss". Contrary to what may be implied in an observation in Sydney Water Corporation v Caruso [46] with which I expressed agreement, [47] the use of the expression "financial loss" in s 61, whatever its meaning, does not control the interpretation of s 59 (c) or (f).
9. In any event I agree with Basten JA that "financial loss" in s 61(b) of the Just Terms Act should be understood as referring to "loss attributable to disturbance" as defined in s 59. If, as was suggested in George D Angus (CA), [48] s 61(b) precludes only compensation for the costs identified in s 59, interpreting "financial loss" in s 61(b) to mean "loss attributable to disturbance" as defined in s 59 achieves harmony between the two provisions.

A difficulty

1. Although there is a strong textual basis for limiting s 59(f) of the Just Terms Act to losses in the nature of liabilities or outgoings, this construction encounters a difficulty that was not fully addressed in argument in the present case. It has long been accepted that the compensation payable to a person whose land has been compulsorily acquired may include compensation for loss of an income stream or profits resulting from the relocation of a business conducted on the acquired land. Prior to the enactment of the Just Terms Act, loss attributable to disturbance was not a separate head of compensation in New South Wales. But a long line of authority interpreted "value" for the purposes of the law of compulsory acquisition to mean "value to the owner". This formulation was a "unifying concept" that encompassed, among other things, loss attributable to disturbance. [49] By this means the "loss of trade or production" occasioned by a relocation or termination of a business came within the concept of special value to the owner and thus could be compensable. [50]
2. It appears to have been accepted after the enactment of the Just Terms Act that loss of income or profits due to the relocation of a business continues to be compensable. In El Boustani (LEC) the trial Judge awarded the claimant compensation for loss attributable to disturbance calculated by reference to the profits lost over the three year period required to relocate and re-establish a market garden previously conducted on the acquired land. The trial Judge made the award pursuant to s 59(c) of the Just Terms Act [51] but held that if, contrary to her view, s 59(c) was not applicable, s 59(f) would support the award. [52] On the appeal this Court recorded that it was not controversial that compensation for loss of profits was payable and that the dispute was merely as to the period of time for which lost profits should be allowed. [53]
3. In George D Angus (CA), Tobias AJA expressed the view that: [54] "Given that it was the clear intent of the Just Terms Act that disturbance losses should be recoverable as a separate head of compensation … it cannot be the case that disturbance losses which under the prior law were recoverable as special value should no longer be recoverable because of a narrow construction of the expression "financial costs" in s 59(f)." His Honour considered that the decision in El Boustani (CA) mandated rejection of the proposition that loss of income or profits due to disturbance can be compensated as part of "special value", now separately defined in s 57 of the Just Terms Act. [55] It followed, so his Honour held, that if lost income or profits are to be compensated in compulsory acquisition cases, this can only come about if the loss falls within s 59(f). [56]
4. RMS did not submit that El Boustani (CA) and George D Angus (CA) were incorrect insofar as they held that loss of income or profits by reason of the forced relocation of a business cannot be claimed as an element of "special value of land to the person on the date of its acquisition" within the meaning of ss 55(b) and 57 of the Just Terms Act. [57] Nor did RMS submit that this Court in El Boustani (CA) was incorrect to proceed on the assumption that s 59(c) of the Just Terms Act permits compensation to be claimed for loss of income or profits incurred in connection with relocation.
5. In the present case United Petroleum cannot rely on s 59(c) of the Just Terms Act because it does not seek compensation for loss of profits incurred in connection with relocation of its business. It therefore must rely on s 59(f) which is not confined to financial costs arising from relocation of a business. The language of s 59(f) is capable of covering financial costs incurred by reason of the closure of a business previously conducted on the acquired land, where the evidence shows that relocation of the business was not feasible.
6. In the absence of an attack by RMS on the reasoning in El Boustani (CA) and George D Angus (CA) referred to above, the construction of s 59(f) of the Just Terms Act should be approached on the basis that the expression "financial costs" in s 59(c) extends to the loss of income or profits resulting from the forced relocation of a business conducted on the acquired land. On that basis, there is nothing incongruous in construing the expression "other financial costs" in s 59(f) to extend to the loss of income or profits where a business conducted on the acquired land is forced to close and cannot be relocated.
7. In reaching this conclusion I do not foreclose the possibility that in a future case the construction of s 59(c) of the Just Terms Act assumed in El Boustani (CA) and of s 59(f) adopted in George D Angus (CA) might have to be reconsidered. That may involve reconsideration of the nature and source of the entitlement of a person whose land has been compulsorily acquired to compensation for lost income or profits resulting from the forced relocation or closure of a business conducted on the acquired land.

