Land and Environment Court New South Wales Medium Neutral Citation: Mathew Massasso t/as Five Dock Pharmacy v Sydney Metro [2023] NSWLEC 115 Hearing dates: 17 to 21 and 24 to 28 July 2023 Decision date: 30 October 2023 Jurisdiction: Class 3 Before: Moore J Decision: See directions at [689] Catchwords: COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for loss of profit rent allegedly lost for the remainder of the term of the lease renewal options – consideration of market rent – no difference between passing rent and market rent established – profit rent claim fails COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for relocation of retail pharmacy business – substantial demolition and construction/reconstruction and structural alterations to relocation premises – whether structural alteration costs appropriate to be borne by Applicant and reimbursed by acquiring authority – costs of demolition and construction/reconstruction appropriate to be regarded as landlord's costs – claim rejected COMPENSATION – claim for cost of buying out existing tenants in order to render demolition and construction/reconstruction activities possible – cost of buying out existing tenants appropriate to be regarded as landlord's expenses – claim for reimbursement of cost of buying out existing tenants rejected COMPENSATION – claim for costs of fit-out of new premises – new premises fitted-out not only in compliance with regulatory requirements but also to best contemporary pharmacy practice – were costs of fit-out reasonably incurred and thus compensable – costs of fit-out reasonably incurred – Applicant entitled to reimbursement for costs of fit-out COMPENSATION – claim for differential in rental between that paid at the acquired premises and that paid at the relocation premises – rent at relocation premises higher than that at acquired premises - claim based on full term of lease assuming exercise of multiple renewal options - relocation premises larger than acquired premises rate per square metre at relocation premises lower than that at acquired premises – rent comparison appropriate on rate per square metre – no basis for claim – differential rent claim rejected COMPENSATION – claim for reimbursement for double rental paid at the acquired premises and that paid at the relocation premises – claim based on time including time for demolition and construction/reconstruction works – not appropriate to order reimbursement for rent paid during period whilst landlord's works were being undertaken – appropriate to allow nominal three-month rent-free period for fit-out works as provided for in the lease– claim for reimbursement of double rental rejected COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for temporary business losses – losses said to arise as a consequence of this favourably located new premises – whether loss occasioned by ongoing gradual decline of business – claim not established. COMPENSATION – compulsory acquisition of leasehold interest in shop premises – claim for long-term loss of profit as a consequence of non-establishment of proposed nearby medical Centre – site of proposed medical Centre also resumed for public purpose – assumptions underpinning claim of increased business from medical centre not established – claim rejected – claim rejected COSTS – claims arising from compulsory acquisition of leasehold interest in retail premises – although significantly unsuccessful, Applicant's case not completely unarguable or hopeless – appropriate acquiring authority pays costs of Applicant on ordinary basis Legislation Cited: Civil Procedure Act 2005 Health Practitioner Regulation 2016 (NSW) Land Acquisition (Just Terms Compensation) Act 1991 Uniform Civil Procedure Rules 2005 Cases Cited: Alexandria Landfill Pty Ltd v Transport for NSW [2020] NSWCA 165 Banno v Commonwealth of Australia (1993) 45 FCR 32 Briginshaw v Briginshaw (1938) 60 CLR 336 Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404 Croghan v Blacktown City Council [2019] NSWCA 248 El Boustani v Minister for Administering Environmental Planning and Assessment Act 1979 [2014] NSWCA 33 Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 George D Angus Pty Ltd v Health Administration Corporation [2013] NSWLEC 212 G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20 Home Care Services (NSW) v Albury City Council (2003)136 LGERA 117; [2003] NSWLEC 214 Hoyts and Spencer (1919) 27 CLR 133 Hua V Hurstville [2010] NSWLEC 61 James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 Konduru v Roads v Maritime Services (2017) 224 LGERA 262; [2017] NSWLEC 36 McBaron v Roads and Traffic Authority (NSW) (1995) 87 LGERA 238 McDonald v Roads and Traffic Authority of New South Wales [2009] NSWLEC 105 Minister for Army v Parbury Henty & Co (1945) 70 CLR 459; [1945] HCA 52 Peter Croke Holdings Pty Ltd (1998) LGERA 108 Roads & Traffic Authority of NSW v McDonald [2010] NSWCA 236 Qasabian Family Investments Pty Ltd v Roads and Maritime Services; Fishing Station Pty Ltd v Roads and Maritime Services [2017] NSWLEC 73 RTA v Perry & Anor (2001) 52 NSWLR 222; [2001] NSWCA 251 Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391 Roads and Maritime Services v United Petroleum Pty Ltd [2019] NSWCA 41 Category: Principal judgment Parties: Mathew Massasso t/as Five Dock Pharmacy (Applicant) Sydney Metro (Respondent) Representation: Counsel: I Hemmings SC/N Eastman and E Dunlop, barristers (Applicant) G Sirtes SC/C Norton, barristers (Respondent) Solicitors: Thompson Cooper Lawyers (Applicant) Bick & Steele (Respondent) File Number(s): 362945 of 2021 Publication restriction: No JUDGMENT Introduction The site and Shop 1 Mr Massasso's claims The summary of the competing opening positions Representation A necessary general observation The hearing Sydney Metro's concessions The evidence Relevant statutory provisions Introduction The Land Acquisition Act. The relevant pharmacy location framework The site view Relocation claims generally The burden of proof in compulsory acquisition compensation cases Mr Massasso's evidence Introduction Mr Massasso's affidavit evidence Mr Massasso's oral evidence The terms of the lease for 104 Great North Road The relocation costs claim Introduction The background contextual lay evidence Introduction Mr Rupolo's evidence A summary of Mr Rupolo's affidavit evidence Mr Rupolo's oral evidence Mr Megna's evidence A summary of Mr Megna's affidavit evidence Mr Megna's oral evidence (in cross-examination) Mr Megna's re-examination Consideration The acquisition, fitout and leasing of 104 Great North Road Introduction The elements of the works undertaken at 104 Great North Road Ms Massasso's evidence Introduction Ms Massasso's affidavit evidence Ms Massasso's oral evidence The expert evidence concerning the fitout Introduction Ms Stybowski's evidence Mr Mihulka's evidence The closing submissions for Mr Massasso Introduction The factual matters relevant to the claim Criteria for the new premises The regulatory and best practice regimes for pharmacies The relocation application process Operational requirements The approach to s59(1)(c) in the authorities The Applicant's primary proposition on relocation The items in the quantity surveyors' joint report Item 1 "Demolition for Proposed Extension" Item 2: Structural Repairs Item 3: In-ground stormwater drainage (xii) Item 4: New works to the retained portion of the existing building (xiii) Item 5.1: Consult Room (xix) Item 5.2: Access for WC and DAA servery Item 6: New Building Works for Ground Floor Extension Item 7: External Works – Secure Parking and Delivery Area Sydney Metro's closing submissions on the relocation costs claim Introduction The major works The pharmacy relocation evidence The Quantity Surveying Exercise and the Construction Claims Item 1: Demolition for proposed extension (demolish existing roof structure and cladding, new first floor extension; new lower roof) ($46,777). Items 2, 3, 4, 6 and 7: Various structural and services works ($729,446) – general comments Item 3 – In-ground stormwater drainage Item 4 – New works to retained portion of existing building and Item 6 – New building works for ground floor extension Item 7 – External works – secure parking and delivery area Claimability of item 5.1 – consulting room ($36,123) Claimability of item 5.2 – accessible toilet and DAA [dose administration aid] servery ($52,206). Claimability of Item 13 – General relocation costs including the vaccine fridge ($11,706). Consideration Introduction What were properly landlord's works or what were tenant's fit-out costs? Compensation for the fit-out of the reconstructed premises Summary of the outcomes from the joint quantity surveyors' schedule The buyout of the existing tenants at 104 Great North Road The rent differential claim Introduction The submissions for Mr Massasso The legal validity of the claim The basis for Mr Massasso's claim The submissions for Mr Massasso Sydney Metro's submissions Consideration The double rent reimbursement claim Introduction The basis for Mr Massasso's claim The submissions for Mr Massasso Sydney Metro's position Consideration Consideration The profit rent claim Introduction The pleaded claim Sydney Metro's position The evidence The submissions Introduction The submissions for Mr Massasso The submissions for Sydney Metro The reply submissions for Mr Massasso Consideration The business loss claims – general legal issues The business loss claims – expert evidence issues Introduction Objections to Ms Carroll's written evidence Mr Holland's reliance on Ms Carroll's evidence The temporary business loss claim Introduction The expert evidence Introduction – the pharmacy business evidence The forensic accounting evidence Introduction Points of agreement Points of disagreement The submissions for Mr Massasso Sydney Metro's submissions on temporary business loss Proposition a): did Five Dock Pharmacy underperform during the sample period? Proposition b): Is the relocation the only possible explanation for any loss of revenue? Calculating the loss – the iscount rate Consideration The permanent business loss claim Introduction The lay evidence The expert evidence on potential script capture Introduction The submissions for Mr Massasso The establishment of the medical centre Evidence concerning script capture from the medical centre Discount rates Conclusion on the permanent business loss claim. Sydney Metro's submissions on the long-term business loss claim Introduction Ms Carroll's evidence General matters relating to Mr Holland's evidence Sydney Metro's general submissions Consideration Disturbance Costs Conclusions Directions Annexure A JUDGMENT Introduction 1. These proceedings arise from the acquisition of land at Five Dock for the purposes of the Sydney Metro West Project being undertaken by Sydney Metro. The acquisition occurred on 19 March 2021. 2. The land which was acquired is described as Lots X and Y in Deposited Plan 414325. The address of the land the subject of the acquisition was known as 157 Great North Road, Five Dock, NSW (the site). At the date of acquisition, the site contained two retail shops at ground level, and a first-floor office. One of the retail shops (Shop 1) was leased to Mr Matthew Massasso who operated a retail pharmacy business known as Five Dock Pharmacy. 3. The lease to Mr Massasso was extinguished upon the date of acquisition. As a result of the extinguishment of his leasehold interest, Mr Massasso appealed against the determination of compensation payable to him under the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act). 4. The total claim made by Mr Massasso was for $7,188.078. The vast majority of the total claim made by Mr Massasso ($6,434,625) was claimed as disturbance arising under s 59(1)(c) of the Land Acquisition Act. Specifically, the disturbance related to the financial costs said to be reasonably incurred in connection with the relocation of Mr Massasso's business to new business premises. The new business premises are situated across the main road in the Five Dock shopping strip at 104 Great North Road, Five Dock. The new business premises were purchased by Mr Massasso's wife, Ms Susan Massasso, who subsequently leased the new premises to him. 5. A small component of these costs in the sum of $4,753 was alternatively claimed under s 59(1)(f) of the Land Acquisition Act. 6. In addition to the relocation claim, there was a claim for market value in the sum of $224,000 under s 55(a) of the Land Acquisition Act. There was also a claim made by Mr Massasso for legal costs and disbursements (including consultants and valuation costs) in the sum of $529,453. 7. Sydney Metro denied most of the claims made by Mr Massasso. Sydney Metro admitted a total amount of $974,478. The site and Shop 1 1. The site was on the western side of Great North Road in the commercial centre of Five Dock. To the south on the same side of the road is a public open space and thoroughfare known as Fred Kelly Place. Fred Kelly Place is a closed road that has been converted into a mall. There was one shop (occupied by Westpac Bank at the time of acquisition) separating Fred Kelly Place from the site. 2. Fred Kelly Place runs east-west between Great North Road and East Street. At the western end of Fred Kelly Place is a complex containing, amongst other facilities, a Coles supermarket and an underground car park. East Street is accessible by walking to the north from the Coles Supermarket entrance. 3. There is a signalled pedestrian crossing across Great North Road at Fred Kelly Place, and the Five Dock Post Office faces Fred Kelly Place across the pedestrian crossing. 4. As at the date of acquisition, the registered proprietor of the site was Ms Geraldine Rizzo. The site comprised two street-level retail shops (with Shop 1 the more southern of the two) and also a first-floor commercial tenancy leased to a design and construction company. The gross lettable area of Shop 1 was 114.2m2. 5. In 2000, Mr Massasso had purchased a pharmacy business operating in Shop 2, (a business which became Five Dock Pharmacy) and the leasehold interest was subsequently transferred to him. In 2002, following discussions with the owners (Ms Rizzo and her late husband), Mr Massasso moved Five Dock Pharmacy from Shop 2 into Shop 1 and entered into a long term lease and options for renewal arrangement for that shop. 6. The lease of Shop 1 that existed at the date of acquisition was entered into in 2019 between Mr Massasso and Ms Rizzo (Shop 1 Lease). The necessity for the 2019 lease arose as a consequence of Mr Massasso forgetting to exercise his option to renew the 2002 long-term lease (it having been for a period of five years with multiple five year options). This new lease commenced on 15 September 2019 and ran for a period of five years (to 14 September 2024), with four options to renew each for a further period of five years (that is, ultimately extending potentially to September 2044). 7. The rent payable under the Shop 1 Lease was $84,232.15 per annum (excluding GST). This amount was payable by monthly instalments of $7,019 (excluding GST) together with a 33.3% share of outgoings for the site. 8. As at the date of acquisition, the net passing rent was equivalent to $86,759 per annum (excluding GST) and the share of outgoings was $15,800 per annum. Therefore, the gross passing rent was equivalent to $102,559 per annum, or $898/m2 of gross lettable area. 9. The Shop 1 Lease provided for fixed annual increases of 3% of rent payable including for the option periods (if the option periods were exercised). The new Shop 1 Lease was negotiated between Mr Massasso and Ms Rizzo's son, Mr Joe Rizzo. Mr Joe Rizzo is a real estate agent (Exhibit C, Evidence Book, page 411 to 412). 10. At the time of entering into the Shop 1 Lease, the fit-out of Five Dock Pharmacy comprised: 1. A floor to ceiling glass frontage to Five Dock Road with signage and sliding door; 2. Shelving for retail pharmaceutical products; 3. A dispensary of about 8m2; 4. A rear storeroom and a further storage area under the stairs to the upper unit; 5. Rear stair access to a parking area for 3-4 cars at the rear of the pharmacy, accessible by vehicle from East Street (although the Shop 1 Lease did not include any dedicated car space). 1. The Five Dock Pharmacy did not include a consulting room, with the consequence that the pharmacy was unable to offer vaccination services. 2. There were three other pharmacies located on Great North Road in 2019, including at 125 Great North Road (about 100m south of Shop 1); Chemist Warehouse at 89-91 Great North Road (about 200m south of Shop 1); and a medical centre pharmacy also owned by Mr Massasso at 150 Great North Road (about 300m north of Shop 1). Mr Massasso's claims 1. Mr Massasso's compensation claim is made on a number of separate bases. These are: 1. a claim for profit rent compensation on the basis that the rent to which he would have been entitled in the long-term for Shop 1 under the new lease and the options (on the assumption that the options would be exercised) was less than the market rent that would have applied to those premises. As a consequence, Mr Massasso claims that he should be compensated for the difference between the passing rent and the market rent over the entirety of the remaining available period of the Shop 1 lease until 2044 on the basis of a profit rent foregone; 2. the cost of renovation and fit-out arising from the relocation of his business from Shop 1 to its new premises at 104 Great North Road, Five Dock. Extensive additions and alterations to the ground level of the building to fit it out for pharmacy use are claimed by Mr Massasso under this element of his claim. It is to be noted that, although, during the course of the carrying out of the additions and alterations, an upper floor was added to the premises, Mr Massasso expressly disavows any claim for any costs associated with the construction of that additional level to the building; 3. a claim for the monies expended by him in buying out the existing tenancies at 104 Great North Road as expenses reasonably incurred in enabling him to have access to vacant premises in order to carry out additions and alterations within the permitted statutory time period for his business relocation; 4. a claim for the difference between the higher rent being paid at the new premises and that paid at Shop 1 for the entirety of the period of his lease at the new premises (including the various options for renewal of that lease) over the whole of the period until the expiry of those options; 5. a claim for the double rental paid by Mr Massasso for the period after the expiry of the rent free allowed in his lease at 104 Great North Road and the date when he ceased paying rent at Shop 1; 6. a claim for short-term business losses arising from what is said to be the downturn in his business, in the short term, occasioned by its relocation from Shop 1 to his new premises at 104 Great North Road; and 7. finally, a claim for long-term business loss as a consequence of Sydney Metro acquiring premises in East Street (in the vicinity of the Coles supermarket at the western end of Fred Kelly Place) where development consent had been granted by the City of Canada Bay Council (the Council) for the establishment of a medical centre – a development which did not proceed as a necessary consequence of Sydney Metro's acquisition of that land. As a consequence of this, Mr Massasso claims compensation for what he says is the long-term business loss that arises because he is unable to harvest the script business (and associated other retail pharmacy business) that would have been generated for Five Dock Pharmacy had that medical centre been constructed and become operational. The summary of the competing opening positions 1. The written opening submissions for Sydney Metro set out, in tabular form, the opening positions of the parties on the various aspects of the claim advanced on behalf of Mr Massasso. A copy of that table is reproduced below: Head of compensation Applicant's claim Respondent's position s 55(a) $244,000 Nil Market value s 59(1)(a) $529,453 TBC Legal costs (plus disbursements for consultants and valuation costs) s 59(1)(c) $1,731,914 $864,000.64 Physical relocation costs s 59(1)(c) $2,506,813 Nil Rent differential s 59(1)(c) $401,033 Nil Tenant buy-out s 59(1)(c) $200,893 Nil, or no more than $118,652 Double rental s 59(1)(c) $305,219 Nil Temporary business loss s 59(1)(c) $1,284,000 Nil Permanent business loss on relocation (medical centre) s 59(1)(c) or (f) $4,753 Nil Make good costs TOTAL $7,188,078 Up to $982,652.64 plus legal costs and valuation fees TBC 1. It will be necessary to consider and determine each of the contested elements set out in the above table. To the extent that any of those elements result in my determination that Mr Massasso is entitled to compensation for that element in a specific amount, that amount is nominated as the outcome of that element of my consideration. 2. On the other hand, if an element of the above table can only presently result in a determination of issues that form the basis for calculation of some entitlement to compensation (as will be seen to be the position concerning the compensation for the fit-out of the new pharmacy), I have made a determination which will provide a proper basis for the relevant experts to undertake additional work to derive the dollar value to be applied in the making of the necessary orders to formalise the outcome of that element of Mr Massasso's claim. Representation 1. Mr Massasso was represented by I Hemmings SC and N Eastman and E Dunlop, barristers. Sydney Metro was represented by G Sirtes SC and C Norton, barristers. A necessary general observation 1. During the course of oral closing submissions on behalf of Sydney Metro, Mr Sirtes proposed that I should not accept that Mr Massasso had, himself, actually paid for all of the elements that were the subject of his claim where those elements were said to represent expenditure by him for the various outcomes in his claim. It is unnecessary to address this submission at any length. It is sufficient to note that, during Mr Hemmings' closing oral submissions in reply, he addressed this submission head on, taking me to various elements in the Evidence Book and/or the Supplementary Evidence Book that recorded relevant expenditure items in Mr Massasso's accounting records. It is sufficient to note that I am satisfied that this element of Sydney Metro's submissions is one without foundation. The hearing 1. The hearing occupied the 10 working days between Monday 17 July and Friday 28 July with a site inspection being undertaken on the morning of the second day. Sydney Metro's concessions 1. During the course of the hearing, Sydney Metro made three concessions that are appropriate to be noted. The first was that, to the extent to which any regulatory changes might have occurred since Mr Massasso fitted out his former pharmacy and which now required an increase in allocation of space (for example increased widths of circulation spaces in order to meet current accessibility circulation requirements), this was to be regarded as necessary to be undertaken as part of the compensable fitout costs for the purposes of his relocation. 2. Second, although originally not accepted by Sydney Metro as a compensable relocation fitout cost, provision of an accessible toilet as part of the cost of the fitout at the relocation premises at 104 Great North Road was accepted by Sydney Metro to be a compensable cost. 3. Finally, Mr Massasso had claimed the sum of $4,753 as make-good costs. When I enquired of Mr Hemmings where I would find an explanation for the basis of these costs, I was taken to Appendix 6 of the Statement of Evidence prepared by Mr Connaire, a quantity surveyor. My enquiry, Mr Hemmings' response and the subsequent exchange between us concerning how matters of the detailed elements of this claim might be established are recorded in the transcript of 27 July 2023, at page 449, line 45 to page 450, line 38. It is not necessary to set out the terms of this exchange. On 28 July 2023, Mr Sirtes advised that Sydney Metro would no longer oppose this element of Mr Massasso's claim. It is appropriate to note the terms in which this concession was made (Transcript 28 July 2023, page 477, lines 20 to 30): SIRTES: Your Honour, can I raise an issue of agreement between the parties that takes an issue off the table for your Honour; which is that relatively small sum of staffing costs of $4,753? HIS HONOUR: Yes. SIRTES: Make good costs it's been. Make good. I just indicate to your Honour that there is no admission by Sydney Metro that that matter has been properly established or proven, but it is such a small amount in the context of the case that we're not going to trouble the Court with quibbling over it. The evidence 1. Mr Massasso deposed an affidavit dated 30 August 2023. Mr Massasso was required for cross-examination. Exhibit MDM-1 was annexed to his affidavit and tendered as part of Exhibit C. 2. The following lay witnesses provided affidavit evidence for Mr Massasso, each of whom were required for cross-examination: * Mr D. Cordaro (Affidavit dated 26 August 2022); * Ms S. Massasso (Affidavit dated 26 August 2022); * Mr M. Megna (Affidavit dated 26 August 2022); and * Mr J. Rupolo (Affidavit dated 26 August 2022). 1. Several expert witnesses prepared individual Statements of Evidence for the purposes of these proceedings. These statements were later tendered as part of Exhibit C. The following expert witnesses were relied upon in Mr Massasso's case, each of whom were required for cross-examination concerning their respective findings: * Ms M. Stybowski (Pharmacy relocation expert) (Statement of Evidence dated 26 August 2022); * Ms N. Carroll (Pharmacy business expert) (Statement of Evidence dated 9 September 2022); * Mr N. Connaire (Quantity surveyor) (Statement of Evidence dated 9 February 2023); * Mr C. Holland (Forensic accountant) (Statement of Evidence dated 10 February 2023); and * Mr M. Dyson (Valuation expert) (Statement of Evidence dated 9 March 2023). 1. Mr M. Szczerbick, an architect, also deposed an affidavit in Mr Massasso's case. It was dated 30 August 2022. Mr Szczerbick was not required for cross-examination. 2. In response to the evidence put on for Mr Massasso, the following expert witnesses were called by Sydney Metro, each of whom were required for cross-examination concerning their respective findings: * Mr S. Mihulka (Pharmacy relocation expert) (Statement of Evidence dated 1 December 2022); * Mr F. Sirianni (Pharmacy business expert) (Statement of Evidence dated 6 December 2022); * Mr I. Tucker (Quantity surveyor) (Statement of Evidence dated 17 February 2023); * Mr A. Giliberti (Forensic accountant) (Statement of Evidence dated 17 February 2023); and * Mr D. Lunney (Valuation expert) (Statement of Evidence dated 24 March 2023). 1. Each expert witness, with the exception of Mr M. Szcerbick, engaged with their relevant counterpart expert witness and prepared a joint expert report outlining issues of dispute that were relevant to their respective disciplines. The following disciplines were the subject of joint expert reports that were prepared and later tendered as part of Exhibit C: * Pharmacy relocation (Ms M. Stybowski and Mr M. Mihulka) (Joint Expert Report dated 20 January 2023); * Pharmacy business (Ms N. Carroll and Mr F. Sirianni) (Joint Expert Report dated 22 December 2022); * Quantity surveying (Mr N. Connaire and Mr I. Tucker) (Joint Expert Report dated 18 April 2023); * Forensic accounting (Mr C. Holland and Mr A. Giliberti) (Joint Expert Report dated 18 March 2023); and * Valuation (Mr M. Dyson and Mr D. Lunney) (Joint Expert Report dated 21 April 2023). 1. The relevant expert evidence is later addressed in the appropriate section of this judgment. 2. Objection was taken by Sydney Metro to the admissibility of several documents referenced by Ms Carroll and sought to be incorporated as foundations for the opinions and conclusions which she set out in her expert report. It will later be necessary to address those objections and my reasons for my upholding significant elements of them and rejecting, as a consequence, significant portions of Ms Carroll's evidence. Relevant statutory provisions Introduction 1. Three provisions of the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act) are engaged for consideration. In addition, various regulatory requirements setting out the restrictions that governed the options available to Mr Massasso in his selection of a location for, and timing of relocation to, the new pharmacy are also relevant. With respect to these relocation criteria, it is not necessary to set out the elements of each of these regulatory instruments. It is sufficient to note that there is no dispute as to their effect in Mr Massasso's circumstances. The Land Acquisition Act. 1. The first provision of the Land Acquisition Act to be noted is s 4(1). That section contains the definition of an "interest in land", a definition which makes it clear that Mr Massasso's leasehold interest in the site of his former pharmacy is an interest giving rise to a claim for compensation under the Land Acquisition Act. This definition is in the following terms: 4 Definitions (1) In this Act— 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. 1. The next relevant provision of the Land Acquisition Act is s 56(1), the provision which sets out the nature of the hypothetical transaction requiring to be considered in determining what compensation is to be paid to Mr Massasso for the acquisition of his leasehold interest in the site of the former pharmacy. This provision is in the following terms: 56 Market value (1) In this Act— market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid)— (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and (b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and (c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law. 1. In this regard, it is to be noted that there is no dispute between the parties as to the public purpose which is required to be disregarded (the public purpose being the construction of the Sydney Metro – particularly here relevant, the proposed Five Dock Station to be constructed to serve that metro line). There is also no dispute between the parties as to the date when Mr Massasso first became aware of the intention to carry out the public purpose. That occurred on 21 October 2019, when two representatives of Sydney Metro called on him at the former pharmacy to notify him of the intention to acquire the property within which his former pharmacy was located and to acquire his leasehold interest in that property. 2. The third element of the Land Acquisition Act engaged is s 59(1), this being the provision which allows for a range of elements of compensation (if applicable) to be claimed from the acquiring authority as compensation elements arising from a compensable compulsory acquisition of an interest in the land. As can be seen from the earlier set out table summarising the matters in dispute between the parties, Mr Massasso's claims made pursuant to s 59(1) of the Land Acquisition Act are primarily advanced under s 59(1)(c). The relevant elements of s 59(1) are: 59 Loss attributable to disturbance (1) In this Act— loss attributable to disturbance of land means any of the following— (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) … (c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs), (d) … (e) … (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition. The relevant pharmacy location framework 1. The relevant criteria governing (and limiting) the scope of Mr Massasso's ability to select a location for the new pharmacy are contained in the following statutory instruments: * National Health Act 1953 * National Health (Australian Community Pharmacy Authority Rules) Determination 2018 1. It is not necessary to set out the detail of these statutory requirements. The site view 1. The site view took place on 18 July 2023. Notes of the site view were settled by the parties' legal representatives and subsequently tendered. The site view notes are reproduced below: The parties met at the front of 104 Great North Road. From that location and by reference to the document provided by the Applicant, Mr Hemmings pointed out the comparable transaction properties that were visible standing at the front of the premises. They were: Starting from the north the "chiropractor" premises at 108A Great North Road. It was noted that the depiction on the plans prepared by the Respondent of the chiropractor site is wrong. The red outline appears to show the whole of the property whereas that property only has a GLA of 38m2. Next it was to point out the approximate location of the acquired premises (157 Great North Road) and the previous location of the Westpac premises immediately to the south. Those two premises (as well as other adjoining properties to the west and north) have been demolished and the site was a construction site. Attention was then drawn to the location of Fred Kelly Place and the location of Coles Supermarket at its western end. The property at 147 Great North Road was then identified noting that it has four different tenancies. The relevant comparable leasehold tenancy at Shop 4 is a café on the southern side of Fred Kelly Place, towards the western end. Next, attention was drawn to Liquorland at 145 Great North Road. Next attention was drawn to the premises immediately to the south of the relocated premises being 102 Great North Road. Those premises are referred to in the evidence as "Made in Italy" but are currently undergoing fit out for a Guzman Y Gomez restaurant. The location of 109 Great North Road (referred to as the accountant) was then pointed out though not visible from the standing point at the front of the relocated premises. The location of the two pharmacies to the south of Garfield Street (along the western side of Great North Road) were also pointed out. The parties then commenced their walk around the locality. First, the parties went north to the chiropractor (108A Great North Road) and viewed that property from the footpath. It was confirmed that the relevant leasehold tenancy was only the front half of the property and that it did not have access to the rear. The parties then walked south to view 102 Great North Road. The parties then continued south and walked down the walkway to the Council carpark (being the carpark off Waterview Street). The parties stopped at the end of the walkway and Mr Norton drew the Court's attention to the location of the carpark. The parties then returned to Great North Road and walked south to a location generally opposite 109 Great North Road. It was noted that although having previously been a Flight Centre there was now an accountant (who could be seen to be occupying the first floor) and a jewellery store on the ground floor. Attention was once again drawn to the location of the two pharmacies on the Western side of Great North Road to the south of Garfield Street. The parties then returned north on the eastern side of Great North Road and crossed at the pedestrian crossing (on the northern side of Garfield Street). The parties proceeded north to 145 Great North Road (Liquorland). The Court viewed Liquorland from the front and Mr Lunney identified that the property went all the way through to the rear laneway beside Coles Supermarket. The parties then walked up Fred Kelly Place and viewed the café – known as Bar Piccolino – at Tenancy 4, 147 Great North Road. The parties then continued up the pedestrian way past the north facing entry to Coles Supermarket and into East Street. The general location of the proposed medical centre at 2 East Street (now within the construction site for Metro) was pointed out. The parties then returned to Fred Kelly Place and walked down the pedestrian pathway behind the café and to the rear of Liquorland. The Court was invited to note the entry door at the rear of Liquorland. The parties then returned to Fred Kelly Place. Mr Hemmings invited the Court to note that the Council had plans in relation to the Westpac building – and its location was again pointed out – for it to form part of an expanded Fred Kelly Place. The Court was invited to note the visibility of the awning to the relocated premises – 104 Great North Road – from Fred Kelly Place. The view then concluded. Relocation claims generally 1. I have earlier set out the terms of s 59(1)(c) of the Land Acquisition Act. This provision is the foundation upon which most of the elements of Mr Massasso's claim that were in dispute at the commencement of the proceedings has as its statutory foundation. The necessary broad understanding of how claims pursuant to this provision should be approached was addressed by Tobias JA in the oft cited passage of Roads & Traffic Authority of NSW v McDonald [2010] NSWCA 236 at [143]. This paragraph is in the following terms: 143. In summary, I am of the following views: (a) As was acknowledged by the RTA, in each of s 59(c) and (f), the word "reasonably" governs the word "incurred" and not the expression "financial costs". The issue that arises under each subparagraph is whether the relevant costs are "reasonably incurred": it is not a question as to whether those costs are reasonable in themselves; nor does the Just Terms Act contemplate some overarching test of reasonableness in respect of compensation otherwise properly assessed having regard to "all relevant matters" in Part 3; (b) Given that it was not in dispute that upon vacating the residence on the acquired land when required by the RTA the respondent had no option but to rent premises pending the construction of her new residence upon the residue land, the only relevant question was whether the incurring of the financial costs in the form of rent was itself reasonable. The incurring of rent may not have been reasonable if, for instance, the respondent already owned an alternative residence which she and her partner could have occupied pending the construction of her new residence upon the residue land or if she had rented an expensive penthouse overlooking Sydney Harbour at an exorbitant rent. In such cases it could legitimately be said that the rent claimed was not "reasonably incurred"; (c) The factors to which Talbot J referred in Horton could not as a matter of law bear upon the reasonableness of the respondent incurring the rent claimed as a consequence of leasing temporary premises in which to reside having been forced out of her home by the compulsory acquisition; (d) Accordingly, the primary judge erred in relying upon Talbot J's approach to the question of the rental claim in that case and applying it to the present case. His Honour seems to have applied a general test of reasonableness that does not accord with either the plain text of s 59(c) or (f) or the statutory objective of ensuring just compensation for the separate head of loss attributable to disturbance. 1. As discussed in the above passage, the approach to be taken to claims advanced pursuant to s 59(1)(c) is to consider, at the relevant level of generality, whether the amount claimed was reasonably incurred by the dispossessed interest owner as part of the costs of relocation of that owner. If that test is satisfied, then it will be relevant to move to determining if the quantum of the costs claimed is extravagant or excessive. Each of the relevant elements of Mr Massasso's claim advanced in reliance on this statutory provision is to be considered in this fashion. The burden of proof in compulsory acquisition compensation cases 1. Whilst there are occasions when there will be what can be regarded as a presumption in favour of the dispossessed owner, this presumption is a limited one arising in narrow and specific circumstances. When there is what can be regarded as an unresolvable equality of evidence, Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391 acts as a precedent to tip the balance in favour of the dispossessed owner on that point. Similarly, there is a line of authority commencing with the decision of Wilcox J in Banno v Commonwealth of Australia (1993) 45 FCR 32 that can be regarded as creating a presumption in favour of a dispossessed owner getting costs in compulsory acquisition compensation proceedings, even if unsuccessful, provided that the applicant's case is one which was efficiently advanced and not occasioning unnecessary expense; and not so fanciful as to be unmaintainable on any arguable basis. 2. None of this, however, takes away the broad requirement that any compensation applicant bears the onus of proof of establishing the basis for the claim advanced (or if there are multiple different elements in a claim, of each of those different elements), before the validity of the claim, or the validity of the discrete part of the claim, can be regarded as established (RTA v Perry & Anor (2001) 52 NSWLR 222; [2001] NSWCA 251, at [67], per Handley JA with whom Powell and Hodgson JJA agreed). 3. For reasons later explained concerning some of the elements of Mr Massasso's claim, he has been unable to establish, on the balance of probabilities and to the necessary degree of satisfaction appropriate in the circumstances (Brigenshaw v Brigenshaw (1938) 60 CLR 336) – thus resulting in that element of his claim being rejected. Mr Massasso's evidence Introduction 1. Much of what requires to be determined concerning the activities undertaken by Mr Massasso and Ms Massasso requires to be understood and assessed on the basis of Mr Massasso's affidavit evidence and the evidence which he gave in cross-examination and, subsequently, the submissions made as to how I should approach that evidence and draw conclusions from it. As a consequence, it is appropriate to summarise both Mr Massasso's affidavit evidence and his oral evidence in some detail. Mr Massasso's affidavit evidence 1. I set out below a summary of Mr Massasso's affidavit evidence. That summary is the following terms: Mr Massasso graduated with a Bachelor of Pharmacy from the University of Sydney in 1995, after which he began working for a pharmacy in Ryde to obtain his registration as a pharmacist. He commenced his first pharmacist in charge role at W H Soul Pattinson in Five Dock in 1996. In 2000, Ming Pharmacy at 157A Great North Road was purchased by Mr Massasso. It was subject to a lease that was transferred to him, and Carmelo and Geraldina Rizzo were the landlords of the whole building which also contained 157 Great North Road. At the time of purchase, the lease had 3 years to run, with a 5 year option to renew. In 2002, Carmelo Rizzo informed Mr Massasso that he wanted to renovate both premises. Discussions between the two resulted in: • Mr Massaso agreeing to move the pharmacy to 157 Great North Road; • He would carry out a new fit-out to enable its use as a pharmacy; • He would obtain the necessary development approvals from the Council; • He would obtain approval from the Pharmacy Council (NSW) to relocate; • A new lease would be entered into with a term of 7 years with a 5 year option. Mr Massasso approached Mr Rizzo again in 2007, around 2 years before the expiry of the lease, and negotiated a new lease term for a 5 year period with two 5 year options. Before the expiration of the next lease term he negotiated with Joe Rizzo, Carmelo Rizzo's son. This resulted in a new lease with an initial 5 year fixed term, with three 5 year options. Mr Massaso recalled that during these negotiations his primary focus was ensuring added option years to give him long term security, while Mr Rizzo's focus was on the amount of rent being discussed. Around 15 September 2014, Mr Massasso signed a lease agreement for Shop 1 of 157Great North Road, commencing the same day and expiring on 14 September 2019 with options to renew for an additional 20 years. The rent was $72,659.40 per year excluding GST. In 2017, he became aware that a medical centre was being proposed for 2 East Street, Five Dock, which was the building adjacent to the rear of the pharmacy. This prompted regular discussions with Daniel Cordaro, a director of the company seeking to develop the centre. In 2018, the medical centre received development approval from the Council and he understood that they were ready to proceed with construction. Mr Massasso was aware that a building adjacent to the pharmacy was being acquired by the council to expand Fred Kelly Place. This reinforced the strength of the pharmacy's location, as it would be in sight of the Coles supermarket and have direct access from the proposed medical centre. A new lease was entered into in September 2019. At the time of the execution of that lease the premises were already fitted out as a pharmacy including the following: • A floor to ceiling glass façade facing Great North Road with signage saying "Five Dock Pharmacy" • A single entry sliding glass door on the southern side facing the shop; • A number of rows of shelving for retail pharmaceutical products; • A dispensary of approximately 8m cubed; • A rear store room and storage area under the stairs at the front of the premises; • Rear stair access to parking at the rear of the pharmacy At this time there were three other pharmacies located on Great North Road. In addition to Pharmacy for Less and Chemist Warehouse, there was also a small medical centre pharmacy at 150 Great North Road, which Mr Massasso purchased in 2018. Notice of the Acquisition Prior to October 2019, Mr Massasso was aware of rumours about the location of a new Metro station in Five Dock. There had been similar rumours in the past which did not come to fruition. At the time of lease renegotiation in 2019, though aware of rumours, he was of the view that it would be "commercially unsound" to change his business operation on their basis. On 21 October 2019, two Metro representatives attended the pharmacy to advise that the property would be compulsorily acquired. The first correspondence Mr Massasso received from Metro was dated 4 November 2019. Outline of the steps taken to find a relocation site Mr Massasso immediately rang his wife, Susan, who was in New Zealand for work, and they quickly decided to relocate the pharmacy. The reasons for doing so were: • He intended to continue being a pharmacist trading as Five Dock Pharmacy; • He intended to continue employing the staff of the pharmacy; • He loved the work, having spent 20 years as a well known member of the Five Dock business community; • It was a commercially profitable and established business and Mr Massasso did not wish to start again in a completely different location; • He was aware of the requirements of the Australian Community Pharmacy Authority and the Pharmacy Council of NSW regarding locational requirements for pharmacies, and the strict nature of relocation requirements; and • He cames from a family of pharmacists, with both his father and grandfather having been in the profession and he wanted to maintain the potentiality for one of his sons to take over the business at some point in the future. Mr Massasso also had his own requirements for relocation including: • Premises compliant with all of the locational rules and relocation requirements of the Australian Community Pharmacy Authority; • Having as close a place as possible to 157 Great North Road with the ability replicate the business as closely like-for-like as possible, to maintain the business he had built over the past 2 decades. • Premises suitable for a pharmacy, that maintained the vibe of a community pharmacy on the local high street; and • Being on Great North Road between Garfield St and the Post Office, and not too close to the existing pharmacies or too far from the commercial centre of Five Dock. From his long association with the area, he was aware it was possible to negotiate with some known landlords in the area regardless of whether properties were marketed for lease or sale. He knew he would need legal advice to ensure that at each step he did the right thing in the context of legal entitlement to compensation. Mr Massasso took a number of initial steps as soon as he was made aware of the acquisition. One of the first was contacting local real estate agents who managed nearby commercial properties. Mr Massasso identified four possibilities for the relocation of Five Dock Pharmacy: (a) 102 Great North Road (b) 104 Great North Road (c) 135 Great North Road (d) 137 Great North Road On 22 October 2019, he contacted property owner Michael Megna. He knew Mr Megna's family owned tenanted commercial properties at 135 and 137 Great North Road. There was a phone call between