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Ostroco v Department of Transport and Main Roads[2013] QLAC 4

Ostroco v Department of Transport and Main Roads[2013] QLAC 4

LAND APPEAL COURT OF QUEENSLAND

CITATION:

Ostroco v Department of Transport and Main Roads [2013] QLAC 4

PARTIES:

OSTROCO PTY LTD
(appellant)

v

CHIEF EXECUTIVE,

DEPARTMENT OF TRANSPORT AND MAIN ROADS
(respondent)

FILE NO/S:

Appeal No. LAC001–13

Land Court No. AQL020–11

DIVISION:

Land Appeal Court of Queensland

PROCEEDING:

Appeal

ORIGINATING COURT:

Land Court at Brisbane

DELIVERED ON:

17 October 2013

DELIVERED AT:

Brisbane 

HEARING DATE:

27 March 2013

THE COURT:

Peter Lyons J

PA Smith, Member

WL Cochrane, Member

ORDER:

  1. The appeal and cross-appeal are allowed. 
  2. Compensation is assessed at $553,043 for relocation costs; and $11,000 for valuation and legal fees. 
  3. Interest be awarded on valuation and legal fees, and on so much of the sum of $32,000 for Mr Bettenay’s fees as has been paid, from the dates of payment to the day immediately preceding the date upon which compensation is paid, at the interest rates identified in the decision of the Land Court. 
  4. (Costs to be determined)

CATCHWORDS:

REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – ASSESSMENT – DISTURBANCE – GENERALLY – where the appellant was lessee of premises which were resumed – where the sole director and shareholder of the appellant acquired replacement premises which were leased by the appellant – where the appellant incurred costs related to the make over of the replacement premises – where the appellant claimed those costs as disturbance costs attributable to the resumption – where the Land Court accepted that many of the items included in the costs related to the make over of the replacement premises represented works ordinarily paid for by the landlord – where the rent paid by the appellant for the replacement premises was fair market rental for the premises in their condition at the time of the lease – whether the Land Court erred in finding that costs identified as landlord’s costs would not be reasonably incurred by the appellant

REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – ASSESSMENT – DISTURBANCE – GENERALLY – where the appellant was lessee of premises which were resumed – where the appellant contended that the appellant’s business suffered negative impacts from pre–resumption announcements – where the appellant contended that the appellant’s business suffered negative impacts from actions associated with the resumption process – where the appellant claimed for economic loss – where the appellant’s claim related to loss prior to and after the resumption – where the Land Court concluded that it did not have jurisdiction to award compensation for losses which occurred prior to the resumption – where the Land Court concluded that no loss was established by the evidence – whether the Land Court erred in holding that it did not have jurisdiction to award compensation for losses which occurred prior to the resumption – whether the loss was a direct and natural consequence of the taking of the land – whether the Land Court erred in holding that no loss was established by the evidence

REAL PROPERTY – COMPULSORY ACQUISITION OF LAND – COMPENSATION – ASSESSMENT – DISTURBANCE – GENERALLY – where the appellant was lessee of premises which were resumed – where the appellant leased replacement premises – where the appellant continued to occupy the resumed premises, and to pay rent – where the appellant claimed that, pending the relocation of its business to the replacement premises, it attempted unsuccessfully to sub–let them, but was unable to do so because of uncertainty about the date when it would be required to relocate  – where the Land Court determined it had no jurisdiction to award compensation for this loss – whether the Land Court erred in finding it had no jurisdiction to award compensation for this loss – whether the loss was a direct and natural consequence of the taking of the land

Acquisition of Land Act 1967 (Qld), s 12, s 20

Almona Pty Ltd v Roads and Traffic Authority (NSW) (2008) 160 LGERA 375, cited

Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 255, cited

Brock v Roads and Maritime Services (No 3) (2012) 191 LGERA 410, cited

Browne v Dunn (1893) 6 R. 67, cited

Caruana v Port Macquarie–Hastings Council [2007] NSWLEC 109, cited

Director of Building & Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111, considered

El Boustani v Minister Administering the Environment Planning and Assessment Act 1979 [2012] NSWLEC 266, cited

Equuscorp Pty Ltd v Glengallon Investments Pty Ltd (2004) 218 CLR 417, cited

Harvey v Crawley Development Corporation [1957] 1 QB 485, cited

Hua v Hurstville City Council [2010] NSWLEC 61, cited

Kabale Holdings Pty Ltd v Department of Transport (1997) 18 QLCR 166, cited

McInnes v Commissioner of Highways (1992) 78 LGERA 410, cited

Yarn Traders Pty Ltd v Melbourne and Metropolitan Board of Works [1970] VR 427, cited

COUNSEL:

PJ Flanagan SC, with PW Hackett, for the appellant

DR Gore QC, with J Horton, for the respondent

SOLICITORS:

H Drakos and Company Solicitors for the appellant

Clayton Utz for the respondent

  1. [1]
    THE COURT: On 31 July 2009, land on which was constructed the Coorparoo Shopping Mall was resumed for the purpose of the Eastern Busway Project (Busway Project). The appellant was the lessee of Shop 17 in the shopping mall, from which it conducted under a franchise an LJ Hooker Real Estate Agency. It claimed compensation in consequence of the resumption. It has appealed against the determination of compensation, acknowledging an error in its favour, but contending that it was inadequately compensated for relocation costs, principally for works referred to by the Land Court as “landlord’s costs”; and also for design costs. It also contended that it should have been awarded compensation for losses associated with the renting of premises to which it proposes to move; and for economic loss to business of the real estate agency. The learned Member considered that he did not have jurisdiction to grant compensation in respect of some parts of the claim.

Background

  1. [2]
    The appellant (Ostroco) is the franchisee for the LJ Hooker Coorparoo Real Estate agency franchise. Mr Peter Weiss is its sole director and shareholder. Mr Weiss has extensive experience as a real estate agent. In 1996, he arranged for the incorporation of Ostroco, which then acquired the Coorparoo franchise.
  1. [3]
    In 1998, Mr Weiss sought larger premises for the agency. His locational criteria were satisfied by a tenancy which he located in 2002, being Shop 17 in the Coorparoo Shopping Mall, located at 264 Old Cleveland Road, Coorparoo. The Coorparoo Shopping Mall is located on the northern side of old Cleveland Road. Ostroco entered into a lease of Shop 17 for a term of three years commencing 1 January 2003, with two options to renew the lease, each for a term of three years. The Coorparoo Shopping Mall adjoined a building which had previously been the Myer Centre Coorparoo, and which, at the commencement of the lease, was the premises of a Mega Mart, part of the Coles Myer group.  In about 2005 the Harvey Norman Group took control of the Mega Mart.
  1. [4]
    In 2005 Ostroco exercised the first option to renew the lease.
  1. [5]
    In about April 2005 there was an announcement of the intended construction of the Eastern Busway. Options for its location were developed over time, two of which affected premises on the northern side of Old Cleveland Road at Coorparoo. In December 2006 the then Minister for Transport announced that the Eastern Busway would be located on the northern side of Old Cleveland Road.
  1. [6]
    Mr Weiss and his wife are trustees for the Weiss Family Superannuation Fund (Superannuation Fund). Mr Weiss wished to secure appropriate premises for the future conduct of the real estate agency. He identified premises at 326 Old Cleveland Road as suiting his locational criteria for premises for the agency. On 2 February 2007, he and his wife as trustees of the Superannuation Fund entered into a contract to acquire this property for the sum of $825,000. The contract settled on 2 April 2007. At that time, the premises were occupied by a tenant described as a wholesale travel agent, on a monthly tenancy. The tenant terminated the tenancy, and vacated the premises in July 2007.
  1. [7]
    Mr and Mrs Weiss entered into a commercial tenancy agreement with Ostroco of the premises at 326 Old Cleveland Road, the effect of which appears to have been accepted as being to create a lease for a term of three years commencing on 1 July 2007, with three options to renew the lease, each also for a term of three years. The initial rent was $6,250 per month. The agreement made no provision for any improvements to be carried out by the lessors, but was regarded as an agreement to lease the premises "as is".
  1. [8]
    Mr Weiss (or, perhaps more accurately, Ostroco) engaged the services of Mr Russell Bettenay, then a design fit out consultant, in relation to fitting out 326 Old Cleveland Road as an LJ Hooker Real Estate agency. Mr Bettenay carried out design and related work for the make over of 326 Old Cleveland Road in 2007, and further such work in 2009.
  1. [9]
    Mr Neil Fraser, a building estimator, prepared an estimate of the cost of the make over work in 2009. Initially he was employed by Alliance Interiors. However, in the course of that year he changed employers, his new employer being Better Build Constructions Pty Ltd. He then provided a revised costing for the work. The total amount (excluding GST) was $548,463. Of that amount, Ostroco accepts that $38,590 is not relevant to its claim. Mr Fraser's cost estimate identified a number of matters not included in the estimate; for example, out of hours work, signage, repairs to the car park and driveway, and repairs to the existing roof and structure (uncosted items). Mr Weiss gave evidence that Ostroco did not have the financial resources to carry out the work at 326 Old Cleveland Road, unless it received compensation from the respondent.
  1. [10]
    Mr Weiss gave evidence that, late in 2007, the Department of Transport and Main Roads (DTMR) entered into negotiations with some property owners to acquire their land. This land was required for the Busway Project. He sought unsuccessfully to have the lessor of 264 Old Cleveland Road engage in such negotiations. He also communicated with a representative of the Department, relating to the likely timing of construction. In November 2007 he was informed that possession of the tenancy at 264 Old Cleveland Road would be required by around March or April 2009.
  1. [11]
    On 3 March 2008, Ostroco exercised its option to renew the lease of Shop 17. A Notice of Intention to Resume, dated 23 March 2009, was sent to Ostroco, at about that time. On 31 July 2009, a notice was published in the Queensland Government Gazette recording the taking of land which included Shop 17 and the Coorparoo Shopping Mall. However, Ostroco continued to occupy these premises, and to pay rent. It remained in possession of Shop 17 at the commencement of the hearing in the Land Court.

