Land and Environment Court New South Wales Medium Neutral Citation: Olde English Tiles Australia Pty Ltd v Transport for New South Wales [2021] NSWLEC 90 Hearing dates: 8, 9, 10, 11, 12, 15, 16, 18 and 19 March 2021 20, 21 and 22 April 2021 Date of orders: 27 August 2021 Decision date: 27 August 2021 Jurisdiction: Class 3 Before: Duggan J Decision: See paragraphs 89 and 90 Catchwords: COMPULSORY ACQUISITION – compensation – assessment – disturbance – whether applicant has a compensable interest in land – arrangement between registered proprietors and company granting company bare license or permission to occupy land – registered proprietors are sole directors and shareholders of company – not a right, power or privilege over, or in connection with land – interest not capable of alienation by way of sale or transfer Legislation Cited: Conveyancing Act 1919 (NSW) Land Acquisition (Just Terms Compensation) Act 1991 (NSW) Roads Act 1993 (NSW) Cases Cited: Alexandria Landfill Pty Ltd v Transport for NSW (2020) 243 LGERA 102 Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47 Dial a Dump Industries Pty Ltd v Roads and Maritime Services (2017) 94 NSWLR 554 El Boustani v Minister Administering the Environmental Planning and Assessment Act 1979 (2014) 199 LGERA 198 Farrah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 George D Angus Pty Ltd v Health Administration Corporation (2013) 205 LGERA 357 Hornsby Council v Roads and Traffic Authority (NSW) (1997) 41 NSWLR 151 Minister for Education and Training v Tanner (2003) 128 LGERA 281 Mooliang Pty Ltd v Shoalhaven City Council (2001) 114 LGERA 45 Radaich v Smith (1959) 101 CLR 209 Rakus v Energy Australia (2004) 138 LGERA 373 Roads & Maritime Services v United Petroleum Pty Ltd (2019) 99 NSWLR 279 The Minister v The New South Wales Aerated Water and Confectionary Company Limited (1916) 22 CLR 56 West v Roads and Traffic Authority of NSW (1995) 88 LGERA 266 Category: Principal judgment Parties: Olde English Tiles Australia Pty Ltd (Applicant) Transport for New South Wales (Respondent) Representation: Counsel: I Hemmings SC and L Nurpuri (Applicant) R Lancaster SC and A Hemmings (Respondent) Solicitors: Mills Oakley (Applicant) Herbert Smith Freehills (Respondent) File Number(s): 2018/288532 Publication restriction: No Judgment 1. On 9 February 2018, Olde English Tiles Australia Pty Ltd (the Applicant) occupied the land identified as Lot 1 in Deposited Plan 510297 and Lot 101 in Deposited Plan 701466, known as 182 (No 182) and 184-186 (No 184-186) Parramatta Road, Annandale (or Camperdown). 2. By Acquisition Notice published in the Government Gazette on 9 February 2018, the Respondent (then Roads and Maritime Services) compulsorily acquired both parcels of land (the Acquired Land). 3. On 22 June 2018, the Valuer-General determined compensation payable to the Applicant as a consequence of the compulsory acquisition in the sum of $1,061,379 in accordance with s 55(d) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act). The Applicant has objected to the amount of compensation offered pursuant to s 66 of the Act. 4. The registered proprietors of the land were Antonino Gaudioso and Carmel Gaudioso (Mr and Mrs Gaudioso), who together were the sole directors and shareholders of the Applicant. 5. From the Acquired Land, the Applicant operated Olde English Tiles (the OET Business) which involved the manufacture and sale of Victorian and Federation tessellated tiles, mosaics, and subway tiles for retail and commercial installation. 6. Mr and Mrs Gaudioso have made a claim for compensation for the acquisition of their interest as owners of the Acquired Land, which claim will be determined in other proceedings. Background facts 1. The Acquired Land comprised two adjacent parcels located on the north side of Parramatta Road, between Gordon and Mallett Streets in Camperdown, and with rear access to Bignell Lane. The Acquired Land had a total area of 1,731m2 and a frontage to Parramatta Road of 37.994m2. The land was improved by a single mixed-use building the footprint of which occupied the whole of the surface area of the site. 2. Mr and Mrs Gaudioso became the registered proprietors of the Acquired Land on 26 March 1999. Since mid-2002, the Applicant occupied the Acquired Land and carried on the OET Business. 3. The structural improvements to the Acquired Land had gross lettable area of 2,054m2 and a floor space ratio (FSR) of 1.187:1. 4. At the Date of Acquisition, the Acquired Land was zoned "IN2 Light Industrial" under the Leichhardt Local Environmental Plan 2013 (NSW) (LEP 2013). 5. Under the LEP 2013, the maximum permitted floor space ration (FSR) in the IN2 Light Industrial zone was 1:1. There was no height of building control applicable to the Acquired Land and it was not in a heritage conservation area. The rear portion of the Acquired Land was partially affected by the 1 in 100-year flood event as identified in the relevant flood map. No 182 1. No 182 had a site area of 752.5m2. A single-storey, older-style period building occupied 100% of the site footprint, with frontages presenting as 2 storeys to Parramatta Road and Bignell Lane. 2. The front elevation of the building had nil setback from Parramatta Road and had shop-front openings at ground floor level, a driveway crossover and pedestrian entry. The rear elevation abutted Bignell Lane with a single vehicle entry. No 184-186 1. No 184-186 had a site area of 978.5m2 with a full-width frontage to Parramatta Road and a partial width frontage to Bignell Lane, which incorporated a single high-level vehicle entry loading dock access to the premises. Development history 1. At all relevant time the Acquired Land was situated within the Leichhardt Council local government area which now forms part of the Inner West Council (the Council). 2. The parties agree that there are no Council records of any development consent or building approval associated with the Acquired Land at the Date of Acquisition that related to the sale and display of tiles and tile products. 3. There is no dispute in these proceedings that the use of the Acquired Land was for a light industrial purpose was permitted in the zone. It was not contended in the proceedings that the use of the Acquired Land was not a lawful use of that land. Public Purpose 1. The Acquired Land was compulsorily acquired for the purposes of the Roads Act 1993 (NSW), specifically for the WestConnex Project (the Public Purpose). Relocations 1. On 29 October 2018, the Applicant ceased carrying on the OET Business at the Acquired Land and vacated the land. 2. The Applicant was not able to immediately secure suitable alternative premises for the OET Business. 3. On 3 July 2018, the Applicant entered a three-month lease (which reverted to a month-to-month lease on expiration) for a temporary warehouse at 2-8 Parsons Street, Rozelle (Rozelle Temporary Warehouse). 4. Building works were carried out to the Rozelle Temporary Warehouse to ensure its compliance with the Building Code of Australia. The Applicant retained ES Design to prepare drawings of the works. 5. On 13 August 2018, Mr and Mrs Gaudioso exchanged contracts to purchase a 964m2 premises at 71 John Street, Leichhardt (Leichhardt Factory and Warehouse), intending to lease it to the Applicant for the OET Business factory and warehouse operations. Vacant possession was provided on 31 December 2018. 