Provans Timber Pty Ltd v Secretary to the Department, Jobs, Transport and Resources

The following decision was handed down on 14 June 2019 and impacts valuations where multiple related interests in the land are present.  

Facts of the Case

  1. The case was a result of the compulsory acquisition by the Linking Melbourne Authority of land owned by Provans Timber Pty Ltd (“Timber”).
  2. At the time of the acquisition, the land was also occupied by Provans Timber and Hardware (“Hardware”) and Provans Timber Joinery Pty Ltd (“Joinery”). 
  3. Timber, Hardware and Joinery (“Claimants”) are all owned by the same family and all had a separate interest in the land. 
  4. An initial offer of $5.675 million for market value and $2.871 million for relocation costs was made jointly to Timber, Hardware and Joinery.(“the Initial Offer”)
  5. An advanced payment of $2.871 million for relocation costs was paid to Hardware.
  6. The market value on the basis of its highest and best use was re-determined at $12.2million.
  7. The Authority paid to Timber the amount of $12.2 million less the amount advance to Hardware pursuant to the Initial Offer for relocation expenses.

Argument

The Authority argued that the Initial Offer was made jointly to the Claimants as one entity, and therefore neither Hardware nor Joinery had an entitlement to compensation as Timber had been compensated for the market value of the land based on its highest and best use. 

The Authority further contended that Hardware and Joinery had no entitlement to compensation for relocation costs as compensation had been paid to Timber for the market value of the Land which was based on its highest and best use which was not the existing use of the Land at the date of the acquisition, the existing use being land leased to Hardware and Joinery.

Held

The Judge held that Section 30 of the Land Acquisition and Compensation Act 1986 (“The Act”) confers a right to a person who immediately before the publication of a notice of acquisition had an interest in land which interest was divested or diminished as a result the acquisition.

Additionally, the Judge held that the Act does not ‘preclude Hardware from obtaining compensation for loss attributable to disturbance in circumstances where Timber obtains compensation for the market value of the Land based on its highest and best use.’

For valuation purposes, this judgement is important as it confirms that, when valuing land where there are a number of interests (and claimants), each interest is to be valued and dealt with separately. 

A copy of the full decisions can be accessed here

Note: this advice is intended to be of a general nature only and should not be acted on without the specific circumstances being reviewed by a legal practitioner experienced in this area of law.

If you have any questions regarding the above, please do not hesitate to contact Dan Minogue on 98617730, Lauren Sullivan on 9861 7715 or Selina Clark on 9861 7722.