This matter was appealed to court of appeal by authority. The appeal allowed.

The compensation awarded to Hardware does not faithfully reflect the divestment or diminution of its insubstantial leasehold interest as a tenant at will. Compensation afforded for disturbance loss cannot be divorced from the interest in land that is divested or diminished. We do not consider that the relocation costs incurred by Hardware can be viewed as the natural, direct and reasonable consequence of the divestment of its interest in the Land.

The valuation would be assessed either on the basis of the business as a going concern (an ‘in use’ assessment, where additional compensation would be paid for relocation costs and loss of profits) or, alternatively, on the basis of the highest and best use of the Land, in which case compensation for relocation costs would not be payable.


The Court confirmed there are three alternative ways to value the Land, to the following effect:
(1) based on its highest and best use, which would involve the Authority denying any claim for compensation for clearing the Land or relocating the business, as the highest and best use was different from the (then) current use;
(2) based on its existing use, with the Authority to pay relocation costs; and
(3) on the basis that all three claimants were treated as one and the property was treated as owner-occupied, in which case compensation would ‘presumably’ result in an assessment based on the existing use and relocation costs.

The Court said, the market value of the property were to be assessed at its highest and best use (that is for residential development) it would be necessary for the land to be cleared to enable the property to be developed for its highest and best use thus removing (for the purposes of assessing compensation payable by [the Authority]) the concept of the costs of relocation of the business enterprises conducted upon the property.

Tenant at will no compensation for relocation costs.

Original judgment her honour said (at [299]):
In the usual course, the existence of a leasehold interest of any substance will be reflected in the market value of the land. The entitlements of the owner claimant and the tenant claimant will be broadly aligned in that the existence of the lease will affect the land value. In this case, for the reasons given, it is unnecessary for Hardware to establish a leasehold interest of any durability in order to qualify for relocation costs and it is unlikely that its ‘ephemeral’ leasehold interest would affect the market value of the Land. Because of the arrangements in [the Act], Hardware’s entitlement to relocation costs is not limited by reason of any inconsistency with the basis upon which the market value of the Land is assessed.


The judge’s conclusion on causation is challenged on the appeal.

Separate or one offer?
On the appeal, the Authority challenges the judge’s conclusion that the initial offer was capable of disaggregation into offers to Timber, Hardware, and Joinery, respectively, that could be accepted separately and/or was a single joint offer capable of partial acceptance. It also challenges the conclusion that the initial offer was not based on incorrect information.

On the appeal, the Authority claims that the judge misconstrued the prohibition imposed by s 41(2) on double recovery and that it should be interpreted as applicable in respect of the compensation to be awarded to distinct interest-holders in the same land.[98]

Court found no relocation costs were recoverable for a tenancy at will.


Our experience

Phillip Leaman has extensive expertise in compulsory acquisitions under the Land Acquisition and Compensation Act 1986 (Vic) and we have acted in various major projects undertaken by the Victorian Government. Under the provisions of the Land Acquisition and Compensation Act, the Victorian Government and other authorities such as councils and water authorities and Vicroads can acquire privately owned land for public purposes, either compulsorily or by negotiation. As compulsory acquisition lawyers based in Melbourne, we can assist clients dealing with compulsory acquisition with all government projects in Victoria including:

We have acted for a significant number of land owners and tenants in various government infrastructure projects and we have been able to achieve excellent outcomes during the compulsory acquisition process for clients. We have also assisted a significant number of property owners who have been eligible for voluntary purchase schemes such as for the east west link, level crossing removal projects and Caulfield to Dandenong sky rail.

If you own a property or a business in the affected areas and may have your property acquired or affected directly, you should obtain advice from us.

If you are part of one of the above projects or any other compulsory acquisition under the Land Acquisition and Compensation Act, our legal costs are recoverable from the relevant authority during the acquisition process up to any Court or Tribunal proceedings being issued.

It is important that you obtain advice from professionals as early as possible to ensure that you maximise the compulsory acquisition compensation for your particular circumstances. We can also assist you with obtaining professional assistance from other experts such as valuers and relocation experts.

Our website has very useful frequently asked questions: Click here to view our Frequently Asked Questions on Compulsory Acquisition. 

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For advice and assistance please contact Phillip Leaman, an expert compulsory acquisition lawyer. Phillip Leaman is an expert in compulsory acquisition matters and obtaining the best achievable outcomes for his clients.


For advice or assistance, please contact Phillip Leaman on 03 8600 9314 or by email [email protected].