6. Modifications were carried out to make the Leichhardt Factory and Warehouse fit for purpose including: * The installation of a series of mezzanines; * The installation of a service lift; * Installing a narrow aisle racking layout to increase the density of pallet racking; * Acquiring a fit-for-purpose forklift to operate in the narrow aisles; * The decommissioning of a gas kiln and installation of three smaller electric kilns; and * The connection of natural gas. 1. On 10 September 2018, the Applicant entered a 3-year lease for a 350m2 temporary office/retail showroom at 118 Parramatta Road, Stanmore (Stanmore Temporary Office/Showroom). At some time after this the Applicant surrendered its lease. 2. On 7 March 2019, the Applicant entered a 2-year lease at 130 Pyrmont Bridge Road, Camperdown for use as a 540m2 retail showroom (Camperdown Showroom). The lease has two 2-year options, and the Applicant has exercised the first option. 3. The Camperdown Showroom required demolition works and works relating to the finishing of internal flooring and walls, the construction of displays, and the installation of lighting. 4. The Applicant is also the registered proprietor of a property in Minto (Minto Property) used as storage space for the business. The Minto Property has been utilised to a higher degree due to the reduced storage capacity of the Leichhardt Factory and Warehouse than the Acquired Land. Nature of claim 1. The Applicant claims compensation as a consequence of the acquisition of its interest in the Acquired Land. The claim is pleaded on three alternative bases: 1. Alternative 1 – compensation is claimed as disturbance pursuant to s 59(1)(c) of the Just Terms Act. 2. Alternative 2 – compensation is claimed as disturbance pursuant to s 59(1)(c) and s 59(1)(f) of the Just Terms Act. 3. Alternative 3 – compensation is claimed as a combination of disturbance pursuant to s 59(1)(c) and special value pursuant to s 55(b) of the Just Terms Act. 1. Depending upon the alternative approach adopted the quantum of compensation differs as set out in Annexure A. 2. In order for the Applicant to be entitled to any amount of compensation it is fundamental that it establishes that it had an interest in the Acquired Land. In its initial Points of Claim the Applicant contended that it had an interest in the Acquired Land as lessee pursuant to an oral lease. Consequent upon the Respondent pleading in its Amended Points of Defence that the Applicant had no interest in the Acquired Land the Applicant, thereafter, ultimately contended that it had an interest in the Acquired Land as: 1. Mr and Mrs Gaudioso (acting as owners) gave to the Applicant (of which Mr and Mrs Gaudioso were the sole directors and shareholders) exclusive occupation against all others, including Mr and Mrs Gaudioso as owners; 2. The right to exclusive occupation was a right, power or privilege over, or in connection with, the Acquired Land within paragraph (b) of the definition of interest in the Just Terms Act; and 3. The right, power or privilege constituted an interest in the Acquired Land as the right, power or privilege was over, or in connection with, the Acquired Land and was not a personal interest indicated, inter alia, by the Applicant's capacity to alienate that right, power or privilege. 1. During the course of its closing submissions the Applicant abandoned an alternative argument it had relied upon that the occupation of the Acquired Land amounted to a statutory tenancy pursuant to s 127 of the Conveyancing Act 1919 (NSW) and, therefore, it had a legal interest within subparagraph (a) of the definition of "interest" in the Just Terms Act (Tcpt, 22 April 2021, p 561(8-30)). Accordingly, that issue will not need to be determined in these proceedings. 2. The parties agreed that the determination of the nature of the interest of the Applicant with respect to the Acquired Land was an essential precondition to its claim for compensation. It was only if it was able to establish the necessary interest as required by the Just Terms Act that any of the three scenarios relating to the quantum of compensation would arise for determination. For that reason, it is appropriate to consider this potentially determinative issue first as it will inform the extent, if any, to which the balance of the issues raised will need to be considered. Interest in the Acquired Land 1. The Just Terms Act provides that: 37 Right to compensation if land compulsorily acquired An owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part by the authority of the State which acquired the land. 1. Section 4 of the Just Terms Act defines interest and land as meaning: interest in land means— (a) a legal or equitable estate or interest in the land, or (b) an easement, right, charge, power or privilege over, or in connection with, the land. land includes any interest in land. 1. As observed above, the Applicant does not claim a legal interest as referred to in paragraph (a) of the definition of interest. The Applicant only claims that the interest it has had extinguished, for which it is entitled to be paid compensation comprises a right, power or privilege over, or in connection with, the Acquired Land. Evidence of interest 1. The Applicant adduced evidence relating to the nature of its interest primarily through the affidavit evidence of Mr and Mrs Gaudioso, upon which neither was cross examined. In particular, the Applicant relied upon the affidavit evidence of Mr Gaudioso sworn 19 September 2018 in the following terms: 23 The sites were purchased by us with the intention that they would ultimately be made available for exclusive occupation and possession by the Applicant as long as it required it. … 27 I recall Carmel and I discussing the arrangements for the use of the sites at the time Olde English Tiles moved into the sites. I said to Carmel words to the effect of: 'Olde English Tiles will occupy 184-186 Parramatta Road initially, and then, when it's ready, it will occupy 182 Parramatta Road. Olde English Tiles will have the right to use the land as long as it wants to'. 28 I recall Carmel saying in reply words to the effect of: 'I agree'. 29 Carmel and I have always agreed that if the land was ever to be sold, the rights of Olde English Tiles must be respected. We have discussed this on more than one occasion (prior to the acquisition of the sites by the Respondent). 1. Mrs Gaudioso deposed that she agreed with the evidence of Mr Gaudioso and his account of the conversation. 2. In addition, Mr Gaudioso deposed in his 19 September 2018 affidavit that Mr and Mrs Gaudioso were approached to consider a redevelopment of the Acquired Land and that during discussions relating to the proposal with the developer he and Mrs Gaudioso had the following conversations: 29 Carmel and I have always agreed that if the land was ever to be sold, the rights of Olde English Tiles must be respected. We had discussed this on more than one occasion (prior to the acquisition of the sites by the Respondent). In particular, I recall that we discussed it when I commenced negotiating with a property developer, Britely Property, about the possible re-development of the sites in September 2015. 