Quantum of compensation

1. For these reasons, I approach Ground 2(b) in the Notice of Appeal on the basis that s 59(f) of the Just Terms Act allows compensation for lost profits where a business conducted on the acquired land is forced to close by reason of the compulsory acquisition. The question is then whether the compensation awarded to United Petroleum should have been limited to foregone profits for a period no longer than one month.
2. RMS contended, in effect, that the answer to this question depends on a straightforward application of the decision in Aerated Water. However the High Court in that case addressed a different issue than that presented by United Petroleum's claim to be compensated for profits lost by reason of the closure of the business it conducted on the acquired land.
3. In Aerated Water the Government of New South Wales compulsorily acquired a leasehold interest that had two years to run at the date of acquisition. The question was whether, in calculating the value of the lessee's interest in the land, regard should be paid to the likelihood that the freeholder (who had an interest in the lessee company) would renew the lease. The answer was that in assessing the value of the leasehold to the lessee "personal matters" such as the relationship between lessor and lessee could not be taken into account. [58] It was therefore not open to the jury to add to the value of the lease the "estimated value of the expectancy" of obtaining a new lease. [59]
4. 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.
5. Another point of difference is that the lease in Aerated Water was for a fixed term. The lessee had no legal entitlement at the date of acquisition to remain on the land beyond the date its lease expired. By contrast, United Petroleum was entitled to remain in occupation of the land until the lessor elected to give the notice required to terminate the tenancy at will. United Petroleum could therefore remain in possession indefinitely subject to the lessor's right to terminate the tenancy. The exercise of that right required the lessor to take affirmative action by giving notice to United Petroleum.
6. Although the decision in Aerated Water cannot be applied directly to a claim for disturbance attributable to loss pursuant to s 59(f) of the Just Terms Act, the reasoning is nonetheless significant for the present case. The analysis in Aerated Water suggests that, subject to any applicable legislation, the interest compulsorily acquired is the legal or equitable estate held by the person entitled to compensation. Any advantages a lessee might enjoy by reason of "personal matters", such as a co-operative lessor, are to be ignored.
7. 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.
8. Section 59(f) of the Just Terms Act relevantly provides for compensation for financial costs reasonably incurred "as a direct and natural result of the acquisition". "Acquisition" is defined in s 4(1) to mean "an acquisition of land or of any interest in land". Thus compensation for lost profits or income by reason of the closure of a business in the acquired land can only be awarded if the loss is a direct and natural consequence of the acquisition of United Petroleum's tenancy at will. [60] As a matter of law the lessor was entitled at any time to give the one month's notice required to terminate the tenancy.
9. The drafting of s 59(f) of the Just Terms Act appears to owe something to the Australian Law Reform Commission's report on Land Acquisition and Compensation. [61] The Commission noted that the case law recognised that loss had to result "directly" from the acquisition to be the subject of compensation for disturbance. [62] It recommended that the matters to be taken into account should include: [63] "disturbance, that is any loss or damage suffered or cost incurred by the person as a natural and reasonable consequence of … the acquisition by the Commonwealth of the land …" (Emphasis added.)
10. For reasons that are not entirely clear the Commission thought it better not to use the word "direct", and preferred the formula "natural and reasonable consequence of the … acquisition". [64] Despite the Commission's preference, s 59(f) of the Just Terms Act incorporates the word "direct", but as part of the compound expression "direct and natural consequence of the acquisition". This rather open-ended language is clearly intended to operate as a limitation on what would otherwise be the scope of s 59(f).
11. 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.
12. 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.
13. Since one month's notice was required to terminate the tenancy at will, it is only the loss of one month's profits can fairly be said to be the "direct and natural consequence of the acquisition". I do not consider that the loss of profits in respect of a longer period satisfies the requirements of s 59(f) of the Just Terms Act.
14. Mr Lancaster submitted that George D Angus (CA) is distinguishable insofar as it held that the tenant at will in that case could receive compensation for the loss of profits that would have been earned from the business conducted on the acquired land over a two year period. [65] In my view, however, the conclusion I have reached is inconsistent with the reasoning in George D Angus (CA). The essential point of difference is that I consider that it is the "financial costs" that must be incurred as a direct and natural result of the acquisition of the tenancy at will. The fact that the tenant at will would not have incurred the losses had the acquisition not taken place does not establish that the claimed losses were a direct and natural consequence of the acquisition. The inquiry needs to go further.
15. In my respectful opinion this aspect of the reasoning in George D Angus (CA) is plainly wrong and should not be followed. The error lies in the assumption that because the closure of the business was triggered by the compulsory acquisition of the lessee's interest the loss of profits was the direct and natural consequence of the acquisition. Further analysis is required before that conclusion can be reached.
16. I note that the conclusion I have reached limits the opportunities for related companies to order their affairs so that each is entitled to claim compensation for what is essentially the same economic detriment. It may be accepted that a loss sustained by two different entities as a consequence of the acquisition of their respective interests in the land must be assessed separately for the purposes of determining compensation, even if the entities are related. [66] But if United Petroleum's argument is correct, in a case such as the present the interest of a lessor may be valued taking into account its entitlement to terminate the tenancy at will on one month's notice (for example, by assessing the value of the fee simple estate by reference to the stream of profits from a business similar to that conducted by tenant at will). Yet the tenant at will's interest is to be valued without reference to the fragility of that interest.