Claim for compensation

  1. [12]
    The claim comprised four elements. The first was identified as relocation cost, in an amount of $658,728. These costs related to the make over of 326 Old Cleveland Road for an LJ Hooker Real Estate agency.
  1. [13]
    The second element of the claim was a claim for lost profits. As presented to the Land Court, some of this element of the claim ($102,486) related to the period prior to 31 July 2009; and some ($74,303) related to the period from then to 30 June 2010.
  1. [14]
    Ostroco paid rent to Mr and Mrs Weiss in respect of 326 Old Cleveland Road. It claimed that, pending the relocation of its business to these premises, it attempted unsuccessfully to sub-let them; but was unable to do so because of uncertainty about the date when it would be required to relocate the real estate agency. It claimed $309,037.41, described as being for loss of rental income. The loss was for the period from 1 July 2007 to 30 June 2012[1].
  1. [15]
    Finally, there was a claim for professional costs associated with the making of the claim, for a sum of $30,000.
  1. [16]
    No claim was made for Ostroco's loss of its interest in the premises which it had leased at 264 Old Cleveland Road.

Land Court determination

  1. [17]
    The learned Member allowed compensation in the sum of $319,510 in respect of the claim for relocation costs. Of that sum, he allowed $152,624 for what were described as "tenant works at the resumed premises" (being Shop 17); and $166,886 for what were described as "tenant relocation works at the new premises" (326 Old Cleveland Road). The latter figure reflects the learned Member's acceptance of the evidence of Mr Andrew Brady, a quantity surveyor called by the respondent, to the effect that some of the works which were the subject of Ostroco's relocation claim were, for leased premises, works ordinarily paid for by the lessor, rather than the lessee or tenant. The learned Member's reasoning is discussed more fully, later in these reasons.
  1. [18]
    So far as the economic loss related to the period prior to 31 July 2009, the learned Member concluded that he did not have jurisdiction to order compensation, on the basis that economic loss suffered prior to the resumption could not be "a direct and natural consequence of the taking of the land", referred to in s 20 of the Acquisition of Land Act 1967 (Qld) (ALA).
  1. [19]
    In respect of its claim for economic loss, Ostroco called Mr Lindsay (Gil) Wright, a real estate agent specialising in business brokerage and business valuation. He assessed Ostroco's loss by reference to 2007, as a base year. The respondent called Mr Norbert Calabro, an accountant, to give evidence on this topic. His evidence adopted 2006 as a base year. The learned Member did not accept either year as providing an appropriate base for determining whether Ostroco had suffered economic loss, each being after the announcement of the Busway Project; and accordingly found there was no basis on which economic loss could be determined. He accordingly awarded no compensation for economic loss.
  1. [20]
    In respect of the claim for loss of rental income, the learned Member held, for reasons similar to his conclusion about the claim for economic loss, that compensation could only be awarded in respect of the period after 31 July 2009. He awarded no compensation under this head, on the basis that 326 Old Cleveland Road was purchased before the resumption. He accepted that the rental being paid for 326 Old Cleveland Road represented fair market rent; and that Ostroco reasonably attempted to sub-let these premises, while it continued to occupy Shop 17, and so to mitigate its loss in this regard. Had he found jurisdiction to award compensation, he concluded that it should be assessed at $302,787.41.
  1. [21]
    The learned Member recorded the agreement of the parties that Ostroco should be allowed the sum of $11,000 for legal and valuation fees. Under the heading of professional costs, he also dealt with the fees claimed in respect of the work of Mr Bettenay. He considered that the amount invoiced by Mr Bettenay, being $24,960, was reasonably incurred, and should be allowed. He did not, however, refer, when determining this aspect of the claim, to the fact that an amount of $32,000 was claimed in respect of Mr Bettenay's services[2].
  1. [22]
    Finally, he allowed interest on all elements of the award, including on the amount awarded for relocation costs, and the amount ordered for professional costs, from 31 July 2009.

Statutory basis for the claim

  1. [23]
    By s 12 of the ALA, Ostroco's interest in Lot 17 was converted into a right to claim compensation. The assessment of compensation is governed by s 20 of the ALA, which is as follows:

"20 Assessment of compensation

  1. (1)
    In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also—
  1. (a)
    to the damage, if any, caused by any of the following—
  1. (i)
    the severing of the land taken from other land of the claimant;
  1. (ii)
    the exercise of any statutory powers by the constructing authority otherwise injuriously affecting the claimant’s other land mentioned in subparagraph (i); and
  1. (b)
    to the claimant’s costs attributable to disturbance.

Note—

See, however—

  1. (a)
    the Geothermal Energy Act 2010, section 350D in relation to geothermal interests under that Act; and
  1. (b)
    the Greenhouse Gas Storage Act 2009, section 369D in relation to GHG interests under that Act; and
  1. (c)
    the Mineral Resources Act 1989, section 10AAD in relation to mining tenement interests under that Act; and
  1. (d)
    the Petroleum Act 1923, section 124C in relation to 1923 Act petroleum interests under that Act; and
  1. (e)
    the Petroleum and Gas (Production and Safety) Act 2004, section 30AD in relation to petroleum interests under that Act.
  1. (2)
    Compensation shall be assessed according to the value of the estate or interest of the claimant in the land taken on the date when it was taken.
  1. (2A)
    However, in assessing the compensation, a contract, licence, agreement or other arrangement (a relevant instrument) entered into in relation to the land after the notice of intention to resume was served on the claimant must not be taken into consideration if the relevant instrument was entered into for the sole or dominant purpose of enabling the claimant or another person to obtain compensation for an interest in the land created under the instrument.
  1. (3)
    In assessing the compensation to be paid, there shall be taken into consideration, by way of set-off or abatement, any enhancement of the value of the interest of the claimant in any land adjoining the land taken or severed therefrom by the carrying out of the works or purpose for which the land is taken.
  1. (4)
    But in no case shall subsection (3) operate so as to require any payment to be made by the claimant in consideration of such enhancement of value.
  1. (5)
    In this section—

costs attributable to disturbance, in relation to the taking of land, means all or any of the following—

