The Trustee for Whitcurt Unit Trust v Transport for NSW

Judgment

1. The Applicant, the Trustee for Whitcurt Unit Trust, conducted a golf driving range business at Tempe. The Inner West Council (IW Council) owned the land on which the Applicant's business was conducted and the critical infrastructure necessary for that business such as nets, lights and buildings. The Applicant seeks compensation for the compulsory acquisition of its leasehold interest in the land, Lot 305 in DP 1136081, (Lot 305) on which the business was conducted. The land was acquired by the Respondent Transport for NSW on 20 March 2020. The basis of the claim is to enable the Applicant to relocate to or reinstate its business at a presently vacant site at Campbelltown owned by the Campbelltown City Council (CC Council).
2. The Applicant has filed proceedings pursuant to s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act). The Court has jurisdiction to determine this matter pursuant to s 19(e) of the Land and Environment Court Act 1979 (NSW). The Court is acting as the judicial valuer in this case: Denshire v Roads and Maritime Services (2017) 229 LGERA 118; [2017] NSWLEC 181 at [4] citing Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391 and Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156. A claimant bears the onus of proof in compulsory acquisition matters: Roads and Traffic Authority of New South Wales v Perry (2001) 52 NSWLR 222; [2001] NSWCA 251 (RMS v Perry) at [67] per Handley JA (Powell and Hodgson JJA agreeing).

Land Acquisition (Just Terms Compensation) Act 1991 (NSW)

1. Relevant sections of the Just Terms Act provide: Part 1 Preliminary … 3 Objects of Act (1) The objects of this Act are - (a) to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition, and (b) to ensure compensation on just terms for the owners of land that is acquired by an authority of the State when the land is not available for public sale, and (c) to establish new procedures for the compulsory acquisition of land by authorities of the State to simplify and expedite the acquisition process, and (d) to require an authority of the State to acquire land designated for acquisition for a public purpose where hardship is demonstrated, and (e) to encourage the acquisition of land by agreement instead of compulsory process. (2) Nothing in this section gives rise to, or can be taken into account in, any civil cause of action. 4 Definitions (1) In this Act - … interest in land means - (a) a legal or equitable estate or interest in the land, or …. land includes any interest in land. … Part 2 Acquisition of land by compulsory process … Division 2 Acquisition procedures 19 Compulsory acquisition by notice in Gazette (1) An authority of the State that is authorised to acquire land by compulsory process may, with the approval of the Governor, declare, by notice published in the Gazette, that any land described in the notice is acquired by compulsory process. … 20 Effect of acquisition notice (1) On the date of publication in the Gazette of an acquisition notice, the land described in the notice is, by force of this Act - (a) vested in the authority of the State acquiring the land, and (b) freed and discharged from all estates, interests, trusts, restrictions, dedications, reservations, easements, rights, charges, rates and contracts in, over or in connection with the land. … Part 3 Compensation for acquisition of land … Division 4 Determination of amount of compensation 54 Entitlement to just compensation (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. … 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division) - (a) the market value of the land on the date of its acquisition, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) the disadvantage resulting from relocation, (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. 56 Market value (1) In this Act - market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid) - (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and (b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and (c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law. (2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition. (3) If - (a) the land is used for a particular purpose and there is no general market for land used for that purpose, and (b) the owner genuinely proposes to continue after the acquisition to use other land for that purpose, the market value of the land is taken, for the purpose of paying compensation, to be the reasonable cost to the owner of equivalent reinstatement in some other location. That cost is to be reduced by any costs for which compensation is payable for loss attributable to disturbance and by any likely improvement in the owner's financial position because of the relocation. 57 Special value In this Act - special value of land means the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person's use of the land. … 59 Loss attributable to disturbance (1) In this Act - loss attributable to disturbance of land means any of the following - (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land), (c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs), (d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired), (e) financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage), (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition. (2) Subject to the regulations, a reference in this section to a qualified valuer is a reference to a person who - (a) has membership of the Australian Valuers Institute (other than associate or student membership), or (b) has membership of the Australian Property Institute (other than student or provisional membership), acquired in connection with his or her occupation as a valuer, or (c) has membership of the Royal Institution of Chartered Surveyors as a chartered valuer, or (d) is of a class prescribed by the regulations.
2. Section 56(3) of the Just Terms Act was introduced by the Land Acquisition (Just Terms Compensation) Amendment Act 2016 (NSW) and commenced operation on 1 March 2017.
3. Section 54(1) of the Just Terms Act creates an entitlement to compensation. The Applicant claims compensation on three alternative bases - 1. as disturbance under ss 55(d)/59(1)(c) for relocation of the business to Campbelltown; 2. under ss 55(a)/56(3) as market value for reinstatement of the business at Campbelltown; and if not successful on either of these bases - 1. as special value under ss 55(b)/57.
4. There is agreement that legal costs under ss 55(d)/59(1)(a) and a business valuer's fees under ss 55(d)/59(1)(b) are payable. The Respondent otherwise submits that no further compensation is payable.
5. The claim for compensation has three components: (i) fit-out of a new facility as a golf driving range at Campbelltown; (ii) ancillary relocation expenses (such as the costs of advertising and mail redirection); and (iii) loss incurred due to business interruption being loss of profits foregone in the ramp-up period of the new business.
6. The precise claims are set out in the following table (MFI 1). As the parties agreed during the hearing that the Applicant should not claim GST (as that can be claimed as an input tax credit), the table has been amended to exclude figures which included GST. Item Amount claimed as per Amended Points of Claim Amount allowed by Respondent s 59(1)(a) - Legal costs $94,087 (ex GST) $96,121.98 (ex GST) [Note: The amount claimed does not include invoice #3159 $5,000 (ex GST)] s 59(1)(b) - Mr Andrew Firth's fees (business valuer) $22,259 (ex GST) $22,259 (ex GST) s 59(1)(c) - Mr Terry Hams' fees (quantity surveyor) $15,200 (ex GST) Nil $3,405,235 (ex GST) s 59(1)(c) or s 56(3) or s 57 - Relocation costs (i) fit-out costs and Nil (ii) ancillary relocation expenses s 59(1)(c) or s 56(3) or s 57 - Loss of profits (during relocation of business) $498,384 (ex GST) Nil (iii) lost profit foregone in ramp-up period of new business TOTAL $4,035,163[sic] [$4,035,165] (ex GST) $118,380.98 (ex GST)

1. I note that no alternative claim is made for extinguishment of the business, the basis on which the Valuer-General (V-G) determined compensation of $345,000. Both parties agreed that compensation for disturbance based on business extinguishment, meaning loss of future profits, is no longer available under ss 55(d)/59(1)(f) following Roads and Maritime Services v United Petroleum Pty Ltd (2019) 99 NSWLR 297; [2019] NSWCA 41 (UP (CA)) in the circumstances of this case.
2. An agreed schedule of relevant facts (tendered by the Applicant as Ex A) provides: 1. Immediately prior to 20 March 2020 (the Date of Acquisition), the Applicant leased Lot 305 in DP 1136081 with improvements (the Subject Property) from Inner West Council pursuant to an unregistered lease which commenced on 20 November 2017 and expired on 19 May 2018 (Lease). 2. Following the expiration of the Lease until the Date of Acquisition [20 March 2020], the Applicant continued to occupy the Subject Property as a monthly tenant and the Lease was terminable on two months' written notice. 3. The Subject Property had a total area of approximately 2.804ha, was zoned RE1 Public Recreation under the Marrickville Local Environmental Plan 2011, and was improved with a golf driving range and associated facilities, amenities and car parking facilities that included: a. concrete slab with 25 covered hitting bays with tees and 4 hitting positions not under cover; b. grass hitting areas; c. turf and target "greens" for the driving range; d. net poles and netting along the north-west (15m height), north-east (15m height) and south-east (15m height) boundaries; e. 2.4m security chain wire fence along the south-west boundary; f. flood lights and light structures on 30m high steel post (four along the north-west boundary and five along the south-east boundary); g. chipping green and bunker; h. outdoor putting green; i. a 12.0m x 6.0m ATCO structure that was fitted out used as a clubhouse and office / shop and adjacent covered alfresco area; j. a 7.2 m x 3.0m ATCO structure that was fitted out and was used for toilets / amenities; k. covered walkway between the shop and adjacent covered alfresco area; l. a shed used for the storage of maintenance equipment; m. a storage container; n. ramped concrete driveway between the car park and range; o. wooden walking ramp and stair between car park and range; p. services (water, sewer, stormwater and electrical); and q. 20 paved and line marked car parking spaces on the Subject Property and another 56 paved, line marked off-street car parking spaces immediately adjacent to them provided by Inner West Council (noting per condition 2 of the development consent for the golf range driving range provided "Forty five (45) off-street car parking spaces being provided, paved, line marked and maintained at all times in accordance with the standards contained within Marrickville Development Control Plan No 19 - Parking Strategy. Reason: To ensure practical off-street car parking is available for the use of the premises."). …
3. It is agreed in par 2 of the agreed schedule that at the date of acquisition the interest in land held by the Applicant was a monthly tenancy terminable on two months' notice. As the lease was unregistered, the Applicant had an equitable interest in the acquired land as provided in the definitions of "land" and "interest in land" in s 4(1) of the Just Terms Act.

Chronology

1. The following chronology is agreed: 1. 8 December 2004 - Modification to Development Application DA200300739 approved to erect a golf driving range and associated facilities, amenities and car parking facilities on Lot 305 in DP 1136081 (the Subject Property). 2. 2005 - Golf driving range improvements erected on the Subject Property by Marrickville Council (now Inner West Council (IWC)). 3. November 2016 to October 2017 - Mr Whittle (and, initially, Mr Stegbauer and later Mr Curtis in Mr Stegbauer's place) sought to negotiate to purchase the Tempe Driving Range business from the then current operator (Mitchell) and have the then current lease of the Subject Property assigned to the Applicant. However, the purchase did not proceed because of some of the purchase and assignment preconditions were not acceptable to the Applicant (including that the Applicant, in addition to purchasing the business and its assets, would also have to pay all outstanding rent to the IWC owing by Mitchell). 4. 20 November 2017 - Applicant's lease of the Subject Property from IWC commenced. Various maintenance / renovation activities carried out by the Applicant after lease commencement. 5. 19 May 2018 - Applicant's lease from IWC expired, and continued on a holding over basis terminable on two months' notice. 6. 8 August 2018 - Mr Montague of IWC endorses offering a lease of [up] to 10 years (likely a 5+5 year lease with 12 month termination clause in the option term if Council require the space for alternative recreational needs). An offer to lease with all relevant terms including rent, etc. is not made. 7. 12 September 2018 - Sydney Gateway Project announced and on 13 September 2018 the Applicant becomes aware that its business will be compulsory acquired. 8. October to November 2018 - the Applicant searches for replacement sites and has IWC send a flyer (Flyer) to other Councils in Sydney for sites to which to relocate. 9. 30 October 2018 - the final version of the Needs Study dated 16 October 2020 was presented to Council meeting for endorsement. 10. 7 December 2018 - As a result of receiving the Flyer, Campbelltown City Council (CCC) contacted the Applicant and notified of call for expressions of interest to establish and operate a golf driving range on land owned by CCC at Hepher Road, Campbelltown (the Campbelltown Site). 11. 18 December 2018 - Applicant submitted expression of interest to CCC. 12. 8 January 2019 - CCC notified the Applicant that it was the successful tenderer and provided draft terms of agreement for a proposed licence of Campbelltown Site with term of 10 years plus 10 year option, subject to conditions precedent. 13. 16 January to 30 April 2019 - Applicant negotiates the terms of a potential licence agreement with CCC. 14. 12 February 2019 - CCC approved a licence of the Campbelltown Site for 15 years plus 15 year option at the request of the Applicant. 15. February 2019 to April 2020 - Applicant engaged architects to design golf driving range for the Campbelltown Site and design modified in consultation with CCC in connection with CCC's requirements. 16. 19 February 2019 - CCC provided a draft Deed of Licence to the Applicant with proposed term of 15 years plus 15 year option. 17. 18 March 2020 - Applicant and Respondent agreed on terms of the Applicant's continued occupation of the Subject Property following the Respondent's acquisition. 18. 20 March 2020 - Subject Property acquired by the Respondent. 19. 20 May 2020 - Valuer General determination of compensation for the Applicant in the amount of $345,000. 20. 19 June 2020 - Applicant commenced these proceedings. 21. 6 July 2020 - Respondent made advance payment of compensation to the Applicant. 22. 31 August 2020 - Applicant vacated the Subject Property. 23. 1 April 2021- Ms Thompson of CCC confirmed by email that CCC still wants to work with the Applicant on delivery of the golf driving range at the Campbelltown Site.
2. One area not agreed in the chronology are events relied on by the Applicant concerning negotiations with the IW Council in relation to a longer term lease at Tempe. This will be outlined in the affidavit evidence below.

