Mills and Minister for Finance and Administration [2002] AATA 508 (26 June 2002)

Last Updated: 27 June 2002

DECISION AND REASONS FOR DECISION [2002] AATA 508

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2001/678

GENERAL ADMINISTRATIVE DIVISION )

Re Leslie Mills

Applicant

And Minister for Finance and Administration

Respondent

DECISION

Tribunal Mr R P Handley, Deputy President

Date 26 June 2002

Place Sydney

Decision The Tribunal varies the decision under review by increasing the final offer of compensation made by the Respondent to the applicant to $11,754.

..............................................

R P Handley

Deputy President

CATCHWORDS

ACQUISITION OF LAND - LANDS ACQUISITION ACT 1989 - proposed acquisition by Minister for Finance and Administration - principle that compensation must justly compensate an applicant - discussion of just compensation where relocation of business is claimed - necessity to establish causation in relocation claims - latitude that a Tribunal may exercise in determining just compensation including taking into account the lifestyle of the applicant - held that the decision of the Minister should be varied to allow for those relocation costs where causation established - compensation increased.

Lands Acquisition Act 1989 ss 55, 76, 81

Brown Bros (Marine) Holdings Pty Ltd and Another v New South Wales Land and Housing Corporation (1991) 72 LGRA 50

Director of Buildings and Land v Shun Fung Ironworks Ltd (1995) 2 AC 111

Keogh v Housing Commission of Victoria (969) 18 LGRA 289

Pastoral Finance Association Limited v The Minister (1914) AC 1083

Peter Croke Holdings Pty Ltd and Others v Roads and Traffic Authority of NSW (1998) 101 LGERA 30

REASONS FOR DECISION

26 June 2002 R P Handley

1. This is an application by Leslie Mills ("the Applicant") for a review of a decision of the Minister for Finance and Administration ("the Respondent") made on 19 February 2001 to make a final offer of compensation to Mr Mills under s 76 of the Lands Acquisition Act 1989 ("the Act") of "$6,754 plus those reasonable legal or other professional costs, if any, outstanding from the initial claim" in respect of the Applicant's licence at 130 Anton Road, Luddenham. At the hearing, the Applicant was represented by Alison Stenmark, of Counsel, and the Respondent was represented by Christine Adamson, of Counsel. The evidence before the Tribunal comprised the documents produced pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 ("the T Documents"), together with the documents tendered by the parties. Oral evidence was given in person by the Applicant, Jennifer McPhie (the Applicant's sister), Donald Grigson (the valuer employed by the Applicant) Robin Humphreys (who prepared a report for the Applicant on the loss sustained due to the relocation of his business) and Michael Dyson (a valuer employed by the Australian Valuation Office ("AVO")).

BACKGROUND

2. The Applicant, Leslie Mills, was born on 6 January 1950 and is aged 52. The Applicant's father, Cecil Mills, owned a property at 130 Anton Road, Luddenham comprising 4.27 hectares of land with a two bedroom weatherboard cottage and a number of both large and small sheds, including a hay and machinery shed of 345 square metres. After completing an apprenticeship in fitting, machining and tool making in 1971, the Applicant purchased a truck and started carting stock feed from country areas and selling it in the Luddenham area. The Applicant conducted his business from his father's Luddenham property under a registered business name, LG Mills Industries. Apart from selling lucerne, hay and grain feeds, the Applicant also carried out engineering/truck repairs, repairs to farming plant, and built stock crates and grain augers. The Applicant used his father's property for his business pursuant to a verbal agreement with his father. The property was not otherwise used for any income producing purposes and it was further agreed that the Applicant would not pay rent for the use of the property and that his parents, who lived in the cottage, would sometimes provide minor assistance with the business, for example by answering telephone calls. The Applicant had a workshop on the property from which he maintained his trucks and carried out mechanical repairs. He also installed two 60 tonne and one 20 tonne grain silo, a 20 tonne weighbridge, a roller mill, a chaffcutter, and associated plant on the property for the purposes of his business.

3. In about 1979 or 1980, the Applicant moved on a part-time basis to a property at Forbes where, by agreement with the owner, he commenced improvements to the property on the basis that he would be able to purchase the property when he could afford it. In about 1984 or 1985, the Applicant and his wife exchanged contracts on the purchase of the property having lived there permanently after being married in 1981. The Applicant grew grain and hay at the Forbes property which he then transported to Luddenham for processing and sale. The silos at Luddenham were used for storage of the grain.

4. The Applicant states that in about 1984, he heard rumours that Badgery's Creek had been selected as the site for a new airport. By letter dated 25 February 1986 (A2), the Department of Local Government and Administrative Services notified Mr Cecil Mills that his property was within the nominated site for the development of the second Sydney airport at Badgery's Creek. The letter stated that officers of the Commonwealth Property Directorate would call on Mr Mills to advise him of developments and seek to negotiate a purchase of his property at a fair and mutually agreeable price. However, this was not likely to occur for two or three years. The letter stated that aside from prudent repairs and maintenance, any further development of the property would be controlled, so that the site was kept available. All Development and Building Applications would require Commonwealth consent.

