Land and Environment Court New South Wales Medium Neutral Citation: Qasabian Family Investments Pty Ltd v Roads and Maritime Services; Fishing Station Pty Ltd v Roads and Maritime Services [2017] NSWLEC 73 Hearing dates: 6, 7, 8 and 9 March 2017 Date of orders: 21 June 2017 Decision date: 21 June 2017 Jurisdiction: Class 3 Before: Moore J Decision: Conclusion at [178] to [187] and directions at [188] Catchwords: Qasabian Family Investments Pty Ltd - 2016/151503 COMPULSORY ACQUISITION – valuers reported a range within which the value of the acquired interest could fall – agreement between valuers on an identified outcome within a range – is Caruso presumption in favour of dispossessed owner engaged – whether highest point in range should be adopted despite agreement by valuers – no basis to disturb agreement between valuers COMPULSORY ACQUISITION – claim for stamp duty for future acquisition of replacement investment property – passive investment – claim rejected Fishing Station Pty Ltd - 2016/158775 COMPULSORY ACQUISITION – claim for compensation for acquisition of interest in land – the interest in the land was an uneconomic sublease at below market rent – term of lease (including options to renew) until 2041 – restriction in sublease limiting use of premises – whether land valuation should be replaced by business valuation to reflect impact of restriction – business valuation appropriate to be used – compensation determined on business valuation basis COMPULSORY ACQUISITION – claim for future costs of relocation of business – whether business is to relocate in the future or has the business actually relocated – business has actually relocated – claim for future costs rejected COMPULSORY ACQUISITION – costs for actual relocation – basis for costs set out and basis for compensation determined COMPULSORY ACQUISITION – claim for reimbursement of rent paid to acquiring authority during holding over period – relevant statutory provisions – comity with other decision-makers on this point – claim allowed Legislation Cited: Land Acquisition (Just Terms Compensation) Act 1991 Cases Cited: Attard v Transport for NSW (2014) 205 LGERA 396; [2014] NSWLEC 44 Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 Browne v Dunn (1893) 6 R 67 George D Angus Pty Limited v Health Administration Corporation (2013) 205 LGERA 357; [2013] NSWLEC 212 Hatzivasiliou v Roads and Maritime Services [2017] NSWLEC 9 Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66 Roads & Traffic Authority of NSW v McDonald (2010) 175 LGERA 276; [2010] NSWCA 236 Rocco Fraietta v Roads and Maritime Services [2017] NSWLEC 11 Speter v Roads and Maritime Services [2016] NSWLEC 12 Sydney Water Corporation v Caruso [2009] NSWCA 391 Taylor v Roads and Maritime Services [2016] NSWLEC 138 Category: Principal judgment Parties: Qasabian Family Investments Pty Ltd (Applicant - 2016/151503) Fishing Station Pty Ltd (Applicant - 2016/158775) Roads and Maritime Services (Respondent in both matters) Representation: Counsel: Mr I Hemmings SC/Mr T To, barrister (Applicants in both matters) Ms S Duggan SC/Mr M Astill, barrister (Respondent in both matters) Solicitors: Beatty Legal (Applicants in both matters) Corrs Chambers Westgarth (Respondent in both matters) File Number(s): 151503 of 2016158775 of 2016 Publication restriction: No TABLE OF CONTENTS Introduction The Fishing Station sublease The evidence The Qasabian Investments' claim Market value The Qasabian Investments' stamp duty claim Other Qasabian Investments' disturbance (s 59(1)(f)) claims The Fishing Station claim Introduction The claim for acquisition of Fishing Station's interest in the site Assessing the Fishing Station relocation claim Compensation for actual relocation of Frenchs Forest Fishing Station Rent payable to the RMS The Qasabian Investments Beacon Hill legal expenses claim The accounting costs' claim Costs Conclusion The Qasabian Investments' proceedings The Fishing Station proceedings Other disturbance matters in dispute Directions Annexure 1 Judgment Introduction 1. The New South Wales Government is consolidating Sydney's Northern Beaches Health and Hospital Services in a new health campus, currently under construction at Frenchs Forest. This major new health campus, located in the north-western quadrant of the intersection of Warringah Road and the Wakehurst Parkway, has necessitated significant upgrades to the road system in its vicinity. This has included, relevant to these proceedings, significant road widening to Warringah Road on its southern side to the west of this major intersection. 2. Roads and Maritime Services (the RMS), as the authority responsible for construction of these roadworks, has determined that the appropriate design at this location, on the southern side of Warringah Road, required construction of a road 12 lanes' wide. To accommodate this, the RMS has compulsorily acquired properties at this location. Included in these acquisitions has been a service station site at 461 Warringah Road (the site), to the west of what was the Bantry Bay Road shopping complex on the western side of that intersection. 3. Determining the appropriate compensation for such acquisitions (when there is no agreement between the RMS, as the acquiring authority, and the owners of the land acquired) is a task given to this Court by virtue of the provisions of the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act). 4. These two matters involve separate claims by entities forming part of the interests of the Qasabian family. First, Qasabian Family Investments Pty Ltd (Qasabian Investments) was the owner of the freehold title of the site. The site is located on an island allotment, with its principal frontage being to Warringah Road; its western frontage being to Hilmer Street, and its eastern and southern frontages being to the unnamed, L-shaped lane running from Warringah Road to Hilmer Street. The unnamed lane, where forming the eastern boundary of the site, separated the site from what had been the Bantry Bay Road shopping centre (which has also been acquired by the RMS for these roadworks). 5. Erected on the site, at the date of acquisition, was a service station. This service station had been the subject of a lease to 7-Eleven for a term expiring in 2026, with three five-year option extensions. As a consequence, this long‑term lease envisaged use of the site by 7-Eleven for service station/convenience store purposes until 2041. 7-Eleven, in turn, subleased these service station/convenience store operations to another entity. Compensation for 7-Eleven and for the operating entity of the service station/convenience store forms no part of these proceedings. 6. These proceedings are simply confined to the Qasabian family interests involved with the site. The first interest is the ownership by Qasabian Investments of the site itself. The second comprised a business operated by Fishing Station Pty Ltd (Fishing Station), which operated a retail fishing tackle and related fishing supplies (including bait supply) shop on the site. Fishing Station occupied a purpose-constructed building on the site, separate from the principal service station/convenience store building of the 7‑Eleven service station operation. This occupancy was on the basis of an unregistered sublease from 7-Eleven. Some of the terms of that unregistered sublease will require later consideration. 7. Where appropriate, I will refer to the Qasabian family interests collectively in this fashion but to the separate interests, as appropriate, as Qasabian Investments or Fishing Station. The Fishing Station sublease 1. There are three aspects of the Fishing Station sublease from 7-Eleven that require to be noted. 2. First, it is accepted by the land valuers giving evidence in these proceedings that this sublease was what can be described as a non-commercial arrangement. The rent that was paid by Fishing Station to 7-Eleven was $1,500 per month ($18,000 per year), with Fishing Station being separately metered for utilities and meeting the cost of these. It was agreed that this was not a market rent. The valuers agreed that the appropriate market rent would have been $90,000 per annum. The Fishing Station rent paid to 7-Eleven was not passed through to Qasabian Investments by 7-Eleven. 3. It was considered by Fishing Station that the service station operation acted as an attractor to those going fishing, in that they could fuel their boats and obtain fishing supplies at the same time and that, for the same reasons, the co-location also acted as an attractor for the service station through this symbiotic co-location arrangement. 4. Second, Fishing Station was prohibited by the terms of the sublease from changing the nature of the retail activities that it conducted on the site, with cll 1(i) and 6(a) of the sublease specifically confining those retail activities to the fishing equipment and related supplies activities conducted by Fishing Station as at the date of acquisition. 5. Third, the terms of the sublease sought, effectively, to make this arrangement a personal one with the Fishing Station entity within the Qasabian family interests. This was sought to be effected by cl 7 in the sublease that prohibited Fishing Station from assigning or subletting the premises. The evidence 1. At the commencement of the hearing, with the agreement of Mr Hemmings SC (for the Qasabian family interests) and Ms Duggan SC (for the RMS), I ruled that, to the extent relevant, evidence in one proceedings was to be taken as evidence in the other. It is to be noted, however, that, despite this ruling, some of the evidence (both written and oral) is clearly only relevant to the proceedings in which that evidence has been put before me. 2. The evidence given on behalf of the Qasabian family interests was from: * Mr Varoujan Qasabian (who is referred to as "Vic"); * Mr Alexander Qasabian (who is referred to as "Alex"); * Mr Michael Dyson, land valuation expert; and * Mr Peter Russell, business valuation expert. 1. For the Respondent, expert evidence was given by: * Mr David Lunney, land valuation expert; and * Dr Rodney Ferrier, business valuation expert. 1. During the course of the hearing, it was necessary to adjourn, during the business valuation evidence, to permit Mr Russell and Dr Ferrier to conduct a further joint expert conference and prepare a Further Joint Expert Report. This report addressed matters arising out of the oral evidence of these experts. These experts were instructed to consider a number of questions settled by Mr Hemmings and Ms Duggan. The responses to these questions potentially arose for consideration in the context of the future relocation costs' claim in the Fishing Station proceedings. The questions were: On the assumption that (1) Mona Vale exists but (2) FSFF has not been relocated, and (3) that the relocated premises will not commence operating until six months after the date of the Court Orders, then: 1. What is the starting sales %? 2. How long will it take to recover to the 100% sales level of the average sales for the year ended 31 December 2015? 3. After the recovery in 2, is there growth? If so at what % pa and for how long? 4. After the period in 3 will the business then continue to grow at 2.1% and, if so, until when? On the same assumptions, what is the present value of the future profits that would have been earned from FSFF but for the resumption? 1. A further assumption was required to be taken into account by these experts but it is unnecessary to set out the details of that additional assumption. As it transpires, this evidence did not require my consideration. 2. It is also to be noted that the oral evidence given concurrently by Mr Dyson and Mr Lunney, and that given concurrently by Mr Russell and Dr Ferrier, was addressed, solely, to matters arising in the Fishing Station proceedings. The Qasabian Investments' claim 1. The two major elements in contest concerning the Qasabian Investments' claim arising out of the acquisition of the site for the public purpose were: 1. Whether or not the market value of the freehold of the site should be increased above the $4.7 million that had been agreed to, in the Joint Expert Valuers Report, by Mr Dyson and Mr Lunney; and 2. Whether or not Qasabian Investments was entitled to reimbursement for future stamp duty costs that would be incurred in the purchasing of a replacement property investment (such a replacement property investment not yet having been acquired by Qasabian Investments). Market value Introduction 1. I turn, first, to consider whether or not Qasabian Investments is entitled to compensation for the freehold acquisition at a rate higher than that agreed to by the valuers. In this regard, the joint report by Mr Dyson and Mr Lunney said (Exhibit A, Tab 12, folio 215): Agreement 26. We agree that the difference in our valuations is purely in the yield variance of 3.8% and 4.25%. 27 The midpoint of this range is 4.025%. We agree that if the passing net rental income were to be capitalised at 4.025%, a capital value of 4,707,975 [sic] would be derived. For practical purposes we have rounded this some down to $4,700,000 which is equivalent to a capitalisation rate of 4.03%. In our opinion, a capitalisation rate of 4.03% and capital value of $4,700,000 is within an acceptable margin of error and it is our joint opinion that the market value of the subject property as at 21 August 2015, assessed in accordance with the Just Terms Act is $4,700,000. 1. Because of the competing positions of the parties as to how I should respond to this agreement, it is necessary to set out, although somewhat lengthy, the full submissions in support of those positions. The Qasabian Investments' position 1. In his outline of opening submissions on this point, Mr Hemmings said, at [15] and [17]-[22]: 15. For the valuation task the only matter upon which [the valuers] disagree is the capitalisation rate to be applied (JR at [26]). The capitalisation rate is extremely sensitive. The difference between them is small. Mr Lunney for the RMS adopts 4.25%. Mr Dyson for the Applicant adopts 3.8%. … 17. As a result, the only matter in disagreement between them is the difference in the capitalisation rate brought about as a result of their subjective analysis of the same transactions. Ultimately, they accept that the analysis is so fine that the midpoint – 4.03% - is "within an acceptable margin of error" by reference to the capitalisation rate that they have each otherwise arrived at (JR at [27]). 18. As a consequence of that agreement they therefore strike upon a market value – determined by reference to the mid point between their analysed capitalisation rates - of $4.7 million (applying the capitalisation rate of 4.03%). 19. Finally, it is to be recalled that Mr Dyson performed both a primary valuation assessment (using the capitalisation approach) and also applied a direct comparison approach as a check. His check method disclosed a value in a range of $4,712,500-$5,183,750 (and he adopted $5,200,000). 20. In the Applicants' submission, in light of (1) the agreement between the valuers, (2) their acceptance of a margin of error and (3) Mr Dyson's check method, compensation in this matter must be resolved by application of the principal first identified in Commissioner of Succession Duties (SA) v Executor Trustee and Ageing Co of South Australia Limited. That is not just that – as it is so often paraphrased – resolving doubts in favour of the dispossessed. Rather, "that doubts are resolved in favour of a more liberal estimate" of value. 21. The Applicant does not press for Mr Dyson's $5,200,000. That is not merely part of the doubt, that is a matter upon which the Court would need to resolve conflicting evidence. However, the range, and margin of error, in relation to capitalisation rate should be resolved in favour of the more liberal estimate. 22. The Court would apply the 3.8% capitalisation rate and determine market value in the amount of $5,000,000. 1. During the course of his opening oral submissions, Mr Hemmings said (Transcript 6 March 2017, page 3, lines 3 to page 3, line 19; page 3, line 28 to page 3, line 48; and page 4, line 1 to page 5, line 50): HEMMINGS: Your Honour has a joint report which has been prepared by the valuers where, as we've tried to summarise in these submissions, they have agreed upon a methodology. The methodology is the capitalisation of net rent. They've agreed upon using the four As. The first A of those, they've agreed upon the sales that they're going to accumulate in order to then capitalise the rent. They've looked at other Seven Eleven sites. They've agreed upon at least part of the analysis which is to recognise that the market has improved since the date of the sale of those Seven Eleven sites they've looked at and it's the 0.25% reduction in cap rate or reflected in about a 6% uplift in value and they then do some subjective adjustments to those in order to determine how to then apply the last of the four As those transactions to the subject site. They come up with a range for their capitalisation rate that we've set out … … Capitalisation rate as set out in their joint report of 3.8% on the one hand for the applicant Mr Dyson and 4.25% for Mr Lunni for the respondent. Having come to that split, they've examined that and they have agreed to in effect adopt the mid point. Not in effect, they have agreed to adopt the mid point. They adopt the mid point because in their language, that's within the acceptable margin of error, the acceptable margin of error arising because the subjective analysis they've had to carry out once they've started with the same approach, started with the same sales, carried out the same adjustment in market and simply then they've tried to work out how best to analyse those transactions probability means that neither of them can suggest the other is right or the other is wrong. This is not one of those cases where differences of opinion might mean further analysis. It takes you further into a transaction to work out how one might separately adjust it. We send up a list of authorities, your Honour, and I'd very rarely go into authorities in opening but there is one paragraph I'd like to take the Court to in the Court of Appeals decision in Caruso which your Honour finds at 170 Local Government Reports 298 and the president in his judgment starting at para 1 with whom Alsopp J at para 191 agreed ultimately‑‑ … … with whom his Honour Mr Justice Sackville, para 191 agreed and the three judges, Tobias J as well, came to the same conclusion but there was one difference between them but relevantly, if you go to para 3 of the president's judgment, the general principle that in determining compensation to a dispossessed owner doubts should be resolved in favour of a more liberal estimate is well known and can I pause there. You'll have noted in our submissions frequently that the expression coming from the executive trustee's case is expressed in the language of resolving doubts in favour of the dispossessed. The actual language is to resolve in favour of a more liberal estimate. But as the Court notes in this case, that does not however detract from the need to engage with and evaluate evidence in competing witnesses. I pause there for a moment. Your Honour, issue that arose in Caruso, which came from para 81 Payne J, which is extracted at para 89 of this judgment. We might need to deal with this in more detail on closing submissions, I'm just touching upon it in opening. What had happened in Caruso, this is one of those cases where there was a series of transactions, all next door to each other, all acquired, had a creek system running through the middle of them, and there was a need to move and relocate the creek system in order to make available more developable land. And there was a competition - and a significant competition - between storm water engineers as to the correct way in which the creek could be treated. And her Honour exceed to a submission that to the extent there was conflict between those two engineers, her Honour would resolve doubt in favour of the dispossessed, and so accepted the opinion of the applicants engineer. And that - the Court found - was in error, because that was a matter about which her Honour in the normal course had to descend into the evidence to understand whether one witness was to be preferred over the other. And as the president says in this paragraph that ,"His Honour however…describing a value." That example is one where fine cap rates similarly applied and the Court prefer to result doubts in favour of a more liberal estimate. In such circumstances, applying the general principle would be uncontentious. The Court in the next paragraph, "It's not helpful…the judge at 81" so that's her Honour, Payne J, that she simply resolved out some favour extracted to para 89 would suggest. In our submission, this is a classic example where the experts have on the evidence agreed to split the difference. And because the difference between them is never the less within an acceptable margin of error, that the Court would not simply adopt the mid point, rather the Court would resolve doubts in favour of a more liberal estimate. We simply then note at para 19 that in his approach to the valuation task, Mr Dyson used both a primary and a check method. His primary method was the capitalisation of net market rents. HIS HONOUR: Stop you there. When I read this element of your submission and went to para 27 of the joint report at 115 in the court book in the Qasabian matter, particularly the last two lines of that paragraph, it occurred to me I should ask you in light of those lines, where is the doubt, or what is the doubt that should be resolved in favour of the more liberal estimate, given that that is - it struck me reading it - an unqualified expression of joint agreed opinion? HEMMINGS: The unqualified - with respect to his Honour known qualified expression of opinion - it is in fact a qualified expression of an opinion, because it is something which sits within an acceptable margin of error. So the conclusion that they reach, which is to strike a bargain at a mid point between their rangers is not the expression of their ultimate opinion - in our submission - because they both accept. They both remain of the view that their percentage is correct, however they accept that because it is so fine, and because the adjustments are subjective, that either of those points in the range are within an acceptable margin of error, and so they choose a mid point. That is something which is - in our submission - in fact adopting the fact that there is doubt, and so they amongst themselves have decided to resolve doubt. Mr Lunney has resolved doubt by going up in value from 4.025 down to 4.03. Mr Dyson has resolved doubt by going down in value from 3.8 up to 4.03. But that is the task that they have undertaken themselves of resolving doubt. That's a matter ultimately for the Court to undertake. The Court's not obliged to accept their splitting of the difference. The Court's not obliged to accept their resolution of the doubt. When the Court sees that the whole of the previous 26 paragraphs, the purpose of which has been to come to the conclusion that they both have a yield variance between 3.8 and 4.25. As I said, the last matter in support of the resolving doubt in favour of the more liberal estimate of course is Mr Dyson had a dual approach to his valuation task. The primary method is the capitalisation of net market rent. And he does use a check method, his check method is a comparable sales approach. His comparable sales approach is appropriate, identifies a range of values. That range of values which is summarised at para 19 but between 4.7 and - I'm rounding - and 5.2. He adopted 5.2 in his statement of evidence in order to - again he was there resolving doubt, but he adopted the 5.2. We don't suggest that your Honour would then adopt the 5.2 because that would fall into the Caruso territory. That would be territory where there would then be the necessity to descend into the comparable sales approach, to consider and analyse those transactions, to work out how they might appropriately be applied. And that would not be a case that's simply resolving doubt, it would be in fact avoiding the task of the president, Sackville J, the Court cannot. It's very different however to the resolving doubts in favour when we're looking at cap rates, and I simply put it otherwise, needs support because of the conclusion that's come between this (not transcribable) but the secondary method is one which similarly support the $5 million assessment of value at the 3.8% cap rate. That is the market dispute in the Qasabian proceedings, and for our purposes, because I do not go behind the evidence, rather I simply rely upon the expression of opinion in their statements of evidence, and ultimately in their joint report, we do not require the real estate valuers for cross‑examination in the Qasabian proceedings. 