Affidavit of Mr Whittle

1. The Applicant read the affidavit of its director Glenn Whittle sworn 13 November 2020 and tendered the bundle of documents exhibited to his affidavit (Ex B). Mr Whittle's affidavit is summarised as follows.

Commencing lease with the Inner West Council

1. Mr Whittle and his business partner Robert Curtis established the Applicant company with the aim of operating a golf driving range business. In September 2017, Caroline Tunney of the IW Council told Mr Whittle that IW Council was conducting a "Needs Study" in relation to the ongoing use of Lot 305. The Applicant could have a six-month lease over Lot 305. If the Applicant was a responsible tenant and the Needs Study did not require the site to cease being used as a driving range, then the IW Council would offer the Applicant a lease for five years plus a five-year option (5+5 year lease).
2. On 31 October 2017, the Applicant provided the IW Council with a copy of its "New Business Plan" (Business Plan) which outlined its mission to offer the community a first-class public access golf facility. The Applicant had a business plan spanning from April 2017 to June 2020 to set up and carry out the business at Tempe. Initial steps between April 2017 and September 2017 included distributing 50,000 flyers, online promotion, purchasing equipment and physical upgrade work. The Business Plan outlined hours of operation, items the Applicant was proposing to sell at the shop, ongoing marketing and promotion and facility improvements such as new range mats, balls, bay dividers, distance markers, a grass hitting area and short game area. The Business Plan also referred to a golf academy, clinics and junior development program. Mr Whittle and Mr Curtis spent considerable time, effort and cost setting up the business before the lease commenced on 20 November 2017.

Development of Tempe business

1. Mr Whittle attested that the golf driving range on Lot 305 was in poor condition when the Applicant's lease commenced. The nets were about 17 years old and would not last much longer; the grass area was in poor condition and overgrown; the chipping green was in average condition; the putting green had weeds and dirt patches; the bunker was in very bad condition; the roof shelter was in average condition but rusting; the net poles, light poles, shed, shop, concrete hitting slab, toilets and carpark were in average condition. Photographs taken at the beginning of the Applicant's lease show the condition of these facilities.
2. Within six months of opening for business the Applicant had installed new signage; recarpeted the retail space; commenced a summer maintenance program of the grass hitting area applying top soil, fertiliser, watering and mowing; installed a putting studio; installed an enclosure for a ball machine; removed approximately 2,000 m2 of dead turf and installed a new grass area on the northern side of the retail space and a new putting green on the southern side; spent hours to improve the chipping green; and installed an alarm system. Photographs taken during the Applicant's occupation of Lot 305 show the improvement in facilities. Invoices billed to the Applicant from about November 2017 onwards show the money spent on improving facilities.
3. The renovated grass hitting area was popular with the Applicant's members and the general public. Renovations across the entire facility attracted positive reviews online. The range on Lot 305 became a destination for members of the inner west community. The Applicant's directors monitored the effectiveness of marketing, membership and loyalty programs. The range was listed number four out of Sydney's 11 best golf driving ranges by the website "Man of Many".

Negotiations with the Inner West Council

1. By email dated 8 August 2018, Peter Montague of the IW Council "endorsed" the following actions outlined by Helen Langford the IW Council's property and assets manager: … You may recall our brief discussion regarding the Tempe Golf Driving Range when meeting to review the Recreation Needs Study. For public safety and risk management, the nets need repairing or replacing and both options are an expensive maintenance cost. $8 - 88K. We will make further investigations in the repair / replace options to decide what provides the best safety and value for money. … Property & Assets would like to ameliorate this cost through either an RFT [request for tender] or a new lease with the existing (but new tenant) and seek your endorsement for Council to offer a lease for up to ten years, likely to be broken into a 5 year lease with a 5 year option to renew. I understand from our discussion that there are no current plans to change the use of this land and that if a change of use is recommended that it would take in excess or five years. As discussed the Option Period to include an early termination clause providing 12 months' notice should the Council require the space for alternative recreational needs. …
2. Mr Whittle summarised further dates relating to the Applicant's lease at Tempe in an email dated 14 October 2018 addressed to Ms Tunney of the IW Council including: 1. Mr Whittle spoke to Ms Tunney in early September 2018. Ms Tunney mentioned the community Needs Study recommended keeping the golf driving range, that the IW Council had internally approved a 5+5 year lease for the Applicant and was in the process of issuing it; 2. a representative of the Roads and Maritime Service (RMS) (predecessor of the Respondent Transport for NSW) contacted the Applicant on 12 September 2018 and proposed a meeting in relation to compulsory acquisition of Lot 305 for the Sydney Gateway Project; 3. Mr Whittle and Mr Curtis met with Ms Tunney on 19 September 2018. Ms Tunney confirmed that the IW Council was finalising a 5+5 year lease with the Applicant taking over responsibility for all nets. Mr Whittle and Mr Curtis also met with the RMS on 19 September 2018; 4. on 8 October 2018, Mr Whittle and Mr Curtis received an email with minutes of their September 2018 meeting with the RMS. They responded with some amendments noting discussion of a 5+5 year lease for Lot 305; and 5. Mr Whittle and Mr Curtis spoke to Ms Tunney on 9 October 2018 who confirmed that the IW Council had been in the process of offering the Applicant a 5+5 year lease over Lot 305 prior to knowing anything about the Sydney Gateway Project.
3. A final version of the Needs Study dated 16 October 2018 recommended continued use of Lot 305 as a golf driving range.
4. Representatives of the RMS visited Lot 305 on 24 October 2018 for another meeting with the Applicant. The RMS prepared minutes of that meeting. Mr Whittle instructed his solicitor to amend those minutes to clarify that the IW Council had approved a new 5+5 year lease for the Applicant before the Sydney Gateway Project was announced.

Search for alternative sites

1. Mr Whittle and Mr Curtis began looking for alternative sites after the September 2018 announcement that Lot 305 would be compulsorily acquired. They asked Ms Tunney to distribute a flyer to other councils in the Sydney area enquiring about vacant land that the Applicant could relocate its business to. Mr Whittle and Mr Curtis considered relocating to an indoor facility and inspected two indoor sites but decided an outdoor range was more feasible.
2. In mid-December 2018, Mr Whittle made enquiries about a possible site at Kurnell in the Sutherland Shire. The site was a suitable size, had access to electricity and water and was suitably zoned. The owner's representative was accommodating and interested in leasing the site to the Applicant. However, the rent was over $1.2 m per annum. The Applicant had paid $140,000 per annum at Tempe. The Kurnell site was not economically feasible.
3. In mid-December 2018, Mr Whittle became aware of an upcoming tender for a driving range at Hudson Park in Strathfield. The Strathfield Council wanted the successful tenderer to build a two-storey golf driving range development. Mr Whittle estimated that that would cost about $7 m. The Applicant did not have enough capital to invest that could fund building a facility of this kind. It also would not be a like-for-like with Lot 305, which has always been the Applicant's priority. At Tempe, the Applicant had had "a Holden Commodore, but this facility would be a Mercedes Benz".
4. From mid-December 2018 to November 2019, the Applicant met with the Bayside Council in relation to a possible relocation to Botany Golf Course. However, the future use of the land was uncertain, the successful tenderer would have to pay for developments beyond those of a golf range, the RMS was considering acquiring a section of the site, the potential for lighting needed to be investigated, and any proposal would likely take many years to come to fruition. Relocation to Botany Golf Course was too uncertain to pursue.
5. By email dated 7 December 2018, the CC Council supplied Mr Whittle with an "Information Memorandum 2018" in relation to part of Lot 104 DP 1056782 Hepher Road, Campbelltown (the Campbelltown site) which was available for the establishment of a golf driving range with associated retail and ancillary café facilities. An "Expressions of Interest" document stated that the anticipated licence term would be for 10 years with one five-year option available. The service provider was required to construct the golf driving range facility at their own expense, and was obliged to maintain and keep the site in good condition. The Applicant submitted an expression of interest (EOI) on 18 December 2018 which included a statement that its relocation and the building of infrastructure at Campbelltown would be funded by impending compensation from the RMS. The Applicant was notified on 8 January 2019 that it was the successful tenderer for the Campbelltown site.

Campbelltown terms of agreement

1. On 8 January 2019, the CC Council provided the Applicant with draft terms of agreement, including a licence term of 10 years plus one 10-year option, monthly rent of $10,000 plus GST and the following conditions precedent: 1. the Applicant lodging an application for development consent on or before 31 March 2019; 2. the CC Council obtaining a resolution that the option term can be extended to 10 years by 28 February 2019; and 3. the Applicant obtaining development consent within three months of the CC Council providing consent or authorisation to lodge the application for development consent.
2. On 6 February 2019, Emma Thompson of the CC Council provided Mr Whittle with a marked-up version of the "Terms of Licence Agreement", including a term of 15 years with an option to renew for 15 years (15+15 year licence). On 19 February 2019, the CC Council provided the Applicant with a draft "Deed of Licence" for "consideration and feedback" which included a 15+15 year licence. The licence fee payable was $10,000 plus GST per month. The commencing date of the licence was to be the earlier of: 1. the date immediately following the date the work of constructing the facilities, structures and buildings the Applicant proposed to construct at the Campbelltown site was to be complete; 2. the date the Applicant was to commence trade from the Campbelltown site; and 3. 28 February 2020.

Preparing for move to Campbelltown

1. The Applicant contacted a construction business to develop the Campbelltown site and has engaged architects and surveyors to prepare plans and surveys. Mr Whittle exhibited to his affidavit the plan for the Campbelltown site. The concept has always been to create a simple range as close as possible to what the Applicant had at Tempe allowing for CC Council requirements and site constraints. Recent correspondence between the Applicant and the CC Council has focused on conducting the necessary geotechnical and vegetation surveys. The Applicant is fully committed to relocating to Campbelltown.

Leaving Tempe

1. The Applicant vacated Lot 305 at the end of August 2020 and left the following: large storage shed, storage shipping container, steel shade over the cement slab, the demountable building used as a golf shop, toilet blocks, grass areas, the nets and net poles, the light poles and lights, the carpark, the ramp entrance, and keys.