  1. (a)
    legal costs and valuation or other professional fees reasonably incurred by the claimant in relation to the preparation and filing of the claimant’s claim for compensation;
  1. (b)
    the following costs relating to the purchase of land by a claimant to replace the land taken—
  1. (i)
    stamp duty reasonably incurred or that might reasonably be incurred by the claimant, but not more than the amount of stamp duty that would be incurred for the purchase of land of equivalent value to the land taken;
  1. (ii)
    financial costs reasonably incurred or that might reasonably be incurred by the claimant in relation to the discharge of a mortgage and the execution of a new mortgage, but not more than the amount that would be incurred if the new mortgage secured the repayment of the balance owing in relation to the discharged mortgage;
  1. (iii)
    legal costs reasonably incurred by the claimant;
  1. (iv)
    other financial costs, other than any taxation liability, reasonably incurred by the claimant;
  1. (c)
    removal and storage costs reasonably incurred by the claimant in relocating from the land taken;
  1. (d)
    costs reasonably incurred by the claimant to connect to any services or utilities on relocating from the land taken;
  1. (e)
    other financial costs that are reasonably incurred or that might reasonably be incurred by the claimant, relating to the use of the land taken, as a direct and natural consequence of the taking of the land;
  1. (f)
    an amount reasonably attributed to the loss of profits resulting from interruption to the claimant’s business that is a direct and natural consequence of the taking of the land;
  1. (g)
    other economic losses and costs reasonably incurred by the claimant that are a direct and natural consequence of the taking of the land.

Example of costs for paragraph (g)—

cost of school uniforms for children enrolled in a new school because of relocation from the land taken."

  1. [24]
    All elements of Ostroco's claim (save for interest) were said to form part of its "costs attributable to disturbance". The provisions of s 20(5) of particular relevance to this appeal are paragraphs (c), (d), (f), and (g).