30 I recall saying to Carmel words to the effect of: 'We must think about the interests of Olde English Tiles. The location is important to the business. It has a long history there. People know where we are. If the land is to be redeveloped Olde English Tiles must be allowed to occupy the ground floor retail premises in the new building'. 31 I recall Carmel saying words to the effect of: 'Yes, I agree. If there are apartments above, we can own some of the apartments and live there and be very comfortable - carrying on the business as usual on the ground floor'. 32 The interests of the Applicant were at the front of my mind when I had negotiations with property developer – Britely Property – about the possible re-development of the sites between September 2015 and November 2016. 33 Britely Property was represented in these negotiations by Alex Sicari. In our about September 2015 at a coffee-shop in Double Bay, I recall saying to Mr Sicari words to the following effect: 'It is very important to me and my family to remain in the area as we have been there for 35 years. I want to keep the ground floor just for Olde English Tiles showroom and warehouse, whatever I can get, as much as possible. Then l want six apartments, one for my wife and I, and the others for family.' 34 I recall Mr Sicari saying words to the following effect in reply: 'Yes, no problem. We will give you whatever you want downstairs. We can do that on the apartments too.' 35 Carmel's and my intention was that this space would be made available to Olde English Tiles to exclusively occupy as long as it needed to, in-line with the existing arrangement. 36 Our wish to own the ground floor retail in any re-developed premises was reflected in the developer's first draft offer that was given to us for discussion on or about 3 October 2015. A copy of that offer is behind tab 7 is a copy of that offer. 37 In July 2016 we engaged AE Design Partnership to conduct building envelope testing and prepare a planning snapshot of the area in order to determine the viability of the offer made by Britely Property. A copy of the documentation produced by AE Design Partnership is behind tab 8. 38 The work included ground floor retail space that would be occupied by the Applicant (being 1,077 sqm under option 1 or 1,315.5 sqm under option 2). 39 On 1 November 2016 I signed a heads of agreement with Britely Property in the office of Mr Sicari in the city. Mr Sicari. I said to words to the effect of: 'I have to think about Olde English Tiles. This ground floor space of 200 square metres is not enough. The business will need more space than that.' 40 Mr Sicari said in reply words to the effect of: 'This is an initial idea only. It's not locked-in by this agreement. We can discuss this and make it work for you.' 41 I signed the heads of agreement so that we can then move to the next stage to have a proper legal document prepared. Based on this discussion I understood that this next legal document would ensure that the right of Olde English Tiles were properly provided for. A copy of the heads of agreement is behind tab 9. 42 Further discussion did not take place, nor was the heads of agreement ever formalised in a legal document. This is because, on 9 November 2016, a representative of the Respondent contacted me to tell me that the Respondent would compulsorily acquire the sites. This put an end to any further discussion with Britely Property and Mr Sicari. 1. There was evidence adduced that the Applicant paid no rent to Mr and Mrs Gaudioso. However, a sum was paid to Mr and Mrs Gaudioso which was described as "occupancy costs" and which was said by the Applicant to comprise the payment of outgoings for the Acquired Land and the payment of interest on Mr and Mrs Gaudioso's mortgage over the Acquired Land. The nature and purpose of the provision of such money to Mr and Mrs Gaudioso by the Applicant was disputed by the Respondent. 2. At the Date of Acquisition the evidence disclosed that the Applicant was the only person in physical occupation of the Acquired Land. Applicant's submissions 1. The Applicant submitted that based upon the evidence the right to exclusive occupancy of the Acquired Land amounted to a right, power or privilege over, or in connection with, that Land and that such was an interest of a proprietary or quasi proprietary nature: West v Roads and Traffic Authority of NSW (1995) 88 LGERA 266; Mooliang Pty Ltd v Shoalhaven City Council (2001) 114 LGERA 45 at [46]-[48]; and Rakus v Energy Australia (2004) 138 LGERA 373 at [20]-[21]. 2. Although there is no need to establish that the right, power or privilege was of a proprietary or quasi proprietary nature, in this case it could be so described: George D Angus Pty Ltd v Health Administration Corporation (2013) 205 LGERA 357 at [25] and [128] (George D Angus) ; Hornsby Council v Roads and Traffic Authority (NSW) (1997) 41 NSWLR 151 at 152; Minister for Education and Training v Tanner (2003) 128 LGERA 281 at [16]; and Dial a Dump Industries Pty Ltd v Roads and Maritime Services (2017) 94 NSWLR 554 at [156] (DADI). 3. The Applicant accepted that it was no part of any agreement between the Applicant and Mr and Mrs Gaudioso that rent or some other payment would be paid or that outgoings would be paid. To the extent that the Applicant did in fact pay some money to Mr and Mrs Gaudioso there was no legally enforceable agreement to do so. However, the fact that some money was paid to Mr and Mrs Gaudioso by the Applicant, coupled with the fact that the Applicant occupied the Acquired Land, was evidence that the Applicant had accepted the arrangement for occupation deposed to by Mr and Mrs Gaudioso. 4. To the extent that the provisions of s 37 of the Just Terms Act requires some notion of ownership, the nature of the Applicant's right, power or privilege over, or in connection with, the Acquired Land included a capacity for it to alienate that interest. The right to exclusive occupation for as long as it wanted permitted the Applicant to sublease all, or part of, the Acquired Land or use it for purposes not related to the OET Business. 5. The Applicant's interest is to be distinguished from the circumstances in DADI in so far as in that case the occupier only had permission to carry on business on behalf of other parties and there was an intervention of a lease to one of those parties that precluded the alienation by DADI of any of the existing rights under that lease. 6. In this case, the Applicant relied on the "unity of purpose" between the Applicant and Mr and Mrs Gaudioso. The use that the Applicant wished to make of this unity was clarified in an exchange between Senior Counsel and me at Tcpt, 22 April 2021, p 564(7-18) as: HER HONOUR: So here in relation to the interest, right, power or privilege, what I'm trying to understand is, is the unity of purpose going to evidence or is unity of purpose going to the creation of the or an element of the creation of the right, power or privilege? I HEMMINGS: The unity of purpose, your Honour, was able to rely upon as evidence to demonstrate the agreement. HER HONOUR: So you only rely on unity of purpose for evidentiary purposes? I HEMMINGS: Yes, I do. 1. In the context of unity of purpose, it was contended that the arrangement proposed by Mr and Mrs Gaudioso as owners was also evidence of the acceptance of such agreement by the Applicant, through its directors and shareholders, Mr and Mrs Gaudioso. The fact that the Applicant went into and remained in occupation for a lengthy period of time is evidence of the acceptance of the arrangement proposed by Mr and Mrs Gaudioso. 