Agreement with the Campbelltown City Council

1. By email dated 21 January 2021 addressed to Ms Thompson of the CC Council, Mr Whittle noted that a 15+15 year licence at the Campbelltown site was agreed and that the Applicant intended to pay for developments at the Campbelltown site with compensation it received from the RMS/Respondent. Mr Whittle stated "there should be a condition precedent that the licence is subject to us receiving a payout from the RMS that it covers the costs of our intended development and our other costs in connection with any relocation". Ms Thompson replied on the same day that the 15+15 year licence was "noted and agreed".

Lease terms of Tempe premises

1. Relevant terms of the unregistered written lease between the IW Council and the Applicant for Lot 305 included: … Purpose of use of Premises 4.2 The Tenant must use the Premises for the purpose stated in Item 6 of the Reference Schedule. The Tenant must not use them for any other purposes. 4.3 The Tenant must do everything necessary for the Tenant to use the Premises lawfully including, without limitation, complying with the conditions of use as outlined in the Development Consent. … Maintenance of the Premises 4.10 The Tenant must keep the following (excluding, for the avoidance of doubt, all substantial (as determined by the Landlord acting reasonably) repairs, in Good Repair to the Landlord's reasonable satisfaction: 4.10.1 the clubhouse, office/shop, amenities, turf, tees, roof covering the tees, ramp, verandah, (including painting, removal of graffiti); 4.10.2 netting and netting structures on the eastern boundary only including but not limited to holes to the netting panels and associated fixtures, cables rigging and re tensioning of the netting panels; 4.10.3 lighting and lighting structures; and 4.10.4 the ground and associated areas of the driving range (including the car parking areas). … 4.14 The Landlord is responsible for the following in relation to the netting and netting structures: 4.14.1 re-tensioning of the cables on the western and northern boundaries of the Premises only if there is a failure of the tensioning of the cables that support the netting panels; 4.14.2 to either repair or replace damaged netting that has been subject to previous repair should there be damage to the netting panels and any associated fixtures, cables and / or rigging on the western and northern boundaries of the Premises. The decision to either repair or replace is at the Landlord's absolute discretion. … 11 Ending of the Lease Occupying the Premises after end of Lease period 11.1 If the Tenant wants to continue to occupy and use the Premises beyond the period of this Lease stated in Item 3 of the Reference Schedule the Tenant must obtain the Landlord's written permission. The Landlord may give permission subject to conditions. If the Landlord gives permission, the Tenant will continue to occupy and use the Premises on the following basis including (without limit on what conditions the Landlord may require): 11.1.1 The Tenant will be a monthly Tenant; 11.1.2 The conditions in this Lease continue to apply with any necessary changes; 11.1.3 Either party may terminate the tenancy at any time by giving the other party 2 months written notice; and 11.1.4 The Tenant will pay Percentage Rent on a monthly basis. … 18 Definitions 18.1 In this document the following definitions apply: … Landlord's Property includes the clubhouse, office shop, netting, netting structures, lighting, lighting structures, turf, tees and the tee shelters. … Tenant's Property includes property that the Tenant owns, hires or leases including the office shop contents, equipment used for driving range operations, ball dispensers.
2. Under the heading "Reference Schedule" the rent payable is recorded as "$10,058.34 per month plus GST" and percentage rent is recorded as "10% of the audited Ball Sales (plus GST)". The "period of the lease" is 20 November 2017 to 19 May 2018. The "use of premises" is identified as "golf driving range including clubhouse and associated amenities and designated golf driving range car parking spaces".

Respondent's documentary evidence

1. The Respondent tendered a "Tender Bundle" vols 1-2 (Ex 5). Relevant documents are summarised as follows. An internal IW Council memorandum dated 8 December 2017 in relation to the lease between the Applicant and the IW Council commencing 20 November 2017 notes that the lease is for six months "to accommodate for the recreation needs study and possible change in the future use of the premises … Once the future use of the site is confirmed an EOI [expressions of interest] process can be undertaken. That is expected to be 2020/2021".
2. Minutes of the CC Council's ordinary council meeting held 12 February 2019 confirmed that the CC Council had approved a licence agreement with the Applicant over the Campbelltown site. The CC Council approved a 15+15 year licence. Item 14.1 of the minutes included: "A key advantage of Whitcurt is that the acquisition of their business by RMS delivers compensation to construct a replacement facility. As this is not a direct cost for Whitcurt it is able to pay full rental to Council from commencement of the lease".
3. By email dated 14 March 2019, Ms Thompson of the CC Council noted the Applicant's position that an agreement with the CC Council should be conditioned on outcomes relating to the claim for compensation with the RMS. The CC Council requested that the Applicant finalise the Terms of Licence Agreement so that it could be signed immediately once terms of settlement were agreed between the Applicant and the RMS.
4. In a report dated 20 May 2020, the V-G determined the compensation for the acquired interest of the Applicant in accordance with s 55(d) (disturbance) was $345,000, on an extinguishment basis plus legal costs and expert fees.

Quantity surveyors

1. The Applicant's quantity surveyor (QS) Terry Hams and the Respondent's QS David Lawson prepared the following reports: 1. the Applicant tendered the report of Mr Hams dated 6 November 2020 (Ex E); 2. the Respondent tendered the report of Mr Lawson dated 2 February 2021 (Ex 2); and 3. the Applicant tendered the joint report of Mr Hams and Mr Lawson dated 3 March 2021 (Ex F).
2. Mr Hams and Mr Lawson agreed in the QS joint report (Ex F) that the cost of relocating and re-establishing assets owned by the Applicant would be $40,000. This figure was based on the cost of relocating existing retail stock, ball return system, corporate signage, office furniture, video equipment, mats and barriers, telephone equipment, IT/Comms systems, project management and sundries.
3. Mr Hams and Mr Lawson largely agreed in the QS joint report that the cost of constructing a new driving range at the Campbelltown site (fit-out costs) excluding the number of car parking spaces would be between $2,980,000 (Mr Lawson's estimate) and $3,080,000 (Mr Hams' estimate). These figures were based on the following costings: site establishment; site clearing; topsoil and ground management; bulk excavation; footpaths; walkways and range booths; machinery shed container; office and toilet sheds; putting green; bunker; target greens; chipping green; tee shelters; power and lighting; landscaping and turfing; and fencing and perimeter netting. The fencing and permitter netting itself was estimated to cost $1,558,960.
4. Mr Hams and Mr Lawson disagreed on the number of car parking spaces needed for the Campbelltown site. Mr Hams stated that the Applicant would be required to provide car parking spaces in accordance with CC Council requirements regardless of the number of parking spaces that were at Lot 305. The CC Council had indicated that 30-40 car parking spaces may be required. Mr Hams included 43 car parking spaces at the Campbelltown site based on plans prepared by the Applicant's architect. This would cost about $214,000. Mr Lawson included 20 car parking spaces on the basis that he could detect approximately 20 car parking spaces within the boundary of land that was subject to the lease between the IW Council and the Applicant. This would cost about $103,000.

Land valuers

1. The Applicant's land valuer Paul Dale and the Respondent's land valuer David Lunney prepared the following reports: 1. the Applicant tendered the report of Mr Dale dated 21 December 2020 (Ex C); 2. the Respondent tendered the report of Mr Lunney dated February 2021 (Ex 1); and 3. the Applicant tendered the joint report of Mr Dale and Mr Lunney dated 15 March 2021 (Ex D).
2. Mr Dale and Mr Lunney agreed that: 1. the passing rent payable under the lease was broadly in line with market; 2. the Applicant did not therefore enjoy a "profit rent"; 3. the market value of the lease at Lot 305 would be nil or nominal; and 4. leasehold interests in developed golf driving ranges in Sydney are infrequently traded.
3. Mr Dale identified 19 golf driving ranges in metropolitan Sydney with leasehold interests and a 20th golf range outside of Sydney at Helensburgh (Ex C). Mr Dale expressed the opinion that only one out of the 20 driving ranges appeared to have directly comparable features to Lot 305. This was the range at Jamisontown. The lease at Jamisontown commenced in July 2018. Transactions identified by Mr Dale occurred between 2006 and 2019. Mr Dale expressed the opinion that there is no general market for the leasing of developed golf driving ranges in metropolitan Sydney.
4. Mr Lunney stated in his report that 10 out of the 20 golf driving ranges identified by Mr Dale appeared to be subject to a lease or tenancy. Mr Lunney identified nine lease and eight sales transactions of golf ranges in the Sydney metropolitan area from 1991 to 2019. Mr Lunney's transaction summary table shows no sale information for four of the transactions, others have information showing that they were traded between 1991 and 2019. Mr Lunney stated that these transactions demonstrate there is a market for leasehold and freehold interests, albeit a market that is infrequently traded. Mr Lunney also identified the Jamisontown range as a relevant and helpful comparison because, similar to Lot 305, the lessor owned the majority of the golf related infrastructure.
5. Mr Lunney did not express a view about whether there was a general market for golf driving ranges, considering that was a matter for the Court.

Business valuers

1. The costs incurred due to business loss and interruption are in dispute. The quantum of those costs was calculated by the business valuers. The Applicant's business valuer Andrew Firth and the Respondent's business valuer Adam Giliberti prepared the following reports: 1. the Applicant tendered the report of Mr Firth dated 20 November 2020 (Ex G); 2. the Respondent tendered the report of Mr Giliberti dated 29 January 2021 (Ex 3); 3. the Applicant tendered the joint report of Mr Firth and Mr Giliberti dated 28 February 2021 (Ex H); and 4. the Respondent tendered the supplementary report of Mr Giliberti dated 23 March 2021 (Ex 4).
2. Mr Firth's report assesses the value of the relocation of the business to Campbelltown on the assumption that the Applicant had a longer term lease than two monthly, being the 5+5 year lease discussed with the IW Council. Mr Firth assumes that relocation will require the critical assets at Lot 305 to be installed at Campbelltown (being facilities that are functionally equivalent with the Tempe premises) together with other relocation costs totalling $3,588,837. He assumes such costs are recoverable as relocation under s 59(1)(c).
3. Mr Firth also assesses loss of profits during the relocation period between 1 August 2020 when the Applicant vacated the Tempe premises and, on the assumption the business will commence operations at Campbelltown on 1 January 2022, a ramp-up period of 18 months, of $448,027. He refers to the claim being made under s 59(1)(f). This was clarified at the hearing as being claimed under subs (c).
4. Mr Giliberti prepared a report (Ex 3) on: 1. firstly, whether a reasonable businessperson would incur the claimed relocation costs of $3,476,866 to move the Tempe business to Campbelltown if payable under s 59(1)(c) of the Act; 2. secondly, the value of the Applicant's business as at 31 August 2020 based on the assumption that the Applicant had a long tenure and also based on the Applicant's actual tenure being limited to two months' leasehold; and 3. thirdly, lost profits (putting UP (CA) limits to one side).
5. Firstly, in Mr Giliberti's opinion a reasonable business owner would not incur fit-out costs of $3,476,866 because the Applicant did not own the critical business assets at Tempe, these were owned by the landlord. The proposed interest at the Campbelltown site is as a licensee. A reasonable businessperson would not incur costs for constructing assets to be owned by a third party and then pay rent to that third party for use of those constructed assets as a licensee. The Applicant's claim for $3,476,866 under s 59(1)(c) is 2,757% more than the value of its business at the time of vacating the site on 31 August 2020, assuming a long-term tenure of the site was secured and the business could be valued as a "going concern". The Applicant's position, if the Campbelltown site is utilised, will be significantly improved compared to its financial position as at 31 August 2020.
6. Secondly, the value of the business if for sale as a going concern business as at 31 August 2020 with a long-term tenure was $135,000. The Applicant offered $122,500 to buy the business from the former operator at Tempe in about November 2016, suggesting Mr Giliberti's valuation is reasonable. It ultimately took over the lease itself.
7. The value of the Applicant's actual tenure if limited to two months is likely to be nil as a hypothetical purchaser is unlikely to want to acquire a business with such limited tenure.
8. Thirdly, as to loss of profits, assuming these can be recovered despite UP (CA), Mr Firth's assessment of loss of profits relates to a period of no trading over 15 months and a ramp-up period of reduced trading over 18 months. Mr Firth's assessment of $448,028 is 332% greater than Mr Giliberti's assessment of the Applicant's business value as at 31 August 2020 of $135,000, absent the Respondent's acquisition of Lot 305, assuming long-term tenure over Lot 305 was secured and that the business could be valued as a going concern. Mr Giliberti considered Mr Firth's quantification of $448,028 is mathematically incorrect, based on unsupported assumptions and assumptions which are not reasonable.
9. Mr Giliberti prepared a supplementary report (Ex 4) assessing the likely improvement in the Applicant's financial position in the event that compensation was found to be payable pursuant to s 56(3) with the Applicant entitled to the costs of equivalent reinstatement at Campbelltown. On the basis that the Applicant will not become the owner of the to-be-constructed assets at Campbelltown, the owner being the CC Council, and given the finding of nil value for the Applicant's business, the improvement in the Applicant's financial position with the resumption of trading on the assumed date of 1 January 2022 is $297,840 assuming the same annual profits as at Lot 305, $182,535 assuming lower profits for nine months, or $160,246 assuming lower profits for 18 months.
10. In their joint report (Ex H) the business valuers agree on a number of matters - that reliance can be placed on the QS experts for fit-out costs; the net profit of the Tempe business for the financial year ending 30 June 2020 and the gross profit amount for the same period, taking into account directors Mr Whittle and Mr Curtis not drawing a wage; and in the alternative, making such an allowance. Mr Firth assumed 18 months and Mr Giliberti assumed nine months as the ramp-up period.
11. The business valuers disagree about the reasonableness of incurring relocation costs in the amount claimed, the value of the Tempe business as a going concern, the appropriate risk-adjusted discount rate to quantify loss of profit, the amount of loss of profit based on different ramp-up periods being applied and the appropriate discount/capitalisation rates being used.
12. Mr Firth and Mr Giliberti also gave oral evidence in relation to areas of disagreement concerning the appropriate discount rate and the appropriate ramp-up period for a new business at the Campbelltown site.