5. On 10 October 1989, the Australian Property Group of the Department of Administrative Services notified Mr Cecil Mills that his land had been compulsorily acquired on 29 September 1989 (T7). On 14 March 1990, the Mills family solicitor lodged separate claims for compensation by Mr Cecil Mills and the Applicant in respect of the compulsory acquisition of the property at Luddenham. Mr Cecil Mills' claim was for $791,851 (T12) and the Applicant's claim was for $65,764.20 (T13). The Applicant's claim was rejected on 1 May 1990. After negotiations between Mr Cecil Mills' solicitor and the Australian Property Group, Mr Mills' claim for compensation was settled for the sum of $514,700 on 28 June 1991 (T32). It was agreed that Mr and Mrs Mills would continue to reside at the property paying rent, which was initially $192 per week.

6. In a decision dated 19 September 1991 (T34), the Tribunal decided that the permission given by Mr Cecil Mills to the Applicant to use his land constituted a bare licence which could be terminated at will by Mr Mills. The Tribunal found that this was an "interest in land" as defined by s 6 of the Act. The Tribunal found that because the Applicant had an interest in land as at 29 September 1989 which was extinguished by the force of the Act under s 41(4)(b) on that date when the fee simple vested in the acquiring authority, s 41(5) accordingly provides that the Applicant's interest in land (being his licence to use the land) shall be taken to have been acquired by compulsory process. The Tribunal therefore accepted the Applicant's claim.

7. On 18 December 1991, a delegate of the Minister for Administrative Services made an offer of compensation of $6,754 plus reasonable legal costs, comprising $5,400 in respect of removalist costs and $1,354 in respect of stationery. This sum was paid on a "without prejudice" basis with the signing of a Deed of Discharge, Release and Indemnity on 29 June 1992 (T47).

8. During the period 1986 to 1989, the Applicant began to wind down his business at Luddenham. He states he paid a cheap rent for a shed at Murrumbateman, near Yass, where he sought to establish another outlet for his produce. On 7 June 1991, the Applicant signed a licence agreement for the use of a storage unit at Murrumbateman which he continued to rent until the owner terminated the agreement in June 2000.

9. After Mr Cecil Mills was notified of the proposed compulsory acquisition of his property by letter dated 25 February 1986, the Applicant erected three 50 tonne silos at his Forbes property for the storage of grain. Also in 1986, the Applicant dismantled the weighbridge at the Luddenham property which he used for weighing stock feed and trucks, but he did not move this to his Forbes property until about 2001 and the weighbridge has still not been installed because of the costs involved.

10. Mr Cecil Mills died on 4 September 1993 and his wife, Mrs Jean Mills, took over the lease of the Luddenham property where she continues to reside. The Applicant's sister, Ms Jennifer McPhie, is married and lives in South Penrith. Both she and the Applicant state that their mother has told them that when she dies, her estate will be divided equally between them. The Applicant and his wife continue to live at the Forbes property. They have two sons aged 21 and 17. The Applicant's wife works off the farm and her income helps support the family. Mr Mills was shown a calendar for L G Mills Industries for 1991, which uses the addresses of both Luddenham and Forbes (A11).

11. Negotiations over the Applicant's claim for compensation in respect of the Luddenham property continued between 1992 and 1999 when on 8 September 1999, the Applicant lodged a claim for $460,775. On 21 December 2000, the Applicant's solicitors formally rejected the Respondent's offer of $6,754 (T68). On 19 February 2001 (T71), the Acting Minister for Finance and Administration made a final offer under s 76 of the Act of $6,754 plus outstanding reasonable legal or other professional costs. On 26 February 2001 (T72), the Applicant's solicitors rejected that final offer. On 24 May 2001, the Applicant lodged an application for a review of the offer of compensation dated 19 February 2001, by the Tribunal.

RELEVANT LAW

12. The process by which the Commonwealth acquires property and the compensation payable is set out in the Act. In particular, s 55 sets out the general principles as to the amount of compensation to which a person is entitled:

55 Amount of compensation- general principles

(1) The amount of compensation to which a person is entitled under this Part in respect of the acquisition of an interest in land is such amount as, having regard to all relevant matters, will justly compensate the person for the acquisition.