Relocation costs

  1. [25]
    The learned Member identified paragraphs (c), (d) and (g) of s 20(5) of the ALA as providing a potential basis for this element of Ostroco's claim. Mention has been made of his acceptance of Mr Brady's evidence that many of the items included in Mr Fraser's assessment represented works ordinarily paid for by the landlord. He noted that Mr Weiss was effectively the controlling mind of Ostroco, as well as the person likely to make decisions on behalf of the trustees of the Superannuation Fund, and accordingly was on both sides of the transaction. He concluded that the agreement for lease "loaded the building-work costs onto the tenant". He noted that s 20(5) only extended to "costs reasonably incurred"; and accepted Mr Brady's evidence that compensation should be limited to some only of the works the subject of the evidence of Mr Fraser. On that basis, he assessed compensation in the amounts previously mentioned.
  1. [26]
    It should be observed that the learned Member’s assessment included an amount of $152,624 for work done at 264 Old Cleveland Road. There is no explanation in his reasons for including this amount. It was the subject of the cross-appeal, and was acknowledged by Ostroco in its Notice of Appeal, wrongly to have been included in the assessment.
  1. [27]
    The appellant submitted that the division of the relocation costs into those for what was referred to as landlord's works, and those for what was referred to as tenant's works was entirely hypothetical. The submissions referred to the evidence from Mr Cameron of Crisp Valuation Services, that the market rental was a fair market rental for 326 Old Cleveland Road "on an as is, how is, where is basis". It was submitted that, since Mr Brady's evidence was not put to Mr Cameron, there had been a breach of the rule in Browne v Dunn[3], the consequence of which was not identified in the appellant's written submissions. It was however, submitted there was no factual or legal basis to conclude that items of expenditure for what were identified as landlord's works would in fact be incurred by the lessors. It was submitted that Mr Brady did not, in his evidence, deal with a number of items which were in truth costs of relocation. To the extent that there were other differences between the costs assessed by Mr Brady, and those assessed by Mr Fraser, it was submitted Mr Fraser's evidence should have been preferred, he not having been cross-examined about Mr Brady's views. It was also submitted that an amount should have been allowed for the uncosted items. It was submitted they should be allowed for by adopting a contingency factor of 15 per cent resulting in an award of an additional $78,265. It was submitted that in respect of these items, the learned Member erred in taking the view that Mr Brady allowed nothing for them, when in fact his evidence was that some of the items formed part of the amounts he had assessed as being either landlord costs or tenant costs.
  1. [28]
    For Ostroco, it was submitted that the starting point for determining whether relocation costs would be reasonably incurred by it was the lease which it entered into with the trustees of the Superannuation Fund. That lease was entered into at a fair market rental, for the premises "as is". In those circumstances, it was an error to determine whether costs would reasonably be incurred by reference to what works a landlord might ordinarily pay for. The fact that the lease was not an arm's length transaction was irrelevant.
  1. [29]
    It was also orally submitted that the evidence of costs provided by Mr Fraser should be accepted, he having done similar work in 2003; and having obtained trade quotations for the work to be done. Such evidence should be preferred to that of a quantity surveyor like Mr Brady.
  1. [30]
    The appellant's submissions dealt, it is considered correctly, with Mr Bettenay's fees as part of the relocation costs, rather than as professional costs in relation to the making of the claim. It was orally submitted that Mr Bettenay's evidence established the redesign costs to be $32,000, being the amount invoiced, and an estimate of $7,200 for further work, including while the make over was carried out[4]; and no reason was identified for accepting his evidence in part, but not in whole.
  1. [31]
    The oral submissions on behalf of Ostroco identified the uncosted items by reference to Mr Fraser's quotation of 5 November 2009[5]. They referred to a letter from Ostroco's solicitors of 6 February 2012 which stated that Mr Wright had estimated $78,000 for the uncosted items[6]. The amount of $78,000 was said in the submissions to be reflected in a total figure for relocation costs of $658,728 which appeared in Mr Wright's report[7]; but was not particularised nor further explained in his evidence. The submissions referred to Mr Brady's comments on the estimate[8]. Mr Brady stated that some of the works might not need to be carried out; but in some cases he had allowed some of the costs as tenant costs. Thus he did not allow out of hours work as part of the cost of moving from Shop 17 to 326 Old Cleveland Road, on the basis that the fit out could be carried out in normal working hours. He assumed that some items claimed were for things that could be transferred from Shop 17. He excluded the cost of excavation of rock; and he identified a number of other costs as landlord's costs[9].
  1. [32]
    For the respondent, it was submitted that Mr Brady's evidence was correctly accepted, on the basis that costs incurred as tenant's costs were the only costs reasonably to be incurred in respect of the relocation of the real estate agency. It was submitted that the learned Member's findings were based on his assessment of Mr Brady, and accordingly would only be overturned on appeal in exceptional circumstances. This Court could only overturn the learned Member's assessment if satisfied he acted on some wrong principle of law, or that his assessment was entirely erroneous. It was submitted that there was no breach of the rule in Browne v Dunn, Mr Brady's report having been provided to Ostroco. It was submitted that cogent reasons would be required to intervene, because it was open to the learned Member to conclude that Ostroco was not entitled to recover any relocation costs as such costs would in any event have been incurred when the lease expired. It was also submitted that Mr Fraser's quotations should not have been accepted, because in 2012, on Mr Brady's evidence, lower quotations could have been obtained than those obtained in 2009.
  1. [33]
    It was submitted for the respondent that there was no evidence which would allow a finding to be made in respect of the uncosted items. With respect to Mr Bettenay's costs, it was submitted that Ostroco did not make sufficiently clear its true claim in the proceedings in the Land Court; and in any event, some of those costs were attributable to landlord works. As a result the amount in fact awarded was generous.
  1. [34]
    It was submitted orally for the respondent that in allowing for relocation costs, a "betterment factor” cannot be included, unless it was in effect unavoidable. Mr Brady's evidence was said to be based on the fittings which were in Shop 17, and the cost of bringing 326 Old Cleveland Road to a similar condition, with the exclusion of other costs as landlord costs.
  1. [35]
    It was submitted that the learned Member was correct to take the view, in effect, that the lease was not negotiated at arm's length; and accordingly the situation was different from the ordinary case where a tenant relocates; so that it was correct to limit relocation costs to those identified by Mr Brady, as having been reasonably incurred. It was submitted that the fact the rent was the market rent for the premises "as is", was irrelevant. It was submitted that the Member was correct to find that there had been "a loading of costs on to the tenant", and an absence of fair negotiations in relation to the overall outcome. It was submitted that grounds for intervention on an appeal against an assessment of compensation had not been established.
  1. [36]
    It was also submitted for the respondent that the evidence did not satisfactorily establish an allowance for the uncosted items; and any award would involve a "large amount of guesswork". Mr Brady had excluded the cost of some other items, in a number of instances because they were things that could be moved from the old premises[10]. It was submitted that he was correct to do so.
  1. [37]
    Although the respondent's written submissions asserted that it was open to the learned Member to conclude that Ostroco was not entitled to recover any relocation costs, because they would have been incurred on the expiry of the lease, that was not pursued in oral submissions. Indeed, Ostroco's Senior Counsel said orally that had the matter been raised in the Land Court, evidence could have been advanced to demonstrate that Ostroco would have remained at Shop 17, having entered into negotiations with the owners either to purchase the property, or to take out a longer lease[11]. It might be observed that, if the submissions on this point were good, it would have provided a ground for a cross-appeal, as it would have meant that no relocation costs could have been recovered by Ostroco. However, the cross-appeal was brought on quite different grounds.
  1. [38]
    The case has been conducted on the basis that s 20 of the ALA permits recovery of relocation costs, even if they have not been incurred by the time of the hearing in the Land Court. Given the way the case was conducted, it is unnecessary to consider the correctness of this approach. It is not obviously wrong, in the context of provisions providing for compensation relating to the compulsory taking of land.
  1. [39]
    The major issue raised by this part of the case is whether the learned Member erred in finding that costs identified as landlord’s costs would not be reasonably incurred by Ostroco, on the basis of his acceptance of the evidence of Mr Brady, and his observations about the circumstances which resulted in Ostroco's lease of 326 Old Cleveland Road. With some exceptions which are discussed later in these reasons, it was not suggested that works in respect of which these costs would be incurred are for things which it would be unreasonable for Ostroco to have provided at 326 Old Cleveland Road. Rather, the effect of the finding, and the respondent's submission on appeal, is that Ostroco would not reasonably incur the costs, because it should have entered into a lease under which the benefit of these works was provided by the lessor.
  1. [40]
    The appellant's submissions on this issue relied on the decision in Equuscorp Pty Ltd v Glengallon Investments Pty Ltd[12] for the proposition that Ostroco, and the lessors, were bound by the terms of the agreement into which they had entered. The consequence was that the lessors' obligations were as defined in that agreement, and did not include the provision of the items described by Mr Brady as landlord's works. The question whether the expenses for these works would reasonably be incurred by Ostroco was to be determined by reference to the effect of the obligations undertaken by the lessors, and not by evidence from Mr Brady about leases of other premises, made between other parties.
  1. [41]
    The respondent did not seek to suggest that it had proven that Ostroco could have entered into a lease for 326 Old Cleveland Road, under which the lessors would be prepared to pay for what was described as landlord’s works. That indicates that the learned Member's findings should be approached with some caution.
  1. [42]
    On Mr Brady's evidence, the costs of the works he identified as landlord's works was $175,741[13]. When Mr Weiss was cross-examined about some of these works, he said that the costs would be reflected in an increase in rent[14]. Apart from the fact that Mr Weiss has extensive experience as a real estate agent, it is inherently likely that this evidence is correct.
  1. [43]
    Mr Weiss's evidence was that in the 2007 financial year, the rent paid for Shop 17 was $43,567; and in the following year the rent paid for it and 326 Old Cleveland Road was $116,832. Of the latter amount, some $75,000 was attributable to 326 Old Cleveland Road. The evidence did not explore the question whether Ostroco, acting reasonably, should nevertheless have agreed to pay an even higher rent, on the basis that the lessors would pay for the landlord’s works. Moreover, the respondent's approach would suggest that the negotiations about payment for landlord’s works should have occurred prior to entry into the lease; so that the higher rent became payable from that time. Yet Ostroco had not, at the time of the Land Court hearing in February 2012, commenced to operate a real estate agency from 326 Old Cleveland Road.