Claim 1 relocation of business s 59(1)(c)

1. There are three components to the relocation costs sought under s 59(1)(c) of $4,035,165. Firstly, the fit-out costs of a new golf driving range at Campbelltown, secondly, ancillary costs such as mail redirection in setting up a new business (collectively $3,405,235) and thirdly, business hiatus costs from August 2020 to January 2022 (lost profit during ramp-up of new business for that period) of $498,384.

Applicant is relocating the business

1. In UP (CA) Basten JA identifies at [14] that "[t]here is no apparent reason for limiting 'the relocation of those persons' [in s 59(1)(c)] 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". The focus of the claim must be the business operations conducted on the land. That the critical infrastructure such as netting and lights in this case is owned by the landlord is irrelevant. At issue is what is the reasonableness of the Applicant incurring these necessary costs in order for it to re-establish the business. Reasonableness does not relate to the quantum incurred. The definition of "loss attributable to disturbance" focusses on the business operations. Critical infrastructure is required for the business to operate. The statutory language is "relocation of those persons" not relocation of the things that the person actually had on the land that were the tenant's property and could be removed or put elsewhere. Moving business operations must obviously include more than chattels where fixtures are required to be removed and put at a new operation. Disturbance loss places a displaced owner in the position they would have been in but for the acquisition, with the ability to continue their business operations elsewhere.
2. Such an approach was taken in Hua v Hurstville City Council [2010] NSWLEC 61 (Hua) at [42]-[45], [59] and Konduru T/as Warringah Road Family Medical Centre v Roads and Maritime Services; Konduru v Roads and Maritime Services; Konduru v Roads and Maritime Services [2017] NSWLEC 36 (Konduru) and should be applied in this case. In order for the Applicant's business to be reinstated, essential new equipment must be installed at the Campbelltown site and incurring that cost is reasonable. In Hua the installation of a bakery oven at new premises was allowed. In Konduru a claim for relocation of a doctor's surgery being conversion and fit-out costs for a nearby residential premises was successful. Financial costs reasonably incurred extends to work where strict like-for-like premises are not available. In Konduru it did not matter whether Dr Konduru's new asset was improved. It did not matter that the 25 year old fit-out which had depreciated to zero dollars was now being paid for as new. Moore J found that it fitted within the statutory language as being necessary to carry out the operations as a doctor's surgery in new premises which required alteration.

Incurring the costs is reasonable

1. The Applicant wishes to continue its business and has found a new site to do so at Campbelltown. There are very few suitable sites given the scarcity of golf driving ranges in Sydney. The Applicant genuinely intends to move there and has demonstrated a long-term commitment to stay at the Campbelltown site negotiating a lease of up to 30 years, being the 15+15 licence. Mr Whittle attested to his efforts to secure the use of Lot 305 under a long-term lease and subsequently the Campbelltown site.
2. It is also reasonable to allow those costs, even though there was no long-term lease in place at Lot 305 at the date of acquisition. This is because: 1. there was, but for the acquisition, a likely new 5+5 year lease such that the Applicant would likely have had tenure secured for a further 10 years. There is an internal memorandum from the CC Council demonstrating its decision to enter into that agreement. However, the lease did not proceed because of the compulsory acquisition; 2. the expected length of leasehold tenure informs the likely long-term future operation of the business if it wasn't for the public purpose. That, in turn, informs the reasonableness of the move to Campbelltown on a long-term basis to secure long-term employment for Mr Whittle and Mr Curtis; and 3. further, the tenure which has been agreed to at the Campbelltown site (contingent upon the Applicant being compensated to allow the move) is a 30 year tenure of a 15+15 year licence, and demonstrates future long-term commitment. This is also a reasonable position for the Applicant to negotiate to secure its tenure and provides a lasting ability to continue its business.
3. Underpinning all of this is the fact that this is a claim for compensation and as stated in Tolson v Roads and Maritime Services (2014) 201 LGERA 367; [2014] NSWCA 161 (Tolson) at [3]-[4], compensation is for loss the purpose of which is to place a person in the same position or as near one as that person would have been in if the acquisition had not occurred.
4. If it was not for the acquisition the Applicant would have continued to operate its business from Lot 305 and likely on a long-term basis. That is the Applicant's evidence. The Applicant's directors are now proposing to operate in what is essentially the only other viable place they can find. That, as best as is possible in the circumstances, tries to restore them to a position they would have been in were it not for the acquisition. They cannot find like-for-like premises to simply walk into and relocate. They will need to incur these new fit-out costs in order to restore themselves to the position of being able to operate their business. It is not unlike Dr Konduru's move from an existing medical surgery to a residential premises needing to be fitted out. Nor is this dissimilar to the fact that a family bakery business operated by the Huas was permitted to continue even if the profitability of that existing business was marginal. The underlying test is reasonableness and here the proposed financial costs to be incurred allow the Applicant to continue its business.
5. Extinguishment of a business loss is no longer compensable following UP (CA). The position has changed since Hua and United Petroleum Pty Limited v Roads and Maritime Services [2018] NSWLEC 35 (UP (LEC)). It is no longer appropriate to balance up extinguishment losses with relocation costs as occurred in Hua and UP (LEC). The test from Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 1 All ER 846 (Shun Fung) has no relevance and/or the fifth criteria ("will the cost of relocation be less than the costs of extinguishment") does not apply. Consequently, Mr Giliberti's evidence that a reasonable businessperson would not choose to relocate the Applicant's business on the basis of costliness of the proposed move is incorrect.
6. Further, Mr Giliberti did not take into account the particular circumstances of the Applicant's business given the dearth of golf driving ranges in metropolitan Sydney and the Applicant's clear wish to continue the business.

Amount of costs claimed

1. The fit-out costs at Campbelltown are generally agreed by the QS experts. The only disagreement is how many car parking spaces should be allowed. Mr Hams allowed for 43 spaces and his approach should be adopted.
2. Ancillary costs of relocating and re-establishing assets owned by the Applicant are agreed by the QS experts at $40,000.
3. The business interruption costs claimed under s 59(1)(c) are not agreed by the business valuers. The four areas of disagreement are: (i) whether capital expenditure should be included; (ii) input of owners' remuneration; (iii) the appropriate discount rate; and (iv) the appropriate ramp-up time. Mr Firth's evidence as to the discount rate and the appropriate ramp-up time should be preferred.