Costs

1. Since the appeal is to be allowed and the judgment in favour of United Petroleum set aside, its claim has been unsuccessful. However in my opinion the primary Judge's award of costs in favour of United Petroleum should stand on the principles discussed in Dillon v Gosford City Council. [67] It acted reasonably in pursing the proceedings, particularly having regard to the authorities relating to a claim for lost profits. [68]
2. However I see no reason why the ordinary principle that costs follow the event should not apply to the appeal. RMS has succeeded in setting aside the judgment of the Land and Environment Court. It is true that RMS's primary position was that George D Angus (CA) was distinguishable, but it did contend that the reasoning was incorrect insofar as it supported an award of substantial compensation for lost profits said to result from the compulsory acquisition of a tenancy at will. United Petroleum's reliance on George D Angus (CA) is sufficiently recognised by allowing it to retain the costs order made by the primary Judge.
3. PRESTON CJ of LEC: The appellant ("RMS") raises four appeal grounds, which fall into two categories. The first category (appeal grounds 1 and 2) concerns the primary judge's award of compensation to the respondent ("United") for the forgone profits in perpetuity of the business previously conducted on the land acquired by RMS. The primary judge awarded this compensation on the basis that it was a loss attributable to disturbance under s 59(f) of the Land Acquisition (Just Terms Compensation) Act 1991 ("Just Terms Act"). United incurred a financial loss by being unable to continue to operate its business on the acquired land. The second category (appeal grounds 3 and 4) concerns the primary judge's award of compensation, also as a loss attributable to disturbance under s 59(f) of the Just Terms Act, for the difference between the rent which United would have paid to the owners of the land, if the land had not been compulsorily acquired, and the higher sum paid to the acquiring authority, RMS, under s 34 of the Just Terms Act while United remained in occupation after the acquisition until RMS obtained vacant possession.
4. RMS's grounds of appeal raise the issue of the proper construction of s 59(f) of the Just Terms Act. The primary judge applied the construction of s 59(f) that had been given by this Court in Health Administration Corporation v George D Angus Pty Ltd (2014) 88 NSWLR 752; [2014] NSWCA 352 (George D Angus (CA)) in awarding compensation, as loss attributable to disturbance, for the forgone future profits of the business of United previously conducted on the acquired land. The primary judge relied on this Court's decision in Roads and Traffic Authority of New South Wales v McDonald (2010) 79 NSWLR 155; [2010] NSWCA 236 to award compensation, also as loss attributable to disturbance, for the difference between the rent which United would have paid to the owners of the land, if the land had not been compulsorily acquired, and the higher sum paid to the acquiring authority, RMS, for continued occupation of the land after the acquisition under s 34 of the Just Terms Act.
5. RMS submitted on the appeal that the decision in George D Angus (CA) was distinguishable but alternatively that the construction of s 59(f) given in the decision was wrong and should not be followed. RMS submitted that the decision in McDonald was distinguishable and did not support the primary Judge's decision. RMS submitted that the primary judge erred on questions of law in awarding United compensation for these two types of losses attributable to disturbance.
6. I will structure my reasons by the two categories of appeal grounds concerning, first, the award of compensation for the financial loss occasioned by being unable to continue to operate the business on the acquired land in perpetuity and, secondly, the award of compensation for the difference between the rent that would have been paid and the occupation fee that was paid.

Compensation for continuing operation of business

1. The award of compensation for the loss of the opportunity to continue to operate the business on the acquired land depended on applying the construction of s 59(f) of the Just Terms Act given in George D Angus (CA). I agree with the other Judges that the construction of s 59(f) of the Just Terms Act should be revisited and revised. In so far as I offered a construction of s 59(f) in George D Angus Pty Limited v Health Administration Corporation (2013) 205 LGERA 357; [2013] NSWLEC 212, which decision was upheld in George D Angus (CA), I now consider that a different construction is to be preferred. Adopting Mason P's palinode in Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707; [2004] NSWCA 422 at [137], "the matter does not appear to me now as it appears to have appeared to me then". Applying the revised construction of s 59(f), the primary judge's award of compensation for the loss of the opportunity to continue operating the business on the acquired land in perpetuity is in error.
2. There are four requirements in order for costs to fall within s 59(f): 1. "any other financial costs" 2. "reasonably incurred (or that might reasonably be incurred)" 3. "relating to the actual use of the land" 4. "as a direct and natural consequence of the acquisition."
3. These phrases are not to be read in isolation, but rather together as a composite clause. The meaning of one phrase is influenced by the other phrases. The breadth of the phrase "any other financial costs" is limited by the requirements in the subsequent phrases that the financial costs be reasonably incurred, relate to the actual use of the land and be incurred as a direct and natural consequence of the acquisition. The limitations in these later phrases curtail the loss attributable to disturbance that can be awarded under s 59(f). Although it is necessary to read s 59(f) as a composite clause, an understanding of the meaning of the clause is assisted by examining each of the constituent phrases in the clause.

