“Our business was forced to close to make way for the highway, so we deserve compensation.” Which case won?
RMS acquires land for upgrade of Pacific Highway
In 2016, Roads and Maritime Services of New South Wales compulsorily acquired a block of land to upgrade the Pacific Highway.
The landowner accepted an offer of $3,114,540 as compensation from RMS for the compulsory acquisition of land. This sum was determined by the Valuer-General and comprised $2,950,000 for the market value of the land and $164,540 for disturbance to the business.
Service station impacted by compulsory acquisition
The service station which occupied the land was to be significantly impacted by the compulsory acquisition. The business had been successful because of its proximity to the Pacific Highway. Due to its locality, it serviced a number of nearby towns.
The landowner and the owners of the service station business were two distinct and separate legal entities. The service station had no lease over the premises. Instead, it had a verbal tenancy agreement with the landowner and paid monthly rent under a “tenancy at will” (that is, one of no fixed duration) which could be terminated with one month’s notice.
The Valuer-General determined compensation payable to the service station operator based solely on disturbance to the business and did not otherwise take into consideration the anticipated costs associated with relocation or alternatively, if it had to close, the permanent loss of profits by the service station.
Service station makes claim for disturbance to business
The service station reasoned that the amount paid to the landowner was irrelevant to its own claim for compensation, because the service station was a completely different entity and its claim was based solely on disturbance to the business from the compulsory acquisition, not on the market value of the land.
The service station claimed compensation for the loss attributable to the disturbance, which included the anticipated costs associated with relocation, including short-term loss of profits, or alternatively, the permanent loss of profits that the service station would have otherwise derived, but for the acquisition by RMS.