the two discussing Mr Massasso's need for relocation and with him asking for dates that the existing leases would finish. The same day Mr Megna messaged him advising that the end dates of the leases were 30 June 2022 and 30 June 2021 for 135 Great North Road and 137 Great North Road respectively. Mr Massasso requested copies of the lease agreements and received them on 25 October 2019 and 28 November 2019. On 22 October 2019, Mr Massasso phoned Fausto Biviano, the owner of 104 Great North Road, a property which had gone to market a few years earlier but did not sell. The discussion between the two was about the length of leases for the existing tenants. Mr Biviano described the leases as short, saying they were constructed that way so it would be easier to sell. When asked he would be interested in selling, Mr Biviano said he would be but the La Cava's who owned in partnership might not. Later that day there was a text exchange between Mr Biviano and Mr Massasso. Mr Massasso then assembled a legal team. He first discussed the matter with Mr Kulukovski of Thompson Cooper Lawyers later in the day after Sydney Metro in formed him of the impending acquisition. The discussion was regarding the process of acquisition and what was lawful and reasonable compensation in relation to relocating. On 24 October 2019 a meeting was held which included three representatives from Metro, Mr and Ms Massasso, Mr Kulukovski and Ms Jenna Rich, a Senior Associate from his firm. During the meeting Mr Massasso said words to the effect of (Paragraph 35): "I have been a pharmacist all my life and I come from a family of pharmacists. I've had my Pharmacy in Five Dock for almost 20 years, have a lease for another 25 years, and the most important thing for me is to save my business." Regarding a freehold option the following conversation occurred between Mr Massasso and Lloyd Williams a Metro representative: Mr Massasso: Has Sydney Metro ever been involved in moving a pharmacy before? Do you understand how strict the regulations are to move a pharmacy? You can only move once every five years and you have to be within a kilometre? Mr Williams: Yes, we've done one. We had to relocate Chemist Warehouse from Pitt Street in the city as part of that project and that involved relocating to a new premises which had an existing tenant who needed to be bought out. For you we want to keep all options on the table. This can include purchasing a property or buying out tenants to facilitate the continuation of your business. Following the completion of the meeting, Mr and Ms Massasso had a discussion to the following effect: Mr Massasso: So if Metro have previously allowed a pharmacy relocation and allowed a tenant to be bought out to help Chemist Warehouse relocate from Pitt Street, and they say all options are on the table, we should really try and see if we can buy 104 and strike a similar lease. Susan Massasso: Yes, like we've talked about before, I buy and you can rent it. We just have to be sure that we get some legal and financial advice on it all. Mr Massasso: I agree, maybe I'll ring Marcello now. Susan Massasso: Yes, but I will do it, give me your phone. Ms Massasso then called Marcello Biviano to begin the negotiations. At this point Mr Massasso still sought to explore every reasonable opportunity and keep his options open in the best interest of his business. He met with Mr Megna and the existing tenant of 135 Great North Road on 31 October 2019. Over the following days Mr Massasso discussed all possible options with local real estate agents. In late October/early November, there were ongoing discussions about Ms Massasso's potential purchase of 104 Great North Road. On 4 November 2019, Mr Massasso received a message from Marcello Biviano containing a photo of a signed contract of sale for the property. Once the property was purchased, Mr Massasso still had to convince the two existing tenants to end their leases and therefore still had to keep his options open. On 5 November 2019, Mr Massasso emailed Mr Megna confirming their discussions of the potential lease of 135 Great North Road. The proposed terms included a maximum lease period of 10 years and a demolition clause. The agreement was conditional on Mr Massasso being able to obtain vacant possession from the existing tenants. Each of the options regarding 135 Great North Road meant that a long-term tenancy as he had at 157 Great North Road would not be possible, which caused Mr Massasso to pause negotiations with Mr Megna. Mr Massasso also kept negotiations open regarding 102 Great North Road. On 8 November 2019, he was informed that the owner was seeking rent of $3,135 per week and insisted on a 10 year demolition clause. Again the demolition clause was a problem for his security of tenure. On 16 December 2019, after buying out the tenants of 104 Great North Road Mr Massasso sent correspondence to Mr Rupolo confirming he was no longer interested in leasing 102. Another early step taken was to engage Pharmacium, a pharmacy consulting company, to assist with the management of the relocation. This was done to ensure the relocation was compliant with all legislative requirements, codes, and standards, and that all licensing and accreditation was maintained. It was also important to Mr Massasso maintain his accreditation under the Quality Care Pharmacy Program (QCPP), which he had obtained while at 157 Great North Road. This informed his decisions regarding suitability of potential premises and fit out requirements. Agreement with Ms Massasso Ms Massasso purchased 104 Great North Road on 4 November 2019. Around this time it was apparent to Mr Massasso that the best way to put his business in a like-for-like position was to move the pharmacy to 104 Great North Road as it was diagonally across the road from the original premises. His lawyers advised that steps should be taken to ensure the arrangement was on commercial terms. As a result of that decision expert opinion was sought on the market and conditions of a leasehold agreement at 104 Great North Road. The following valuations were obtained: (a) A report by Access Valuation Pty Ltd dated 24 April 2020, using a direct comparisons approach concluded the market rental value to be $192,000 (excluding GST); (b) A report by Cushman and Wakefield Valuations Pty Ltd dated 27 April 2020, using a direct comparisons approach concluded the market rental value to be $176,000 (excluding GST); (c) A letter from PRB Real Estate in Five Dock dated 4 May 2020 estimated an 'achievable rental price' of $202,400; and (d) A letter from Adam Scappatura of Time Reality received on 5 May 2020 estimated the market rental to be between $197,824 and $207,715 based on comparable rentals and the market. Mr and Ms Massasso engaged separate lawyers to advise them with respect to the lease of 104 Great North Road. Mr Massasso engaged John Chidiac of Sanford Legal while Ms Massasso engaged Peter Clinch of Clinch Long Woodbridge and there was a meeting on 15 May 2020 to discuss the valuation reports and reach an agreement about rent. Consequently Mr Massasso considered he had taken all the necessary steps to ensure market rent and the terms of agreement had been subject to independent legal and valuation advice to ensure all terms were reasonable and on a proper commercial basis. Mr Massasso read the NSW Government Finance Services and Innovation Guidelines titled "Determination of Compensation following the acquisition of a business" which reassured him as to what was reasonable. He subsequently received a report from Colliers International dated 1 October 2020 which Sydney Metro had obtained which said that the business could sustain an occupancy rate of 7%. It noted that the business had a gross turnover of $3,000,000 per annum and that reasonable rent for the pharmacy would be $210,000 per annum. The report made Mr Massasso feel the agreed rent was very reasonable. Tenant Buy Outs Part of relocating to 104 Great North Road would involve agreements to have the two existing tenants move out, in order to allow carrying out of works relocation before what would otherwise be the expiry of their leases. Given what was said by Lloyd Williams at the meeting with Metro, Mr Massasso was confident that the steps he took were reasonable and acceptable by Metro. On 6 November 2019, two days after Ms Massasso purchased the property, Mr Massasso reached an agreement with Linting Huang regarding the transfer of her lease of shop 1/104Great North Road. He also corresponded with Barry Green, the partner of Linting Huang. On 29 November 2019 a draft agreement was exchanged. An issue with clause 4 was amended to allow Ms Huang to occupy the premises rent free until vacation of possession and Mr Massasso would pay the rent that she would otherwise have paid. On 2 December 2019, Mr Massasso issued an amended agreement and, on 4 December 2019, the agreement was finalised and signed. On 6 November 2019, Mr Massasso also began negotiation with Stella Contos and Jim Antoun, the tenants of shop 2 at 104 Great North Road. On 8 November 2019, he enquired of Mr Biviano about the amount of rent paid by Ms Contos and, on 13 November 2019, he requested a copy of past water, council rates and electricity notices. On 11 November 2019, Ms Contos contacted Mr Massasso seeking an offer for an amount to vacate the premises in writing and an agreement was reached in early December 2019. A finalised agreement was signed by Mr and Ms Massasso, Jim Antoun and Stella Contos dated 10 December 2019. Department of Health and Council approvals Mr Massasso required approval from Canada Bay Council for the fit-out work as well as approval from the Department of Health and Pharmacy Council in order to relocate. The Department of Health would required that there be an executed lease before any application for relocation would be considered. Regarding the development application, Mr Massasso sought advice from Milestone, expert town planners who regularly dealt with similar matters. A development application was submitted on 22 April 2020 seeking consent for the construction of a two-storey addition to the rear of the building, including partial demolition of the existing premises for fit-out, with parking and signage. The estimated cost for the work was $1,115,000. As part of the development application, the following documents were submitted to council: (a) An Acoustic Assessment by Renzo Town and Associates, dated 1 April 2020; (b) Architectural plans; (c) A cost summary report; (d) A disability access report by Access-I Pty ltd., dated 9 April 2020; (e) A fire safety engineering assessment by Code Performance, dated 15 April 2020; (f) Mechanical ventilation plans; (g) An owner's consent letter, dated 5 April 2020; (h) A schedule of colours, materials and finishes; (i) An assessment of State Environmental Planning Policy No. 64 – Advertising and Signage by Milestone (AUST) Pty Ltd, dated April 2020; (j) A stormwater drainage plan; (k) A structural engineering design certificate for alterations and additions by Birzulis Associates Pty Ltd, dated 14 April 2020; (l) A survey plan; (m) A traffic and parking assessment by McLaren Traffic Engineering, dated 17 April 2020; and (n) A waste management plan by Milestone (Aust) Pty Ltd, dated April 2020. On 15 June 2020, the Council approved the Development Application. Whilst waiting for approval, Mr Massasso engaged the services of Mark Szczerbicki, a local architect. He relied on advice from Mr Szczerbicki to ensure the pharmacy would comply with all applicable codes and standards and that Mr Massasso complied with all his legal obligations. He was conscious of his legal obligations as a pharmacist, employer and occupant of commercial retail premises. Mr Szczerbicki oversaw the works carried out by contractors engaged to do so at 104 Great North Road. Mr Massasso obtained signage advice from Signwave and engaged interior fit-outs. On 16 June 2020, he received a letter from the Pharmacy Guild of Australia dated 15 June 2020 addressed to Mr Tim O'Connor of Sydney Metro outlining the necessary requirements for the relocation of the pharmacy. He also received a letter from the Pharmaceutical Society of Australia dated 14 August 2020 outlining the complexities of relocating a community pharmacy. Clinch Long Woodbridge provided legal assistance with Mr Massasso's application to the Department of Health and the Pharmacy Council for the relocation of Five Dock Pharmacy. On 5 February 2021, he received an email regarding the application - including a list of the necessary information he had to provide. On 4 March 2021, he received a further email attaching the relevant applications and requesting floor plans of the pharmacy's professional services rooms. These plans were provided in reply on 11 March 2021. Images of the pharmacy's entry and exit were also provided as part of the application. On 20 April 2021, an email was received referring to previous correspondence with the Pharmacy Council confirming the conditional approval of the relocation, subject to completion of an inspection. The Pharmacy Council also issued notice of the required inspection. Relocation After being informed of the acquisition, uncertainty remained because Metro initially only indicated verbally that possession was required by "mid 2021". He was later informed that the date would be 30 June 2021. The physical fit-out works commenced on 17 August 2020 and concluded 18 May 2021. Mr Massasso had planned to make the physical relocation period as short as possible to prevent disruption to staff and customers. His pharmacy approval number did not permit him to operate from two locations requiring him to ensure that business could open at the new premises the day after closing at the original premises. The relocation process involved all available staff and security contractors throughout the night. Each medication was packed as per the Pharmacium plan to ensure compliance with the Poisons and Therapeutic Goods Regulation 2008. In the period preceding the relocation date, it was suggested by Metro that Mr Massasso vacate the premises with no "make good" requirement however as per his obligations under the Poisons and Therapeutic Goods Regulation, Mr Massasso would not have been able to do this. The process of physical relocation was drawn out and complicated, causing Mr Massasso time away from his family, his business, the community, patients and added pressure on staff, who had no choice but to go through the process with Mr Massasso. The process occurred in the midst of the Covid-19 Pandemic and the pressures of being frontline workers took a toll. Mr Massasso was proud of ensuring the survival of his business and the support from his customers. He suggested that Metro dragged out the process by questioning his decisions and making disingenuous comments about alternative relocation options. The costs of relocation were significant. The costs incurred with respect to the upper level have not been included in his claim. All the costs incurred have been based on advice as to what was reasonably necessary to relocate. Mr Massasso has kept track of all the extra rent, and legal and consultant fees he paid as a result of relocating. New operations at 104 Great North Road On 19 May 2021, Mr Massasso began operating from the new premises. Though he attempted to maintain the same look and feel as a community pharmacy, with similar retail space, staffing, stock, patient health outcomes and functionality, the challenge was maintain his customer base, QCPP accreditation and business performance. QCPP accreditation, which Mr Massasso has possessed since 2002, was important for maintain like-for-like operations. Following relocation Mr Massasso was subject to re-assessment. A key obligation is to maintain secure premises. At 104 Great North Road, the premises were built to the boundary with a single front public entrance and single back entrance with two security doors. This was to ensure compliance with section 12 of the Health Practitioner Regulation (NSW) 2016. Between 19 May 2021 to 31 December 2021, Mr Massasso was able to see how his business was affected by the relocation, as no significant Metro works commenced in Five Dock until the beginning of 2022. A key indicator of performance in the industry is script numbers and script revenue. NostraData was engaged to provide data as to the performance of shopping strip pharmacies between 1 June 2021 and 31 December 2021. Mr Massasso's script numbers have remained steady compared to the same period in the previous year. The data shows that Five Dock Pharmacy only experienced 0.25% growth in script volume, with a 9.64% decline in script value in that period. Contrastingly NostraData reported that similar shopping strip pharmacies experienced an average growth of 4.40% in script volume and 7.44% in script value in that period. A letter from the Pharmacy Guild of Australia dated 3 June 2022 shows that pharmacies had experienced an average growth in script volume of 3.05% and average growth in dispensary turnover of 6.4% in the period from 1 June 2021 to 31 December 2021. This indicates that while Mr Massasso was able to maintain script numbers, his business suffered financially due to the relocation, as there is no reason why Five Dock Pharmacy would not have achieved similar growth if it was still at 157 Great North Road. Since being advised of the acquisition, Mr Massasso did all that he reasonably could have to save his business professionally and financially. In his view, he took all the necessary steps to achieve that. Whilst the new pharmacy is slightly larger, the increased size did not result in revenue growth. Mr Massasso took advice at every step and made decisions having regard to that advice. Mr Massasso's oral evidence 1. Mr Sirtes cross-examined Mr Massasso on the third day of the hearing, 19 July 2023. It is appropriate to address this evidence primarily through questions and answers taken from his evidence. Mr Sirtes asked Mr Massasso about the discussion that he had had with Joe Rizzo in July 2019 concerning the option to renew. This exchange was in the following terms (Transcript, 19 July 2023, page 90, line 8 to 23, line 41 to 48): SIRTES: Is Mr Rizzo someone who you're still familiar with? WITNESS MASSASSO: Joe, yes. SIRTES: I take it he's around and you see him at Five Dock? WITNESS MASSASSO: I see Joe regularly, yes. SIRTES: If we fast forward by five years, you say in paragraph 12 that you realised in or about July 2019 that you had forgotten to exercise the option, correct? WITNESS MASSASSO: Correct. We had both forgotten. SIRTES: When you say "both", it was up to you to exercise the option, correct? WITNESS MASSASSO: Yes, it was up to me but he was also equally worried that I was going to go. SIRTES: Without just unnecessarily adding to the question I asked you, it was your obligation to exercise the option if that's what you wished to do, correct? WITNESS MASSASSO: Sorry, can you just repeat it? … SIRTES: You set out a conversation in paragraph 12 that you say occurred in about July 2019 where you say to Mr Rizzo, "Joe, we have all forgotten to exercise the option"? WITNESS MASSASSO: Yes, correct. SIRTES: The truth was that the party that had forgotten to exercise the option, was you? WITNESS MASSASSO: Yes, legally, yes. 1. Mr Sirtes questioned Mr Massasso about the first time that he was notified that his pharmacy was going to be compulsorily acquired. Mr Massasso confirmed that on Monday, 21 October 2019, two Sydney Metro representatives attended his pharmacy in person and advised him that his pharmacy was going to be compulsorily acquired (Transcript, 19 July 2023, page 92, line 22 to 26). 2. Mr Massasso conceded that when he was verbally put on notice by the two Sydney Metro representatives that his pharmacy was going to be compulsorily acquired by Sydney Metro, he was made aware that the acquisition and, subsequently, the relocation of his business, would not occur until around mid-2021 (Transcript, 19 July 2023, page 92, line 28 to 30). 3. Mr Sirtes asked Mr Massasso about the initial steps that he took in response to finding out that his pharmacy was going to be acquired at some later date in mid-2021 (Transcript, 19 July 2023, page 93, line 25 to page 94, line 13): SIRTES: At paragraph 26 of your affidavit you say that as a consequence of your intention to relocate, you took a number of initial steps almost as soon as you were aware of the acquisition, one of which was contacting local real estate agents in the Five Dock area; do you recall doing that? WITNESS MASSASSO: Yes. SIRTES: You say that you engaged in some discussions with some of the owners and agents of nearby commercial properties-- WITNESS MASSASSO: Yes. SIRTES: --and through that process, you say that you identified four potential options and you set those options out (a) through to (d)? WITNESS MASSASSO: Yes. SIRTES: When you say you identified in that paragraph four options-- WITNESS MASSASSO: Yes. SIRTES: --were they options to purchase or were they options to lease or a combination of both? WITNESS MASSASSO: First lease and, and some were on - probably a combination of both is the best answer, but first it was finding out the leases. So I, I asked the owners that I knew for their leases firstly so I could ascertain that and then some had short leases. In particular, 104 had short leases. He was interested in - more interested in selling. SIRTES: You were content at that point to either purchase or lease, whichever suited your purposes better; is that the case? WITNESS MASSASSO: That is not the case. I was hoping to move my pharmacy and have the same tenure I'd built up over all this time, and purchase wasn't an option. Having another, another lump of money in Five Dock wasn't my first option. SIRTES: Whether you say purchase was not your first option, within days of having a discussion with Sydney Metro representatives at the meeting at your solicitor's office, you were already on the phone to Fausto Biviano exploring whether or not you could buy 104 Great North Road from him, weren't you? WITNESS MASSASSO: My wife was on the phone but, yes, we contacted Fausto, yes. SIRTES: That happened, as I said, within a very short space of time-- WITNESS MASSASSO: Yes. 1. Mr Massasso was asked further questions by My Sirtes regarding the exchange of text messages with Mr Fausto Biviano about the prospect of purchasing 104 Great North Road (Transcript, 19 June 2023, page 96, line 16 to page 97, line 16): SIRTES: You say in your affidavit that you then exchange some text messages? WITNESS MASSASSO: Yes. This is the notice to produce. SIRTES: This is the very same day as the conversation, correct? 22 October? WITNESS MASSASSO: Yes, the day after the acquisition, yep. SIRTES: Would it be a fair suggestion to put to you that you situated the conversation on 22 October in your affidavit based upon the date on the text message? WITNESS MASSASSO: Yes, I'm having - yes, I think that's - I'm having conversations and I'm - yes. SIRTES: The first message at 6.54pm was recording that you'd spoken to Ms Massasso, "I seriously wanted to offer to buy the Great North property if you would consider, and what price would you accept?", and he then responds as he does talking about the Lekava interests, and things are left at that point. Now, again, in relation to that text exchange, there's not a mention in any text message exchanges that you had with that gentleman of wanting to lease those premises, correct? WITNESS MASSASSO: On those text exchanges? No. SIRTES: You haven't included any other text messages in your affidavit evidence that concerns leasing those premises, correct? WITNESS MASSASSO: If it's not in my affidavit, no. SIRTES: What your affidavit, can I put to you, makes plain is that your principal interest, in fact the only interest, if I put it that way, in relation to 104 Great North Road was to buy those premises from the Biviano and Lekava families? WITNESS MASSASSO: No, I don't agree. I went-- SIRTES: Certainly there is absolutely nothing in your evidence or in any of the documents that suggests any intention for you to strike a lease with him in relation to those two shops? WITNESS MASSASSO: Can you just repeat the question, sorry? SIRTES: There's no document or anything else you've revealed in your affidavit evidence that suggests an interest by you to strike a deal with Mr Biviano in leasing those shops? WITNESS MASSASSO: No, not in my affidavit. SIRTES: And the reason, can I suggest, that you asked Mr Biviano about the leases is because your principal interest was to buy the building, and what you wanted to know was how long those tenants could potentially be there for? WITNESS MASSASSO: My principal interest was to move the shop with a lease, and if I couldn't do that - in, in early stage of negotiations, I'm finding out what he would - this is the second day, the day after acquisition. So, I'm quizzing him on the different options that I have; not committing to anything because this is the first day. So, my principal concern to buy the premises on the, the, the day after, I'm searching all options, and it is an option, but I'm also concerned to try and replicate my lease, my 25-year lease, and relocate my pharmacy. That's my priority throughout all this. 1. Mr Sirtes put the following propositions to Mr Massasso in relation to him potentially striking a long-term lease with Ms Massasso after her intended purchase of 104 Great North Road (Transcript, 19 June 2023, page 102, line 45 to page 103, line 28). SIRTES: It says that you said to Mrs Massasso that "all options are on the table" and "we should really try and see if we can buy 104 and strike a similar lease". Am I correct in understanding that what you're suggesting by that conversation with your wife is that you would buy this building and then you would see if, as between you and the purchaser - which would either by you or your wife, or you and your wife - would be able to strike a lease with effectively yourself? WITNESS MASSASSO: I'm talking - yes, but I'm talking to my lawyers about the options or how - what makes sense, and the accountant. But effectively, I'm talking to her about me returning me - returning myself to a lease of 25 years the best I could. SIRTES: I'm just trying to understand, you say that you've said to Mrs Massasso, "We should really try and see if we can buy 104", and that's self-evident-- WITNESS MASSASSO: Yes. SIRTES: --but the words, "and strike a similar lease". Are you talking about striking a lease with Mrs Massasso or yourself or who? WITNESS MASSASSO: For my wife to strike a lease with myself. SIRTES: Do you seriously suggest to his Honour that you would need to enter into some kind of tough bargaining position with Mrs Massasso if you in fact bought the building? WITNESS MASSASSO: Say that again, sorry? SIRTES: Are you suggesting, through that conversation that you say you had between yourself and Mrs Massasso, that you anticipated there was going to be some kind of tense bargaining position in order to strike a long term lease over the building? WITNESS MASSASSO: I was talking to my wife about striking a lease, about replacing my 25 year lease. I don't know about the bargaining at that stage. I don't think - I was looking at the term of the lease is what I was - the striking the term of the lease, if that makes sense. The amount or anything else, I - we were talking to the solicitors, we were talking to the accountant, seeing what options, where the money is. But the lease effectively is between my wife and myself. 1. Although somewhat lengthy, it is appropriate to set out in full the following exchange between Mr Sirtes and Mr Massasso in relation to the tenant buy out claim (Transcript, 19 June, page 115, line 9 to page 117, line 18): SIRTES: I just want to return to the topic of what I'll call the tenant buyout. You approached the tenant buyout presumably on the basis that if the tenants were amenable to the notion of leaving their respective tenancies earlier than they otherwise would need to, then it was a matter of negotiating to pay them some kind of break fee in order to hasten their early departure, correct? WITNESS MASSASSO: Yes, but I wasn't doing it by myself. I checked with the lawyers first. SIRTES: I understand that but the question I asked you, I'm talking about whether you were doing it with yourself or a group of other people, the way you approached this understanding that if they were amenable at all to the notion of leaving early, you were going to have to pay them some money? WITNESS MASSASSO: Yes, I was going to pay them money but the moneys - yes, I was going to pay them money but I did that in consultation with my lawyers. SIRTES: The amount of money, if I can just deal with that, did you have a budget, an overall budget for how much you were prepared to pay? WITNESS MASSASSO: No. No budget. I was - I would say I'm pretty used to doing commercial deals. Obviously, you know, having experience and with, you know, an accountant and accountant with 20 or 30 years' experience, I had - I would - no, but I didn't have a budget, no. SIRTES: When you say you were pretty used to doing commercial deals, you were first and foremost a pharmacist, weren't you? WITNESS MASSASSO: Yes. SIRTES: What was the other sphere in which you were doing commercial deals? Was it as a pharmacist or in other business activities? WITNESS MASSASSO: As a pharmacy and I would buy property myself in my name. And, and I - you know, my pharmacy. SIRTES: In terms of just returning to this notion of budget, you had not formed in your own mind an amount of money that was, for example, a maximum that you would be prepared to pay these tenants? Is that what you tell his Honour? WITNESS MASSASSO: I would never say I didn't have a maximum. I just didn't have a budget. I needed - it's a - no, I didn't, I didn't set a budget but there was no way I was going to not consider the commercial terms that was put in front of me. SIRTES: In terms of the amounts that each of the respective tenants on each side of that dividing wall were paying, their rent was roughly comparable, wasn't it? That's what they were paying the landlord? WITNESS MASSASSO: I, I think so, yeah. They were paying around the amount - the same amount of money, but it was the term of the lease was also something - 'cause I was - the, the length of the term was important. SIRTES: The amount of money that was paid to Combos and Antoun was very significantly greater than the amount that was paid to Lin Ting Huang, correct? WITNESS MASSASSO: Yes, but that was because Stella had been there 19 years and was pretty emotionally attached to things. SIRTES: That's what you say to his Honour but isn't this the case: that in terms of the amount that you ended up paying, the person you described as Stella just negotiated a lot harder than Ms Huang, didn't she? WITNESS MASSASSO: I completely reject that, no. SIRTES: She demanded hundreds and hundreds of thousands of dollars and, as compared to Ms Huang who did not, you were prepared to pay it? WITNESS MASSASSO: I disagree. She didn't demand. We were in negotiations. She'd been there 19 years and she was sentimentally attached to the place. And I'm not the government where I can force people to move easily. SIRTES: When you say "sentimentally attached", she had a lease that was expiring with no option to renew in mid 2022, that's correct isn't it? WITNESS MASSASSO: That's correct, but she'd been there 19 years. SIRTES: Whether she was there for 19 years or ten years, the fact is that her time in that premises to your knowledge was coming to an end by mid 2022, wasn't it? WITNESS MASSASSO: Time was coming to the end, but mid 22 was problematic for me. SIRTES: It was problematic for you because you needed to relocate before then, correct? WITNESS MASSASSO: To regain my 25 year lease. I hoped to get in there before the Metro consumed me. SIRTES: So, to the extent that it was important for you, for your own ends, you were prepared to pay her and Mr Antoun a very, very significant amount of money to achieve her exit from the premises? WITNESS MASSASSO: I paid her a significant amount of money to exit the premises because that's what we negotiated. SIRTES: No doubt, as being a commercial person who was, as you say, experienced in these kind of deals, you were obviously going to negotiate to pay the least amount you could, correct? WITNESS MASSASSO: Yes, I was trying to pay the least amount I could. SIRTES: The reason why you ended up paying hundreds and hundreds of thousands of dollars, I think around $360,000, was because she was driving a hard bargain? WITNESS MASSASSO: No. She, she had things in the deal that - I had one tenant who was considering to leave that made the deal easier, and I had one tenant who was convinced to stay. So, the terms of the deal were different. It wasn't the fact one was driving a bargain harder or less. SIRTES: The fact is that they wanted more money, the transactional cost, to get them out the door than the other tenant? That's correct, isn't it? WITNESS MASSASSO: It's not the fact that they wanted more money. They wanted certainty for their - to remain in Five Dock. They were much more emotionally attached. They relocated just down the road and their deal was much more complicated because they wanted to not be, say, closed up. They had a successful business and they wanted to maintain that successful business. And I'm not the government and others to push them out the door. It cost me a significant amount more money that I didn't want to pay, but she had many more things on the table for the deal. SIRTES: She was going to stick to her guns until you paid that, correct? WITNESS MASSASSO: We negotiated. SIRTES: And you were obviously prepared to pay what she wanted in order to achieve your commercial end? WITNESS MASSASSO: I wasn't ready to pay anything for her - to achieve my commercial end. I was willing to pay what I thought was reasonable. 1. The proposition that Mr Massasso only enquired about leased properties in the Five Dock area to construct a narrative for an eventual compensation claim was rejected by Mr Massasso. Mr Sirtes' case theory was put to Mr Massasso in the following terms (Transcript, 19 July 2023, page 127, line 3 to 22): SIRTES: In fairness, I want to put the proposition to you that what you were doing here, weren't you, is that you were dealing with people like Mr Megna and Mr Rupolo in November after you had already purchased - after the property, I should say, 104 had already been purchased? So, you could construct a narrative in terms of a compensation claim for Sydney Metro to try to demonstrate that you had at least made some efforts to inquire about leased properties in the area. WITNESS MASSASSO: I totally reject that. Why would I have contacted this gentleman straight after Metro came? I didn't sleep that night when Metro showed up. This gentleman was contacted the day after, then after that week, we got to Lloyd and company. It's no narrative here that I'm trying to portray; I'm just making sure this man is on hold because there's no secure tenant at this stage. I can't guarantee - you saw from the text messages from Stella, it's quite clear that she wasn't even - she goes "This - this is bad news that your wife's bought the property". In no way have I got certainty through any of this; this is all uncertain. I've got this gentleman on hold, I had him on from the beginning, and I'm having him on - I'm (as said) still got him on hold now. I'm not going to reveal all my cards to him and that's part of me saying the words in that email. They're not specific, they're ambiguous and it's involving Metro. 1. Mr Sirtes advanced this proposition in the following terms (Transcript, 19 July 2023, page 130, line 36): SIRTES: I put to you that in relation to your dealings with these various people, Mr Megna and the tenants et cetera, you were just trying to create a paper trail for the purposes of informing a compensation claim that you were going to make in these proceedings and you never had any intention after 4 November of leasing any premises anywhere other than 104? WITNESS MASSASSO: No, that's not true. I deny that. The terms of the lease for 104 Great North Road 1. A copy of the lease between Ms Massasso and Mr Massasso was Annexure H to Ms Massasso's affidavit. Although the copy of the lease as annexed to Ms Massasso's affidavit is not a copy of the executed document, there is no dispute that the executed document is in the terms of Annexure H. 2. This documentation takes up 38 pages of the Evidence Book (folios 252 to 289). It is unnecessary to set out more than the relevant details for the purposes of this decision. The relevant matters in the least to be noted are: 1. the lease is for the entirety of the property at 104 Great North Road. This is confirmed by clause 3.1 of the body of the lease at folio 262; 2. the permitted use of the premises is described as being: Pharmacy office and sale of pharmaceutical products and other items (including health and beauty products) usually sold in pharmacies including but not limited to processing of photographic film. 1. At folio 257, an addition is recorded to the otherwise applicable lease covenants in Annexure B to the lease. This constitutes an alteration to clause 23 which overrides the otherwise applicable provision. This is in the following terms: Clause 23. Rent free period 23.1 despite anything in this lease, but subject to clause 23.2, no rent will be payable by the lessee for the initial three months of the lease. 23.2 (not presently relevant); 1. Schedule 2 Part A – Lessors Disclosure Statement sets out, under the description of the premises at 1.3 Lettable Area of the Premises that the premises have the following attributes: total area of property: 271.9 square metres main retail area: 176 m² carport/garaged: 20 m² It is it then noted that the rent is calculated on the main retail area 1. clauses 8 and 9 provide that the lessor is not required to carry out any works prior to the commencement of the lease nor is the lessor to make any contribution to the lessee's fit-out of the lease in Part 7 – a part headed Alteration Works (including renovations, extensions, redevelopment, demolition); 2. the carrying out of the public purpose is noted in clause 17.1 but clause 18 (dealing with relocation and demolition works) is marked as not applicable 3. Part 10 – Other Disclosures provides, in clause 28, for the recording of any other representations made by the lessor or the lessor's agent. No such representations are there recorded. 1. A critical provision is Clause 7 (Condition and Repairs) of the lease – a provision needing to be set out in full. It is in the following terms: CLAUSE 7 CONDITION AND REPAIRS Who is to repair the property? 7. 1 The lessor must - 7.1.1 maintain in a state of good condition and serviceable repair the roof, the ceiling, the external walls and external doors and associated door jambs, and the floors of the property and must fix structural defects; 7.1.2 maintain the property in a structurally sound condition; and 7.1.3 maintain essential services. 7.2 The lessee must otherwise maintain the property in its condition at the commencement date and promptly do repairs needed to keep it in that condition but the lessee does not have to - 7.2.1 alter or improve the property; or 7.2.2 fix structural defects; or 7.2.3 repair fair wear and tear. 7.3 The lessee must also - 7.3.1 reimburse the lessor for the cost of fixing structural damage caused by the lessee. apart from fair wear and tear; 7.3.2 maintain and decorate the shop front if the property has one; 7.3.3 decorate the inside of the property in the last 3 months of the lease period (however it ends) - 'decorate' here means restoring the surfaces of the property in a style and to a standard of finish originally used e.g. by repainting. 7.4 If an authority requires work to be done on the property and it is structural work or work needed to make the property safe to use then the lessor must do the work unless it is required only because of the way the lessee uses the property. If it is any other work, or is required only because of the way the lessee uses the property, then the lessee must do the work. 7.5 If the lessee fails to do any work that the lessee must do the lessor can give the lessee a notice in writing stating what the lessee has failed to do. After the notice is given the lessee must - 7.5.1 do the work immediately if there is an emergency; and 7.5.2 do the work promptly and diligently in any other case. If the lessee does not do the work, the lessor can do it and the lessee must reimburse the lessor for the cost of the work. 7.6 The lessee must not make any structural alterations to the property. Any other alterations require the lessor's consent in writing (but the lessor cannot withhold consent unreasonably). 1. It is to be noted that the additions/alterations at folio 257 made to override standard provisions in Annexure B (the body text of the standard lease) do not alter the above set out Clause 7 in any respect whatsoever. The relocation costs claim Introduction 1. Mr Massasso has, as can earlier be seen, relocated his pharmacy business to new premises at 104 Great North Road – a building purchased by his wife, Ms Susan Massasso, in the aftermath of Mr Massasso becoming aware of the proposal by Sydney Metro to acquire the site. The time frame within which Mr Massasso would need to relocate his business was not only governed by the date anticipated by Sydney Metro for taking possession of the acquired site but also, on a time count back requirements for relocations of pharmacies set by the regulatory regime for such relocations. The area within which Mr Massasso could contemplate relocation was also set by those pharmacy relocation regulatory requirements. 2. Mr Massasso addressed the necessity to relocate in two separate fashions (both being engaged for consideration) in the context of his relocation costs claim in order to ensure that the relocation of his pharmacy business could be effected within the regulatory requirements and, in a fashion which best preserved the nature of his existing pharmacy business – being one located in the Five Dock retail strip located on Great North Road. 3. Pursuit of the relocation options not only focused on the site to which his business has been relocated (and which was purchased by his wife for this purpose) but also the necessity to explore other potential relocation options along the relevant shopping strip portion of Great North Road in Five Dock. With respect to these latter endeavours, Mr Massasso (or, in one instance, Ms Massasso) explored options for renting other premises in this shopping strip as potential relocation options. 4. In order to understand how the relocation costs' claim is advanced (and contested by Sydney Metro). It is necessary to detail: 1. contextual evidence concerning Mr Massasso's exploration of potential relocation options other than 104 Great North Road; 2. the nature and extent of the additions and alterations carried out to the premises at 104 Great North Road after they had been acquired by Ms Massasso. In this context, there is a contest between Mr Massasso and Sydney Metro as to whether the extent of the additions and alterations to 104 Great North Road (and, therefore, the cost incurred for them) were reasonably incurred by him for the purposes of the relocation of his pharmacy business; and 3. the monies expended by Mr Massasso in buying out the remainder of the leases of the existing tenants of 104 Great North Road at the time of his wife's purchase of this property. 1. An understanding of the nature of the additions and alterations to 104 Great North Road (excluding the new partial first storey added during the renovation process – the cost of this not being claimed by Mr Massasso) when compared to what were the relevant regulatory requirements for pharmacies at the time of the relocation requires exploration. The question of whether the existing relocated pharmacy business was to be established to best professional practice at the time of relocation or merely to satisfy the relevant regulatory standards at the time of relocation also requires consideration (there being a difference between the two propositions with a "best practice" layout and fit-out being more extensive (and, therefore expensive) than one which met the minimum regulatory standards); The background contextual lay evidence Introduction 1. Mr Massasso had provided lay witness affidavit evidence concerning a number of premises in the Five Dock shopping strip that were explored by him as potential relocation options. This affidavit evidence was given by those with whom he explored various alternative premises options. The deponents of the affidavits concerning these discussions were required for cross-examination. 2. To understand these and the later timing contexts which require consideration, it is appropriate to set out summaries of the affidavit and oral evidence of the persons with whom Mr Massasso had dealings during the course of his exploration of these potential relocation options (ones that were potential alternatives to 104 Great North Road, the premises to which he did relocate). This lay evidence is summarised below. Mr Rupolo's evidence A summary of Mr Rupolo's affidavit evidence 1. Mr Rupolo is a licenced Real Estate agent with over 26 years of experience in the field in Sydney's Inner West, who established Locale Property Agents in 2012, which is now located at 133 Great North Road, Five Dock. In 2019, he was engaged to manage the split tenancy property at 102 Great North Road by its landlord, Mr Chris Nittis. The property comprised commercial premises at the front and a residence at the rear. In late 2019, the commercial premises were vacated by its previous tenant and Mr Rupolo was to seek to lease out the property. 2. He recalls that Mr Massasso approached him in late October or early November 2019 regarding potentially leasing 102 Great North Road after being forced to relocate his business due to Sydney Metro and sought a 5x5 year lease term similar to the lease Mr Massasso had at his existing shop. 3. The owner of 102 Great North Road would agree to a 5x5 year lease term with the condition of a demolition clause after 10 years and would be seeking $3,135 per week (inc. GTS) equal to $163,020 per annum. The offer was to lease the whole property, including the residence. 4. Annexed to his affidavit was an email Mr Rupolo sent to Mr Massasso confirming the proposed terms of the lease. 5. The landlord offered no incentives and no rent-free period and was not prepared to contribute to any fit-out or other ensuing costs – these being the responsibility of the tenant. 6. As the commercial premises remained vacant, the landlord was using two Real Estate agents and ultimately agreed to reduce the asking rent for the commercial premises then being leased to a pizza shop. The residence remained tenanted and was still managed by Mr Rupolo. Mr Rupolo's oral evidence 1. Mr Rupolo was cross-examined by Mr Sirtes. A summary of his oral evidence is set out below. 2. Mr Rupolo's business is located on the corner of Garfield and Great North Road next to a two-dollar shop and a Vietnamese baker. Prior to October 2019 Mr Rupolo only knew Mr Massasso as the local pharmacist. 3. Mr Sirtes directed Mr Rupolo's attention to paragraph 4 of his Affidavit in which he confirmed he was managing the premises at 102 Great North Road, directly to the south of what is now the Five Dock Pharmacy. He no longer manages that property. After being called "Yum Burger" it became vacant before becoming a pizza shop called "Made in Italy". it was then vacated to be refurbished. 4. Mr Rupolo met Mr Massasso when he wanted to inspect the premises after being forced to relocate due to the Metro project. Mr Rupolo said that, after the inspection (Transcript 63, lines 42-43): "Well, he would have shown an indication, made an offer and then we sought instructions as would normally be the case." 1. As Mr Rupolo recalled there was already a sign in the window at that stage and the property was being advertised online. An email dated 8 November 2019 confirmed the offer made by his client to Mr Massasso, including a 10 year demolition clause. According to Mr Rupolo, such a clause would have been included for two reasons, the first being that the Metro project could result in a rezoning and the second being that the clients were elderly. 