"Any other financial costs"

1. At the heart of the case before the primary judge and the appeal before this Court is the concept of "financial costs" in s 59(f). The RMS argued on appeal that "financial costs" in s 59(f) are limited to "actual expenses" and cannot include "financial losses". United's claim for loss attributable to disturbance for forgone profits of the extinguished business was dependent on s 59(f) allowing compensation for financial losses in the form of the forgone profits resulting from the forced closure of its business on the acquired land.
2. The amount of compensation to which a person is entitled under the Just Terms Act is such amount as, having regard to all relevant matters under Part 3 of the Just Terms Act, would justly compensate the person for the acquisition of the land (s 54(1)). In determining the amount of compensation to which a person is entitled, regard must be had only to the matters specified in s 55, as assessed in accordance with Div 4 of Part 3 of the Just Terms Act. One of the specified matters is "(d) any loss attributable to disturbance". Compensation for "loss attributable to disturbance" is defined in, and is to be assessed in accordance with, s 59 of the Just Terms Act. Section 59 as at August 2015 provided: "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 reasonably incurred by those persons in connection with the compulsory acquisition 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."
3. These categories of loss attributable to disturbance in s 59 exhaustively define the compensation to which a person is entitled for "loss attributable to disturbance".
4. Each of these categories of loss attributable to disturbance assume the acquisition of the land. The acquisition of the land is a necessary cause of the disturbance of the person's occupation and use of the land and of the person incurring any of the specified categories of loss attributable to disturbance. Although acquisition of the land is a necessary cause of incurring loss attributable to disturbance, it is insufficient by itself to establish entitlement to compensation for loss attributable to disturbance. This is because the specified categories of loss attributable to disturbance in s 59 require further matters to be established. For example, as I will explain further below, s 59(f) requires that the "other financial costs" incurred relate to "the actual use of the land", not a potential future use, and be a "direct and natural consequence of the acquisition", not that some state of affairs, such as a closure of a business conducted on the land, be a direct and natural consequence of the acquisition.
5. The concept of "financial costs" in s 59(f), read alone, is capable of bearing a wide meaning. Financial costs can include not only expenditures (outgoings) but also forgone benefits and advantages, such as a forgone stream of income or profit (forgone ingoings). However, the words "financial costs" in s 59(f) need to be read in context, both the specific context of s 59(f) as well as the general context of the other categories of loss attributable to disturbance in s 59.
6. The word "costs" is used in five of the six categories of loss attributable to disturbance in s 59 and the word "fees" is used in the remaining category. The particular meaning of "costs" and "fees" in these categories is influenced by the specific context in which the word is used, including the adjective qualifying the noun and the requirements of the particular paragraph specifying the loss attributable to disturbance. In paragraph (a), the costs are "legal costs" incurred in connection with the compulsory acquisition of the land. In paragraph (d), the costs are "stamp duty costs" incurred in connection with the purchase of land for relocation. In paragraph (e), the costs are "financial costs" incurred in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation. All of these legal costs, stamp duty costs and mortgage costs can only be expenditures or outgoings. They cannot include forgone benefits. Paragraph (b), although referring to "fees" rather than "costs", specifies "valuation fees" incurred in connection with the acquisition of the land. Such valuation fees also can only be expenditures or outgoings.
7. The costs referred to in paragraph (c), being "financial costs" incurred in connection with the relocation of the person, are not so clear cut. The costs can include expenditures, such as legal costs in connection with the relocation and removal costs, but might also include forgone benefits, such as loss of profits, incurred in connection with the relocation. In El Boustani v Minister Administering the Environmental Planning and Assessment Act 1979 (2014) 199 LGERA 198; [2014] NSWCA 33, it was not in controversy at trial or on the appeal that compensation could be awarded under s 59(c) for the profits lost during the period from the date of acquisition to the date the business was relocated onto alternative land (at [17]). As both Basten JA (at [14]) and Sackville AJA (at [104]) posit in their reasons for judgment in this appeal, paragraph (c) is capable of extending to loss of income or profits resulting from the forced relocation of a business conducted on the acquired land.
8. The word "costs" in paragraph (f) has a different specific context to the specific contexts in which the words "costs" and "fees" are used in the other paragraphs of s 59. The adjectival phrase describing the costs, "any other financial", is capable of bearing a wide meaning to include not only expenditures (outgoings) but also forgone benefits such as financial losses. The requirements in the later phrases of s 59(f) do not dictate that the costs can only be expenditures. A person can not only "incur" an expenditure, but can also incur a financial loss. Indeed, the language that financial losses can be incurred is used in s 61(b) of the Just Terms Act. Both an expenditure and a financial loss can relate to the actual use of the acquired land. Both an expenditure and a financial loss can be incurred as a direct and natural consequence of the acquisition of the land.
9. The word "other" in the expression "any other financial costs" in paragraph (f) evidently conveys that the costs in paragraph (f) are to be costs other than those categories of loss attributable to disturbance in paragraphs (a) to (e) of s 59. However, this does not necessarily align the meaning of the word "costs" in paragraph (f) with the meaning of the words "costs" and "fees" in paragraphs (a) to (e) for three reasons.