Claim 2 reinstatement under s 56(3) market value

1. Section 56(3) commenced on 1 March 2017 following David Russell's Review of the NSW Land Acquisition (Just Terms) Compensation Act 1991 (February 2014) (Russell Review). An alternative claim is available under that section. It is clear from the Russell Review and the NSW Government's response in NSW Government response - Review of the NSW Land Acquisition (Just Terms) Compensation Act 1991 (18 December 2014) at 18, that s 56(3) is intended to create a provision that allows for the payment of fair compensation to interest holders whose interest relates to land that is used for a specific, "particular purpose". A golf course is used as an example of such a land use in the NSW Government's response at 42-43. The subsection supports the reinstatement of the Applicant's business so that it is put back in its former position before acquisition.
2. The second and equally important part of subs (3) is that there is "no general market for land used for that purpose". Lot 305 is used for a particular purpose, as a golf driving range and associated business. It has a narrower focus than a recreational facility or something of that type which might be defined in the local environmental plan. There is a dearth of transactions in metropolitan Sydney concerning golf driving ranges. There might be a very limited market for them over an extended period of time, as the land valuers discuss in their evidence above in [46]-[47]. This is far from a general market. The best evidence of this is that there is nowhere else for the Applicant to actually go and relocate to.
3. No case relating to s 56(3) has yet been determined since it came into effect. Chapter 14 of Alan Hyam, The Law Affecting Valuation of Land in Australia (6th ed, 2020, Federation Press) (Hyam) on reinstatement is of assistance. Hyam states at 471 that "the reinstatement principle of compensation following the compulsory acquisition of land is applicable where the acquired land is devoted to a use of such a nature that there is no general demand or market for land for that purpose". That is generally equivalent to the language of s 56(3).
4. Charles Cripps, A Treatise on the Principles of the Law of Compensation (5th ed, 1905, Stevens and Sons) at 118-119 and Clifford Collins, Valuation, Compensation and Land Tax (3rd ed, 1949, Law Book Co) (Collins) at 216-217 provide statements on the principle of reinstatement cited in Hyam at 471-472. Collins quotes from School Board for London v SE Railway Co (1887) 3 TLR 710: "The site ought to be as nearly as possible the same as the old site, and the school ought not either to gain or lose in acquiring the new site". That has been the subject of what underpins the Applicant's search for something that can be like-for-like with Lot 305.
5. At 474-475 Hyam refers to the following extract of Brown Bros (Marine) Holdings Pty Ltd v New South Wales Land and Housing Corporation (1991) 72 LGRA 50 at 55 where Hemmings J considered a question that is really one of reasonableness: The circumstances which make it appropriate to adopt the reinstatement approach in order to produce a fair result cannot be precisely defined, and must therefore depend upon each case. The principle has limits to its operation, but it is always relevant to determine whether, if also the occupier, the dispossessed owner acted reasonably in seeking to relocate and reinstate the building or the business conducted thereon. A comparison of its value with the cost of reinstatement is usually made for that purpose. However, the fact that the cost incurred to relocate exceeds the value of the business may not necessarily be a bar to the assessment of compensation on the reinstatement approach, or be a determining factor on any other basis. It is but one of the matters which should be considered with all others: see Santana Coffee & Tea Pty Ltd v Minister for Public Works (Land and Environment Court, No 30261 of 1984, 30 July 1985, unreported).
6. Section 25(1)(i) of the Land Acquisition Act 1969 (SA) is very similar to s 56(3), providing that where there is no general demand or market for land devoted to a purpose, the compensation may, if reinstatement in some other place is bona fide intended, be assessed on the basis of the reasonable cost of equivalent reinstatement. Hyam states at 475 that it was "pointed out, however, by Wells J in Commissioner of Highways v Shipp Bros Pty Ltd (1978) 43 LGRA 355 at 358, 360 that this provision only applies to part of the reinstatement principle and has no application to those cases involving the re-establishment of a disturbed business". There are many statements to the contrary.
7. The application of the reinstatement principle was aptly explained by Gobbo J in Kozararis v Roads Corporation [1991] 1 VR 237 at 240-241 as "[t]he principle of reinstatement … has been described as applicable where that property was of such a character that there was no market or general demand for the property" (Hyam 476-477).
8. Hyam states at 472, 478: The reinstatement principle is not an independent method of assessing compensation following compulsory acquisition. It is but one of several methods available in arriving at the value of the acquired land to the dispossessed owner: Cook v Commissioner for Railways (1954) 19 LGR (NSW) 226 at 228-229; Housing Commission of NSW v Falconer (1981) 50 LGRA 334. Although most of the leading cases relating to the reinstatement of businesses are cases of actual reinstatement, the employment of the reinstatement principle has not been restricted in practice: Sydney Ferries Ltd v Minister (1923) 6 LGR (NSW) 156; Cook v Commissioner of Railways at 229. However, the application of the reinstatement principle must be confined within the limits of reasonableness such that the expenditure can in all the circumstances be said to have been reasonably incurred; Riverstone Meat Co Ltd v Sydney County Council (1956) 1 LGRA 216 at 219. … A dispossessed owner cannot be compensated for the cost of land, buildings and immovable plant, that are plainly superior in value and construction to the acquired property, when something more modest, and reasonably comparable to what was taken, could be found or built: Commissioner of Highways v Shipp Bros Pty Ltd (1978) 43 LGRA 355 at 363; Commissioner of Highways v George Eblen Pty Ltd (1975) 34 LGRA 207. Where the claimant is forced to acquire a replacement property which is more expensive and commodious than that acquired, some allowance must be made for this enhancement: Keogh v Housing Commission of Victoria (No 2) (1969) 18 LGRA 295 at 299; Shipp Bros' case at 363.
9. In relation to deductions, Hyam at 478-479 refers to Keogh v Housing Commission of Victoria (No 2) (1969) 18 LGRA 295 where the claimant was a lessee of the acquired premises in which the business activity of importing and purchasing chemicals and laboratory equipment in bulk and their resale was conducted. Compensation was awarded in respect of architects' fees, cost of partitioning, cost of shelving, increase in fire insurance premiums and increase in rental. The Applicant submitted that this is what was meant by fit-out.
10. Hyam at 480 references Hubertus Schuetzenverein Liverpool Rifle Club Ltd v Commonwealth (1994) 85 LGERA 37 at (Hubertus) 49-50 where Wilcox J considered s 58 of the Lands Acquisition Act 1989 (Cth), which is very similarly worded to s 56(3), and states: I do not think that s 58 … requires claimants to demonstrate that they have made the best possible selection of alternative land, and bargain in purchasing it, in order to reinstate the activities conducted on the compulsorily acquired land cannot properly be described as being "in substitution" for the land. It does not follow that the new land cannot be larger than the old. It may not be possible for the claimant to reinstate its activities on land as small as the old site. The old site may have unique features. There may no longer be vacant land of that size. Events which occurred between the commencement of the use of the old and the compulsorily acquisition may require that any reinstatement be on a larger site.
11. Hyam's last comment refers to Wilcox J in Banno v Commonwealth (1993) 81 LGERA 34 in relation to the general provisions contained in s 55 of the Land Acquisitions Act 1989. Wilcox J stated at 43: "If the circumstances are such that a claimant can be justly compensated only by reference to the cost of reinstating a business in another location, this course must be taken."
12. The point of reinstatement must essentially be that a simple like-for-like transaction may not be available and issues of size, or development controls, might be different. In this case, it is true that the IW Council was the owner of some of the existing infrastructure at Lot 305, and in order to reinstate the business that will need to be recreated. That is reasonable and in fact not dissimilar to the new oven in the Hua case or the new medical fit-out in the Konduru case or the new plantation of blueberries in Taylor v Roads and Maritime Services [2016] NSWLEC 138.
13. The Applicant's claim can properly be made out pursuant to the elements of s 56(3) of the Just Terms Act. All the factual elements of the provision are satisfied, being that: 1. Lot 305 was used for a particular purpose; 2. there is no general market for land used for that particular purpose in metropolitan Sydney; and 3. the Applicant genuinely intends to relocate to Campbelltown.
14. The "reduction" for disturbance referred to at the end of s 56(3), is included to prevent a double dip. In this case, the business loss during the relocation can be claimed under s 59(1)(c) based on the decision in UP (CA) and is not claimed twice under ss 59(1)(c) and 56(3). To construe the provision otherwise would create an absurd result in which reinstatement by way of physical relocation was allowed but the disturbance to the business, already a penalty to a claimant from the acquisition, was not only to be disallowed but the subject of a negative deduction. The Applicant's approach prevents double counting. The reinstatement sought under s 56(3) does not include the business loss on relocation.
15. Mr Giliberti's evidence asserted improvements in the Applicant's financial position, including adjustment of the capitalisation rate given the likelihood of a longer term tenure at the Campbelltown site than at Lot 305. This evidence should not be accepted because the Applicant is seeking as far as possible to replicate its former business at Lot 305 like-for-like at Campbelltown. Mr Firth considered there was no sufficiently reliable market evidence to derive a capitalisation rate so that he attributed a minimum value figure for the Tempe business. There is no market evidence that longer tenure results in more secure cash flows to justify a decreased capitalisation rate. There is no significant difference in the tenures in any event, given that security of tenure at Lot 305 was highly likely given communications with the IW Council before acquisition and that the Applicant paid a large bond initially for the short lease which indicated it was likely to obtain a long-term tenure.

Claim 3 special value s 57

1. If unsuccessful in relation to either of the first two alternative claims, special value under s 57 is sought. The Applicant adopts the analysis in Mr Brunton, "Out of Land and Out of Pocket: An Update on Disturbance under the NSW Land Acquisition (Just Terms Compensation) Act 1991" (2019) 23 Local Government Law Journal 3, 19-23. Dr Brunton summarises the shift in the Court of Appeal's position potentially to award compensation under this head of power instead of "traditional" disturbance. Basten JA observed in Roads and Maritime Services v Allandale Blue Metal Pty Ltd (CA) (2016) 212 LGERA 307; [2016] NSWCA 7 (Allandale) at [36] that some claims for disturbance could comprise special value. The last major decision to consider special value was the High Court in Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209; [1999] HCA 64 (Boland v Yates) at [292] (Callinan J). Special value was considered in Melino v Roads and Maritime Services (2018) 98 NSWLR 625; [2018] NSWCA 251. Claims brought under special value were rejected in Monti v Roads and Maritime Services (No 4) (2019) 243 LGERA 302; [2019] NSWLEC 11 (Monti) and Alexandria Landfill Pty Ltd v Roads and Maritime Services [2019] NSWLEC 98.
2. The Applicant relies on the summary of principle by Pepper J on special value in Monti at [142] and considers these are met in the Applicant's circumstances.

Threshold issue; relocation of business s 59(1)(c)/reinstatement under s 56(3)

Leasehold interest

1. The costs of building a new golf driving range facility at Campbelltown to enable the relocation of the Applicant's business at Tempe, when at the date of acquisition the Applicant did not own the fixed assets on the acquired land or the land, are not recoverable under s 59(1)(c) of the Just Terms Act. Nor are they recoverable under s 56(3) as market value.
2. The primary answer to the claims under ss 59(1)(c) and 56(3) is that the move to Campbelltown is neither a relocation nor a reinstatement within the meaning of ss 59(1)(c) or 56(3). Before the costs of the Campbelltown proposal qualify for consideration under those provisions at all, those costs (in the case of s 59(1)(c)) or the claimed market value (in the case of s 56(3)) must reflect, respectively, a relocation or reinstatement of that which the Applicant had at Lot 305. The correct approach entails examining the nature and extent of the Applicant's occupation of Lot 305, including assets owned by it. The result of that examination circumscribes that which would be reinstated or relocated.
3. The Applicant's interest in Lot 305 was pursuant to a lease terminable at two months' notice. Pursuant to that lease, it neither owned, nor incurred costs associated with the purchase, construction or development of, the assets and improvements that comprise "Landlord's Property" (as defined in the lease above in [34]). The landlord's property at Lot 305 included the clubhouse, office shop, netting structures inter alia. The tenant's property was items that it owned, hired or leased for the purposes of running its business on the land leased from the IW Council. The Applicant is seeking to construct a new fit-out of the Campbelltown site and to operate the business indefinitely or subject to a 15+15 year licence.
4. As it was not the owner of fixed improvements at Lot 305, the Applicant is not entitled to compensation for any costs of purchasing, constructing or developing comparable assets as part of the Campbelltown proposal: Housing Commission (NSW) v Falconer [1981] 1 NSWLR 547 (Falconer) at 569 citing Horn v Sunderland Corporation [1941] 2 KB 26 at 42. Falconer considered s 124 of the Public Works Act 1912 (NSW) (now repealed).

Possibility of renewal of lease

1. That discussions were held with the IW Council for a longer term lease is irrelevant as no lease resulted. There is no evidence of any unwritten agreement that a lease would be provided. The "internal memorandum" to which the Applicant refers appears to be the email chain extracted in part above in [20]. That email chain demonstrates an interest on the part of the IW Council to ameliorate the costs of the repair or replacement of the netting at Lot 305 (both of which involved a significant maintenance cost) through either a request for tender or a new lease with the Applicant. It does not evidence a decision to enter into a new lease with the Applicant, let alone its terms. The email seeking endorsement refers to the likely breakdown of the term into lease and option period and the need to include an early termination clause in relation to the option (for which there was no equivalent in the lease). However, the email gives no further indication of the terms of any new lease, including as to how the new lease would give effect to the stated aim of ameliorating the cost associated with the netting. Other internal correspondence included above in [36], albeit predating the email chain, suggests that upon the expiry of the lease the IW Council would have called for expressions of interest for any new lease.
2. The submission that the Applicant should be assumed to have continued to operate the business at Lot 305 cannot be accepted.
3. Even if the intention of the IW Council and the Applicant to enter into a new lease could be satisfied, that intention is irrelevant as it is impermissible to rely upon it. In Allandale, land owned by Allandale Blue Metal was acquired for the Hunter Expressway. Quarry Products (Newcastle) Pty Ltd (QPN) held the lease and operated a quarry on the land. At the date of acquisition QPN held a periodic lease terminable one month's notice. Two propositions can be drawn from Allandale. First, in considering claims for disturbance it is important to assess such claims in the context of the interest that is being acquired. Second, advantages a lessee might enjoy by reason of personal matters, such as a cooperative lessor, are to be ignored: Allandale at [39]-[40] (Basten JA) confirming The Minister v New South Wales Aerated Water and Confectionary Co Ltd (1916) 22 CLR 56; [1916] HCA 48 (Aerated Water).
4. This approach is consistent with the very clear intent of the Just Terms Act, articulated most clearly in s 54, that it is directed to awarding compensation. Compensation is a well understood expression, the purpose of which is to place in the hands of the claimant the monetary equivalent of that which they have been deprived, being the property taken from them at the date of acquisition: Nelungaloo Pty Ltd v Commonwealth (1947) 75 CLR 495 (Nelungaloo) at 571 (Dixon J). Compensation in the Just Terms Act is, prima facie, "compensation… for loss": Leichhardt Council v Roads and Traffic Authority (NSW) (2006) 149 LGERA 439; [2006] NSWCA 353 at [37]-[38] (Spigelman CJ).