(2) In assessing the amount of compensation to which the person is entitled, regard shall be had to all relevant matters, including:

(a) except in a case to which paragraph (b) applies:

(i) the market value of the interest on the day of the acquisition;

(ii) the value, on the day of the acquisition, of any financial advantage, additional to market value, to the person incidental to the person's ownership of the interest;

(iii) any reduction in the market value of any other interest in land held by the person that is caused by the severance by the acquisition of the acquired interest from the other interest; and

(iv) where the acquisition has the effect of severing the acquired interest from another interest, any increase or decrease in the market value of the interest still held by the person resulting from the nature of, or the carrying out of, the purpose for which the acquired interest was acquired;

(b) if:

(i) the interest acquired from the person did not previously exist as such in relation to the land; and

(ii) the person's interest in the land was diminished, but not extinguished, by the acquisition;

the loss suffered by the person because of the diminution of the person's interest in the land;

(c) any loss, injury or damage suffered, or expense reasonably incurred, by the person that was, having regard to all relevant considerations, including any circumstances peculiar to the person, suffered or incurred by the person as a direct, natural and reasonable consequence of:

(i) the acquisition of the interest; or

(ii) the making or giving of the pre-acquisition declaration or certificate under section 24 in relation to the acquisition of the interest;

other than any such loss, injury, damage or expense in respect of which compensation is payable under Part VIII;

(d) if the interest is limited as to time or may be terminated by another person--the likelihood of the continuation or renewal of the interest and the likely terms and conditions on which any continuation or renewal would be granted;

(e) any legal or other professional costs reasonably incurred by the person in relation to the acquisition, including the costs of:

(i) obtaining advice in relation to the acquisition, the entitlement of the person to compensation or the amount of compensation; and

(ii) executing, producing or surrendering such documents, and making out and providing such abstracts and attested copies, as the Secretary to the Department requires

13. The final step by the Minister in relation to the payment of compensation is as provided in s 76:

76 Minister to reconsider offer of compensation and to make final offer

(1) On receipt of a notice under paragraph 75(b), the Minister shall reconsider the question of the amount of compensation to which the claimant is entitled and shall, by written notice given to the claimant:

(a) make a final offer to the claimant of the amount of compensation to which the Minister considers the claimant is entitled in accordance with 76

14. The jurisdiction of the Tribunal is set out in s 81:

81 Determination of compensation by Administrative Appeals Tribunal

(1) A person who has rejected a final offer of compensation under this Part may apply to the Administrative Appeals Tribunal for a review of the decision of the Minister to make the offer.

(2) Subject to subsections (3) and (4), the Administrative Appeals Tribunal Act 1975 applies to the application.

(3) Section 29 of the Administrative Appeals Tribunal Act 1975 applies to the application as if the prescribed time for the lodging of the application with the Tribunal were the period of 3 months commencing on the day on which the notice making the final offer was given, or is to be taken to have been given, to the person.

(4) On the application, the Tribunal may exercise all the powers and discretions conferred by this Act on the Minister in making the final offer of compensation and shall make a decision:

(a) affirming the final offer of compensation made by the Minister; or

(b) varying the final offer of compensation made by the Minister.

(5) If the Tribunal affirms the final offer, the amount of compensation payable to the person under this Part is the amount of the final offer.

(6) If the Tribunal varies the final offer, the amount of compensation payable to the person under this Part is the amount of the final offer as varied by the Tribunal.

EVIDENCE

Leslie Grant Mills (the Applicant)

15. The Applicant acknowledged that his statement dated 15 January 2002 is true and correct (A1). The Applicant said that after his father received notification of the Government's intention to proceed with the compulsory acquisition of his property in February 1986 (A2), he began to run down his business in Luddenham because the effect of the notice of the intended acquisition was that people began moving away and his business was losing clients. He continued to use Luddenham as a stock feed outlet but his business was declining. The Applicant said he had a workshop on the Luddenham, property which he used for maintaining trucks and carrying out mechanical repairs. In the workshop, he had a lathe, power hacksaw and welders which he used both for truck maintenance and to build items for his farm at Forbes. Three phase electricity of 415 volts was available at the property and used for running heavier industrial equipment and plant. The Applicant said he needs such three phase electricity at his Forbes property to run the chaff mill but not at the Murrumbateman outlet.

16. The Applicant said that when he commenced his business at Luddenham, his intention was to keep on using the property "forever". He therefore installed the silos for storing grain and the weighbridge for weighing stock feed and trucks. Mr Mills was asked about the replacement value for the grain silos at Luddenham cited in the compensation claim at $17,386 (T13). He said this was based on a quote from a silo manufacturer. The Applicant said the silos are still on the property at Luddenham, but he does not use them. He purchased three other silos which he installed at his Forbes property. Whereas at Luddenham there are three large silos and one small fixed silo with a total capacity of 190 tonnes, he purchased three large transportable silos for the Forbes property with a total capacity of 150 tonnes. These were erected on the Forbes property in 1986 after his father had received notice of the intended acquisition of the Luddenham property. The Applicant said that Mr Grigson's claim in respect of the silos of $16,400 had been based on a quote from another manufacturer. After the 1986 notification, the Applicant dismantled the weighbridge at Luddenham with a view to transporting this and reinstalling it on the Forbes property. However, because of the costs involved this was not done, and it was not until about 12 months ago that the Applicant transported the weighbridge to the Forbes property. This involved three truck loads. It has not yet been installed however because of the cost of doing so.

17. The Applicant was shown photographs of the Luddenham property. He said he used the following sheds on the property in his business: the office which comprised about one third of the building which is the office and work shed, the whole of the machinery and storage shed, and the hay and machinery shed. The dimensions of the hay and machinery shed are 72 x 100 feet: it has a concrete floor concrete floor and includes a lunch room.