10. First, as I have noted, the words "costs" and "fees" in paragraphs (a) to (e) are strongly influenced by the specific context in which they are used, including the adjective qualifying the noun and the requirements of the paragraph. The word "costs" in paragraph (f) has a different specific context.
11. Secondly, the word "other" signifies that the costs falling within paragraph (f) are to be costs not falling within paragraphs (a) to (e). It would undermine the carefully drawn scheme for compensation for loss attributable to disturbance if costs and fees of a category of loss attributable to disturbance described in paragraphs (a) to (e), but not falling within those paragraphs because of a failure to satisfy the requirements of those paragraphs, could nevertheless be compensable under paragraph (f). As Basten JA observes (at [13], [14] and [53]), the construction of paragraph (f) should not subvert the limitations contained within the earlier paragraphs of s 59.
12. Thirdly, the words "costs" and "fees" in the other paragraphs do not bear the same meaning. Whilst the legal costs, valuation fees, stamp duty costs and mortgage costs in paragraphs (a), (b), (d) and (e) are expenditures, the financial costs incurred in connection with relocation in paragraph (c) are capable of extending to financial losses rather than being restricted to expenditures. It is therefore not incongruous to construe the expression "any other financial costs" in paragraph (f) as not only including expenditures but also as extending to financial losses (as Sackville AJA notes at [104]).
13. The word "any" in the expression "any other financial costs" in s 59(f) corroborates this construction flowing from the word "other". It emphasises that the costs falling within paragraph (f) are not to be restricted to the types of costs and fees that fall within the other paragraphs of s 59. To read the financial costs in paragraph (f) as being limited to expenditures, because the costs and fees in paragraphs (a), (b), (d) and (e) are limited to expenditures, would not give effect to the wide words "any other".
14. I do not consider that the reference to "financial loss" in s 61(b) assists in construing the expression "any other financial costs" in s 59(f) of the Just Terms Act. The two statutory provisions are directed to different purposes.
15. Section 61 is intended to avoid a person being compensated for the particular aspects of compensation referred to in s 61(a) and (b). A person is to be compensated for the market value of the land acquired (s 55(a) of the Just Terms Act). Mostly, the market value of the land will reflect the purpose for which the land is currently used. In some instances, however, the market value of the land might be assessed on the basis that the land has potential to be used other than for the purpose for which it is currently used. For example, the market value of land currently used as a market garden in a peri-urban area might be assessed on the basis that the land has potential to be used for a higher and better use for residential purposes, such as a residential estate. The realisation of the potential of the land to be used for the more valuable residential purpose necessitates the cessation of the current, less valuable, market garden use. This cessation of the current use in order to use the land for the more valuable purpose can have two consequences: first, there will be a forgoing of any financial advantage, such as income or profits, from the current use of the land and secondly, there may be losses that need to be incurred in order to realise the potential for land to be used for the more valuable purpose, such as losses attributable to disturbance of the current use.
16. Section 61 ensures that compensation is not payable in respect of either of these consequences (the first is covered by s 61(a) and the second by s 61(b) of the Just Terms Act). The rationale is that an award of compensation, on the basis that the land has potential to be used for a more valuable purpose than the current use of the land, should take account of these necessary consequences of realising the potential to use the land for a more valuable purpose than the current use.
17. These forgone financial advantages and financial losses might, to some extent, be taken into account in assessing the market value of the land, but they can also separately be taken into account by making an adjustment of the total compensation that is payable under Part 3 of the Just Terms Act. This Court in Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391 rejected the argument that s 61 was limited to the assessment of market value (under s 55(a)) alone and was not referrable to the other heads of compensation claimable under s 55, including loss attributable to disturbance under s 55(d) and s 59 of the Just Terms Act (at [184] and see [190]). Importantly, it was held that "s 61(b) may deny a claim for loss attributable to disturbance pursuant to s 55(d) and s 59" (at [184]).
18. Hence, the reference to "financial loss" in s 61(b) includes "loss attributable to disturbance" in s 55(d), which loss is defined in s 59 to include the six categories of loss attributable to disturbance in paragraphs (a) to (f). As noted above, some of these categories of loss attributable to disturbance, being various types of costs and fees, are limited to expenditures (paragraphs (a), (b), (d) and (e) of s 59), but other categories, being financial costs, are capable of including not only expenditures but also forgone benefits (such as financial losses) (paragraphs (c) and (f) of s 59). The category of "financial loss" in s 61(b) extends to both expenditures and financial losses for falling within any of the categories of loss attributable to disturbance in s 59.
19. It does not necessarily follow, however, from this construction, that the wider category of "financial loss" in s 61(b) includes the specific categories of loss attributable to disturbance in s 59, that the specific categories of loss attributable to disturbance in s 59 must include financial losses. Whether any specific category of loss attributable to disturbance in s 59 does include financial losses, in addition to expenditures, depends on the proper construction of the specific category, in its specific context and in the general context of s 59. Assistance is not to be gained in construing each specific category in s 59 from the construction of s 61(b).