2. Mr Sirtes then directed Mr Rupolo to some documents which were not attached to his affidavit (Evidence Book folio 498). Mr Sirtes asked (Transcript 64, line 50 to page 65, line 1): "…do you recall roughly how long before you sent that email that you first met Mr Massasso? Was it a period of days, or weeks, or?" 1. To which Mr Rupolo responded (Transcript 65, lines 2-5): "Most people don't inspect a property if they're interested; would make an email offer of this nature within a general inspection period. Like, I don't expect an inspection longer than a week or two or three maybe before they firm up an offer." 1. The offer made to Mr Massasso was described by Mr Rupolo as being appealing to Mr Massasso. To Mr Rupolo's recollection, this was an opening offer made to Mr Massasso on the basis for which the property was being promoted by Mr Rupolo. 2. Mr Sirtes then directed Mr Rupolo to the bottom of folio 499 and then folio 500 regarding an email sent from Mr Rupolo to Mr Massasso on 2 December 2019 at 12.11pm – an email which reads (Transcript 65 lines 27-29): "Any news? Just keeping my clients posted as they saw you with some dignified individuals around at the property". 1. Mr Rupolo referred to this as a courtesy email, and that, judging by the email, he probably had not heard back from Mr Massasso at that point. 2. Mr Rupolo received a response to this email at 1.51pm the same day which read (Transcript 65, line 40): "Re follow up. Hi Joseph, still no news from Metro. I'll let you know." 1. Mr Rupolo believed this to mean that Metro was acquiring properties and negotiating tenants out of leases. When asked if he had any recollections of Mr Massasso saying he had to speak with Metro before getting back to him, Mr Rupolo said (Transcript 66, line 1) "…all I say was I just see it on an email." 1. In an email dated 16 December sent to Mr Rupolo, Mr Massasso indicated that there was no need for him to proceed further with this property. This was the end of the dealings between the two. 2. Mr Rupolo only recalled discussing a 10 year demolition clause with Mr Massasso in passing in the email and that he made no attempt to negotiate any of the provisions set out in the email. 3. As per his Affidavit, Mr Rupolo became aware that the landlord had agreed to reduce the asking rent many months later, but he was never privy to the amount. Mr Megna's evidence A summary of Mr Megna's affidavit evidence 1. Mr Megna is a Public Accountant who has operated his practice, JF Wells and Associates since 1974. His business is currently located at Level 1, 156 Great North Road, Five Dock. 2. Mr Megna has represented his community on the Council for over 30 years and has known Mr Massasso for over 20 years due to their both having businesses in Five Dock. Mr Megna stated: "In my assessment Mathew is a highly respected member of our local Five Dock business community" 1. In 2019, Mr Megna's family owned commercial properties at 135 Great North Road and 137 Great North Road, and his cousin owned a commercial property at 139 Great North Road. 2. Both properties at 135 Great North Road and 137 Great North Road are located on Great North Road between Garfield Street and Fred Kelly Place and were tenanted by a discount variety store and a bread shop respectively. 3. Mr Megna recalled being contacted by Mr Massasso in late October 2019 regarding Sydney Metro's acquisition of the property from which he operated his pharmacy. Mr Massasso approached Mr Megna about relocating his business, inquiring about whether any of his current tenants were at the end of their lease, which they were not as far as Mr Megna knew. 4. Mr Massasso's response to this was (paragraph 9): "Can we both go up and speak to them to see if they are interested in me buying out their lease?" 1. Mr Megna agreed to make an appointment with the tenants of 135 Great North Road. 2. The discussions between Mr Megna and Mr Massasso continued into early November. Mr Megna's lawyers provided Mr Massasso with a copy of the leases for both properties. 3. After the initial meeting organised by Mr Megna, he had no further involvement in the dealings between Mr Massasso and the tenant of 135 Great North Road, however Mr Massasso and the tenant both confirmed they had agreed on a figure to buy out the lease. Mr Megna made it clear to Mr Massasso that any payment to buy out the lease or the cost of any works required to equip the premises in order to operate a pharmacy would incurred by Mr Massasso, a proposition with which Mr Massasso agreed. 4. Mr Megna also made it clear than an essential term of any lease would be a 10 year demolition clause, which would allow his family to sell the properties in the years ahead. 5. Mr Megna's family sold both properties jointly with 139 Great North Road in July/August 2021, with settlement occurring in December 2021. Mr Megna's oral evidence (in cross-examination) 1. Mr Megna was cross-examined by Mr Sirtes. A summary of his oral evidence is set out below. 2. Mr Megna confirmed he was generally aware of various council plans to change the facilities or orientation of the area around Great North Road but not around Fred Kelly Place specifically (Transcript 54, lines 32 to 40). 3. Mr Megna was aware of changes specifically in the area now encompassed by the Post Office, however he was not aware of the specifics. Because he was a property owner, he was unable to read any documentation or engage in any Council discussion about it. 4. He became aware of the plan for a Five Dock Metro station in October 2019, around the time Mr Massasso contacted him about relocating due to Sydney Metro acquiring properties on Great North Road next to Fred Kelly Place. 5. Mr Megna's mother owned the property at 137 Great North Road which operated as a bread shop, and he, his mother and his sister owned the property at 135 Great North Road which operated as a discount variety store. The two properties are roughly the same size. 6. Mr Megna confirmed that Mr Massasso asked him "Can we both go up and speak to them (the tenants) to see if they're interested in me buying out their lease?" In response to this request, he organised a meeting with them. 7. According to Mr Megna the discussions with Mr Massasso occurred from late October 2019 to early November 2019 – a matter of a few weeks. After this period, their discussions ceased as Mr Massasso was engaged in discussions with the tenants directly. 8. Mr Megna agreed to with Mr Sirtes' proposition (Transcript 56, lines 39 to 40): "And so far as you were concerned, whatever he managed to work out was a matter between him and the tenants;" 1. He confirmed he knew that Mr Massasso and the tenant of 135 Great North Road had reached an agreement. Each party approached him separately him to indicate this, however he was never made aware of the terms. Mr Megna did not follow he up, leaving them to contact him if anything came of the discussions. 2. Mr Sirtes directed Mr Megna to folio 497 of the Evidence Book – an email from Mr Massasso dated 5 November which reads: "Just to formalise our discussion over the past two weeks" … an email confirming Mr Megna's recollection that the two had been in discussion for only a matter of a few weeks. 1. The email also said: "For the purpose of presentation to the Metro" … a comment about which Mr Megna said he did not understand the meaning. 1. Mr Massasso told Mr Megna in the email, confirming that he (Mr Massasso) had met with the tenant – Mr Jai, who was open to extinguishing his business. Mr Megna, though he did not remember the name of the tenant, indicated that it was a gentleman who held the lease together with his parents. 2. Mr Sirtes asked (Transcript page 58, lines 31 to 34): 'He (Mr Massasso) said "We also agreed on a potential new lease between us, your family's property and the pharmacy as a result of the Metro." Just to be clear it's not entirely clear whether he's talking about you or Mr Jai. Did you agree on a potential new lease with him?' 1. To which Mr Megna responded: "Yes. If, he had sported things out with Mr Jai, then there'd be a new lease entered in, entered into with Mr Massasso." 1. At that stage, by 5 November 2019, Mr Megna had not identified how much the rent would be but had indicated that a demolition clause would be part of any lease entered into with Mr Massasso. Mr Megna did not recall whether he or Mr Massasso had raised the idea of a demolition clause, only that there was discussion of such a clause. 2. As a result of the Metro being due to arrive in Five Dock in the late 2020s, there was a perception that developers would move into the area to capitalise on this. Mr Megna anticipated there would be rezoning in the area and that rezoning would occur anywhere along the main strip, including the precinct where his properties were located. The idea of the clause was that he would have the ability to sell later to someone planning to develop the property. 3. Mr Sirtes then asked (Transcript page 59, lines 36 to 39): 'It says there "And ten years is maximum time a lease can be agreed." Just so as I understand it, it was envisaged at that stage that you would be giving a lease longer than ten years but with the right to terminate the lease for the purposes of a development or demolition after ten years?' 1. To which Mr Megna Responded (Transcript page 59, lines 40-42): 'I think from memory, Mathew wanted a longer lease, and our lawyers said "Look, just put the ten-year demolition clause in there, just to give you the flexibility." 1. Mr Megna indicated he might have asked the lawyer what a demolition clause was. This led Mr Sirtes to ask whether it was something that may have been suggested to him. He agreed that it probably the case and that he certainly did not know what a demolition clause was and hence asked his lawyer. Mr Megna said he was sure that it never got to the stage of his lawyer drawing up a draft lease. 2. Mr Sirtes then directed Mr Megna to his own email in response to Mr Massasso's in which he said (Transcript 60, lines 13-15): "Happy for you to proceed with government to further your desire to secure the property as soon as possible" 1. When asked what he meant by this, Mr Megna said he could not recall the context of writing the email but that Mr Massasso must have needed to respond to whoever was acquiring the property. He affirmed that he could not recall why that sentence was included in the email. Mr Megna's re-examination 1. Mr Eastman requested Mr Megna to look at paragraph 15 of his Affidavit in regard to his inability to recall whether he or Mr Massasso had raised the idea of a demolition clause. 2. Mr Megna then referred to his earlier reply, saying that he had in fact made it clear to Mr Massasso that there would be a ten year demolition clause. He confirmed that that evidence was correct. Consideration 1. Sydney Metro's complaint that the exploration by Mr Massasso of alternative premises in the Great North Road shopping strip was not genuine (at least at the time he commenced the discussions with Mr Megna or Mr Rupolo) are misplaced. Although it can clearly be understood that Mr Massasso's primary desire, as events unfolded during November and December 2019, was that Mr Massasso's pharmacy would relocate to 104 Great North Road, this was by no means something which could be regarded by Mr and Ms Massasso as a "done deal" until vacant possession was achieved of the premises to which the pharmacy did, eventually, relocate. 2. There is a contest between Mr Massasso (supported by Ms Massasso) and Sydney Metro as to whether there was some pre-existing intention on behalf of Mr Massasso to acquire the freehold premises in the Five Dock shopping strip for the purposes of relocating his pharmacy with that intention, on Sydney Metro's case, preceding any knowledge by Mr Massasso that the acquired premises were to be compulsorily taken by Sydney Metro for the purpose of constructing the Five Dock Metro station. 3. I am satisfied that there is a simple, compelling indicator that this was not the case. Sydney Metro's proposition is given the lie because, on 19 September 2019, Mr Massasso entered into a new lease for the acquired premises with this lease running for five years with multiple further five-year options granted to Mr Massasso to renew the lease. Entry into this minimum five-year lease arrangement occurred prior to Mr Massasso being made aware of the proposed compulsory acquisition of those premises. 4. At the very least, this created a contractual obligation between Mr Massasso and his then landlords for the initial five year period of that lease with Mr Massasso facing the legal liability (whether hypothesised to be enforced or not being irrelevant) that would arise if he was to seek to break that lease in order to move to an acquired freehold property (whether by himself or in partnership with his wife also being irrelevant). 5. Whilst relocation to 104 Great North Road, might well have been the primary desired outcome (and the effecting of this after undertaking the extensive structural rebuilding of, and creation of additional space at, 104 Great North Road has resulted in Mr Massasso having what could fairly be described as a "Rolls Royce" pharmacy), this was not an inevitably achievable outcome (wherever the costs of doing this were to be regarded as appropriately falling). During the period until purchase of these premises was finalised and vacant possession obtained, thus giving the Massasso interests a clear run at achieving the project outcome eventually realised, uncertainty remained. 6. As was submitted for Mr Massasso, even if the desired outcome was not able to be achieved as the intermediate step of obtaining vacant possession in sufficient time and in a fashion that would realistically permit achievement of the desired project outcomes, nonetheless, Ms Massasso would have obtained a valuable commercial property in the Five Dock shopping strip at a highly desirable location within that strip and where she had two existing and established tenancies. This position of a prime location in the vicinity of the proposed Sydney Metro station would likely, in the future, also have significant longer term development potential had the pharmacy relocation to that site not been achieved as has occurred. In this context, it is to be noted that the evidence concerning the financial resources immediately available to the Massassos through the family trust fund (however their expenditure might appropriately be legally characterised for the purposes of attributing ownership of the acquired premises being irrelevant), there was no doubt that purchasing 104 Great North Road could be regarded as a rational investment decision under the circumstances. 7. Although the timing and urgency of doing so was undoubtedly triggered by Sydney Metro's evinced intention to acquire the premises then occupied by Mr Massasso's pharmacy and this resulted in the celerity that this aroused in Mr Massasso to drive achievement of the outcome eventually realised does not, in itself, demonstrate inevitability that his pharmacy would relocate as it has done. 8. In this context, given the necessity to relocate, the desire for that relocation to be to premises where he could be assured of long-term tenure was not unreasonable. 9. The risk occasioned by a demolition clause if the pharmacy relocation was effected to other leasehold premises subject to such a provision and with only a 10 year tenure made those alternative premises unattractive to Mr Massasso. This was particularly so given the fact that he had traded at the acquired premises (or immediately next door to them) with a long-term supportive (and guaranteed) landlord/tenant relationship. This made it highly desirable, in Mr Massasso's eyes, to be able to replicate this then existing tenure via purchase of 104 Great North Road but did not guarantee this outcome. 10. It is also clear that Mr Massasso can be regarded as relocation averse (and noting that the regulatory regime for pharmacies prevent frequent relocation - the five year limitation - amongst other things), thus pursuit of 104 Great North Road as the primary and desired opportunity for relocation was not unreasonable. 11. In this context, it is appropriate to set out the terms of a brief exchange I had with Mr Hemmings concerning the fact that Mr Massasso continued to hold out to Mr Megna and Mr Rupolo the possibility that his pharmacy might relocate to one of the Five Dock shopping strip premises which one or other of them might be able to make available to Mr Massasso. The exchange was in the following terms (Transcript 27 July 2023, page 414, lines 22 to 36): HIS HONOUR: Let me put this proposition to you now as a tentative conclusion which if Mr Sirtes seeks to take in some other direction you can deal with it in reply. That is that it's going to sound uncharitable when I say it, but I'll say it anyhow, that Mr Massasso needed to string along the other potential landlords until he was guaranteed to be able to evict the existing tenants at 104 and that he promptly cut the strings once he had negotiated the prices for getting the tenants out. I make no ethical or moral judgment about that process, but it strikes me that that is how I should regard those other transactions. Had Mr Massasso not been able to get the tenants out of 104 Great North Road, he would have been faced with the inevitability of leasing one of these other premises with shorter term leases and a demolition clause if he was going to stay in the Five Dock shopping strip. HEMMINGS: Your Honour with the greatest respect is entirely correct. 1. Although it might be rationally concluded that Mr Massasso had adopted a "whatever it takes" attitude to obtaining vacant possession at 104 Great North Road (and the lack of justifying detail for the substantial payments made - particularly the major payment would tend to support such a conclusion), the earlier noted evidence concerning the Massasso's financial position demonstrates that that was an approach well capable of being undertaken by Mr Massasso. 2. Given the conclusions I have reached, for reasons elsewhere explained, that the major project costs of the works undertaken at 104 Great North Road are not ones which are to fall on Sydney Metro nor are the costs of the buyouts of the then existing tenancies at that location going to fall on Sydney Metro, whether or not these transactions were undertaken with an eye to, or structured so as to facilitate an anticipated claim for, compensation to be achieved from Sydney Metro through the statutory processes of the Land Acquisition Act is a matter of irrelevance. The acquisition, fitout and leasing of 104 Great North Road Introduction 1. As earlier noted, the Five Dock Pharmacy is now situated in the Five Dock shopping strip at 104 Great North Road. These new business premises were purchased by Mr Massasso's wife, Ms Susan Massasso, who subsequently leased the new premises to him. The elements of the works undertaken at 104 Great North Road 1. The physical works carried out by Mr Massasso at 104 Great North Road can be summarised as set out below. In doing so, for reasons which will later become obvious, it is convenient to divide them into two groups – these being the major demolition and construction/reconstruction elements and, separately, the pharmacy fit-out elements. 2. The major works were: * demolishing almost the entirety of existing the premises (other than the common wall with 102 Great North Road, the top of the front façade and portion of the northern wall – other than the portion at the rear and set back from the northern boundary); * constructing a new second-storey addition toward (but not at) the rear of the premises; * adding a new parking and delivery area at the rear; * extending the internal area for the building so it now ran to the northern boundary for its full length; * adding a large window to the northern wall at the Great North Road frontage; * removal of internal level differentials stepping through the floorplate; * structural alterations including a new roof and structural supports for the upper level; and * structural repairs, including damp rectification, a water mains upgrade and in-ground stormwater drainage. 1. Only after all the above listed works had almost been completed was it possible to effect fit-out for pharmacy use. The fit-out works amounted to a full internal partitioning to enable installation of: * the retail and publicly interfacing or viewable dispensary area of the pharmacy; and * "back of house" facilities - the DAA area, consulting room, staff room, accessible toilet/bathroom and the extensive shelving in the garage/storage area. Ms Massasso's evidence Introduction 1. Ms Massasso gave affidavit evidence concerning the acquisition, fitout and leasing of these new premises. She was required for cross-examination. Ms Massasso's affidavit evidence 1. A summary of her affidavit evidence is set out below. 2. On 21 October 2019, Ms Massasso received a call from her husband saying that he had just been informed that the property where their pharmacy business was then located was going to be acquired by Sydney Metro for the propose Five Dock Station project. 3. Following that contact, Ms Massasso recalled discussions with Mr Massasso about relocating the business in a way that would maintain his business. She also recalled her husband telling her that he anticipated some difficulty in finding somewhere to which he could relocate. 4. According to Ms Massasso, her husband had built the business up over a period of 20 years. In the days following 21 October 2019, he feared he would lose it. As they hoped that one of their sons would eventually go into the business, its long-term viability was a priority for Ms Massasso and her husband. 5. On 24 October 2019, Ms Massasso attended a meeting between representatives of Sydney Metro and Mr Massasso and his lawyers, during which the possibility of a freehold purchase was raised, so that they could obtain tenure of similar security. 6. Following the meeting, Mr Massasso told his wife that Fausto Biviano and his son, Marcello Biviano, might be interesting in selling their property located at 104 Great North Road. 7. After a discussion between her husband and Marcello, Ms Massasso spoke to Marcello herself indicating their eagerness to come to an agreement about purchasing the property. Marcello responded that he would have to consult his family and get back to her. Negotiations continued very quickly thereafter and Ms Massasso reached an agreement to purchase the property for $3,500,000, with contracts for the sale being exchanged on 4 November 2019. 8. Mr Massasso then approached the tenants to try to convince them to vacate so that he could relocate his pharmacy business there. In early December 2019, Mr Massasso reached agreements with the tenants to vacate early. 9. Ms Massasso said she was aware that being landlord to her husband could potentially impact his ability to obtain compensation from Sydney Metro. Because of this, they agreed to get valuations done and use separate lawyers. 10. Ms Massasso received independent advice from Peter Clinch of Clinch Long Woodbridge Lawyers on valuation of the property, the appropriate rent and lease terms, which advice was in annexures C, D, E and F to her affidavit. 11. These reports were discussed in a meeting on 15 May 2020 between Ms Massasso and her solicitor and Mr Massasso and his solicitor. The object of the meeting was to agree on a rental having regard to the valuation reports and to ensure they were doing the right thing in regard to a commercial and market based rent and lease terms. A rent of $198,000 per annum was agreed upon, which Ms Massasso considered to be in line with the valuation reports. 12. During this process of agreeing to the lease, Ms Massasso followed advice from her independent legal advisor and had regard to the valuation reports, to ensure that she treated Mr Massasso as if he was an ordinary commercial tenant. She then entered the lease with Mr Massasso. Ms Massasso's oral evidence 1. Ms Massasso was cross-examined by Mr Sirtes. A summary of her oral evidence is set out below. 2. Many years prior to the purchase of 104 Great North Road, Ms Massasso and her husband had discussed buying a property in that street for the purpose of locating the pharmacy. 3. After becoming aware in October 2019 of the proposed compulsory acquisition by Sydney Metro of the pharmacy site, one of the options available to the Massassos was for them to purchase a building to house the pharmacy, which they did very shortly afterwards. 4. Ms Massasso did not recall whether her husband made an inquiry with Fausto Biviano about purchasing the property. 5. During a roughly two-week period after Ms Massasso spoke with Mr Biviano's son, Marcello, Ms Massasso had concluded a deal – agreeing to purchase the property for $3,500,000, a price that was negotiated without the assistance on an independent valuation. 6. The intention in purchasing the property was to house the pharmacy, however Ms Massasso was aware that this could not be guaranteed. 7. Mr Sirtes then asked (Transcript page 142, lines 3-5): "What was necessary, no doubt, was for you as the owner of the building to be able to grant vacate possession to your husband if he was going to occupy the premises that was otherwise occupied by sitting tenants, correct?" 1. To which Ms Massasso responded (Transcript page 142, lines 6 to 9): "That wasn't the only criteria. So, as per previously, ideally a long lease is better than a – an owned property. So, we – he was still investigating other options and, yes it was a plan B in the event that didn't lead to anything, and we could get or he could get the tenants out." 1. Ms Massasso agreed that purchasing a commercial property, in the shopping precinct on Great North Road, offered future potential development considering the arrival of the Metro. 2. Mr Sirtes directed Ms Massasso's attention to folio 256 of Exhibit 3, a folio containing a loan facility agreement dated 20 April 2020 – a document which he proposed (Transcript page 142, line 48 to page 143 line 1): "…was created so that the money that was drawn from trust – would not be treated by the ATO as a declaration of dividend but a loan." 1. Ms Massasso understood the purpose of the document and confirmed that the $3.5 million that was withdrawn by her husband (the account's trustee) was the money for the purchase of 104 Great North Road. The funds were transferred from a family trust Commsec account of which Mr and Ms Massasso were the principal beneficiaries, and which recorded all of the proceeds from Ms Massasso's personal company shares that she had sold. 2. Mr Sirtes asked (Transcript page 144, lines 4 to 7): "Then a number of months after that occurred – you entered into that document, is that correct?" 1. To which Ms Massasso responded (Transcript page 144, lines 8 to10): "Well, the document was drafted a bit late because our accountant is a bit busy. But the understanding of how that was all going to work was known to all of us." 1. Mr Sirtes then noted that the document was an umbrella document for any monies borrowed and that it didn't specify any loan amount in it. 2. Ms Massasso did not know that combined rent that then tenants were paying at the time because she deemed it irrelevant to her and her husband because their principal focus in buying the property was not to become the landlord of the existing tenants. 3. The purchase price was negotiated to be $3.5 million, in a fashion that Mr Sirtes proposed was (Transcript page 144 lines 36 and 37): "…dissociated with the underlying rental income stream that those tenancies paid?" 1. Ms Massasso responded that it was purchased with the view to her earning rental income. The price was negotiated in accordance with Ms Massasso's broad understanding of property values in the area rather than figuring out the net rent or any specific values. Ms Massasso suggested she, instead, viewed it as a long-term investment. 2. When the property was purchased, Mr Massasso was tasked with dealing with the existing tenants. He and his wife had no particular budget of what he would need to pay the tenants to vacate the premises. 3. During a meeting on 24 October at the solicitor's office with three Sydney Metro officers present, a number of concerns were raised regarding that relocation and compensation. Following that meeting Ms Massasso had no further direct contact with anyone from Sydney Metro, with contact instead being maintained via her advisors and her husband's advisors. 4. Mr Massasso had some notion of refurbishing the building at the time of its purchase by his wife on 4 November, with the idea that he could gain access to it as a tenant and was speaking to consultants about developing a plan for this. 5. He had kept Ms Massasso informed of his dealings with consultants regarding putting in a development application with the Council for extensive refurbishment of the building, which as all left to him, including financing. Ms Massasso was not aware of whether or not the $1.9 million to finance the refurbishment came from their trust. 6. Ms Massasso signed the development application, the construction certificate application and a modification document for the proposed works. When asked if she had formally authorised her husband, as a tenant, to undertake the structural work, Ms Massasso said she assumed that signing the development application was sufficient. The expert evidence concerning the fitout Introduction 1. As earlier noted, evidence concerning the fit out at 104 Great North Road and general pharmacy fit out requirements was given by Ms Stybowski and Mr Mihulka. Each of them provided an expert report and, together, they subsequently gave concurrent oral evidence. They also produced a joint expert report. It is appropriate to set out relevant elements of their primary evidence and to summarise relevant elements of the concurrent evidence. Ms Stybowski's evidence 1. In her letter of instructions, Ms Stybowski was asked to address, as Topic 4, the following: Whether you consider the increased size of the new pharmacy at 104 Great North Road is reasonable when compared to our client's previous pharmacy at 157 Great North Road, having regard to the requirement to comply with current standards, current occupational health and safety requirements and current pharmacy regulations/guidelines, including QCPP requirements. 1. In her Statement of Evidence, she addressed this topic in the following terms: 5.1. Having regard to what I have described in section 4. (Question 3.5 (3)) above, my understanding of 'reasonable' in this context is being fair and appropriate to accommodate as close to the same type of pharmacy at 104 GNR as to the former pharmacy at 157 GNR. 5.2. I base my opinion on what would be considered fair and appropriate according to the pharmacy regulatory and best practice guidelines and BCA compliance requirements discussed above. 5.3. I refer also to the floorplan comparisons presented to me (Fig. 2 below), which indicate additional areas required in the new premises to comply with such aspects as egress and necessity for a DA compliant toilet. From experience working alongside designers, I am also aware of additional clearances required around doorways and around thoroughfares, which whilst not indicated on this plan would also impact spatial layout and hence space requirements. Fig. 2 Pharmacy Floorplan Comparison 5.4. The scope of practice for pharmacists has changed over the past few decades and the basic requirements of a pharmacy premises has evolved with this. Therefore, elements such as a private consulting room as discussed above, current pharmacy specific guidelines and best practice recommendations are considered the norm rather than exception. Added to this, requirements such as inclusion of an appropriate toilet, space for appropriate server rack with capabilities for current IT requirements in pharmacy (not likely to have been a necessity when the former pharmacy premises was fitted out) and provision for sufficient storage of refrigerated and S8 (safe) medicines (which has changed over time) – all requiring appropriate space. 5.5. In my opinion it is therefore not unreasonable that the new pharmacy is slightly larger to accommodate this, rather than move into a new tenancy where perhaps retail space would need to be sacrificed to fit these elements in properly – and this would likely impact other aspects of business performance. 5.6. Therefore, I would consider the increased size of the new pharmacy at 104 GNR to be reasonable and an acceptable increase to accommodate all of the above discussed requirements. 1. During the course of her oral evidence, she was questioned on matters relating to the various elements contained in this portion of her instructions. The oral evidence in this regard was in the following terms (Transcript 20 July 2023, page 188, line 1 to page 189, line 1): SIRTES: Can I again then take you to the next page, 1492? You'll see there that question 3.5.4 was whether you considered an increased size of the new pharmacy is reasonable and you can read on, "having regard to the requirement to comply with current Standards, current occupational health and safety requirements and current pharmacy regulations, guidelines, including" I think it's QCPP requirements. There's a use there in three different instances of the word "requirement" or "requirements". Am I correct in understanding that there are actually very limited requirements as to things such as size of a pharmacy and things of that kind, prescribed numerical requirements for the size of a pharmacy? WITNESS STYBOWSKI: The actual size of the pharmacy itself, no. There's, there is a requirement for a size of a dispensary but not the actual size of the pharmacy. SIRTES: So it goes without saying you can have a pharmacy like the small one at the medical centre, which is very, very considerably smaller than these premises, correct? WITNESS STYBOWSKI: Correct. SIRTES: That pharmacy down at the medical centre doesn't have anywhere near the range of facilities that this one does? WITNESS STYBOWSKI: No, it doesn't. SIRTES: When you talk there about - when you use the expression "Requirement to comply with current standards", do I understand that to be to the extent that a pharmacist wants to include a number of these additional items, there may be requirements that arise at that point, but the actual need for them to comply is relatively limited to things like the size of the dispensing area? WITNESS STYBOWSKI: Yes, although there are - the requirements do differ based on the tenancy itself. For example, this is a, I'm going to loosely call it freestanding, it's in the shopping strip, whereas if you use the example of the very small pharmacy within the medical centre, that tenancy is in a different, I guess, context location, i.e., within a facility. So, something like, for example, the DA toilet, it would fall, from the best of my understanding, into a different building code category compared to a building like this. So, that would be the only sidenote, I'd say. SIRTES: When we use the expression, if I can just take you to page 1493, paragraph 5.4, and you talk about there in the first sentence, "The scope of practice for pharmacists has changed over the past few decades, and the basic requirements of the pharmacy premises has evolved with it". When you use the expression there, "requirements", are you folding within that expression concepts such as best practice and common practice as distinguished from just actual minimum requirements? WITNESS STYBOWSKI: Yes, I'm referring to all of that in totality. Mr Mihulka's evidence 1. Mr Mihulka was questioned by Mr Hemmings with a significant portion of his evidence relating to a number of different location requirements for pharmacies in the context of relocation of any existing pharmacy and relationships with other existing pharmacies. As matters have evolved in these proceedings, nothing arising from Mr Mihulka's evidence in that regard requires further consideration. 2. Mr Mihulka was also questioned by Mr Hemmings concerning the various individual elements of the fit-out at 104 Great North Road. It is not necessary, in detail, to go through this material. In effect, Mr Mihulka adopted a position in common with Ms Stybowski concerning what was to be regarded as best practice in the fit-out of new pharmacy premises. As I understood his evidence, he accepted that the fit-out which had been undertaken by Mr Massasso at 104 Great North Road, in fact reflected what he and Ms Stybowski both regarded as best current practice in pharmacy fit-out (as well as satisfying any necessary regulatory requirements for such fit out). The closing submissions for Mr Massasso Introduction 1. The submissions advanced for Mr Massasso are extensive – addressing, in considerable detail, specific aspects of the works undertaken and the contested costs relating to them. Although, as will later be seen, it is not strictly necessary to reproduce all of this detail, I consider that it is appropriate to do so in order to understand the complete nature of the case advanced on Mr Massasso's behalf in support of his claim for the entirety of the works at 104 Great North Road to be acknowledged as reasonably incurred costs of relocation and, thus, reimbursed to him by Sydney Metro. 2. The amount claimed for physical relocation is $1,731,914.00 on the basis that the costs identified have actually been incurred by Mr Massasso and are reasonably incurred. 3. The claim for fit-out costs relates to the works required to make 104 Great North Road fit for carrying out the relocated pharmacy operations. 4. Mr Massasso contended that "financial costs reasonably incurred" covers work done to allow for a business to be relocated even if like-for-like premises can not be found. Given the applicable building codes and standards and the regulatory regime under the National Health legislation, the possibility of finding like-for-like premises is impossible. 5. If it were not for the acquisition Mr Massasso would have continued to operate the business from the acquired site, likely on a very long-term basis. 6. Fit out costs were essential to restore Mr Massasso's ability to operate the business, not unlike in Konduru v Roads v Maritime Services (2017) 224 LGERA 262; [2017] NSWLEC 36 (Konduru), where Dr Konduru's move from a medical centre to a residential premises required a fit-out. It is also similar to the fact that a bakery was permitted to continue despite limited profitability (Hua V Hurstville [2010] NSWLEC 61). 7. The joint report of quantity surveyors, Mr Connaire and Mr Tucker, largely agrees on the individual components of the costs claimed, including the quantum, however the entitlement and reasonableness of various elements of the claim are disputed. 8. Mr Massasso's position is that: 1. At all stages he has implemented advice from experts to ensure his costs claimed are reasonable and within permitted scope of the Land Acquisition Act; 2. In relocating Five Dock Pharmacy, he conducted appropriate searches within an acceptable area; 3. Metro informed him that relocating to a building purchased on a freehold basis was a possibility; 4. When deciding on 104 Great North Road, he sought to replicate his lease as closely as possible. Both parties agreed on terms in accordance with their legal advice; 5. In carrying out the fit-out, he complied with building codes and standards, applicable State and Federal laws and regulations, requirements under the National Health regulatory regime addressing the size and layout of the fit-out, as well as best practice and common practice; and 6. He accepted his construction of a first floor could not be claimed and never made it part of the claim and has prepared evidence on this basis appropriately apportioning the costs involved. 1. That those costs were reasonably incurred is advanced on the basis that because the relocation to 104 Great North Road was itself reasonable, then the works were required to make the premises fit for purpose were also reasonable. The factual matters relevant to the claim 1. When it was acquired, Mr Massasso had run his pharmacy in Five Dock for two decades. He commenced operations in 2000 at 175A Great North Road when he purchased a pharmacy business that held a lease for 3 years to run and a 5-year option to renew. 2. The landlords owned the whole of the building which also contained the premises at 157 Great North Road and in 2002 the landlord intended to renovate both. Mr Massasso negotiated a new lease and moved next door to 157 Great North Road, which remained the site of Five Dock Pharmacy until the acquisition. From then on, Mr Massasso would negotiate a new lease well prior to the exercise of the option, each time providing longer term options in his favour. The last of these leases was struck on 15 September 2019, for a term of 5 years, with multiple 5 yearly options to renew which were not to expire until 14 September 2044. 3. Immediately after he was notified of the acquisiton, Mr Massasso took steps to relocate in accordance with the locational rules and relocation requirements issued by the Community Pharmacy Authority and the Pharmacy Council of NSW under the National Health Act 1953. He intended to relocate as close by as possible and replicate 157 Great North Road as like-for-like as possible. 4. Mr Massasso took legal and other consultancy advice in selecting other premises. 5. He met with representatives of Sydney Metro early in the process during which he informed Metro that: 1. Their objective was to grow the family business and eventually pass it on to one of their sons. They wished to relocate within the same area to maintain their client base; 2. The reason they had a 25-year lease was because "it is very hard to relocate their business"; 3. A shorter lease was not appropriate for their business as pharmacies cannot move more often than every five years to maintain their license; 4. Surrounding properties had reduced their leases and added demolition clauses since the metro announcement; and 5. Moving from a leasehold to a freehold was the closest they could get to be put in the same position. 1. Mr Massasso noted that Metro responded that they wanted to keep a range of options available including purchasing a property or buying out a lease and noted previous instances where something similar had occurred. 2. The advice informed the steps Mr Massasso took and assisted in setting a course for the purchase of 104 Great North Road by Mr Massasso's wife and the consequent, properly assessed, market rental that arose. 3. The property comprised a building with two separate tenancies, each with time left on their lease, requiring negotiation to convince the tenants to end their leases early. 4. An agreement was made with the same length of lease term as the lease at the original premises. Both Mr and Ms Massasso received independent legal and valuation advice to ensure the arrangement was on proper commercial terms. 5. Mr Massasso has also submitted that he felt the rent was reasonable from the fact that a Colliers report of 1 October 2020 commissioned by Metro concluded that reasonable rent would be $210,000 per annum if turnover were $3,000,000 with an occupancy cost of 7%. Metro no longer relies on this report. 6. In order to relocate, approval from the Council for the fit-out work was required as well as approval from the Department of Health and Pharmacy Council. Following advice from a range of consultants, he obtained all of those approvals. 7. The fit-out works were commenced on approximately 17 August 2020 and concluded 18 May 2021, with operation commencing at the new premises on 19 May 2021. Criteria for the new premises 1. In his affidavit, Mr Massasso outlined what he considered were the requirements to be satisfied enabling him to relocate. He sought to relocate as close to the original premises as possible and replicate the business as closely as possible to maintain it. This required suitable premises for a pharmacy, located on the main street which would maintain the feeling of a community pharmacy on the local high street. It needed to be on Great North Road between Garfield Street and the Post Office and not too close to existing pharmacies, or too far from the commercial centre of Five Dock. 2. Those criteria were reasonable and the premises at 104 Great North Road met such criteria. Mr Massasso acted reasonably at all relevant stages in moving to this site. The regulatory and best practice regimes for pharmacies 1. The relocation of a pharmacy is heavily regulated. The regulatory requirements for relocation and operation are described below: The relocation application process 1. A pharmacist must apply for approval to relocate a Pharmacy under s90 of the National Health Act 1953. Key requirements for relocation are: (a) Satisfaction of locational requirements: The distance within which a pharmacy may relocate is restricted, and in the case of Five Dock Pharmacy would be either 1km or 1-1.5km, with the 1km option allowing Mr Massasso to most closely replicate his business. (b) Satisfaction of general requirements: 1. The Applicant has a legal right to occupy the proposed premises. 2. The proposed premises can be used to operate a pharmacy under applicable laws on land development. 3. The proposed premises would be accessible by the public. 4. The proposed premises will be ready to trade within six months pf a recommendation being made by the Australian Community Pharmacy Authority. (c) Existing approval to be cancelled immediately before the approval is granted: the authority must be satisfied that the pharmacist has requested this in writing and that if the pharmacist has ceased business at the existing premises the Secretary is aware of the cessation and reasons for it and has agreed to cancel the existing approval. (d) Demonstration that the approval at the existing premises has been in force for a continuous period of at least 5 years: one or more approvals regarding the existing premises were in force immediately before the application was made for a continuous period of a least 5 years 1. All applications made for the relocation of an existing pharmacy are referred to the Authority for determination. The application process is strict and the authority meets 10 times per year to consider applications with cut off dates for each meeting being 5 weeks prior. There is no discretion as to late applications or additional information after the application has been made. If the Authority considers additional information necessary, it may defer until a subsequent meeting. Operational requirements 1. Fit out plans must enable the pharmacy to meet regulatory requirements. It was agreed in the joint report that where there were regulatory deficiencies in an old pharmacy fit-out it is not mandated to meet the latest requirements however where a change is made, the new operation must comply with legislated requirements and is advised to comply with best practice. 2. Fit out requirements include a dispensing area of at least 8m squared, an area which can be used for consultation with a pharmacist that will not be heard by others, access for people with a disability to all areas used by occupants and accessible sanitary facilities. 3. Best practice guidelines include Quality Care Pharmacy Program (QCPP) 2020, a framework for best practice operations with excellence in safe and quality care. Mr Massasso has been QCPP accredited since 2002. Best practices under QCPP include: 1. Ensuring there is an area which allows for private conversations with consumers; 2. Establishing and maintaining a procedure to monitor each dispensary refrigerator; 3. Ensuring the pharmacy can cater for those with mobility aids and provide seating to consumers as required; and 4. Determining emergencies that may affect the pharmacy and implementing measures to prevent or minimise their impact. 1. Mr Mihulka agreed that it would be best and common practice to include a consult room in a fit-out. The approach to s59(1)(c) in the authorities 1. There are many past cases dealing with relocation which include the re-establishment of the business operations of the person entitled to compensation, on another site. 2. One such case was McBaron v Roads and Traffic Authority (NSW) (1995) 87 LGERA 238, which related to acquired farming land. The court found the piecemeal before and after method should be used. This comprehends severance damage and enhancement of value. Any change to the value of improvements can be considered pursuant to s55(f), or if they need to be replaced or modified, the costs might be recovered as loss attributable to disturbance pursuant to s 59(c) or (f). 