What is to be reinstated and relocated?

1. What the Applicant has been deprived of is not the ability to have the construction of a new golf driving range funded and to continue to operate from a new facility for 15 to 30 years but rather the ability to continue to operate its business from Lot 305 pursuant to its leasehold interest that was terminable on two months' notice. The Applicant's submission that replicating this situation at Campbelltown at the Respondent's cost places it in the same position as it was in at Lot 305 simply does not reflect the interest it held.
2. The salient details regarding the Campbelltown proposal are as follows: 1. On 8 January 2019 the Applicant was informed that it was the successful tenderer to license the Campbelltown site. The tender was on the basis that the Applicant would construct at its own expense a new golf driving range facility on the site that would be suitable for golf driving range activities and associated retail and ancillary café facilities: see above in [28]. 2. The Applicant and the CC Council have proceeded on the basis that the costs of the Campbelltown proposal will be borne by the Respondent. This was the basis on which the Applicant submitted its proposal to the CC Council: see the Applicant's EOI above in [28]. The Applicant was chosen as the winning tenderer for the Campbelltown site at least partly on the basis that its financial position was better than the other tenderers because the costs of constructing a golf driving range would, according to the tender, be borne by the Respondent (see minutes of the ordinary council meeting above in [37]). The Applicant then proposed that a condition precedent be included in the proposed licence of the Campbelltown site to the effect that the licence is subject to the Applicant receiving a payout from the Respondent that covers the costs of the Campbelltown proposal (see Mr Whittle's affidavit above in [33]). The CC Council appears to have been willing to wait for resolution of the Applicant's claim for compensation before finalising any agreement with respect to the Campbelltown proposal (see Ms Thompson's email above in [38]). 3. On 8 January 2019 the CC Council provided to the Applicant the draft terms of agreement for licence which relevantly included a licence term of 10 years plus a 10 year option, monthly rent of $10,000 plus GST and conditions precedent set out above in [29]. 4. On 19 February 2019, the CC Council provided the Applicant with a draft Deed of Licence for "consideration and feedback" which contemplated a 15+15 year licence with a licence fee payable at $10,000 plus GST per month as set out above in [30]. The commencing date of the licence is set out above in [30].
3. The Campbelltown proposal would result in the Applicant having far more than it had at Lot 305, such that the claimed cost of the Campbelltown proposal is not an appropriate measure of compensation. Rather than seeking compensation to place it in the same position as it would have been in had the acquisition not occurred, the Campbelltown proposal would result in the Applicant having new facilities and a much longer tenure than existed at Lot 305. The claim does not meet the description of a relocation of the things that the Applicant had at Lot 305, nor is it a reinstatement of its interest in Lot 305.
4. Hua and Konduru had quite different facts and provide no basis for the Applicant's claim. These proceedings should be distinguished from Hua which was a compulsory acquisition of land on which the claimants conducted a bakery business. The business was fitted out at the expense of the claimants, pursuant to a fixed term lease. Pain J found in Hua that the baker's oven, various shop fittings, electrical and plumbing infrastructure necessary for the bakery's operation could not be economically relocated to an alternative property. Relocation costs could include the replacement of this essential equipment in new premises.
5. In Konduru, Dr and Mrs Konduru owned the land and premises that were acquired by the RMS, and in which Dr Konduru conducted his medical practice. They also owned the residential premises to which Dr Konduru relocated his medical practice following the acquisition. Additions and alterations to the residential property were necessary in order to render it fit for purpose for the operation of Dr Konduru's medical practice. That these works and the costs incurred were reasonable and appropriate in the statutory context was not disputed. At issue was whether compensation for the value of the improvements was recoverable given that Dr and Mrs Konduru had already received compensation for the value of the improvements at the acquired land as part of market value. Moore J considered that the claim for the costs of additions and alterations at the residential property should be paid under s 59(1)(c), referring to Tolson.
6. Neither Hua nor Konduru involved relocation costs where the business in question operated pursuant to an insecure tenure or did not include ownership of critical assets. These proceedings are concerned with a business that is conducted on a monthly tenancy involving the use of assets, the construction of which it did not pay for.
7. The costs that are being claimed which involve construction and fit-out of a new driving range are not costs of relocation when one looks at s 59(1)(c). The ordinary meaning of relocation assumes you have something to relocate. Loss attributable to disturbance arises from disturbance of the interest in land that you have at the date of acquisition.
8. UP (CA) does not support the Applicant's claim. It is important that subsections are read consistently so as not to subvert the purpose of the provisions. For example, subs (f) should not permit recovery of financial costs of relocating persons beyond those recoverable pursuant to subs (c): UP (CA) at [13] (Basten JA). In UP (CA), Basten JA elucidated at [14] that "the relocation of those persons" in subs (c) is not restricted to relocation of the individuals concerned, it includes the relocation of businesses. Basten JA's reasoning does not expand the scope of the provision to relocating business operations in terms of re-establishing a business absent security of tender or fixtures. His Honour raised the question of costs concerned with interruption to the business. These costs may be recoverable under subs (c) but they cannot also be recoverable under subs (f).
9. Basten JA's observations in UP (CA) were made in the context of subs (f). Basten JA found at [15] that the compulsory acquisition terminated the business operation. There was no relocation so the question was whether the claimant in UP (CA) could be compensated under subs (f) for loss of an opportunity. His Honour gave three reasons for why that question should be answered in the negative. First, the ordinary meaning of financial costs related to the actual use and was not apt to describe the loss of an opportunity to continue to use land. Second, the direct consequence of the acquisition was to prevent the continuation of the business but that did not cause the owner to reasonably incur the termination of the business. It caused the owner to suffer a loss of revenue. So whilst the acquisition might have caused the business owner to take steps, it is not aptly described as a financial cost. Third, the kinds of financial costs covered by subss (a)-(e) are all incidental to the loss of land. They assume the loss of the land for which market value will have been paid pursuant to other provisions.
10. The Court of Appeal has subsequently stated in Alexandria Landfill Pty Ltd v Transport for NSW (2020) 103 NSWLR 479; [2020] NSWCA 165 (Alexandria Landfill (CA)) how subs (c) should be construed consistently with subs (f) on the question of costs. Basten JA's observations of subs (f) in UP (CA) should be applied to subs (c).
11. For the reasons canvassed above concerning the nature of the Applicant's interest at the date of acquisition, establishing a new business at a new site in Campbelltown in the manner proposed does not reinstate that interest in accordance with s 56(3) of the Just Terms Act.

Additional issues in relation to s 59(1)(c)/(f) claim

No relocation costs incurred

1. The Applicant vacated Lot 305 on 31 August 2020. The Applicant asserts an intention to relocate to Campbelltown and claims the costs thereof. As addressed earlier, the Campbelltown proposal is not a relocation.
2. The Applicant has not satisfied all limbs of the threefold test from Shun Fung at 854-855 for the reimbursement of relocations costs, being: 1. the claimant must genuinely intend to relocate; 2. relocation must be practically possible; and 3. relocation must be reasonable in the circumstances.
3. The Applicant may satisfy the first limb, but not the other two from which it follows that the Applicant is not entitled to any relocations costs under either subss (c) or (f). There is no evidence of a reasonable prospect of the Applicant relocating its property to an existing golf driving range that has the same infrastructure on it that existed at Lot 305. Even if the Campbelltown proposal represented a practical possible relocation, no binding arrangement between the Applicant and the CC Council has been executed.
4. The Applicant may say that it is awaiting the outcome of these proceedings so it will know the quantum of its compensation. In response to this is the proposition that compensation is not intended to provide a means whereby a dispossessed owner of an interest in land can finance a business venture which, were they using their own money, they would not countenance: Shun Fung at 854. As noted above in [28], the Applicant was proceeding with the Campbelltown proposal on the mistaken understanding that the Respondent would be covering all the costs.
5. The Campbelltown proposal does not satisfy any of the limbs of the threefold test set out above in [110]. None of the relocation costs claimed by the Applicant are compensable pursuant to subss (c) or (f).

Lost profits

1. The Respondent submits that loss of profits is not compensable under ss 59(1)(c) or 59(1)(f) of the Just Terms Act. Recent Court of Appeal authority confirms that loss of profit is not recoverable under s 59(1)(f): UP(CA) at [26], [52] (Basten JA); Alexandria Landfill (CA) at [137]-[139] (Basten JA). Any claim would be limited to two months after the date of acquisition in any event, and the Applicant remained on Lot 305 for that period after the acquisition. Even if recoverable, no loss arises.
2. The Applicant accepts that loss of profits is not compensable under subs (f) in light of Alexandria Landfill (CA) and UP (CA) but is seeking to claim loss of profits under subs (c). The Court should draw on Sackville AJA's construction in UP(CA) at [94]-[96] of subss (c) and (f) as to how they interrelate and the commonality of language. If "costs" means one thing in one subsection, it should mean, subject to some contrary intention, the same thing in all other subsections. Since the meaning of "costs" in subs (f) does not include loss of profits, then neither should it in subs (c).

Reasonableness

1. Reasonableness is relevant to and is expressly incorporated in both ss 56(3) and 59(1)(c) of the Just Terms Act. The Respondent relies on that qualification.
2. Under s 59(1)(c) costs must be reasonably incurred by a claimant. The question is would it be reasonable having regard to the tenure, whether it is terminable on two months' notice, or assuming against the Respondent on a going concern basis, to spend the amount of money that is going to be spent if the Applicant is allowed to relocate? Considering the business valuers' evidence, on the assumption that the business was a going concern with long-term tenure in Lot 305, Mr GiIiberti valued the business as $135,000 and Mr Firth valued the business as $448,028.
3. However the Applicant did not have security of tenure. Mr Giliberti stated that if it was assumed the Applicant did not have security of tenure, then the value of the business was nil. These business valuations must be compared against a relocation cost of about $3.4 m excluding GST, leaving aside loss of profits. Incurring such costs is not reasonable.