"Reasonably incurred (or that might be reasonably be incurred)"

1. The second requirement for financial costs to fall within s 59(f) is that the financial costs be "reasonably incurred" or "might reasonably be incurred". The adverb "reasonably" governs the verbs "incurred" and "might be incurred" and not the noun "financial costs". The enquiry is whether the financial costs are incurred or might be incurred reasonably, not whether the financial costs are reasonable in themselves.
2. This second requirement is linked to the third and fourth requirements in s 59(f). The financial costs that are reasonably incurred or that might reasonably be incurred must relate to the actual use of the land and be as a direct and natural consequence of the acquisition. As I explain below, these further requirements of s 59(f) limit the financial costs that can fall within the category of financial costs in s 59(f).

"Relating to the actual use of the land"

1. The third requirement is that the financial costs reasonably incurred or that might reasonably be incurred must be "relating to the actual use of the land". The "land" in s 59(f) is the acquired land: Blacktown Council v Fitzpatrick Investments Pty Ltd [2001] NSWCA 259 at [1], [10], [35]; Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority (NSW) [2006] NSWCA 314 at [88]; Roads and Traffic Authority (NSW) v Peak [2007] NSWCA 66 at [56], [66].
2. The "use" of the land is the use by the person entitled to compensation, not the use by the acquiring authority: Almona Pty Ltd v Roads and Traffic Authority (NSW) (2008) 160 LGERA 375; [2008] NSWLEC 112 at [60].
3. The use must be an "actual" use and not a potential future use: Blacktown Council v Fitzpatrick Investments Pty Ltd at [5], [26]-[27]; Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority (NSW) at [88].
4. The expression "relating to" is of wide import: Blacktown Council v Fitzpatrick Investments Pty Ltd at [28].
5. Where the actual use of the acquired land by the person entitled to compensation is terminated by the acquisition, the loss of an opportunity to continue to use the land (and any concomitant financial loss) is not a financial cost reasonably incurred "relating to the actual use of the land", but rather financial costs not relating to the actual use of the land. The actual use has come to an end. Any financial costs incurred after the actual use has terminated, including the loss of the opportunity to continue operating a business on the land, cannot relate to the actual use of the land (as Basten JA observes at [16]).

"As a direct and natural consequence of the acquisition"

1. The fourth requirement is that the financial costs reasonably incurred must be "as a direct and natural consequence of the acquisition".
2. The word "consequence" establishes a requirement for a causal connection between the acquisition of the land and the incurring of the financial costs. Paragraph (f) only requires that the incurring of the financial costs be "a" and not "the" consequence of the acquisition and hence does not demand that the incurring of the financial costs be the only consequence of the acquisition: Blacktown Council v Fitzpatrick Investments Pty Ltd at [31].
3. A distinction needs to be drawn between the acquisition and the carrying out of the public purpose for which the acquisition was undertaken. The financial costs incurred need to be a consequence of the acquisition not the public purpose: see Roads and Traffic Authority (NSW) v Peak at [74].
4. The adjectives "direct" and "natural" limit the compensation payable for loss attributable to disturbance under s 59(f) by reference to the proximity and nature of the causal connection. The word "direct" requires that there be a direct relationship between the acquisition and the incurring of the financial costs. A direct relationship is to be contrasted with an indirect relationship between the acquisition and the incurring of the financial costs, where although the acquisition affects the incurring of the financial costs, it does not do so directly but rather through a third variable or action. The word "natural" refers to the ordinary course of things or events. Together, the words "direct" and "natural" confine the required causal connection between the acquisition and the incurring of the financial costs. Only those financial costs that were incurred as a direct and natural consequence of the acquisition will fall within the scope of s 59(f).
5. This limitation imposed by the requirement that the financial costs be incurred as a direct and natural consequence of the acquisition operates to confine the compensation payable to United in this case. As Sackville AJA points out (at [117]-[120]), the loss of future profits from the business that had operated on the acquired land is not a "direct and natural consequence" of the acquisition. The closure of the business that had operated on the acquired land might be a direct and natural consequence of the acquisition, but the loss of a perpetual stream of profits from the business, by United not being able to operate the business on the land indefinitely, is not a direct and natural consequence of the acquisition. Rather, the forgoing of these profits is a consequence of United's decision to conduct its business under a tenancy at will terminable on one month's notice. As Sackville AJA finds at [118], since one month's notice was required to terminate the tenancy at will, at most only one month's profits could be said to be a "direct and natural consequence" of the acquisition. The loss of profits for an indefinite period after one month is not a "direct and natural consequence" of the acquisition, but of other causes, including United's arrangement of its business affairs. This interposition of a third variable or action between the acquisition and the incurring of the financial costs results in there being only an indirect relationship, rather than the required direct relationship, between the acquisition and the incurring of the financial costs.