3. In Peter Croke Holdings Pty Ltd (1998) LGERA 108, the width of the meaning of "relocation" was considered. Bignold J allowed as s 59(c) relocation costs, the costs of dispossessed tenant in relocating and re-establishing business on another site. 4. In Home Care Services (NSW) v Albury City Council (2003)136 LGERA 117; [2003] NSWLEC 214, at [18], Bignold J held that the compensable amount under s 59 (c), in that case, included all relocation costs in re-establishing its business premises. The costs that HH allowed included all fit-out costs. 5. In McDonald v Roads and Traffic Authority of New South Wales [2009] NSWLEC 105, Biscoe J, at [107], said, "The word "relocation" in s 59(c) has a wide meaning," noting the comments of Dixon and Williams JJ in Minister for Army v Parbury Henty & Co [1945] HCA 52; (1945) 70 CLR 459. 6. On appeal in McDonald, at [143], Tobias JA said: "In summary, I am of the following views: a) The word "reasonably" governs the word "incurred" and not the expression "financial costs. The issue that arises under each subparagraph is whether the relevant costs are "reasonably incurred": it is not a question as to whether those costs are reasonable in themselves; nor does the Just Terms Act contemplate some overarching test of reasonableness in respect of compensation otherwise properly assessed having regard to "all relevant matters" in Part 3; b) Given that it was not in dispute that upon vacating the residence on the acquired land when required by the RTA the respondent had no option but to rent premises pending the construction of her new residence upon the residue land, the only relevant question was whether the incurring of the financial costs I the form of rent was itself reasonable. The incurring of rent may not have been reasonable if, for instance, the respondent already owned an alternative residence which she an her partner could have occupied pending the construction of her new residence upon the residue land or if she had rented an expensive penthouse overlooking Sydney Harbour at an exorbitant rent. In such cases it could legitimately be said that the rent she claimed was not "reasonably incurred"…" 1. Paragraph b) above indicates that unreasonableness does not come down to like-for-like costs or pro-rata assessment, but whether the bounds of reasonableness are exceeded due to the exorbitant nature of the costs. 2. Konduru considers similar facts, as an example of approaching reasonableness where a direct like-for-like replacement cannot be found. In that case, a claim was allowed for relocation from a doctor's surgery to proximate residential premises which required fit-out costs. 3. In Qasabian Family Investments Pty Ltd v Roads and Maritime Services; Fishing Station Pty Ltd v Roads and Maritime Services [2017] NSWLEC 73 (Fishing Station), the court dealt with a relocation claim that included a rent differential claim which was allowed in part. 4. Those cases support the propositions discussed below about the application of s 59(1)(c) in this case. The Applicant's primary proposition on relocation 1. Claims permitted by s 59(c) must be ones for the "financial costs reasonably incurred by persons entitled to compensation, in connection with the relocation of those persons". In this case, Mr Massasso is the person entitled to compensation, the relocation relates to the movement of his business activities and there have been financial costs incurred as a result of relocation. 2. Mr Massasso submits that such costs have been "reasonably incurred". 3. The primary case for Mr Massasso is that once I determine that the move to 104 Great North Road was reasonable, then compensation for that relocation's costs is to be paid pursuant s 59(1)(c). 4. The primary reason advanced on that basis is that Mr Massasso sought the advice if experts in a range of specific areas at all relevant stages. He implemented that advice and relied on what was said to him at a meeting with Metro's representatives. 5. The fit-out at 104 Great North Road has been carried out with regard to three main principles: 1. The works at 104 Great North Road make it fit for purpose, which required some structural work. 2. The works comply with the regulatory and best practice regimes for pharmacies. 3. The works were otherwise to be carried out as closely adherent to replicating the old premises (where he himself had incurred the fit-out initially). 1. What is not like-for-like, because of choices by Mr Massasso (construction of the upper level), has been excluded from the claim. 2. Sydney Metro has attacked Mr Massasso's credit based on the following propositions: 1. Mr Massasso intended to move from leasehold to a freehold property owned by his wife even before receiving notice of the acquisition. 2. Mr Massasso always intended to enter a lease at 104 Great North Road, which was purchased by his wife, without entertaining the prospect of entering into other leases. 3. Mr Massasso's investigation of possible options for relocation after his wife's purchase of 104 Great North Road but before finalising buy-out agreements with the tenants was done in order to construct a narrative for the purpose of a compensation claim. 1. The evidence demonstrates these propositions are baseless. 2. First, though Mr and Ms Massasso had spoken about moving the shop to a freehold prior to receiving notice of acquisition, Mr Massasso was not asked about the timing of such conversations and Ms Massasso said they had occurred around 2003. This was not challenged in cross-examination and is not open for Sydney Metro now to contend otherwise. 3. Second, after being notified of the acquisition on 21 October 2019, Mr Massasso acted promptly to determine his options, make choices, and pursue them. 4. On 22 October 2019, Mr Massasso contacted Michael Megna, whose family owned the properties at 135 and 137 Great North Road to enquire about the leases. Mr Megna responded with the lease dates and recommended Mr Massasso consider 137 as there was less time remaining on the lease. He also suggested that their lawyers be in touch, after which Mr Massasso contacted to Donna Bakovski of Egisto Lawyers, who represented Mr Megna, and she sent Mr Massasso's lawyers copies of the leases. 5. Mr Megna gave evidence that any lease with him would include a 10 year demolition clause. He stated that, although Mr Massasso wanted a longer lease, his lawyers suggested he add the clause for flexibility. 6. On 22 October 2019, Mr Massasso also contacted Fausto Biviano, whose family owned 104 Great North Road. Mr Massasso was aware that the property had gone to auction a few years earlier but did not sell. He had a conversation with Mr Biviano in which it was indicated that the leases at the premises were short, so the property would be easier to sell should they chose to do so. 7. Mr Sirtes suggested to Mr Massasso that, in contacting Mr Biviano, his only interest was in the purchase of the property, not striking a lease. Mr Massasso rejected this proposition. 8. Mr Massasso also contacted Joseph Rupolo, a licensed real estate agent who managed Mr Nittis' property at 102 Great North Road. 9. Mr Rupolo's evidence was that "about late October or early November 2019", he was approached by Mr Massasso about potentially leasing 102 Great North Road. This meeting "probably" occurred in person when Mr Massasso sought to inspect the premises. Mr Rupolo informed him that the owner of the property would agree to a 5 x 5 year lease with a 10 year demolition clause. Mr Rupolo sent an email setting out the terms to which the landlord would agree. 10. Neither Mr Rupolo nor Mr Massasso indicated precisely how long they were in contact before the email was sent however in any event the email was received less than 3 weeks after Metro advised Mr Massasso of the acquisition. 11. The contemporaneous evidence does not support the view that Mr Massasso did not seriously consider entering into other leases. Contrarily, it shows that he immediately made inquiries as to his options. 12. It is also clear Ms Massasso was quick to purchase the property at 104 Great North Road. Negotiations moved quickly between Ms Massasso and Mr Biviano's son Marcello, with a period of 11 days between her first contacting him and contracts for sale being exchanged. 13. Ms Massasso accepted that, in purchasing the property, her intention was that it could house the pharmacy, but that it was plan B and was not guaranteed, noting that either way it was a solid investment opportunity for her. 14. Third, Sydney Metro's contention that negotiations were only continued with Mr Megna and Mr Rupolo after the purchase of 104 Great North Road for the purpose of a compensation claim was baseless and was rejected by Mr Massasso. 15. The theory was baseless as Mr Massasso's actions are clearly explicable in their context. He maintained communication while negotiating buyouts with the tenants of 104 Great North Road, as there was no certainty such negotiations would be successful. 16. After the buyout agreements were finalised on 4 and 10 December 2019, Mr Massasso informed Mr Rupolo that he would not be leasing 102 Great North Road. There was no further contact with Mr Megna beyond the emails sent on 5 November 2019. 17. Mr Massasso gained no advantage in his claim for compensation by continuing communication. All the leasehold options available to him would be limited by a 10 year demolition clause. It is reasonable that given the complex regulations and extensive fit-out required Mr Massasso should not be required to repeat the process in 10 years. The only reason for keeping the alternative options open would be if he had no other option to save his business. 18. Finally, Sydney Metro relied what it described as Mr and Ms Massasso's haste in securing the future of the business to support their case theory, showing a lack of appreciation for the context and complexity of pharmacy relocation. 19. Ms Massasso had sufficient financial liquidity available to her to take commercial opportunities when they arose, and she also sought to maintain the long term viability of her husband's business. The purchase of 104 Great North Road was a sensible decision even if a suitable lease was to be found elsewhere. Ms Massasso now has the benefit of a stable tenant until 2044 and she will not be able to embrace other commercial opportunities granted by the purchase for over 20 years. 20. As to the complexity, at the time when Mr Massasso was informed of the acquisition, Metro indicated that relocation would occur around mid-2021, leaving Mr Massasso with just over 20 months to: 1. Find appropriate premises which met both commercial and locational requirements. 2. Negotiate lease terms to place him in a like-for-like position. 3. Execute a lease or agreement to lease. 4. Gain landlord approval for the required fit-out. 5. Submit a development application. 6. Have that development application approved. 7. Prepare a building or fit-out schedule for when works would be completed. 8. No more than 6 months prior to relocation, apply to the Authority for relocation of the pharmacy premises. 9. Receive approval from the Authority. 10. Undertake final preparations for the move to the new premises. 11. Fulfil all regulatory requirements when vacating the original premises. 1. Sydney Metro characterised the time available for relocation as a "reasonable period", a proposition with which Mr Massasso did not agree given the number of steps involved in the process. 2. The evidence in the quantity surveyors' joint report largely reflects agreement on the individual components of the costs claimed. It does not address 'entitlement' to that claim. The dispute essentially relates to items 1 to 7 of the QS joint report. Consideration of these items is only necessary if I do not accept the position that the move to 104 Great North Road was reasonable, with the costs incurred therefore being reasonable. It was, therefore, necessary for the submissions for Mr Massasso to address each of these items. The items in the quantity surveyors' joint report Item 1 "Demolition for Proposed Extension" 1. To understand item 1 of the joint report, a review of the quantity surveyors' individual reports was required. What is referred to as "Demolition for Proposed Extension" in the joint report is termed "Demolition of portion of existing premises and carparking at rear" in the Connaire Report. The table, at 5.5 of the Connaire Report, lists the amount for the demolition as $31,481, with additional amounts for preliminaries, "Head Contractor's Profits and Overheads", "Long Service Leave Levy", "Consultant fees as invoiced" and "City of Canada Bay" with GST then added. 2. In his appendix 9, Mr Connaire provides this detail: "Demolition for new extension and carparking to match PC9 trade cost of $51,380 with $19,900 allowed in section 10 of this estimate". 3. The Tucker Report addresses these works at 3.2.1, referring to the demolition of the roof and cladding but not the demolition of the north-east and eastern walls. 4. The plans submitted with the development application can be compared with the Notice of Determination of the development application which includes the list of the plans that the Council expressly approved. Condition 15 of the development consent required changes to the plans including the removal of the parking area from the rear boundary by 3m. The construction certificate plans which included some minor changes are included in the Connaire Report. There was also an approved demolition plan included with the development application and specifically approved in the development consent. 5. The Statement of Environmental Effects described the extent of the demolition as: "Demolition • Part demolition of the existing front façade, including etry doors, glazing surround and shopfront glazing facing Great North Road. • Part demolition of the north eastern corner of the building to install a new retail display window measuring 3,575mm x 2,400mm. • Demolition of the existing intertenancy wall, rear sanitary facilities and back of house storage areas for the building. • Demolition of all internal walls, existing suspended ceiling, AC ductwork and lighting. • Removal of the existing tenancy fit-out and existing external business identification signage. • Demolition of the rear external wall and windows, and ancillary garage structures at the rear of the site. • Removal of existing downpipes from the north elevation." 1. The approach by Mr Connaire by applying $31,481 gave an adjusted amount which he considered was directly allowable. 2. Mr Tucker included separate items relating to the roof of the existing building: 1. In item 2 which is structural work: "repair to roof sheeting, awning and façade work". 2. In item 4 which is new works to the retained portion of the existing building: "ROOFING" 1. The actual works for item 1 are now agreed in the joint quantity surveyors' report as $51,455. 2. Sydney Metro proposed that these costs should be disallowed, submitting: 1. First, Mr Tucker rejected item 1 as the costs were considered to be an owner's cost under section 7 of the lease which puts the onus of such structural works on the lessor. Clause 7.1 of the lease covers the landlord's obligation to 'maintain' good condition of the walls and roof and clause 7.2 requires the tenant to maintain the premises including to fix structural defects. 2. Second, in Metro's opening submissions propose, at [47], that "these works mostly relate to works preparatory for the addition of the first floor extension, as well as the ground floor roof". 1. There are four aspects which influence these works having been done: 1. To ensure the premises are wide enough to contain a compliant space. 2. The existing building was too long to provide space for parking and vehicular access. 3. There would have been three different floor levels without the demolition. 4. For improved and compliant security to the new pharmacy. 1. Ms Stybowski compared the old and new premises in her Figure 3. 2. Mr Mihulka accepted that the layout in this location of the building was reasonable regarding the bathroom, consultation room, corridors and dispensary area. 3. Mr Szczerbecki, the project architect, said, in his affidavit, that prior to the works being done, the premises at 104 Great North Road were not compliant as pharmacy premises and that there were numerous non-compliance issues. He continued by saying that after the development consent was approved, he had considered the reports prepared for the development application and what had to be done to ensure the building would be fit for occupation as a pharmacy. He further said that he made amendments to the development application plans when preparing the construction certificate so it complied with the reports, all applicable codes and standards and the Council's development consent conditions. 4. These conditions included allowance for wider passageways for the access of, and a sanitary facility able to be used by, the mobility impaired. Such requirements would have needed to be in place whether the pharmacy was relocated to 104 Great North Road or any other nearby location. The evidence is that the works carried out were necessary, including the widening of the building. 5. The access report accompanying the development application explains the requirements of the Disability Standards 2010 and that an "Affected Part" of an existing building requires that when new works to an existing building are proposed, upgrades to the 'affected part' of the building are sometimes required. The Access Report said, in Section 20.9, that where the 'affected part' is triggered there is a need to upgrade the existing building to "achieve a continuous accessible path of travel" from the entrance to new work. Recommendations were made in the Access Report to achieve compliance: 1. Widening of the entry door, aisle circulation and compliant circulation on both sides of the doorway between the carpark and pharmacy. 2. Accessible parking to be provided. 3. "Accessible unisex sanitary compartments must be provided" in accordance with AS1428.1-2009. 4. These matters are to be done at Construction Certificate design phase. 1. The marked-up diagram of the Construction Certificate plan A01 shows the existing building is 1.3m narrower than the new extension. The next marked up plan Construction Certificate A02 shows an internal width of the building extension of 6.56m. The existing building was 1.3m narrower at the rear of the premises, necessitating the demolition of the northern external wall and roof and rebuild to widen the eastern side of the existing building. The building needed to be widened at the "Access WC" point in order to accommodate: 1. The necessary corridor widths identified by Ms Stybowski and the Access Report. 2. A width of 2.67m for consult room/access toilet was set out in Mr Mihulka's and Ms Stybowski's joint report and recommended by the Access Report. 3. A sufficient workable space of 2.4m width to provide space for working bench, electrical cupboard with space for staff access and to work. 1. Retaining the existing building and extending eastwards to accommodate a consult room and access WC does not work. If the existing building was retained the only alternative would be to build these spaces into the backyard, which would require extending the building 1.28m to the east. This work would have been structurally difficult as the back wall of the building was dilapidated. 2. The existing building was too long to allow space for parking and vehicular access. Referring to A01 of the Construction Certificate, a length of 8.2m was required for the car space and 3m for vehicle access. The McLaren traffic report demonstrated that the applicable development control plan (DCP) required 2 car spaces for the pharmacy use. To comply with both the DCP and condition 15(a) of the consent, the rear of the building had to be altered. 3. The existing building was stepped and this would require expensive new ramps which would reduce functional floor space. If the existing building was retained, the three different floor levels would require steps or a disabled access ramp, either of which would reduce the functionality of the space. 4. The fence between the Post Office and the premises was removed to facilitate building the new premises to the boundary. As set out in Clause 12(1)(b) of the Health Practitioner Regulation 2016 (NSW), the premises including doors, windows, floors and ceilings was to be secure to minimise risk of unauthorised access. The Quality Care 2020 requirements provide that measures should be taken to prevent emergencies which include armed robbery, a common security risk for pharmacies. The development application documents stated that "the entrance on Great North Road is clearly visible. The rear access point is only accesses by staff and will be controlled via a secure garage opener only"Having an enclosed area between the wall and fence with no public surveillance, where the pharmacist would use the rear portion of the premises would not achieve the security necessary. The need for security was the basis for the s 4.55 modification application. 5. Mr Massasso said he relied on expert evidence as to the specific steps and works required in order to achieve compliance. He also said in his affidavit that he wished, for security purposes that the building be built to the boundary. 6. The pharmacy relocation experts differed in their joint report as to the need for capital works on the ground floor however they do not include analysis of cl 12(1)(b) of the Regulation nor the Quality Care 2020 requirements. 7. The valuation report prepared for Mr Massasso to provide a basis for striking the rent, prepared by Cushman and Wakefield, extracts an early version of a plan prepared by Ms Stybowski's former firm, Pharmacium. The existence of that plan does not make the costs incurred in the ground floor extension unreasonable because: 1. It pre-dates the lodgement of the development application. 2. The plan was not prepared by Mr Szczerbecki who prepared his design in accordance with the specific requirements. 3. The plan shows a different car parking configuration that is not compliant with the DCP. 4. The changes required to the approved plan, A090, when compared with the Construction Certificate plans, demonstrated the changes needed to the ground floor to achieve compliance. 1. The evidence was that the ground floor was designed to achieve compliance with accessible paths of travel, WC, doorways and a proper and workable dispensary area. 2. The reasonableness of costs incurred relating to the demolition of the rear portion of the building can be demonstrated by any of the following factors. First, to provide DCP compliant car spaces 3m off the eastern boundary, alterations were necessary. Second, to have a sufficient width for corridor compliance, WC/consult room and dispensary area, justified the widening of the building. Third, for security having a wall to the boundary justified these works. 3. The works are reasonable as they were necessary for compliance and like-for-like replication. They were not exorbitant and do not fail the McDonald test. Item 2: Structural Repairs 1. The description of the need for work in the executive summary of the Connaire Report "Rectification of rising damp, structural strengthening of external awning and western external wall, render existing western external wall, new bracing for front window, repair to roof sheeting, awning and facade work". In the table at 5.5 of the Connaire Report, the amount for structural repairs is listed as $43,994 with added amounts for "Preliminaries", "Head Contractor's Profits and Overheads", "Long Service Leave Levy", "Consultant fees as invoiced and "City of Canada Bay" with GST then added. 2. The Tucker Report addresses these works at 3.2.3. 3. Sydney Metro's reasons for disallowance of these costs were similar to that set out in item 1, being: 1. The Tucker Report says the item was rejected as it is considered to be an owner's cost under section 7 of the Lease. 2. Metro's opening submissions say that the works are significant and substantially improve the building, not a matter for which a lessee pays. 1. Mr Tucker makes it clear that the works were necessary and Sydney Metro's only argument seems to be whether the works should have been carried out by the landlord. 2. The quantity surveyors do not contend that these works were unnecessary. The works were necessary for the building to be fit for purpose and were not exorbitant. Sydney Metro had not advanced a viable alternative for Mr Massasso to have moved to as a basis to set aside the conclusion that moving to 104 Great North Road was anything other than reasonable. Item 3: In-ground stormwater drainage 1. The amount for the demolition is listed as $26,673 in the table at 5.5 with added amounts for "Preliminaries", "Head Contactor's Profits and Overheads", Long Service Leave Levy", "Consultant fees as invoiced" and "City of Canada Bay" and GST. 2. The Tucker Report notes at 3.2.4 that the works included the items: "(i) Investigations, demolition works; (ii) Connections, piping and trenching works". 3. There were no apparent engineering plans submitted with the development application to allow a precise understanding of these works. The legend includes "D-downpipe", "G-gutter", "BG-boxed gutter" and "FW-floor waste". 4. Sydney Metro submitted that: 1. The works should be considered an owner's cost not a tenant's cost. 2. The works substantially improved the building – not a matter for which a lessee pays. Works requiring alteration of the roofing necessitated the provision of new pipes, guttering and stormwater connections. The necessity of new stormwater infrastructure caused by items 1 and 4 was the basis for the reasonableness of this item. The quantity surveyors accepted that if item (1) was allowed, so too would these works be. The quantity surveyors do not contend that none of these works were necessary. (xii) Item 4: New works to the retained portion of the existing building 1. The Connaire report gives an amount of $83,994 for "New Works to the Retained Portion of Existing Building", with the amount for the demolition being $47,983 with amounts added for "Preliminaries", "Head Contractor's Profits and Overheads", "Long Service Leave Levy", "Consultant fees as invoiced" and "City of Canada Bay" and GST. 2. The Tucker report addresses these works at 3.2.5, noting that they include: (i) new structural steelworks/supports; (ii) new ground floor substructure; (iii) new lower roof; (iv) new balustrades to entry point. 3. Further detail in the table at Annexure B indicates that for the "structural steel" and "new floor slab", the construction did not comply with BCA requirements and therefore had to be demolished and a new slab installed. 4. The reasons for Sydney Metro's disallowance were the same as provided above: 1. Mr Tucker deems the works "owner's cost" 2. The works substantially improve the building, "not a matter for which a lessee pays". 1. The works were confined to the ground floor and arose out of the necessity to provide structural support to the first floor addition. If the "new structural steel works" fit into the category relating to the first floor, Mr Massasso does not make, and accepts deletion of that part of the claim. New roofing at the ground floor and new ground floor substructure does not appear to fit into that category. 2. The position of the quantity surveyors was that if item (1) was required, so too would these works be reasonable. Otherwise, the submissions regarding the structural works are repeated here, namely that the quantity surveyors do not contend that any of these works were unnecessary. (xiii) Item 5.1: Consult Room 1. The table at 5.5 of the Connaire report lists the amount for demolition as $11,750 with added amounts for "Preliminaries", "Head Contractor's Profits and Overheads", "Long Service Leave Levy", "Consultant fees as invoiced" and "City of Canada Bay" and GST. 2. The Tucker Report at 3.2.8 identifies that this represents elements which could be easily identified as a deviation from the baseline facility. He provides no analysis of the regulations or best practice. 3. Ms Stybowski acknowledges the retail and dispensary space is larger than that of the previous premises. However, aspects such as greater access space and the provision of an accessible toilet were required to comply with Building Code of Australia. (xix) Item 5.2: Access for WC and DAA servery 1. This was not costed by Mr Connaire as a separate item but was included in his ground floor works assessment. That has been adjusted in the joint report. The allowance for this is agreed in the joint report to be $57,229. 2. Ms Stybowski opined that the dispensary at 104 Great North Road provided similar function to that the 154 Great North Road and that while aspects of the dispensary are more spread out, it was not unreasonable and in some cases was necessary to meet regulations and best practice recommendations. Item 6: New Building Works for Ground Floor Extension 1. The amount given in the executive summary of the Connaire Report for "New Building Works for Ground Floor Extension" is $233,516. In the table at 5.5 of the Connaire Report, the amount for demolition is listed as $233,566 with amounts added for "Preliminaries", "Head Contractor's Profits and Overheads", "Long Service Leave Levy", "Consultant fees as invoiced" and "City of Canada Bay" and GST. 2. The Tucker Report at 3.3.8 notes "…in relation to the new building works for the ground floor extension of the existing building and I believe the pricing/costs/allowances are reasonable as provided in the Applicant's cost schedule." 3. The reasons for Metro's disallowance are the same as set out earlier - the works are deemed an "owner's cost" and as it substantially improved the building it was not a matter for which a lessee should pay. Item 7: External Works – Secure Parking and Delivery Area 1. In the executive summary of the Connaire report gives an amount of $197,723 for "External Works – Secure Parking and Delivery Area". In the table at 5.5 of the Connaire Report the amount for demolition is listed as $113,020 with added amounts for "Preliminaries", "Head Contractor's Profits and Overheads", "Long Service Leave Levy", "Consultant fees as invoiced" and "City of Canada Bay" and GST. 2. The Tucker Report accepts these costs as reasonable. 3. The works were necessitated by a condition of the consent and were unavoidable. These works were required by condition 15(a) of the development consent, which required amended plans removing the parking area from the rear boundary by 3m. The modified application put the car spaces into an altered garage as shown on the construction certificate plans. 4. Sydney Metro's reasons for disallowance are the same two-fold reasoning as above - the works were to be deemed an "owner's cost" and, as these works substantially improved the building, they were not costs for which a lessee should be responsible. 5. The balance of the quantity surveyors' evidence (on items other than (1) to (7) and (13)) was agreed – these being: 1. The fitout works in (8) 2. The agreed but not claimed first floor works in (11) 3. The agreed (with some exceptions) relocation costs in (13) 4. The make good costs in (15) 1. The exception in item (13) as otherwise being agreed are the exclusion of the vaccine fridge and some staffing costs, totalling around $12,000. The vaccine fridge is again the implementation of modern best practice. Concerning the unconceded staffing costs, Sydney Metro has not explicitly given reasons why these should be deducted. 2. Mr Massasso's position is clear. The move to 104 Great North Road was reasonable and the costs claimed have been incurred and are therefore reasonable, unless they fail the McDonald test. 3. Alternatively on the detailed analysis of each component of the works, the costs claimed meet the test of reasonableness. Sydney Metro's closing submissions on the relocation costs claim Introduction 1. As with the detail reproduced with respect to Mr Massasso's claim relating to matters of detail concerning works undertaken at 104 Great North Road, it is similarly appropriate to reproduce detail from Sydney Metro's submissions on this point to understand the complete nature of the response advanced as requiring the rejection of these claims. 2. Before turning to matters of detail of Sydney Metro's submissions on this topic, it is appropriate to set out a quote from Mr Sirtes oral closing submissions as it encapsulates Sydney Metro's overall position on the major works undertaken at 104 Great North Road. Mr Sirtes said (Transcript 28 July, page 495, lines 19 to 35): My friend Mr Eastman dealt very extensively with the demolition costs. In terms of the agreed schedule that the quantity surveyors prepared, items 2, 3, 4, 6 and 7, they're various structural and service works. I just wished to point out to your Honour item 2 of that agreed schedule dealt with structural repairs. It's important just to pause and note when we're talking about structural repairs, they're the very things that are picked up in the lease as being the responsibility of the landlord. Again, the reason we stop and put our finger on that particular item was that it just serves to demonstrate that had this been a typical landlord‑tenant relationship, then as soon as structural repairs arise in the context of a fit‑out, a tenant will invariably pick up the lease and say to the landlord "Your cost. Your premises. Your structure. I'm prohibited from touching them. You need to undertake this at your cost." So the very fact that it's being claimed by the applicant in circumstances where his lease specifically allocates responsibility to someone else for it is just an indication, we say, of the broader submission that we make. The major works 1. After the purchase of 104 Great North Road and before Mr Massasso had secured a lease, he commenced the process of retaining consultants and applying for development consent for extensive structural alterations to the property in his own name, including: — Demolishing almost the entirety of the premises; — Constructing a new two storey addition to the rear of the premises; — Adding a new parking and delivery area at the rear; — Adding a large window to the northern wall; — Internal reconstruction to build the 'behind the counter' area of the pharmacy; — Structural repairs; and — Structural alterations including a new ground floor, roof and structural supports. 1. These works have significantly improved the capital value of the property. 2. The work done at 104 Great North Road involved demolishing almost all of the existing building and only after the building had been almost completely reconstructed it was fitted out as a pharmacy. 3. The lease for 104 Great North Road contained clause 7 – "Who is to repair the property?". The clause contained conditions that gave the lessor responsibility for maintaining: — The roof, ceiling, external walls and doors, and floors of the property and fixing structural defects. — The property in a structurally sound condition. — Essential services. 1. It required that the lessee must: — Maintain the property and carry out repairs but does not have to alter or improve the property, fix structural defects or repair fair wear and tear. — Reimburse the lessor for the cost of fixing structural damage caused by the lessee — Not make structural alterations to the property; and — Any other alterations require the lessor's consent in writing. 1. Ms Massasso had no written agreement with Mr Massasso allowing him to carry out this work other than having signed a development application. Their agreement was not in the capacity of landlord and tenant because such a relationship did not yet exist when the development application was lodged. 2. As Mr Massasso wished to be regarded only as a lessee, this raises concerns about the extent to which a capital improvement of this nature to someone else's land would be reasonable under other circumstances. Metro suggests that a fit-out and minor interior alterations would be reasonable, but that without seeking written consent from the lessor to carry out demolition and construction work to the extent effected by Mr Massasso could not be considered reasonably incurred. 3. The cost of effectively building a new building at 104 Great North Road is not a relocation cost, or at least is not a reasonably incurred relocation cost. Even if Mr Massasso did incur the construction cost expenditure, the Court would need to consider the following in relation to relation to such costs: 1. The land was purchased using trust money and 104 Great North Road was a marital asset – so any improvements benefited Mr Massasso as well as Ms Massasso; 2. In expending money on the site, Mr Massasso obtained, to the extent of his expenditure, an equitable charge over the property; 3. Being a central beneficiary of the trust, Mr Massasso equally had a beneficial share in the purchase and therefore was a beneficial owner of the property under a resulting trust. 1. Either Mr Massasso did not expend any of his money at all (Metro's submission), but, even if he had, he would be compensated because in doing so he would have an equitable charge over the property to the extent of such expenditure. 2. If he had leased a wholly vacant property but had to build the capital improvements because the landlord refused to pay, the cost would not be a relocation cost. 3. If he had purchased a building, he would not be entitled to the cost of doing so as a relocation cost. 4. If he was forced to spend his money on the building, this demonstrates how old and deficient the original premises were – a position which would not justify the cost of building upmarket new premises. 5. To upgrade the standard of his pharmacy during a forced relocation is not a reasonably incurred cost resulting from the relocation. It is an expense that became possible through the need to relocate but was not to be regarded as reasonably incurred as a consequence of relocation. The pharmacy relocation evidence 1. The issue of reasonableness of incurring the relevant costs cannot be determined solely on the opinion of relocation experts regarding general reasonableness. 2. Ms Stybowski acknowledged that in considering whether relocation to 104 Great North Road was reasonable she did not look at other premises, only at whether the tenancy was reasonable. This excludes issues such as costs involved in moving to those premises compared with other premises or whether there were other viable alternatives that would not require work to the same extent to be completed. 3. Regarding the works carried out at 104 Great North Road: 1. Its size has been increased from about 176m2 to 185m2 on the ground floor alone and by an extra 91m squared when including the first floor, representing a net increase of 133%. 2. The facilities constructed are superior to those at Shop 1, including a consulting room on the ground floor, a potential second consulting room on the first floor, a more spacious dispensary area which would allow for greater output of dose administration aids, a secure carpark and delivery area, a second accessible toilet and additional storage space. 3. the inclusion of consulting rooms permits Five Dock Pharmacy to do vaccinations, a use not permitted at Shop 1. 1. Mr Mihulka saw no indication that, given a fit-out and removal of internal walls, 104 Great North Road was unsuitable to relocate Five Dock Pharmacy without works to create the first floor. Ms Stybowski agreed with this. 2. These opinions are reinforced by the plan at EB691, prepared by Ms Stybowski (the draft design). In such a plan Ms Stybowski would have accounted for the brief from the client and then applied the relevant regulations and best practice. The plan includes a retail area, dispensary area, consultation room, accessible toilet, and staff room which fit comfortably in the original space at 104 Great North Road. A pharmacy more modest than constructed but still an improvement compared to the Shop 1 facilities could have been constructed within the existing building without need for expansion. 3. This plan was excluded from Mr Massasso's evidence. The plan reveals that: 1. It was entirely possible to relocate Five Dock Pharmacy into 104 Great North Road's existing footprint. 2. There was no need for construction of a new portion of the building at the rear. 1. The plan was included in Mr Dyson's initial valuation, which would enable me to infer that at that time it was well developed and legitimate. In oral submissions, Mr Hemmings proposed five reasons for why I should place no weight on the draft design: 1. The plan was prepared before the involvement of the architect who dealt with BCA and accessibility issues so it was not tested for compliance with these; 2. It is an early iteration of the plans; 3. It preceded the development application and accessibility report; 4. It preceded the advice of McLaren Consulting that 2 car spaces were required; and 5. Council required no structures or parking on the rear 3m of the property. 1. As to a), Sydney Metro submitted that, when Mr Szczerbicki was approached by Mr Massasso to assist with the works at 104 Great North Road, a development application for a design similar to what was ultimately constructed had already been lodged based on plans by Strutt Studios. Mr Szczerbicki did not consider the reports prepared in relation to accessibility and BCA compliance until after development application approval. He did not indicate whether the Draft Design would have been compliant, or if a compliant design that fit within the footprint was possible. There is no evidence that the plans were not tested for compliance and the plan includes notations that would indicate compliance was considered. 2. As to b), Sydney Metro submitted that the stage of the plans was irrelevant to the issue of weight to be given to the design. 3. As to c), Sydney Metro submitted that the plan may have preceded the development application and accessibility report is irrelevant. The development application and accessibility report related to a different design and says nothing on the ability to construct a pharmacy in the nature of the draft design. 4. As to d), Sydney Metro submitted that the McLaren report notes in the parking assessment summary that the control for parking was for 1 space per 40m2 of GFA, but that credit for carparking spaces is given in relation to developments including minor alterations to an existing building. If the floorplate of the building was not increased, that existing car space would have been sufficient. 5. As to e), Sydney Metro submitted that the design dis not trespass onto the laneway area. 6. It is further submitted that Mr Massasso's evidence focuses on what might have been required to achieve compliance of the 2 storey design, not whether that design was a reasonable response to the relocation of Five Dock Pharmacy as it was at the original premises. 7. Mr Massasso suggested that he needed to build the premises to the boundary with a single front and rear entrance, to comply with cl 12 of the Health Practitioner Regulation 2016 (NSW). 8. The provision does not warrant building a new wall to the boundary. If it was required to secure existing windows that could have been achieved through bars. The draft design incorporates windows and does not rebuild the northern wall to the boundary. There is no evidence that the wall was required to be rebuilt for security reasons. 9. Under cl 12 more broadly, there are only two specified numerical requirements regarding pharmacy layout - that the dispensing area is at least 8m2 and that the area have a bench at least 40cm wide and providing not less than 1m2 of free working space. 10. Ms Stybowski acknowledged that she sometimes used the term "requirements" to encompass aspects of best and common practice not just minimum requirements. This is important when considering the reasonableness of incurring costs as result of relocating an existing business rather than reasonableness of might be done in establishing a pharmacy. 11. Ms Stybowski acknowledged that you could have a very small pharmacy like the original Five Dock Pharmacy that would meet relevant requirements. 12. The reference in her report to "requirements" for vaccination does not mean that vaccination services must be provided only that, if they are, the requirements must be complied with. The Quantity Surveying Exercise and the Construction Claims 1. The quantity surveying evidence proceeds on the basis of the costs that were actually incurred by Mr Massasso in carrying out demolition and construction works at 104 Great North Road, and then moving Five Dock Pharmacy into those premises. The quantity surveying experts have agreed on the apportionment of those costs into different categories of expenses in the schedule of their joint report. 2. Mr Massasso claims all items in that schedule under this heading save for item 11 and item 15. Any figures in the joint report are inclusive of GST. Any amount in that report that is awarded should be reduced by an amount of 1/11. The figures below are ex-GST. 3. It is to be noted that Sydney Metro concedes the following items totalling $864,000.64: 1. Fit-out works - $705,895 2. Construction of accessible WC (not independently costed) 3. General relocation costs (excluding cost of vaccine fridge) - $158,105.64 1. The basis for Sydney Metro's objections addresses specific categories. 2. Sydney Metro accepted that it would be open for me to indicate a pharmacy design which might be considered "reasonable" in connection with the relocation of Five Dock Pharmacy and for the quantity surveying experts then to provide costings of the design. 3. Sydney Metro made the overarching submission that any justification based on an argument that the work was necessary to implement the design in the approved development consent is irrelevant as it addresses only the design for which Mr Massasso ultimately sought development consent. Item 1: Demolition for proposed extension (demolish existing roof structure and cladding, new first floor extension; new lower roof) ($46,777). 1. These works relate to the demolition of most of the building at 104 Great North Road save for some portions of the external walls. These costs were partly in aid of major structural replacement, and also represent the costs of substantially expanding the floorplate of Shop 1, were no need for such an expansion has been demonstrated. 2. It is acknowledged that reasonable costs of relocation may require some demolition works of internal walls to accommodate an appropriate floorplan for the pharmacy however it is not possible to isolate such costs in this item as presented. Works to the overall building shell should not be claimable. 3. The Applicant's reasons for justifying the works are: 1. To ensure premises are wide enough to contain a compliant and workable space. 2. The existing building was too long to provide the required space for parking. 3. There would have been three different floor levels. 4. For improved and compliant security. 1. Many of these matters went to compliance of the development application rather than the ability of a different design to achieve compliance. Parts of the works might have been necessary to implement Mr Massasso's chosen design but there was no evidence that this was the only design. 2. The existing building had a single car space. The McLaren report demonstrated that the need for an additional car space came from the addition of floorspace to the building. 3. The draft design included ramps accommodating changes in floor level. The replacement of the floor slab was a structural issue for which the landlord was responsible. 