2. The unity of purpose between the Applicant and Mr and Mrs Gaudioso did not offend the principle expressed in The Minister v The New South Wales Aerated Water and Confectionary Company Limited (1916) 22 CLR 56 (Aerated Water). The decision in Aerated Water related to a determination of market value where the landlord and the tenant had some arrangements that indicated that the landlord may take a favourable position of the particular tenant in granting an option to renew the lease. In this case, it is not the issue of market value but rather what is being determined is the nature of the Applicant's interest. The position in this case is the status quo, being the arrangement between Mr and Mrs Gaudioso and the Applicant to allow the company to remain in exclusive occupation. Applying Aerated Water to the circumstances of this case would have the consequence that it must be assumed that the status quo will not change, there is no decision affected by a personal relationship that is being undertaken such that it would offend the principle in Aerated Water. 3. Whilst there is no express reference in the agreement between Mr and Mrs Gaudioso and the Applicant that there was a right to alienate the right conferred, it is an inescapable inference where the two directors of the Applicant are the owners and the owners have given to themselves the right of exclusive occupation for as long as they want. The right of exclusive occupancy as against all including the owners and the inescapable conclusion is that the Applicant has the right to sublease the Acquired Land. Whilst the Applicant has no lease to sublease its right to alienate would allow someone to occupy the land. In effect, the Applicant's submission was that Mr and Mrs Gaudioso relinquished their capacity to deal with the Acquired Land to the Applicant retaining only their reversionary interest in the fee simple. 4. The capacity to alienate the interest was derived from the right of occupation and use of the land. Such right was not limited in terms to the OET Business and, therefore, the Applicant could continue to use the land even if occupied by another party. Mr and Mrs Gaudioso in granting the exclusive occupation could not lawfully prevent the Applicant from granting an entitlement to another to occupy the land for a purpose other than the OET Business. The Applicant's capacity to alienate does not require its interest to be a legal or equitable interest in land, rather it is a lesser right, power or privilege over,or in connection with land. This proposition was formulated in the following way at Tcpt, 21 April 2021, p 492(17-24): Because the owners of the land are the same as the shareholders and directors of Olde English Tiles and because the owners of the land have given Olde English Tiles exclusive occupancy that if Olde English Tiles decided that they didn't need the whole of those premises, and consistent with their they having exclusive occupation against the interests of Mr and Mrs [Gaudioso], wanted to make available part of the premises to someone else the features of the exclusive occupation and the coincidence of the parties, in our submission makes good that ability to alienate the property. And at Tcpt, 21 April 2021, p 488(32-40): It's, in our submission, an inescapable inference where you have two owners who are the two directors and shareholders of the company that's occupying where those two owners have given to themselves the right of exclusive occupation for as long as they want and then you pose the question, and if Olde English Tiles wanted to sublease part of that property to someone else would that be consistent with Olde English Tiles have exclusive occupancy, ie against the interest of the freehold owners. In our submission in the circumstances of this case it's the inescapable conclusion that the answer is yes. 1. It was submitted that the determination of the Applicant's interest involved exercising some concept of fairness in the determination. Senior Counsel for the Applicant formulated this proposition at Tcpt, 21 April 2021, p 491(7-13) as: …. We said it in opening and I'll say it again, your Honour. It cannot be that the correct approach to the interpretation of this legislation which requires the finding of an interest which is not a legal nor an equitable interest, it can be something less, can mean in circumstances such as this one where a husband and wife are making available to themselves a property and their fault is not have put in place a lease means a claim otherwise potentially worth millions of dollars is not maintained. 1. Where the interest is one that is something less than a legal or equitable interest and relates to a right, power or privilege as referred to in (b) of the definition of interest it is inappropriate to attempt to apply principles that relate to a legal interest to the lesser interest. By its very nature a right, power or privilege is not a legal interest else it would fall for consideration in (a) of the definition. To determine whether such an interest is alienable principles relating to legal interests are inapplicable. Respondent's submissions 1. The Applicant bears the onus of establishing that it was the owner of an interest in land. 2. The Applicant had no right, power or privilege over, or in connection with, the Acquired Land, rather, at best, it had a bare license or permission to occupy the Acquired Land which was terminable at will of either party with no requirement for notice. Such a bare license or permission does not constitute an interest in land as it is not capable of alienation by sale or transfer, as a bare license terminates upon any assignment coming to the attention of the landowner: Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47 at 50. That is, the Applicant had nothing at the Date of Acquisition which was capable of sale or transfer and, therefore, it was not the owner of a right, power or privilege over, or in connection with, the Acquired Land 3. The oral agreements upon which the Applicant relies were made at unspecified times in vague terms and are unable to support a finding of an interest in the Acquired Land. There is no evidence of the terms of any asserted right, power or privilege. This factor distinguishes the subject circumstance from those in cases such as George D Angus. There is no evidence as to any agreement as to the payment of expenses or outgoings by the Applicant. The evidence of payment of what were described as "occupation fees" were based on instructions to the experts and not evidence as to an agreement or what in fact such sums represented. There is no evidence or a commencement date or duration of any such interest. 