  1. [44]
    Prima facie, in a case where a lessor is not obliged by its agreement with a lessee to provide works, and the works are reasonably required for the operation of the lessee's business, then the expense of providing those works is reasonably incurred. The fact that the lessee may (perhaps) have been able to make a different arrangement with a lessor, under which, in return for a higher rent, the lessor would meet the cost of the works, does not mean that the lessee was not acting reasonably, when it entered into the lease.
  1. [45]
    Had the evidence demonstrated that a tenant in Ostroco's position could have obtained a lease of premises suitable for its business, at the same rent, and under which the landlord was prepared to pay for the works described as landlord’s works, there would have been a basis for a finding that Ostroco would not reasonably incur the cost of those works. The evidence did not do this.
  1. [46]
    Had the evidence demonstrated that Ostroco could have entered into an arrangement with its lessors (or with someone in the position of its lessors, who was acting reasonably) under which the lessors would pay for the landlord works, and that from a commercial point of view, as between it and the lessors, such an arrangement, having regard to the rent, and the lease as a whole, was at least as advantageous to Ostroco as the lease which it in fact entered into, such evidence would have provided a basis for finding that Ostroco would not reasonably incur the cost of those works. Again, there was no such evidence.
  1. [47]
    It was not suggested to Mr Weiss that the terms of the lease which Ostroco entered into with the trustees of the Superannuation Fund were struck with a view to maximising compensation. There was no direct evidence that he did so. A conclusion that the terms of the lease were reached for that purpose could only, in those circumstances, be speculative. It could not, therefore, be concluded on this basis that the costs of the landlord works would not be reasonably incurred by Ostroco[15]. It follows that if the learned Member's statement that the lease "loaded the building-work costs on to the tenant", is intended to amount to such a finding, it did not have a sufficient basis in the evidence.
  1. [48]
    The learned Member referred to Mr Brady's "industry-relevant knowledge and expertise" about what costs were reasonably to be borne by a landlord, and what costs borne by a tenant. If it is accepted that the rent for 326 Old Cleveland Road is fair market rental for the premises in their condition at the time of the lease, and that a lessor could not be expected to pay the cost of those works without charging additional rent, then Mr Brady's evidence could not rationally be relied upon to determine whether or not the costs of those works were reasonably incurred by Ostroco under its lease. The evidence did not provide a basis for displacing the prima facie position, that the costs would be reasonably incurred by Ostroco, given the terms of its lease. For this reason, in addition to the amount for expenses for Shop 17 about which the parties were in agreement, the learned Member's determination of compensation must be set aside.
  1. [49]
    The items which Mr Brady said should not be included in the relocation costs for other reasons were the provision of a new shop front; the cost of a second illuminated external sign; the cost of constructing three toilets; the cost of a colour consultant; and the cost of various joinery items, office furniture and screens, and a compactus (totalling $72,340).
  1. [50]
    Mr Weiss gave evidence that when he moved to Shop 17, he had works carried out which included replacing the glass shop front to comply with LJ Hooker’s design requirements. Mr Bettenay, in his affidavit, deposed to the fact that a new shop front was required for Shop 17 to comply with the design requirements of LJ Hooker. He also said that to adapt 326 Old Cleveland Road for an LJ Hooker office, major items required change, including the façade. Exhibited to his affidavit were specifications produced by him in 2009, which included work relating to a new glazed shop front. Neither he nor Mr Weiss was cross-examined to suggest that this work was not required for the transfer of the real estate agency to 326 Old Cleveland Road. Mr Brady's oral evidence suggested that he excluded this cost on the basis that premises which are rented are usually enclosed by four walls[16], which would suggest he did not take into account the specific requirements of an LJ Hooker real estate agency. His written report indicated that he understood the purpose of the work was to achieve greater floor area[17]. That is not something of which he could have had personal knowledge. In any event it does not deal with the question whether this work is to be carried out to meet the requirements of an LJ Hooker franchise agreement. Given the state of the evidence, it would seem appropriate that the cost be included in the amount for relocation works.
  1. [51]
    There were two illuminated signs at Shop 17. Mr Brady only allowed for the cost of one, being unaware of the other. If one were to assume that similar provision needs to be made at 326 Old Cleveland Road as was found at Shop 17, the extra cost of the sign should have been allowed.
  1. [52]
    Mr Fraser's quote included an amount of $9,528 for plumbing works at 326 Old Cleveland Road[18]. The work included the supply and installation of three new toilets. Mr Brady treated this as forming part of the landlord works[19]. However, he provided his own measurement and pricing for work to be carried out at 326 Old Cleveland Road. He was cross-examined on the basis that he had not allowed for the cost of constructing three toilets[20]. This may perhaps have been a reference to work carried out at Shop 17. It would appear that in his own pricing and costing of work at 326 Old Cleveland Road he has allowed for the cost of three toilets[21]. The total cost he has allowed for hydraulic services seems to be a little greater than Mr Fraser's costs of plumbing works. It would therefore seem to be common to the evidence of both parties that the cost of three toilets should be included in the assessment.
  1. [53]
    Mr Fraser had included an amount of $52,922 for office furniture and screens[22]. Mr Brady excluded this on the basis that he assumed the relocation of existing office furniture[23]. In cross-examination, it was suggested to Mr Weiss that the office furniture and screens could be relocated from Shop 17. He stated that the screens are installed with electrical and power cabling through them, and that the cost of dismantling and re-establishing them would be greater than the cost of new screens. He also said that some of the furniture in Shop 17 would not work at 326 Old Cleveland Road because of the shape of the premises[24]. He reached that view on the advice of Mr Bettenay. That appears consistent with Mr Bettenay's specifications[25]. Mr Bettenay was not cross-examined about this. There is no reason to think that Mr Weiss and Mr Bettenay were not better placed than Mr Brady to make a judgment about the need for new furniture and screens.
  1. [54]
    Mr Brady excluded some joinery costs on the basis that equivalent joinery could be relocated from Shop 17[26]. He excluded a colour consultant, on the basis that, with the LJ Hooker franchise colour scheme this would be necessary; or alternatively Ostroco could simply match the existing colour scheme[27]. In cross-examination Mr Weiss said that while it was planned to relocate one of the front counters from Shop 17, the shape of the premises at 326 Old Cleveland Road did not permit the relocation of the other[28]. Although Mr Bettenay's specifications did not in terms refer to joinery, exhibited to his affidavit is a schedule of drawings which includes a "Joinery Set"[29], as well as joinery drawings[30]. One appears to have Mr Bettenay's signature[31]. It is difficult to see these drawings as not reflecting Mr Bettenay's recommendation, consistent with Mr Weiss’s evidence. Again, there was no reason to prefer Mr Brady’s evidence to that of Mr Weiss.
  1. [55]
    Finally, Mr Brady was not prepared to include the cost of a compactus in the relocation costs on the basis that there was none in Shop 17[32].
  1. [56]
    The reasons of the learned Member did not deal with the question of whether or not these items should have been allowed. It seems unlikely that a determination of this question would be influenced to any significant extent by the demeanour of the witnesses. Rather, it seems appropriate to determine that by reference to the state of the evidence, and in particular the reasons for allowing or not allowing these costs; as well as which witness was better able to assess what would be needed at 326 Old Cleveland Road. It was not submitted that if this Court formed the view that the learned Member erred in his treatment of them, the matter should be remitted to him for further consideration.
  1. [57]
    The evidence of Mr Weiss showed that the compactus is to be purchased to take advantage of the storage facility provided by the existing bank vault at 326 Old Cleveland Road[33]. It is, accordingly, not a cost reasonably to be incurred as a consequence of the relocation; but rather a cost incurred to take advantage of a facility found at 326 Old Cleveland Road but not in Shop 17.
  1. [58]
    For the rest of these items, the state of the evidence favours the view that these costs are costs of the relocation of the real estate agency to 326 Old Cleveland Road, incurred to adapt it to the business of the real estate agency.
  1. [59]
    The costs calculated by Mr Fraser included amounts which Ostroco acknowledges it cannot recover as compensation under the ALA. With those excluded, Ostroco submits that the sum of $509,873 should be awarded for those costs. However the costs also include the cost of the compactus[34]. With that excluded, but with the inclusion of the items just discussed, and items treated by Mr Brady as tenant’s work, the estimate becomes $501,043.
  1. [60]
    It was submitted that, on the basis of Mr Brady's evidence that quotations would be lower in 2012, the estimate should be reduced. However Mr Brady's evidence is expressed in rather general terms. Thus he says that he "would be expecting to receive a lower quote in the current market"; and that he believes, in this market, "a more competitive price may be achieved".[35]  The extent of any reduction is not specified. Moreover, his comments were made in February 2012. Mr Fraser's estimate more accurately reflects the position at the time of resumption. On the basis that the work had not been carried out at the time of hearing in the Land Court, and is unlikely to be carried out until compensation is received, it may be doubted whether Mr Brady's evidence is of assistance in determining the amount which in fact will be expended. Overall, and resolving doubts in favour of the dispossessed land owner, it seems appropriate to adopt generally the estimate provided by Mr Fraser, and for those items which compensation is to be allowed, to assess compensation at $501,043.
  1. [61]
    For items uncosted by Mr Fraser, there is little reliable evidence. Yet Mr Brady seems to accept that some of the works would have been required, and they undoubtedly would result in the incurring of some expense. The most that can be done is to adopt a broad brush approach of the assessment of these costs, recognising that some may not in fact need to be incurred, and the overall absence of evidence relating to them. On that basis, an amount of $20,000 seems an appropriate allowance.
  1. [62]
    There is no explanation in the learned Member’s reasons for not allowing the full amount of the fees claimed for Mr Bettenay; that is, the estimated cost of future work, as well as the cost of work already carried out. Although Mr Bettenay’s affidavit evidence was silent regarding these costs, his oral evidence supported the claim for both work already carried out and for future work[36]. In the circumstances, it therefore seems appropriate to allow the sum of $32,000, in lieu of the sum of $24,960, as determined by the learned Member.
  1. [63]
    Accordingly, compensation in respect of relocation costs should be assessed at $553,043.