1. Finally, in his closing oral submissions on this aspect of the claim, Mr Hemmings said (Transcript 9 March 2017, page 151, line 40 to page 152, line 18 and page 154, line 7 to page 154, line 27): HEMMINGS: Your Honour is now well familiar with the approach that's been taken by the experts. The joint report at para 27 has identified an agreement on the range of the capitalisation rate to be used for the purposes of the valuation exercise. It is, as we've already submitted in our opening submission, a classic example of the situation in which the Court resolves doubt in favour of a more liberal estimate. We addressed your Honour briefly on this point by reference to the authority in Caruso. Can I pause there for a moment? We haven't attempted to take your Honour to the numerous decisions where this Court, the Court of Appeal and indeed the High Court have referred to the principle, the application of the principle and the fact that it remains part of the approach to be taken to resumption at all. There, as I would understand it, is no argument about the relevance and application of the principle. It's whether or not it should be applied in this case. In our submission, the approach to be taken to para 27 of the joint report can only be that there is a doubt. The doubt is, what is the correct capitalisation rate? This falls precisely into the sort of circumstances that the president with whom Sackville J agreed in Caruso accept is appropriate. Indeed the example they relied upon was one where it was a difference in capitalisation rate, appropriate for the doubt to be resolved in favour of a more liberal estimate and there is a doubt. The doubt is, they cannot be certain amongst themselves as to whether the correct capitalisation rate is 3.8 or the correct capitalisation rate is 4.25 because it is so fine and they accept that neither of them are right or wrong, that to choose a number, which is what they have done in order to resolve doubt in the middle, is a means and it's a means by which they can resolve doubt in favour of the dispossessed. … The respondent does not - I don't think, but in any event cannot - attempt to take the UCPR provisions which may suggest leave is required to go beyond the reposition of an expert - I'm not even going to ascend into whether that's what it actually means - because what they don't say is that the Court must accept their decision in relation to the manner in which they resolved at. The Court is exercising the role of judicial valuer. As I was speaking to Mr To this morning, as Bignold J - I think probably more often than not - rejected the conclusion of both valuers but was content that his Honour had significant evidence before him to - in the exercise of his role as judicial valuer - come to a conclusion. If your Honour needs support for that proposition about the role of the Court as judicial valuer, one easy place to do it - because we'll be going to Leichardt v ITA - you don't need to go to it now, but your Honour might note para 83 of the Court of Appeal in Leichardt and ITA is one of those descriptions of the proposition that makes it clear the Court is exercising a role as judicial valuer. The Court is not bound to adopt or accept the evidence of any of the parties, as long as the Court has evidence sufficient to come to a conclusion. There is a doubt that needs to be resolved in favour of a more liberal estimate. The Court would be satisfied that it would adopt an evaluation task, the 3.8% capitalisation rate, which then comes to the agreed position of $5 million. The RMS' position 1. On the other hand, the RMS' position is in stark contrast to that proposed for Qasabian Investments. In essence, it is that there was a specific and precise agreement between the two expert land valuers and that, absent some application to reopen and adduce additional evidence as to why that agreement should not be adopted (there being no such application and the land valuers being required for limited oral evidence unrelated to this point), there was no basis for this aspect of the Qasabian Investments' claim. In her outline of opening submissions, Ms Duggan wrote on this point: 10. The dispute between the parties on market value relates to the nature of the agreement reached by the parties' land valuers in their joint report – specifically, whether the land valuers agreed in paragraph 27 of the valuers' joint report that the market value of the Acquired Land is $4,700,000. 11. The respondent submits that paragraph 27 of the joint valuation report is clear – the parties' land valuers agreed that the market value of the Acquired Land is $4,700,000. 12. However, the applicant's view appears to be that, where the valuers agree a range of values, the applicant should be awarded the higher end of that range. 13. The respondent submits that this is incorrect and contrary to the authorities. In particular, the respondent relies on Sydney Water Corporation v Caruso and Ors (2009) 170 LGERA 298; [2009] NSWCA 391. 14. Even if there was doubt, which the respondent submits there is not, any the general requirement to resolve doubt in favour of the applicant cannot be taken in the abstract and the Court must assess the evidence in the usual way. 15. The joint report that agrees market value at $4,700,000 and this is evidence of that fact (UCPR 31.26(3)). The applicant requires leave to call any contrary evidence and no grounds have been made out for that leave to be granted. 1. During the course of her opening oral submissions, Ms Duggan said (Transcript 6 March 2017, page 29, line 6 to page 29, line 20 and page 29, line 35 to page 29, line 44): DUGGAN: Your Honour, the Qasabian dealings are very simple. There is an agreement between the land valuers as to what the market value of the land is. That agreement, your Honour, is not couched in terms of compromise, it is not couched in terms of doubt, it is not couched in terms of anything other than the joint opinion of those experts as to what the market value of the subject property is. The reason for that is that the experts agree that the value can be within a range. And what they have done, in their expert opinion, is agree on what the number is within that range which represents market value. To do anything other than to accept the agreement of the valuers is to, we say, not only undermine the provisions of the Uniform Civil Procedure Rules, but also the Expert Witness Code of Conduct and requires the Court to go behind the evidence, which his clear and uncontroversial, which is that the land value is $4.7 million. That, we say, is the beginning, the middle and the end of that argument. … There's no doubt, it is not a matter of looking behind the evidence, as Mr Hemmings would have you do, in suggesting that they've split the difference or that they've got two views which are equally open. They have expressed a single opinion jointly, and that is the end of the matter. In relation to the issues of disturbance, there is a large amount of agreement now. There is a remaining matter of principle, not of quantum, in relation to the disturbance issue for the Qasabian family trust proceedings which relate to, in broad terms, whether or not they're entitled to stamp duty. Again, if your Honour finds that they are, the quantum would just need to be determined based upon the market value. 1. Finally, in her closing submissions, Ms Duggan said on this point (Transcript 9 March 2017, page 193, line 18 to page 193, line 29): What Mr Hemmings would have you do is to read all of the joint report of the land valuers, excluding the paragraph where they reach an agreement. It's an admission. It's akin to an admission for the purposes of the proceedings. Your Honour in performing your function as judicial valuer, and your Honour in performing that function and resolving doubts has no doubt to resolve. These experts have for whatever reason agreed the market value of the land. What Mr Hemmings wants you to do is to unpick that agreement and ask why did they reach that agreement and do you agree with that? That is going behind the agreement of the land valuers. Their words could not be clearer. The value was 4.7 million and the authorities and the principle that Mr Hemmings relies upon is not relevant nor applicable in the circumstances of this case. Should the agreed position of the experts be set aside? 1. As can be seen from the above material, Mr Hemmings relies on the approach described by Allsop P in Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391, where his Honour said at [3]-[4]: 3. The general principle that in determining compensation to a dispossessed owner doubts should be resolved in favour of a more liberal estimate is well-known: see generally A Hyam The Law Affecting Valuation of Land in Australia (4th Ed 2009 Federation Press) at 316-318. That does not, however, detract from the need to engage with and evaluate evidence and competing witnesses. If, however, upon engagement and assessment, the judicial valuer finds, for example, as Anderson J did in Cook and Edwards v City of Sterling (1991) 4 WAR, that the reasoning of both valuers was not fallacious, that their respective capitalisation rates were open, that none took into account irrelevant considerations and no errors otherwise appeared, the proper conclusion might be that there are simply two open views on the relevant issue – as there can be in ascribing a value: cf Fenton Nominees Pty Ltd v Valuer-General (1981) 47 LGRA 71 at 76-77. In such circumstances, applying the general principle would be uncontentious. 4. It is not helpful to examine the scope of the general principle in the abstract beyond saying that it is not a licence to accept one expert over another without undertaking the task of assessing the evidence in the usual way. If a judge properly undertakes that task, the evaluation of the evidence may well persuade the judge to accept the evidence favouring the resuming authority. That would be a product of assessing the evidence. That process is not to be abandoned as the statement of the judge at [81] of her reasons would suggest she did. 1. This approach is one now conventionally adopted, as a matter of course, when there is, in an evidentiary weighing process, a choice to be made between rationally available and potentially justified positions and where one of them would lead to a more beneficial outcome for the person whose interest in land was being compulsorily acquired for a public purpose. It is a broad principle and, as is the general framework of the Land Acquisition Act, one which addresses any acquisition of an interest in land (as defined) for a public purpose and the resulting dispossession of the holder of the interest in the land. 2. As set out above, Mr Hemmings suggests that, in the context of the application of the principle in Caruso, I should regard the range of capitalisation rates (and, hence, the derived market value of the site) that applied at the beginning of the joint conferencing process of Mr Dyson and Mr Lunney as remaining available for my determination rather than being required to adopt the position set out in the extract from the Joint Expert Report. I am satisfied that it would be improper to do so. I have reached this conclusion, essentially, for the reasons advanced on behalf of the RMS. 3. For the Caruso approach to be engaged, there must be some uncertainty; some range or ambiguity to be addressed by the decision-maker. In these circumstances, the evidence from the Joint Expert Report discloses no uncertainty, nor any ambiguity. 4. No attack has been made on behalf of Qasabian Investments suggesting that the joint conferencing process was anything other than the mandated meeting of the minds of Mr Dyson and Mr Lunney in discharging their responsibilities to set out: * those matters about which they agreed; * those matters about which they disagreed; and * for the matters about which they disagreed, the reasons for that disagreement. 1. It is frequently the position in valuation matters that experts will, during the course of their joint conferencing, discuss areas where they commence with differences in opinion and, having discussed and considered each other's views, reach agreement on what is the appropriate outcome (whether as a monetary amount, adjustment factor between comparable sales or, as is here the case, the appropriate capitalisation rate). 2. The reasoning by which these experts reached their initial positions is exposed to me in their individual expert reports. The joint report discloses, in the extract earlier set out, that, as a result of the joint conferencing process, there was agreement between them that led to the derivation of the $4.7 million market value agreed as appropriate for the site. Because they have reached agreement, it was not necessary for them to set out, in any structured and detailed analysis, why they reached that agreement. The agreement, itself, is sufficient and self-contained. There is no evidentiary basis in these proceedings that would provide any foundation for me to seek to disturb it. 3. As a consequence, to the extent that the Qasabian Investments' claim seeks to have me increase the market value for the site above the agreed $4.7 million, that claim is rejected. The Qasabian Investments' stamp duty claim 1. A claim has been made on behalf of Qasabian Investments that I should determine that that entity is to be entitled to reimbursement of the stamp duty costs that will be incurred when a new property is purchased to replace the site as part of the Qasabian Investments' portfolio. 2. It was Mr Vic Qasabian's evidence that, although he had been looking for such an appropriate property (Qasabian Investments' investment profile favouring owning the freehold of service station sites and leasing them to others who would actually operate the business on such sites), no suitable alternative investment had yet been located. His evidence also disclosed that Qasabian Investments used appropriate professional advisers for a number of the necessary tasks associated with the investment portfolio but that some of the management tasks were undertaken by him and his wife. 3. This claim is resisted by the RMS on the basis that authority from the Court of Appeal (such as Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259) has established that, in circumstances such as these where it is appropriate to regard Qasabian Investments as a passive investor, there is no entitlement to reimbursement of the nature now sought. 4. I am satisfied that this is the correct approach. Indeed, the nature of this, and the reasons for adopting it, were recently summarised by Robson J in Speter v Roads and Maritime Services [2016] NSWLEC 12 (Speter), where his Honour took the approach advocated by the RMS in these proceedings. For the reasons which his Honour set out in Speter, I am satisfied that that approach is appropriate. Indeed, even if I had any lingering doubt as to its correctness, the recent further following of this approach by his Honour in Rocco Fraietta v Roads and Maritime Services [2017] NSWLEC 11 (Fraietta), and by Pain J in Hatzivasiliou v Roads and Maritime Services [2017] NSWLEC 9 (Hatzivasiliou), would mean that, even if I had some vestige of doubt as to the correctness of the approach (which I do not), comity would oblige me to follow their reasoning to the same conclusion, unless I felt that there was a compelling reason not to do so. 5. Indeed, a reading of Pain J's decision in Hatzivasiliou discloses a not dissimilar chain of investment activities as is here the case with Qasabian Investments, with that range of investment activities leading her Honour to conclude that no stamp duty entitlement arose. 6. The Qasabian Investments' stamp duty claim is rejected. Other Qasabian Investments' disturbance (s 59(1)(f)) claims 1. There were a number of other claims for reimbursement of outgoings associated with the making of the Qasabian Investments' compensation claim. There is no dispute as to the amount to be reimbursed, if there is a proper statutory basis founding each of the disputed elements. It is, therefore, necessary to address each element and the competing arguments as to their validity. As some of these are joint claims with Fishing Station, they are all dealt with after the end of my Fishing Station analysis. The Fishing Station claim Introduction 1. There are two major elements of the Fishing Station claim. To understand my consideration of and conclusion concerning each of them requires extensive quotation of extracts from the parties written and oral submissions and from the transcript of the evidence (lay and expert). 2. The first element of the claim arises from what compensation Fishing Station is entitled to as a result of the extinguishment by the acquisition of its non-commercial lease which had the potential to run to 2041. This is a claim for compensation to represent the market value of the interest in the site held by Fishing Station by virtue of its unregistered sublease. The RMS does not dispute the validity of a claim by Fishing Station on this basis but does dispute the quantum to which Fishing Station is entitled for its interest. 3. The second element of the claim arises from what is said to be the fact that the Fishing Station business at Frenchs Forest, a business extinguished on the site (subject only to a holding-over period after acquisition) by the acquisition of the site, has not yet been relocated. This is an anticipatory claim for "disturbance" founded on s 59(1)(f) of the Land Acquisition Act. 4. Fishing Station says the consequence of that non-relocation is that the Frenchs Forest Fishing Station business is, in effect, in hibernation unless and until suitable alternative premises appropriate to the Fishing Station business model being pursued by Mr Alex Qasabian and his wife are able to be identified at a location in reasonable proximity to the site and thus capable of serving the geographic market for which the Frenchs Forest-located Fishing Station outlet catered. On this basis, it is submitted that Fishing Station is entitled to compensation for its future relocation. 5. The RMS' position is that, in fact, the business has relocated and now operates under the name Fishing Station at new premises purchased by Qasabian family interests at Mona Vale. RMS concedes that some compensation for disturbance is appropriate but that it is confined to that which can be ascertained by having regard to the actual relocation to Mona Vale. The claim for acquisition of Fishing Station's interest in the site 1. Fishing Station's land interest claim is for the value of its non-commercial sublease agreement from the date of acquisition until the expiry of that sublease and its three options in 2041. 2. This compensation is claimed in the amount of $1 million, with this being what is said by Fishing Station to be the value of the loss of the differential between the agreed $90,000 per annum commercial rent that should notionally be attributed to Fishing Station's occupancy of the site and the $18,000 non‑commercial rent actually payable under Fishing Station's unregistered sublease. The $1 million is agreed between Mr Dyson and Mr Lunney to be the appropriate attributable value in current terms, if there are no other factors requiring consideration in determining whether this is the correct position to be adopted. 3. On behalf of Fishing Station, Mr Dyson says there are no matters which arise that warrant any revision of this figure and, therefore, as a consequence, this is the amount to which Fishing Station should be entitled. 4. On the other hand, Mr Lunney initially adopted the position that there were two factors arising out of the terms of the unregistered sublease that required consideration in this regard, with these requiring significant adjustment to the amount postulated by Mr Dyson. The two factors raised by Mr Lunney were: 1. The restriction in the lease that precluded Fishing Station from subletting the premises (cl 7 of the sublease); and 2. The restriction in the sublease document that limited the permitted use of the premises occupied by Fishing Station as a "Fishing Tackle shop" (cll 1(i) and 6(a) of the sublease). 