4. There is no evidence of any right to exclusive possession of the Acquired Land. The mere agreement between Mr and Mrs Gaudioso that the Applicant should have exclusive possession for as long as it wants does not constitute a legally enforceable right to exclusive possession. A "bare license" or permission does not grant the licensee the legal right of exclusive possession enforceable against third parties. Further, there is no evidence to support the submission that the Applicant had the entitlement to exclusive possession as against Mr and Mrs Gaudioso as owners. 5. To the extent that the Applicant relies upon the decisions in George D Angus; West v Roads and Traffic Authority of NSW at 274; Mooliang Pty Ltd v Shoalhaven City Council at [46]-[48]; and Rakus v Energy Australia at [20]-[21] to suggest that there is a principle that a commonality of purpose can be the foundation for a right, power or privilege over land or convert the arrangement from a bare license to something else, those authorities are distinguishable on their facts. In each of those cases the permission in question was quite different in scope to that the subject of these proceedings. Further, if they do stand for such a principle they are clearly wrong in light of the decision in DADI and should not be applied. 6. Further, contrary to the Applicant's submissions the decision in Hornsby Shire Council v Roads and Traffic Authority (1997) 41 NSWLR 151 is still binding authority and the interest relied upon by the Applicant must be able to be characterised as jura in re aliena, that is, limited to proprietary or quasi proprietary rights less than a fully-fledged estate, and the bare license relied upon by the Applicant is not capable of such characterisation. 7. The evidence establishes nothing more than a personal license to occupy. All the agreement was that while the Applicant is a party with which the Gaudiosos have this unity of purpose the arrangement will work and the agreement is coextensive with the continuing will of the landowners and the unity of purpose. 8. The proposition of the right being over, or in connection with, the Acquired Land can be tested by asking what the Applicant could do if the owners sought to sell, or whether upon a sale of the Applicant the right to occupy would persist. 9. The reliance by the Applicant upon Mr and Mrs Gaudioso, as owners, being the controlling mind of the Applicant and, therefore, some use may be made of this relationship, is misplaced and offends the principle in Aerated Water recently explained by Basten JA in Roads & Maritime Services v United Petroleum Pty Ltd (2019) 99 NSWLR 279 at [25]-[26] (United) and general law. The Respondent responded to the Applicant's submission on this matter as follows (Tcpt, 21 April 2021, p 529(37-50) and p 530(1-9)): Your Honour, we, with respect, invite your Honour to reject the general tag unity of interest if it's deployed, as it on occasions was, as a way of saying the corporate [veil] should be disregarded. There are circumstances ‑ I'll address Aerated Waters in a little more detail in a minute. But it's clear enough that Aerated Waters is in its primary operation concerned with the determination of market value and not taking into account personal factors. Basten J refers to three ongoing operations of Aerated Waters in United Petroleum that identifies the reasoning of Aerated Waters as having a somewhat wider operation and we certainly rely on that. But even if one put Aerated Waters entirely to one side in the assessment of whether or not there's an interest in land, one can't put totally to one side the fact of a separate legal entity being in occupation and using and Mr and Mrs Gaudioso not being in occupation and not using the property when applying the provisions of the Just Terms Act. There is an irreducible minimum of law infact that must be recognised as at the date of acquisition and subsequently when the Just Terms Act operates and one can't simply rewrite that structure by saying there's a unity of interest between them. Of course Mr and Mrs Gaudioso might decide, as directors, to act in the best interests of the company but they might decide the next day to wind up the company. It's a very vague notion that's deployed to fill obvious gaps in the evidence in the applicants' case, in my submission, in a way that doesn't have much or any legal justification. 1. As to the Applicant's proposition that the Just Terms Act must operate to provide some fairness and permit the Applicant to make a claim for its interest Senior Counsel for the Respondent submitted at Tcpt, 21 April 2021, p 528(35-46) in the following terms: My learned friend made a submission that the statute just can't work this way if a company is allowed to occupy premises owned by its principals or its members, surely the Just Terms Act provides a remedy. Your Honour was with respect quite right to raise in response to that, that Mr and Mrs Gaudioso took the decision to set up a separate legal entity. There are all sorts of advantages that occur of course by a corporate entity carrying out the business, the limited liability of the members of course being the obvious one. So Mr and Mrs Gaudioso, with respect to them, have to take the consequences good and bad over the years as they fall of the decision to operate the company, to establish the company and then take the consequences as they fall of the way the arrangements were entered into with the company. 1. However the Applicant's asserted interest is to be characterised, it must be capable of being alienated in order for the Applicant to be entitled to assert a compensable interest: DADI at [159]. The Applicant has been unable to provide any authority or other foundation that would permit a finding that the asserted interest was alienable. Findings on interest in the Acquired Land 1. The right of occupation enjoyed by the Applicant was a personal right and does not constitute a right, power or privilege over, or in connection with, the Acquired Land. The submissions of the Respondent are accepted, what the Applicant enjoyed was a bare license or permission to occupy the land and it did not have ownership in the sense of the right being alienable or transferable nor did it have power or control over, or in connection with, the Acquired Land. 2. In order for there to be a right, power or privilege over, or in connection with, the Acquired Land, the entitlement must satisfy a number of criteria as identified by Beazley P (as her Excellency then was) in DADI at [156]-[160], namely: 156 Accepting that, on the basis of the New South Wales authorities, an "interest in land" within the meaning of para (b) is not as confined as was found in Hornsby Council v Roads and Traffic Authority, including on the view of Mason P, there remain two requirements in the legislation which are fundamental to the determination whether Dial A Dump had an "interest in land" within the meaning of para (b). The first requirement is that the power or privilege" must be "over or in connection with the land". The second requirement is that there must be an "owner" of the power or privilege such as to be entitled to compensation: see s 37. 