4. To provide security, it is the position that the regulation cited does not oblige expansion of the building to the boundary. The reference to the pharmacist using the rear portion of the premises is not a reference to use for pharmacy purposes – rather, it seems that people may use the back door to access the parking area. The parking area at the old premises was similarly insecure. Items 2, 3, 4, 6 and 7: Various structural and services works ($729,446) – general comments 1. The works under these items are as follows: • 2: Structural repairs/ damp/ awning/ water mains upgrade/ render repairs/ boundary trap/ sub-soil leaks/ mains power supply ($81,303) • 3: In ground stormwater drainage (investigations, demolition works, connections, piping and trenching works) ($35,286) • 4: New works to retained portion of existing building (new structural steelworks/supports; new ground floor substructure; new lower rood; new balustrades to entry point) ($73,520) • 6: new building works for ground floor extension (building of new ground floor structure/ external walls; new fit out for tenancy occupation; new services/ infrastructure)($364,378) • 7: External works – secure parking and delivery area (demolish existing rear shed and driveways; build new garage, roller shutters and paving; new services and security)($174,959) 1. Many of these works were structural improvements to the building for which a lessee does not pay. 2. Some of the stormwater works related to the removal of the roof and would have been required by the expansion of the building footprint and addition of the first floor. Stormwater works were required as a result of the replacement of the ground floor slab, another major structural repair. 3. Mr Connaire agreed that to construct the new portion of the building with a concrete slab between the ground and first floor, more engineering work to support that slab would be required. Larger beams would be required and greater consulting costs would be incurred. The Applicant accepts the deletion of costs relating to steel works. 4. Sydney Metro contends that if a business expands its services as a result of relocation, s 59(1)(c) only covers relocation costs relating to relocation of the original services. The addition of services that were not available at Shop 1 was not "relocation" but expansion. 5. The quantity surveyors were not asked to cost the cost of maintaining most of the old structure. In such a costing numerous things would change and that the costing of the existing works would be largely irrelevant to the draft design. Item 3 – In-ground stormwater drainage 1. It is not accepted that the wall relocation and new roof costs were reasonably incurred. They are landlord costs under the lease and were not required to relocate Five Dock Pharmacy. Item 4 – New works to retained portion of existing building and Item 6 – New building works for ground floor extension 1. The works may have been necessary to build the premises that Mr Massasso desired, however the necessity for the demolition and rebuilding has not been established. 2. Item 6 relates to the expansion of the ground floor by about 10m2, which (together with the addition of the first floor) demonstrated that benefit was seen in expanding. 3. Item 6 required extensive structural works for engineering reasons, which are likely to have been specified to support the first floor works above. Even if I was to allow the item in general, I should find that any costs relating to engineering required due to first floor works should be disallowed. Item 7 – External works – secure parking and delivery area 1. The leased area of Shop 1 did not include a secure parking and delivery area. This is a substantial improvement over the former premises and there was no evidence it was a mandatory requirement for a pharmacy. 2. The submission is made that the need for an additional car space comes only because the building has been expanded. Claimability of item 5.1 – consulting room ($36,123) 1. No consulting room was available at Shop 1. Including a consulting room permits Five Dock Pharmacy to provide vaccination services which could not be offered at Shop 1, representing a significant improvement for Five Dock Pharmacy. 2. According to Mr Mihulka, it is not a requirement to provide vaccinations - only that, if vaccinations services are provided, then the requirements for such services must be met. Those requirements do not mandate a consulting room. 3. Relocation of Five Dock Pharmacy as it was does not entail adding consulting facilities and the associated cost would not be reasonably incurred in connection with the relocation. Claimability of item 5.2 – accessible toilet and DAA [dose administration aid] servery ($52,206). 1. At shop 1: 1. There was no accessible toilet; and 2. The DAA area was inferior to that of the New Shop 1. Sydney Metro accepts the costs of the accessible toilet should be allowed, however is has not been costed separately to the DAA area. 2. Regarding the DAA area, it is acknowledged that such an area is required in a pharmacy. Sydney Metro's objection is to the significant improvement of this facility. Sydney Metro would be content for me to find that provision of a DAA area as indicated in the draft design would be reasonable as part of the costs of the relocation. 3. If I disallow the expanded DAA area, the quantity surveying experts should be requested to apportion the costs in this category between the two items. Claimability of Item 13 – General relocation costs including the vaccine fridge ($11,706). 1. This item was not addressed in Mr Massasso's written submissions. Sydney Metro accepts the amounts covered in this item save for the costs of a vaccine fridge (priced at $3,531.36), therefore the amount of $8174.64 is accepted. 2. The vaccination fridge is an item the facilitates the expanded services offered by Five Dock Pharmacy as a result of relocating to a larger premises with the addition of a consulting room. The cost was not incurred in connection with relocation but resulted from the expansion of the space. 3. On the site inspection, I was shown two fridges. Sydney Metro submitted there was no evidence that the larger of the two was insufficient to satisfy the statutory requirement for "refrigerator manufactured… for the purpose of storing vaccines" in Sch 5 of the Health Practitioner Regulation 2016 (NSW). There is no evidence of whether there was a compliant refrigerator at the original premises and, if so, why it could not have been relocated. If the consulting room is disallowed so too should the fridge in that room be disallowed Consideration Introduction 1. The written closing submissions for Mr Massasso conveniently set out, at (132) the steps which were an advanced as necessary for Mr Massasso to complete after having been advised that he would be required to vacate the premises where he had been conducting his pharmacy in order to be able to continue the trading of his business at new premises that were able to meet and satisfy the mandatory regulatory requirements necessary for such relocation. The paragraph sets out the 11 steps advanced on behalf of Mr Massasso for these purposes, and the context in which they were said to arise. The paragraph is in the following terms (footnotes omitted): 132. As to the complexity, Mr Massasso was informed of the impending acquisition on 21 October 2019. At the time, Metro indicated that relocation would be "about mid 2021" though they were "uncertain". Mr Massasso therefore had just over 20 months (and perhaps less, given the uncertainty at that stage) to: (a) Find an appropriate premises to which to relocate, which met both commercial and locational requirements; (b) Negotiate terms of that lease which placed him in a like-for-like position (bearing in mind the requirement that pharmacies not relocate more often than once every five years; the regulatory, financial and personal burden of doing so; and Mr Massasso's efforts to build a substantial tenure on his lease at the previous premises, which had a term of 5 years but multiple 5 yearly options to renew which expired in 2044); (c) Execute a lease or an agreement to lease; (d) Gain approval from the landlord to carry out the required fit-out; (e) Submit a development application to Council; (f) Have that development application approved; (g) Prepare a building or fit-out schedule indicating when works would be completed; (h) No more than six months before the relocation date, apply to the Authority for relocation of the pharmacy premises (bearing in mind the need to lodge an application at least five weeks before the relevant meeting of the Authority and the fact that the Authority only met approximately 10 times per year); (i) Receive approval from the Authority; (j) Undertake final preparations for the move to the new premises, including temperature testing any medical fridges in the new location for a 72-hour period, and housing all stock in an alternate fridge during that testing; (k) Fulfil all regulatory requirements when vacating the previous premises, including that no medicines or confidential data (eg scripts, labels, etc) remained. What were properly landlord's works or what were tenant's fit-out costs? 1. The first and fundamental issue requiring to be addressed is whether any of the costs of the works carried out at 104 Great North Road were ones which are properly to be accounted for as costs of works carried out for Ms Massasso as the landlord rather than ones properly incurred by Mr Massasso as the incoming tenant of her newly acquired premises. 2. A number of the matters which are in dispute between the parties do not relate to the cost of individual items where expenditure was incurred in preparing 104 Great North Road from its state at the time of its acquisition by Ms Massasso to when it was rendered capable of being fitted-out in an appropriate form to be occupied by Mr Massasso for his relocated pharmacy but do relate to who should be taken to be responsible for them . 3. Whilst there are individual elements where there is a dispute to be resolved between what was reinstatement on a "like for like" basis or whether what was provided was more than that, but reflected the best practice at the time of the relocation, the more fundamental point arises as to whether significant elements of the costs incurred in transforming 104 Great North Road were costs which ought properly have been born by Ms Massasso as the owner/landlord The length of tenure he required was one reflecting what he had had, at his old premises, and which he regarded as an essential prerequisite for the acceptability of any new location for his business. 4. This was addressed in the written closing submissions for Mr Massasso, tackling this issue head on in the context of the various elements identified by Mr Tucker as being properly ones with the cost should fall of the landlord and not the tenant. The written closing submissions addressed this at 193 to 195 in the following terms (footnotes omitted): Justification for the works 193. The necessity of these works to ensure that there could be adequate carrying out of the fit-out works is self-evident from Mr Tucker's detailed description. The only argument appears to be whether these ought be carried out by the landlord because they, according to Metro's submissions "significantly improve the building – not a matter for which the lessee pays" (see [49]). Reasonableness of the incurring of these costs 194. Importantly, the QS experts do not contend that none of these works were necessary. Mr Massasso in doing these works was about to commence a very long term lease which had options in his favour for 25 years. These works were fundamentally necessary for the building to be fit for the purpose it was required to fulfill. They were not exorbitant and to the extent they were otherwise not carried out by Mr Massasso, could have (on a 'swings and roundabouts' basis) been accounted for in a higher rental (noting that Mr Lunney had made other adjustments based on superiority of building works in his assessment of other comparable leases such as the Liquorland lease at 145 Great North Road). 195. Metro have not provided any evidence of a viable alternative for Mr Massasso to have moved it to dispel the conclusion that the move to 104 Great North Road was anything other than reasonable. These are the same sort of costs which were necessary to incur in cases such as Konduru and Home Care Services which have been set out above. 1. Although what is set out above arises from the one specific element addressed by Mr Tucker and rejected by him, it is emblematic of the broad approach taken on behalf of Sydney Metro as to how the major works carried out at 104 Great North Road were to be characterised. If they are properly to be characterised as expenses for which the landlord should be regarded as responsible (particularly, after proper consideration of the terms of the lease between Ms Massasso as landlord and Mr Massasso as tenant), then those expenses could not be regarded as being reasonably incurred in the fashion discussed by Tobias JA in McDonald. 2. It is only if the incurring of these costs by the tenant can be regarded as reasonable at that level of generality, does it then become necessary to consider whether some of the elements (such as construction of the extra width at the northern rear of 104 Great North Road in the post construction layout when compared to the pre-existing layout) are reasonably incurred as a specific cost item and, if so, to be accounted for in Mr Massasso's favour. 3. Sydney Metro's position on this was set out concisely in 52(c)(iii) of its closing written submissions where it advanced the proposition that: c) However, it does not follow that every cost in relation to any particular new premises that might be incurred would be reasonably incurred. Costs for physical works or activities which are unlikely to be reasonably incurred in connection with the relocation include: i. …; and ii. …; and iii. cost of structural works to the overall building fabric that are the responsibility of the landlord under the New Shop Lease; 1. During the course of Mr Massasso's cross-examination by Mr Sirtes concerning the fact that the various activities relating to 104 Great North Road had not been communicated to representatives of Sydney Metro until a letter from his solicitors of 21, January 2020 Mr Massasso described his role in the following terms (Transcript 19 July 2023, page 125, lines 11 to 24). SIRTES. In terms of what in fact occurred, you have a meeting on 24 October-- MASSASSO. Yeah. Q. --where the gentleman known as Lloyd says to you that there are options, and you should communicate, speak to Sydney Metro as to how you wish to proceed. In fact, what happened was you went ahead, proceeded, did deals, concluded amounts of money, and then informed Sydney Metro after the fact and told them you were going to seek reimbursement. That's the way things occurred, isn't it? A. No, no, except for the - you say that I did this just myself. I drove it as the person getting all the paperwork together, but I'm talking to my side, my wife, the accountant, the lawyers. The - the I is only I, I'm doing - is not the case; I'm doing the grunt work. The negotiations - and negotiations occurred and the - and the agreements are all what they are. 1. I set out the terms of the above exchange in full before I now turn to explain why I am satisfied that the conclusion which I draw concerning how Mr Massasso's activities can properly explain where responsibility correctly lay for significant elements of expenditure incurred in the fitting out of 104 Great North Road as the venue for the replacement pharmacy. It is that Mr Massasso was determined to drive and achieve the premises he wanted, without the intrusion of technicalities or niceties about who responsibility it was, as a matter of law, to be responsible for any particular element of the desired outcomes. Mr Massasso drew no distinction between activities properly to be undertake by him as Ms Massasso's agent and those he should properly undertake as the proprietor of the Five Dock Pharmacy – that is as a principal. With respect to the major works at 104 Great North Road (demolition, construction/reconstruction and expansion), the only available conclusion is that he was acting as Ms Massasso's agent – particularly as clause 7.6 of his lease banned him from doing so as a principal. 2. There can be no doubt that the project undertaken by Mr and Ms Massasso to effect relocation of Mr Massasso's pharmacy to 104 Great North Road was a joint effort by the two of them. This is particularly so with respect to the demolition, construction/reconstruction and extension works undertaken at 104 Great North Road. These are all structural works. Although Ms Massasso signed the development application to the Council, she subsequently executed (as did Mr Massasso), a lease which, in clause 7.6, expressly denies Mr Massasso, as the tenant, any entitlement to carry out structural works to the premises. 3. Mr Massasso's comment that he carried out the "grunt work" is, I am satisfied, reflective of the fact that he was acting as a facilitator of the project overall and that, to the extent that works were carried out under his broad authority and/or supervision, his doing so should be regarded as being as Ms Massasso's agent for the purpose of any landlord's works rather than Mr Massasso being the principal for those purposes. 4. In making this observation, I do not extend this conclusion to the fit-out of the premises. Once the major construction activity said been completed, supervision and arrangement of the fit-out for pharmacy use is, clearly, properly something that should be regarded as carried out by Mr Massasso legitimately in his role as the incoming tenant of 104 Great North Road. 5. For these reasons, I am satisfied that the submissions advanced on behalf of Sydney Metro that the major demolition, construction/reconstruction, extension and structural works are all ones which should properly be characterised as being landlord's expenses and, thus, not to be regarded, in a McDonald sense, as reasonably incurred for the purposes of relocating Mr Massasso's pharmacy. In this respect, Mr Massasso's claim is rejected. 6. The conclusion I have drawn from the "grunt work" remark is also relevant in my consideration of the negotiations which Mr Massasso undertook with the existing tenants of 104 Great North Road and the expenditure of more than $400,000 in order to persuade those tenants to vacate the premises and make them available to permit Mr Massasso to undertake his rebuilding and fit-out projects. 7. At (66) of Sydney Metro's closing submissions, there are a number of detailed criticisms of Mr Massasso's evidence (or omissions of matters about which it is said he would reasonably have been expected to have given evidence). To the extent that any of the matters there can potentially arise in the context of where responsibility should be found to lie for the costs of the significant structural alterations to 104 Great North Road, it is unnecessary that I address them in detail given the conclusion that I have set out above that. These significant cost elements were not ones that were properly to be met by Mr Massasso and are not, therefore, reasonably incurred by him for the relocation of his pharmacy. 8. A wide range of matters were also addressed on behalf of Sydney Metro concerning what was asserted to be the substance of the financial relationship between Mr Massasso and Ms Massasso (and the family trust) in the structuring and ongoing tenure arrangements for 104 Great North Road. Given that I have concluded that these major structural and construction expenses are ones which were properly landlord's expenses and Mr Massasso had neither a right or an obligation to undertake those works and incur those costs pursuant to the lease which was entered into by him with Ms Massasso, it is unnecessary for me to consider or draw any conclusions about those matters. 9. However, Mr Massasso's claim for reimbursement of these major works is rejected. Compensation for the fit-out of the reconstructed premises 1. The contest between Mr Massasso and Sydney Metro concerning the extent to which the fit-out costs of 104 Great North Road should be regarded as compensable boils down to the issue of whether or not that which has been achieved by the fit-out being more than merely compliant, in a regulatory sense, but also reflecting best pharmacy facilities and layout practice should be adopted as the basis for compensation. 2. There was no dispute between the relevant experts that what had been achieved by the fitting out of the substantially reconstructed building at 104 Great North Road reflected not merely regulatory compliance but also best pharmacy design practice. There was also no dispute that this expanded the facilities available to Mr Massasso for the future conduct of his business. 3. Under the circumstances, I am satisfied that, on a McDonald test basis, the full fit-out costs (including the vaccine fridge) can be regarded as reasonably incurred. There are two reasons why I have reached this conclusion. 4. The first (and major) reason is that which arises from my conclusion that none of the demolition, major construction/reconstruction works and additions to the ground floor plan of 104 Great North Road can be regarded as expenditure undertaken personally by Mr Massasso on his own behalf. 5. This significant building project, for reasons earlier explained, is to be regarded as properly attributed to Ms Massasso as landlord – a landlord creating an appropriate and functionally desirable shell to which a pharmacy business tenant could relocate. 6. In this fashion, Ms Massasso's major building project can and should be regarded as separate from, and unrelated to (except to the extent that Mr Massasso can be regarded as her agent/project manager), the separate fit-out activities necessary for Mr Massasso to undertake to enable his business to move to this new location. 7. Viewed in this bifurcated fashion, Mr Massasso's fitout within the scope of the premises to be available to him after the completion of Ms Massasso's construction project (excluding any fit-out costs associated with the upper level addition) can be regarded as reasonably incurred given the space which was to be made available to Mr Massasso for the relocation of his pharmacy after the completion of the building project undertaken by his putative landlord. 8. In these circumstances, fitting out the ground floor shell provided to him in a fashion that provided not only a mere replication of what Mr Massasso had had at the acquired premises, but also providing a pharmacy which complied with contemporary regulatory standards for accessibility as well as what are admitted to be expanded facilities (the consultation room, the vaccine fridge and an expanded DAA area being the primary examples of this) was appropriate. Provision of these elements can be regarded, under the circumstances, as resulting in expenditure reasonably incurred to achieve acceptable pharmacy relocation outcomes. 9. The second (and significantly subordinate) reason arises from the concession that Sydney Metro had accepted that the creation of an accessible bathroom was to be regarded as a claimable relocation expense. This was revealed by Mr Sirtes on 27 July 2023, transcript page 411, lines 19 to 25. 10. Had this concession not been made (and contrary to my immediately above conclusion), there would have been the necessity to strip out elements of the fit-out costs of 104 Great North Road as the location of the accessible bathroom (being toward the eastern, rear end of the ground floor of the building) would have necessitated not merely mathematical calculations by the quantity surveyors, but also the hypothesising of what would be a theoretically redesigned internal layout of the premises necessary in order to strip out that facility. Whilst this, in itself, would not have provided a sufficient basis alone upon which to conclude that the entirety of the fit-out costs should be regarded as reasonably incurred, it reinforces the conclusion which I have reached founded on the primary (and sufficient) reason set out above as supporting this conclusion. 11. As a consequence of this broad conclusion, it is unnecessary to go through, on a shopping list basis, all the individual elements which might otherwise potentially have required a series of in/out rulings as to whether the cost of those elements were or were not reasonably incurred. 12. This conclusion that the entirety of the fit-out costs of the ground floor space at 104 Great North Road were reasonably incurred, in a McDonald sense, is based not merely on the fact of replication of what was present at the acquired premises; upgrading those facilities to reflect contemporary regulatory standards; and reflecting best current pharmacy practice but also recognising that, although the costs of demolition, construction/reconstruction and additions at 104 Great North Road are not compensable (for the reasons earlier explained), nonetheless, it must be assumed that the space resulting from those non-compensable works was that which was available to Mr Massasso as the space within which fit-out was to occur for the relocation of his pharmacy. In this sense, it would be unreasonable to confine the relocation fit-out compensation on the basis of the precise mathematical imposition of a calculation based on a ratio derived from the floor areas of the acquired premises and 104 Great North Road (although rental apportionment on this basis is appropriate). As elsewhere discussed, I do not consider that this principle should be applied to the internal fit-out of the pharmacy given that it is reflective of current best pharmacy practice. Summary of the outcomes from the joint quantity surveyors' schedule 1. The joint quantity surveyors' schedule of costs and the agreements relating to items in it (whether compensable or not being dealt with elsewhere) also contained a notation from Mr Tucker with respect to Item 13 – a notation where he had excluded the cost of the vaccine fridge and of two staff costs elements. 2. I have addressed the vaccine fridge as part of my conclusion that the entirety of the fit-out works for 104 Great North Road should be regarded as compensable. With respect to the sum of $9,032.65 (the total of the two staffing costs items noted by Mr Tucker), Mr Sirtes indicated that they were accepted by Sydney Metro (in an exchange recorded in the transcript of 27 July 2023 at page 438, line 48 to page 439, line 1). 3. As a consequence, no matters in Item 13 in the quantity surveyors' joint report remain unaddressed. 4. The overall outcome of my consideration and determination of the various elements claimed by Mr Massasso for works at 104 Great North Road means that, as I understand it, Items 1, 2, 3, 4, 6 and 7 are rejected, but the remaining items in the joint quantity surveyors' schedule are no longer in contention and are to be reimbursed to Mr Massasso. The buyout of the existing tenants at 104 Great North Road 1. As earlier described in the summaries of his evidence, it was Mr Massasso who negotiated with the existing tenants of 104 Great North Road in occupation at the time that his wife had purchased the property. 2. It was necessary, for the purposes of carrying out the construction project that Mr Massasso had determined to undertake to those premises that he have early vacant possession of them. That vacant possession was necessary so that the full scope of the major works could be completed in sufficient time for Mr Massasso to do the internal fit-out and transition from the site which was to be acquired by simply swapping premises in a seamless fashion to commence trading at 104 Great North Road. As can be seen from what has been earlier set out, this was achieved with trading at the new location commencing on 19 May 2021. 3. Mr Massasso personally negotiated prices with the existing tenants of 104 Great North Road to establish what would persuade them to vacate the elements of the premises which each occupied. 4. Although the amounts differed (the two payments totalled over $400,000 but were of significantly differing amounts), there is no distinction in principle between the two payments. 5. As can be seen from the competing submissions earlier set out, the question to be determined, initially, concerning these payments is whether the making of them was appropriate to be made as an incoming tenant's expense (therefore to be paid by Mr Massasso as occurred) or as a landlord's expense (therefore to be incurred by Ms Massasso). 6. Sydney Metro's written submissions concerning the monies expended to secure vacant possession of 104 Great North Road by buying out the existing tenancies are, relevantly, as earlier set out at 100 to 104 of Sydney Metro's written closing submissions. The critical element requiring my consideration in this context is what is set out in 101 from Sydney Metro's written closing submissions repeated below: 101. The suggestion that it was Mr Massasso's responsibility is not correct – the tenants were the concern of the landlord (Mrs Massasso). The fact that the task of securing their departure was undertaken by Mr Massasso in itself is demonstrative that he was as much an owner of the property, in substance, as his wife. Technically, it was only in Mrs Massasso's interest, as the lessor, to provide vacant possession to assist her husband.) 1. Given the conclusions which I have explained as to why it is to be understood that, apart from internal shop fit-out matters that could properly be made part of an arm's-length commercial lease between Ms Massasso as landlord and Mr Massasso as tenant, it is unnecessary to conclude that, in his activities in negotiating a buyout of the existing tenancies, Mr Massasso was acting as a de jure co-owner of the premises. It is an equally conventional and potentially uncontroversial conclusion to draw that in doing so, he was acting as Ms Massasso's agent/project manager (this reflecting my earlier conclusion) for the purposes of those negotiations. 2. In any event, as the responsibility to provide vacant possession to enable Mr Massasso to undertake the necessary shop fit-out at his own expense (as opposed to the structural works which should be attributed to Ms Masato's expense) so was it Ms Massasso's responsibility to obtain vacant possession of the premises, followed by such structural construction as was necessary to permit Mr Massasso to undertake the necessary internal fit-out for his pharmacy business to be able to operate from 104 Great North Road. 3. The claim to be reimbursed the cost of the tenant buyouts is rejected. The rent differential claim Introduction 1. The basis for Mr Massasso's rent differential claim was, conveniently, summarised at paragraphs 245 to 247 of the written closing submissions on his behalf. These paragraphs are in the following terms: 245. The entitlement to compensation for the rent differential is a component of compensation for relocation under s 59(1)(c) being "financial costs reasonably incurred by the persons entitled to compensation, in connection with the relocation of those persons". 246. The claim for rent differential is set out in paragraph 19 of the Amended Points of Claim dated 8 June 2023. The amount claimed is $2,506,813.00. The basis for the claim is that the costs identified, are costs which have actually been incurred by Mr Massasso, and the incurring of those costs is reasonable. 247. Mr Massasso's rent differential claim relates to the difference between the monthly rental that has been paid and will continue to be payable under the new lease at 104 Great North Road as compared to the amount that would have been paid under the lease for 157 Great North Road in the period from 1 July 2021. 1. In this context, it is to be noted that this element of Mr Massasso's claim is separate from, and distinctly different to, the claim advanced by Mr Massasso for what is advanced as his entitlement to reimbursement for the rent which he was required to pay on both the acquired site and on 104 Great North Road in order for him to undertake the fit-out of 104 Great North Road prior to moving his pharmacy to the new premises to be able to commence trading at them on 19 May 2021. 2. It is also appropriate to note that it was accepted for Mr Massasso that, if I held that his profit rent claim for the acquired premises was established, such profit rent was appropriate to be offset against any determination, I made concerning this differential rate claim. Given that I have, for reasons elsewhere explained, rejected the profit rent claim, it is not necessary to address this potential offset further. The submissions for Mr Massasso 1. The submission advanced for Mr Massasso as to the period over which the rental differential should be calculated (the entirety of the initial lease and its various extension options) was that Mr Massasso and Ms Massasso had agreed that the lease would, in terms of its timespan (including options) place him in as close to an identical position as he would have been in had he remained at the acquired premises. Thus, the rent differential claim covered the entire lease plus options period. In determining the rent for 104 Great North Road, they took independent legal and valuation advice so that the lease which was entered into was demonstrated to be a proper commercial arrangement. 2. It was noted that Mr Massasso's rent claim was one which was able to be understood simply – being a claim for the difference between the rent actually paid at the acquired premises and the higher rent to be paid at the new premises. 3. The rent element for 104 Great North Road involved in this claim is confined to a rental struck with Ms Massasso that related solely to the ground floor shop premises at the new location (Transcript 26 July 2023, page 398, lines 30 to 43). The effect of this is, as later addressed, a matter which Sydney Metro submits is of no relevance given the terms of the lease – being a lease for the whole of the building. The legal validity of the claim 1. Although Sydney Metro proposes that there is no legally valid basis for a rent differential claim following the Court of Appeal's decisions in Roads and Maritime Services v United Petroleum Pty Ltd [2019] NSWCA 41 (United Petroleum) and Alexandria Landfill Pty Ltd v Transport for NSW [2020] NSWCA 165 (Alexandria Landfill), given the conclusion which I have reached as to the lack of any compensable quantum able to be discerned if such a rent differential claim was validly able to be maintained, it is not necessary that I explore and make any determination about the legal availability of such a claim. The basis for Mr Massasso's claim 1. It is unnecessary to set out in any significant detail, the bases advanced for Mr Massasso as to why the rent differential claim should be granted. In part, the claim as is advanced on the basis that the actual rent for the lease of 104 Great North Road is reasonably incurred in a McDonald sense for the whole of the fitted-out ground floor area. The submissions for Mr Massasso 1. The submission advanced for Mr Massasso as to the period over which the rental differential should be calculated (the entirety of the initial lease and its various extension options) was upon on the basis that Mr Massasso and Ms Massasso had agreed that the lease would, in terms of its timespan (including options) place him in as close to an identical position as he would have been in had he remained at the acquired premises. In doing this, they undertook independent legal and valuation advice so that the lease which was entered into was demonstrated to be a proper commercial arrangement. 2. It was noted that Mr Massasso's rent claim was one which was able to be understood simply – being a claim for the difference between the rent actually paid at the acquired premises and the higher rent to be paid at the new premises. 3. It was also submitted that, with respect to the size of the floor area for which Mr Massasso was paying rent, this was for the ground floor of 104 Great North Road (175 m²). This was confirmed by Mr Hemmings in his closing submissions (26 July 2023, page 398, lines 30 to 43): HIS HONOUR: While I'm putting you on notice of things, how do I understand from the lease of the current premises between landlord and tenant that that discounts out any rental for the first floor as opposed to the fit-out construction costs? HEMMINGS: Yes, your Honour knows that the lease was struck for the premises in the form they were at upon entry into the lease, that is 175 square metres worth of premises. So the rent that was struck and it can be seen through the four documents and the memorandum, contemporaneous notes, is for 175 square metres of shop. What Mr Massasso has been able to do of course is by him expending his money to make the 175 square metres of the shop the like for like relocation premises he's also then made it bigger. He's got the benefit of making it bigger at his expense but without an increase in rent. 1. The proposition is confirmed by the element of the Lessor's Disclosure Statement earlier reproduced in my extraction of the relevant provisions of the lease for 104 Great North Road earlier set out. 2. It was also submitted that the creation of additional area as a consequence of the extensive reconstruction works undertaken by Ms Massasso and their subsequent fitting out for pharmacy purposes (excluding the first floor) did not provide any basis for some apportioned reduction in the rent paid under Mr Massasso's lease for 104 Great North Road on a per square metre basis when compared to the rate on a similar basis which had applied at the acquired premises. In this regard, the written submissions for Mr Massasso said: .. the additional space was required to meet regulatory requirements. There is no discernible business advantage from the increased size of the new premises – Mr Massasso's script numbers appear to have remained steady in the new location. 1. The proposition that the valuation assessments undertaken by Mr Dyson or Mr Lunney could be used to permit an assumption that the rent for 104 Great North Road on a pre-fit-out basis could be used to validate, retrospectively, a downward adjustment to his actual rental liability is inappropriate in the context of assessing the rental actually paid in a McDonald test consideration of whether it was reasonably incurred. 2. It was noted on behalf of Mr Massasso that the valuations which had been obtained for the purposes of striking the rental to be incorporated in his lease with Ms Massasso were ones based on the floor space of 104 Great North Road of 175.6 m² – this being the floor space of these new premises prior to the additional floor space added by the reconstruction and extension works. 3. There are two further matters of detail appropriate to note arising out of this element of Mr Massasso's claim. It is sufficient, for present purposes, to record that: 1. the forensic accountants' greed proposition is that any rent differential compensation should be addressed on a proper tax accounting basis; and 2. the proposition in Mr Holland's report that Mr Massasso might potentially be permitted to sublease the new upper level of the building, noting that this was not permitted under the applicable Pharmacy Council Guidelines (written closing submissions at 266). 1. With respect to the extent of the operation of the lease, it is appropriate to note what is said as the concluding point in the closing written submissions for Mr Massasso – paragraph 267 saying: It is accepted that the lease relates to the entirety of the pharmacy premises, albeit that was struck on the basis of the 175m2 unimproved premises. Mr Massasso makes no claim for the works undertaken to build the upper floor. Sydney Metro's submissions 1. It is sufficient, in addressing this element of Mr Massasso's claim merely to set out what was put, relevantly, in Sydney Metro's written closing submissions. The approach adopted by Sydney Metro in its written closing submissions concerning Mr Massasso's rent differential claim commenced by setting out why Sydney Metro submitted that such a claim was not one which could be maintained legally. As I earlier noted, I have concluded it is not necessary to determine this. 2. The submissions then addressed: 1. the process undertaken by Mr Massasso for the works which he proposed to undertake at 104 Great North Road, whilst not yet a tenant – Sydney Metro submitting that, in substance, he was the owner of the building; he did not need a lease; and he had security of tenure by virtue of being married to the owner of 104 Great North Road; 2. this meant, Sydney Metro proposed, effectively, that the leasing process subsequently embarked upon was not needed; and 3. the various benefits Mr Massasso derived from the purchase of 104 Great North Road and the relocation of his business there were extensive; 1. Sydney Metro also advanced propositions concerning security of tenure and tax benefits to Mr Massasso. 2. The written submissions then addressed how I should approach the went differential claim having regard to the apportionment approach. I had adopted in Fishing Station, when I had found that the business there being relocated had done so to larger premises and I had, as a consequence, applied a process of adjustment, in order to reflect the difference between the size of the original premises and the size of the larger premises to which the relocation had taken place. 3. Sydney Metro's submissions next addressed what should be the appropriate calculation for the purpose of striking the appropriate rate per square metre of gross lettable area as at the date of the lease based on the evidence given by Mr Dyson and Mr Lunney (Mr Dyson's rate being higher than that of Mr Lunney but nonetheless lower than that which had applied per square metre at the acquired premises). It is not necessary to set out this analysis in detail given the conclusion that I have reached on this aspect of Mr Massasso's claim. 4. Sydney Metro next addressed, under the heading A like for like basis? the difference between the floor area of the acquired premises and the nominated floor area encompassed by the lease as earlier set out in my summary of the lease terms. Sydney Metro submitted that I should not accept that only 176 m² was encompassed by the lease and the rent was inconsistent because a correct application of principle meant that the lease was over the entirety of the building and that the element of the lease nominating this attribution of rent was void (citing Hoyts and Spencer (1919) 27 CLR 133). 5. At this point, the submissions traversed (again) the additional benefits to Mr Massasso said to arise from the reconstructed premises – noting that Mr Dyson had rejected the possibility of a pro rata rental calculation on the instruction to him that the additional area was necessary for compliance with current requirements for pharmacies which were not prescribed for the existing premises. Sydney Metro's submission was that this instruction to Mr Dyson was not established by the evidence. 6. Sydney Metro then proposed two alternative bases for calculating whether or not a rental differential was established. The first of these was that it should be done on a rate per square metre basis in comparison with the acquired premises. 7. The second was that it should be undertaken by having regard to comparative areas between the acquired premises and 104 Great North Road having regard to the levels of functionality at the two premises. With respect to this latter proposition, Sydney Metro suggested that, for this second alternative approach, regard could have been head to the draft design in the evidence book at folio 691, a draft design which had been included in a valuation report prepared by Cashman & Wakefield; dated 27 April 2020 and signed off by Mr Dyson and one of his colleagues. The plan there displayed was an early version hypothetical prepared by Pharmacium (a firm for which Mr Massasso's pharmacy layout expert, Ms Stybowski, had been employed but a plan which was not a design resulting from her engagement. 8. The written submissions then addressed a number of disbursement issues which would need to be taken into account if the claim was successful. It is not necessary to set these out given the conclusion which I have reached concerning this claim as they would only relate to matters of calculation if that point was reached. Consideration 1. Resolution of this differential rent claim is comparatively easy.In Fishing Station, I had been faced with a comparable position where the relocation premises were of a significantly greater floor area but also enabled, as a consequence, a wider range of products to be sold at those retail premises, than had been able to be sold at the acquired retail premises. I am satisfied that that approach is to be adopted in these circumstances. 2. The area of 104 Great North Road expressed to be encompassed by the lease of those premises is176m2 (setting aside Sydney Metro's submission that a much larger area is, at law, encompassed by the lease) is to be compared with the area of the acquired premises, this being 114m2. 3. The valuers assessed the rental rate per square metre for each of these properties. Although they differed in their derived rates per square metre, they agreed, at (69) of their joint report (Exhibit Book, folio 2868) in the following terms: 69. Although we disagree, as to the market rental value of the Relocation Premises, we agree that, if expressed on a $/m2 p.a. basis, it should be lower than the market rental value for the Acquired Premises. 1. It is also convenient to note the rates which each of them had derived to reach their agreed conclusion set out above. 2. Mr Dyson concluded that the appropriate rate for the acquired premises was $1000m2 whilst that for 104 Great North Road was $950m2 (Exhibit Book, folios 2867 and 2868). Mr Lunney's derived rates showed $898m2 for the acquired premises whilst his rate derived for 104 Great North Road was $750m2 (Exhibit Book, folio 2868). 3. As can be seen, although Mr Dyson and Mr Lunney disagreed in the numerical calculations, the difference which each of them nominates between the rate per square metre for the acquired premises when compared to the rate per square metre for 104 Great North Road is significantly more than what might be regarded as a mere rounding error. 4. On this basis and adopting the approach which I applied in Fishing Station, the only conclusion to be drawn is that there is no disadvantageous rent differential burden imposed on Mr Massasso by his relocation to 104 Great North Road – to the contrary, on a like-for-like basis, he is better off as a consequence of his relocation rather than having any additional cost burden imposed on him. 5. This differential rental claim must be rejected. The double rent reimbursement claim Introduction 1. Mr Massasso claims reimbursement for rent paid by him during the period whilst he was undertaking the entirety of the works at 104 Great North Road and also paying rent at the premises where the pharmacy continued to operate until mid-May 2021 prior to its relocation to 104 Great North Road and Sydney Metro taking over the acquired premises. The basis for Mr Massasso's claim 1. This claim is advanced on behalf of Mr Massasso on the simple basis that it was necessary for him to pay rent at 104 Great North Road for the period after the expiry of the three month rental holiday provided by Ms Massasso at the commencement of his tenancy and thus during the period while he was having carried out the extensive works of both a construction and of a fit-out nature at 104 Great North Road in order to prepare those premises for him to be able to transfer his pharmacy there prior to Sydney Metro taking over the acquired property where his pharmacy continued to operate until the transfer. The submissions for Mr Massasso 1. This rental is said by Mr Massasso, to be incurred throughout the period after the expiry of the rental holiday because it was necessary for him to have control of 104 Great North Road in order to carry out the construction project and, at the time of its almost completion, carry out the fit-out of the reconstructed premises in order to enable it to operate as his relocated pharmacy. 2. The necessity for this, it was submitted for Mr Massasso, demonstrated that these additional rental expenses at 104 Great North Road were reasonably incurred in order to permit the relocation of his pharmacy. 