1. During the course of the oral evidence of the valuers, Mr Hemmings put to Mr Lunney the proposition that the restriction on subletting of Fishing Station's interest in the premises was set aside by the terms of s 56 of the Land Acquisition Act for the purposes of a valuation exercises such as this. 2. Mr Hemmings suggested to Mr Lunney that this statutory provision mandated consideration of a hypothetical sale or otherwise economically valuable transmission of the interest in the site held by Fishing Station despite the restrictive provision in the sublease. Mr Lunney accepted that this was the basis upon which the matter should be approached and that, therefore, his first sublease-based objection was to be ignored. 3. With respect to the second restriction raised by Mr Lunney, he also accepted, in response to further questioning by Mr Hemmings, that the hypothetical sale, or other disposition required to be assumed, could be one in which the potential purchaser or purchasers were other persons or entities interested in acquiring Fishing Station's interest in the site for the purposes of running a business in the space occupied by Fishing Station, where that business was for the purpose of a "Fishing Tackle shop" – this being the use permitted by the terms of the sublease. 4. Mr Lunney indicated that he was prepared to assume that such a market might exist. However, he indicated that if this were the case, a "s 56 purchaser" for that narrow purpose would not be making a land valuation-based decision in determining whether or not to undertake such a transaction and, if so, on what terms. It was Mr Lunney's opinion that such a valuation process for that hypothetical purpose was one which should be undertaken by the business valuation experts, rather than by land valuation experts. 5. As a result of this evidence, there remain two matters to be determined concerning the model of valuation for such a hypothetical s 56 transaction based on Fishing Station's interest in the site before moving to the question of precisely what number might be derived from that approach with respect to this element of Fishing Station's claim. The two matters are: 1. Is the necessary approach simply one of land valuation, or is Mr Lunney's position that the matter should be deferred to the business valuers to be preferred? and 2. If Mr Lunney's position is correct, what is the business value to be adopted? 1. Although, in reverse sequence, two extracts from the oral evidence given by Mr Lunney explain his position that a pure real estate valuation approach in such circumstances was not appropriate. The first is of short compass and reads (Transcript 7 March, page 88, lines 4 to 9): WITNESS LUNNEY: I don't believe a purchaser, potential purchaser of the leasehold interest would calculate the value of the interest at a real estate based discount rate of 9%. The advantage to such a purchaser in the saving of rent is one of many cash flows in the conduct of that business. I think the calculation and the basis of the calculation would be entirely different if the potential purchaser was limited to a fishing tackle shop operator or perhaps two of those operators. 1. The above quotation is, in effect, a summary of what he had explained a little earlier in response to Mr Hemmings' questions. Mr Lunney had earlier said (Transcript 7 March, page 86, line 27 to page 87, line 6): [HEMMINGS] Mr Lunney, I am asking you a question in relation to, you've identified two alternative bases, if someone is buying it for the purposes of a fishing tackle shop. If you are looking at your real estate capitalisation rate, you do not disagree? WITNESS LUNNEY: Correct. A real estate investor would apply a real estate based discount rate. HEMMINGS: I now want you to look at the rate that's been used by Dr Ferrier. WITNESS LUNNEY: That's a higher rate. HEMMINGS: That's the 20% rate. WITNESS LUNNEY: Correct. HEMMINGS: And you don't come to your own conclusion on that, you've just adopted Dr Ferrier's approach? WITNESS LUNNEY: I defer to Dr Ferrier on that. HEMMINGS: And in deferring to Dr Ferrier on that, of course you are deferring not to something which I've previously called a real estate capitalisation rate. You are now deferring to a business risk rate? WITNESS LUNNEY: Correct, and the basis for that is that if the buyer is going to buy this leasehold interest and conducts a fishing tackle shop business out of the premises, a discount rate that's reflective of that business and those business cash flows is in my opinion the discount rate that would be adopted by a purchaser in that category. HEMMINGS: So you're suggesting the real estate value is changed by potential changes to cash flows? WITNESS LUNNEY: The market, the reason I believe a fishing tackle shop operator would not pay a million dollars is because there's a different buy who this asset would appeal to if one is not permitted to ignore the amenities [sic] clause. 1. Following the first of the above extracts from Mr Lunney's evidence, Mr Hemmings asked Mr Dyson some questions on this topic. This led to a summary by Mr Dyson of his position (Transcript 7 March, page 88, lines 16 to 40): (HEMMINGS): Mr Dyson, can I ask you, you've identified for the purposes of the calculation that you've done of the million dollars, you've applied what I'm calling the real estate capitalisation rate? WITNESS DYSON: That's correct. HEMMINGS: You've seen Mr Lunney's description of his business capitalisation rate to adjust to 20% instead? WITNESS DYSON: Yes. HEMMINGS: And you've heard his reasons for that adjustment? WITNESS DYSON: Yes. HEMMINGS: Sorry, for using the different rate. Do you have a comment upon them? WITNESS DYSON: Well, I thought because it was a property matter not a business matter, so it has property risk as compared to business risk but it should be a lower discount rate because with a business risk you have the risk to the operator and all the other things that come along with it, whereas with the, the profit rent is part of the property and therefore you have a similar, same risk profile as you would with a profile, ie, that for a retail property that the property becomes vacant is your main risk of having a vacant property. 1. Although Mr Hemmings put a more complex possible transaction to Mr Lunney (at pages 90 and 91 of the transcript of 7 March), I do not consider that I am assisted by this discussion of a more complex hypothetical transaction for the purpose of my present analysis. In so concluding, I note that Mr Lunney had had no prior experience with transactions so structured. Whilst Mr Dyson had had such experience, he had not raised this with Mr Lunney in joint conferencing and it was not referred to in the joint conferencing reports. 2. Ms Duggan's questioning of Mr Dyson on this point needs to be set out at some length to understand the conclusion I have reached on the choice between Mr Lunney's approach (of deferring to a business valuation by Dr Ferrier) and Mr Dyson's position of taking a simple land valuation approach and not considering business risk matters. The relevant portion of Mr Dyson's evidence reads (Transcript 7 March, page 92, line 6 to page 96, line 35): DUGGAN: And in relation to the joint report of 2 March 2017, it is fair to say - is it not - that the million dollar figure that you've put on, which appears in the table below the heading Discussion on page 5, is subject to the agreement that is recited at page 4? WITNESS DYSON: Yes. DUGGAN: So, the million dollars in the calculation at page 5 is subject to two relevant assumptions, firstly that there is no constraint on the capacity to transfer a assign or sublet of the lease? WITNESS DYSON: Yes. DUGGAN: And secondly, that there is no restriction on the manner or type of use that's undertaken at the premises? WITNESS DYSON: It was more to do with the conditional sale, to do with having an amendment to the assign and permit a due course, yes. DUGGAN: So, is that a yes or a no, what I'm asking you is was it the two restrictions, namely transfer a assign or sublet, was the first assumption you made, there was no restriction on that? WITNESS DYSON: Yes. DUGGAN: And the second assumption you made in driving the million dollars was that there was no restraint on the permitted use of those premises? WITNESS DYSON: The permitted use could be changed. DUGGAN: Yes. WITNESS DYSON: Yes. DUGGAN: So, you assumed in calculating the $1 million, that those two circumstances had occurred? WITNESS DYSON: Yes. DUGGAN: Now, let me ask you this, I'd like you to assume that there is a capacity to transfer assign or sublet of the lease, but the lease that is assigned, transferred or sublet is subject to precisely the same terms as the lease that Fishing Station currently has? WITNESS DYSON: Yes. DUGGAN: So, it's going to restrain future assignment subletting, or transferring, they can do it once, but just stuck with the clause thereafter? WITNESS DYSON: Mm‑hmm. DUGGAN: And that the only permitted use for the premises is the fishing tackle shop, correct, can you make those two assumptions? WITNESS DYSON: I can make those assumptions. DUGGAN: On those two assumptions, it would be fair to say that a purchaser in the market on that basis would not pay a million dollars for the interest? WITNESS DYSON: They may discount it a bit because of those restrictions. DUGGAN: Now, when we talk about discounting it for those restrictions, you indicated to Mr Hemmings that you considered that the discount was appropriately done in a real estate rate rather than a business rate? WITNESS DYSON: Correct. DUGGAN: Now, if you're looking at just people who are going to or wanting to conduct a fishing tack shop, the occupation of the real estate is subject to them continuing that business. Correct? WITNESS DYSON: Correct. DUGGAN: So the risk is not a real estate risk, the risk is a business risk. WITNESS DYSON: No because it's still a real estate risk because it's still an investment in the real estate component. It's like buying a business and a freehold premises. You don't say well, because a business has a 20% risk factor as according to the business value, you don't then assume that the property has the same discount factor. DUGGAN: No, but Mr Dyson, it would be fair to say would it not that in the scenario that you've just put forward a person who is investing in the property knows that if the fishing tackle store goes belly up they can get somebody who wants to run a café or a dress shop or a motor repair business. WITNESS DYSON: They may be able to because it's a standard clause in leases that a permitted use is specified in the lease. DUGGAN: Yes. WITNESS DYSON: And that under the Retail Leases Act, I think it is, the lease cannot be changed, the use can't be changed. DUGGAN: Correct. WITNESS DYSON: So it's a fairly standard provision in a lease but uses of shops do change because if a lessor sees that he can have a better occupant for the property, if he can see that one business is not going very well and another business can come in and take over and run the property better, then he'd be happy to change the use of the property as long as it doesn't conflict with the other uses in the property or in the case of 7‑Eleven, a use that they're using it for. DUGGAN: So what I'm putting to you, Mr Dyson, is this. The real estate risk when you're a land investor is that you have a broad market from which you can chose and you can control by permitting or giving permission to change a use. WITNESS DYSON: Yes. DUGGAN: And that's why the risk from the real estate investor point of view is different from the business point of view. WITNESS DYSON: Yes. DUGGAN: I'm asking you to assume two things. One, that I've bought an interest that I cannot assign, sublet or release and one that I can only use for a Fishing Station so those risk factors are then tied to the business operate not the real estate, aren't they? WITNESS DYSON: Partly. DUGGAN: Not partly because I know that if a Fishing Station, if a fishing tackle shop goes belly up I have to find another fishing tackle stop to go into those premises. WITNESS DYSON: Yes. DUGGAN: So how the fishing tackle shop is going to perform is going to inform me as a real estate investor as to what the risk is for those premises. WITNESS DYSON: No, I don't, because the problem is with a lot of these businesses is that it's the operator that makes them succeed or fail. DUGGAN: Yes. WITNESS DYSON: So part of that risk is to do with the operator of the business. DUGGAN: Yes. WITNESS DYSON: So if one operator fails, then another operator running a fishing tackle shop if the position is ideally suited for it such as this one, you'd find another fishing tackle shop would want to come in and take over that site. DUGGAN: So you're assuming that there is an investor who is going to go into the market place and examine the performance of that operator before they offer them a lease. WITNESS DYSON: They try to. That's what‑‑ DUGGAN: In examining the performance of that operator, what they're examining is not the real estate return of another set of premises that have a broad range of uses but they're viewing the cash flow and the business performance of the prospective tenant. WITNESS DYSON: Yes. DUGGAN: So the risk in relation to the return is the risk associated with running the business not the real estate. WITNESS DYSON: Sorry, I don't‑‑ DUGGAN: What the investor is looking at is how well the business will perform to determine what their return is going to be. WITNESS DYSON: They do that when they're seeking a tenant, yes. DUGGAN: Yes. So what they are doing when they are trying to work out what the return on their investment is going to be is to determine what the risk of the business performance is. WITNESS DYSON: That operator, yes. DUGGAN: Yes, that operator. That business. WITNESS DYSON: Yes. DUGGAN: That business's risk is likely to be much higher than the risk of real estate performance where there is no constraint on the type of business that can be run in those premises. WITNESS DYSON: It would depend on the premises and how ideally suited they are. An example of that is like hotels where the business risk and the premises are wrapped up together within the risk factor. DUGGAN: In this case, in the assumptions that I've asked you to make which is that the sublease can't be again transferred and the sublease can't have its use changed, the business risk is what's wrapped up in the real estate return. WITNESS DYSON: If it couldn't be transferred again, yes. DUGGAN: If it couldn't have its use changed. WITNESS DYSON: Yes. DUGGAN: Yes. That would mean that what we would be looking at is a calculation much like that which Dr Ferrier has undertaken in his joint report at paragraph 7.4. WITNESS DYSON: I don't think it would be a 20% discount rate. DUGGAN: But that's a matter for business values rather than land values. WITNESS DYSON: Yes, because I don't think it would be that high. DUGGAN: But you defer to the business valuers on that. WITNESS DYSON: I beg your pardon? DUGGAN: You'd defer to the business valuers on that. WITNESS DYSON: No, because it's still property asset. DUGGAN: It's still an asset but the asset's performance is not linked to the real estate, inherent real estate it's linked to the inherent performance of the business. WITNESS DYSON: It's also related to the real estate as well. DUGGAN: You're not going to get the money back from the sublease unless the tenant has a business that's performing. WITNESS DYSON: If you're restricted on the basis that you could never transfer it again. DUGGAN: Yes. WITNESS DYSON: Yes. 1. In further questioning, Ms Duggan explored with Mr Dyson and Mr Lunney their views on the potential for 7-Eleven to consent to a potential change of use despite the restriction in the sublease. The transcript records the following as part of this evidence (Transcript 7 March, page 99, line 2 to page 100, line 21): DUGGAN: 7 Eleven has a mixed business, part of which includes the sale of food. WITNESS DYSON: Yes. DUGGAN: Part of which is the sale of convenience items. You're nodding? WITNESS DYSON: Yes. DUGGAN: Part of which is the sale of beverages. WITNESS DYSON: Yes, that's what I said, a mini-mart would not be able to go into the property. DUGGAN: But somebody who's likely to take any aspect of that business or reduce any aspect of that business is unlikely to be supported by 7 Eleven. WITNESS DYSON: Correct. DUGGAN: And if there was a notion that 7 Eleven was being asked to permit a use other than the nominated use in the lease, there is a strong likelihood that 7 Eleven would require the rent to be reviewed to market. WITNESS DYSON: I don't know about that because the question arises we've determined market rent of the premises which includes the building. The interest leased from 7 Eleven is only the land. DUGGAN: Yes. WITNESS DYSON: So therefore the first thing you have to do is assess what's the market rent or value of the land. I think Mr Lunney and I agreed in one of our reports that it may be in the order of $44,000 a year at $100 a metre for the land. DUGGAN: Are you still answering my question? WITNESS DYSON: Yes, so therefore if they're going to be charging a market rent they'd only be charging a market rent for the land not for the building whereas we've assessed in these when we worked out the profit rents that they, or the building which was built by - for the fishing station premises. DUGGAN: It was and that was - that is what you're valuing in this million dollars. WITNESS DYSON: Yes. DUGGAN: So what I'm suggesting to you though, Mr Dyson, is to the extent that there is a restriction on the nature of the use, the risk that you would have to factor into that million dollars is a risk that 7 Eleven won't let you change the use. WITNESS DYSON: Yes. DUGGAN: But there is also a risk, is there not, that if 7 Eleven does allow you to change your use, they will no longer permit you to have the lower-than-market-rent rent. WITNESS DYSON: Yes, but it wouldn't go up to the 90,000. DUGGAN: What do you say, Mr Lunney? WITNESS LUNNEY: As I understand the scenario that we're exploring, the purchaser buys the fishing station leasehold interest, goes and has a chat to 7 Eleven to say, "Can you please change my permitted use for this?" The advice that I would give to such a purchaser is that it's not likely that 7 Eleven would agree to change the permitted use choice, at least not free of charge, and any agreement that they might make to change the permitted use clause would likely be conditional on other changes to the lease, such as a review of the rental and full market rents. It's difficult to envisage 7 Eleven voluntarily changing the permitted use without anything in it for them. 1. In light of Mr Lunney's comment at the end of the above passage and Mr Dyson's unquantified acknowledgement that the change of use scenario would involve an upward adjustment to the rental, it seems to me that it is appropriate to prefer Mr Lunney's position for the reasons later set out. Conclusion on the basis for assessing the acquisition compensation 1. In his outline of closing submissions, Mr Hemmings summarised the position put for Fishing Station in these terms: 67. It is correct that the business valuers have agreed upon a 20% discount rate in order to determine the value of the business (at least in the before). By its very nature, that is a rate which takes into consideration the many variables inherent in the running of a profitable business. Those considerations are different - and fundamentally so - from the real estate risks considered in order to determine the "real estate discount rate". 68. In that task - in order to determine market value - the relevant risk is whether the premises will become vacant, and if so whether they will be relet. The potential for vacancy is inherent in every transaction of real property that includes, or anticipates, a lease. The risk is not of any particular business failing, but of continuing vacancy. If Mr Lunney's approach was right there would never be a "real estate discount rate". The approach would always be one to use the business rate. 1. In these circumstances, the risk is not merely one of vacancy but one in which there might be vacancy but the only permitted use for a new tenant would be as a "Fishing Tackle shop" – a significant and narrow use defined by the risks associated with running such a business at the site. 2. Mr Lunney explained succinctly the reason for a business valuation approach was (as quoted above – from page 87 lines 2 to 6): ….. the basis for that is that if the buyer is going to buy this leasehold interest and conducts a fishing tackle shop business out of the premises, a discount rate that's reflective of that business and those business cash flows is in my opinion the discount rate that would be adopted by a purchaser in that category. 1. Having considered the competing positions of Mr Lunney (business valuation basis – deferring to Dr Ferrier) and Mr Dyson (straight land valuation), I have concluded that Mr Lunney's position is to be preferred. This is, in essence, that the restriction on use is one the value of which can only be determined by having regard to the profitability of, and risks associated with, that permitted use – as Mr Dyson acknowledged, at the very least, any attempt to change that use would have required the consent of 7-Eleven and, as he conceded, would have led to some (unquantified) upward rental adjustment. Mr Lunney's position is clear, rational and understandable, whilst that of Mr Dyson lacks both clarity and precision (particularly on the issue of variation to the permitted purpose). Compensation calculation on a business valuation basis 1. As a consequence, it is necessary to move to consider what is the outcome of a business valuation approach to the value of Fishing Station's uneconomic sublease. The business valuers agree that the discount rate to be applied to the relevant calculation to derive a value for the unexpired portion of the non-commercial sublease until 2041 (including options for renewal). In a different context, Dr Ferrier explains the relevant calculation (at [7.4] of the joint report of Mr Russell and Dr Ferrier of 23 February 2017) in the following terms: … the difference between market rental of $90,000 per annum and actual rental of $18,996 for a remaining lease term of 311 months, discounted at 20% per annum) would be $391,934. 