Case note: Olde English Tiles Australia Pty Ltd v Transport for New South Wales

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Case note: Olde English Tiles Australia Pty Ltd v Transport for New South Wales

By Gabriella Hijazi and Alyce Kliese

In the case of Olde English Tiles Australia Pty Ltd v Transport for New South Wales [2022] NSWCA 108 the NSW Court of Appeal addressed the types of interests which grant a right to compensation for the purposes of the Just Terms Act, in the context of a compulsory acquisition.

Background

The Roads and Maritime Services (RMS) (now Transport for New South Wales) compulsorily acquired a parcel of land on Parramatta Road (the Premises).

The registered owners of the Premises were the sole directors of a company (Olde English Tiles) that occupied the Premises under a bare licence (a bare licence is an informal arrangement where the owners gave permission to Old English Tiles to enter and operate a tile business from the premises). Under the bare licence, Olde English Tiles had no enforceable right to possess the Premises, and the registered owners could terminate Olde English Tiles’ occupation of the Premises at any time.

The RMS offered compensation to the registered owners and Olde English Tiles pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act), but both parties challenged the adequacy of the offers in class 3 proceedings in the Land and Environment Court (LEC).

The claim brought by Olde English Tiles sought compensation for loss attributable to disturbance losses incurred in relocating the business, pursuant to section 59 of the Just Terms Act.

In the first instance, the LEC dismissed the claim brought by Olde English Tiles because the bare licence could be terminated at any time by the registered owners, and the disturbance losses were therefore not compensable.

Old English Tiles appealed the decision of the LEC to the Court of Appeal.

The appeal was unanimously dismissed by the Court of Appeal.

Standing

Olde English Tiles claimed it had a right for compensation, as an ‘owner of an interest in land’ pursuant to section 37 of the Just Terms Act which states:

“37   Right to compensation if land compulsorily acquired

An owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part by the authority of the State which acquired the land.”

Section 4(1)(a) of the Just Terms Act defines an ‘interest in land’ as ‘a legal or equitable estate or interest in the land, or (b) an easement, right, charge, power or privilege over, or in connection with, the land.’

The key question before the Court of Appeal was whether Olde English Tiles had a ‘privilege over, or in connection with, the land’ within the meaning of the definition of interest in land pursuant to section 4 of the Just Terms Act.

The Court of Appeal found that the definition of interest in land does not include interests which are dependent upon a personal relationship between the occupier and the owner.

Ultimately, the statutory context of the Just Terms Act makes it so that all compensable interests in land must be ‘over or in connection with land’. The bare permissive occupancy between Olde English Tiles and the registered owners which could be withdrawn at any time, was considered to be an interest between the parties and not an interest in connection with the land. The Court clarified that this type of occupancy may be a ‘privilege’ within the ordinary meaning of the term, however, in light of the statutory context it is not a ‘privilege’ over or in connection with the Premises within the objects of the Just Terms Act, for the following reasons:

  1. the only evidence of the alleged interest in land was an oral conversation with the landowners granting Olde English Tiles permission to occupy the Premises for as long as it wanted;
  2. Olde English Tiles did not pay rent; and
  3. there was a separate arrangement entered into by the registered owners, to develop the land, with no consideration given to Olde English Tiles in that arrangement.

Claim for disturbance loss

Olde English Tiles also made a disturbance claim pursuant to section 59(1) of the Just Terms Act, to seek compensation for compensation of the loss of potential future profits in carrying out the business as a result of having to relocate Olde English Tiles. This claim was also dismissed.

The Court found that disturbance costs pursuant to section 59(1) are those incurred by persons entitled to compensation only. Where a business has no interest with a market value, or any other value, the fact that the business happens to require relocation following compulsory acquisition does not give it a right to recover the costs of relocation.

Furthermore, the holder of a bare licence or permission to occupy land, terminable at will by the owner, has no foundation or interest on which it can build a claim for compensation for losses attributable to disturbance under section 59 of the Just Terms Act.

What does this mean?

The key take-aways from this case are as follows:

  1. Only a proprietary interest is compensable under the Just Terms Act. Personal interests, such as licences or permission to occupy land which can be terminated at will, are not compensable.
  2. The intention behind the Just Terms Act is to provide a right to compensation for the market value of interests in land. Compensation for other losses such as disturbance losses under section 59 of the Just Terms Act:
  3. are additional to the amount of the market value of interests in land; and
  4. can only be claimed by people who are able to establish a right to receive compensation for the market value of an interest in land.