3. They should, therefore, be reimbursed to him as relocation expenses falling within the ambit of s 59(1)(c) of the Land Acquisition Act. Sydney Metro's position 1. As I understood Sydney Metro's position, it can simply be summarised as being that rental incurred as a consequence of Mr Massasso's tenancy requiring him to pay rent during the period that works properly to be ascribed as landlord's works were being carried out was not a cost reasonably incurred as part of the relocation of his pharmacy. Consideration 1. After Mr Massasso and Ms Massasso signed the lease for 104 Great North Road, Mr Massasso's rental obligations did not commence until three months later as Ms Massasso had included a three-month rent-free period at the commencement of the lease. However, from the expiry of that rent free period until Mr Massasso quit his occupation at the acquired premises in mid-May 2021, Mr Massasso had two separate rental obligations (which he met) – being to pay the rent at the acquired premises and to pay the rent at 104 Great North Road. 2. It is, however, appropriate to consider the extent to which time ran at the acquired premises whilst Mr Massasso was undertaking the extensive demolition and construction/reconstruction works undertaken at 104 Great North Road where those works were properly, as I have earlier explained, works which were not his financial responsibility (in the context of his relocation costs claim). It is also relevant to consider the extent and nature of the works undertaken at his initiative and the amount of time that necessary to undertake all of the steps which he did, on behalf of Ms Masato, to achieve the outcome of this project. In this context, it is appropriate to repeat some of the oral submissions advanced by Mr Sirtes in this regard. 3. I commence (although out of transcript order) with Mr Sirtes taking me (Transcript 28 July 2023, page 493, lines 19 and 22) to what was said by the town planner who submitted the development application to the Council for the extent of the works encompassed by it as lodged with the Council for approval. The relevant portion of the application (Evidence Book folio 783) was in the following terms: … for the proposed part demolition, construction of alterations and a ground and first floor addition to the existing building, new car parking and the installation of new business identification signage to establish a new pharmacy use at 104 Great North Road, Five Dock 1. Mr Sirtes submitted, with respect to this development application, the following (Transcript 28 July 2023, page 493, lines 20 to 37): … It was simply just building a building for a new pharmacy. The notion that that comports with the relocation of an existing pharmacy, one can understand if it has a new fit-out et cetera. It can technically be stated as being new in that sense but we are talking about a purpose-built building and not forgetting of course that the building itself, the entire building is considered to be the pharmacy as Ms Stybowski accepted. The Pharmacy Council when they give an approval, gave approval to the entire building as comprising the pharmacy. The demise is over the entire building. As much as I have made the same kind of submissions a number of times as our friends have for example at para 160 they say "The consistent and…building were necessary." Again is an ipse dixit which begs the question but doesn't bother answering the question because even by reference to their reference to the access report at 162 there is not a single report the applicants can point to that demonstrates compliance could not be achieved within the existing footprint, not one. Everything they've put on including the reference to the access report is all about the DA plan which was for a radically, we say, a radically different, and new building. 1. Mr Sirtes also addressed the various matters set out in paragraph 132 of the written closing submissions for Mr Massasso saying (Transcript 28 July 2023, page 488, line 45 to page 489, line 12): Of course, all those things that are said there, A through to K, are also based upon the scenario that he was building what he ultimately built there. There's no attempt to suggest or deal with the issue that your Honour raised, which is, "Well, how would it have been different in terms of, for example, the double rent claim if he utilised the building as it was and did what we say would be a traditional fit-out without all the bells and whistles?" Even if there was some need for some work to be done, surely your Honour, a programming expert and not so much a quantity surveyor, but they could probably, we will say, have a crack at the exercise. But, really, a person who is most suited to identifying how much a project should take is a programming expert, and a programming expert would have to go, "Well, this is how long it would take to do a fit-out", and probably do some structural work if they discovered a problem with the floor or some other problems in the building. But, "To do a traditional fit-out on the existing building, the original building", even accepting there were some problems, "would take this period of time, but to do that which you ultimately built would take", either the amount of time it did take or some variance of that. 1. The third passage of Mr Sirtes' oral submissions to which it is appropriate to refer in this context, is that advanced by him in the following terms (Transcript 28 July 2023, page 500, line 40 to page 501, line 6) a submission in the following terms: The double rental claim starts with a proposition that Mr Massasso enters into a lease in - I think - May, and he's given a three month rent holiday, rent free period. Just pausing there for a moment and stepping back from that. Again, it just exemplifies and amplifies the ludicrous nature of the landlord tenant relationship and the blurring of the roles between registered proprietor, husband, wife, lessor and tenant. Because this is the scenario that's put forward as being a reasonable scenario for the purposes of the double rent claim. Lessee says - in a universe that must be parallel because it cannot reflect commercial reality - to lessor, "I'm going to come in and knock down your whole building and I'm going to rebuild it. Leave up three walls, but otherwise I'm rebuilding it at my cost. It's going to take a year to do that. You will get the capital benefit in circumstances where I'm spending millions in giving you a brand-new building." The response is "I'll give you a three month rent free period." It's completely understandable if there's a fit-out process happening that one would go "I'm giving you a three month period." 1. The final relevant submission on this point, in my assessment, is that which was advanced by Mr Sirtes at page 500, lines 7 to 25 of the transcript (although out of sequence – it is, in my assessment, to be taken as an appropriate peroration of his submissions on this point). The submission was in the following terms: If we're wrong about that, we say that the claim in any event fails at a factual level on the basis that they are getting what they paid for. That is to say if they're paying 198,000, and our friends say "Yes, but that was a rent that was tied to the building that was there", we say that is a proposition that should not be accepted at face value because we know that Ms Massasso has agreed previously when she wasn't a landlord, when she was a registered proprietor, to the building being knocked down and rebuilt. If one looks at the proposition of what is being rented for 25 years and what is being paid for over a 25 year period, it's a new pharmacy and a new building, and it's the entire building. So our friends say "Well, the rent was only set in relation to the ground floor." The lease concerns the entire building. He gets the benefit, if he exercised his options, of this new building with all the benefits that it brings that are plain to see, with all the additional space, the carparking, et cetera, and the much greater space than the relocated premises over a 25 year period, and he pays for that. So the question begs, if he wants to, as a businessman, rent a much larger premises, pay more money for it, then he doesn't get that paid for. He doesn't get millions and millions of dollars of compensation for renting a much larger premises with all the benefits that he gets with that. 1. As earlier noted, although these submissions addressed the case that was advanced on behalf of Sydney Metro as to the delineation of the structural works undertaken at 104 Great North Road (works said not to be – and found not to be – compensable) and fit-out works at 104 Great North Road (acknowledged to at least some extent by Sydney Metro to be compensable and found by me – for reasons earlier explained – to be compensable in their entirety), they are equally appropriate to be considered in the context of the reasonableness of the incurring of the rental of 104 Great North Road for the full period (from the date of entry into the lease and after allowance of the three month rent free period) until Mr Massasso ceased paying rent at the acquired premises when he vacated and they were taken over by Sydney Metro. Consideration 1. Although the lease between Mr Massasso and Ms Massasso did not commence until some time after her acquisition of 104 Great North Road, it did run through this period which commenced after Mr Massasso had caused the development application to be lodged with the Council – being a development application described in the covering letter to the Council, relevantly, in the terms earlier set out. 2. Whether or not the time taken for the Council to assess the development application and determine to grant it conditional consent (also noting that there was a subsequent modification made to what was approved) is irrelevant. Nonetheless, the dominant elements of that development application as described in its submission to the Council comprised very extensive demolition and structural construction or reconstruction works – works which were, as I have earlier explained in the section of this judgment addressing what elements of those works are compensable as relocation expenses, properly works where the cost should have been borne by Ms Massasso and not by Mr Massasso and should be so attributed. 3. To the extent that Mr Massasso was not able to take possession of 104 Great North Road for the purposes of fitout of those premises as a pharmacy (an event which did not take place until close to the end of the period necessary for the major structural elements to be completed), this demonstrates that any rent expenditure from Mr Massasso paid to Ms Massasso during the period when the works that were properly the responsibility of Ms Massasso could not conceivably be regarded as being reasonably incurred in a McDonald sense for that period. 4. In this regard, no evidence has been provided of any substantive nature explaining why it was appropriate that Mr Massasso accepted a rental obligation to pay a not inconsiderable monthly rental to Ms Massasso during the period when it was not possible for him to undertake the necessary fit-out works to render 104 Great North Road capable of functioning as a retail pharmacy. Indeed, it is to be observed that Ms Massasso incorporated, in the terms of the lease executed by each of the Massassos, a three-month rent-free period from the commencement of the lease. It was, as I understood the evidence, the position that a three-month period could reasonably be regarded as an appropriate length of time for the fit-out of 104 Great North Road after the major construction works had taken place in order to render the premises functional as a pharmacy and compliant in a regulatory fashion (including the necessity for accessibility requirements being met). 5. Under these circumstances, whilst it would have been the position that the incorporation of a rent-free period on a conventional landlord/tenant basis would have been appropriate to permit the fit-out of the premises, there is no valid reason why such an allowance should be regarded as commencing from the time actually established by the lease rather than during the period when the actual internal fit-out was undertaken after the major structural works were completed to a sufficient extent (almost at the conclusion of those works, I understood the evidence to establish) and prior to Mr Massasso taking over the premises at 104 Great North Road for that fit-out purpose at that time. 6. On this basis, Mr Massasso has not established, on the balance of probabilities, that the rental obligations he had incurred up until the commencement of what would have been a reasonable pre-occupation fit-out were reasonably incurred. In addition, it is to be assumed that, had Ms Massasso acknowledged that the major demolition works and the resultant reconstruction and structural works were ones appropriate to be carried out by her and at her expense, there would not have been any issue arising as to what would have been the appropriate timing of Mr Massasso assuming a rental burden for the premises. 7. Viewed in this context, it is unnecessary that I explore any of the issues sought to be advanced on behalf of Sydney Metro: * as to sources of funds for the major works; or * the nature of any potentially resulting equitable or other interest that Mr Massasso might have in the property rendering the necessity for a lease between him and Ms Massasso either unnecessary or a confected fiction for the purposes of a claim for the rent differential being established under s 59(1)(c) of the Land Acquisition Act. 1. It is sufficient, as I have explained, that I have concluded that there is no valid basis establishing that any of the rent paid by Mr Massasso (whether justified on a rent differential basis when compared to the rent at the acquired premises being a matter of complete irrelevance in this consideration) is claimable with the consequence that this element of his overall compensation claim must be rejected. The profit rent claim Introduction 1. Mr Massasso claims the amount of $224,000 as compensation for what he says is the profit rent he has been obliged to forgo as a consequence of the compulsory acquisition of his former pharmacy site. This claim arises because it is asserted that the passing rent Mr Massasso was paying the landlord at the former pharmacy (and would have continued to pay in the fashion specified by the lease entered into and operative from 15 September 2019 - the passing rent) was a rental which was less than the true market rental which should have been applicable for the lease of those premises. The difference between the passing rent and the market rent, if a difference between the two in Mr Massasso's favour is established, would constitute a profit rent to Mr Massasso's benefit. He therefore claims compensation for the loss of this profit rent over not only the life of the September 2019 lease but also over each of the further option periods granted to him by that lease – options which should be assumed as being exercised in the future as and when necessary. The pleaded claim 1. Mr Massasso's Points of Claim pleaded this compensation element in the following terms: 15. The claim for market value is made on the basis of the assessment of the profit rental value of the leasehold interest, having regard to the following leasehold evidence: (a) Shop 2, 157 Great North Road, Five Dock; (b) Ground Floor 109 Great North Road, Five Dock; (c) Ground Floor, 145 Great North Road, Five Dock; (d) Shop 4, 147 Great North Road, Five Dock; (e) 108a Great North Road, Five Dock; (f) 102 Great North Road, Five Dock. 16. Having regard to the terms of the comparable leasehold evidence, the market value pursuant to s.56(1) of the Just Terms Act for the Lessee's Interest in the Subject Property on the Present Value of the Profit Rent determined under the Direct Comparison Approach is considered to be $224,000. Sydney Metro's position 1. Sydney Metro says that Mr Massasso has no entitlement to compensation on the basis set out above. The position advanced for Sydney Metro is that, in short, there is no profit rent because the rental obligations on Mr Massasso as a result of the September 2019 lease (and continuing pursuant to the options to renew granted by that lease) should be regarded as the proper market rental for the acquired site. As the burden of proof falls on Mr Massasso to substantiate each of the elements in his claim, he has not done so to establish that there is any rent differential between the passing rent and the market rent. On this basis, there is no profit rent for which Mr Massasso is entitled to be compensated. The evidence 1. The primary evidence advanced in support of this claim is contained in Mr Massasso's affidavit at paragraphs 11 to 15. These paragraphs are in the following terms: 11 In July 2019, I became aware that I had not exercised the option at the required time to trigger the option period in my lease. At that stage I had assumed I still had the opportunity to lease the premises at 157 Great North Road for 20 further years. 12 I then had a discussion with Joe Rizzo in about July 2019 to the following effect: Me: Joe, we have all forgotten to exercise the option, its due to renew on 15 September, but we were meant to start the process before now. I would like to stay. I was meant to have another 20 years to go. Can we negotiate a fresh lease. Joe Rizzo: Yes of course. You are a great tenant and we're keen to keep you going and we don't want to lose you. We can agree on some terms and get the lawyers to draw up a new lease. Me: Ok, that's great, we can talk about the rent later when we deal with the terms, but I'd really like to have a number of options, say 5 years plus four lots of 5 years after that. Joe Rizzo: Yes, that will be fine. Let's keep the rent the same and you can have an extra 5-year option if you like. I'll get Romeo my lawyer straight onto it. 13 I then instructed the solicitor I engage in commercial matters, Peter Clinch of Clinch Long Woodbridge solicitors, to act for me in respect of the lease as he did previously. 14 By 15 September 2019, the process of negotiation and preparation of the lease was completed and I instructed Mr Clinch to cause the registration of the lease. 15 A copy of the lease entered into in 2019 is at pages 49 - 68 of Exhibit MDM-1. 1. Evidence on this point was also given by Mr Dyson and Mr Lunney. Mr Dyson's primary position was that the 2019 lease was merely a continuation of the lease arrangement which had been entered into in 2004 and that, but for Mr Massasso's failure to exercise his option, would have continued. On the other hand, it was Mr Lunney's position that the 2019 lease was a fresh lease entered into on a commercial basis after negotiation between Mr Massasso and Mr Rizzo, as the agent for his mother. Approaching the lease on this basis, Mr Lunney considered that the 2019 lease embodied a bargain striking a market rent for the premises. 2. Beyond these primary defining positions, Mr Dyson and Mr Lunney also considered the terms of a number of leases of other properties in the Five Dock shopping strip to determine what, on an analysed and adjusted basis, might be comparable market rents calculated on an equivalent rate per square metre to enable consideration of whether, on such a comparative basis, the rental embodied in the 2019 lease for the acquired premises reflected a market rental. 3. Unsurprisingly, their approach to analysis and adjustment varied, both as to the appropriate leases to be considered for this purpose and what conclusions should be drawn as to rates per square metre should be derived for comparison purposes. Set out below is a table extracted from the valuers' joint expert report showing the locations and other relevant details of the leases considered in the valuers' comparative analysis. The table is in the following terms: Lease No. / Address GLA Use Term Commence Incentive (%) Gross Rent Gross rental (m2) (years) p.a. $/m2 p.a.5 1. 145 Great North Rd 19 Liquor shop 7 + 4 x 5yr Jun-19 $198,550 $1,045 0 2. 4/147 Great North Rd 40 Café 3 + 3 x 3yrs Nov-19 $46,800 $1,170 3. 108a Great North Rd 38 Chiropractor 5 Mar-20 $34,000 $895 4. 102 Great North Rd 10 Take away / café 3 + 2 x 3yr Nov-20 $91,000 $782 7 5. 109 Great North Rd 70 Accountant 3 Oct-20 $60,000 $857 The submissions Introduction 1. It is to be observed at the outset that, arising from the oral evidence given by both Mr Dyson and Mr Lunney, each of the advocates proposed that I should conclude that there were flaws in the comparative approach taken by the other party's valuer to the question of what of utility could be derived for present purposes by consideration of the leases of the various other premises in the Five Dock shopping strip. Given the conclusion which I have reached concerning how the 2019 lease should be regarded, it is unnecessary to set out in any detail of these aspects of the valuers' evidence and the criticisms advanced concerning it. The submissions for Mr Massasso 1. The written closing submissions on behalf of Mr Massasso concerning the characterisation of the 2019 lease were in the following terms: The subject as a 'comparable' 26. As was set out in summary above, Mr Lunney's position is that in order to determine whether a profit rental exists, the best point of comparison is the subject leasehold itself. There are two points in response. 27. The first point is that this distorts the method to determine profit rental. It is wrong to proceed upon the assumption that all, or (at least) this leasehold, represents market merely because it was struck between two parties. The circumstances of the transaction must be interrogated. Once that is done it can be determined whether there is a pool of potential purchasers for this interest because its terms are more favourable, and worth paying for, rather than that which can be struck in a new transaction. This is done by comparing the rent (and terms) of the subject lease with the rent and terms of other otherwise comparable leaseholds. 28. The second point is that Mr Lunney does not appreciate that the rent was not the subject of renegotiation in 2019. 29. … 30. … 31. The commencing rent of 157 GNR under the 2014 lease was $72,659.4020. When a simple arithmetic extrapolation, increasing annually by 3% as per the terms of the 2014 lease is applied, it shows as follows: (a) 2014: $72,659.40 (3% of this is $2179.782); (b) 2015: 2014 lease + the 3% figure set out directly above = $74,839.182 (and 3% of this is $2245.17546) (c) 2016: 2015 lease + the 3% figure set out directly above = $77,084.35746 (and 3% of this is $2312.5307238) (d) 2017: 2016 lease + the 3% figure set out directly above = $79,396.8881838 (and 3% of this is $2381.90664551) (e) 2018: 2017 lease + the 3% figure set out directly above = $81,778.7948193 (and 3% of this is $2453.36384458) (f) 2019: (2018 lease + the 3% figure set out directly above) = $84,232.16. 32. The commencing rent of 2019 lease was the same as that figure directly above, being $84,232.1621. Accordingly, Mr Lunney's rationale that rent was renegotiated is incorrect. 33. For those two reasons (the incorrect approach to the method, and the fact that the lease has in fact been the subject of 3% increases without renegotiation or without reviews to market, since at the very least 2014), demonstrates that using the subject lease as the best evidence of market rent is wrong. 1. During the course of his oral closing submissions, Mr Hemmings addressed this topic, saying (Transcript 26 July 2023, page 383, line 44 to page 384, line 33): HEMMINGS: We do say there are a number of difficulties with his [Mr Lunney's] approach to the valuation task. But we'll deal with it in a moment. But to identify it now as your Honour recalls, he had the table of sales in his statement of evidence. I said sales. He had the table of transactions in his statement of evidence that he relied upon. We'll go to those in a moment. That although he accepted in the normal course you would carry out explicit adjustments to them, in order to obtain a persistence he said something like, "Well I'd do that in the normal course if I was doing a market rent review, but because all I'm doing here is trying to work out whether there's a profit rent or not, I haven't made the adjustments". The very obvious tension that appears from his evidence is on the one hand he says you need to have a clear and obvious profit rental, but for some reason when he's determining whether there is one, he doesn't apply the orthodox approach to a consideration of the transactions to determine whether or not there actually is a profit rent. It, in fact, highlights the difficulty with his evidence in our submission. As we say at 18 in summary form his assumption of renegotiation is not made good, and as your Honour has already noted there was no renegotiation of the rent in 2019. It was simply a continuation of the rent from the previous lease from 2014 applying 3% fixed increases that are provided for in that lease, but we deal with that in some more detail. The process to be adopted is then, under the heading, "Accumulation of Comparable Leaseholds", a process your Honour is very well familiar with and nothing we need to dwell upon. We have the details of the lease extracted at p 9. [In] paragraph 24 there were seven potentially comparable leaseholds, they ultimately agreed that the table in the joint report which has five of them and we'll go through that table in a moment. There are two not in the table because they weren't agreed as comparables and that's the subject property of 157A so we deal with those separately first. Now turning from 26 to the topic of whether or not the subject lease is itself relevantly to be considered as a comparable transaction in order to do so the Court needs to be satisfied that it is a reflection of market in our submission and we do that at 27, it's wrong to proceed upon the assumption that all or at least this leasehold represents market merely because it was struck between two parties or, as Mr Lunney said, merely because it was a new lease. The submissions for Sydney Metro 1. The written closing submissions for Sydney Metro dealt with this topic in the following terms: Market value of Shop 1 lease (s 55(a)) - $224,000 claimed 18. The basis of this claim is that there was a profit rental enjoyed at Shop 1, as the premises were leased below market value. The claim is made over the remaining term of the lease and all options (that is, 23.5 years) capitalised at a discount rate of 4%. 19. Relevantly, the Shop 1 Lease at 157 GNR had the following features, as agreed by the valuers: • The commencing rent (in September 2019) was a net rent of $84,232.16 pa with 3% fixed increases per year. • The net passing rent at the Date of Acquisition (19 March 2021) was $86,759 per annum. • The outgoings are accepted to be $15,800 per annum. • The gross passing rent as at the date of acquisition was $102,559 or $898/m2. • The Applicant had the use of one car space at Shop 1, but the Shop 1 lease did not include a dedicated car space. 20. Metro denies that there was any profit rental. In particular, it is noted that the Shop 1 Lease was renegotiated commencing in July 2019, and ultimately executed in September 2019, shortly before the announcement of Metro's intent to acquire the Acquired Land. It was negotiated at arm's length between Mr Massasso and Joe Rizzo, the son of the owner, who is a Five Dock real estate agent. It is good evidence – indeed, the best evidence – of the actual market value of a lease of Shop 1. In Mr Lunney's opinion, it is also in line with other market evidence. 1. During the course of his oral closing submissions, Mr Sirtes said (Transcript 27 July 2023, page 465, line 27 to page 466, line 13): SIRTES: There is a statement made in para 18 the second sentence that there was no renegotiation of the rent in 2019. The fact that the rent itself remained effectively the same or it was the same confuses process with outcome. There was a renegotiation and that is the applicant's very own evidence. That is it arrived at the same amount only confirms that the lessor was content that the amount that was reflective of the rent as at the end of the prior lease conformed with his view that it was market rent at that point in time. My friend cannot make a submission that there was no renegotiation of the rent in 2019. At best, he can say based on his own evidence that insofar as there plainly was, on his own client's case, a protracted negotiation, that it arrived after the protracted period of negotiation at an amount that by happenstance was the same rent. In paras 26 and 27, he deals with Mr Lunney's position that in order to determine whether a profit rental exists, the best point of comparison is a subject leasehold. What's then said in para 27 is it's wrong to proceed upon the assumption that at least this leasehold represents market merely because it was struck between two parties. The circumstances of the transaction must be interrogated. First, it is wrong to interpret what Mr Lunney propounded as some sort of Catholic, one size fits all principle. That is not his evidence. That assertion is hardly universal. The principle that the circumstances of the transaction must be interrogated is of and by itself equally not a universal proposition. If it is correct, then what circumstances were interrogated by Mr Dyson in relation to any of the comparables. The notion that one must "interrogate" every single lease transaction would (a), turn valuation methodology entirely on its head, and (b), it's not something that has happened here. One cannot undertake that task selectively. What my friend says is "Well, what should've happened here if you're going to give pre-eminence to" - as Mr Lunney has - "the actual lease between Mr Rizzo and Mr Massasso in 2019 is you can't accept [it] at face value. You have to interrogate it." It only begs the question of why would you just look at that lease and apply that principle - and it's not a principle. Apply that approach to that lease? Why not apply it to each and every single lease that they considered? Particularly when it comes to Mr Dyson, why wouldn't you interrogate the Liquorland lease? The reply submissions for Mr Massasso 1. In his oral reply submissions, Mr Hemmings responded to the position advanced for Sydney Metro in the following terms (Transcript 28 July 2023, page 510, line 32 to page 511, line 25): HEMMINGS: Mr Sirtes, yesterday, was criticising our approach to the cross examination of Mr Lunney and the approach generally for the purposes of the profit rent to determine what the circumstances of a particular transaction were. I think the submission went something along the lines of it would turn valuation on its head if you couldn't just rely upon a contract of sale, an agreement for lease and need go no further. Of course, that fails to understand a few things. The first is, of course, his witness' own concession, if your Honour wants to go to the transcript at p 329. So that's from Tuesday, I think it was. 329 at line HIS HONOUR: Just wait for a second. 329, line? HEMMINGS: Line 35; a question expressed in fairly confident language by me. Starting with the first of those, "Q. [You obviously accept, do you, that in order to determine whether it's a contract of sale or an agreement for lease, reflects market value or market rent, you need to properly consider the circumstances surrounding the transaction?] A. Yes, I do]." The second matter is, of course, certainly as part of the Court's practice and experience, there are many types of transactions that of necessity one needs to have a look at the circumstances surrounding them to determine whether there is something about the transaction itself and the parties to it that means that it's not a proper reflection of market. We gave one example that the adjoining owner influenced. There's the sale to acquiring authorities, not compulsory acquisitions but under the shadow of an acquisition to look at the bargaining powers between the parties. There's special conditions in a contract which might have affected the way in which the property transacted. All of those matters need to be considered to ensure that it is market that's been reflected in the agreement. That is the very reason why this Court's jurisdiction class 3 rules of evidence do not apply, because as was explained by some judge called Hemmings J many years ago, 1988, in Koutsouras. It's Koutsouras [1988] NSWLEC 83, and more recently cited by Sheahan J in Maroun. The reason this Court does not have the rules of evidence is because for the valuers to be able to do their task, there must be the ability to rely upon the hearsay evidence of the valuers and going and speaking to the people in the marketplace that not only are informing the market, the real estate agents and the like, but those that were the parties to the transactions, to see what was working in their minds. The last matter, of course, is it demonstrates a failure to under the four As, as this Court has identified them, and the second and third which require analysis and adjustment before the application. Not turning the process on its head, it is an inevitable consequence of this Court to properly exercise its jurisdiction to determine market value to look at the circumstances of a transaction and properly understand them. Consideration 1. I am satisfied that the 2019 lease should be regarded as a fresh lease and not merely as a rubber‑stamped replica of the pre-existing arrangement embodied in the lease which could have been extended had Mr Massasso exercised his option in a timely fashion. 2. There are two reasons why I have reached this conclusion. First, it was Mr Massasso's evidence that his dominant concern was to obtain a lease whose operative length (by the incorporation of, and to the expected exercise by him of, extended future options to renew) would have at least an overall life equivalent to that which had been forfeited as a consequence of his failure to exercise his first option pursuant to the 2014 lease. 3. As paragraph 14 of his affidavit says, Mr Massasso expressly set aside the question of striking the rent for a lease which would continue his tenancy beyond the otherwise lapsing in September 2019 with the question of the rental basis being deferred for further negotiation. As is necessarily implicit from the time of the conversation recorded in paragraph 12 of his affidavit as taking place in July 2019, at least some two months of further negotiations continued until a bargain was struck with Mr Massasso instructing his solicitor, who was acting on the lease transaction, to register the resulting lease in time for it to commence seamless operation at the expiry of the 2014 lease. 4. In this context, it is to be noted that the 2019 lease incorporated further renewal options able to be exercised by Mr Massasso (noting that, contrary to Mr Massasso's assertion in paragraph 12 of his affidavit that there was some mutual obligation to exercise the option under the 2014 lease), those options were to the benefit of, and responsive to, what Mr Massasso regarded as his dominantly sought outcome from a new lease. It is also to be noted that the 2019 lease gave Mr Massasso four five‑year options, taking the expiry date, if all those options were to be exercised in the fashion Mr Massasso confirmed was his aspiration, resulting in the ultimate expiry date of the 2019 lease being more beneficial to Mr Massasso by a period of five years than would have been the position had he exercised (and subsequently continued to exercise) his option entitlements under the 2014 lease. 5. Had there merely been an intention, by effecting the 2019 lease, to replace seamlessly the operation of the expiring 2014 lease, the ultimate expiry date of the 2014 lease would have been replicated. This additional benefit to Mr Massasso, reflective of his primary objective, demonstrates, I am satisfied, that the 2019 lease bargain struck created a fresh (and different) landlord‑tenant basis for Mr Massasso's occupancy of the acquired premises. 6. I am also satisfied that the criticism advanced by Mr Sirtes of the failure by Mr Massasso to adduce evidence from Mr Rizzo is valid and that this failure goes to the issue of whether I can have the necessary degree of satisfaction on the balance of probabilities that this aspect of Mr Massasso's compensation claim has been made out. This failure, however, is not determinative of this element of Mr Massasso's claim. 7. The profit rent claim is therefore rejected. The business loss claims – general legal issues 1. Mr Massasso makes two separate claims for losses arising out of the relocation of his business. The first of those (the temporary business loss) arises from what he says is the diminution of his trading position as an immediate consequence of the compulsory acquisition of his former pharmacy. The second loss (the permanent business loss) is said to arise as a consequence of the compulsory acquisition of Mr Cordaro's property at 2 East Street and, as a consequence, the non-establishment of the medical centre for which Mr Cordaro had obtained development consent from the Council. The temporary business loss is claimed on the basis that this loss is an ongoing one – one persisting for the entirety of the remaining period of Mr Massasso's lease at the former pharmacy – that is, a loss persisting until 2044. 2. Each of these claims is rejected by Sydney Metro on two separate bases. First, Sydney Metro submits that losses of this type, even if established, are not able to be claimed pursuant to s 59(1)(c) of the Land Acquisition Act – this, rather than s 59(1)(f) of the Land Acquisition Act, being the statutory provision upon which each of the temporary and permanent business loss claims are said to be founded. Second, Sydney Metro submits that, if such claims are (contrary to its submissions on the legal point) available to be claimed, the facts said, for Mr Massasso, to establish each of these claims (different factual circumstances being engaged for consideration of each claim) do not establish the validity of each claim. 3. The legal issue concerning the temporary and permanent business loss claims is advanced in common terms. 4. The position advanced for Mr Massasso is that, although such claims had, in the past, been entertained as potentially validly able to be made pursuant to s 59(1)(f) of the Land Acquisition Act, that avenue had been closed as a consequence of the decision of the five‑member Court of Appeal Bench in United Petroleum. 5. However, Mr Hemmings submitted that the subsequent Court of Appeal determination in Alexandria Landfill provided support for the proposition that, although s 59(1)(f) was not available to found business loss claims, such claims were still able to be maintained pursuant to s 59(1)(c) as costs associated with the relocation of a business from a compulsorily acquired property. For these purposes, the statutory construct that costs included losses for this purpose was maintained. 6. As a consequence, Mr Hemmings submitted, the earlier line of authority in George D Angus Pty Ltd v Health Administration Corporation [2013] NSWLEC 212 and El Boustani v Minister for Administering Environmental Planning and Assessment Act 1979 [2014] NSWCA 33 remained valid giving rise to the validity of Mr Massasso's claim for both the temporary and permanent business losses. 7. On the other hand, Sydney Metro submitted that, although this issue had potentially been left open as a consequence of this decision of the Court of Appeal, the subsequent Court of Appeal decision in Alexandria Landfill had the effect of conclusively determining that such claims were not available. With respect to this proposition, Mr Sirtes submitted that the proposition advanced on behalf of Mr Massasso, that judicial comity required that I follow, by necessary inference, the decision of Duggan J in G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20, was not apt because her Honour's decision related to consideration of entirely different factual circumstances – one arising as said to provide a basis for a claim pursuant to s 59(1)(f) of the Land Acquisition Act. 8. It is to be observed that, in United Petroleum, the Court of Appeal deferred, for a future appropriate case, reaching a definitive conclusion on the issues underlying whether or not such business loss claims were able to be maintained. Although, as Mr Sirtes submitted, Alexandria Landfill was superficially relevant to the matters said to arise from Mr Massasso's claims, the factual circumstances in that case did not lead to the conclusion advanced on behalf of Mr Massasso in these proceedings. 9. Forensically fascinating though these issues might be, I must pass the opportunity to provide, potentially, an appropriate opportunity for the Court of Appeal to consider these matters further. I pass up this opportunity because I am satisfied that, on the facts, the evidence adduced on behalf of Mr Massasso in support of either of the business loss claims does not prove, on the balance of probabilities, that such losses have occurred (the temporary business loss claim) or would occur (the permanent business loss claim). It follows that each of these claims fails on its merits – thus removing the necessity for me to consider whether or not either claim was legally available. The business loss claims – expert evidence issues Introduction 1. As a background to this consideration, it is appropriate to set out a paragraph contained in Mr Siriani's expert report where he offered a general comment concerning the premises at 104 Great North Road. He did so at 6.1 of his report in the following terms: 6.1 The New Premises is significantly larger and is likely to provide updated amenities in comparison to the Old Premises which, in my experience, should lead to business improvements and ability to provide more services. For example, a new consulting room will allow the relocated pharmacy to easily participate in the COVID-19 (and any other) vaccination rollout and there appears to be additional space for DAA packing services. 1. I did not understand this observation to be a subject of any disagreement with Ms Carroll and it may be taken as an uncontroversial commentary concerning the nature of the premises rather than any business performance of it at this location. Such business performance analysis requiring consideration is to be derived from the forensic accounting evidence. Very significant elements of the forensic accounting evidence given by Mr Holland were dependent on, and derived from, the written expert evidence of Ms Carroll and the documents upon which she relied for the derivation of her evidence. 2. Significant elements of the foundational documents relied upon by Ms Carroll in her expert report concerning what she considered would have been the benefits of the establishment of Mr Cordaro's proposed medical centre on the operations of the Five Dock Pharmacy and what might be the impacts of the abandonment of that proposed medical centre on the Five Dock Pharmacy were subject of objection by Sydney Metro. For the purposes of understanding how these objections were addressed by me and what might be the consequences for Ms Carroll's evidence and, consequently, Mr Holland's evidence, I now turn to address these matters. Objections to Ms Carroll's written evidence 1. On 18 July, I addressed objections that were pressed on behalf of Sydney Metro to three documents upon which Ms Carroll had relied in the preparation of her export report on pharmacy performance measures – not merely with respect to the Five Dock Pharmacy but also as to what she relied upon for comparative information concerning trading patterns of other pharmacies or groups of pharmacies. Two of the documents upon which Ms Carroll had relied (documents from Rose Health and Corporate Financial Services) were rejected by me (Transcript 18 July 2023, page 40, line 40 onward). The approach to the third document is discussed in the following paragraphs. 2. However, with respect to an eight-page detailed document which had been annexed to Ms Carroll's expert report as Annexure J (a document entitled Pharmacy Alliance – January 2020 Medical Centre Pharmacies), I indicated that I was not prepared to rule on a range of objected to elements of this document until I had had an opportunity to read and consider the document overnight. I therefore stood over my ruling on that document until the following day. 3. On 19 July 2023, I indicated that I would provide the parties with draft rulings on (a) the entirety of the document and, if relevant, (b) specific rulings concerning elements of the document. I later provided those draft rulings to the parties and adjourned consideration of them to the following day. 4. On 20 July, I ruled that I did not reject the entirety of the document, but that there were a number of specific rulings which I made which imposed significant limitations on the utility of the document. 5. It is also appropriate, for present purposes, to note that there were a number of other occasions during her cross-examination by Mr Sirtes where Ms Carroll acknowledged that there was imprecision in her use of language (the use of the word "attached" to a medical centre being but one example) and other examples of where she had not done any further research herself to establish whether or not the attributes of pharmacies nominated by the Pharmacy Alliance field staff were, in fact, correctly to be regarded as comparable in any relevant sense to Five Dock Pharmacy. 6. The broad approach advocated by Sydney Metro that I should take to Ms Carroll's evidence was set out at (265) to (267) of Sydney Metro's written submissions in the following terms: The Applicant's expert evidence in support – Ms Carroll's evidence 265. The supporting evidence for each claim is based on the expert evidence of Ms Carroll and Mr Holland. This will be addressed in detail in relation to each claim but some general comments may be made. It must be borne in mind that, as noted above, the Applicant bears the onus of establishing its claim. 266. The basis of the lost profits claims is based on the bedrock of Ms Carroll's evidence in two respects: a) first, the temporary loss claim is based on loss of trade allegedly suffered by reference to what Ms Carroll described as "like pharmacies"; and b) secondly, the permanent loss claim is based on scripts lost from the hypothetical medical centre that did not open in East Street. 267. The Court should not accept Ms Carroll's evidence and, as a consequence, it should reject the quantification of the temporary and permanent business loss claims. 1. It is not appropriate, I am satisfied, to adopt such a blanket rejection of Ms Carroll's evidence in the fashion proposed immediately above. It will, however, later be necessary for me to return to more detailed consideration of Ms Carole's evidence and the weight to be placed on it. Mr Holland's reliance on Ms Carroll's evidence 1. It is in the context of these various evidentiary rejections of material relied upon by Ms Carroll that I now turn to address, in general terms, Mr Holland's evidence. 2. It is to be noted that Mr Holland was instructed to assume, as set out in 119(b) of his expert report that: (b) there has been and will continue to be a significant loss incurred as a result of the relocation. 1. It is also to be noted that Mr Holland's evidence is, subsequently, predicated on that assumption – noting that he was not instructed to determine whether or not there had been a loss of business, incurred for Five Dock Pharmacy after it had relocated to 104 Great North Road. 2. It is also appropriate to set out various elements of Mr Holland's expert evidence which noted, or relied upon, Ms Carroll's written evidence or the joint expert report of Ms Carroll and Mr Siriani. This referencing is relevant to the extent which it is later necessary to consider Mr Holland's evidence where his conclusions are founded on material provided by Ms Carroll and where Ms Carroll's material was, in itself, founded on documents that were otherwise rejected as a consequence of objections raised for Sydney Metro as to its admissibility. 3. In 123 to 125, Mr Holland's expert report sets out matters concerning his "Loss calculation methodology". Of these paragraphs, 124 references Ms Carroll's expert report. The paragraph in Mr Holland's report is in the following terms: 124. I have been provided with a copy of an expert report dated 9 September 2022 prepared by Ms Natalie Carroll of the Platform [Pharmacy] Alliance Group (Ms Carroll) (the Carroll Report). Ms Carroll notes that she does "not believe that 104 GRN benefited from the relocation away from major foot traffic as crossing the road is a major barrier that customers must now navigate." 1. It is to be observed that this comment (whether accepted or not being irrelevant) would not appear to be founded on anything in the rejected material. 2. In the joint forensic accounting report, Mr Gilberti notes, at 90, that Mr Holland has relied on: 1. the January 2020 Pharmacy Alliance report; 2. the 10 February 2020 Rose Health letter; and 3. the 13 February 2020 Corporate Financial Services letter. 