Economic loss

  1. [64]
    The appellant’s claim was based on the report of Mr Gil Wright. Mr Wright expressed the view that the appellant’s business suffered negative impacts from pre-resumption announcements relating to the Busway Project, and actions associated with the resumption process. He referred to the fact that what he described as “the major anchor business in the Coorparoo Mall” namely, Harvey Norman, left its premises in February 2007, with adverse impacts on the number of persons who would pass Shop 17. He considered that the appellant suffered loss of profits as a result of the many announcements of the Busway Project before resumption took place, which created “a confusing and uncertain business environment”[37]. He noted a fall in property listings from 2007 to 2009 (the year of the resumption); with a slight improvement in 2010; a generally similar pattern in sales and leasing income; and a slightly different, though not totally inconsistent, pattern in what was called the Vendor Marketing Program[38]. He also stated that the fall started before the impact of the Global Financial Crisis was felt in the real estate industry in Queensland. He assessed the economic loss due to the impact he had identified as being $102,486 up to the date of resumption; and $74,303 subsequently.
  1. [65]
    The learned Member relied on paragraphs (f) and (g) of s 20(5) of the ALA, which referred to losses “that are a direct and natural consequence of the taking of the land” to exclude losses which occurred prior to the resumption. He said, “A consequence can only occur after the taking”[39]. For the appellant it is submitted that if a loss was a direct and natural consequence of the taking of the land, the fact that it occurred prior to the resumption did not matter.  It was nevertheless a loss for which compensation was to be given under s 20 of the ALA.
  1. [66]
    The learned Member’s reasoning with respect to pre-resumption losses was not supported by the respondent. It submitted that the learned Member had misunderstood its submissions in the Land Court, which were that the awarding of compensation for pre-resumption losses was consistent with the decision of the Privy Council in Director of Building & Lands v Shun Fung Ironworks Ltd[40], where it was held that such losses might be recovered if they satisfy three conditions, namely, that the losses were causally connected with the resumption; that they were not too remote; and that they were not losses which a reasonable person would have avoided. At a time when s 20 of the ALA was somewhat different from its current form, this Court adopted the principles in Shun Fung Ironworks[41].
  1. [67]
    Shun Fung Ironworks was decided under the provisions of s 10 of the Crown Lands Resumption Ordinance (Hong Kong). It provided that compensation should be determined on the basis of “the amount of loss or damage to a business conducted by a claimant at the date of resumption on the land resumed or in any building erected thereon, due to the removal of the business from that land or building as a result of the resumption”. It was in respect of that language that the Privy Council decided that compensation might be paid for losses suffered prior to the resumption, providing the stated conditions were satisfied.
  1. [68]
    While paragraphs (f) and (g) of s 20(5) are differently expressed, there is nothing in them which would preclude the awarding of compensation for a loss suffered prior to resumption. Thus s 20(5)(g) provides an example of costs in respect of which compensation might be awarded. It is the cost of school uniforms for children enrolled in a new school, because of relocation from the land taken. It is not difficult to envisage a case where, a notice of intention to resume having been received and, perhaps, an objection having been adversely decided to the land owner, the land owner might have been informed that the resumption would take effect in March of a particular year. To reduce disruption, children might have been enrolled at a new school from the commencement of the school year, shortly prior to the resumption. It would seem quite unlikely that the legislation intended the expenses of doing so would not be compensable.
  1. [69]
    The major issue is whether the learned Member erred in holding that no loss was established by the evidence. For the appellant, it was submitted that Mr Wright’s evidence correctly established the loss, which was apparent from his analysis of various aspects of the appellant’s income. It was submitted that even on Mr Calabro’s evidence a loss of $32,509 was shown. It was submitted that Mr Calabro initially adopted the 2006 financial year, but incorrectly analysed the income, failing to take into account the fact that the average revenue from sales had increased in that year, while the number of sales had decreased. It was submitted that his subsequent adoption of the 2007 financial year was “disingenuous”, not reflecting the financial data.
  1. [70]
    Orally it was submitted for the appellant that the state of the evidence required the learned Member to identify an appropriate starting base for determining whether the appellant had suffered loss; and then to determine that loss. Given that, even on Mr Calabro’s evidence, some loss was suffered, it was necessary for the learned Member to provide an adequate explanation of his determination that no loss was suffered.
  1. [71]
    The respondent’s submissions supported the learned Member’s approach to both 2006 and 2007 as inappropriate years by reference to which to determine whether the appellant had suffered loss. The submissions also relied upon the learned Member’s finding that he was not satisfied that the Busway Project had any depressing effect on the appellant’s business.
  1. [72]
    The respondent submitted that loss claimed by the appellant was not recoverable. It was a consequence of the announcement of the Busway Project, not the taking of the land, and accordingly did not come within the language of s 20(5)(f).
  1. [73]
    The respondent’s oral submissions referred to three authorities in support of its contention that compensation for loss of profits could only be awarded where that loss was a direct and natural consequence of the taking of the claimant’s land; and not where the loss was a consequence of other matters, such as the effect of the Busway Project, or its announcement, or uncertainty about when the land would be taken. They were Almona Pty Ltd v Roads and Traffic Authority (NSW)[42]; McInnes v Commissioner of Highways[43]; and Brock v Roads and Maritime Services (No 3)[44]. Reference was made to the report of Mr Wright[45] for the proposition that Mr Wright identified the source of loss of profits as the earlier announcements relating to the Busway Project, creating a confusing and uncertain business environment; as well as the fact that other business nearby ceased operation. 
  1. [74]
    It was also submitted that an examination of Mr Calabro’s evidence showed that he did not consider that the business had suffered a loss, whether before or after resumption[46]. Reference was made to the fact that the income from the rent roll had not declined; and that if there were an aspect of the appellant’s business which might be affected by passing trade it was the rent roll; whereas sales were the product of off-site activity, and computer on-line access[47]. It was also submitted that, the Busway Project having been announced in 2005, neither the 2006 nor 2007 years could provide a satisfactory basis for determining whether the appellant’s business suffered loss as a result of its announcement; particularly when 2007 appears to have been a good year.
  1. [75]
    The appellant’s written submissions in reply accepted that any loss had to be shown to be “a direct and natural consequence of the taking of the land”. It was submitted that at least losses which occurred after the resumption were of that character. The appellant’s oral submissions referred to evidence that showed Mr Wright’s analysis attempted to identify loss in addition to the consequences of the Global Financial Crisis, by showing that his real estate agency suffered more significantly than the other agencies in the general area.
  1. [76]
    The fundamental problem with the claim for business losses, or lost profits, is that the evidence does not seek to demonstrate that any loss suffered by the appellant was a direct and natural consequence of the taking of Shop 17. Rather, Mr Wright’s evidence is premised on the effect of the announcements of the Busway Project; and, perhaps to a significantly lesser extent, the closure of nearby businesses, as a consequence of the taking, or the proposed taking, of the land on which they were conducted. Accordingly, any loss suffered by the appellant was not shown to be a kind for which compensation is available, by reference to s 20(5) of the ALA.
  1. [77]
    The appellant submitted that there was reason to award compensation for loss which occurred after the resumption. However, the evidence of such loss was given on the same basis as the evidence of loss before the resumption. That is to say, the evidence of Mr Wright sought to demonstrate that the appellant’s business suffered economic loss by reason of the announcements relating to the Busway Project; and by reason of the fact that nearby businesses ceased to operate. There was no evidence of any additional or different effect after the resumption. There was no evidence to suggest that the effects of the announcements, and the closure of other businesses, ceased or diminished when the resumption occurred. Accordingly, the evidence did not provide a basis for awarding compensation for losses suffered by the appellant’s business, after the land was resumed.
  1. [78]
    Even if loss claimed by the appellant were suffered, for which compensation might be awarded, the evidence of that loss is not satisfactory. The effects on which they were based commenced in 2005, and it would follow that both the 2006 financial year and the 2007 financial year were years where the appellant’s business suffered some effects from the announcements of the project. It is therefore difficult to see how either year could be used as an appropriate basis for assessing the loss. Beyond that, there is the difficulty that 2007 was in fact a good year. The appellant’s submissions do not seek to reconcile this fact, with its contention that the announcement of the Busway Project had an adverse effect on its business. Nor do the submissions seek to reconcile the fact that income from its rent roll business was unaffected, with its contention that its other income was adversely affected by the Busway Project.
  1. [79]
    Accordingly, so far as Ostroco’s appeal relates to its claim for lost income, the appeal does not succeed.