1. The position described by Dr Ferrier reflects the outcome to be achieved by application of the appropriate rate for a business valuation. This reflects the position put by Ms Duggan to Mr Dyson (at page 96, lines 3 to 5 of the transcript of 7 March). This calculation reflects the business valuation for the appropriate outcome of the compensation claim by Fishing Station based on the future value lost by the acquisition causing extinguishment of the sublease held by Fishing Station. Dr Ferrier's calculation is to be accepted. Conclusion on compensation for the acquisition of Fishing Station's interest 1. The compensation due to Fishing Station for the acquisition of its interest in the site is $391,934. Assessing the Fishing Station relocation claim Introduction 1. In order to determine the nature of the compensation framework within which calculations for compensation for the acquisition of the Fishing Station interest in the site is to be dealt with, it is necessary to determine whether or not this business (for convenience to be called "Frenchs Forest Fishing Station", although its legal title does not include the geographic descriptor "Frenchs Forest") has relocated to Mona Vale, so that Mona Vale Fishing Station (adopting a similar geographic, but not legal, descriptor) became the reincarnation, for the purposes of the Land Acquisition Act, of Frenchs Forest Fishing Station. 2. Consideration of this question involves a weighing of all of the factual material and does not involve me being required to make any assessment of whether or not Mr Alex Qasabian is a witness of truth. Indeed, the RMS expressly disavowed making any submission that would attack the credibility of Mr Alex Qasabian's belief that such relocation has not occurred. However, belief alone is not an appropriate foundation upon which to base my decision. 3. Dr Ferrier was questioned on this aspect of the Fishing Station claim. The questioning related to the instruction given to him to assume that Fishing Station had relocated to Mona Vale. The exchange with Mr Hemmings was in the following terms (Transcript 7 March, page 107, lines 12 to 31): HEMMINGS: All of those matters - we'll keep going - but all of those matters do not assist you in identifying the correctness of your instructions compared to the applicant's proposition? WITNESS FERRIER: Well, my instructions are in the context of a business ceasing to trade from one location and commencing to trade in another location. HEMMINGS: I just ask you to focus on my question. All of those matters are equally supportive of your instructions or the applicant's position of expansion and relocation? WITNESS FERRIER: The applicant's position of expansion but not yet relocation? HEMMINGS: Yes. WITNESS FERRIER: Yes, I suppose that's right. That would be consistent with a business that was expanding and planning as part of that expansion to relocate but had not yet relocated, yes. 1. Dr Ferrier's evidence was given in his role as an expert in business valuation. The assessment of whether or not relocation had taken place for the resolution of this element of the Fishing Station claim is a matter for me, rather than to be determined on any opinion of Dr Ferrier outside his area of expertise. 2. This decision must be made after a weighing of the indicia said by the Qasabian family interests, on the one hand, to support the proposition that Mona Vale Fishing Station is a distinct and separate entity and that Frenchs Forest Fishing Station remains dormant and yet to be relocated and, on the other hand, the indicia that are said by the RMS to lead to the conclusion that, as a matter of fact, Frenchs Forest Fishing Station relocated to Mona Vale and Mona Vale Fishing Station is (although differing in a number of aspects when compared to Frenchs Forest Fishing Station when at Frenchs Forest), nonetheless Frenchs Forest Fishing Station for the purposes of assessment of claims made pursuant to the Land Acquisition Act. There is only a yes/no choice to be made on this point – there is no graduation of outcome as is the position where there are competing evaluative positions to be weighed. 3. To understand how I have reached my conclusion on this point, given its centrality to resolution of the significantly different, potential financial outcomes of the Fishing Station proceedings, it is necessary to set out, at some length, the evidence and submissions on this point. Fishing Station's submissions 1. In his written outline of opening submissions, Mr Hemmings said, on this point, at [36]-[44]: 36. The principal difference on quantum arises because the acquiring authority's expert, Dr Ferrier, proceeds upon the basis that Fishing Station has already relocated to Mona Vale. It is unclear whether he proceeds upon that basis because of his instructions or assumptions made from his understanding of the evidence. That will need to be explored. 37. Whatever the basis – instructions or assumptions – it is one that assumes that Fishing Station through its Director Alex Qasabian, is lying. The Court would not come to that conclusion. 38. The new business – Fishing Station – established by Alex Qasabian and his wife was, although in its early days, doing well. Fishing Station's directors had, and still have, grand visions for the business. Alex has a Bachelor of Business majoring in accounting, Dina has a Bachelor of Commerce majoring in accounting. The business therefore has a formal business plan. It has always been the goal to establish Fishing Station as a chain, or even potentially a franchise. 39. It was for that reason that the name "Fishing Station" was chosen, and not one that otherwise focused upon a location or an individual. That gave the ability to establish: Fishing Station Frenchs Forest, Fishing Station Mona Vale and Fishing Station "suburb". 40. Fishing Station has opened a store in Mona Vale. It is not the relocated Fishing Station Frenchs Forest. To the contrary, and as Alex Qasabian attests, he has been looking – and continues to look - for premises to which Fishing Station Frenchs Forest can relocate. 41. For the purposes of these opening submissions it is unnecessary to descend into the detail of the differences between the Mona Vale site and the Frenchs Forest site. Generally speaking: ● the Mona Vale site is almost four times as large; ● the Mona Vale site provides a large number of additional services and carried different stock; ● the Mona Vale site is on industrial land and retail is limited to only 30% of the floor area only; ● the Mona Vale site is not co-located with a 7-Eleven; and ● the Mona Vale site serves a different waterway. 42. Tellingly no costs are claimed for the relocation to, or the fit out of, the Mona Vale premises. 43. Alternatively, it may be that the acquiring authority accepts as the truth Alex Qasabian's intention for the Fishing Station business and that it is his intention to relocate. In that case, it may be suggested that the claimed costs are not "reasonably incurred" (where reasonable informs the incurring, not the quantum). 44. It is difficult to see how it could be suggested that Fishing Station's conduct is anything but reasonable. The authorities make it clear that the dispossessed owner is entitled to wait until they know if, and how much, compensation they will receive. Fishing Station has not waited. It is looking. Unfortunately, premises have not yet become available. 1. In his oral opening submissions, Mr Hemmings said (Transcript 6 March 2017, page 11, line 23 to page 12, line 18; page 12, line 30 to page 13, line 12; page 13, line 19 to page 13, line 40; and page 14, line 6 to page 15, line 27): HEMMINGS: … And then there were the costs associated with the physical relocated that again, in relation to those costs, we don't understand there to be any dispute in relation to quantum, just in relation to whether or not we have in fact already moved. The approach that seems to be taken by the respondent on this issue is that the question - I should go back one step. My para 37 suggested that it - it appears to us an assumption - that what Mr Alex Qasabian, the director of Fishing Station his telling us is not true. Mr Qasabian tells us that Fishing Station, Frenchs Forest - if I can use that description as the short hand for the premises that used to be used at 7‑eleven premises have now been acquired - has not relocated, that is Mr Qasabian's evidence. And I said here - it appears from the respondent's written submissions incorrectly - that they must have been proceeding upon a basis that he's lying. It doesn't appear to be the case. From the respondent's submissions, they appear to suggest that in fact it's a matter for expert evidence. They appear to suggest that what one does is ask Dr Ferrier whether in his analyses of the accounts, his experience with analyses Facebook pages, his experience in knowing that businesses expand, whether in his opinion, there has been a relocation or not. And with respect, if that is the approach to be taken, it's just wrong. What needs to be determined for the purposes of the s 59 (1F) is as a question of fact, whether a relocation has occurred or is yet to occur, so that those costs that will be associated with the relocation that - in our submission - has not yet occurred, a cost that can meet the description in 59 (1C) of a relocation, or 59 (1F) for a financial cost that might reasonably be incurred. The complication arises because my client - I started doing a bit of a Martin Luther King speech in here, I was criticised by those on my side - did have a dream, young business, setting out, with the benefit of a very detailed business plan. An opportunity at the Qasabian premises to start this business, Fishing Station. We know a couple of things, they choose a name deliberately because they have dreams that this business is going to grow, and they'll anticipated Fishing Station, Frenchs Forest, Fishing Station in whatever other suburb they can find appropriate premises to identify and then locate the Fishing Station. And so as Mr Qasabian, Alex Qasabian - we're going to give him two Qasabian, as Alex tells us - chooses a name for the business which is not location dependant, chooses a name for the business which is not just identified with a person, chooses a name which allows people to identify with the business and know where it is located. An important part of the business is when it is, for example - co‑located with the 7‑eleven premises, means that the fisherman with the boats on the back of their cars are able on their way to the waterway, where they are going to go fishing, pull into a 7‑eleven premises, fill up with fuel, get food and drinks for their fishing journey, and buy their live bait‑‑ … … The co‑location is important because of those facilities, but importantly, they buy live bait, they buy supplies, they buy fishing materials, and they buy it on the way to going fishing. And people fish in different waterways, and as a consequence, the aim has been to establish these Fishing Station premises on major routes towards the different waterways. Frenchs Forest premises serve a waterway. The Mona Vale premises are entirely different. There are a number of features that we've identified about Mona Vale which are different in para 41, I should have paused there to say. There have been premises opened at Mona Vale, they are entirely different. There a couple of important features that identify that difference at para 41. The first of which is the site's almost four times as large. Now, it's almost four times as large because, my third bullet point says 30%, that's an error, it should actually be 33%. The Mona Vale site is within an industrial estate. Because the land is owned industrial, it is of great use to the Fishing Station dream business, because there are things that can be done in the industrial component of the business that there is simply not room to be done - and was not done - at Frenchs Forest, like the making of rods, and now I get lost on the detail of the fishing equipment, the schooling of the reels, and the like. Importantly, in the industrial complex, the retail component, which is what was carrying on, for example at Frenchs Forest, is limited to 33% of the property by area only. The balance of the property is used for the alternatives, which include rod and reel repair, custom rod building, the bait processing. So they actually receive live bait and there, prepare and package it. They do in house rigging, they run from those premises the online store. They provide warehousing for the Fishing Station group, and they assemble lures. All of those are identified at Folio 572 - you don't need to go to it now - para 20 (a) of Alex Qasabian's affidavit. So the retail component at Mona Vale provides for a large number of additional services, and it carries a larger range and a different stock, and it's a different waterway. … HIS HONOUR: One can observe on 619 that there is an original version of the business plan prepared prior to knowledge of the potential acquisition of the Frenchs Forest site, and a version prepared after that. Is it necessary for me to have the earlier version to understand this matter properly? HEMMINGS: I don't know if it's necessary, but your Honour can have - have I got one? I don't have one, but I can get one. It's certainly reacquisition‑‑ HIS HONOUR: The first version is reacquisition, the second version is post‑knowledge of acquisition. HEMMINGS: Post‑knowledge of acquisition, prepan, reacquisition. HIS HONOUR: I understand that, but presumably on the evidence as I read it the original business plan is pre‑knowledge of the public purpose, and the revised version is post‑knowledge of the public purpose, so to the extent that matters on file 637 relate to what Mr Alex Qasabian says about long‑term planning and the like, it would seem to me prima facie necessary for me to know whether that was in the 2013 plan or whether it was inserted in the 2014 revision. HEMMINGS: We'll look at that. … HEMMINGS: That identifies some of the differences between the retail stores that Alex Qasabian and Fishing Station were intending to set up on different waterways for different purposes, and as part of which they would have something like the Mona Vale premises preparing the live bait, carrying out services for the other stores, premises of which rods can be repaired and the spoke manufacture to then be sold at the other store. The evidence of Mr Alex Qasabian is that he has been looking for somewhere to go. I'll pause there for a moment. As your Honour knows, the authorities make it clear that a dispossessed in fact doesn't have to take any steps until they know whether firstly they're going to get compensation and secondly how much. Nevertheless, the Fishing Station has not been sitting on its hands, they have been actively looking for premises to which they can relocate the business. To date, they've not found any. They continue to look. That has a consequence when we deal with the lost profits claim which I'll talk about in a moment. When one then looks at the claim that's been made, the experts have in accordance with the direction that the forensic accountants have as your Honour will recall the direction your Honour made. Both assessed compensation based upon each other's assumptions so that we don't end up with the ships passing in the night or golf and tennis I think is an analogy that is sometimes used. Tellingly, as we say in para 42, we accept there's no hiding from it, we accept that Mona Vale has opened. We accept that Mona Vale is part of the Fishing Station business. We don't accept that that's where it relocated to, because we still intend to relocate: we're looking. And so, no costs have been claimed in relation to the establishment of the Mona Vale premises. Now, if that was the premises to which we were to relocate, the fit out costs would have been claimed. The potential for differences in rent could have been claimed. All of the claims that are made in relation to the physical relocation claim, all the premises to which we have not relocated would have been made and they have not been. And it's not because it's been forgotten, it's because as a question of fact that the Court needs to determine for the purposes of s 59(1)(F) claim as to whether or not we might reasonably incur a cost where that cost relates to our relocation. That relocation has not yet occurred. As I say, in our written submissions I'd mistakenly assumed that there was going to be a suggestion that Mr Qasabian was lying, and as we see from the submissions that's not right. Rather it's a matter of expert opinion. But at 43 we alternatively addressed the other potential that we thought may have been raised, and it could have been suggested that the costs were not reasonably heard. Again, the respondent suggests there's a double move, and yes, in George v Angus the chief judge considered the doctors first move from one premises to another, and then considered the second move from the first relocation to Newcastle and rejected the second move. As to remote, it was mainly because it was the timing temporally, it was remote, but of course that was the consensus where there'd been a claim for relocation once and then a claim for relocation twice, and we don't claim once and twice, we only claim for the premises to which we have not yet moved. The reasonably incurring then is simply attempting to determine whether or not it is reasonable for my clients to incur costs to relocate the business which is without a doubt ticking all the other boxes of 59(1)(F) relating to the actual use of the land, and costs that might reasonably be incurred clearly identifying the potential for the recovery of future costs. It leads to, as we've identified at 46, an approach the needs to be taken by your Honour and your Honour's judgment if your Honour accepts our approach. Mr Russell, of course, has attempted to assess quantum for the lost profits claim is where this arises most significantly at a single point in time on the basis of a set of instructions. That fundamentally assumed a six month hiatus between moving out of the Frenchs Forest in January of 2016 and being in new premises by July 2016. That has not occurred. In fact, we have no yet found a new premises and have not yet moved into new premises. It doesn't change the model - we'll have to talk about the model in a minute - but it doesn't change the model that the experts have discussed for the purposes of assessing compensation, but it stretches the first period of time in that model, because rather than a six month assumption, it needs to be converted to reality with an assumption that it will be a time that runs from the making of your Honour's orders, and we anticipate that that which your Honour would do is make findings and then invite the experts to come in with a result that implements your Honour's findings. 1. At the close of proceedings, Mr Hemmings' written submissions on this point said, at [72]-[87]: 72. For the purposes of the Court's decision tree, the first decision is whether Fishing Station has already relocated to Mona Vale or is yet to relocate to new premises. 73. In the Applicants' submission the evidence is clear. The Court will conclude that the opening of Mona Vale was the expansion of the current business, not the relocation of Fishing Station Frenchs Forest. 74. Before dealing with the detail of that evidence, the Applicant notes that there is no obligation upon the dispossessed owner to find the premises to which it intends to relocate prior to the Court determining both (1) whether it is entitled to compensation; and (2) in what amount. 75. The lost profits claim is made pursuant to s 59(1)(f). As already submitted above, the Chief Judge in George D Angus has identified the approach to be taken to the component parts of that provision. 76. Relevantly, although the task is one which includes consideration of costs to be incurred in the future (because of the words "might reasonably be incurred"), it is not the purely hypothetical task often required for other purposes in the Just Terms Act. 77. Rather, the Court is to determine, as a question of fact, whether Fishing Station is yet to relocate. 78. The best evidence to determine that question is the unchallenged evidence of Fishing Station (through its Director, Alex Qasabian). 79. The Applicant had raised in its opening submissions that the Respondent might suggest that Mr Qasabian was lying. As was apparent from the Respondent's opening submissions, that is not the Respondent's position. Further, Mr Qasabian was not challenged on his evidence that Fishing Station is yet to relocate. Having not been put to Mr Qasabian, the contrary submission simply cannot be made. 80. It is to be recalled that the requirement in s 59(1)(f) is, relevantly, that the loss must be "reasonably incurred". That is not a decision to be made in a vacuum. To the contrary, it is a decision, the reasonableness of which is to be considered in the circumstances of the Applicant. So much is clear from the approach taken by the Chief Judge in George D Angus. 81. It would appear that the Respondent is going to suggest it is a matter for expert evidence. As a matter of approach to the Just Terms Act that is, with respect, wrong. Even if it is not wrong, that evidence comes apparently from Dr Ferrier. Dr Ferrier conceded in cross examination that it was not a matter for forensic accountants. That leaves the Respondent with no evidence as to whether or not the relocation has yet occurred other than the unchallenged evidence of Mr Qasabian for and on behalf of Fishing Station. 82. Finally, and even if those hurdles can be overcome, Dr Ferrier's approach to the valuation task – and the fundamental consideration of whether the premises have yet relocated – was one based upon instructions. The Court cannot resolve that competition on the evidence by reference to Dr Ferrier's instructed assumptions. 83. Of course, Dr Ferrier identifies in both his Statement of Evidence, and cross examination, that he accepts - after his own enquiries - those assumptions as reasonable. 84. The reasons for his acceptance of those instructed assumptions as reasonable are set out in paragraph [2.4] of his Joint Report. Dr Ferrier was cross examined upon those reasons. Ultimately, he accepted that each of those reasons were "equally supportive" of either relocation to Mona Vale on the one hand, or an expansion with future relocation to an as yet unknown location on the other. 85. The last matter that he relied upon was his interrogation of Facebook. Again, as he fairly conceded, that was not something which was relevant to his specific area of expertise as a forensic accountant. It properly sits within his acceptance that this issue was not one for a forensic accountant. Even if it was relevant, it sits within the framework already identified by the Applicant in its opening submissions that it was an understandable "puff". Again, it is important to note that no questions were asked of Mr Qasabian about the Facebook page. 86. In the Applicants' submission, the evidence is all one way. The Court would be satisfied that Fishing Station has not relocated to Mona Vale. That forms part of the intended expansion of the business. Consistent with Mr Qasabian's evidence it is yet to be relocated. 