Eureka Operations Pty Ltd v Transport for New South Wales [2022] NSWLEC 104

Land and Environment Court New South Wales

Medium Neutral Citation: Eureka Operations Pty Ltd v Transport for New South Wales [2022] NSWLEC 104 Hearing dates: 28 July 2022 Date of orders: 18 August 2022 Decision date: 18 August 2022 Jurisdiction: Class 1 Before: Duggan J Decision: See paragraph 43 Catchwords: COMPULSORY ACQUISITION – ss 55 and 56 of Land Acquisition (Just Terms Compensation) Act 1991 (NSW) – remitted to redetermine compensation based on Court of Appeal findings – legal and equitable term of lease – compensation to take into account risk of early termination Legislation Cited: Land Acquisition (Just Terms Compensation) Act 1991 (NSW) Cases Cited: Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41 Roads and Traffic Authority v McDonald (2010) 175 LGERA 276 Transport for NSW v Eureka Operations Pty Ltd [2022] NSWCA 56 Category: Consequential orders Parties: Eureka Operations Pty Ltd (Applicant) Transport for New South Wales (Respondent) Representation: Counsel: Mr M Seymour (Applicant) Mr M Astill (Respondent)

Solicitors: Allens Linklaters (Applicant) Clayton Utz (Respondent) File Number(s): 2020/27760 Publication restriction: No

Judgment 1. As a consequence of the determination of Eureka's cross-appeal to the Court of Appeal in Transport for NSW v Eureka Operations Pty Ltd [2022] NSWCA 56 (Eureka (No 2)) the proceedings have been remitted to me in the following terms: Remit the proceedings to the Land and Environment Court to be redetermined having regard to the extension of the term of the respondent's leasehold interest to 2 February 2029 subject to the possibility of earlier termination as explained in the reasons of Preston CJ of LEC. 1. The particular matter to which this remitter relates is primarily the consequence of the finding that Eureka's interest in the land, being a commercial lease, had a term in excess of the term previously determined by me. The Court of Appeal relevantly determined at [146] that: …the term of the lease should be regarded, for the purposes of determining the compensation to which Eureka is entitled, as having been extended beyond the end date of 28 April 2024 set out in Item 2 of Schedule 1 of the lease but not necessarily to the end date of 2 February 2029. 1. For the reasons identified in [147]-[154] the Court of Appeal found at [155] that: The primary judge was therefore in error in determining the compensation to which Eureka was entitled on the basis that there had been no amendment of the term of the lease, rather than on the basis that there had been an extension of the term of the lease. To this extent, Eureka's cross appeal should be upheld. However, the end date will not necessarily be 2 February 2029, as Eureka contended, but could be an earlier date. An earlier date could arise for the purpose of cl 2.1 of the lease if either of the events specified in cl 3.2(a) or (b) of the Alliance Agreement were to occur before the date of 2 February 2029 specified in cl 3.2(c), or a Network Planning Agreement were to be made specifying a date when the site should cease to be an Alliance Site, which would set an Agreed End Date, which date might be earlier than any Alliance End Date. 1. On that finding it was necessary that the matter be redetermined as was identified in [156] (emphasis added): This uncertainty in the term of the lease will need to be taken into account in determining the amount of compensation payable for both the market value of Eureka's leasehold interest in the acquired land under s 55(a) and the decrease in the value of Eureka's leasehold interest in the residue land under s 55(f). The market would not value the lease as having a certain term until 2 February 2029, but instead as having an uncertain term that might extend up to 2 February 2029 but might be an earlier date. That assessment of the value of the lease has not yet been done. The proceedings will need to be remitted to the court below for this assessment to be done. 1. In this remitter the parties accepted that the only relevant finding to which the remitter related is that contained at [142(1)] of my earlier decision in Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41 (Eureka (No 1)). As a consequence, the remaining findings persist, and it is therefore necessary for me to now redetermine the compensation to which Eureka is entitled on the basis that (adopting the other inputs identified in Eureka (No 1) at [142] as modified in input (1) by the finding of the Court of Appeal in Eureka (No 2)): 1. The market would not value the lease as having a certain term until 2 February 2029, but instead as having an uncertain term that might extend up to 2 February 2029 but might be an earlier date; 2. The purchaser is a networked operator and not an independent operator; 3. There is no delay in the manifestation of the impact from the carrying out of the Public Purpose and it is to be assumed to have commenced on the acquisition date; 4. The Eureka earnings represents the earnings capability of a reasonably efficient operator; 5. The before gross profit is $576,579; 6. The after gross profit is reduced by 23.6% as appropriate for a networked operator as agreed by the accounting experts as at [4.1.14] of their joint report; and 7. The appropriate discount rate is that for a networked operator agreed by the accounting experts at [4.1.11] of their joint report at 13.6%. I note that by employing this discount rate the Applicant's claim for Special Value does not arise. 1. For the purposes of this decision, I adopt the relevant factual background identified by me in Eureka (No 1) together with the same defined terms. 2. Further, to the extent that the making of this decision requires the express reference to any material the subject of my earlier Confidentiality Order made on 14 December 2020 I will adopt the same approach as was adopted in Eureka (No 1) and enable the parties to address me as to whether any part of the reasons should be restricted from publication prior to the final publication of my reasons.