Application of construction of s 59(f)

1. The construction of s 59(f) of the Just Terms Act that I have proffered differs from that accepted in George D Angus (CA) in a number of respects. As the primary judge rightly applied George D Angus (CA), it would follow that if a different construction of s 59(f) is to be adopted, the primary judge's award of compensation for the forgone profits of the business was in error.
2. Applying what I have proffered as the correct construction of s 59(f), financial losses, such as loss of profits of a business, do not necessarily fall outside the scope of "any other financial costs" in s 59(f). However, any loss of profits incurred after the business was terminated (and the actual use of the acquired land ceased) does not fall within s 59(f), as the incurring of the financial loss was not "relating to the actual use" of the land or "as a direct and natural consequence of the acquisition". The award of compensation by the primary judge calculated as the capitalised value of a notional perpetual stream of profits from the business on the acquired land is not maintainable.
3. Accordingly, the orders of the primary judge awarding compensation for this claimed loss of profits should be set aside and the claim dismissed.

Claim for adjustment of rent

1. United made a second claim for loss attributable to disturbance relating to the occupation fee paid by United under s 34 of the Just Terms Act in order to stay in occupation of the acquired land for a period of 223 days. The total payment of occupation fees for this period exceeded the amount of rent that United would have paid to its landlords under the prior arrangements by $82,956. The primary judge awarded compensation to be paid by RMS to United in that amount.
2. I agree with Basten JA, for the reasons he gives at [55]-[64], that the appeal with respect to the award of compensation for the difference between the occupation fee paid and the rent that would have been paid if the prior arrangements had continued should be allowed and the award set aside.