18. The Applicant said that at the time he signed the claim for compensation on 14 March 1990 (T13), he had not commenced running his outlet at Murrumbateman and had not had any accounting advice in relation to his compensation claim about loss of profit or the need to pay rent. He said he considered using another property in the Luddenham area but none suitable were available. In any event, there was no future for his business in Luddenham because of the announcement of compulsory acquisitions in the area for the second Sydney airport. The Applicant said he needed another outlet for his business because, if he sold his produce in Forbes, he would be competing with all the other local farmers. Having looked for alternative outlets outside the Luddenham area, he therefore decided to operate part of his business in Murrumbateman because he was able to find a shed there at a cheap rent in a reasonable area. He therefore signed a lease for the shed on 7 June 1991 (A3). With an outlet in Murrumbateman, he considered he had an edge. With his equipment on his Forbes property, he turned his farm produce into more valuable stock feeds, for example by making lucerne hay into lucerne chaff.

19. In the years 1986 to 1989, the Applicant was able to support his family from the business, living at Forbes and running the business partly out of Luddenham. In 1981, he married, and, by 1989 he had two young boys, who are now 21 and 17. After undertaking the lease of the shed in Murrumbateman in June 1991, even with paying the additional rent, the Applicant was still able to support his family from the business. He was asked about the lack of financial records from this period. He said that in 1990, his property at Forbes suffered a major flood and all his pre-flood records were destroyed. Then, about 12 months ago, he found that many other documents had been destroyed by termites. The Applicant said he gave Mr Humphreys all the records he asked for but Mr Humphreys did not ask for the records from 1990. Mr Humphreys' report (T54) records a loan of $60,000 on 5 May 1991 from the NSW Rural Assistance Authority (A4) made after the floods. The Applicant said he still owes this sum, together with interest which he has been unable to pay because he has been trying to re-establish his business. As at 30 June 1997, his loan account statement showed that he owed $80,850 (A5).

20. Because there was no restriction on what the loan could be used for, the Applicant said he used the $60,000 to pay various expenses: the set up of the outlet in Murrumbateman, for example for the cost of access to the shed and signage which cost about $5,000 (T6D p97), and to shift the chaff plant for making lucerne into chafe feed for horses and cattle from Luddenham to Forbes. The Applicant also used some of the loan moneys in 1994, to improve the exiting shed at Forbes. A concrete floor was laid and the shed extended so that the chaffing plant was inside, rather than outside where it had previously been located, covered in tarpaulins. The applicant said he did the extensions himself.

21. In cross-examination, the Applicant said his Luddenham business principally involved selling grain for horses in the area. He acknowledged that he has no documentary evidence of this. He used the weighbridge to record the weight of loads going in and out of the premises. The weighbridge was dug out of the ground and dismantled in 1987 and he has operated his business without a weighbridge since then. Without the weighbridge, it is more difficult, but where necessary he has used public weighbridges. However, the nearest public weighbridge to Forbes is 40 kilometres away.

22. The Applicant said when his father showed him the letter of 25 February 1986 (A2) notifying him of the Government's intended acquisition of Mr Cecil Mills' land, the Applicant had to make a decision to protect his own interests. The main reason for his buying the Forbes property had been to supply the outlet at Luddenham and also to provide a house and home for himself, his wife and children. It was a small farm of 129 hectares and not large enough to support a family just from cereal crops. His wife works "off-farm" and her income has helped support the family, particularly in the years when L G Mills Industries has made a loss.

23. The Applicant said that in 1950, Luddenham was an area of small farms. He acknowledged that, gradually, the urban sprawl has got closer, and small farmers have moved out to the south and west. Nevertheless, his mother still lives on the Luddenham property and is happy for him to continue using it. When the Applicant was using the property for his business, his parents would assist by answering the phone. His mother continued to do this even after his father had a stroke. However, the Applicant no longer has any customers in the Luddenham area and the last time he sold grain there was in 1990. He said the Murrumbateman area has much the same customer base as Luddenham used to have. In Luddenham after 1986, all development was frozen and properties could not be improved. His view was that there was no future at Luddenham and, after the 1986 notification, he thought the property would be torn down within "five years".

24. The Applicant said he started making individual deliveries in the Murrumbateman area in 1986. The driving time from Forbes to Murrumbateman is about three and a half hours as opposed to four and a half hours from Forbes to Luddenham. Within a few years, his sales in Murrumbateman had increased beyond those in the Luddenham area. Initially, from 1986, he supplied a Mr Smith in Murrumbateman who retailed his produce. In 1991, the Applicant established his own outlet. He was asked about various figures in his accounts. With respect to the lease of the Murrumbateman shed dated 7 June 1991 (A3), although this shows rent of $200 per week, the Applicant said this was renegotiated after he spoke with Mr Grigson and the actual rent paid was $100 per week; the rent shown on the profit and loss accounts for 1992 and 1993 are in respect of the Murrumbateman rent. With regard to the cost of transporting equipment from Luddenham to Forbes, the Applicant said that as at 5 March 1990, he had transported the equipment himself but had needed the assistance of a crane to lift heavy items on and off his truck. The crane was provided by a friend and no money actually changed hands.

