Key Takeaways
- Viva Energy’s lease and additional contractual agreements with Eureka to supply fuel for a service station did not amount to a legal interest in the acquired land.
- Viva Energy’s contractual right to profit from fuel sales on that land was not a legal interest able to be compensated, especially when similar commercial relationships existed on numerous other sites.
- A legal interest in land must be tied to the land itself, as opposed to a business that merely takes place the land.
Background
This case involved an assessment of compensation under s 55(f) of the Land Acquisition (Just Terms Compensation) Act 1991 (‘Just Terms Act’) for a leasehold interest in part of a land used for a service station, and the effect of contracts for fuel supply.
The Applicant, Viva Energy Pty Ltd (‘Viva’) held a leasehold interest in the acquired land in Dubbo (‘the Site’), part of which was compulsorily acquired by Transport for New South Wales (‘TfNSW’) for the purpose of the Mitchell Highway Intersection upgrade.
The relationship between Viva and Eureka was established through a concurrent lease, granted by Ver Custodian Pty Ltd, (‘Viva Lease’) and a few additional contractual agreements (‘Alliance arrangements’) for the purpose of jointly selling fuel and groceries in a number of service stations across the country. The Site contained a fuel station and convenience store which was occupied and operated by Eureka. Viva sold the fuel to Eureka, who acted as Viva’s agent in selling that fuel to customers on the Site.
Viva was initially offered $44,154 in compensation before commencing Class 3 proceedings objecting to this amount.
Viva argued it had a relevant interest in the Site because of the Viva Lease, and/or a right, power, privilege over the Site because of the Alliance arrangements. It was argued that the works for carrying out the public purpose would reduce foot traffic to the Site, leading to a reduction in business income from reduced fuel sales.
Based on valuation evidence in the proceedings, Viva accepted that it would only be entitled to further compensation under s55(f) if it could be proved that the hypothetical purchaser of the Viva Lease would enter into a new agreement with Eureka on essentially the same terms as the Alliance arrangements with Viva.
Judgment
The issues before the court were:
- The nature and scope of the legal interest in the Site.
- Whether the Alliance arrangements indicated the nature and type of arrangements that would be put in place by a hypothetical purchaser.
- In the alternative, whether any ancillary right under the Alliance arrangements constituted a right, power or privilege over the site.
Determination of the First Issue
Viva was unable to point to any provision of the Lease or Alliance arrangements that would entitle the hypothetical purchaser to compel Eureka to enter into a similar fuel sale arrangement.
The transaction in the hypothetical scenario was the transfer of the Viva Lease, which would involve selling the entitlement to act as a Eureka’s landlord. The role of Eureka to act as an agent for selling fuel would remain, regardless of the changing of hands in the Viva Lease. The only advantage of the hypothetical purchaser of the Viva lease was that it obtained the right to ensure that Eureka continued to act as an agent to sell the fuel of the leaseholder.
The Court found that the extent of Viva’s control was limited to the control of the supply and sale of the fuel, not the land upon which the business is conducted.
Determination of the Second and Alternative Issue
Whilst the income generated by fuel sales occurred on the land, the Court found that this was insufficient of itself, to evidence an interest in land. Viva’s proprietary interest was limited to the fuel and was dependent on the delivery of fuel to Eureka, and Eureka’s ability to sell it.
The nature of the contractual relationship was personal, as opposed to in connection with the land. This was further substantiated by the fact that the Alliance arrangements related not just to the provision and supply of fuel to the Site, but also to a much larger number of nominated sites across the country.
Viva had no permission to occupy the Site or the right to dictate how Eureka’s business was conducted on the Site. If Viva were to decline to supply fuel, that would have an effect on the range of goods sold by Eureka, but no effect on the use of the land.
The Court found that Viva did not establish that it had a right, power or privilege over or in connection with the land. The power and privileges related only to the provision and sale of the fuel.
Outcome
Viva was not entitled to further compensation pursuant to s55(f) of the Just Terms Act.
Compensation for the Applicant’s interest in land was determined to be $45,309.85, which was the agreed upon number of Viva’s disturbance claim.
Respondent was ordered to pay the Applicant’s costs as agreed or assessed.
The full judgement can be found at the following link: Viva Energy Australia Pty Limited v Transport for New South Wales [2021] NSWLEC 67
Disclaimer: Beatty Hughes & Associates acted for the Applicant in these proceedings.