Costs

1. I agree with Basten JA as to the costs of the proceedings in the Land and Environment Court and in this Court.

Orders

1. I agree with the orders proposed by Basten JA in [71].

Endnotes

1. Elmon Pty Ltd v Roads and Maritime Services [2016] NSWLEC 168 at [11].
2. (2014) 88 NSWLR 752; [2014] NSWCA 352 ("George D Angus").
3. The primary change since August 2015 has been the removal of the reference to "solatium" in s 55(e) and its replacement with "the disadvantage resulting from relocation".
4. The identical language is now s 59(1).
5. Just Terms Act, s 4(1), interest.
6. Cf s 55(f).
7. Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 at [31], [35] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ).
8. [1954] AC 475 at 491.
9. (1941) 67 CLR 544 at 559; [1941] HCA 37.
10. (1916) 22 CLR 56; [1916] HCA 48.
11. Aerated Water at 65-66 (Griffiths CJ), 70 (Barton J), 74, 77 (Isaacs J) and 83 (Gavan Duffy and Rich JJ).
12. Aerated Water at 77.
13. (1907) 5 CLR 418; [1907] HCA 82.
14. Aerated Water at 65-66.
15. [2013] NSWLEC 212; 205 LGERA 357 (Preston CJ of LEC).
16. George D Angus at [47]-[63] (Tobias AJA, Emmett and Leeming JJA agreeing).
17. George D Angus at [39] (the submission), addressed at [47]-[60].
18. Smalley v Motor Accident Authority of New South Wales (2013) 85 NSWLR 580; [2013] NSWCA 318 at [47] (Leeming JA); 2 Elizabeth Bay Road Pty Ltd v The Owners - Strata Plan No 73943 (2014) 88 NSWLR 488; [2014] NSWCA 409 at [81] (Leeming JA); South Western Sydney Local Health District v Gould [2018] NSWCA 69 at [78]-[82] (Leeming JA); see also Thiess v Collector of Customs (2014) 250 CLR 664; [2014] HCA 12 at [23].
19. See, eg, Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW (1998) 101 LGERA 30 at 44 (Bignold J), approved in McDonald v Roads and Traffic Authority of New South Wales [2009] NSWLEC 105; 169 LGERA 352 at [123]-[126] (Biscoe J).
20. [2009] NSWCA 391; 170 LGERA 298 at [186] (Tobias JA, Allsop P and Sackville AJA agreeing).
21. George D Angus at [68].
22. George D Angus at [70].
23. Ibid.
24. [2018] NSWCA 252 at [99] (Payne JA, Beazley P and I agreeing).
25. [2006] NSWCA 314 at [55] (Handley JA agreeing).
26. [2010] NSWCA 236; 175 LGERA 276 (Tobias JA, Giles and Macfarlan JJA agreeing).
27. [2011] NSWCA 328; 184 LGERA 179.
28. Dillon at [70].
29. And Basten JA at [37].
30. United Petroleum Pty Ltd v Roads and Maritime Services [2018] NSWLEC 35 (Primary Judgment) at [248].
31. Primary Judgment at [288].
32. Primary Judgment at [26]; Conveyancing Act 1919 (NSW), s 127(1).
33. See at [6] above. Section 55 contains "an exhaustive list of the relevant matters": Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 (Walker) at [13] per curiam.
34. See at [7] above.
35. Tolson v Roads and Maritime Services [2014] NSWCA 161; 201 LGERA 367 at [9]-[10] (Beazley P), [83] (Basten JA). Cf Melino v Roads and Maritime Services [2018] NSWCA 251 (Melino) at [22] (Basten JA), [72]-[73] (Payne JA, Beazley P agreeing).
36. Section 59(a) defines "loss attributable to disturbance" to include legal costs reasonably incurred in connection with the compulsory acquisition.
37. United Petroleum's claim for legal costs pursuant to ss 55(d) and 59(a) failed on the ground that the costs incurred related primarily to the commencement and conduct of proceedings rather than in connection with the compulsory acquisition: Primary Judgment at [103].
38. (1916) 22 CLR 56; [1916] HCA 48. See at [21]-[23] above.
39. Melino at [56] (Beazley P agreeing), citing Marshall v Director-General, Department of Transport (2001) 205 CLR 603; (2001) HCA 37 (Marshall) at [38] (Gaudron J).
40. Marshall at [62] (McHugh J), quoted in Walker at [31].
41. [2013] NSWLEC 212; 205 LGERA 357 (George D Angus (LEC)) at [90], [95].
42. Health Administration Corporation v George D Angus Pty Ltd (2014) 88 NSWLR 752; [2014] NSWCA 352 (George D Angus (CA)).
43. Angus LEC at [96].
44. SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; 91 ALJR 936 at [14] (Kiefel CJ, Nettle and Gordon JJ), [35]-[40] (Gageler J).
45. Melino at [12] (Basten JA).
46. [2009] NSWCA 391; 170 LGERA 298 at [186]-[187] (Tobias JA).
47. Sydney Water v Corporation v Caruso at [190].
48. George D Angus(CA) at [61].
49. Leichhardt Council v Roads and Traffic Authority (NSW) [2006] NSWCA 353; 149 LGERA 439 at [23]-[26] (Spigelman CJ, Beazley, Bryson and Basten JJA, Campbell J agreeing).
50. El Boustani v Minister administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33; 199 LGERA 198 (El Boustani (CA)) at [76]-[80] (Preston CJ of LEC, Beazley P and Gleeson JA agreeing).
51. El Boustani v Minister Administering the Environmental Planning and Assessment Act 1979 [2012] NSWLEC 266 (El Boustani (LEC)) at [138]-[150].
52. El Boustani (LEC) at [88]-[96].
53. El Boustani (CA) at [17].
54. George D Angus (CA) at [56].
55. George D Angus (CA) at [55], referring to El Boustani (CA) at [85]-[86].
56. George D Angus (CA) at [56].
57. See Roads and Maritime Services v Allandale Blue Metal Pty Ltd [2016] NSWCA 7; 212 LGERA 307 (Allandale) at [33]-[35] (Basten JA, Ward JA agreeing).
58. Aerated Water at 63-64 (Griffith CJ).
59. Aerated Water at 70 (Barton J).
60. Melino at [83].
61. Law Reform Commission, Lands Acquisition and Compensation, ALRC 14, 1980 (Lands Acquisition). The Second Reading Speech for the Land Acquisition (Just Terms Compensation) Bill 1991 (NSW) stated that the "extensive consultation process" that had led to the Bill took into account two State reports prepared in 1968 and 1978 and the more recent Law Reform Commission report on Lands Acquisition: New South Wales Parliamentary Debates, Legislative Assembly, 11 April 1991,1975 (Mr WTJ Murray, Deputy Premier, Minister for Public Works and Minister for Roads).
62. Lands Acquisition at 242 citing Harvey v Crawley Development Corporation [1957] 1 QB 485 at 493 (Denning LJ).
63. Draft Lands (Acquisition and Compensation) Bill 1980 (Cth), cl 35(2)(d) in Lands Acquisition at 210.
64. Lands Acquisition at 242.
65. George D Angus (CA) at [65]-[71].
66. Allandale at [45] (Basten JA), [92] (Sackville AJA).
67. Dillon v Gosford City Council [2011] NSWCA 328; 184 LGERA 179 (Dillon) at [60]-[72] (Basten JA, Macfarlan JA and Handley AJA agreeing).
68. Dillon at [70]-[72].

Amendments 06 March 2019 - [154] Italicising case citations. 07 March 2019 - [115] - Amending "declaration" to "acquisition" in quote. Footnote 11 deleting comma after "Gavan". Footnote 50 amending case citation to "Minister administering". Footnotes 63 and 64 deleting square brackets from pinpoint references. Footnote 62 - amending 252 to read 242, [1975] to [1957], Denning LJ and deleting square brackets from pinpoint reference. 06 September 2019 - [67] - Adding citation end of paragraph. [90] - Correcting citation in fn 38. 16 September 2019 - [141], [142], [145] and [163] - Amendments to typographical errors. 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: 16 September 2019