25. The Applicant was asked about his claim for compensation made on 14 March 1990 (T13). He said the figure for the replacement value of the silos came from H E Silos in Forbes. The figure for the weighbridge came from Mrs Masterton of Masterton Scales (A7), a quote obtained in about 1989. With regard to the figure for the relocation of machinery from Luddenham to Forbes, the Applicant said he obtained a quote in 1989 for $7,350 from K & A Traders, a transport company in Luddenham. However, he did not actually pay for this because he did the work himself. With regard to the cost of connecting three phase power to the Forbes property for the use of machinery, the Applicant said he obtained a quote in September 1992 from Central West Electricity for $10,715 (A9). However, three phase power has never been connected to the Forbes property. Instead, he used a three phase power generator, initially, in 1989, borrowed from a friend and then, when the friend needed the return of this, the Applicant purchased a generator. The use of three phase power was necessary to run the chaff plant when this was installed at Forbes after being moved from Luddenham. Thus, the $10,375 referred to in the claim (T13 p123) for the connection of three phase power has never been paid. The Applicant said that during the first few years when he was delivering chaff to Murrumbateman, this was chaff which he purchased. However, after moving his chaffing plant from Luddenham to Forbes, he supplied the chaff himself. With regard to the claims in respect of telephone, phone calls, travelling expenses and loss of earnings, the Applicant said these figures were worked out by his solicitor.

26. The Applicant was referred to the quotation from K & A Traders dated 29 May 1990 (T30) of $5,400 for moving six trailer loads of machinery from Luddenham to Forbes. He agreed that as at December 1991, this was the only written quotation which he had provided and he acknowledged that his intention was to transport the machinery himself. He also acknowledged that compensation of nearly $10,000, including interest, was paid to him in July 1992. In the 1991 financial year, his business had shown a loss of $40,402 which was a result of the effect of the floods in 1990 and the cost of re-establishing his business in Forbes. The 1990 floods wiped out all his lucerne hay and he had to re-seed and start all over again.

27. The Applicant was asked about the item "wages" shown in the profit and loss accounts for his business (R1). He said this was probably wages paid to shearers whom he employs from time to time. However, he has not been able to run enough sheep at Forbes to make it a paying proposition. The Applicant said he is largely a "one man band" and his time is taken up with processing hay and delivering chaff to customers. He was asked about Mr Grigson's report and the figure of $258,535 which he cited as the total cost of relocation to Murrumbateman. The Applicant acknowledged that he actually spent about $5,000 which included to the rent of the shed from June 1991, together with the cost of access, signage etc. Over the period 1991 to June 2000 when the lease was terminated, he would have spent no more than $100,000. The Applicant said he operated the Murrumbateman outlet for two days a week only, at weekends. The shed, measuring 60 x 40 feet, had a dirt floor. It had none of the facilities mentioned in Mr Grigson's report of 29 September 1989 (T6D p89), such as an office, workshop section, lunchroom, or shower and toilet facilities, all of which existed at Luddenham. There was also no security fencing for the shed. Although there was no such fencing at the Luddenham property, his parents were there to protect his plant and equipment. With regard to the figure of $11,920 cited by Mr Grigson as the cost of plumbing and drainage for the shed, the Applicant said this was based on a quotation from a licensed plumber dated 20 November 1992 (A8).

Jennifer McPhie

28. Ms McPhie, the Applicant's sister provided a statement dated 13 April 1998 (A15). As a joint beneficiary of their mother's will, Ms McPhie said she would have no objection to her brother continuing to run his business from the Luddenham property on the same terms as he had done so by arrangement with their parents: that is, he could run the business from the property rent free on the basis that at some time in the future he would buy out her share as agreed between the two of them.

29. Ms McPhie said she had moved away from Luddenham in 1975 and spent much of the 1980s overseas. She agreed that her husband runs a business as a plumber from their home but said she was not aware that he had provided a quotation in respect of plumbing and drainage for the Murrumbateman shed in November 1992 (A8).

Donald Grigson

30. Mr Grigson, who is now retired, became a registered valuer in 1978. He had previously been a stock and station agent in Queensland from 1954 and in New South Wales from 1958. Mr Grigson acknowledged in cross-examination that he had no formal instruction in valuation, accountancy or business valuation although he said he has been valuing rural properties since 1974 and was a business manager since 1961. In managing businesses, he has supervised accountants who have prepared the accounts for those businesses. Mr Grigson prepared a "valuation of assessed loss" for the Applicant and his business as a result of the relocation from Luddenham as at 29 September 1989 (T6D). Mr Grigson made his first visit to the Luddenham property in late 1991. He visited the Forbes property and the Murrumbateman property in 1992. The valuation was finalised in 1994 although Mr Grigson has since made a number of corrections to the figures. The amended figures show a total cost of relocation to Murrumbateman and Forbes of $351,995. A valuation on a lease cost basis shows the total cost of relocation to Murrumbateman and Forbes of $366,173.