1. Mr Gilberti also notes, in 91 of the joint report, that Mr Holland has also referred to and relied on Ms Carroll's report: 91. In addition to the above 3 documents, Mr Holland's Report also refers to and relies on the opinion of Ms Natalie Carroll (contained in her report dated 9 September 2022), to inform his opinion that the Five Dock Pharmacy would have generated additional sales assuming a hypothetical medical centre would have opened at 2 East Street, Five Dock on 1 February 2021. The source of Ms Natalie Carroll's data was not made available to Mr Frank Sirianni (as stated in their joint report dated 22 December 2022) and therefore Ms Natalie Carroll's opinions are the subject of dispute between the parties in the Proceedings. 1. In the joint report, Mr Holland notes, at 101(a), that he has relied on the Rose Health report, noting that: (a) the Rose health report specifically refers to the additional sales per annum to the pharmacy. The loss of revenue stated by Rose Health therefore incorporates any capture rate. 1. Mr Holland also noted, in the joint report - under the heading Other retail revenue, that: 123. Mr Holland states that the retail aspect of the medical centre loss was based upon the conclusions reached by Ms Carroll and as set out in the Pharmacy Alliance Report as summarised in Table 15 of Mr Holland's Report. Mr Holland refers to paragraphs 195 to 198 of Mr Holland's Report. Mr Holland considers that the proportion of retail sales (which include scheduled non-prescription medicines) of between 18% and 25% of total revenue adopted in his calculation to be reasonable. 1. With respect to the above matters, several elements of cross-examination by Mr Sirtes of Mr Holland are appropriate to be noted. The first is in the following terms (Transcript 24 July 2023, page 276, lines 20 to 32): SIRTES: Can I then just ask a follow-on question in relation to that, in relation to 119(b) where you've made that assumption you then talk, there's then a heading "Loss calculation methodology" you'll see further down the page on page 2613 which culminates in a conclusion at 125 if I may take you to that, that says, just pausing there, as a result of the above factors there has been a permanent diminution of the number of customers that patronise the business, was that conclusion based in terms of the reference to the above factors to the assumption in 119 amongst other things 119(b)? WITNESS HOLLAND: A combination of 119(b) and the factors in 122 through 124. 1. As can be seen from this transcript extract, Mr Holland acknowledges that, for the purposes of the assumptions he had adopted, he had included the matters set out earlier contained in 123 of the joint expert report being Ms Carroll's conclusions and matters she has derived from the Pharmacy Alliance report. 2. Mr Sirtes also questioned Mr Holland about elements in his individual expert report. This questioning was in the following terms (Transcript 24 July 2023, page 292, line 36 to page 293, line 44): SIRTES: Can I just then return to your report, not the joint report? Can I take you to page 2616? You'll see there that you talk about the you say I summarise the above data in the following table and include the script numbers and this is growth in script numbers and you've got three sources of information there, one is NostraData and there are two different sources, there's all stores and there's street/shop strip. WITNESS HOLLAND: Yes. SIRTES: And there's Pharmacy Guild and there's Ms Carroll. WITNESS HOLLAND: Yes. SIRTES: Am I correct in understanding that what you've done is you have ignored the NostraData all stores information and you have also not considered if I'm correct the Pharmacy Guild, is that right? WITNESS HOLLAND: That's correct, yes. SIRTES: So you have based your conclusions in relation to growth entirely on NostraData, street/shop strip and Ms Carroll? WITNESS HOLLAND: That's correct. SIRTES: You haven't independently undertaken any assessment of whatever assumptions lay behind by the Ms Carroll's cohort or the NostraData cohort more than what's described there, is that correct? WITNESS HOLLAND: That's correct. SIRTES: And so for example even though you have taken the view that NostraData all stores have limited relevance because they include all pharmacies irrespective of type or location. In relation to the NostraData results and this is in paragraph 136(b) you've said, "The NostraData street/shop strip result and the growth side of the Carroll report are directly relevant." Now, just where you say directly relevant, in relation to NostraData that was streets or shop strips more than five kilometres from the CBD is that correct? WITNESS HOLLAND: That's correct. SIRTES: Do you know whether that meant central business district of major cities or regional town centres, do you know what that actually was referring to? WITNESS HOLLAND: No but I'd assume it is what you've just said. SIRTES: Well, I've given you two options? WITNESS HOLLAND: I mean here today I haven't, I haven't really considered that before. SIRTES: In terms of a whole array of other potential factors that may make that cohort directly relevant; whether or not it is a pharmacy in a regional town or a capital city, or whether it's got a lot of competition or no competition and close to or away from a medical centre, they were all factors that are beyond your knowledge. WITNESS HOLLAND: That's correct. 1. The overall conclusion that I am satisfied it is necessary for me to draw as to how I should approach Mr Holland's various business loss conclusions is that they are to be treated with caution as a consequence of me being unable to discern to what extent to which they might have been contaminated, unwittingly, by Mr Holland's relying on material provided to him when that material has been rejected and was not able to be relied upon for evidentiary purposes. The temporary business loss claim Introduction 1. Mr Massasso makes a claim for business losses under s 59(1)(c) said to arise from the relocation of his business to 104 Great North Road. The loss is one which is claimed for the balance of the 2019 lease and until September 2044. For the purpose of differentiating it from Mr Massasso's second business loss claim, it is to be described as the temporary business loss claim. 2. The loss is said to be the loss incurred due to the acquisition, when the business was moved from 157 Great North Road to the new premises at 104 Great North Road. It is advanced as not due to Sydney Metro's works and the carrying out the public purpose, but by the acquisition. The expert evidence Introduction – the pharmacy business evidence 1. Mr Sirianni had accepted that often the locational characteristics of a pharmacy including proximity to supermarkets, medical centres and parking, are important to its ability to generate income. He also accepted that, all other things being equal, one would choose a site on the same side of the road as a shopping centre, rather than the opposite side and agreed that, if there were changes in locational characteristics from one site to another, he would anticipate a reduction in income, though this would be hard to quantify. 2. Mr Siriani observed, by implication, in his expert report (at 5.2) that he did not have sufficient information available to him to understand properly the financial performance of Five Dock Pharmacy. 3. Mr Siriani also set out, in his joint report with Ms Carroll at page 8, three factors which he postulated might provide an understanding of what impacts, if any, had been caused to Five Dock Pharmacy as a consequence of the relocation. However, it is to be noted that, in Appendix 1 to the joint report, a table is set out for the period from the 2015/16 financial year showing script numbers (and their values) and a graph of the moving average trends derived from those numbers – these demonstrating fluctuating numbers and revenue (in a declining trend) over these periods. 4. It is also to be noted that, in his individual report, at pages 8 and 9, Mr Siriani set out what he considers to be significant specific deficiencies in information that should have been provided by Ms Carroll to permit him to draw conclusions concerning whether or not the relocation of Five Dock Pharmacy had, in reality, impacted adversely on the pharmacy's performance. 5. It is also to be noted that, in Part 9 of his individual report, Mr Siriani sets out, at 9.1.1 to 9.1.3, further specific criticisms about the adequacy of the information provided by Ms Carroll and the basis upon which she has founded her performance conclusions for the Five Dock Pharmacy. 6. To the extent that Ms Carroll's evidence in her export report remained standing, it was founded on what she proposed were appropriate comparable pharmacies and the rate at which they performed during the sample period of July to December 2021 when compared to the performance of the Five Dock Pharmacy over the same period. These "comparable pharmacies" had been identified by her as having been selected from suggestions that had been provided to her from responses she had received from various of the field staff who were employed by the Pharmacy Alliance to service the needs of pharmacies in their identified geographic area of responsibility. 7. During the course of her cross-examination by Mr Sirtes, it became apparent that Ms Carroll had undertaken no effective independent personal research as to whether the attributes of the eight pharmacies which she had selected to utilise in her expert report sufficiently coincided with the attributes of the Five Dock Pharmacy to be able to be regarded as genuinely comparable. 8. It is not necessary to explore the criticism advanced of this aspect of her evidence as set out at some length in the closing written submissions for Sydney Metro. It is sufficient, under the circumstances, merely to set out two elements of the transcript which were cited (only in part) for Sydney Metro as evidencing what Sydney Metro proposed was the overall unreliability of drawing any relevant conclusions from Ms Carroll's eight pharmacy example evidence. Although it is somewhat lengthy, the first transcript extract I consider it appropriate to be reproduced from Mr Sirtes cross-examination of Ms Carroll is in the following terms being somewhat longer than the element footnoted in Sydney Metro's written submissions (Transcript 21 July 2023, page 252, line 221 to page 253, line 23): SIRTES: What was the criteria in which you chose each of those pharmacies noting at that time you did not have any financial information about them? WITNESS CARROLL: No, I did not and I just I simply randomly chose them off comments effectively from the team members. SIRTES: When you say you "randomly chose them off comments" for example if I take you to "Wynnum Day & Night" do I take it the only information you had in selecting that pharmacy was what you were told in the email that I think I took you to-- …… SIRTES: I see, so Wynnum is what you did - just so as his Honour understands it - is you picked places that had a doctor nearby or in a vicinity? WITNESS CARROLL: Yeah, effectively I just, you know, from the information I'd been given the task for what we were going to do was quite consuming so I wanted a very narrow list. SIRTES: In terms of the concept of "close" I take it that so far as you were concerned 500 metres was still considered to be close in terms of for example the location of a grocery story like Coles? WITNESS CARROLL: Yes. SIRTES: Now, so you then in a very short space of time, and I don't say that critically, but within a very short space of time, within say 18 hours you had sent out the email, received some suggestions, picked ones based upon the information that his Honour finds on page 25, that is what's been set out underneath the following sites, and you then ask Erandu and Rahul [two staff members of Pharmacy Alliance] to then provide you with the financial information? WITNESS CARROLL: Correct, yes. SIRTES: And after you had made that selection based upon the information you say you received did you undertake any further investigation in relation to those sites such as population of locations, number of doctors in medical facilities, any other factors that may influence the performance of the pharmacy such as how many other pharmacies were within proximity? WITNESS CARROLL: No, so I literally wanted to judge it or use it as a benchmark of how pharmacies were performing against Five Dock. 1. Mr Sirtes also questioned Ms Carroll as to how she had undertaken her analysis in order to draw conclusions supportive of Mr Massasso's temporary business loss claim. It is, for present purposes, appropriate to include one extract from his cross-examination of Ms Carroll which, on my understanding of it and the submissions subsequently made concerning the reliability of Ms Carroll 's evidence, exemplifies the lack of rigour in her analysis upon which she founds her support for Mr Massasso's proposition that the performance of Five Dock Pharmacy has been less, in the immediate aftermath of its relocation, less than that of what she proposes should be regarded as a comparable sample cohort of pharmacies (Transcript 21 July 2023, page 257, lines 25 to page 259, line 32): SIRTES: Now, in terms of figures and averages which is what you have done in relation to these various other pharmacies, in New South Wales and Queensland you have done nothing more, and I don't say that critically, but what you have done is you've just taken the figures added them up divided them by six, is that correct? WITNESS CARROLL: Effectively an average of the half so what would the percentage be over the half, yes. SIRTES: Now in relation to script percentage increases and decreases would you agree with me that what these figures reveal if you track along each of the individual line items is a very large discrepancy on a month to month basis between performance in a number of instances of which I'll - well first of all I'll put that general proposition to you, do you accept that? WITNESS CARROLL: Yes. SIRTES: And so for example you have the Kirrawee Pharmacy in June of 2020 recording a what I understand would be a 17% increase in the script sales in that month but when you come to for example March of 2021 it's down 8.5%. WITNESS CARROLL: Yes. SIRTES: Similarly, if one looks at the Five Dock Pharmacy one sees that there is in relation to that particular pharmacy a very considerable discrepancy month to month as to how it's performing. WITNESS CARROLL: Yes. SIRTES: So, in June 2020 it's up 1.2% but the next month in July 2020 suddenly it's down 6.5% and then it's no change in August and then the next month it's up by almost 6%? WITNESS CARROLL: Correct, yes. SIRTES: So if one is tracking that along a line it's going to be quite a squiggly line without any discernible trend, is that correct? WITNESS CARROLL: Yes, that's correct. SIRTES: Would you also accept that in terms of the performance of these pharmacies in terms of if you're not looking at averages but you're just looking at the actual performance of each pharmacy, what you've corrected this morning is that the average six month performance of the Five Dock Pharmacy in terms of script percentage increase or decrease was that between July 21 and December 21 it increased by .89% which you rounded up to .9. WITNESS CARROLL: Mm-hmm. SIRTES: That's a yes? WITNESS CARROLL: Yes, sorry. SIRTES: If you look at for example then Bayside Pharmacy Queensland, I've done the math, no doubt someone will tell me if I'm wrong, there's a decent margin of error for me 0.3% for that over the six month period. WITNESS CARROLL: Yes. SIRTES: Similarly Wynnum Day & Night Pharmacy 1.34% increase. I'm going to ask you to accept as well-- WITNESS CARROLL: Yes. SIRTES: Good Life Pharmacy in South Windsor over that period was 0.5% and Moorebank Day & Night Pharmacy was roughly 1.05% WITNESS CARROLL: Yes. SIRTES: So five of those eight pharmacies excluding Five Dock have had a performance which has been either less than or just marginally better than the Five Dock Pharmacy over that same period of time, would you agree with that? WITNESS CARROLL: On script trade, yes. SIRTES: So where we have the figures that you provided today if we're talking about an increase of I think what your figure was is it 4%? WITNESS CARROLL: 4.8 yes. SIRTES: 4.8% you'd accept that what's occurred is that despite the fact that five of the eight pharmacies have in fact performed substantially less than that, a few other pharmacies have pulled up that average not insignificantly. WITNESS CARROLL: Yes. SIRTES: So one of the pharmacies that would have done that would have been the Kirrawee Pharmacy because for example if you have a look across that line it's gone up in the months of July through to December 12% and I'm rounding up of course, 12%, 8%, 17%, 9%, 24% and then 12.5%. WITNESS CARROLL: Yes. SIRTES: It was in terms of the pharmacies that you looked at a quite a considerable outlier from the performance of a number of the other pharmacies. WITNESS CARROLL: Well one of them is up 10%, one of them is up 7% so it's not hugely different to me to those other ones. SIRTES: Well, when you say not hugely different, I think you would accept that the average of Kirrawee when you look across and compare it to the performance of the five pharmacies that I've referred you to it's six month average is considerably greater than Moorebank, Good Life, Wynnum, Bayside and Five Dock. WITNESS CARROLL: Yes. The forensic accounting evidence Introduction 1. Expert forensic accounting evidence on this topic was given by Mr Holland and Mr Gilberti. It is appropriate to set out a summary of the evidence of these experts, first setting out a short summary of relevant matters where they were in agreement. It is then appropriate to summarise the areas where they do not agree concerning the temporary business loss claim. 2. The temporary business loss claim was discussed in their joint expert report tendered as part of Exhibit C. The total and pre-tax amount claimed under this head of compensation was $327,649. This amount was subject to calculations that were adjusted (to $305,219) and later tendered as part of Exhibit H (Exhibit H, Table 2 of the Amended Joint Forensic Accounting Report, page 4). 3. The forensic accounting experts agree that a broad approach for estimating loss which is the difference between the estimated predicted net profits absent the cause of loss and the estimated net profits that Five Dock Pharmacy currently generates and will continue to generate. Factors contributing to this estimate are: a stream of net profits following this cause of loss, assessment of the risk associated with generating this stream of profits and an appropriate after tax discount rate (agreed to be 20%), reflecting those risks to convert the stream into a singular amount. If an award of compensation is subject to income tax or capital gains tax in the year of receipt, a tax gross-up should be calculated. Points of agreement 1. Mr Holland and Mr Giliberti agreed that a broad approach for estimating loss of profit was to determine the difference between the estimate of net profits that Five Dock Pharmacy would have generated absent the cause (or causes) of that loss and the estimate of net profits that Five Dock Pharmacy has and will now generate as a result of the cause (or causes) of that loss (Exhibit C, Evidence Book, page 2716). 2. Mr Holland and Mr Giliberti also agreed that if a loss was established, it could be quantified as a compensable sum by discounting the future cash flows at a rate of 20% (Exhibit C, Evidence Book, page 2716). 3. Mr Holland and Mr Giliberti further agreed that if some or all of an award of compensation to the Applicant would be subject to income tax or capital gains tax in the year of receipt, it would be appropriate to calculate a tax gross-up in respect of the compensation amount (Exhibit C, Evidence Book, pages 2716 to 2717). Points of disagreement 1. Despite agreeing on the above, the following conclusion was drawn by Mr Giliberti at paragraph 22 of the joint expert report in relation to the temporary business loss claim (Exhibit C, Evidence Book, page 2723): 22. The conclusion I draw from the rationale and my analysis above is that there is no credible evidence of any loss in sales of Five Dock Pharmacy that is caused by a relocation for the period up to 30 November 2023 and more specifically, the lost script numbers referred to in paragraph 10.a above has been determined by reference to an inconclusive 7-month 'before-and-after analysis'. 1. In reaching this conclusion, Mr Giliberti was of the opinion that the Five Dock Pharmacy had been experiencing a decline in script volumes since 2015 (Exhibit C, Evidence Book, page 2722); that the pattern of month-to-month variation of script data after the relocation was not materially different to the pattern before the relocation occurred (Exhibit C, Evidence Book, page 2723) and that the discount rate should be applied back to the date of relocation of the pharmacy in May 2021. 2. Mr Giliberti further formed the view that the performance of the pharmacy was not consistent with the pharmacy industry as a whole over the 12-month period from May 2020 to April 2021 (Exhibit C, Evidence Book, pages 2721 to 2722). 3. During the course of his examination-in-chief by Mr Sirtes, Mr Giliberti summarised his position in the following terms (Transcript 24 July 2023, page 288, lines 25 to 44): SIRTES: Is this the case? If you are looking at past loss and you're looking at past actual loss, you don't apply a discount? WITNESS GILIBERTI: Well, firstly, I don't see evidence of a loss. However, if I were to accept Ms Carrol's assumptions, she does an analysis which looks at a cohort of comparative pharmacies and says, it would increase – the script volumes increase by roughly 4 to 5%. If it is found that Five Dock Pharmacy performed, prior to relocation, in the same manner as what these pharmacies, cohort of pharmacies, consider both Ms Carroll, if they performed in a similar fashion, then we might be able to assume that Five Dock Pharmacy would have performed in a similar fashion. However, that is still a forecast. It's not certain. There's no guarantee that Five Dock Pharmacy would have performed exactly the same as a cohort of four to eight pharmacies. Within those four to eight pharmacies there is a range so it could be the bottom end of that range. It could be at the top end of that range or it could be somewhere in between that range. It's not certain so that's why you're standing at the date of relocation and you're projecting forward what might have happened to Five Dock Pharmacy, which is why I assess the loss – if there was a loss, I would assess it at the date of relocation. 1. Mr Holland expressed a different view to that of Mr Giliberti. Mr Holland considered that the Five Dock Pharmacy did incur a loss arising from the relocation. That loss was considered by Mr Holland to be the difference between the growth in prescription numbers that should have been achieved and the growth that was achieved. Mr Holland disagreed with Mr Giliberti's characterisation of the performance of the pharmacy, particularly with respect to its relevance (Exhibit C, Evidence Book, pages 2723 to 2724). 2. The evidence of growth in script numbers considered by Mr Holland included a NostraData report dated 30 May 2022 (Exhibit C, Evidence Book, page 1476); a letter from Mr Scott Harris, Pharmacy Guild of Australia, dated 3 June 2022 (Exhibit C, Evidence Book, page 1482) and evidence from Ms Carroll with respect to eight pharmaceutical sites (Exhibit C, Carroll Statement of Evidence, page 1862) (Exhibit 4, Subpoena to Produce – Natalie Carroll). 3. Mr Holland conceded that the results from the Pharmacy Guild report and the NostraData "all stores" results had limited relevance to the Five Dock Pharmacy given their lack of comparability (Exhibit C, Holland Statement of Evidence, page 2616). However, Mr Holland was of the opinion that both the NostraData "street/shop strip" results and the Carroll report were comparable and directly relevant to the Five Dock Pharmacy (Exhibit C, Holland Statement of Evidence, page 2616). 4. Mr Holland expressed the view that the evident reduction between 2016 (73,757 scripts) and 2021 (71,342 scripts), which amounted to approximately a 3.3% loss over 5 years (on a calendar year basis), was not a significant reduction (Exhibit C, pages 2723 to 2724). It was also not clear to Mr Holland why the historical trend of script volumes had any bearing on whether a loss had been suffered due to the relocation (Exhibit C, Evidence Book, page 2724). 5. Under cross-examination by Mr Sirtes, Mr Holland reiterated his findings in the following terms (Transcript 24 July 2023, pages 289, line 44 to 290, line 5): SIRTES: Are you saying to his Honour that the historical trend of a business's operation is irrelevant to determining its future performance? WITNESS HOLLAND: No. I'll withdraw the answer I said previously to the extent I implied that. Of course it's not irrelevant. It's indicative only. All sorts of things could have happened to the business afterwards that make it – that would have made it different to how it historically performed and I should say, incidentally, that the decline that Mr Giliberti talks about, is not a marked decline. It's a few percent either way. The number of prescriptions hovers around 70-something thousand, in the low 70,000s in the previous five years. It's not a decline in massive terms so I feel that that point is not really germane to what we're trying to calculate. 1. The position taken by Mr Giliberti was that the calculations derived from Appendix F of Mr Holland's report that purported to quantify a temporary loss instead calculated a loss of profits that was based over the entire period in which Mr Massasso held a leasehold interest (potentially up to September 2044 subject to the exercising of the various options to renew). In Mr Giliberti's opinion, Mr Holland's calculations were more reflective of a permanent business loss rather than a temporary one (Exhibit C, Evidence Book, page 2725). 2. Although Mr Holland accepted that his description of the loss as temporary was not fully descriptive of the nature of the loss, Mr Holland expressed the opinion that such a characterisation had no material impact on his calculation of loss (Exhibit C, Evidence Book, page 2726). 3. Mr Holland's calculation of temporary business loss amounted to $327,649 as a result of the relocation from the old premises to the new premises. The submissions for Mr Massasso 1. The written closing submissions for Mr Massasso summarised Mr Gilberti's evidence and Mr Holland's responses to it. This was set out at (319) to (324) of the closing written submissions in the following terms: 319. Mr Holland concludes that the NostraData "all stores" result and the Pharmacy Guild Report result have "limited relevance" to the Five Dock pharmacy given a lack of comparability. However, he concludes that the NostraData "street/shop strip" results and the Carroll report growth are directly relevant. 320. On the basis of the evidence, he concludes that Five Dock Pharmacy has incurred a loss as a result of the relocation of the difference between the growth in prescription numbers that should have been achieved and the growth in fact achieved. 321. That loss is then used to estimate a loss in retail sales, on the assumption that there is a "relationship between prescription numbers and retail sales". 322. In contrast, Mr Giliberti's considers that "there is no credible evidence of any loss in sales of Five Dock Pharmacy that is caused by a relocation for the period up to 30 November 2022". Under cross-examination, he stated that there was "no guarantee" that the pharmacy would perform in a similar fashion to those identified by Ms Carroll, and could be "the bottom end of the range". 323. Mr Holland summarises the basis of Mr Giliberti's opinion as being that: (a) Since 2015, the pharmacy has experienced "a decline in script volumes"; (b) "The pattern of month-to-month variation of script data after relocation was not materially different to the pattern before relocation"; (c) The pharmacy "did not perform in line with the pharmacy industry as a whole over [the] 12-month period from May 2020 to April 2021". 324. On these points, Mr Holland notes: (a) The "decline" identified "is not a significant reduction" and equates to 3.3% over 5 years or less than 1% per annum, and, moreover, it is "not clear" why historical trends have "any bearing on whether a loss has been suffered due to relocation". Under cross-examination, Mr Holland accepted that past performance was "indicative", but given the minor nature of the decline considered it not to be "germane". (b) The analysis undertaken by My Giliberti to identify a pattern of month-to-month variation is not clear; nor is its relevance to whether a loss has been suffered; (c) The comparative measure relied upon by Mr Giliberti, an IBISWorld report, relies on 5,875 "approved PBS community pharmacies', and it is not clear how comparable those pharmacies are to Five Dock Pharmacy. Moreover, the period of comparison is inconsistent with the period after the relocation. 1. Mr Hemmings' closing oral submissions addressed this aspect of Mr Massasso's claims in the following succinct fashion (Transcript 27 July 2023, page 444, line 23 to page 445, line 22): Dealing first then with what's called the temporary, so this is something caused by the relocation, to the extent the - sorry, the location factors of relocation as opposed to the medical centre. 312, the experts I essence agree with a task that they're trying to undertake and they also agree that if we are capitalising whether it's future income streams or all income streams they agree on the 20%. It seems to us that they also agree that there should be a tax gross up that we will come back to in just a moment. In order to consider the reasonableness of the loss suffered to now use the language that occurs for the loss rather than the cost the reasonableness of the loss suffered, we turn to the cross-examination of Mr Sirianni. He accepted the locational characteristics of a pharmacy more often than not are important to its ability to generate income and you obviously would accept that. That those locational characteristics include proximity to a supermarket, for example, proximity to a medical centre, for example, being positioned on the ant line or attracting the passing trade and if you had the choice to be on the same side of the road. We note that we have moved to the other side of the road, we've moved further away from the supermarket, we've moved off the direct ant line of those that are using Fred Kelly Place. The Court would be satisfied that the location is less desirable and indeed that seem to be the, if one's looking at the approach of the rental evidence, that also seems to be accepted, everyone makes an adjustment for location, it's just a matter of how much that adjustment would be. There being that change in the location the characteristics which one would reasonably expect to reflect itself in the income and Mr Sirianni agreed with that. It was then about how do you calculate it and he tells us well it's difficult to quantify but the mere fact that something is difficult doesn't mean that the quantification task is to be avoided and it's what Mr Holland has done. He has attempted to undertake that difficult task to determine the reduction in income and consequently profit as a consequence of the relocation. We set out the process that's been undertaken and doing the best we can with the limited time period available to us and the information available to us Mr Holland has attempted to determine by reference to comparable stores over a comparable period where he relies upon others we accept for the identification of that comparability whether the turnover trade of the subject site and comparables has been the same or different. It's different, it's quantifiably different and it being quantifiably different, that's the 4%, that could be then applied to the turnover and subsequently the profit of the pharmacy to identify the quantum of that decline in income which can be determined by reference to the relocation across the road. We deal with some of the matters already addressed in cross-examination but we might deal with some of them in reply. Things like at 324 a suggestion that it was a business already in decline, it's a bit difficult to say that a business which is over five years fluctuation around about only 3.3% is something which can be described as in decline especially when as Mr Holland said look at the numbers both in terms of script presentation and turnover and it is a generally consistent sale and turnover levels over those years. 1. In his oral reply submissions, Mr Hemmings returned to address the business loss claims , but only doing so in the context of the jurisdictional dispute (one, as earlier explained, I do not need to address). 2. In concluding the written submissions on the temporary business loss claim, Mr Hemmings submitted that the issues for determination should be answered as follows (Applicant's Closing Submissions, page 80, paragraph 331): 1. The business loss identified is attributable to the relocation and thus a claim within the ambit of s 59(1)(c); and 2. The total loss was $327,649 which should be subject to a tax gross-up. Sydney Metro's submissions on temporary business loss 1. Sydney Metro's primary submission was that any loss is not recoverable under the Land Acquisition Act and further, the evidence did not substantiate any loss and, even if it did, any such loss is not demonstrated to have arisen due relocation. 2. Sydney Metro also submitted that, despite the claim being described as temporary, there was nothing "temporary" about the loss claimed as it is claimed over the entire life of the Shop 1 lease plus options, that is until September 2044. 3. Mr Massasso's claim appears to be based on the propositions: 1. Between 1 June 2021 and 31 December 2021, as a result of relocating, Five Dock Pharmacy suffered a loss of revenue compared to what Shop 1 would have been expected to earn. 2. That relocation is the sole reason for this loss. 3. Five Dock Pharmacy would have continued to operate at Shop 1, but will now operate at the New Shop, until September 2044. 4. This loss of revenue is assumed to continue until then. 1. Sydney Metro's position is that: 1. Assuming these propositions to be correct, the amount claimed is not compensable as a matter of law. 2. Even if it were, the evidence does not support the assumptions which need to be made to demonstrate that such a loss is specifically attributable to relocation 3. If the court finds otherwise, some adjustments may need to be made to figures quantifying such a loss. 1. As earlier noted, it is not necessary to address and determine whether there is a proper legal basis for this claim. 2. The period between June 2021 to December 2021 will be referred to as the sample period. 3. Mr Massasso's accounting expert, Mr Holland, relied on evidence from Ms Carroll, Mr Massasso's pharmacy business expert and the data provided by NostraData regarding the performance of 4500+ pharmacies nationwide. Sydney Metro's pharmacy business expert was Mr Sirianni. 4. With respect to the evidentiary basis for the temporary business loss claim, Mr Sirtes submitted (Transcript 27 July 2023, page 454, lines 5 to 12): The temporary business loss claim suffers a slightly different problem which we say it's a claim which is constructed on a range of assumptions that we contend and submit to your Honour, your Honour will simply not be satisfied that there is a proper evidentiary basis to be satisfied that there is a justification for finding that there is a cohort of pharmacies out there that are sufficiently similar to the Five Dock Pharmacy that over a very abbreviated period of time that your Honour would be satisfied would suffer a loss and I'll come to it but really the essence of that claim is this. Proposition a): did Five Dock Pharmacy underperform during the sample period? 1. Looking at the finances of Five Dock Pharmacy, there was no basis to infer that its performance over this period was outside the normal range. 2. The values for prescription count and total value set out in the joint pharmacy business expert report indicated the Five Dock Pharmacy had shown a wide variation in growth trends. 3. The conclusion to be drawn from the report, Mr Sirianni proposed, was that, based on prescription volume, the new site was performing as well as the previous one. 4. Sydney Metro's accounting expert Mr Gilberti opined that, over the period between June 2015 and November 2022, there had been a declining trend in volume of scripts filled per month, a static (or no) trend in script revenue and variation from month to month in both volume and revenue. He suggested that the sample period is too small to reach the conclusion that Five Dock Pharmacy has suffered a loss of profit due to relocating. 5. Mr Holland, operating under the instructed assumption that "…there has been and will continue to be a significant loss incurred as a result of the relocation" derived no loss from the historical trading information for Five Dock Pharmacy. 1. Sydney Metro's proposed that the opinion that any loss suffered during the sample period would be sustained until 2044 was not supported by anything other than this assumption. 2. Mr Holland's analysis was based on four datasets: 1. Data from NostraData on the performance of approximately 4,500 pharmacies. 2. Data from NostraData on a subset of 300+ pharmacies designated as shopping strip pharmacies, over 5km from the CBD. 3. Data from the Pharmacy Guild that represents 'script volumes and total cost for items dispensed…through pharmaceuticals benefits scheme. 4. Ms Carroll's data sourced from 'eight like pharmacies'. 1. Mr Holland disregarded sets a) and c) but considered sets b) and d) to assess pharmacies similar to Five Dock Pharmacy, however he derived this conclusion based on solely their descriptions not from personal knowledge. 2. The exercise which Mr Holland performed for these two datasets was to examine the average growth in script numbers between Jun-Dec 2021 and Jun-Dec 2021 across the nominated cohort and compare it with that of Five Dock Pharmacy - inferring that Five Dock Pharmacy would have achieved the same amount of growth so that any difference represented a loss, assuming that such a loss resulted directly from relocation. 3. The growth for cohorts b) and d) were 4.40% and 4.21% respectively, compared with Five Dock Pharmacy's 0.25%, which he concluded was due to Five Dock Pharmacy's relocation. 4. The assumption that due to the "direct relevance" of cohorts b) and d), Five Dock Pharmacy should have seen similar growth was based merely on the attributes shared between those cohorts and Five Dock Pharmacy, which according to Sydney Metro occurs at only a very general level. 5. Sydney Metro submitted that the analysis did not demonstrate that similarity in attributes equates to similarity in performance, and that so to conclude, it would have to be demonstrated: 1. There was a historical link between the performance of the relevant cohorts and Five Dock Pharmacy. 2. In the sample period, the performance of Five Dock Pharmacy was anomalous and not matched by the performance of the relevant cohorts so that one can assumed that some factor has affected the isolated performance of Five Dock Pharmacy. 1. Such analysis would also have to allow for statistical variation, noting that an underperformance of one pharmacy compared to the average did not reflect an anomaly, and that by its nature an average would contain samples from above and below it. Mr Holland conceded this in the joint report with Mr Gilberti and criticised Mr Gilberti for giving a counterexample underpinned by the same problems of comparability. 2. Sydney Metro suggested that neither Ms Carroll nor Mr Holland established true comparability of performance, or the predictive value of using these cohorts to assess Five Dock Pharmacy. Ms Carroll had admitted that she did not analyse the relationship between the performance of Five Dock Pharmacy and the '8 like pharmacies' prior to 2021, noting it was possible that Five Dock Pharmacy had never kept pace with the group. 3. The only basis for assuming comparability between Five Dock Pharmacy and the 300+ NostraData 'like cohort' pharmacies was their locations as shopping strip/street pharmacies, over 5km from the CBD (noting, however, which CBD is not set out). 4. Mr Holland was unaware of other factors which might produce relevance between groups. There was no evidence that these attributes alone demonstrated comparability of financial performance. 5. There had been no demonstration of any sound basis for predicting Five Dock Pharmacy's performance based on that of the "eight like pharmacies". 6. Sydney Metro submitted that Mr Holland's evidence ought be rejected on the basis that he disregarded the reality that Five Dock Pharmacy had been on a downward trajectory for half a decade, he instead favouring the "rubbery statistics" of unknown comparative pharmacies, none of which were demonstrated to have suffered the same decline over the past half decade. 7. Sydney Metro proposed I should find that: 1. Mr Massasso had not demonstrated the relevance of the performance of the cohorts relied upon to predict the performance of Five Dock Pharmacy. 2. He had not demonstrated that performance of Five Dock Pharmacy in the sample period was outside the expected range, so as to demonstrate any abnormal loss. Proposition b): Is the relocation the only possible explanation for any loss of revenue? 1. Assuming I was to find that there was a loss of revenue, a further finding must be made that this was solely due to the relocation and the interference of any other factor would undermine the amount of loss claimed. 2. Historically, Five Dock Pharmacy has a low gross profit margin averaging 27.8%. However, Mr Sirianni would expect a margin of 34-38% based on its location. Ms Carroll suggested that the margin was low due to competition in the area. Sydney Metro suggested that if this was the case it was "interesting" that she did not consider those competing pharmacies when choosing her "like" pharmacies. 3. Five Dock Pharmacy has relocated a very short distance from its original location and the new location is more visually prominent and has better exposure to the north. The new shop can be easily seen from Shop 1 and there is a pedestrian crossing almost immediately outside the new shop. The change in location was both advertised online and communicated to many of Mr Massasso's existing customers prior to the move. 4. The new shop is close to a carpark and the Nuvo Medical Centre as well as a bus stop which people travelling to or from Coles are likely to use, thus there is no significant disadvantage due to the move. 5. Sydney Metro proposed, even if underperformance was accepted to have been demonstrated, Mr Massasso had not established how much, if any, of this was due to the relocation from one side of the road to the other. 6. Regarding the current future of Five Dock Town Centre, the Metro is also likely to result in change, with the Massassos themselves being aware of this and having inquired as to whether former business owners might have "first dibs" on premises in the new Metro station building. 7. Nuvo Medical Centre opened in 2021 on the same side of the road as Five Dock Pharmacy. Any future potential benefits of proximity to the centre are dismissed in Mr Massasso's analysis. 8. No consideration is given any future benefit resulting from the ultimate opening and operation of the new Metro system, with its entrance almost directly opposite Five Dock Pharmacy. 9. Sydney Metro submitted that I should find that the duration of any loss due to relocation cannot be demonstrated by Mr Massasso. If anything, the relocation placed Five Dock Pharmacy in the best position to attract business from the medical centre. There is no basis to assume ongoing loss through to September 2044. 10. The analysis earlier set out was based solely on loss of prescription volume and revenue and did not consider retail sales. 11. Mr Holland conceded he had not been provided with any monthly retail figures. Mr Massasso was able to provide his expert with sales data, including retail revenue figures but had not done, although still claiming to have lost revenue. The omission should lead me to infer that its inclusion would not have helped Mr Massasso's case. 12. Mr Holland attempted to estimate lost retail sales according to past performance based on the assumption that a profit margin of 27.2% would apply to calculate future lost revenues. Sydney Metro submitted that I could not safely infer any decline in retail sales from any alleged decline in script revenue. Calculating the loss – the iscount rate 1. It is agreed between experts that, that if a loss is established, it could be quantified as a compensable sum by discounting the future cash flows at a rate of 20%. 2. What is disputed is what the discounted period should be. Mr Gilberti applies the discounted rate back to the date of relocation, while Mr Holland considers that losses up to 30 June 2023 to be certain and therefore does not discount these. 3. There was still an element of uncertainty as to whether any losses were, in fact, incurred. 4. During the sample period, the performance of Five Dock Pharmacy was known, however it cannot be known how Five Dock Pharmacy would have performed absent the relocation. Even if I accepted that 'like cohorts' were somewhat predictive of the performance of Five Dock Pharmacy, there was still uncertainty as to the level of accuracy of the prediction. As there is a risk that losses may not have been suffered, these speculative losses must be discounted. 5. Regarding the period of January 2022 to June 2023, calculations were based on two assumptions, these being that: 1. the performance of Five Dock Pharmacy from January 2022 into the future would have remained at the same level as during the sample period; and 2. Five Dock Pharmacy would continue to underperform compared what it would have taken place at Shop 1. 1. Sydney Metro's concluding proposition was that Mr Massasso had failed to demonstrate that he incurred any loss of profits, let alone that any loss (if it existed) was solely due to relocation. Consideration 1. I have carefully considered the submissions that were made concerning the extent to which I might accept Ms Carroll's evidence, both as to its relevance to the temporary business loss claim and, separately, to Mr Massasso's permanent business loss claim. In doing so, I have not only had regard to the submissions by Mr Sirtes and Mr Hemmings which I have earlier set out by have also had regard not only to my notes of her evidence, but, in conjunction with those notes, a reading and a rereading of the entirety of the primary body of her evidence (this being recorded in the transcript of 21 July 2023 – commencing at page 212 and concluding at page 268 (but with interruptions)). In doing so, as is appropriate, I pay no general heed to her evidence given on the voir dire as there was no suggestion advanced by either Mr Sirtes or Mr Hemmings that that evidence should be carried forward as admitted in evidence in the proceedings in its entirety. 2. I have earlier set out the position concerning the burden of proof in these proceedings and the fact that it falls on Mr Massasso to establish the various elements that make up his overall claim (Perry). 3. I now turn to consider Ms Carroll's evidence in the two separate contexts for which it is sought to be engaged for Mr Massasso to establish elements of his claim. Ms Carroll's evidence, it is to be understood, are advanced with respect to each of the business loss claims advanced for Mr Massasso. 