157 Dial A Dump did not have any power "over or in connection with the land". "Power" involves an ability to control or direct. There was no evidence that Dial A Dump had any such power and indeed the evidence was to the contrary. Dial A Dump had no power to control or direct the grant of leases or licences over the land. That power remained in ALF and in Boiling subject to the terms of its lease. Dial A Dump's function was to conduct two particular businesses on behalf of the owners of those businesses. It could thus determine how the businesses were carried on, but it could not otherwise control or direct what went on on the land, except "on behalf of the Alexandria landfill group" as recorded in the minutes of 30 June 2008. 158 It is arguable that a permission to use land could constitute a "privilege in, over or in connection with land" within the meaning of para (b) of the definition of "interest in land". Whether that could be so would depend on the terms of the permission. Dial A Dump's permission to be on the land was for the purposes of the businesses that it was carrying on for ALF and Boiling. It was, on his Honour's finding, a permission personal to it. ALF and Boiling at all times had control of Lot 2, as owner, lessee and pursuant to their obligations as the holders of the POEO licences. Dial A Dump, at the most, had no more than the rights of an agent or a licensee to be on the property for the purposes of carrying on the business. I do not consider that that right gave it an interest in land as defined. 159 I am also of the opinion that for there to be a power or privilege within the meaning of para (b), that power or privilege must be capable of alienation. Otherwise, the concept of ownership as part of the statutory scheme, especially in s 37, would be superfluous insofar as a power or privilege over or in connection with the land was concerned. Dial A Dump had nothing that it could sell or transfer. Its rights were, as I have stated, no greater than its obligation to conduct the two businesses on behalf of ALF and Boiling for so long as those entities permitted it to do so. 160 My view on this is reinforced by the terms of s 20 and the balance of the terms of s 37. Section 20 provides that on the date of publication of the acquisition notice the land described in the notice is vested in the acquiring authority. There was no interest by way of a power or privilege over or in connection for which Dial A Dump contended that could vest in the Authority: such permission as Dial A Dump had to be on the land to carry on the businesses terminated when those businesses ceased operation on the land. That occurred when the land was compulsorily acquired. For the same reason, insofar as Dial A Dump was concerned, there was nothing that was "divested, extinguished or diminished". 1. In this case, the questions that must be considered are: 1. Did the Applicant have a right, power or privilege over, or in connection with, the Acquired Land? And if so: 2. Was the right, power or privilege over, or connection with, the Acquired Land one that was capable of alienation by way of sale or transfer? If the answer to either of these question is "no" then the Applicant will not have an interest in the Acquired Land for which they are entitled to be paid compensation in accordance with the provisions of s 37 of the Just Terms Act. Did the Applicant have a right, power or privilege over, or in connection with, the Acquired Land? 1. To answer this question the nature of the asserted right, power or privilege needs to be ascertained. In this case, the ascertainment of the exact nature of the asserted interest is difficult as it is neither in writing nor is it expressed succinctly in any oral communication. The only evidence that relates to the nature of the interest is a conversation between the owners of the land and not the Applicant and then inferences, if available, to be drawn from the conduct of the relevant parties. The evidence is further complicated by the fact that the landowners are the same individuals who are the directors and shareholders of the Applicant. The role that each of the individuals is assuming at any time is not always distinguishable from the evidence. However, I must do the best I can with the evidence I have to ascertain the nature of the interest based upon that evidentiary foundation. 2. Dealing first with the single conversation relating to the occupation arrangement of the Applicant referred to at [37]: this conversation, it is accepted, is between the landowners and not the company directors (albeit they are the same persons), and upon which neither of the deponents were cross examined. The conversation is limited to the notion of the Applicant being permitted to occupy the Acquired Land for as long as it wants to. The terms of this conversation take the matter no further than that. By reference to this conversation only, there is no expression of terms or conditions relating to occupation or even the evincing of an intention that such occupation entitlement was intended to confer to the occupier any right, power or privilege over, or in connection with, the Acquired Land. As has been stated in DADI at [58], occupation alone is insufficient to evidence a relevant interest. 3. Looking beyond the conversation the Applicant contends that it was given exclusive possession of the Acquired Land and that such carried with it a right to exclude all persons including the landowners while it was in occupation as recited at [37] above in [23] of Mr Gaudioso's affidavit. This submission relates to what Mr Gaudioso said was in his mind when he purchased the land with Mrs Gaudioso. In this respect it is noteworthy that Mrs Gaudioso did not confirm that the content of [23] of Mr Gaudioso's affidavit was one with which she identified as being accurate and consistent with her recollection of conversations and events (see [5] Affidavit of Carmel Mary Gaudioso sworn 19 September 2018). 4. Even if it is accepted that this was a common intention of the landowners there is a real question as to whether, where that intention is not communicated even between the landowners, that it is a statement of the nature of the occupation. But even assuming that it was a relevantly held common understanding of the landowners and the Applicant it is still necessary to ascertain what this intention means. The Applicant assumes by its submission that the term used by the landowners was a legal term and carried with it the legal consequences that follows when such a legal term is used. It is difficult to accept this proposition without understanding what the landowners understood that term to mean. In this case, that can only be ascertained from looking at the actions of the landowners and the Applicant once the Applicant went into occupation of the Acquired Land. Those actions do not speak in favour of a finding that the legal meaning of the terms "exclusive occupancy" meant that the Applicant was entitled to exclude all persons including the landowners from the land. The evidence is: 1. At the time the landowners purchased the land the Applicant did not physically occupy the whole of the Acquired Land and to the extent that part was unoccupied by it that land was dealt with by the landowners where leases were granted to third parties. This indicates that prior to the occupation of the totality of the Acquired Land the "right" of the Applicant was not exclusive possession in the legal sense; and 2. After the Applicant entered into occupation of the whole of the Acquired Land the landowners entered into negotiations with a developer to develop the Acquired Land (see [39] above). The terms of the agreement that the owners were prepared to accept was the retention of ground floor space for the Applicant and some residential floor space above for the landowners to occupy. This arrangement was entered into without any reference to the Applicant or any condition relating to the obtaining of the Applicant's consent being required in order for the agreement to be implemented. 