31. Mr Grigson said he was asked to assess the loss which the Applicant had suffered as a result of the compulsory acquisition of the Luddenham site. He investigated the price of land in the area and determined that it would cost $260,000 to acquire an alternative block of land. He worked with a lease cost of 20% to reflect what an investor would have to invest in order to equip the site to an appropriate standard. He noted that in the late 1980s, interest rates were high with industrial properties yielding 12% - 15% at that time. On reflection, Mr Grigson agreed that Mr Dyson's alternative lease cost figure of 14% was not unreasonable. Mr Grigson said that in his opinion it was not feasible for the Applicant to move to another property within the Luddenham area and it was appropriate for him to find an alternative outlet in Murrumbateman.

32. Mr Grigson was asked about the quotations that he took into account in preparing his valuation for the connection of three phase power at Forbes. He said he reduced the quotation of $10,715 (A9) to $10,000 and from the Masterton quote (A7), for the removal and installation of the weighbridge, he deducted about 10% to give a figure of $24,400. This reflected the fact that the quotation was made in 1992 and the relevant date in respect of which his valuation was made was 29 September 1989. He allowed for a smaller shed at Murrumbateman than at Luddenham because storage would be increased at Forbes and worked off a quotation for the construction of a shed of $132,000, again deducting 10% from the quotation. Mr Grigson acknowledged that the quote for the shed at Murrumbateman was for a better shed than that which the Applicant actually rented. For example, the shed rented had a dirt floor whereas the quote was for a shed with a concrete floor.

33. Mr Grigson assessed the annual rental of the premises at Luddenham at $97,660 on the basis of a 20% net return. Mr George Nelson, the AVO valuer, assessed the market rent of the property at $11,440 per annum or $220 per week. The figure of $488,300 Mr Grigson based on the capitalised cost of the facility to an investor. He worked on a three year rental of a replacement depot in respect of the Luddenham area and a five year rental of a replacement depot at Murrumbateman, reflecting the fact that this would be a less attractive area for an investor. Mr Grigson noted that in a five year period from 1986 in respect of Luddenham, any proactive business person would attempt to relocate his or her business.

34. Mr Grigson allowed for a cost of replacement silos of $16,400 based on the September 1992 quotation from HE Silos (A12). He allowed for five silos at $3,305 each plus $336 cartage to Murrumbateman totalling $3,641 per silo and $18,205 for the five silos. He then discounted this amount by about 10% to give the figure of $16,4000.

35. In preparing his valuation, Mr Grigson said he worked from the quotations obtained. He did not know at the time that the Applicant had no intention of paying others to do the required work but was proposing to undertaken the work himself.

Robin Humphreys

36. Mr Humphreys prepared a report for the Applicant dated 29 July 1999 (T54). Mr Humphreys, who arrived in Australia in 1966, has a Bachelor of Laws Degree. He is a barrister of the Supreme Court of New South Wales, a fellow of the Institute of Chartered Accountants, a registered tax agent and a company auditor. He was a partner in Deloittes from 1976 to 1994 when he set up his own firm specialising in forensic accounting and later undertaking quality control work. Since 1 July 2000, he has been with White Life Forensic. Mr Humphreys said the Applicant provided him with the Profit and Loss Accounts for his business for the years 1972 to 1997. Mr Humphreys' report takes 1990 as a benchmark, with part of that year's income derived from Luddenham and part from Murrumbateman. He looked at the results for the business as a whole in providing a trend analysis over two different periods: 1984 to 1989, and 1991 to 1996. The gap between the trend lines for the two periods represents the loss arising from the relocation of the Applicant's business. By measuring the gap for each year prior to the trend lines meeting, a loss of about $65,700 is indicated arising from the relocation. Taking into account the rent payable by the Applicant in respect of the Murrumbateman premises, Mr Humphreys calculated an additional loss due to the relocation of $52,500 for the years 1991 to 1996.

37. In cross-examination, Mr Humphreys said he was surprised to learn today of the severe floods in Forbes in 1990. He acknowledged that these floods compromise his analysis and that his trend line could change as a result of that information. Mr Humphreys said he assumed that after 1990, the business was operated from Murrumbateman and not from Luddenham. He acknowledged that if evidence were available to show a decline in the business generated in Luddenham after 1986 and a start to sales in Murrumbateman in 1986, this would make a difference to his analysis. He was also unaware that the Applicant's parents were elderly and only able to give very limited assistance from about 1989/1990. Mr Humphreys said it was impossible to tell from the figures provided to him what the profitability of each of the three locations, that is Luddenham, Forbes and Murrumbateman, might be.

Michael Dyson

38. Mr Dyson is a specialist valuer for the AVO. He provided a copy of his curriculum vitae (R4) and a report which he had prepared dated 18 December 2001 (R5), after he met with Mr Grigson on 29 November 2001.

