To print this article, all you need is to be registered or login on Mondaq.com.
The Facts
RMS acquires land for upgrade of Pacific Highway
In 2016, Roads and Maritime Services of New South Wales
compulsorily acquired a block of land to upgrade the Pacific
Highway.
The landowner accepted an offer of $3,114,540 as compensation
from RMS for the compulsory acquisition of land. This sum was
determined by the Valuer-General and comprised $2,950,000 for the
market value of the land and $164,540 for disturbance to the
business.
Service station impacted by compulsory acquisition
The service station which occupied the land was to be
significantly impacted by the compulsory acquisition. The business
had been successful because of its proximity to the Pacific
Highway. Due to its locality, it serviced a number of nearby
towns.
The landowner and the owners of the service station business
were two distinct and separate legal entities. The service station
had no lease over the premises. Instead, it had a verbal tenancy
agreement with the landowner and paid monthly rent under a
"tenancy at will" (that is, one of no fixed duration)
which could be terminated with one month's notice.
The Valuer-General determined compensation payable to the
service station operator based solely on disturbance to the
business and did not otherwise take into consideration the
anticipated costs associated with relocation or alternatively, if
it had to close, the permanent loss of profits by the service
station.
Service station makes claim for disturbance to business
The service station reasoned that the amount paid to the
landowner was irrelevant to its own claim for compensation, because
the service station was a completely different entity and its claim
was based solely on disturbance to the business from the compulsory
acquisition, not on the market value of the land.
The service station claimed compensation for the loss
attributable to the disturbance, which included the anticipated
costs associated with relocation, including short-term loss of
profits, or alternatively, the permanent loss of profits that the
service station would have otherwise derived, but for the
acquisition by RMS.
CASE A
The case for the service
station
CASE B
The case for Roads and Maritime
Services
We operated this service station business for a long time
before RMS's acquisition of the land. We are a landmark for
road users along that particular stretch of coast in NSW.
To relocate or terminate our business without compensation
would be supremely unfair. We should be entitled to adequate
compensation, taking into account any future loss of profits.
While we have not found a suitable relocation site, we intend
to continue our search. We have found other opportunities; it is
simply a matter of those sites becoming available.
What's relevant is the impact the acquisition has on our
business. If we cannot relocate, we will lose any future profits,
which far exceed the assessment by the Valuer-General.
Any compensation paid to the landowner is irrelevant, because
our claim is based on the impact on our business of relocating or
being forced to close. This is a loss we will suffer as a direct
result of the disturbance, unconnected to the market value of the
land.
We do not deny that the service station business has a legal
interest in the land and that it enjoyed a statutory tenancy at the
time of the acquisition.
The compensation we paid to the landowner took into account the
fact that the service station business's tenancy could have
been terminated at any time with merely one month's notice.
Once we had acquired the land, the service station business's
interest in the land ceased to exist.
The potential of the land to generate a profit in the future
has already been taken into account in calculating the compensation
to be paid to the landowner. Compensating the service station
business separately would mean paying for this potential
twice.
Given the weak nature of the tenancy, the court should set
aside any claim by the service station business that it would have
remained in occupation of the property indefinitely.
The costs associated with relocation are not claimable because
there is currently no alternative site available. It is also
unlikely that a suitable relocation site will be found.
The cost of planning, rezoning and building a new service
station should not be included in the compensation amount,
irrespective of the impact that the compulsory acquisition has had
on the business. The service station's claim should be
rejected.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
The last La Niña (wet period) lasted for more than 1 year and ended in March 2023. After a few months of a neutral period, El Niño (dry period) started in September 2023.
FREE News Alerts
Sign Up for our free News Alerts - All the latest articles on your chosen topics condensed into a free bi-weekly email.