87. Finally, and consistent with that approach, it is to be noted that: ● Mr Qasabian is still looking for premises. This was a matter in relation to which he was cross examined. He identified that he is looking for premises to either buy or lease and that preferably are co-located with a 7-Eleven or service station, or are not. ● No claim has been made for relocation costs to Mona Vale. Clearly, significant costs were incurred in lodging DAs, fitting out those premises and relocating to them. 1. Mr Hemmings' oral closing submissions on this point were (Transcript 9 March 2017, page 160, line 20 to page 161, line 33; page 163, line 12 to page 164, line 16; page 165, line 30 to page 166, line 44; and page 167, line 8 to page 170, line 16): We then turn to the Fishing Station proceedings. The first item to deal with of course in the Fishing Station proceedings is again the claim for market value. And this is a matter that again - we say - there is significant agreement between the experts, which in fact will satisfy your Honour that the appropriate award of compensation for the market value of the acquired interest is $1 million. As I understand the respondent's submissions, there is now an acceptance that upon the correct interpretation of both s 56 and the Leichhardt v RTA - no longer following McDermott - they accept that your Honour must assume a sale, and so Mr Lunney's first qualification no longer applies. The way we've expressed the agreement between the experts is that if your Honour ignores that restriction, that they can't sell it, and accept that the property is to be sold into a competitive market, the experts agree that market value is a $1 million. The experts do agree that there is a competitive market. There needs to be an assumption. Can I deal with this first, the statutory construct, and then secondly from the evidence, because if the evidence is going to attempt to value it in a way other than the statutory requires, it cannot be used. The Act requires the sale between the willing, but not anxious, parties. It either has assume, therefore, that the market it competitive, or that the market is so sophisticated that even if there is only one purchaser, that purchaser will still nevertheless be willing, but not anxious, and so will pay market value. From our submission, the starting point, by reference to s 56, is there is not even a requirement for the consideration of the competitive market to make sure the purchaser is paying market, because of course the vendor is not going to sell for anything less than market. That's the starting point to the approach. On the evidence then before your Honour, Mr Lunney conceded - and as we say in our para 63, properly conceded - that for the purposes of this valuation task, he's assumed that there is two or more purchases. Sorry, I'm corrected in the way Mr Lunney expressed it, it wasn't an assumption, he accepted that in fact there would be - through his hypothetical exercise - two or more purchases in the market place who have an intent - as you see in our para 63 - to use the premises for the fishing tack use. That is, there are two to or more parties in the market place who are fully informed, acting reasonably, not anxious, who want to use the premises for the purpose limited by the use. What did I say? For the use limited by the lease. In our submission, that's the end of the matter. Once I've got an acceptance you can sell the property. Once I've got acceptance that a million dollars reflects market but for some limitation that I'm going to find to impose upon it, once I accept that there is a market competitive with two or more people who want to use the premises for the purposes limited in the lease, there is simply no room, and this is Mr Dyson's evidence, to then say, "Oh, well, hang on, we worked out the market would be if it was simply being sold on the open market, a million dollars, but now we're going to reduce it." There is simply no warrant to reduce below the million dollars. We didn't know transcript had been ordered and we don't have a copy of transcript. I see the respondent's got some transcript references in their submissions so we've asked to be provided with a copy of it. I don't know if we've been provided with it yet so I can check. Mr Lunney's approach is one that in our submission and Mr Dyson's evidence is one which does not undertake a market valuation. It doesn't determine market value. It doesn't apply for s 56. It's not meeting the requirement to s 55A. He takes an approach which is to say yes if it can be sold and yes if it's in a competitive market it'll get a million dollars but fishing tackle shops are risky. Because they're risky, there's a potential that a tenant won't last the life of the lease and you'll need to replace them. As we say in the written submissions and as Mr Dyson said, that is the circumstance in every single instance where a purchaser is buying a property either subject to a lease or buying a property for the purposes of lease. … Then a significant potential fork in the root is whether there's been a relocation or not. Clearly we say that the premises are yet to relocate and we say with respect that the evidence in relation to that question, once the task is properly understood, is all one way. Well, we make a note at para 74 and 75 that there is a level of complication in the proceedings because the relocation has not yet occurred. As we've said already, that is entirely consistent with the requirement of 59 (1) F, words in brackets to the included costs that might reasonably be incurred. So, no doubt includes future costs. And we've given your Honour the reference in para 75 to both the two judges decision in Angus, and also I think it was Jagot J decision in Macaville, that a dispossess person is entitled to weight until they know if they are going to get compensation, principle, and how much quantum before they then go out and make the decision to buy the decision to buy the replacement premises, to go out and buy the new house, to incur those costs. And so no criticism can be laid at the feet of the applicant in these proceedings because they have not yet found the premises to which they intend to relocate, that's the first point. Second point is of course, even though they don't have to, but because it is their business, they have actively been trying to find premises to which they can relocate. And Alex Qasabian was cross‑examined on it, and he's not looking with blinkers on, he's trying to find premises that Fishing Station can buy. He's trying to find premises that Fishing Station can rent, he's trying to find premises that will be collocated with a 7‑Eleven or service station, he's trying to find premises that aren't. He is trying to find premises that are commensurate in location, so they serve a water way, are on a major road, and hopefully provide parking for cars and boats on trailers. They have not yet been able to find one even if they have to. Alex Qasabian's very clear evidence is that they still intend to relocate the Fishing Station, Frenchs Forest business. He also identifies things like - and we'll deal with this when we deal with the evidence of Mr Russell and Dr Ferrier - that he doesn't anticipate that the Fishing Station, Mona Vale, expansion will compete with the Fishing Station, Frenchs Forest, if it was still there or relocated, because the business are complimentary. It's part of the expansion plans that they have. The Frenchs Forest premises have been lost, and as a consequence of the acquisitions, they wish to replace it. That is the very clear position of Alex Qasabian, and although some questions were asked about the expansion into Mona Vale, there's never been any secret about the expansion into Mona Vale. It's clear from the business plan that there was intentions to expand, it's clear from his affidavits that there was intentions to expand and relocate. Very importantly, no questions, no questions, were put to Mr Qasabian to suggest that he in fact does not have the intention to relocate to premises once they find them. No suggestion was put to him that he was lying when he's speaking on behalf of Fishing Station. There is simply no contest on the factual material - and we'll come to assumptions to be made by the experts. There is simply no contest on the factual material that it is the intention of the dispossess owner in these proceedings to relocate the Frenchs Forest business to another location when they find it. Now, that's fundamental in our submission. In different parts the Courts task under the Just Terms Act, sometimes one is working hypothetically, sometimes one is working upon findings of fact that the Court needs to make. … We don't invite a gloss, we invite your Honour to look at the decision and say for Fishing Station to have had a business, to have expanded into Mona Vale where we've got now in an industrial estate with 33% of the property being used for retail, 67% of the property being used for the manufacture of rods, the repair of rods, the manufacture and packaging of bait, the provision of different services, the provision of different products. That was an expansion, one that was able to work as part of the desire, their dream, to grow the business, produce rods there, sell them in the other shop, for example. Their decision when Fishing Station Frenchs Forest is taken away by the acquisition to say we intend to replace that, we intend to relocate to set up Fishing Station, hopefully Frenchs Forest. In any event, on the similar roads to similar waterways. Your Honour, ask yourself "Is that decision by Fishing Station in their circumstances a reasonable one?". And in our submission, one, on the facts, it's all one way because it's untested. Two, in the circumstances, your Honour would be satisfied that it's reasonable. There is circumstantial, if I can express it that way, evidence relied upon the respondent to the contrary. It's relied upon then by Dr Ferrier to explain his instructions, and for him to then adopt the instructions as reasonable. And the circumstantial things are like they've got the same phone number, if only Alex could remember his phone number. Got the same ABN, got the same TFN, got the same corporate identity, they took stock, surprise, surprise, after Fishing Station was taken by the acquisition. When they had the premises open, they put the stock in there. With the greatest respect, it's no great surprise if it's operating as an expansion, why would one leave it sitting in the garage or in the store room until you actually got the replacement premises until you know that you are getting money for it? A whole series of circumstantial material that the respondent relies upon to attempt to rebut, without putting it to him, the proposition that Mr Qasabian and Alex Qasabian, that they intend to relocate. That's evidence that just sits there, upon which submissions will be made. You've then got Dr Ferrier's approach, which in the opening submissions was what was relied upon by the respondent. They expanded a bit to the circumstantial materials now as we would understand their written submissions. They need to because Dr Ferrier can no longer provide the support that they had previously relied upon for the reasonableness of the decision. Dr Ferrier can no longer support the reasonableness of the decision because he did two things fairly. And to his credit, he conceded matters that he properly should have. The first is the question of whether it was an expansion or a relocation or they are yet to relocate was not a matter that fell within the expertise‑‑ HIS HONOUR: It's a matter of objective fact, is it not? Not subjective in the mind of Mr Alexander Qasabian. HEMMINGS: No, that's where I'm stressing the importance of the George D Angus decision. So, it's not an objective test, it's a test of reasonable. So great care needs to be taken not to replace the test with a different one. So it's not an objective test, it's test of reasonableness. Was the decision to incur the costs reasonable? And it's not "Does your Honour think it's reasonable?", it's not "Does Ms Duggan think it's reasonable?". It's "Was the decision by the Qasabians, in their circumstances, reasonable?" So whether Preston J thought Dr Angus' five minute rule was reasonable was irrelevant. Whether Professor Blogs, I can't remember his name, in George D Angus thought the five minute rule was reasonable was irrelevant. Whether assessed as objectively as you possibly could to say here are hospital standards, and we have them from all around the world, look at those - there was actually, I think, a fifteen minute rule in one of them. And there's a five minute rule assessed objectively, fifteen minutes. Irrelevant. The question was "Was Dr Angus' decision, in his circumstances, a reasonable one?" It's difficult to put a handle on the correct description of the test where one tries to supplement the description of the test with a different one. … … Both care needs to be taken not to replace the requirement for consideration of whether the costs were reasonably incurred to replace it with an objective test. Now, I can take your Honour through authorities, if you like, about whether it's subjective, objective or the otherwise. But the Court of Appeal has turned it's mind to objective or otherwise tests and has identified that the market value test is objective. No other cases referred to, and there is no other case that we have been able to find which identifies any part of the‑‑ HIS HONOUR: I understand that. Perhaps I should take a step back and put this to you. Nothing's been put to me by Ms Duggan, I don't know that it will be put to me by Ms Duggan, that Mr Alexander Qasabian is lying. It may be, for the purpose of this question, that it is appropriate for me to assume that Mr Alexander Qasabian did not intend to relocate Fishing Station Frenchs Forest to become Fishing Station Frenchs Forest (At Mona Vale). But is it not open for me to conclude for the purposes of this test that despite his intention, he has in fact done so? HEMMINGS: As we would understand it, with respect, no because if your Honour accepts as the truth - let's put it as it's highest. Your Honour accepts it the truth that we've opened Mona Vale, we've lost Frenchs Forest and we intent to relocate Frenchs Forest. The fact that Frenchs Forest old exists with Mona Vale or without Mona Vale is an interesting fact, but is irrelevant to the relocation question that we are asking. There was a business, Frenchs Forest. "Have you given up on that one and it's just been absorbed by Mona Vale?". Alex Qasabian, "No, I haven't". "Well, what have you done, you've opened Mona Vale?", "We intended to expand and we intend to relocate Frenchs Forest". Unless your Honour is satisfied that it is a lie, and no‑one said that, or unless your Honour could be, without it being said that it's a lie, satisfied that in fact, there is no intention to relocate, it's not good enough being satisfied that they've opened Mona Vale, because that's not in dispute, they've opened Mona Vale. The question is whether you are satisfied that in opening Mona Vale, there is no intention to relocate Frenchs Forest to somewhere else. HIS HONOUR: Go back to Dr Angus, who - as his Honour dealt with - went from Wagga 1 to Wagga 2, and then to Newcastle. Now, let's assume he went from Wagga 1 to Wagga 2, kept Wagga 2 and had Newcastle as well, he would not be entitled to compensation for Newcastle. That being a slightly different circumstance to the circumstance that his Honour actually had to deal with. The relocation from Wagga 1 to Wagga 2 - leaving aside the question of the five minute rule and the change to the diminution of the practice that resulted from that - isn't it at least open to me to conclude on the facts - if I were to do so - that what has happened here is we've gone from Frenchs Forest 1 to Frenchs Forest 2? And there may still be a future intention to have other Fishing Stations, whether one or on an intergalactic scale, but that the relocation to Mona Vale was in fact the relocation of Frenchs Forest on the facts. Isn't that open to me? That would translate the intention to have future Fishing Stations to be to have future Fishing Station, not to have a future Frenchs Forest? HEMMINGS: Your Honour, is it open on the facts, on the facts‑‑ HIS HONOUR: No, if I were to conclude that on the facts, that is a legally permissible decision making path, is it not? HEMMINGS: That's a different question, I can answer that one more easily. Yes, as a legal decision making process, your Honour could conclude that in fact, they have relocated to Mona Vale. HIS HONOUR: And isn't that the first question that I have to ask my self in this part of whether or not I have the tree standing on it's head or not, that is the first decision that I have to make on this aspect, because the Fishing Station claim? HEMMINGS: Yes, I'll come back to that in a moment, but I address your Honour by reference to the Angus decision. So, move one to Wagga 2, of course that diminished his practice by more than half, and so that's where the loss profit was. HIS HONOUR: I understand that. HEMMINGS: And it was on moving from point 1 to point 2. Then he said, "I'm moving from point 2 to point 3 in Newcastle". And his Honour denied that claim, his Honour added an element of temporality to the reasonableness requirement. So, his Honour said that even in George Angus' subjective decision making process of the reasonable incurring of the costs because it was now two years later and he hadn't done anything about trying to fix his practice in Wagga, it was temporally remote. And so either, not reasonably incurred or not a direct and natural consequence. I say that so I don't need to say it again because the respondent actually tried to suggest that this a second move and rely upon George D Angus and the fact that there is no principle that two moves are unacceptable, and in fact, one can easily see how two moves might be acceptable is you can only find temporary premises to move to and then move to your final premises. HIS HONOUR: Qasabian might have conducted garage sales with the fishing stock in the intervening period, I accept that that doesn't create a break in the chain, as it were. HEMMINGS: What the respondents do with George D Angus and the two moves is a little like what they attempt to do with Fitzpatrick and the facts versus the principle. There's nothing wrong with two moves, two moves didn't pass muster in George D Angus. What your Honour would need to do, now going back to your Honour's legal question, yes, of course, legally able to make the decision, but it requires your Honour to reject the evidence of Mr Qasabian, of Alex, that they intend to relocate. It requires your Honour to reject the evidence of Alex Qasabian, that that was an expansion that they intended to do and they get to relocate. And it requires your Honour to reject that evidence in circumstances where it would be unfair to reject it, because it simple wasn't put to Mr Qasabian, and that's not what he did. There is a real problem - even if rules of evidence don't apply - for the respondent to invite your Honour to come to that sort of decision when it wasn't put to Mr Qasabian when he was in the box. I was touching upon Dr Ferrier, because I said the respondent's approach has changed between opening and closing. In opening, they relied upon Dr Ferrier for the support of the relocation, and in close they don't, and they can't. And that's because Dr Ferrier firstly concedes that it's not a matter for forensic accountants. Secondly, I took him through it and we've identified the paragraph, it's our para 84, his para 3.4 of the joint report. He had a list of matters that he said support the assumptions that he was instructed to make, that they'd relocated to Mona Vale. And the assumptions that he'd been instructed to make, I took him through them. And in relation to them all, he agreed that they were equally supportive of Fishing Station either expanding and relocation to Mona Vale, or expanding and yet to relocate to other premises. So, at the end of the day, the respondent has nothing, the respondent has this, the respondent has the untested evidence of Alex Qasabian, the respondent has the instructions apparently given and set out in detail in Dr Ferrier's report. No material that supports those instructed assumptions, because they are otherwise relied upon Dr Ferrier's agreements with the reasonableness of them, and then Dr Ferrier's exceptions that it's not within his expertise, and nor is it supportable in any event. That then leaves Facebook. I said it in opening, as another matter about which Qasabian was not asked a single question. Dr Ferrier apparently - although he said it wasn't something that fell within forensic expert expertise - can use Google and Facebook and found some social media pages which said, sometimes it says opening new store, sometimes it says opening relocated store. It doesn't take - with the greatest respect - a great deal of imagination - or if we're looking at circumstantial cases to say there is hypothesis, which might otherwise explain it - that when they're premises at Frenchs Forest are terminated by the acquisition to keep the market interested in them instead of describing it as a closing down sale, describe it as a relocation sale. If miles are to made out of it, in fairness, it's a matter that should have been put to Alex in cross‑examination, and it wasn't. The last thing you would note at para 87 is his still looking for premises. The present intention to relocate when they find they'll move, and I've already touched upon the variety of premises they're looking for. And the last bullet point, it's not insignificant that clearly in moving to Mona Vale, those premises, there were relocation costs in claim, the premises needed to be fitted out. Your Honour's seen the nature and extent of the claim that's made in relation to the hypothetical Fishing Station relocation, then there's no reason to assume that the cost of fitting out the - even if it's just the retail component - 33% of Mona Vale would be similar, and hundreds of thousands of dollars, and no claim is made. The only rational explanation that no claim is made is because - consistent with Alex Qasabian's evidence on behalf of Fishing Station - they have not relocated to those premises. They still intend to relocate, and those costs, are yet to be incurred. It has a significant consequence, obviously, in these proceedings in terms of significant costs incurred and not claimed because it simply is inconsistent with the applicant's case to claim. 