39. Mr Dyson noted that interest rates at the relevant time were at 14%. He said the main problem in analysing the Applicant's business accounts is that, in effect, he was running three businesses: from Luddenham, from Murrumbateman and from Forbes. To determine the profitability of the business conducted at Luddenham, it would have been preferable to have separate accounts for that location.

40. Mr Dyson noted, that included in the AVO Report prepared by Mr George Nelson (T6A) in respect of Mr Cecil Mills' claim for compensation, are an amount of $16,300 in respect of the hay and machinery shed on the Luddenham property and an amount of $12,250 in respect of the grain silos. By contrast, in the second AVO Report in respect of Mr Cecil Mills' claim (T6B), an amount of $29,000 is allowed in respect of the hay and machinery shed and an amount of $11,500 in respect of the grain silos. Then in a Minute by Mr Nelson dated 20 April 1990 (T17), the depreciated value of the four grain silos is stated to be $11,050 and the replacement cost is estimated to be $17,000. The improvement value of the hay/machinery shed is listed at $44,040.

41. Mr Dyson prepared notes of the meeting he held with Mr Grigson on 29 November 2001 (TR1). Paragraph 4 of those notes refers to the location of the move. Mr Dyson said the demographics of the Luddenham area had, in any event, been changing over a number of years with encroachment from the urban areas of Penrith and Liverpool which have resulted in smaller subdivisions of the land being allowed. With regard to paragraph 6 of the notes which are concerned with the return on investment, Mr Dyson disagreed with the 20% return used by Mr Grigson, but agreed that everybody would expect an investment in a property. With regard to the Applicant's claim for loss of income, Mr Dyson said "it is his belief that a claim for loss of income can only be made if the relocation is made within the same locality".

SUBMISSIONS

Applicant

42. Ms Stenmark submitted that the evidence supports a finding that the licence granted to the Applicant by his father to conduct the Applicant's business from the Luddenham property rent free would have continued under his mother, Mrs Mills' ownership, and the Applicant's sister, Mrs McPhie, would also have permitted this to continue on the basis that at some time in the future, the Applicant would buy out her share as agreed between the two of them. The Applicant said he purchased the silos erected at Luddenham which were used to store grain. The weighbridge was installed in about 1981/1982.

43. The Applicant's evidence is that he became aware of the Commonwealth's interest in the land in February 1986 (A2). Knowledge of the Commonwealth's intentions caused people in the area to more away and the Applicant's business started to decline. Between 1986 and 1989, the Applicant wound down his Luddenham business and sought to establish an outlet in Murrumbateman because it was not commercially feasible to concentrate all his business activities in Forbes. On 7 June 1991, he signed a licence agreement to rent a storage unit in Murrumbateman (A3).

44. Ms Stenmark submitted that as a result of the compulsory acquisition of the Luddenham property, the Applicant lost his facility to use Luddenham as a distribution point for his Forbes produce. That loss was a direct, natural and reasonable consequence of the acquisition of his interest, which included the improvements he had erected on the property. Section 55(2)(c) permits consideration of circumstances peculiar to the Applicant in assessing compensation. The Applicant decided to commence winding down his Luddenham operation in the period 1986 to 1989 as a direct, reasonable and natural consequence of the acquisition.

45. With regard to the expert evidence given on behalf of the Applicant, Mr Grigson expressed the view that a sensible and reasonable person would be proactive in trying to relocate his business elsewhere. It was commercially expedient for the Applicant to do so. Because the Applicant's customers were moving away, it was not expedient to try and relocate in the Luddenham area in which, in any event, further development was being controlled. Mr Grigson also attributed the value of improvements to the Applicant on the basis that they would have greater value to him on an "on farm on going basis".

46. Mr Humphreys assessed the loss occasioned to the Applicant's business at approximately $65,000 but accepted that the 1990 floods would have had an obvious deleterious effect of which he was not aware. Ms Stenmark suggested that the Tribunal could discount Mr Humphreys' figure appropriately but should allow for five years interest on the NSW Rural Assistance Authority loan because the Applicant had been unable to repay the loan due to lack of funds attributable to the relocation of his business.

47. With regard to the evidence Mr Dyson gave on behalf of the Respondent, and the value attributed to the hay/machinery shed and the silos, Ms Stenmark contended that the Applicant should be compensated for the cost of the silos, the connection of three phase electricity, and the loss of the shed because of their value to the Applicant on an "on farm ongoing basis", the loss of which was a direct, natural and reasonable consequence of the Commonwealth's acquisition.

48. Ms Stenmark disagreed with Mr Dyson's contention that the Applicant should only be compensated for any loss incurred in relocation within the Luddenham area. As stated earlier, this was not commercially feasible. The Applicant has already been paid $5,400 for relocation expenses. He should, at the very least, also receive $26,000 for the installation of the weighbridge.