Claim for lost rental

  1. [80]
    In its written submissions in chief, Ostroco submitted that the learned Member erred in determining that he had no jurisdiction to award compensation for this loss. It was submitted that his alternative finding, assuming he had jurisdiction, that the amount of the loss was $302,787.41, should be accepted.
  1. [81]
    In its oral submissions in chief, Ostroco contended that this loss was a direct result of the resumption, and not of the more general Busway Project. Ostroco accepted that if the loss were a result of the Busway Project, rather than the acquisition of its interest in Shop 17, then the loss would not be recoverable. Reference was made to the affidavit evidence of Mr Weiss, to the effect that he and his wife, as trustees of the Superannuation Fund, purchased 326 Old Cleveland Road in order to secure future premises for the business; no doubt for the same reason, Ostroco entered into the lease with the trustees; Mr Weiss thought that it was necessary for the lease to be for a term of three years; he then attempted to find another tenant (no doubt to enter into a sub-lease); at this time, announcements indicated that Shop 17 would be required by early 2009; and that he was unable to secure a sub-lessee because of the uncertainty about offering a longer term to it. The effect of this evidence was that Ostroco was required to pay the rent for 326 Old Cleveland Road in this period. Mr Weiss also gave evidence that Ostroco could not afford to fit out 326 Old Cleveland Road before it received compensation. Accordingly, it was placed in a position of continuing to pay the rent on both premises; but was unable to secure a sub-lessee at 326 Old Cleveland Road.
  1. [82]
    In its oral submissions in chief, Ostroco made it clear that it relied on s 20(5)(g) of the ALA as the provision by virtue which this loss was said to be “costs attributable to disturbance” and accordingly a subject matter for compensation.
  1. [83]
    The respondent’s written submissions relied upon the fact that Ostroco was the tenant and not the landlord, of 326 Old Cleveland Road. The submissions also referred to the fact that the trustees of the Superannuation Fund had in fact received rent for the full period, the subject of Ostroco’s claim. It was submitted that as the dispossessed lessee of Shop 17, Ostroco’s losses could not include any loss of rent suffered as a lessor of some other premises. It was also submitted that the rental expenses were not reasonably incurred, Mr Weiss having panicked when he purchased 326 Old Cleveland Road. It was also submitted that it was relevant that Ostroco chose to stay in Shop 17.  It was also submitted that in assessing this element of the claim, it would be necessary to consider whether the value of 326 Old Cleveland Road had risen since it was purchased. It was also said that the loss could not be recovered, it not being a consequence of the taking of Shop 17.
  1. [84]
    The respondent’s oral submissions pointed out that in its Points of Claim, Ostroco alleged this loss to be the result of matters relating to the general effect of the Busway Project, rather than the acquisition of Shop 17. It was submitted that the purchase of 326 Old Cleveland Road, and no doubt the subsequent lease to Ostroco, were the result of panic on the part of Mr Weiss. Reliance was placed on the failure of Ostroco to move to 326 Old Cleveland Road, even by the time of being in the Land Court. It was submitted that it was not reasonable for Ostroco to have entered into the lease of 326 Old Cleveland Road, in 2007. It was also submitted that Mr Weiss’s evidence about Ostroco’s inability to meet the costs of the make over at 326 Old Cleveland Road should not be accepted. It was submitted that in any event, he could have sought a payment of relocation costs from the Department. These submissions appear to be directed to the proposition that the loss was not a direct and natural consequence of the taking of Shop 17.
  1. [85]
    In its written submissions in reply, Ostroco asserted that Mr Weiss had not panicked in purchasing 326 Old Cleveland Road. It was submitted that the loss was a direct and natural consequence of the taking of Shop 17. It was submitted that Ostroco had taken reasonable steps to mitigate its loss by attempting to sub-let the premises.
  1. [86]
    In its oral submissions in reply, Ostroco referred to its balance sheet as demonstrating a low level of assets, particularly its current assests, in 2006 and 2007, as support for the evidence of Mr Weiss about its inability to pay the costs of relocation. Reference was also made to Mr Weiss’s evidence of his attempts to undertake negotiations with the respondent, unsuccessfully. It was submitted that the payment of rent for new premises by a lessee not in a position to relocate without compensation, satisfied the description of s 20(5)(g) of the ALA; though whether compensation should be awarded in respect of such payment would depend on questions of causation, remoteness and reasonableness, including the reasonableness of its efforts to sublet the new premises.
  1. [87]
    There is no reason not to accept the evidence of Mr Weiss that Ostroco could not afford to pay the relocation costs prior to the receipt of compensation. His evidence was supported by the financial records of Ostroco. The amount required to relocate was significant.
  1. [88]
    There is no evidence to demonstrate that a sufficient amount to enable it to relocate would have been made available to Ostroco by the Department, as a result of negotiations. Mr Weiss’s unchallenged evidence is that he attempted to commence negotiations, but his attempts did not meet with success.
  1. [89]
    Although some allegations in Ostroco’s Points of Claim related this loss to broader considerations, it has a clear connection with the taking of Shop 17. It is the loss of its right to occupy those premises that led to its entering into a lease with the trustees of the Superannuation Fund, in order to secure a location for the future conduct of its business. Indeed, it is difficult to see how matters such as the announcement of the Busway Project would have played any part in the need for Ostroco to relocate its business, unless it were to lose its interest in Shop 17.
  1. [90]
    To determine whether compensation should be awarded to Ostroco in respect of this part of its claim, it is necessary to pay careful attention to the facts on which it is based. They commence with the fact that in 2007, Mr Weiss became concerned about Ostroco’s need for suitably located premises which would not be the subject of resumption for the Busway Project. He identified 326 Old Cleveland Road as satisfying Ostroco’s requirements. He and his wife, as trustees of the Superannuation Fund, purchased 326 Old Cleveland Road. Ostroco then leased the premises. To make the premises suitable for Ostroco’s business would require the expenditure of a substantial sum of money. Ostroco could not afford this. It continued to occupy Shop 17, while paying rent on 326 Old Cleveland Road. It attempted, generally unsuccessfully, to sub-lease 326 Old Cleveland Road. It claimed the net amount it paid to the trustees of the Superannuation Fund for rent from 2007 to 30 June 2012, after allowing for rent it received from sub-lessees.
  1. [91]
    It might be observed that much of the loss claimed by Ostroco relates to rent paid after the date of resumption. The learned Member did not appear to advert to this; nor do his reasons explain why that part of the claim was thought to be beyond the Land Court’s jurisdiction.
  1. [92]
    It is also necessary to pay attention to how Ostroco formulated this claim. In its Points of Claim, Ostroco characterised this loss as “a compensable loss of rental income it would have derived from its operations”[48]. The particulars identify the loss as being related to income which might have been derived from sub-leasing of 326 Old Cleveland Road. Its written submissions in the Land Court identified this loss in a similar way[49]. Its characterisation of this part of the claim identifies it as being for a loss, rather than a cost.
  1. [93]
    A claim of this kind directs attention to the nature and degree of any causal relationship between the taking of the land and the claimed loss[50]. For the application of an analogous statutory provision, the application of “common sense standards” in determining what is a cause of the loss have been applied; and it has been said that causation in this context has to be understood as the man in the street would understand it[51].
  1. [94]
    There is something to be said for the proposition that what a court is required to do is simply to apply the language found in s 20(5)(g) of the ALA. However, the application of similarly worded statutory provisions has been determined by reference to the tests formulated in Shun Fung Ironworks[52]. The difficulty with this is that there is an element of circularity. Thus, in Shun Fung Ironworks, the “much maligned epithet ‘direct’” was recognised as still having its uses in dealing with questions of remoteness[53]. For claims under more broadly drawn provisions, similar rules were formulated by Romer LJ in Harvey v Crawley Development Corporation[54].
  1. [95]
    A difficulty arises in the application of the statutory test, with reference simply to the language used, as well as the other tests which have been adopted for the application of similarly worded statutory provisions. In each case, there may be a causal connection between the taking of the land, and the cost or the loss which is said to be the subject of compensation. The language used by s 20(5)(g) requires the making of a judgment whether the connection was sufficient to enable the cost or loss to be described as a direct and natural consequence of the taking of the land. If, on the other hand, reference is made to the tests formulated in authorities such as Shun Fung Ironworks, a question arises whether the causal connection between the taking of the land on the one hand, and the cost or loss on the other, is too remote. In each case, a judgment must be made, where no point of demarcation is clearly identified for determining whether a cost or loss is the subject of compensation.
  1. [96]
    In the present case, the loss is not an immediate consequence of the taking of Shop 17. A number of intervening events occurred before Ostroco suffered the loss for which it claims compensation. First, it had to enter into an arrangement for suitable premises for the continuation of its business. That in turn, in the present case, required action by the trustees of the Superannuation Fund, resulting in the purchase by them of 326 Old Cleveland Road. Secondly, for the loss to have occurred, Ostroco’s financial position had to be such that it could not afford to relocate to 326 Old Cleveland Road, at the time when it entered into the lease. Thirdly, the loss would not have occurred but for circumstances which had the effect that, for most of the period to which the claim relates, Ostroco could not sub-lease 326 Old Cleveland Road. Whether one asks if the loss is too remote, or if the loss is a direct and natural consequence of the taking of the land, the exercise of the judgment required by s 20(5)(g) leads to the conclusion that the loss is not compensable. Accordingly, in respect of this aspect of its claim, Ostroco’s appeal is unsuccessful.
  1. [97]
    Ostroco’s oral submissions in reply are capable of being understood as raising a different characterisation of its claim, as a claim for a cost incurred by it, rather than a loss; the cost being the payment of rent by it to the trustees, rather than the loss of rent from a potential sub-lessee. That characterisation would raise a large question about the scope of the word “costs” in s 20(5)(g) of the ALA. It would involve giving a broad operation to the word “costs” in this paragraph. It would appear to make redundant other parts of s 20(5), for example, paragraphs (c) and (d). It would lead to a question whether rent was such a cost, even when a dispossessed lessee had commenced occupation of the new premises. Since these matters were not the subject of submissions, and given the way Ostroco had generally framed its case both in the Land Court and on this appeal, its oral submission should not be understood as raising a new basis for its claim. Alternatively, it should not be permitted to do so at such a late stage in the proceedings.