1. Further, in order to accept that the landowners used this term in its legal sense requires an acceptance that the landowners gave to the Applicant, for no consideration or express reference, all the rights they had in the Acquired Land (except the reversion) for an indefinite period which included a right to permit others to occupy the land on terms such as the payment of rent or the like. This inference, it is said, is derived from the landowners' stated intention and the commonality of purpose between the company and the individuals such that they would always act in each other's best interests. From the totality of the evidence, I am not able to draw such a wide-ranging inference. It is not the natural consequence, or necessary for business efficacy that the granting of a right of occupancy, particularly one that lacks express terms, that all rights and powers that the landowners hold with the exception of a reversionary interest would be conferred upon the occupant. 2. The reliance upon the commonality of purpose, rather than supporting the inference, supports the contrary inference. It is apparent from the evidence, including the conduct of the parties, that each considered that they would act in a way that was beneficial to each other. That is, that the personal relationship was the foundation for the arrangement and the reliance upon the goodwill of the common purpose was essential to that arrangement. Once the commonality of purpose with the accompanying goodwill of that common purpose was extinguished the arrangement would be extinguished. This is so when tested by the proposition that if Mr and Mrs Gaudioso were no longer the directors/shareholders of the Applicant whether the right to occupy would remain to the Applicant absent the common personalities of landowners and corporate identity – there is no foundation at law or otherwise that the Applicant was able to identify to justify such a finding. The common purpose is evidence of a personal relationship rather than one that relates to the property. A right to occupy that is coupled to the personal identity of the occupant does not confer a right, power or privilege over, or in connection with, the land but rather is a permission of a personal nature unrelated to a right, power or privilege to exercise some control over, or in connection with, the land. 3. To the extent that the Applicant relied upon earlier decisions of this Court relating to circumstances where there was a unity of purpose between the landowner and the occupier and in such cases a relevant interest for the purposes of the Just Terms Act was found to exist I find that those cases are distinguishable on their facts from the circumstances of this case and do not relevantly assist in the determination of the consequences of the particular factual matters relating to the permission to occupy the Acquired Land nor do they identify any relevant principle beyond determining the particular matters on their own particular facts. 4. In West v Roads and Traffic Authority the occupier was found, on the evidence in that case, to have a contractual license. There is no such asserted contractual license in this case. Further, to the extent that in this case the contractual license was found to exist the question of whether the rights conferred were capable of alienation was not considered. Accordingly, on the basis of the decision in DADI this authority cannot be considered, post DADI, to be authority for the proposition that a right, if created is an interest without also considering the capacity of that right to be alienated. 5. In Rakus v Energy Australia the evidence supported a finding of a right of transfer or alienation of the permissive occupancy (see [17]), it conferred a right of occupancy albeit not exclusive occupancy and the right to erect structures. When considered as a whole the terms of the permissive occupancy conferred upon Mr Rakus was found to be a privilege over the land. The terms of the Applicant's right to occupy the Acquired Land do not confer such similar rights and obligations in terms and is therefore distinguishable. 6. Mooliang Pty Ltd v Shoalhaven City Council related to the occupants of sites in a caravan park where the occupants were also the unit holders of the unit trust that was the landowner. In that case, the occupiers were found to have the benefit of a tenancy at will and, therefore, a legal interest in the land. The Applicant does not contend that its interest is a legal interest. 7. In George D Angus the Applicant in that case was found to hold a tenancy at will. In the alternative it was found to have enjoyed exclusive occupancy such that it had a right, power or privilege over, or in connection with, the land. These findings turned upon the particular evidence of the agreement struck between the owner and the occupier who had related but no coincident interests. The determination turned upon the facts of that case where the evidence of the agreement was quite different in extent and nature from that adduced in these proceedings. It does not identify any matter of principle beyond the application of established principles relating to interests as applicable to the evidence in that case. 8. As was observed at [158] of DADI it was the terms of the permission that dictate whether a person's right, power or privilege is one that is "over, or in connection with", the Acquired Land. In this case, the evidence is of a very loose arrangement between two separate legal entities where the individuals which make up those two entities is fundamental to the continuance of such arrangement. What was conferred was a permission to occupy conferring no right, power or privilege that was over, or in connection with, the Acquired Land. Accordingly, the Applicant has no relevant compensable interest in the Acquired Land. Was the right, power or privilege over, or connection with, the Acquired Land one that was capable of alienation by way of sale or transfer? 1. This question need not be answered in light of my finding as to the nature of the interest. However, even if I be wrong in that regard, I would have found that the interest was not capable of alienation by way of sale or transfer. 