Claim 2 s 56(3) additional issues

1. If contrary to the threshold issue compensation is theoretically payable additional issues arise concerning the application of s 56(3). It appears that no claim based on s 56(3) has been made in New South Wales, or in other jurisdictions where similar provisions have existed for longer, in that no case considering these provisions has been located.
2. Section 56(3) is an alternative to subs (1). If market value can and has been calculated under subs (1), as the land valuers have done, then no claim under subs (3) is available. The land valuers have determined that market value for the leasehold interest is nil as no profit rent is identified by them. Comparable sales for that purpose were able to be identified by the land valuers, albeit in a limited market. For s 56(3) to apply there must be a finding of no general market. The valuers have found comparable sales, both leasehold and freehold, and calculated market value for the purpose of subs (1). There is a general market sufficient to exclude s 56(3).
3. The Applicant's reference to Hubertus above in [82] does not assist since the Commonwealth provision referred to contains a carve-out limiting its application to non-commercial uses. Section 58(1)(b) of the Lands Acquisition Act is limited to circumstances where "immediately before the acquisition, the person was using the old land, or intended to use the old land, for a purpose other than the carrying on of a business".
4. Section 56(3) contemplates equivalent reinstatement of the interest in land acquired. Any replacement must be of similar nature and quality as that compulsorily acquired. Improvement in position must be deducted under s 56(3) if the section does apply (it does not).

Claim 3 special value

1. Special value under s 57 is not available in the Applicant's circumstances. For any entitlement to special value the Applicant must establish that its leasehold interest had a financial value which arose from an advantage which, because of its use of the leasehold interest, it was uniquely positioned to enjoy.
2. While it is accepted that Mr Whittle and Mr Curtis are experienced golf professionals, their use of the leasehold interest as a golf driving range (and associated amenities) through the Applicant company is certainly not unique and does not fall within the concept of "any advantage, in addition to market value" within the terms of s 57.

Quantity surveyor fees not recoverable under s 59(1)(c)

1. In relation to the claim under s 59(1)(c) for Mr Hams' fees, these were incurred by the Applicant as part of formulating the compensation claim to put to the Respondent. These fees were not incurred for actual relocation, rather they relate to quantifying the relocation claim. They are not recoverable under s 59(1)(c).

Consideration

1. The three alternative bases for compensation claimed are under ss 59(1)(c), 56(3) and 57. As the Respondent identifies in its submissions, the threshold issue of what interest should be compensated fundamentally affects the claims under all three sections.

Disturbance (s 55(d), s 59(1)(c))

1. I will first consider the parts of the Applicant's disturbance claim as provided under ss 55(d)/59(1)(c) for fit-out costs of a new golf driving range at Campbelltown and the costs of relocation of the business to Campbelltown, agreed by the QS experts. I will deal separately with the claim for loss of profits in the start-up period for a new business at Campbelltown under s 59(1)(c).
2. Generally a claimant's interest in land acquired "crystallises" at the date of acquisition. By virtue of the compulsory acquisition of an interest in land, that interest ceases to exist on the date of acquisition, being vested in the State on the publication of an acquisition notice in the Gazette as provided by s 19 of the Just Terms Act which has that effect by virtue of s 20. That is the interest the loss of which gives rise to a claim for compensation, including disturbance. It is explicitly expressed in s 55(a) in relation to market value of land at the date of acquisition, and in s 55(b) in relation to special value at the date of acquisition. Section 55(d) refers to loss attributable to disturbance with no specific reference to the date of acquisition. While loss need not be assessed only at the date of acquisition, see Allandale at [60] (Basten JA), the interest for which loss may be payable is fixed by the date of acquisition.
3. The Applicant's interest in the land acquired was reflected in the leasehold interest held at the date of acquisition. The Applicant accepts that at the date of acquisition in March 2020 it held a tenancy terminable on two months' notice.
4. The Applicant argues that its interest should be assessed as if it had a longer 5+5 year lease at Lot 305 and that ownership of the critical infrastructure for its golf driving range business is irrelevant. There are several difficulties with this part of the Applicant's claim.

Tenure

1. The Applicant's counsel submitted that but for the acquisition the Applicant would have continued to operate the Tempe business on a longer term tenure. Assuming that can be accepted as a fact, a matter I address next, it is not apparent why in a disturbance claim that matter is relevant. At the date of acquisition the Applicant had a very limited tenancy interest. The reliance on Tolson to the effect that compensation is for a loss and that as far as possible any loss should be compensated does not overcome the need to come within the provisions of the Just Terms Act, as has been emphasised by the Court of Appeal on many recent occasions, for example Alexandria Landfill (CA) at [123]. Entitlement to compensation under s 54(1) is for the interest in land compulsorily acquired. Placing a person in the same position as they would have been in if the acquisition had not occurred (Tolson) can be accepted as a broad statement but, as the Respondent emphasised, in Nelungaloo Dixon J at 571 emphasised that compensation is the money equivalent of what interest a claimant has been deprived of.
2. This part of the Applicant's argument is essentially seeking compensation for loss of opportunity to obtain a longer term lease in asking that an assumption be made that a longer term lease would have been entered into. The claim is not couched in such terms but the Court is asked to assume that the evidence establishes that but for the acquisition such a lease would have been entered into. The "but for" test, meaning but for the acquisition what should be assumed to have occurred, has been considered on many occasions in the context of market value claims. I am not aware of any similar consideration in relation to a disturbance claim. No case adopting that approach was provided by the Applicant. On that finding alone the Applicant's claim is not able to be based on the assumption of a longer leasehold tenure than was held at the date of acquisition under the Just Terms Act. Such loss is not compensable as disturbance under the Just Terms Act.
3. Given my conclusions above, the evidence relied on by the Applicant to establish that the leasehold interest in land should be considered to be more substantial than it in fact was at the date of acquisition cannot arise for consideration. If it was able to be considered it would potentially require a finding that a very high probability or near certainty for this existed at the acquisition date. Events are referred to in the chronology set out above in [12]. The Applicant relied on the email set out above in [20] and the affidavit evidence of Mr Whittle of essentially hearsay material as set out above in [15] and [21]-[23] to submit that the likelihood of the IW Council entering into a longer 5+5 year lease was certain. The evidence does not establish that level of certainty about any future lease being entered into with the IW Council for the reasons identified by the Respondent above in [94].
4. As the Respondent submitted, the likelihood of an extension of the Tempe lease is irrelevant given the reasoning in the Court of Appeal in Allandale at [40]-[43] (Basten JA) and United Petroleum (CA) at [25] (Basten JA), [111] (AJA Sackville) (monthly tenancy between related entities for a garage), that the attitude of a lessor should not be taken into account in assessing the nature of a leasehold interest into the future.

Equipment

1. The leasehold interest was for a business which required specialised equipment necessary to operate a golf driving range. The IW Council owned the land on which the business operated and the critical infrastructure necessary to operate the Applicant's golf driving range business. The Applicant relies on one sentence in par 14 of Basten JA's judgment in UP (CA) as supporting its relocation case for substantial costs for replacing fixtures it did not own under s 59(1)(c). Basten JA there observed (emphasis added): [14] 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).
2. The Applicant otherwise submits that UP (CA) and Alexandria Landfill (CA) are irrelevant as the disturbance claim in those cases was different (as it was, being a claim under s 59(f) now (1)(f)). The Respondent submits to the contrary and relies on both cases to support its argument that no compensation is payable under s 59(1)(c) in the circumstances of this case because of the nature of the interest in land the Applicant held at the date of acquisition.
3. At the date of acquisition the critical infrastructure necessary to operate the Applicant's business was the landlord's property being the clubhouse, office shop, netting, netting structures, lighting, lighting structures, turf, tees and tee shelters, as specified in clause 18 of the lease, extracted above in [34]. The value of these fixtures to a business can be seen from the relocation costs claimed. The cost of the netting alone is $1,558,960 according to the QS evidence above in [42]. The tenant's property identified in clause 18 was essentially moveable chattels, being the office shop contents, equipment used for driving range operations and ball dispensers.
4. While several cases have awarded costs for relocation of a business following compulsory acquisition including for replacement of equipment, no case similar to the facts in this matter has been identified by the Applicant. Whether a claimant for compensation owned essential equipment has not had to be expressly considered so far as I am aware. Until this matter, that has in all likelihood been the factual basis underpinning the claim in those cases.
5. I agree with the Respondent that the facts in Hua and Konduru are substantially different on the fundamental matter of who owns business assets, making reliance on those cases problematic for the Applicant. The key difference is that the claimants in Hua and Konduru owned the equipment and fit-out on which their respective businesses relied. In Hua relocation costs to enable relocation of a bakery business at new premises were awarded under s 59(1)(c). The award included new equipment such as an expensive oven as it was not economical to move the existing oven to a new site. The bakery business owner owned all the equipment which had to be replaced, had a lengthy lease at premises he had fitted out and had operated as a family business for a number of years before the date of acquisition. In Konduru the claimant operated a medical practice under a lease for which the acquired building was fitted out by the claimant. There was no dispute that fit-out costs at other premises were payable as compensation for relocation of the medical practice pursuant to s 59(1)(c). At issue was what entity could claim those costs as between the owner of the land and the claimant operating the medical practice. The operator of the medical practice received the costs of relocation.
6. Contrary to the Applicant's submissions, I consider it is highly relevant to ask who owns what chattels and what fixtures as part of assessing the nature of the interest in land where the compensation sought is relocation. The Applicant's case ignores the fact that the critical infrastructure for the Applicant's business, being substantial fixtures on the acquired land, were owned by someone else. Reliance on the single sentence in UP (CA) as the basis to do so simply has no support in that general sentence. Paragraph 14 is one paragraph in a lengthy judgment and should not be read in isolation as the Applicant contends. UP (CA) at [14] must be read as part of the overall judgment.

Reasonableness

1. Section 59(1)(c) refers to financial costs of relocation reasonably incurred. Essentially the Applicant's case skates over the lack of ownership of essential equipment by claiming that as the critical infrastructure is needed to establish a business elsewhere it is reasonable for the Applicant to seek such fit-out costs. "Reasonably" claimed does not relate to the amount sought: see George D Angus Pty Limited v Health Administration Corporation [2013] NSWLEC 212 (George D Angus) at [103] citing Sydney Water Corporation v Besmaw [2002] NSWCA 147 at [13]. Before any question of reasonableness on the part of the Applicant arises under s 59(1)(c), the Applicant's interest must come within the subsection. As already held, the Applicant had a limited leasehold interest and it owned property which was moveable (chattels) in relation to the business it operated, not critical infrastructure which were fixtures belonging to the IW Council located on land owned by the IW Council. That was the business interest acquired, as the Respondent submitted, and that is the extent of the interest to which s 59(1)(c) can apply. Its lease at Tempe allowed the Applicant to utilise the IW Council's land and infrastructure to operate a business to make a profit. As the Respondent submitted, the Applicant cannot establish an entitlement to the cost of the Campbelltown proposal by stating that the busines at Lot 305 cannot continue.
2. My reasoning concerning how the Just Terms Act operates means that the question whether the costs incurred from reasonable actions by the Applicant to secure business premises elsewhere does not arise. The efforts made by the Applicant's directors to secure alternative premises at Kurnell, Strathfield, Botany and finally Campbelltown and the costs of establishing a golf driving range on the vacant site there, as identified in Mr Whittle's extensive affidavit summarised above in [24]-[28] and [31], have no role to play in my analysis in relation to s 59(1)(c).