1. Finally, Mr Hemmings' closing submissions in reply on this point were (Transcript 9 March 2017, page 199, line 29 to page 200, line 22; page 201, line 46 to page 202, line 41; and page 204, line 17 to page 204, line 37): HEMMINGS: No, your Honour has a business plan before you. DUGGAN: And it says what it says. HEMMINGS: It says what it says and what it says is entirely consistent with what Mr Qasabian says and there is a continuing suggestion, it comes out I think three different times through the respondent's submissions that you are sometimes going to accept what he says, sometimes you're going to reject what he says, even though it's never put to him that you should reject what he says. You have a business plan which is consistent with the evidence of Mr Qasabian and consistent with the position of the application in the proceedings that they are going to expand and relocate. The submission is made that they are not going to expand and relocate and yet the statement in the business plan was never put to Mr Qasabian and never asked why he said it if they're not doing or are doing it and nor was he ever cross‑examined in relation to the concept generally or specifically. It is, in our submission, an extraordinary submission to have made. Your Honour will look through the balance of the evidence, obviously your Honour has identified those paragraphs and those parts of the business plan already. It talks about expansion, it talks about extra stores. Your Honour has also seen the evidence of Alex Qasabian in his affidavit about their intentions to relocate and the final submission that was on this topic was in relation to para 6 of his affidavit really including properties that he's looked at. Paragraph 6 of the affidavit of 22 February 2017 at folio 642, where there was a reference to the A to E properties and a suggestion that they were not co‑located properties. But of course, it was an inclusive list of the properties that he looked at, as clear from the chapeau, and no questions were put to him in relation to that. We then turn to my description, the puff. This is a classic example of cake and eat it too submission. Apparently, there is no need to cross‑examine Mr Qasabian in relation to the Facebook ads and the relocation comments in them because what he says and what they say speak for themselves. However, we're not entitled to rely upon what Mr Qasabian says when it's something that's inconsistent with the respondent's case. Even if you look at the relocation sale note that is now not hidden by dark blue, they have been compulsorily acquired and they do have to find a new home. It is not inconsistent with the approach that they have identified that they are taking, that until they find a new premises, they will be selling from those premises that they say they intended and have always intended to expand into. It's not inconsistent with the approach that they have adopted and in any event, if the submission was going to be made against him, he should have been tested upon it. … … HEMMINGS: It's getting easier as your Honour goes. There is a submission that I am trying to come up with a name for, but it is the RMS principle of stagnation might be an appropriate description for it. If your Honour accepts, as your Honour will, that Fishing Station was a business that had an intention to expand and if your Honour accepts, as your Honour will, that Fishing Station had the intention to expand and therefore, when Frenchs Forest was taken it wanted to replace and relocate, the reason that the applicant in the proceedings finds itself in difficulty is because rather than doing nothing, it did something. Rather than sitting back and saying "Hold on, if I open Mona Vale, the respondent will say 'Ha ha, you aren't moving somewhere else, you've moved to Mona Vale so we're going to deny you your claim for relocation because you haven't sat on your hands'". Now, the respondent's submission can only mean that the invitation it sends to the world in the circumstances of a compulsory acquisition is "Put your business on hold, don't step any steps because if you take any steps to maintain your business and your business plan, that will frustrate the claim that you intend to make even though it is one that prevents additional losses being incurred". It is a stagnation submission that's suggested needs to be implement and it is one which, in our submission, be rejected. HIS HONOUR: I'm not sure that that's what they're saying. DUGGAN: It's not. HEMMINGS: It's not. Of course it's not what they're saying, it would be an embarrassing submission for that acquiring authority to make, but it is a consequence of the submission. HIS HONOUR: I understand it to be "If you choose to stagnate, you may have a claim of a particular nature", to adopt your word, "you may have a claim of a particular nature. But if you choose to do something else then you will still have a claim but it won't bet he same." HEMMINGS: But therein lies the rub, because unless its stagnating in the first scenario you assume there are two things going to occur. And that is in the first scenario you are going to have Frenchs Forest and you're going to have the expansion. That's the starting point. Now Frenchs Forest gets taken unless you are going to stagnate and not move to Mona Vale - yes, unless you are going to expand and move to Mona Vale, so unless you stagnate, only by stagnating can you not demonstrate the continuing intention to expand and relocate. On the approach that they are taking to the facts in this case it is the only way an applicant can avoid the appearance of the relocation that it says is not a relocation being the relocation that the RMS says it is. It is an approach which invites an applicant to stagnate in order to avoid complication in proceedings. … HEMMINGS: I was bubbling in relation to Alex's transcript references where he found Mona Vale, which was then bought by QFI, while looking for premises to which to relocate Fishing Station. So he's wearing two hats; he is looking for premises for Fishing Station, doesn't find premises for Fishing Station but finds something that QFI will buy. Apparently that evidence must be accepted by your Honour. We don't have a difficulty with it being accepted but apparently that evidence must be accepted by your Honour, but what your Honour apparently must ignore is the totality of his evidence which was that the premises that he found to expand to while he was looking for the premises to relocate, and continues to look for premises to relocate, that have not yet been found. The evidence in his affidavits, and to the extent he was cross-examined on this at all, that when did he find Mona Vale is entirely consistent with the applicant's position. Those are our submissions in reply. 1. The backdrop to these submissions is provided by written and oral evidence from Mr Alex Qasabian and Mr Vic Qasabian. There is also relevant documentary material in evidence to be weighed in this assessment. Mr Alex Qasabian's evidence 1. I turn, first, to the evidence of Mr Alex Qasabian. Mr Qasabian provided four affidavits in the Fishing Station proceedings. It is not necessary to reproduce the entirety of each of those affidavits, as some of their content does not bear upon this issue. On the other hand, a deal of it is here relevant and is reproduced below under the heading of the date of each affidavit from which the material has been extracted. Affidavit of Mr Alexander Qasabian dated 22 June 2016 (Exhibit B), [5] ‑ [10]: 5 There were a number of things I did when setting up Fishing Station with an eye for growing the business in the future: (a) Choosing the name of the business When deciding upon a name for the fishing tackle shop, I was looking for a generic name which did not refer to location (for example, Frenchs Forest Bait and Tackle) or our name: for example, Al's Bait and Tackle. I intended the generic name to allow us to expand the business and potentially franchise it, and it's at that point I was going to include the shop's location in the name (for example, Fishing Station Frenchs Forest and Fishing Station Mona Vale). Furthermore, the generic name Fishing Station did not limit the type of business activities within the fishing industry: for example, manufacturing, retail and wholesale. (The expression "Fishing Station" used in this paragraph is not intended as a reference to the corporation Fishing Station as defined in paragraph 1). (b) Choosing the software package. I acquired the POS software (Vend) for use in Fishing Station's business with the knowledge that it could accommodate multiple stores and activities: for example, online, retail, wholesale, manufacturing, location 1, location 2 etc. (c) Business plan. I refer to Fishing Station's business plan which is Appendix E in the Expert Accountant's Report of Paul Russell dated 28 September 2015. Based on my knowledge and experience of fishing (both as a trader and a fisherman over many years), I thought there was, and is, enormous potential for the Fishing Station model of doing business at service stations where car washes or old mechanical workshops are no longer utilised. 6 On or about 5 November 2015, Qasabian Family Investments No 2 Pty Ltd as trustee for Qasabian Unit Trust No 2 purchased 50 Darley Street, Mona Vale ("Mona Vale"). I intended to carry out at Mona Vale additional activities to those I I had carried out at the Property. 7 Somewhere like Mona Vale was always on the cards for several reasons including: (a) The location accommodates the Pittwater waterways from Narrabeen and Ingleside to Palm Beach. It is far enough away from waterways and Fishing Station in Frenchs Forest that the two would not compete with each other. (b) Fishing Station situated at the Property was predominantly a pure retail shop. In order to accommodate Fishing Station's future goals, I needed a larger facility enabling me to provide additional activities including: (1) in- house fishing rod repairs (2) in-house custom fishing rod building (3) in-house bait processing: that is, sourcing fresh bait, preparing and packaging bait for sale (4) fresh bait (5) skirted lure assembly: that is, purchasing lure heads and assembl1ng with custom skirts, and (6) bulky goods. 8 Mona Vale gives opportunities that were not available at the Property including. (a) Space to provide the services Fishing Station at the Property did not have the space to do so including: (1) rod and reel repair centre and custom rod building (2) bait processing (sourcing fresh bait, preparing and packaging for sale) (3) in-house rigging: for example, bait rigs, shark rigs, tuna rigs, deep dropping rigs and wind-on leaders (4) running the on-line store (5) warehousing for additional retail sites in the Fishing Station Group, and (6) skirted lure assembly (purchasing of lure heads and assembling with custom skirts). (b) Incidentally, Fishing Station is able to apply for, and obtain, a Shimano Fishing Australia ("Shimano") dealership because I understand Mona Vale is not an area where they have a licensed dealership (or equivalent). Shimano is a leading Japanese supplier of fishing rods, reels and accessories and one of the best known brands in the fishing tackle business. I understand Shimano does not give a dealership licence or franchise to a trader operating within 10 kilometres of an existing Shimano dealership. Based on my knowledge and experience of fishmg (both as a trader and a fisherman over many years), a fishing tackle shop like Fishing Station must have at least stock from Shimano and Diawa Fishing Australia in the shop to attract fishing consumers. Both suppliers are ideal. 9 The outlet in Mona Vale is not fully operational and to date I haven't incurred the major costs for marketing and media for this outlet because to do so is premature. I need to do several things before opening the outlet to the general public and have an official opening and carry out a marketing and media campaign including: (a) render and paint the front of the building (b) erect additional signage after building works completed (c) obtain certificates from private certifiers, and (d) complete internal fitout so it is ready for the general public to shop there. 10 I intend on opening Fishing Station in Frenchs Forest to replace the one at the Property RMS acquired. QFT is purchasing 312 Warringah Road, Beacon Hill, from 7-Eleven and intend on obtaining planning approvals to construct and operate a service station and convenience store there along the lines of what 7-Eleven had at the Property. I wish to operate the Fishing Station business there after relevant planning approvals are obtained. If that is not possible, I will try and find another site in Frenchs Forest where I may operate Fishing Station. Fishing Station's retail shop at the Property was profitable and in its growth phase. It serviced Sydney Harbour, Middle Harbour and surrounding waterways. A Frenchs Forest outlet will also provide a distribution centre for products produced at the Mona Vale outlet. Many of Fishing Station's customers expressed disappointment that I had to close the Fishing Station outlet at the property. At various times, customers said to me: "You were so convenient to me. I would buy my fishing tackle, fuel my boat and buy ice and food from 7-Fieven on my way to Roseville Boat Ramp"; and "That's a pity. It suited me to buy my bait and tackle from you on my way to Narrabeen Lake or Narrabeen Beach." These customers may go to competitors at Balgowlah, Chatswood, Narrabeen and Belrose until Fishing Station is re-established in Frenchs Forest. Affidavit of Mr Alexander Qasabian dated 25 November 2016 (Exhibit B), [23]-[290]: Relocating acquired Fishing St ation store to Frenchs Forest premises 23 It has always been, and remains, my intention to open a Fishing Station shop in Frenchs Forest to replace the one at the Property that RMS acquired. 24 Fishing Station's retail shop at the Property was profitable and it was in its growth phase. It serviced Sydney Harbour, Middle Harbour and surrounding waterways. 25 Many of Fishing Station's customers expressed disappointment that I had to to close the Fishing Station outlet at the Property. At various times, customers said to me words to the following effect: "You were so convenient to me, I would buy my fishing tackle, fuel my boat and buy ice and food from 7-Eleven on my way to Roseville boat ramp." and "That's a pity. It suited me to buy my bait and tackle from you on my way to Narrabeen Lake or Narrabeen Beach." 26 These customers may go to competitors at Balgowlah,Chatswood, Narrabeen and Belrose until a Fishing Station is re-establsihed in Frenchs Forest. 27 A Frenchs Forest outlet would also provide a distribution centre for products produced at the Mona Vale outlet. This was also a feature of my growth plans. 28 Based on my expenence in setting up Fishing Station at the Property, I have obtained a number of quotes for packing and closing down the shop at the Property, including for signage, packing, removalists and storage. I have also obtained quotes for the fit-out of the future premises, including fit-out costs, signage and marketing costs. Copies of those quotes are included in applicant's schedule of disturbance losses served in proceedings 2016/158775, Fishing Station v RMS. Moving from the Property 29 When the time came to vacate the Property, I had not located suitable replacement premises in Frenchs Forest. 1. Mr Alex Qasabian was required for cross-examination. His cross-examination was across three days, with this being necessary as a consequence of the interposing of other evidence given on the voir dire but, because this evidence was not subsequently admitted into the proceedings, merely requires to be noted for the purposes of temporal context. The first phase of Mr Alex Qasabian's oral evidence, relevantly, was (Transcript 6 March 2017, page 49, line 38 to page 50, line 34): Q. Mr Qasabian, you and your wife are the principals of the business known as Fishing Station, correct? A. Yes. Q. And you spend your working day in that business‑‑ A. Yes. Q. ‑‑as does your wife? A. Yes. Q. And the business plan that was prepared for that business, the Fishing Station business, was prepared by you and or your wife? A. Yes. Q. Now, in relation to the Fishing Station business, you say that you have been looking for replacement premises for the Frenchs Forest business. Correct? A. Yes. Q. And in relation to those replacement premises, what you have been looking for is premises that are for sale that the Qasabian Family Trust could purchase. Correct? A. No. Q. What you have been looking for are premises which have attached to them a service station or similar business? A. Yes. It's one of the options, family business. Q. And in relation to looking for premises in Frenchs Forest, you have not been looking for premises which are a stand‑alone shop but are for rent by somebody other than your family trust? A. Sorry, repeat that? Q. You have not been looking for premises that are for rent by somebody other than your family trust that is a stand‑alone shop not associated with a service station or other similar business? A. No, I have already. Q. And in relation to looking for such premises, you came across the premises at Mona Vale? A. Yes. Q. And you as part of the trust and in conjunction with the other trust members decided to buy that shop so that Fishing Station could operate from it? A. Yes, we had reasons to. 1. The next relevant oral evidence of Mr Alex Qasabian was given on the third day (Transcript 8 March 2017, page 125, line 3 to page 126, line 2): Q. Mr Qasabian, could you tell me what the phone number was for your shop when it was at Frenchs Forest? A. It's 0‑7‑5, I've forgotten it. Q. It sounds like a mobile number. A. No, no. HIS HONOUR: It sounds like somewhere a long way away, 0‑7‑5. DUGGAN: Yes. WITNESS: I've forgotten the phone number. You mean my, I don't know. I'll have to look it up. DUGGAN: I thought this was going to be an easy question. HIS HONOUR: He probably never had to phone himself, Ms Duggan. WITNESS: ..(not transcribable)..call myself at the old shop. DUGGAN Q. At the old shop? Can I show you‑‑ A. It's 0‑9‑‑ Q. ‑‑a document which is page 2C from the agreed bundle. DOCUMENT SHOWN TO WITNESS Q. Is that a picture of the old shop? A. Yes. Q. And is that phone number that is written on the front of it the phone number for the old shop? A. Yes, it is. Q. What's the phone number for Mona Vale? Is it the same? A. I think it's the same. Q. Okay. A. I have to check. Q. Thank you. If we go onto the Facebook page, if it has a phone number, that will be the phone number for‑‑ A. Yes. Q. ‑‑Fishing Station Mona Vale? A. Yes, it will be. Mr Vic Qasabian's evidence 1. Mr Alex Qasabian's oral evidence had been preceded by more limited oral evidence given by his father, Mr Vic Qasabian. Mr Vic Qasabian had provided a single affidavit, an affidavit which included material relevant to this issue. That material (Affidavit of Varoujan Qasabian dated 28 February 2017 (from Exhibit A), [2]-[16]) was in the following terms: Service station owner 2 Over the past 30 years, together with my wife, Christine Qasabian and through various entities which we control, I have conducted a business of owning service station sites. 3 On or about 7 June 1985, I purchased land at 203 Burns Bay Road, Lane Cove, together with my wife. The land is used for a service station operated by 7 Eleven. To this day my wife and I remain the registered proprietors of the site. 4 In or about 1993 [the late 1980s or early 1990s], I purchased land at 156 Gordon St, Port Macquarie, together with my wife and a number of other individuals. The land was used for a service station operated by Independent Port Macquarie. The site was sold around 2003 [2014]. 5 On or about 31 March 2002 [late 1990s to 2000s], I purchased land at Hornsby Heights together with my wife. The land was used for a service station operated by Independent Hornsby Heights. On or about 26 September 2014 [2005] the site was sold. 6 On or about 16 December 2011, I purchased the land at 461 Warringah Road, Frenchs Forest (Acquired Property) together with members of my family, through QFI. The Acquired Property was used for a service station operated by 7 Eleven and for a fishing tackle shop operated by Fishing Station Pty Limited, a company owned by my son and daughter-in-law. 7 On or about 2 November 2005, I purchased land at 262 Byron St, lnverell, together with members of my family, through Qasabian Investments Ply Limited. The land is used for a service station operated by Woolworths Inverell. The land remains in the ownership of Qasabian Investments Pty Limited. 8 The respondent compulsorily acquired the Acquired Property on or about 21 August 2015. 9 In undertaking my business as owner of service station sites, I engage consultants to advise me on aspects relating to the business, such as: a accountants and tax agents (Bates Cosgrave) who manage the day to day accounts, advise on tax issues in relation to the business, including the sale and purchase of service station sites, structuring such sales or purchases, setting up corporate vehicles as required, asset depreciation; b town planners (KDC Planning and Development Property (KDC)) to advise me on planning matters relating to the service station sites, including the planning rules applicable to sites I am considering acquiring or planning proposals for sites I have already acquired; c solicitors (Dunn Legal) to advise generally on legal issues arising in relation to the sale and purchase of service station sites (including planning and property law) (see Dunn Legal invoices 3093 and 2679) and to prepare conveyancing documents in relation to the purchase or sale of service station sites (see Dunn Legal invoice 3096). 10 Throughout the last 30 years; I have actively looked to acquire and manage service station sites. I receive regular updates regarding service stations that are available for sale from two real estate agents, Burgess Rawson and Jones Lang LaSalle. 11 In reaching a decision on whether to acquire a new service station site, I consider the term of the lease that is in place (if any), the returns, the potential of the site (depending on factors such as location), and the environmental reports prepared with respect to the site. 12 I manage the sites myself, with the assistance of my wife and children, Alex Qasabian and Nadia Jean. I personally: a negotiate leases with the operators of the service stations; b negotiate contracts for the sale of land with respect to service station sites; c meet with my advisors (such as solicitors, accountants, planners) to discuss matters relating to the service station sites I own or I intend to purchase or sell; and (d) inspect the sites periodically. Replacement property 13 On or around July 2014, I became aware that the respondent proposed to acquire the Acquired Property. Soon after this date I started looking for a property that could be used as a service station and a shop to replace it. It has always been my intention to replace the.Acquired Property with a similar property. 