2. The fundamental proposition of the Applicant was that once the Applicant was granted the right to exclusive possession there was an inescapable inference that such right was accompanied by a right to alienate. This submission, however, was not founded on any identifiable principle of concept that would suggest that such was the natural consequence of exclusive possession. It is the case that exclusive possession is the primary indication of whether or not a lease has been created rather than a license: Radaich v Smith (1959) 101 CLR 209. If a lease is created, then the lessee has a legal interest in the land and where a legal interest is held it is a fundamental right that such a legal interest can be alienated. However, such consequences arise solely as a consequence of the holding of a legal interest in the land and not as a consequence of the right to exclusive possession of the land. That is, exclusive possession may evidence a legal interest, but it is the legal interest itself that dictates the right to alienate that legal interest in the land. 3. In this case, the Applicant does not contend that it has a legal interest in the land by way of a leasehold or otherwise. That concession must carry with it the acceptance that the exclusive possession, even if conferred by the landowners, was insufficient in the circumstances of this case to create a legal interest in the land. Without the legal interest there is no legal consequence of a right to alienate the other than legal interest that the Applicant has derived. 4. That is not to say that an interest derived under (b) of the definition of interest in the Just Terms Act can never be capable of alienation, but rather that the terms of the permission will need to be examined to ascertain whether such a right was conferred upon the recipient. In this case, there is no express evidence of the conferral of a right to sell or transfer the interest conferred (even if it is taken to include a right of exclusive possession) and there is no evidence from which an inference could reasonably be drawn that such a right was conferred. Further, from the evidence available the inference that is reasonably available is that such a right was not conferred and that whenever the Applicant no longer required the Acquired Land for the purpose of the OET Business its right to occupy would be relinquished to the landowner. Such is consistent with the manner in which the parties treated the land, and consistent with the common purpose upon which the Applicant relies. 5. Accordingly, I find that the Applicant held a right to occupy the land in the nature of a bare license. Its right to occupation was of a personal nature and did not confer to the Applicant any rights, powers or privileges over, or in connection with, the Acquired Land. Further, that bare license was not capable of alienation, the Applicant, therefore, had nothing that was divested, extinguished or diminished by the Acquisition Notice as referred to in s 37 of the Just Terms Act. 6. Whilst some sympathy may be felt for a family business that sets up corporate structures where the manner of such arrangement means that there is a loss that is not compensable upon acquisition. In choosing to undertake such arrangement both the benefits and the burdens of its structure must be accepted. A company is a separate legal identity from the natural persons and if arrangements are to be made inter parte those arrangements are taken to be between two separate legal identities. There is no room in the statutory language of the Just Terms Act to permit of the "fairness" that the Applicant contended, there is only a determination of whether the arrangement between the two legal identities can be characterised as an interest for the purposes of the Just Terms Act. Further, the import some notion of "fairness" would assume that the corporate and a natural person intended legal consequences that were only apparent upon the acquisition of the land and not at the time of making the arrangement and would, therefore, be imposing an intention that may not have existed at all at the time of the arrangement being put in place, and may not have arisen but for the acquisition. Can business losses be claimed as relocation costs? 1. As part of the arguments in this case both parties addressed me on whether a claim for loss of business profits was compensable as a disturbance claim pursuant to the provisions of s 59(1)(c) of the Just Terms Act. From that argument it is apparent that the law relating to this aspect of a disturbance claim where there has been a relocation is now unsettled. The decisions of the Court of Appeal in United and later in Alexandria Landfill Pty Ltd v Transport for NSW (2020) 243 LGERA 102 at [139] per Basten JA and [416] per Leeming JA raise question of the continuing application of El Boustani v Minister Administering the Environmental Planning and Assessment Act 1979 (2014) 199 LGERA 198 and other cases where it was accepted that such losses are compensable where there has been a relocation. Whilst it is clearly desirable that this area of the law is settled the present unsettled position is, in part, derived from the fact there has not been a case before the Court of Appeal where the issue has directly arisen for determination and commentary has been limited to dicta giving rise to further questions as to whether such dicta should be treated as binding in so far as it is "seriously considered dicta" in the Farrah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 sense. 2. Whilst it is desirable that the question be resolved with some certainty, in light of my findings that the Applicant has no relevant interest in land, the issue does not arise directly for consideration in these proceedings. To embark upon a consideration of this particular question would merely result in my decision adding to the non-binding discourse surrounding the application of 59(1)(c) to business losses. Therefore, I must decline to do so as I do not consider that this case, in light of my findings as to the lack of an interest, is the appropriate forum in which to embark upon an analysis of the unsettled position. Costs 1. The parties have not addressed me on the appropriate costs order in this matter as it is necessary for the reasons for my decision and the determination of compensation to be available to them such that an appropriate position with respect to costs may be determined. I propose to reserve the costs of the proceedings and list the matter before me for mention 14 days after the delivery of this judgment. If the parties reach an agreed position on costs, I invite the parties to forward short minutes of that agreement to my associate and orders will be made in chambers. Should the parties not be able to reach an agreed position on the next mention of the matter a date will be fixed for a hearing on costs and appropriate directions relating to such hearing will be made. Conclusion and orders 1. The Court orders that: 1. The proceedings are dismissed; 2. Costs are reserved; 3. Exhibits are returned; and 4. Matter is listed for mention on the question of costs on Friday, 10 September 2021 at 9am. Orders - 9 September 2021 1. By consent the Court orders that: 1. The Respondent is to pay the Applicant's costs of the proceedings as agreed or assessed; and 2. ​​​​​​​Vacate mention on Friday, 10 September 2021 at 9am. Annexure A (117122, pdf) ********** Amendments 07 September 2021 - Replace 'Old' with 'Olde' in the headnote. 09 September 2021 - Further orders at [90]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 September 2021