No relocation costs incurred

1. Strictly speaking, given my finding above that no compensation is payable under s 59(1)(c) the issue identified by the Respondent that no relocation costs have been incurred and that the three considerations in Shun Fung cannot be satisfied does not arise. I consider the unchallenged affidavit of Mr Whittle identifies that the directors of the Applicant intend to relocate their business to Campbelltown if they receive the compensation they seek. It is acceptable for a claimant for compensation to wait for it to be obtained before incurring expenditure. Negotiations with the CC Council are summarised in Mr Whittle's affidavit summarised above in [29]-[30], [33] and in [38]. I also consider that given the paucity of golf driving ranges in metropolitan Sydney, relocation does require some leeway to be afforded to the Applicant in that finding premises similar to the Tempe site have not been possible. As identified in the extract from Hyam referred to in the Applicant's submissions in relation to s 56(3) summarised above in [75]-[83] reinstatement (here similarly relocation) of the precise circumstances of a business may simply not be possible.
2. The issue however is whether it is reasonable in the Applicant's circumstances to spend so much at the Campbelltown site to create fixed assets which will not be owned by it on land it does not own. That issue is referred to in the evidence of Mr Giliberti summarised above in [53] and his evidence suggests it is not reasonable, as the Respondent submitted.
3. The Applicant submitted that Shun Fung no longer has application or that the last consideration no longer applies. The three considerations in Shun Fung relied on by the Respondent continue to provide a useful guide to determining whether a claim for relocation is warranted.

Additional matters

1. In terms of statutory construction, it would be surprising if the quite specific words which the Applicant says are necessary in order to refuse its claim as set out in its submissions in [62] above appeared in s 59(1)(c). Section 59(1)(c) is drafted in broad terms similar to the other subsections of s 59 reflecting its application to a wide range of potential circumstances arising from compulsory acquisition.

Business valuers

1. In terms of the business valuers, Mr Firth's first report (Ex G) simply assumed that relocation costs including all necessary infrastructure replacement costs were recoverable and it therefore added little to the analysis of the claim. Mr Giliberti's evidence was that a business owner in the Applicant's position would not consider it reasonable to relocate, on the assumption that a secure leasehold interest existed, given the substantial cost of replacing critical infrastructure not owned by the business at another site where the infrastructure would also not be owned by the business. The Applicant submitted that that evidence should be disregarded but I consider it provides a useful "reality check".
2. Mr Giliberti considered the value of the Applicant's actual tenure was nil as a hypothetical purchaser would be unlikely to acquire a business with such limited tenure. Mr Giliberti valued the business at Tempe as a going concern assuming a long-term lease as $135,000. That amount is broadly similar to the amount which the Applicant's directors offered to buy the lease and business from the previous occupier in 2016.

Compensable interest

1. The onus is on a claimant to establish their case for compensation: RMS v Perry at [67]. The manner in which the Applicant has approached its claim makes it very difficult to assess its entitlement on the correct basis. The claim is formulated with reference to the Campbelltown proposal but compensation properly payable bears no relation to the costs proposed to be incurred in that context. My finding that the Applicant's interest must be considered in relation to its actual leasehold interest at the date of acquisition and consideration of what equipment it owned at the date of acquisition means that the claim for fit-out costs and business relocation costs at Campbelltown for $3,405,235 cannot succeed as that is not compensating the Applicant for its disturbance loss.
2. As the Respondent submitted, the Applicant is only entitled to costs related to the relocation or reinstatement of the interest it lost at Lot 305. Those costs would be limited to: 1. as to reinstatement of the interest, the cost of obtaining a leasehold tenure of two months; and 2. as to relocation, the cost to relocate (or possibly replace) the things identified as tenant's property under the lease in [34] above, together with other moveables such as stock and light equipment.
3. When the Applicant's counsel was asked during the hearing if any part of the claim can be separated out, the response was no, as seems inevitable if compensation to move expensive critical equipment is not to be paid. As the costs of installing critical infrastructure at Campbelltown are not claimable, whether the business can relocate at all must be in doubt. The business relocation costs of $40,000 cannot therefore arise.

Loss of profits not claimable: s 59(1)(c)

1. Given my finding that fit-out and relocation costs are not claimable as compensation, it is difficult to see how a claim for loss of profits during business relocation can arise as a practical consequence. If a business is not to be relocated, loss of profits in a start-up period will not arise. I do not therefore need to resolve the differences between the business valuers in relation to the appropriate start-up period and the appropriate discount rate to apply in assessing any loss of profits. Nor do I need to resolve the basis on which loss of profits may be claimable under s 59(1)(c) in light of recent obiter observations in the Court of Appeal in UP(CA) and Alexandria Landfill (CA).

Quantity surveyor Mr Hams' fees not recoverable under s 59(1)(c)

1. Mr Hams' QS fees are sought under subs (1)(c) as part of the costs of relocation of the business. I have not awarded compensation for any relocation costs of the business. It is difficult to see the basis on which these fees could be payable given my earlier finding to that effect. Accordingly, they are not claimable.

Section 56(3) market value

1. In the alternative, the Applicant seeks the same amount as market value under s 56(3) being the equivalent reinstatement of its interest in the acquired land. The land valuers have assessed market value under s 59(1)(a) as nil or nominal. Given the limited nature of the Applicant's interest in land as found above in [131]-[134], no basis for a claim under s 56(3) exists because the claim being made does not reflect reinstatement of the interest for which compensation is claimable. The Applicant's submissions above in [73] referred to sections of the NSW Government's response to the Russell Review at 18, 42-43. These passages simply do not assist the Applicant given the limited interest acquired. The terms of the compensation provided in s 56(3) do not provide a basis for the "but for the acquisition" approach, referred to in [132] above, to apply.
2. The Applicant relied extensively on Alan Hyam, The Law Affecting Valuation of Land in Australia (6th ed, 2020, Federation Press), particularly Ch 14 titled "Reinstatement" which is summarised above in the Applicant's submissions at [75]-[83] in the context of s 56(3). All that is stated can be accepted by way of general understanding of what reinstatement may entail but cannot assist in the particular circumstance of the Applicant. Most relevantly, none of the cases where reinstatement costs were awarded discuss the circumstance of a lessee not owning the business assets to be reinstated yet seeking to incorporate the cost of replacing these in a compensation claim. For the reasons identified by the Respondent above in [121] the case of Hubertus does not offer much assistance.
3. Consequently the affidavit evidence of Mr Whittle summarised above concerning efforts made by the Applicant's directors to develop and improve the business at Tempe (see [16]-[19]), to secure alternative premises at Kurnell, Strathfield, Botany and finally Campbelltown (see [24]-[28]), and in preparing to move to Campbelltown (see [31]), need not be considered. That evidence was to support a finding that the Applicant genuinely intends to relocate its business from Tempe to Campbelltown.
4. Had a claim under s 56(3) be maintainable, s 56(3) requires a reduction for likely improvement in an owner's financial position because of the relocation. Mr Giliberti's evidence identifies the potentially substantial improvement in the Applicant's position were it to relocate to Campbelltown. Given my finding on the nature of the interest claimed, any amount payable on this basis, if that exists, must be far less than the claim made. The substantial improvement in the Applicant's position were it to relocate to Campbelltown is clear from the negotiations with the CC Council detailed in Mr Whittle's affidavit summarised above in [29]-[30], [33] and in Mr Giliberti's evidence in [57] above. That improvement includes reinstatement of critical infrastructure which the Applicant did not own at Tempe and which it will not own at Campbelltown, and a far more secure leasehold tenure of up to 30 years.
5. A number of issues concerning the application of s 56(3) were identified by the parties' submissions. None need to be determined but I make some preliminary observations concerning the arguments. As identified above by the Applicant in [75] and the Respondent in [119], no claim under this section has apparently been considered by the Court or any other court in an Australian jurisdiction with a similar provision. Under s 56(3), for land used for a purpose for which there is no general market, and where an owner genuinely intends to continue that use elsewhere, an alternative basis for compensation for market value is specified.
6. Section 56(3) is in broadly similar terms to s 59(1)(c), albeit referring to reinstatement rather than relocation. The limited difference between the two words was discussed by me in Hua at [42]-[45] where I concluded that the physical relocation of the claimants' bakery business required its reinstatement elsewhere with the installation of essential new equipment such as a baker's oven, which could not be economically removed from the acquired property and relocated to an alternative property.
7. A potentially important difference in drafting is that s 56(3) refers to reasonable cost to the owner of reinstatement, whereas s 59(1)(c) refers to costs reasonably incurred in relation to relocation. Whether the quantum of the cost of reinstatement must be reasonable in s 56(3) would require consideration, given the difference in wording to s 59(1)(c). As already noted above in [141], "reasonable" in s 59(1)(c) does not relate to the amount claimed.
8. I do not need to express a final view about whether there is a general market for golf driving ranges. The evidence of the land valuers, summarised above in [44]-[48] suggests that, given the paucity of the number of such facilities in the Sydney metropolitan area and the very limited trading in these facilities whether for freehold or leasehold, see above in [46]-[47], I am inclined to consider there is not a general market, meaning that property of that type is readily traded. The NSW Government response to the Russell Review gave golf courses, a related land use to golf driving ranges, as an example of an activity which does not have a general market.
9. For completeness, I note that the statutory construction of s 56 as a whole was in dispute. The Applicant submits that s 56(1) and (3) are not mutually exclusive. The Respondent submits that as a matter of statutory construction subs (3) can only operate in the alternative to subs (1). If market value can be assessed under subs (1) then subs (3) does not arise according to the Respondent. As market value was able to be assessed (as nil or nominal) by the land valuer under subs (1), no claim is available under subs (3) according to the Respondent. Looking at the express terms of these subsections, I do not consider s 56(1) and (3) are drafted in such a way that subs (1) takes precedence over subs (3), as the Applicant submitted.

Special value ss 55(b), 57 - alternative claim

1. Special value is claimed by the Applicant as an alternative basis for compensation if the claims under ss 55(d)/59(1)(c) and 55(a)/56(3) are not accepted. Special value is identified in s 57 as the financial value of any advantage to the person entitled to compensation which is incidental to the person's use of the land in addition to market value.
2. Dr Brunton identifies in his article that until relatively recently claims for disturbance as special value had not been considered. That a claim for special value might arise for loss of business profits was identified by Basten JA in Allandale at [36] and Melino v Roads and Maritime Services at [19]. In Boland v Yates Callinan J identified at [292] that in practice there will be few cases in which a property does have special value to a particular owner. All of the cases considered by Dr Brunton deal with fixtures on land which might have special value to the owner of the fixtures not encapsulated in market value. Here special value would have to be found to exist in relation to the use of fixtures not owned by the Applicant, being the critical infrastructure owned by the IW Council at the date of acquisition.
3. I also note that Tobias AJA in George D Angus, quoted in UP (CA) by Sackville AJA at [101], was of the view that El Boustani prevented disturbance losses as loss of profits being recoverable as special value, Tobias AJA considering such losses were recoverable under former s 59(f).
4. Once again given the limited leasehold interest of the Applicant acquired, it is difficult to conceive in this case how such an interest can give rise to a special value claim considering the matters identified in Monti at [142]. No special interest has been established.

Section 59(1)(f) - alternative claim

1. In written submissions the Applicant contended that contrary to earlier submissions, compensation for loss of profits was available under s 59(1)(f). If the Court rejected the other claims and considered that UP (CA) was distinguishable, such a claim is maintainable according to the Applicant. This was pressed very faintly in oral submissions. Such a claim cannot survive given my findings on the nature of the interest acquired.

In conclusion

1. As the threshold issue has been determined against the Applicant, no basis for the claim for compensation it articulates under the Just Terms Act exists and this appeal should be dismissed. Neither party has submitted that the V-G's valuation should be maintained given the approach is based on the loss of profits following the extinguishment of a business. As identified in the table above in [8], the Respondent contends that compensation of $118,380.98 is payable. I agree and will so order.
2. No submissions have been heard about costs. Costs will be reserved.

Order

1. The Court orders: 1. Compensation for disturbance under s 55(d) of the Land Acquisition (Just Terms Compensation) Act 1991 is determined in the sum of $118,380.98. 2. Costs are reserved.

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: 02 August 2021