4. I have earlier set out, in explaining the basis upon which Sydney Metro proposed I should not accept Ms Carroll's evidence, several extracts from the transcript on her questioning by Mr Sirtes. I also later set out the submissions by Mr Norton concerning the effect of the rulings which I made rejecting the entirety of two of the primary documents upon which Ms Carroll had relied and significant elements of the third of those documents. It is, however, the position that little remains of Ms Carroll's evidence where I can be satisfied, on the balance of probabilities, that the evidence she gave in support of Mr Massasso's temporary business loss claim provides any proper factual basis upon which I could accept that claim. With respect to the those remaining elements of her evidence concerning information derived from the Pharmacy Alliance's staff identifications (and her selections from them) of pharmacies proposed as being comparable in a locational and business operational sense for the purposes of comparison with the five dock pharmacy, I cannot be satisfied that those comparisons have been established because of the absence of specific information that would establish the validity of the propositions advanced with respect to each of them. To this extent, I am satisfied that I must reject her evidence. 5. Resolution of the dispute between Mr Holland and Mr Gilberti as to how the trading patterns of Five Dock Pharmacy are to be regarded is to be decided in light of the evidence of the trading position of the pharmacy before and after the relocation and (to the extent that it was admitted) matters arising from Ms Carroll's expert report and her oral evidence. For this claim element to succeed, it was necessary for Mr Massasso to demonstrate that there was any decline in the business performance of Five Dock Pharmacy and that this arose as a consequence of the relocation. 6. The alternative proposition advanced on behalf of Sydney Metro (that there had been a gentle decline in the business performance of Five Dock Pharmacy during earlier trading periods unaffected by the necessity for relocation) is to be preferred because it is based on such actual performance data as is available for Five Dock Pharmacy. This was to be seen on the basis of the tabular information and the moving average trend line graph reproduced at Appendix 1 to the joint report of Ms Carroll and Mr Siriani (originally at Appendix 2 to Mr Siriani's expert report). Mr Siriani's graph is reproduced as Annexure A to this judgment. It is not based on speculative comparisons with the performance of other pharmacy businesses where I cannot be satisfied that, to the extent admissible, the evidence concerning those other businesses demonstrates that they can be regarded as truly comparable with the business of Five Dock pharmacy. 7. In addition, no data was available for Five Dock Pharmacy about revenue generated from its general retail sales. This is a serious evidentiary deficiency – the cure for which lay entirely within Mr Massasso's knowledge. 8. I have earlier explained, in a general fashion, how the burden of proof falls in Class 3 compensation cases and the limited range of circumstances where a determination might tilt in favour of a dispossessed owner. 9. Here, after careful consideration of the evidence upon which Mr Holland and Mr Gilberti based their respective (differing) conclusions and the fact that I cannot be satisfied that the evidence adduced for Mr Massasso in support of this element of his claim satisfactorily demonstrates that the pharmacy businesses whose performance was analysed (to the extent the evidence was admitted) are demonstrated to be truly and appropriately comparable with Mr Massasso's business, means that Mr Massasso has not established any temporary business loss that could be compensable. 10. As I cannot conclude, to the necessary degree of comfortable satisfaction, that this aspect of his claim is valid, it is rejected. The permanent business loss claim Introduction 1. Mr Massasso claims a total amount of $1,284,000 for the permanent loss of future business said to arise from the loss of proximity to an approved medical centre where that centre's construction did not occur because its site was also compulsorily acquired by Sydney Metro for the public purpose. This amount was claimed pursuant to s 59(1)(c) of the Land Acquisition Act − the same head of compensation under which Mr Massasso brought his temporary business loss claim. 2. This claim was brought by Mr Massasso on the basis that, were it not for the acquisition, the approved medical centre would have been constructed directly behind the old premises. The crux of Mr Hemmings' submission on this point was that the significance of the construction of the medical centre was such that the old premises would have seen an increase in script numbers. This would, in turn, have increased the revenue of the old premises and entitled the Applicant to a permanent business loss claim pursuant to s 59(1)(c). The lay evidence 1. The evidence of Mr Cordaro provided the sole factual foundation for Mr Massasso's permanent business loss claim. I have earlier set out a summary of Mr Cordaro's affidavit and oral evidence concerning the proposed construction of the East Street Medical Centre. It is not necessary to set out, again, that evidence. The expert evidence on potential script capture Introduction 1. The relevant foundational evidence concerning what might be the script capture rates from Mr Cordaro's approved medical centre is based entirely on matters derived from Ms Carroll's expert report, and Mr Siriani's consideration of it, in both his written report and in the joint expert pharmacy business report prepared by the two of them. 2. I have earlier set out matters explaining the context of caution necessary in my consideration of Ms Carroll's written evidence and the reliance by Mr Holland on it. At this point, it is appropriate to expand, a little, on Ms Carroll's written evidence and what Sydney Metro submitted was the appropriate approach, on analysis, to take to it. 3. During the course of the oral closing submissions on behalf of Sydney Metro, Mr Norton, junior counsel for Sydney Metro, took me through the various matters relied upon by Ms Carroll as providing a basis for the conclusions which she expressed concerning projected future revenue which she considered would accrue to Mr Massasso's pharmacy as a consequence of the proposed establishment of Mr Cordaro's medical centre on East Street had that medical centre been constructed and commenced to operate – an event which did not happen as a consequence of its site also forming part of the compulsorily acquired lands for the construction of Sydney Metro's Five Dock Station. This detailed evidentiary source analysis arose as a consequence of rulings which I had made upholding objections to significant elements of the source material upon which Ms Carroll had relied for the purposes of forming her opinions. My rulings were recorded in the transcript of 28 July 2023, page 504, line 8 to page 506, line 29). 4. It is appropriate to note that, in the oral and written reply submissions on behalf of Mr Massasso, nothing in Mr Norton's analysis was challenged. It is sufficient, for the purposes of my consideration of the utility of Ms Carroll's evidence as providing support for matters addressed by Mr Holland in his written and oral evidence on behalf of Mr Massasso, that I record the conclusion as to the sole element of Ms Carroll's mathematical comparative analysis that remains standing as a potential evidentiary basis for supporting the conclusions which she expressed concerning the counterfactual position that was postulated to have eventuated if Mr Cordaro's medical centre had been established and commenced trading. Mr Norton's summary conclusion was (Transcript 28 July 2023, page 506, lines 19 to 29): NORTON: And in 2.6 367 to 420. Mr Sirtes asked Ms Carroll in cross examination whether those were derived from the Rose Health and she said, "Yes, they are wholly derivative". So we would say your Honour those were out as well therefore when one comes back to Mr Holland's 2626 that means his calculations at A and B and the figures there are out in particular the additional uplift in retail trade as well. So when again one goes over to the page both those figures in relation to Carroll 100 to 130 and 20 to 26 for retail trade are out so that means there is one and only one number left in that table which is the number for prescriptions 127 based on those four pharmacies. Now that flows through into the calculations which are included at Mr Holland's appendix G and that can be found in the supplementary evidence book exhibit D at p 306. 1. However, in his oral evidence, Mr Siriani did not expressly reject the proposition that 12.9 scripts per doctor per day would be a potential assumption to make with respect to what was being advanced on behalf of Mr Massasso as to what might be expected for the Five Dock Pharmacy's operation to receive additionally generated script performance as a consequence of the establishment of the proposed medical Centre. In addition, at page 6 of the joint report of Ms Carroll and Mr Siriani, Mr Siriani did not reject the proposed utilisation of 12.9 scripts per full-time doctor per day (however, it is to be noted that he raised concerns as to other factors potentially impacting on the extent to which Five Dock Pharmacy would capture this script generation). It is not necessary, under present circumstances, to address those concerns – it is sufficient, for present purposes, that I am satisfied it is appropriate to carry forward, to my consideration of the permanent business loss claim, the 12.9 scripts per day per doctor as an appropriate basis upon which the forensic accountants might approach their evidence. The submissions for Mr Massasso The establishment of the medical centre 1. Mr Massasso's claim was supported by Mr Cordaro's evidence that: 1. In 2014, Cordaro Pty Ltd purchased commercial premises at 2 East St, Five Dock NSW; 2. The company intended to: 1. Undertake works to the property to create a medical centre with 7 GP consultation rooms and 1 treatment room; a reception area and separate floor of physiotherapists and radiology ; and 2. To replicate the DMC Medical centre in Drummoyne. 1. Mr Cordaro was responsible for that project 2. Steps taken towards this included: 1. Submitting a development application to the Council for the redevelopment. 2. Registering the Business name 'DMC Five Dock' which it was to trade as. 3. Receiving development application approval. 4. Engaging Mr Cordaro's brother Joseph who is a director and shareholder of Porters Corporation Pty Ltd, which owns the DMC in Drummoyne, to advise on the requirements of a medical centre. 5. Entering into a Deed of Agreement for Lease between Cordaro Pty Ltd and Porters with an initial term of 10 years with a 10year option to renew. It was Porters' responsibility to tenant the centre. 6. Mr Cordaro gave evidence that a builder had been obtained in regard to the development, though no construction had contract had been entered into; and that a second lease had been entered into with Sports Lab. 1. Mr Cordaro had discussed the proposed development with Mr Massasso and how it would be mutually beneficial for the centre to be next to his pharmacy. In addition, there were plans to expand Fred Kelly Place to the boundary of Mr Massasso's former premises. 2. The only reason Mr Cordaro did not proceed was due to the acquisition of the East Street site by Sydney Metro. Evidence concerning script capture from the medical centre 1. I had ruled two proposed items of evidence inadmissible: 1. A letter from Rose Health to Shane Johnston, Partner Specialist, Pharmacy Alliance, dated 10 February 2020. 2. A letter from Corporate Financial Services to Mr Massasso date 13 February 2020. 1. I had also ruled portions of a further document (the Pharmacy Alliance report) relied upon by Ms Carroll was inadmissible. Consequently, the evidence on scripts potentially generated by the proposed medical centre that Five Dock Pharmacy could be expected to capture derives from: 1. Mr Sirianni's evidence that a full-time doctor would generate around 40 scripts per day, with a capture rate between 20-70%, thus of those 40 scripts between 8-28 would be captured by the nearest pharmacy. 2. Evidence from the admitted portions of the Pharmacy Alliance report dated January 2020 that the average presentations at four pharmacies located directly next to medical centres in Victoria and NSW, per doctor, per day was 12.9 scripts. 3. Ms Carroll had accepted that the rate of 12.9 was derived from the Pharmacy Alliance January 2020 report as well as the inadmissible Rose Partners' report. 4. The pharmacy business experts' joint report in which Ms Carroll presented a capture rate of 12.9 scripts per day, which Mr Sirianni did not challenge. 1. Mr Hemmings submitted, however (Transcript 27 July 2023, page 447, lines31 to 44): You've got Ms Carroll's approach to consideration of four different medical centres that she chose which showed the capture rate of 12.9 - so sitting comfortably within Mr Sirianni's range - and you've got the joint report of the experts, where there was no real demure - it was an acceptance, in fact, by Mr Sirianni of the 12.9. What in fact your Honour sees when we descend into it - and I need to give your Honour an evidence reference. So at 350, the evidence supports a finding that the pharmacy would expect to capture somewhere between eight and 28 scripts per day of a full‑time equivalent doctor. At 351, we note that Mr Holland's calculations actually proceed on the basis not of 12.9 scripts, but the mathematics of his calculation is of ten scripts per doctor per day. Very comfortably sitting, in our submission, within the range of the evidence for the capture rate. 1. The written closing submissions for Mr Massasso had expanded on these matters at (347) in the following terms: 347. As a consequence, the evidence on scripts generated by the proposed Medical Centre that could be expected to be captured by the former premises derives from: (a) Mr Sirianni's (Pharmacy Business Expert for Metro) evidence that a full-time equivalent doctor would generally generate about 40 or so scripts a day"; with a capture rate that is "rarely more than 70%" and "can go as low as 20%". The lower end was described as occurring "if it's not a desirable supportive system between the doctors and the pharmacy". Accordingly, Mr Sirianni would expect that "[o]f those 40 scripts the amount of scripts captured by the nearest pharmacy" would be between 8 and 28. (b) Evidence from a Pharmacy Alliance report dated January 2020 that the average presentations at four pharmacies in Victoria and NSW per prescribing doctor per day was 12.9 scripts per day. The report notes that the four pharmacies "are located directly next medical centres, where anywhere between 3 and 8 doctors operate at different times".431 Ms Carroll gave evidence that the four pharmacies referred to in the report from top to bottom of the page were in Paynesville, Dromana (an Alliance Pharmacy), Inverell (part of the Inverell Medical Centre) and Dromana (an Amcal Chemist). (c) Evidence from Ms Natalie Carroll (Pharmacy Business Expert for the Applicant) in her Statement of Evidence that "[b]ased on the information Pharmacy Alliance has access to and the industry data available, we believe the average pharmacy script presentations from prescribing doctors located in Medical Centres adjacent to pharmacies is 12.9 per doctor per day." Ms Carroll accepted under cross-examination that the rate of 12.9 derived from the four pharmacies in the Pharmacy Alliance January 2020 Report, as well as from the inadmissible Rose Partners' report. She also accepted that her report went no further than saying that the average between those four pharmacies was 12.9. (d) The Pharmacy Business Experts' Joint Report, in which Ms Carroll presented, and Mr Sirianni did not challenge, a capture rate of 12.9 scripts per day. 1. Plans were progressing for the establishment of the medical centre when notice for the acquisition was received. There is no evidence of any other impediments to the medical centre project. But for the acquisitions, Mr Massasso would have benefited from colocation with the proposed medical centre. 2. The evidence supports a finding that Mr Massasso's original pharmacy would have captured between 8-28 scripts per day, per doctor. Mr Cordaro's discussion with Mr Massasso about the mutual benefit of co-location suggests that the figure at the bottom of the range may not be appropriate. Mr Holland's calculations assume capture of 10 scripts per day only. Discount rates 1. Mr Gilberti considered a discount rate of 27.5% should be applied, in comparison with Mr Holland's assessed 20% discount rate. Mr Holland suggested that Mr Gilberti had incorrectly: 1. Started from the 20% rate, assuming that the discount rate for the pharmacy was appropriate and; 2. Applied a 7.5% premium for matters that should be dealt with in the cash flows rather than the discount rate. 1. Mr Holland accepted that different discount rates result from different evaluations and that neither may not be incorrect. 2. In determining the amount of compensation payable, any doubt must be resolved in favour of the more liberal estimate favouring the dispossessed holder of the acquired legal interest. If is determined that there is doubt regarding the appropriate rate, the more generous estimate should be applied. Conclusion on the permanent business loss claim. 1. It was submitted for Mr Massasso that the issues for determination on the permanent business loss claim should be answered as follows: 1. But for the (to be disregarded) public purpose, the medical centre would have been established and would have generated the postulated script capture for Mr Massasso's then existing pharmacy; 2. The relocation away from the proposed medical centre equated to a permanent business loss within s 59(1)(c); and 3. That loss totals $1,284,000 Sydney Metro's submissions on the long-term business loss claim Introduction 1. The claim was described as being for the permanent losses expected to be incurred over the life of the business after relocating due to the inability to benefit from the construction of a medical centre with direct access to Shop 1. 2. Sydney Metro challenged the appropriateness of Mr Massasso's permanent business loss claim on the following bases (Respondent's Closing Written Submissions, paragraphs 358 to 359): 358. Briefly put, the Applicant claims a loss of projected income based on assumptions regarding customers of the Medical Centre who would have filled prescriptions at FDP, had the Medical Centre proceeded. Some of those assumptions are outlined below. 359. The Respondent's position is that: a) even assuming the assumptions to be correct, the amount claimed is not compensable as a matter of law. It is not a loss arising from this compulsory acquisition; it is a hypothetical flow-on loss arising from a different compulsory acquisition, albeit in Five Dock, of land that, the Applicant contends, could have become a medical centre; b) even if a claim is available as a matter of law; the evidence does not support the cascading series of assumptions which must fall in the Applicant's favour (or at least, requires some significant adjustment); and c) finally, if the Court finds otherwise in relation to a) and b), some adjustments may need to be made to the figures adopted to quantify any loss. 1. The factual basis of this claim is said to be as follows: 1. In 2014 Cordaro P/L purchased commercial premises at 2 East Street, Five Dock, located behind Shop 1). 2. Cordaro P/L intended to create a 3 floor, medical centre there which was to be leased by Porters Corporation Pty Ltd for 10 years with the option to renew for another 10 years. 3. Development consent was granted in September 2018 granting approval for the centre. 4. The project was abandoned due to acquisition of the property by Sydney Metro. 1. Mr Massasso claims a loss of projected revenue based on assumptions as to the number of customers of the proposed medical centre who would have filled prescriptions at Five Dock Pharmacy. Ms Carroll's evidence 1. It is appropriate to note, in the context of what information from Ms Carroll's evidence might be carried forward for the purposes of Mr Massasso's permanent business loss claim, that I had a discussion with the advocates during the course of the evidence of Ms Carroll and Mr Siriani (but in the absence of the witnesses) concerning the 12 .9 scripts per prescriber per day that Ms Carroll advanced as the appropriate integer to which regard should be had for the purposes of the permanent business loss claim. This discussion took place on the transcript of 21 July from page 230 to the top of page 234. 2. It is not necessary to reproduce any elements of this transcript. It is sufficient to note that, as a consequence of this exchange, details of the addresses of the pharmacies upon which Ms Carroll had relied were to be provided to Sydney Metro and questioning concerning those pharmacies deferred until later on that day. In this context, Mr Sirtes later questioned Ms Carroll concerning these pharmacies and the basis upon which were regarded by her as comparable. It is not necessary to set out large tracts of this cross-examination. However, a flavour of it can be gleaned from Mr Sirtes submissions as to why I should not place reliance on the information she had provided (Transcript 28 July 2023, page 507, lines 16 to 47): SIRTES: …. That the criticisms we make are the following; first of all when Ms Carroll was asked about the 12.9 figure that she had used she said it was a combination of two things. One was the starting point was the average of those four pharmacies and then extrapolating as it were in relation to the Rose report I said to her that if his Honour was not entitled to consider the Rose report because it had been rejected would that mean that those four figures represented nothing more than the average of those four pharmacies, it had no further significance than that? She accepted that proposition, it follows logically. So then we are driven to what one does with an average derived from - which has two problems with it. One is the range of the sample which is four, the second is the location of the samples. Your Honour recalls that one was in Inverell, two were in Dromana and one was Paynesville. My friend re‑examined Ms Carroll on the basis of the fact that there was a number of doctors by reference those five or six there was some user numbers but the fact remains it's a very small cohort and two are in the same small town. Although one can debate I guess up hill and down dale whether the Mornington Peninsular is considered to be rural or whether it's something different but it's still a relatively small town and then you have Inverell; again, very hard to see how one is going to derive much, particularly when we don't know is it a one-horse town, has it got more than one pharmacy, what's the competition, a whole range of factors are going to intrude. Then we have the third issue which your Honour raised which is an aligned issue arising from the small cohort which is what do you do when you've got three which are on one side of the ledger as it were and one which is statistically skewing the average and so we would say for a range of reasons it is what can best be described as a highly curated small cohort that one has no concept of being statistically representative of anything and thereby intrinsically unreliable. General matters relating to Mr Holland's evidence 1. At the commencement of the submissions for Sydney Metro concerning the permanent business loss claim, Mr Sirtes said (Transcript 28 July 2023, page 504, lines 9 to 11): Because of the evidential rulings that your Honour made in relation to certain parts of the evidence, it impacts upon what stays in Mr Holland's report and what is effectively knocked out as a derivative consequence. 1. Following from this, Mr Norton, junior counsel for Sydney Metro, took me through, in some detail, the matters in Mr Holland's evidence, which Sydney Metro proposed I should conclude were infected and not to be relied upon as a consequence of Mr Holland's reliance of the material from Ms Carroll which had been rejected. 2. Mr Norton indicated to me that what he proposed to outline was in supplementation to (372) of Sydney Metro's written closing submissions. This paragraph of Sydney Metro's written closing submissions not only addressed matters relating to the sources relied upon for Mr Holland's evidence (material which had been rejected after objection) but also addressed other aspects of Mr Holland's evidence. It is not necessary to reproduce these latter elements, but it is appropriate to reproduce the direct criticisms made of Mr Holland's evidence – criticisms made on the basis of his reliance upon Ms Carroll's material. These elements of Sydney Metro's (372) are in the following terms: Mr Holland's assumptions 372. The basis upon which Mr Holland calculates the loss of revenue is the following assumptions regarding revenue sources, with the relevant paragraphs in his report identified: a) the sales value per prescription is $33.79, therefore the new Medical Centre would have generated revenue from prescriptions of approximately $126,545 per doctor per year ([186]-[187]). As noted, this is now to be founded solely upon the data from the four pharmacies on EB 2313. b) Assumptions at par [188] regarding number of scripts per patient, number of customers, number of customers who would purchase retail items, and the value of an average retail basket. All of these figures are drawn from p 8 of the Pharmacy Alliance report (EB 2316) which has been rejected by the Court. Accordingly there is no evidence to support any of these assumptions, or the conclusions at [189]-[190]. c) Pars [191]-[192] rely on the reports of Rose Health and Corporate Services regarding additional script sales for each doctor. Both those reports have been rejected, therefore there is no evidence to support those figures. d) Par [193] refers to the figures in the Carroll Report in relation to the generation of script revenue, and increased script trade, which is a reference to figures on p 1863, par 2.4. Ms Carroll acknowledged that these are entirely derived from the rejected Rose Health report, therefore the Court has no evidence to support these figures. e) This means that there is no evidence whatsoever to substantiate the table at [194], and either end of the ranges there adopted, and the ultimate figures relied on by Mr Holland in relation to additional annual total revenue per doctor, or for 7 doctors in [197]-[198]. Additionally, Mr Giliberti notes that the retail figures Mr Holland uses based on the foregoing assumptions do not match the pattern of spending of current customers of FDP. If FDP data is used, the appropriate input is that retail revenue would be 16% of total pharmacy sales. f) That table appears to assume that 100% of scripts from the medical centre will be captured by FDP. There is no evidentiary basis for that assumption – Mr Sirianni gives a range of 20% to 75% as a capture rate. Mr Giliberti notes there is no reliable conclusion that can be drawn on capture rate. Mr Holland claimed that his calculations does make an allowance for capture rate to deal with issues such as competing pharmacies, and existing clients but it is not at all clear whether this has in fact been done; and Mr Holland conceded that he has no insight into the existing customer base of FDP in order to properly address this issue. Unless the Court is satisfied as to how Mr Holland has appropriately addressed the issue of capture rate, it cannot have confidence in his figures. 1. Mr Sirtes, after Mr Norton had concluded his detailed submissions, said (Transcript 28 July 2023, page 507, lines 1 to 4): So we would say in summary the consequence of your Honour's rulings as to evidence is that there is zero evidentiary basis for Mr Holland's calculations save for that one figure of potentially an extra 1267,000 of script revenue based only on those four pharmacies. 1. It is necessary, next, for me to set out the detail of the further submissions made about the evidence in this regard. 2. During Mr Holland's questioning by Mr Sirtes, he was asked a series of questions about the decline in performance of Five Dock Pharmacy and how it should be regarded in the context of the business loss claim – where, on the information available, there had been a decline in the business performance of Five Dock Pharmacy from a date well prior to the date when Sydney Metro's intention to acquire the pharmacies then location was revealed. It is appropriate, in this context, to quote a short extract from this evidence. It is in the following terms (Transcript 24 July 2023, page 289, line 44 to page 290, line 5): SIRTES: Are you saying to his Honour that the historical trend of a business's operation is irrelevant to determining its future performance? WITNESS HOLLAND: No. I'll withdraw the answer I said previously to the extent I implied that. Of course it's not irrelevant. It's indicative only. All sorts of things could have happened to the business afterwards that make it - that would have made it different to how it historically performed and I should say, incidentally, that the decline that Mr Giliberti talks about, is not a marked decline. It's a few per cent either way. The number of prescriptions hovers around 70-something thousand, in the low 70,000s in the previous five years. It's not a decline in massive terms so I feel that that point is not really germane to what we're trying to calculate. 1. Mr Holland subsequently explained why, in light of the variations in the script numbers processed by Five Dock Pharmacy, there should be an assumption that the business would have achieved in increase in script turnover but for the acquisition. Mr Sirtes questioned Mr Holland about this in the context of what had been a five-year (from 2015) business pattern for Five Dock Pharmacy. This evidence was in the following terms (Transcript 24 July 2023, page 291, lines 7 to 35): WITNESS HOLLAND: Well table 5 is the same as what's there. I was really trying to - and table 5 gives it in more detail if we want to look at it and in fact that the, the paragraph here has an extra year on the front of it which just accentuates my point. It's simply that over the years if we go back as far as 2015 the Five Dock Pharmacy every year it had between in roughly 71,000 prescriptions and 74,000 prescriptions. Some years are slightly better, some years are slightly worse. There was no - there's no major decline as is it seems attempted to be painted here. SIRTES: Putting aside descriptions such as major decline do you accept that there was a trend of decline, whether it was major or minor, would you accept there was a trend of decline over the five year period? WITNESS HOLLAND: I haven't tried to put a trend line to it but that's probably right. SIRTES: And so for is this the case, if we accept that there was a trend of decline for the five years leading up to the relocation do you say that because of the relocation the business should have enjoyed not just a decline but something like a plus 4% increase-- WITNESS HOLLAND: Well-- SIRTES: --in script sale? Is that what - sorry but for the relocation, it should have enjoyed not just a negative, it should have enjoyed a positive increase by something like in excess of 4%? WITNESS HOLLAND: On the basis that that's what similar pharmacies in the market experience then yes. Sydney Metro's general submissions 1. Sydney Metro's position was that: 1. If the assumptions are correct, the amount claimed is not compensable as a matter of law. It is not a loss, but a hypothetical flow-on loss arising from a different compulsory acquisition. 2. Even if a claim is available as a matter of law; the evidence does not support the cascade of assumptions which must favour the applicant. 3. If the court finds otherwise, some adjustments may need to made to the figures used to quantify loss. 1. Of the above list, I have earlier explained why I do not need to address the broad legal propositions advanced by Sydney Metro as to why business loss claims are not ones which may validly give rise to a compensation entitlement. It is not, here, necessary for me to consider such matters further. 2. Whatever the correct legal position with respect to business loss claims, it was submitted for Sydney Metro that the evidence concerning: * when and how Mr Cordaro's proposed medical centre would have been developed; and * how the medical centre would have benefited Five Dock Pharmacy as a result of what would have been the co-location of the two businesses but for the compulsory acquisition of each of them for the public purpose was, taken as a whole, based on speculation and did not provide any valid basis to support Mr Massasso's permanent business loss claim. 1. According to Mr Cordaro's evidence: 1. Cordaro P/L is concerned with property investment and was developing the property at East Street. 2. The plans for such development involved demolishing the existing building and constructing a new building. 3. When Metro advised of the proposed acquisition: 1. No building contract has been signed 2. There was no written plan timetabling construction 3. Financing had not been secured 4. Some work had been done towards obtaining a construction certificate 1. While the lease with Porters Corporation had been signed, Mr Cordaro would not be doing anything further regarding proposal, that would be done by the tenants. 1. There was no evidence of any doctors having been secured. The lease with Porters only concerned occupation of the premises. At the date the project was abandoned due to the Metro proposal, there was considerable uncertainty about the status of the medical centre, with Mr Cordaro's evidence providing little clarity regarding timeframes. 2. This claim is founded upon a proposed development at some time in the future and the hope that a tenant would operate a medical centre as the owner was not intending to operate such a centre. There has been no evidence called from anyone directly involved in the future centre – only the earlier evidence from Mr Cordaro who was a property investor not proposing to take any active role in the future centre. 3. Mr Sirtes advanced a proposition in the alternative that, if I were to accept that compensation was available for the permanent business loss claim under s 59(1)(c), the base factual assumptions regarding the medical centre had not been established. He submitted (Respondent's Closing Submissions, paragraphs 370): 370. In short – this claim is founded not upon the loss of an existing and certain income stream. It is founded upon the evidence of the director of a property investment company [Mr Cordaro] which proposes to build a building at some time in the future, and hopes that a tenant will operate a medical centre, although has no interest in that centre and so cannot give any evidence as to any progress other than the fact of signing an agreement to lease. There has been no attempt to call evidence from anyone connected with the medical centre to provide more firm foundation to the claim. 1. In this context, Mr Sirtes submitted that Mr Massasso had not discharged his onus to demonstrate that Five Dock Pharmacy would have suffered a loss of profits. He advanced this proposition in the following terms (Respondent's Closing Submissions, paragraph 375): 375. Overall, however, this is a speculative claim based upon a range of variables, built on assumption upon assumption, in respect of which the Court would not be persuaded that the Applicant has not satisfied its onus of proof. It is, in truth, a loss of opportunity claim in relation to a hypothetical medical centre that has never been built, may never have been constructed irrespective of the Sydney Metro, may have taken a significant period of time to become fully functional and, even then, may not have contributed much to FDP's existing business. And even though a medical centre has recently opened just south of FDP, no attempt has been made to demonstrate the positive impact (if any) on FDP revenue from the opening of this centre, as opposed to the conjectural centre with attributes, script volume and capture rates all assumed rather than established. The claim is an overreach and should be rejected. 1. Sydney Metro proposed that I should find that the base factual assumptions regarding establishment the medical centre have not been made out. Mr Holland's calculation of lost profits was based the projection that Five Dock Pharmacy's profits would more than double the historical EBITDA reported in any of the 2016-2020 financial years. 2. It was submitted that this was a speculative claim based on a range of variables and assumptions and I would not be persuaded that Mr Massasso had satisfied his onus of proof. It was a loss of opportunity claim in relation to a medical centre that has not been built and may never have been, irrespective of the Sydney Metro project and even if it had it may not have greatly contributed to Five Dock Pharmacy's business. 3. Sydney Metro submitted that the claim is an overreach and should be rejected. Consideration 1. As I have earlier set out several times, the decision of the Court of Appeal in Perry made it clear that the onus falls on the claimant in compensation cases such as these to establish, on the balance of probabilities, all necessary elements to provide a proper foundation for such a claim (or, as here, an element amongst multiple claims). 2. I have concluded that it is appropriate, on the basis of the elements of the evidence of Ms Carroll and Mr Siriani that I should accept, taking Mr Massasso's case at its highest for this purpose, that 12.9 scripts per prescriber per day is a broad general proposition is an appropriate starting point for the evidence from the forensic accountants. Again, taking Mr Massasso's case at its highest, the forensic accounting evidence would, if it had a proper what I might call "operational foundation in fact" relating to Mr Cordaro's proposed medical centre would provide a basis for calculating the profits which might, hypothetically, have accrued to Mr Massasso if all of the myriad hypothetical factual foundations underpinning the counterfactual existence and operation of such a centre had been made out. 3. Unfortunately for this element of Mr Massasso's claim, I cannot be satisfied that all of the foundational underpinnings advanced through the evidence of Mr Cordaro as to the coming into existence of, or future staffing prospects for, the proposed medical centre and the proposed operational level of that medical centre if it came into existence can be regarded as anything more than speculative. 4. For the purposes of determining whether the prospect of the proposed medical centre is to be regarded as a "house to be built upon the rock" or a "house to be built upon the sand", the only firm foundation able to be demonstrated by Mr Cordaro was the fact that he had a development consent from the Council that would permit the construction of the building within which the medical centre was proposed to be established. 5. Mr Cordaro had signed no contract with a builder; was unable to provide any (let alone adequate) evidence as to his ability to finance the construction of the medical centre; had no contract in place for any guaranteed provision of doctors to staff the centre; and no detail on what basis such staffing would operate. These matters, to the extent Mr Cordaro's evidence was relied upon, as was submitted for Sydney Metro, are purely speculation on Mr Cordaro's part and do not provide a proper evidentiary foundation upon which to adopt the business and accounting evidence to establish any future business loss for Mr Massasso. 6. Unless there is a proper evidentiary foundation to assume the existence and operation of Mr Cordaro's medical centre, anything said to arise from its hypothesised existence and operation merely become further elements of a structure built upon the sand and not upon the rock. 7. Mr Massasso's permanent business loss claim must, therefore, also be rejected. Disturbance 1. At the conclusion of the scheduled hearings, I was advised that the parties remained in dispute about the quantum to which Mr Massasso was entitled to be reimbursed legal fees and valuation fees pursuant to s 59(1)(a) and (b) of the Land Acquisition Act. A supplementary hearing was, therefore, scheduled for the Friday of the following week to address this issue. 2. Prior to that hearing, my Associate was advised that the parties had reached agreement on this item. The emailed advice from Mr Massasso's legal representatives advising of this was, relevantly, in the following terms: I can confirm that the parties have now reached an agreement as to s.59(1)(a) and (b) costs in the sum of $493,588. This reflects the amount claimed for s.59(1)(a) and (b) costs in the Amended Points of Claim of $529,453 exclusive of GST less the sum of $35,865. 1. This outcome will, therefore, need be incorporated in the orders to give effect to my findings set out in this judgment. Costs 1. It is to be noted that, in compulsory acquisition compensation proceedings, costs do not follow the event, as might otherwise be expected, as r 42.1 of the Uniform Civil Procedure Rules 2005 (UCPR) does not apply in such proceedings (UCPR r 1.5, Sch 1). Costs are in the discretion of the Court (s 98(1) of the Civil Procedure Act 2005). 2. In Banno v Commonwealth of Australia (1993) 45 FCR 32 (Banno), Wilcox J observed, at 51, concerning compensation claims made by dispossessed owners of property which has been compulsorily acquired for a public purpose: But this is not ordinary litigation. The relationship between the parties giving rise to the litigation did not arise out of their mutual desire; it arose because of a unilateral decision of the Commonwealth to acquire the applicants' land in order to satisfy a perceived public need. The acquisition left the applicants in the position of either accepting the Commonwealth's assessment of the proper compensation or of having the Court rule on its adequacy. 1. His Honour's conclusion in those proceedings was that compulsory acquisition of private real property, when subject to curial proceedings to determine the quantum of compensation to be paid to the dispossessed owner, will usually be followed by a costs order in favour of the dispossessed owner. This has been adopted as applicable in this jurisdiction for compensation litigation pursuant to the Land Acquisition Act by the Court of Appeal in Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 (Dillon), per Basten JA at [70] to [72]. 2. Even in circumstances where the result is a mixed one, where a dispossessed owner does not achieve complete success, but only succeeds on some elements, nonetheless, it is appropriate to make a costs order in favour of the dispossessed owner (Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404) per Tobias AJA at [95] to [98]. 3. Although, conventionally in Class 3 compensation proceedings, costs are only awarded to a dispossessed owner if that owner obtains a compensation result which is greater than that which had been originally determined by the Valuer General or proposed in the proceedings by the acquiring authority, that is not the universal position. I am given a broad discretion by s 98(1)(a) of the Civil Procedure Act 2005 to determine how costs of these proceedings should fall. 4. In these proceedings, it could not be said that the propositions advanced on behalf of Mr Massasso were so entirely lacking in merit as to be fanciful, means that there is no basis upon which I could conclude that the litigation was commenced and continued on his behalf in any unreasonable fashion nor at unnecessary expense. 5. As a consequence, I am satisfied that, despite the overall result of the proceedings being that Mr Massasso may not have obtained compensation greater than that determined by the Valuer General, I am nonetheless satisfied that it would be appropriate to order that Sydney Metro pay Mr Massasso's costs of these proceedings. 6. I can see no basis why any question of costs apportionment should arise (although this is possible - James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296) given that the case mounted for Mr Massasso on all his claims was not fanciful and did raise a number of matters of some novelty in this class of the Court's jurisdiction. 7. I have also turned, on a contingent basis, to what might be the costs outcome in this jurisdiction should there have been any potentially relevant offer of compromise (whether on a Calderbank offer or UCPR r 42.15 basis being irrelevant) made which might potentially impact on costs outcomes. 8. Although applying to the specific circumstances, the position taken in a recent case in the Court of Appeal (Croghan v Blacktown City Council [2019] NSWCA 248) resulted in the dispossessed owner - acting reasonably in all circumstances - still having a costs order in his favour for the costs of the hearing in the first instance despite rejecting a higher offer of compromise. 9. It strikes me that, given the nature of the contest before me, that this should also, prima facie, be the position arising if there are one or more offers of compromise in play here. I therefore propose to order that Mr Massasso have his costs of the proceedings. Conclusions 1. I have reached the following conclusions concerning Mr Massasso's claims: 1. His profit rent claim is not made out; 2. His claim for compensation for relocation to 104 Great North Road is made out but only to the extent of the cost of the complete fitout costs of his new pharmacy; 3. His claim for the cost of the demolition and construction/reconstruction and structural and related works at 104 Great North Road are for works which Mr Massasso had no entitlement (or obligation or power) to undertake pursuant to the lease which he had from Ms Massasso for 104 Great North Road. Indeed, clause 7.6 of his lease from Ms Massasso forbids him from doing such structural work on his own behalf. These works (and the time for them to be effected) are to be attributed to Ms Massasso. This element of his claim is rejected; 4. The costs of obtaining vacant possession of 104 Great North Road negotiated by Mr Massasso (whether done in his capacity as a co-owner of the premises or as agent for Ms Massasso not requiring determination) were expenses properly required to be met by Ms Massasso as the landlord to provide vacant possession to her of 104 Great North Road in order for her to undertake the demolition and construction/reconstruction structural and related works at 104 Great North Road prior to the fit-out by Mr Massasso of those premises to operate as a pharmacy. The costs of these tenancy buyouts are not compensable as a consequence of Mr Massasso's relocation from the old pharmacy; 5. Mr Massasso has not established a valid claim for any temporary business loss. This claim is, therefore, rejected; 6. Mr Massasso has not established any valid claim for any permanent business loss. This claim is, therefore, rejected; 7. His claim for compensation for the rental differential between the acquired site and the ongoing rent at 104 Great North Road is rejected; and 8. Under all the circumstances, Sydney Metro should pay Mr Massasso's costs of the proceedings. Directions 1. I give the following directions: 1. The Respondent is to provide my Associate and the legal representatives of the Applicant draft orders incorporating compensation to the Applicant for all agreed items and for all items in the quantity surveyors' joint expert report table other than items 1, 2, 3, 4, 6 and 7 (together with any necessary interest) and an order that the Respondent is to pay the Applicant's costs as agreed or assessed. The draft orders are also to provide that the exhibits are returned; 2. The orders are to be provided to my Associate and the legal representatives of the Applicant by 12 noon on Tuesday 31 October; 3. If the legal representatives of the Applicant wish to contest the accuracy of the mathematical calculations – and only the accuracy of the mathematical calculations – in the Respondent's draft orders, the Applicant's legal representatives are to advise my Associate and the Respondent's legal representatives of this by 3:30 PM on Tuesday 31 October; 4. If there is a dispute concerning the mathematical calculations, the matter will be relisted at 9:15 AM on 1 November to permit resolution of any such dispute; and 5. If there is no dispute concerning the mathematical calculations in the Respondent's proposed orders, I will make those orders in chambers and will not set the matter down for mention on 1 November. ********** Annexure A 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: 30 October 2023