Cross-appeal

  1. [98]
    It was common ground that the cross-appeal should be allowed. The parties agreed that the learned member erred in including in the award for compensation the sum of $152,624, for work done on Shop 17; and in allowing interest on relocation costs and on professional costs, for periods prior to the expenditure of money for these purposes.

Conclusion

  1. [99]
    The appeal and cross-appeal should be allowed. Compensation should be assessed at $553,043 for relocation costs; and $11,000 for valuation and legal fees. Interest should be awarded on valuation and legal fees, and on so much of the sum of $32,000 for Mr Bettenay’s fees as has been paid, from the dates of payment to the day immediately preceding the date upon which compensation is paid, at the interest rates identified in the decision of the Land Court. The parties will be invited to make further submissions about the orders to be made; and about costs, both in respect of the proceedings in the Land Court and this appeal.

PETER LYONS, J

PA SMITH

MEMBER OF THE LAND COURT

WL COCHRANE

MEMBER OF THE LAND COURT

Footnotes

[1]  Appeal Record (AR) Vol 3 p 620.

[2]  See AR Vol 5 p 954.

[3]  (1893) 6 R. 67.

[4]  See AR Vol 4 p 704.

[5]  See AR Vol 1 p 230.

[6]  See AR Vol 4 p 693.

[7]  See AR Vol 3 p 573.

[8]  See AR Vol 4 p 661.

[9]  See AR Vol 4 p 662.

[10]  These matters are dealt with in paragraph 25 of the appellant's outline of 12 March 2013.

[11]  See also AR Vol 3 p 598.

[12]  (2004) 218 CLR 417, particularly at [33].

[13]  RJ at [16].

[14]  See T1-20/30.

[15]  See Yarn Traders Pty Ltd v Melbourne and Metropolitan Board of Works  [1970] VR 427, at 430; cited in Brown, Land Acquisition (LexisNexis, 6th ed, 2009) [3.29]; and Jacobs, Law of Compulsory Acquisition of Land (Law Book Co, 2010) [25.100].

[16]  AR Vol 1 p 103/30.

[17]  AR Vol 4 p 657.

[18]  AR Vol 1 p 226.

[19]  AR Vol 4 p 659.

[20]  AR Vol 1 p 104.

[21]  AR Vol 4 p 690.

[22]  AR Vol 1 p 227.

[23]  AR Vol 4 p 659.

[24]  AR Vol 1 p 19.

[25]  AR Vol 2 p 431.

[26]  AR Vol 4 p 657.

[27]  AR Vol 4 p 654.

[28]  AR Vol 1 p 19-20.

[29]  AR Vol 2 p 422.

[30]  AR Vol 2 p 433-436; 453-456.

[31]  AR Vol 2 p 433.

[32]  AR Vol 4 p 659.

[33]  AR Vol 1 p 21-22.

[34]  AR Vol 1 p 229.

[35]  AR Vol 4 p 652.

[36]  AR  Vol 1 pp 27, 29, 36 and 37.

[37]  AR Vol 3 p 601.

[38]  AR Vol 3 pages 603-604.

[39]  RJ, at [28].

[40]  [1995] 2 A.C. 111.

[41]  See Kabale Holdings Pty Ltd v Department of Transport (1997) 18 QLCR 166, at 190-193.

[42]  (2008) 160 LGERA 375, especially at [55]-[61].

[43]  (1992) 78 LGERA 410, especially at 411, 414.

[44]  (2012) 191 LGERA 267, especially at [36]-[41].

[45]  AR Vol 3, pages 581, 582 and 601-603.

[46]  AR Vol 3 pages 550-551.

[47]  AR Vol 1 p 66.

[48]  AR Vol 1 p 202.

[49]  AR Vol 5 p 957.

[50]  See Almona Pty Ltd v Roads and Traffic Authority (NSW) (2008) 160 LGERA 375, at [60]; Brock v Roads and Maritime Services (No 3) (2012) 191 LGERA 267, at [40].

[51]Caruana v Port Macquarie-Hastings Council [2007] NSWLEC 109 at [52]; cited in Hyam, The Law Affecting Valuation of Land in Australia (Federation Press, 4th ed, 2009) 414.

[52]  See Hua v Hurstville City Council [2010] NSWLEC 61; see El Boustani v Minister Administering the Environment Planning and Assessment Act 1979 [2012] NSWLEC 266 at [94]; see also Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254, at [57].

[53]  See Shun Fung Ironworks, at p 126.

[54]  [1957] 1 QB 485, at 494.

Close

Editorial Notes

  • Published Case Name:

    Ostroco v Department of Transport and Main Roads

  • Shortened Case Name:

    Ostroco v Department of Transport and Main Roads

  • MNC:

    [2013] QLAC 4

  • Court:

    QLAC

  • Judge(s):

    Lyons J, Member Smith, Member Cochrane

  • Date:

    17 Oct 2013

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 255
1 citation
Jump To
Cite 1 - [2011] NSWLEC 255
Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254
1 citation
Jump To
Cite 1 - [2011] NSWLEC 254
Almona Pty Ltd v Roads and Traffic Authority (NSW) (2008) 160 LGERA 375
3 citations
Jump To
Cite 1 - (2008) 160 LGERA 375
Cite 2 - (2008) 160 LGERA 375
Cite 3 - (2008) 160 LGERA 375
Brock v Roads and Maritime Services (No 3) (2012) 191 LGERA 410
1 citation
Jump To
Cite 1 - (2012) 191 LGERA 410
Brock v Roads and Maritime Services (No 3) (2012) 191 LGERA 267
2 citations
Jump To
Cite 1 - (2012) 191 LGERA 267
Cite 2 - (2012) 191 LGERA 267
Browne v Dunn (1893) 6 R 67
2 citations
Jump To
Cite 1 - (1893) 6 R 67
Cite 2 - (1893) 6 R 67
Buildings and Lands v Shun Fung Ironworks Ltd (1995) 2 AC 111
3 citations
Jump To
Cite 1 - (1995) 2 AC 111
Cite 2 - (1995) 2 AC 111
Cite 3 - (1995) 2 AC 111
Caruana v Port Macquarie-Hastings Council [2007] NSWLEC 109
2 citations
Jump To
Cite 1 - [2007] NSWLEC 109
Cite 2 - [2007] NSWLEC 109
El Boustani v Minister Administering the Environment Planning and Assessment Act 1979 [2012] NSWLEC 266
2 citations
Jump To
Cite 1 - [2012] NSWLEC 266
Cite 2 - [2012] NSWLEC 266
Equuscorp Pty Ltd v Glengallon Investments Pty Ltd (2004) 218 CLR 417
2 citations
Jump To
Cite 1 - (2004) 218 CLR 417
Cite 2 - (2004) 218 CLR 417
Harvey v Crawley Development Corporation (1957) 1 QB 485
2 citations
Jump To
Cite 1 - (1957) 1 QB 485
Cite 2 - (1957) 1 QB 485
Hua v Hurstville City Council [2010] NSWLEC 61
2 citations
Jump To
Cite 1 - [2010] NSWLEC 61
Cite 2 - [2010] NSWLEC 61
Kabale Holdings Pty Ltd v Department of Transport (1997) 18 QLCR 166
2 citations
Jump To
Cite 1 - (1997) 18 QLCR 166
Cite 2 - (1997) 18 QLCR 166
McInnes v Commissioner of Highways (1992) 78 LGERA 410
2 citations
Jump To
Cite 1 - (1992) 78 LGERA 410
Cite 2 - (1992) 78 LGERA 410
Yarn Traders Pty Ltd v Melbourne and Metropolitan Board of Works [1970] VR 427
2 citations
Jump To
Cite 1 - [1970] VR 427
Cite 2 - [1970] VR 427

Cases Citing

Case NameFull CitationFrequency
McPherson v Logan City Council [2021] QLC 332 citations
Ostroco v Department of Transport and Main Roads (No. 3) [2014] QLAC 72 citations
1

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