14 In the period after July 2014, I continued to receive updates from Burgess Rawson and Jones Lang LaSalle (see paragraph 10 .above), and I also approached the following real estate agents: a Narelle Attack from Life Property Group; b Rob Henderson from Hardy's One Realty; c Robert Bakker from Stables Real Estate; d Stuart Bath from Skyline Real Estate; and e Martin O'Brien from Shore Commercial. 15 Since contacting them, I received regular updates from them with respect to properties that may be suitable. 16 Following their recommendations, I visited a number of properties including: a 61 Darley St, Mona Vale. I instructed Dunn Legal to advise on the planning requirements with respect to this property (see Dunn Legal invoice 3093, dated 12 December 2014). The site was unsuitable as It was vacant land and the zoning did not allow retail use; and b 1-3 Currie Rd, Forestville. I instructed Dunn Legal to review contracts for the sale of land with respect to this property (see Dunn Legal invoice 2679, dated 4 February 2015). The site was unsuitable as it was not zoned for retail. 1. Mr Vic Qasabian's oral evidence was, relevantly, in the following terms (Transcript 6 March 2017, page 41, line 31 to page 42, line 49) : Q. Now, in relation to looking for the new premises for Fishing Station, have you been involved in that process? A. Yes, we've been looking for a long time. Q. In relation to that, what you're looking for - are you not - is a piece of land that you can buy? A. Yes. Q. And a piece of land that you can, on which you can put both a service station and the fish and tackle shop? A. Correct. Q. And you've not been looking at land that you can lease? A. Yes, we've been looking. Q. Are you looking at land you can lease for a service station and a fish and tackle shop? A. Yes. Q. So, you're not looking for land which is just a shop for the fish and tackle shop? A. No. Q. Now, you bought Mona Vale? A. Yes. Q. Do you remember when you did that? A. It was I think beginning of this year. Q. Do you remember when you‑‑ A. Sorry, May last year. Q. Last year? A. Yeah. Q. Do you remember when? A. About, probably January - January - January last year. Q. January 2016? A. Yes. Q. Was that when you entered into the contract or when you took possession of the‑‑ A. We took possession that time. Q. In January? A. Yeah, yeah. Q. And do you remember when the fish and tackle shop opened up in that premises? A. In about - around May. Q. End of April, maybe? A. Possible. Q. Do you remember when you lodged a development application for using that shop? A. Well, I think we lodged the development application way April and May, probably as soon as we got it, we put the application in, it's probably around January, February, something like that, yeah. Q. February? A. Yeah. Q. And do you remember when you got the approval from the council? A. Probably eight, ten weeks later, something like that. Q. Eight to ten weeks? A. Yeah. The Fishing Station business plan 1. One of the documents in evidence (as attachments to both Exhibit A, folios 337 to 358, and Exhibit B, folios 619 to 640) was the business plan for the Fishing Station enterprise. This business plan had been prepared by Mr Alex Qasabian's wife. The version in evidence is described, on its cover, as having been prepared in September 2013 and revised in November 2014. There are three elements of this business plan which should here be noted. They are: * at Exhibit B, folio 634, within the SWOT analysis, under "Opportunities", is identified "Expansion of stores co-joining 7-Eleven"; * at Exhibit B, folio 637, under "Long term goals", is listed "Franchise Fishing Station across 7 Eleven sites nationally"; and * at Exhibit B, folio 638, within the "Growth opportunities and future plans" table under "Milestone", is listed "Fishing Station franchise. Roll out Fishing Stations across 7 Eleven sites nationally". 1. All three of these reflect the long-term aspirations of Mr Alex Qasabian and his wife for the Fishing Station business. They are not specific to the present issue of whether or not an actual relocation has taken place. The factual indicia 1. The basic factual matrix within which this dispute arises can be summarised in short order. 2. Frenchs Forest Fishing Station ceased trading on 18 January 2016. Over a period of 10 days, members of the Qasabian family and a variety of helpers (friends, customers of the business, and employees) packed up all of the stock from the business and took it to be stored in the garages at the homes of Mr Vic Qasabian and Mr Alex Qasabian. Although a deal of the stock was stolen from the garage of Mr Vic Qasabian (with it being his evidence that only $30,000 of the $100,000 value of the stolen stock was recovered from insurance being, in my view, irrelevant in these proceedings), this storage was pending the granting of council approval to use premises at 50 Darley Street, Mona Vale as a location to establish a new Fishing Station business. 3. Freezer units from Frenchs Forest were relocated directly to the Mona Vale premises. 4. In April 2016, trading commenced at Mona Vale under the name Fishing Station. This trading is on an expanded range of services' basis, when compared to that which had been undertaken at Frenchs Forest, because the premises at Mona Vale were larger, thus permitting this to happen. Only 30% of the Mona Vale premises are retail and, thus, capable of being equivalent to the premises at the Frenchs Forest site. 5. All of the remaining stock from the Frenchs Forest site was transferred from storage in the two Qasabian family garages to the premises at Mona Vale and formed part of the stock when the Mona Vale premises commenced trading in April 2016. There is no detailed evidence as to the extent to which additional stock (both as to range or quantity) was at the Mona Vale premises when trading commenced. It seems to me that this is not a matter of relevance. It is sufficient for the nature of the dispute between Fishing Station and the RMS that the totality of the stock removed from the Frenchs Forest site and stored was transferred to become part of the stock when trading at the Mona Vale premises commenced. Dr Ferrier's factual evidence 1. As earlier noted, Dr Ferrier provided a Business Valuation Statement of Evidence. In that Statement of Evidence, at [11.9], he included a table setting out factual material that he had derived from the Fishing Station Facebook page. In this respect, although not relevant to the question of business valuation, it is evidence of some of the material on that social media aspect of the Fishing Station's outreach. The relevant portion of Dr Ferrier's written statement is set out below: Although the question of whether the business has relocated is a question of fact to be determined by the Court, I note that the Fishing Station Facebook page contains the following statements: Date Name Comment 14-Jan-16 Fishing station It's the final days of Fishing Station's Moving Sale. Our sale finishes 4pm Sunday 17 January. There are still lots of bargains to be had. Thanks to everyones kind wishes and support during this time, we really hope to see you in the new shop. Details coming soon. 14-Jan-16 Brendon Smith Congrats on the move guys. 14-Jan-16 Sarkis Shimmyshimano Im bringing my boat to park in the shop there's plenty of room 14-Jan-16 Jeremy Voltz New shops going to be awesome 15-Jan-16 Rick Turner Where is the new shop 15-Jan-16 Fishing station We are opening a shop in Mona Vale soon 15-Jan-16 Shane Morris Best wishes on the new move might be a blessing in disguise good luck 16-Jan-16 David Groves Good luck with the move Alex. I'll no doubt see you up there soon. 25-Mar-16 David Groves Nice Alex. Any date on the new shop opening? 25-Mar-16 Fishing station We think mid April but not 100% sure yet. Inside is almost done but we have some work on the outside which we waiting for council approval etc 4-Apr-16 Peter Harrison Hi guys. Any idea when the Mona Vale shop will be open? 4-Apr-16 Fishing station Whilst it's not totally complete we are going to open the doors Tuesday week 19th April 20-Apr-16 Daniel Camilleri Congratulations guys, can't wait to give u all my money at your new shop 20-Apr-16 Sean Naylon Back in business hey awesome 24-Apr-16 Peter Seskin Shop looks great, Well done 26-Apr-16 David Groves Cracker red mate. And a cracker of a new shop too. I hope all your hard work pays off 26-Apr-16 Abdul Majid Nice red, whens the shop opening up? 26-Apr-16 Fishing station We r open. 50 darley st Mona vale 7-Jun-16 Edwin Balayan Nice shop …. Biiiiiig. Good service. Good prices. Thanks again 1. Only the first of the 14 January 2016 entries in the table (that made by Fishing Station itself) has, in my opinion, any relevance to the issue here requiring determination. Ms Yeung's affidavit 1. The Court Book for the Fishing Station proceedings included an affidavit from Ms Samantha Yeung, a solicitor employed by the legal firm acting on behalf of the RMS in these proceedings. Her affidavit includes extracts from the records of the Australian Securities & Investments Commission showing that the principal place of business of Fishing Station had been recorded as being at the Warringah Road address at Frenchs Forest but was now recorded as being at Mona Vale. 2. Given that Fishing Station has no other place of business, I do not consider that that should be regarded as providing any weight in my assessment of whether or not the move to Mona Vale was, as a matter of fact, a relocation of the Frenchs Forest business by Fishing Station rather than the proposition advanced for Fishing Station in these proceedings. 3. A similar position applies, in my assessment, concerning the freezer equipment transported directly to the Mona Vale premises and utilised when Fishing Station reopened there in April 2016. 4. Finally, with respect to matters that are set out in Ms Yeung's affidavit that do not bear upon whether or not there has been a relocation of the Frenchs Forest business to Mona Vale in the fashion pressed on behalf of the RMS, the fact that the stock from the Frenchs Forest premises that had been stored in garages at Qasabian family premises was taken to Mona Vale and sold through those premises does not, it seems to me, weigh in my consideration. The reason for this is that it would have been, to be blunt, commercial idiocy and irrational behaviour on behalf of the Qasabians to have stocked the Mona Vale premises afresh and leave a very considerable volume of valuable stock to sit in storage pending finding some further location at which to re-establish Frenchs Forest Fishing Station. 5. Given the experience with the establishment of Mona Vale (a period of some three months for council processes and fitout for the Mona Vale premises), it would seem to me that a similar period of time would likely have been available to restock the premises for a Frenchs Forest Fishing Station had I accepted that that was the process that had been undertaken. This, I am satisfied, is also a neutral matter in this assessment. 6. However, there is one aspect of the material annexed to Ms Yeung's affidavit that provides a significant indicator that that which has occurred is a relocation of Frenchs Forest Fishing Station to become Fishing Station Mona Vale. It is out of the Facebook presence of Fishing Station itself, as demonstrated from screenshots of material from that Facebook page annexed to Ms Yeung's affidavit. The screenshots include not merely material posted by Fishing Station itself, but also commentary threads associated with those postings. 7. The first of the postings annexed to her affidavit commences with a banner advertisement for a RELOCATION SALE. This posting is dated 1 December 2015 and makes it clear, in the text above the posted banner, that "Fishing Station is having a relocation sale". The following discussion thread material includes not only material posted in reaction to the banner but also replies from Fishing Station itself. At least one of those replies, on behalf of Fishing Station, is posted by "Alex". Given the evidence from Mr Alex Qasabian of the names of those who were employed at Frenchs Forest Fishing Station - Alex Qasabian being the only Alex amongst them – it is reasonable to assume that this post was put up by Mr Alex Qasabian. In doing so, he was clearly being involved with, and responding to, material derived from the posted banner advertisement. A copy of a Facebook extract showing the banner advertisement is reproduced as Annexure 1 to this decision. 8. It is also pertinent to note that, in response to a question in the posting thread shown with the RELOCATION SALE advertisement of 1 December 2015, the response from Fishing Station to the question "Any idea where the new shop will be?" was "Fishing Station moving to Mona Vale". 9. The advertisement itself includes the following notation (diagonally in the bottom-right corner): As you may be aware the NSW government is compulsory [sic] aquiring [sic] our French's [sic] Forest site and we have to find a new home, come in and grab yourself a BARGAIN this Christmas! 1. The banner appeared a further two times. One was undated, as reproduced and annexed to Ms Yeung's affidavit, and did not have any attached posting thread. The banner was, however, in identical terms to that which was posted on 1 December 2015. 2. The third occurrence, in the material annexed to Ms Yeung's affidavit (although it may not be the third in time, given the lack of date of the second instance), was posted on 25 December 2015 and was accompanied by posting threads which also included responses on behalf of Fishing Station. The banner was also in identical terms to that initially posted on 1 December 2015. 3. It is clear from this material that Fishing Station itself held out to its client base that that which it was undertaking by the establishment of a Fishing Station business at Mona Vale was a relocation and not an expansion with Frenchs Forest Fishing Station being in hibernation. The telephone number 1. A photograph of the premises from which Fishing Station Frenchs Forest operated at the site was in Exhibit A at folio 94. This photograph showed the telephone number utilised by Frenchs Forest Fishing Station. Mr Alex Qasabian was questioned about this. The transcript (Transcript 8 March 2017, page 125, line 5 to page 126, line 2) recording the relevant exchange was set out above at [85]. It is clear that Fishing Station Mona Vale uses the phone number that had been the phone number of Fishing Station Frenchs Forest. The search for other sites 1. Mr Alex Qasabian provided four affidavits in the Fishing Station proceedings (24 December 2015, 22 June and 25 November 2016 and 22 February 2017). 2. In his affidavit of 22 June 2016, he said, at [10]: I intend on opening Fishing Station in Frenchs Forest to replace the one at the Property RMS acquired. QFT is purchasing 312 Warringah Road, Beacon Hill, from 7-Eleven and intend on obtaining planning approvals to construct and operate a service station and convenience store there along the lines of what 7-Eleven had at the Property. I wish to operate the Fishing Station business there after relevant planning approvals are obtained. If that is not possible, I will try and find another site in Frenchs Forest where I may operate Fishing Station. Fishing Station's retail shop at the Property was profitable and in its growth phase. It serviced Sydney Harbour, Middle Harbour and surrounding waterways. A Frenchs Forest outlet will also provide a distribution centre for products produced at the Mona Vale outlet. 1. In his affidavit of 25 November 2016, he noted at [29] that, "When the time came to vacate the property, I had not located suitable replacement premises in Frenchs Forest". 2. In his affidavit of 22 February 2017, at [2] to [7], he sets out the activities he undertook, from about July 2014, to seek alternative premises "to which to relocate the fishing station Frenchs Forest shop". He notes the properties he inspected, which included properties in the suburbs of: * Brookvale (four premises); and * Forestville (two premises). 1. He noted that he had also considered properties located in the Forest Shopping Centre, the Skyline Shopping Centre and Starkey Street, Forestville. 2. The material from Mr Alex Qasabian's affidavits concerning the investigations he has undertaken in seeking alternative sites for a Fishing Station enterprise is not consistent with confining a desired relocation to be in the Frenchs Forest vicinity. 3. There is no information provided as to dates when the various inspections of specifically nominated premises were undertaken, nor any information as to the timing of his enquiries about vacancies at the Starkey Street, Skyline or Arndell shopping centres but it is to be inferred that they are in the 2014 enquiry period. 4. At [8] to [14], in the same February 2017 affidavit, he discusses the premises acquired by Qasabian Investments at Beacon Hill. This discussion is consistent with the paragraph quoted above from his June 2016 affidavit. 5. However, the oral evidence of Mr Vic Qasabian made it clear that the Beacon Hill property could not presently be considered a viable relocation opportunity. The transcript reads, relevantly (6 March 2017, page 41, lines 4 to 26): Q. I just wanted to ask you some questions about Beacon Hill. A. All right. Q. Now, you exchanged on Beacon Hill in May 2016 of last year. A. Right. Q. Do you know what the land was zoned? A. It was zoned for residential. Q. And you have purchased Beacon Hill for a number of options, including building your own home on that land, correct? A. If - if I couldn't get any other zoning on it, like a service station and a fishing station, yeah. Q. And in relation to that, you had prepared and lodged with the council an application for rezoning. A. Correct. Q. And you withdrew that, didn't you? A. Yes. Q. And you've not lodged another one since then. A. Correct. 1. This also makes it self-evidently clear that relocation to this site would be highly speculative (due to the need for rezoning) and, if able to be achieved, likely to be temporally remote. This location can play no realistic role in this relocation analysis for these reasons. 2. Mr Alex Qasabian gave no oral evidence concerning any such site-searching activities since the opening of Fishing Station Mona Vale. 3. Most tellingly, from all the written and oral evidence, is the fact that there is no evidence whatsoever of any further premises' location attempts, on the basis put on behalf of Fishing Station, to seek any alternative site for a relocated Fishing Station Frenchs Forest. There is no evidence of any enquiries being undertaken on behalf of the Qasabian family interests since the opening of Fishing Station Mona Vale in April 2016. The expanded activity and product range at Mona Vale 1. Although Mr Alex Qasabian sets out, between [15] and [20] of his affidavit of 22 February 2017, the differences (both physically and operationally) between Fishing Station Frenchs Forest and Fishing Station Mona Vale, those differences are readily explicable by the expanded range of activities now undertaken at Fishing Station Mona Vale as set out in [17] and the expanded range of products at [18] of his affidavit. All this is reflective of the additional; space now available at the Mona Vale premises. They do not provide any support to the proposition that Fishing Station Frenchs Forest has not relocated to Mona Vale. 2. Unlike the position considered by Preston CJ in George D Angus Pty Limited v Health Administration Corporation (2013) 205 LGERA 357; [2013] NSWLEC 212, the activities of Fishing Station at Mona Vale do not involve any curtailing of the range of activities undertaken at Frenchs Forest – quite the contrary position obtains, Fishing Station has been able to expand its activities as a consequence of operating from the Mona Vale premises (whether as a relocation or as new premises being immaterial in this context). Labour portability 1. Finally, with the exception of one member of staff at Frenchs Forest, whose performance was unsatisfactory, and it was acknowledged that he would not have been offered a job at the new premises (Transcript 6 March 2017, page 55, line 4 to page 55, line 23), it was clear from the overall evidence on this point that those members of the staff of Frenchs Forest Fishing Station who wished to work at Mona Vale Fishing Station were employed at the new location. Although of minor import, and not necessary to support the conclusion I have reached, it is nonetheless a factor that is consistent with relocation. Failure to question Alexander Qasabian 1. Mr Hemmings submitted that I should have regard to the fact that Ms Duggan did not cross-examine Mr Alex Qasabian specifically concerning the intention to relocate Frenchs Forest Fishing Station in the aspirational fashion it is proposed I should accept. I do not accept that the absence of cross‑examination on this point provides any assistance in the Fishing Station case. There are two reasons for reaching this conclusion. 2. First, the RMS had expressly disavowed any intention to submit that Mr Alex Qasabian was not telling the truth in his giving of his evidence; merely that a proper, objective assessment of the relevant facts and circumstances would lead to the conclusion that, whatever might be the future business aspirations he and his wife had, there had nonetheless been, for the purposes of applying the provisions of the Land Acquisition Act, a relocation of Frenchs Forest Fishing Station to Mona Vale. 3. Second, as a necessary corollary of the first, because the RMS did not propose to call any evidence to found an attack on Mr Alex Qasabian's credit, there was no Browne v Dunn (1893) 6 R 67 necessity to challenge him on this point during the course of his oral evidence. There is no factual dispute that required cross-examination of the type toward the absence of which Mr Hemmings points. Conclusion on the actual relocation of Frenchs Forest Fishing Station 1. Commendable though the commercial aspirations set out in the Fishing Station business plan may be, nonetheless, I am required to have regard to all of the indicators arising out of what has actually occurred to reach a conclusion as to whether or not Fishing Station Frenchs Forest has been put into hibernation, as is proposed to be the conclusion advanced on behalf of Fishing Station, or whether the appropriate conclusion, on the other hand, is that there has been a relocation and that that has effected the transmuting of Frenchs Forest Fishing Station into Mona Vale Fishing Station. 2. Although Mr Alex Qasabian may have had the initial intent to relocate Frenchs Forest Fishing Station and that Mona Vale Fishing Station was not that relocation, I am not satisfied that that is what has taken place. 3. No evidence of any kind has been given of any activity to seek alternative premises for a relocated Frenchs Forest Fishing Station since Fishing Station Mona Vale opened for trading in April 2016. 4. Perhaps the most powerful indicator that supports the relocation conclusion is that which comes, expressly, from the mouth of Fishing Station itself, as it were, via the medium of its banner Facebook postings as exemplified in Annexure 1. 5. Although, as earlier noted, some matters are neutral, setting those aside and weighing the matters as to whether the Fishing Station theory is correct or whether a relocation has taken place, I am satisfied, on the balance of probabilities, that a relocation has taken place and that transmutation of Frenchs Forest Fishing Station into Mona Vale Fishing Station has been the functional outcome of what has occurred. Whilst it may well be that the Qasabian family interests will establish further Fishing Station outlets, the indicia are that any such future outlets would be the expansion of Fishing Station Frenchs Forest/Mona Vale rather than a relocation of Fishing Station Frenchs Forest (even if such an expansion were to be in the Frenchs Forest area). 6. It therefore follows that the claim for compensation for a future relocation of Fishing Station is to be rejected. Compensation for actual relocation of Frenchs Forest Fishing Station 1. Having explained why, as a matter of fact, it is appropriate to conclude that Fishing Station has actually relocated to the Mona Vale premises, it is then necessary to consider what compensation arises pursuant to s 59(1)(f) as a consequence of that finding. 2. First, it is to be observed that there is a deal of agreement between the parties, reached on a contingent basis by Fishing Station against the eventuality that I would reach the conclusion that I have reached. It is unnecessary for me to address those matters further. 3. Second, Mr Russell was not instructed to address the consequences for a relocation claim if I were to conclude, as I have, that relocation had taken place to Mona Vale. Dr Ferrier did turn his mind to that point and, subject to that which follows, his evidence is uncontested and, to the extent that his oral evidence might be said to have touched upon this aspect, I do not consider that his conclusions in his written evidence on this aspect were in any way disturbed. 4. Before turning to the outcome of Dr Ferrier's calculations, it is appropriate to note one matter where he recorded a caveat as to the correct position to be adopted. This arises in the context of how past lost profits are to be treated in the calculations. The joint report of Mr Russell and Dr Ferrier of 23 February 2017 sets out, at [4.11], the matter to be resolved in the following terms: In Dr Ferrier's opinion, whether the loss should be discounted to the date of compulsory acquisition is a matter for the Court. Although the loss is a past loss at the date of this report, it is Dr Ferrier's understanding that compensation is to be expressed at the date of compulsory acquisition, with interest payable on that loss for the period between the date of compulsory acquisition and the date of payment of compensation. Under these circumstances it is appropriate to assess the net present value of the loss as at the date of acquisition, rather than at the date of this report. 1. The whole of the Land Acquisition Act's structure is predicated on the rights of dispossessed parties and the obligation of the acquiring authority being triggered at the date of the compulsory acquisition. The assumption made by Dr Ferrier that the date of acquisition is the appropriate measuring point for his calculations is the correct one. 2. The conclusions of Dr Ferrier, on this basis, were set out in an agreed table at folio 488 of the Court Book. That table is reproduced below: Table 2: Adopting Dr Ferrier's assumptions as to fact (i.e. the business was relocated to Mona Vale) Agreed $ Loss due to effect on trading 147,243 Loss due to increased rent 39,994 Loss due to DA Fees 4,808 192,045 Effect of discounting to date of compulsory acquisition -16,113 175,932 1. Subject to that which follows concerning rent, compensation for the (found) actual relocation of Fishing Station to Mona Vale is to reflect Dr Ferrier's approach. 2. However, in his submissions, Mr Hemmings drew my attention to the fact that Dr Ferrier had not considered the question of rental differential for the Mona Vale premises until 2041, when compared to the significantly lower rent exposure that Fishing Station had for that period pursuant to the sublease at Frenchs Forest. It is, therefore, necessary for me to address that point. 3. In this context, it is now well settled that, for the purposes of s 59(1)(f), financial losses also fall within this head of potential compensation (George D Angus). It is also the position that compensation, under this provision, arises to be assessed in light of the consequences of the dispossession of the former owner rather than as part of the assessment of the value of that which has been acquired from the former owner (by analogy with the relevant reasoning of the Court of Appeal in Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66). The result of this is that, from time to time, elements of the claim made pursuant to s 59(1)(f) – the element of s 59 invoked in this instance – may appear to involve double‑dipping (as is here the potential appearance concerning the value of the interest in the site at Frenchs Forest acquired from Fishing Station and compensation for the higher actual rent incurred at the new premises), but, in fact, there are two separate and distinct claims arising to be considered under different provisions of the Land Acquisition Act. 4. The joint report of Mr Russell and Dr Ferrier of 23 February 2017 also records (at 7.4): Dr Ferrier notes that his instructions are that the Applicant is not entitled to compensation for increased rental. If Dr Ferrier's instructions are incorrect, then Dr Ferrier has determined that a reasonable assessment of the loss attributable to increased rental adopting Mr Russell's methodology (being the difference between market rental of $90,000 per annum and actual rental of $18,996 for a remaining lease term of 311 months, discounted at 20% per annum) would be $391,934. This amount is included in Mr Russell's total assessment of lost profits of $811,990 as indicated at paragraph 11.2 of Dr Ferrier's report dated 7 February 2017. 1. I have earlier extracted portion of the above paragraph for the purposes of determining what is the compensable value of the acquisition by the RMS of the unexpired future term of the Fishing Station sublease at the Frenchs Forest site. 2. I do not consider that the calculations shown in the above passage are appropriate to be applied for determining the disturbance claim element relating to increased rent for Fishing Station Mona Vale. There are two specific factors to be taken into account in setting the appropriate framework for such a calculation. 3. The first relates to the rate of rent to be used for the calculation. The rent at Frenchs Forest was $1,500 per calendar month. The rent at Mona Vale is $12,500 per calendar month. Although the premises at Mona Vale are rented by Fishing Station from Qasabian Investments, there is no suggestion made by the RMS that this rental arrangement is not on a proper market reflective basis. 4. I therefore accept that this provides the starting point for consideration. However, such consideration must be on a like-for-like basis. The premises at Mona Vale are significantly larger than those at Frenchs Forest and this has permitted Fishing Station to expand the range of services and products which it makes available to its customers. That expansion has, earlier, been discussed briefly, and it is unnecessary to repeat it here. However, it is the agreed position that only one-third of the area at Mona Vale is able to be used for retail purposes, this being the equivalent, in functionality, to that which had been undertaken at Frenchs Forest. 5. There is no accounting information that breaks down Mona Vale trading to demonstrate what proportion of the Mona Vale business, as opposed to the Mona Vale floor area, that might be regarded as equivalent to that which has been relocated from Frenchs Forest. 6. In carrying out my role as judicial valuer on that aspect of these proceedings, I am left with the floor area proportions as the only basis upon which I can consider what would be the appropriate starting point for compensatory consideration of the rental difference between Frenchs Forest and Mona Vale. 7. On this basis, one-third of the rent for Mona Vale ($4,200 per calendar month rounded up) can be attributed to the relocated Frenchs Forest business. After allowing for the $1,500 per month actually paid for the Frenchs Forest premises, the rental disadvantage occasioned to Fishing Station, on a like-for-like basis, arising out of the relocation to Mona Vale, is $2,700 per month. It is appropriate that this be accounted for out to 2041 in the compensation to which Fishing Station is entitled. 8. Second, the percentage to be applied to derive the present value for such compensation should not be 20%, as this is a business risk discount factor to be applied – as earlier discussed – in the confined circumstances of calculating the compensation for acquisition of Fishing Station's unregistered leasehold interest in the Frenchs Forest site. I do not have sufficient information upon which, as judicial valuer, I could strike an appropriate rate (although I speculate – merely that – that a process akin to capitalisation of market rent at a rate somewhere between a "cap rate" of 4% and one of 5.5% might be appropriate). 9. The parties are to consider these findings and settle on the amount of compensation due to Fishing Station for the increased rental component for the actual relocation to Mona Vale. If agreement is not possible, short written submissions are to be sent to me for my determination of this issue (unless either party notifies my Associate within 14 days that it wishes to address or lead evidence on this point). Rent payable to the RMS 1. The Fishing Station claim seeks reimbursement of rent paid to the RMS for the period during which occupation was retained as a tenant after the acquisition was finalised. The claim was opposed by the RMS. 2. In the Land Acquisition Act, lease-back rental occupancy arrangements are provided for in s 34(3) and (4). These provisions read: (3) The terms on which a person remains in occupation of land that has been compulsorily acquired under this Act are, in the absence of agreement, such reasonable terms as are determined by the authority of the State (including terms as to the rental to be paid and the restrictions on the use of the land). The Residential Tenancies Act 2010 does not apply to that continued occupation. (3A) … (4) Any such unpaid rent or other money due to the authority of the State may be set off against the compensation payable under this Act. 1. Initially, a reading of these provisions would not appear to support such a reimbursement claim as is here made. 2. However, in Taylor v Roads and Maritime Services [2016] NSWLEC 138, Pain J recently dealt with such a claim for reimbursement of rent that had been payable to RMS. Her Honour said, at [77] and [78]: 77) The Applicant is liable under s 34 of the Just Terms Act for rent payable to the RMS of $19,500. He seeks to claim this as part of the compensation payable under s 59(1)(f). Such a claim was allowed in Attard v Transport for NSW (2014) 205 LGERA 396; [2014] NSWLEC 44 at [124] -129]. 78) As submitted by the Applicant, s 34 is not engaged at the stage of the compensation process I am considering under Pt 3 Div 4. Section 34 in Pt 2 Div 4 concerns an earlier point in time in the acquisition process when a landowner is deciding if he or she will accept the compensation offered. Section 34(4) is a machinery provision directed to that circumstance. It is not a provision which prevents the Applicant claiming that amount as compensation. Further the reasoning in Attard at [124] - [129] does not disclose any error and in the interest of judicial comity I apply that reasoning also. I consider the Applicant's claim for rent is permissible under s 59(1)(f). 1. As a consequence, I turned to the passage from Attard v Transport for NSW (2014) 205 LGERA 396; [2014] NSWLEC 44 cited by her Honour. In it, in turn, Biscoe J derives his conclusion in support of reimbursement from passages in the judgment of Tobias JA in Roads & Traffic Authority of NSW v McDonald (2010) 175 LGERA 276; [2010] NSWCA 236 at [114] and [117]. Biscoe J's analysis sits comfortably with the Court of Appeal decision in McDonald. 2. As Pain J observed, "… the reasoning in Attard at [124]-[129] does not disclose any error and in the interest of judicial comity I apply that reasoning also". I consider that I should take the same approach. 3. Whilst this has the apparent effect of rendering ineffectual the terms of subss 34(3) and (4) of the Land Acquisition Act in circumstances where a reimbursement claim is made pursuant to s 59(1)(f), if this be a problem, its resolution does not lie in the hands of this Court. 4. The rental reimbursement claim is allowed. The Qasabian Investments Beacon Hill legal expenses claim 1. Qasabian Investments has claimed the costs associated with the exploration by Qasabian Investments of the possible acquisition of a property at Beacon Hill as a form of replacement (with multiple potential uses in contemplation) for the site. Associated with that exploration, Qasabian Investments paid legal expenses to Penklis Lawyers. Reimbursement of those legal expenses is claimed from the RMS. The RMS resists payment of that claim. 2. The claim is to be rejected, as there is no proper statutory basis for allowing it. It cannot arise pursuant to s 59(1)(c) of the Land Acquisition Act, as it is not a legal expense associated with the acquisition by the RMS of the acquired property. 3. Second, it is not claimable pursuant to s 59(1)(f) as it was not incurred as part of the relocation of any use that had been conducted on the acquired land at the time of acquisition. 4. The interest of Qasabian Investments was a passive one, one which did not involve any actual use of the land. That, as with the stamp duty claim, is sufficient to dispose of this claim. 5. However, even if there had been some use to be relocated (which there was not), there was no actual relocation to the Beacon Hill site. Although the Beacon Hill site has been acquired by Qasabian Investments, Mr Vic Qasabian has acknowledged that the future use of the site is unclear and that a range of options remains under consideration (see evidence of Mr Vic Qasabian at Transcript of 6 March page 41, lines 4 to 29). The accounting costs' claim 1. Amounts are claimed by both Qasabian Investments and Fishing Station for accounting work undertaken by Mr Russell and by a firm of accountants named Bates Cosgrave Chartered Accountants (Bates Cosgrave). This work was undertaken for the purposes of submissions to the Valuer General relating to the compensation claims made by both Qasabian Investments and Fishing Station. 2. As I indicated during the course of the hearing, it seemed to me that, although I do not have any detailed evidence as to the break-up of the claims between Qasabian Investments and Fishing Station, these claims needed to be treated, conceptually, separately, with the possibility that there might be differing results, depending on the entity about which the claim was being adjudicated. 3. I have concluded, as a matter of principle, that this should be the outcome. 4. First, it is to be observed that these claims are not, by their nature, claims that relate to either the value of the land (for Qasabian Investments) or the value of the unregistered sublease interest in the land (for Fishing Station), as the advice is of an accounting nature. 5. As the only potential information of an accounting nature remotely, potentially relating to the Qasabian Investments' claim would concern matters in connection with the stamp duty claim (one which, for the reasons earlier set out, has no statutory basis), any of these claimed expenses that relate to work performed for Qasabian Investments cannot fall within the scope of s 59(1)(f) of the Land Acquisition Act. This element of these costs must, therefore, be rejected. 6. However, there were a number of potentially relevant accounting issues arising in the Fishing Station proceedings. Although material was attached to Mr Russell's expert report, where that material had been prepared by Bates Cosgrave, that material was rejected because it was sought to be admitted as "slipstream" expert evidence without the necessary prerequisites under the Uniform Civil Procedure Rules and the Expert Witness Code of Conduct having been observed. 7. That ruling, however, did not disturb the underlying nature of that material. Similarly, any material of that nature prepared by either Mr Russell or by Bates Cosgrave concerning Fishing Station for submission to the Valuer General was capable of falling within the scope of the provisions of s 59(1)(e) of the Land Acquisition Act, given the nature of Fishing Station's activities on the site. 8. I do not understand that the RMS questions the nature of the work performed, merely that it does not qualify for reimbursement under s 59(1)(f). 9. I am satisfied, without examining the details of the material itself, that it is reasonable to assume that this material would, correctly understanding the provision, qualify for reimbursement. Costs 1. The opening and the closing written submissions on behalf of the RMS, in each matter, concluded with the following: The determination of costs must await the Court's determination of compensation. There is no automatic entitlement to costs on the part of the applicant and there may be evidence relevant to the question which cannot be brought before the Court at this time. 1. As a consequence, it is not appropriate to indicate any determination on the issue of costs at this point. Having made the various findings in each of the two proceedings, the directions given require the parties to provide my Associate with settled orders to give effect to my findings. 2. If, in that process, the parties are able to agree on the appropriate costs order in each proceedings, that can be incorporated in them. If, however, such agreement is not able to be reached, the appropriate order to be included is that the question of costs, in each proceedings, is reserved. Conclusion The Qasabian Investments' proceedings The agreed position of the valuers 1. In the Qasabian Investments' proceedings, there were two principal, contested issues. The first was whether or not I should disturb the agreement between Mr Dyson and Mr Lunney as to the appropriate market value compensation for the acquisition of the site. Contrary to the submissions made on behalf of Qasabian Investments, I am satisfied that there is no legally valid basis upon which I could disturb that agreed position. As a consequence, that portion of the Qasabian Investments' claim fails. The stamp duty claim 1. The second major element of the Qasabian Investments' claim was an anticipatory one, seeking that I order provision be made for reimbursement to Qasabian Investments of the stamp duty to be incurred in the purchase of a replacement property to be added to the Qasabian Investments' portfolio. 2. I am satisfied that, on the basis of settled authority and in comity with recent decisions of other judges of this Court, when, essentially, the same point of principle has been argued (although, obviously with variations on the underlying factual circumstances), and those claims have been rejected where the nature of the relationship between the property owner and the acquired property was to have held the acquired property as a passive investment, I can see no valid reason why I should reach a conclusion at variance with that proposition. 3. As a consequence, this portion of the Qasabian Investments' claim also fails. The Fishing Station proceedings Acquisition of Fishing Station's interest in the site 1. The compensation due to Fishing Station for the acquisition of its interest in the site is $391,934. Fishing Station's claim for relocation costs 1. I have concluded that, as a matter of fact, Fishing Station has relocated from Frenchs Forest to Mona Vale. 2. As a consequence, the only expert evidence on that basis concerning compensation matters requiring consideration is that contained in the evidence of Dr Ferrier as, on instructions, Mr Russell did not address this possibility. It therefore follows that, except as noted below, this aspect of compensation is to be calculated in the fashion proposed by Dr Ferrier. 3. However, as Dr Ferrier has only undertaken a limited rental calculation for the purposes of the s 59(1)(f) claim, his calculations need to be revisited in light of my findings and discussion at [146] to [150] based on a rental differential of $2,700 per month rather than one of $11,000 per month. 4. The parties are to consider this finding and settle on the amount of compensation due to Fishing Station for this. If agreement is not possible, short written submissions are to be sent to me for my determination of this issue (unless either party notifies my Associate within 14 days that it wishes to address or lead evidence on this point, in which case I will deal with that at the mention noted in direction (2) below). Other disturbance matters in dispute 1. Resolution of these matters is set out earlier in the judgment. Directions 1. I therefore give the following directions: 1. Subject to my earlier comment concerning costs and rental compensation for Fishing Station as part of its disturbance claim, the parties are directed to provide settled orders to my Associate reflecting the outcome of each of these proceedings by the close of business on 14 July 2017; 2. The matters are listed for mention before me at 9.00 am on 18 July 2017; and 3. If (1) is complied with, I will make orders in chambers and the mention provided for in (2) will be vacated. ********** Annexure 1 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: 22 June 2017