49. With regard to relevant law and its application, the Applicant is entitled to just compensation pursuant to s 55(1) of the Act having regard to all relevant matters including the matters referred to in s 55(2)(e). It is not the point that the Applicant's father was compensated for the silos and hay and machinery shed. The compensation must represent the value to the dispossessed owner.

50. Ms Stenmark submitted that the Applicant is entitled to the reasonable costs incurred in the removal and relocation of his business on the basis of the disturbance principle: Director of Building and Lands v Shung Fung Ironworks (1955) 2 AC 111 at 125 - 127. Some latitude should be allowed in assessing the relocation costs by reason of the Applicant's being a family business. Ms Stenmark submitted that the reasonableness of the Applicant's relocation claim should not only be addressed in financial terms. He has lost both part of his business and his lifestyle.

51. Ms Stenmark said three principles arise in relocation claims: (1) can the business be relocated or has it been extinguished; (2) does the claimant intend to relocate and, if so, has a firm decision been made; (3) would a reasonable businessman relocate? In this case, the first two questions are answered in the affirmative. With regard to the third question, some latitude should be given because the issue "is not a matter of cold commercial judgment". A rural way of life is also involved. The Applicant submits that a reasonable business person would relocate.

52. Ms Stenmark said that as a result of the Commonwealth's acquisition, the Applicant has lost the special value of his interest in the land as a site of business, the measure of which is the expenses/losses incurred in moving his business to a new site. In Shung Fung (supra), the Privy Council referred to three conditions that must be satisfied: (1) a casual connection; (2) not too remote; and (3) reasonable. The Applicant submits that his claims satisfy the conditions.

53. Ms Stenmark contended that the Applicant is also entitled to losses suffered in the "shadow period" 1986 to 1989, when "the shadow of resumption was hanging over his head". During this period, the Applicant's business suffered when customers moved away. This was a direct, natural and reasonable consequence of the threat of resumption.

54. Ms Stenmark submitted a schedule setting out "the base figures of the Applicant's claims" comprising:

1. Relocation from Murrumbateman $66,060

2. Cost for farming activities at Forbes $83,960

3. Rent (at Murrumbateman) for 5 years $25,350

4. Loss of profits $20,000

5. Interest on flood loan $18,000

Total $213,370

An order for interest on the judgment and costs was also sought.

Respondent

55. Ms Adamson noted that the Schedule setting out the Applicant's claim differs markedly from the claim originally made on 14 March 1990 (T13). The Respondent submits that neither the evidence adduced on behalf of the Applicant nor the Applicants' submissions warrant any change to the decision under review which should, therefore, be affirmed.

56. With regard to the cost of improvements to the Murrumbateman and Forbes' sites which comprise the first two heads of the Applicant's new claim schedule, Ms Adamson submitted that these costs were not a direct consequence of the compulsory acquisition, nor do they represent a special value which he would have been prepared to pay to retain his interest. Ms Adamson noted that the Applicant had chosen a totally different location - Murrumbateman - where he also sought to diversify his business, for example, selling saddlery.

57. With regard to the Forbes site, the Applicant was already carrying on a farming business there which was unaffected by the compulsory acquisition. Because no distinction was made in the Applicant's accounts between his various business activities, it is not possible to compare their profits.

58. Where, as in this case, the cost of relocation ($150,020 claimed) substantially exceeds the profitability of the business, compensation cannot be justifiably assessed by reference to relocation costs: Banno (supra). The Applicant conceded that he was dependent on his wife's off-farm income to support their family. Any profit generated was below the minimum wage in terms of recompense for the Applicant's full-time employment. As in Banno (supra), compensation for relocation costs was not warranted because of the marginal profitability of the business. It is not a direct, natural and reasonable consequence.

59. Ms Adamson submitted that the third head of the Applicant's new claim schedule - rent in respect of Murrumbateman, must suffer the same fate. Moreover, there is no evidence to show that the renting of additional storage at Murrumbateman was necessary, nor a "direct" result of the compulsory acquisition. At Murrumbateman, the Applicant diversified the produce sold.

60. Ms Adamson said the fourth head of the claim, for loss of profits, cannot be sustained because the Applicant's business was not profitable and the evidence relied on by Mr Humphreys was given in ignorance of the 1990 floods in Forbes which, the Applicant said, wiped out all his lucerne hay so that he had to re-seed and start again. Similarly, the fifth head, for interest on the flood loan, also cannot be sustained in view of the fact that the Applicant was unable to pay the interest because his business was made even more unprofitable by reason of the flood.

61. With regard to the Applicant's evidence, Ms Adamson submitted that the Applicant's desire to expand his business was the reason for his starting to sell produce in Murrumbateman in 1986. The customer base around Luddenham was only partly affected by compulsory acquisition. It was more significantly affected by encroaching urban sprawl. Murrumbateman, a more rural location, was obviously preferable for a grain business. Murrumbateman was closer to Forbes, so it was more convenient to store the grain and have the chaff plant at Forbes. Thus, the relocation of the silos was not a direct, natural and reasonable consequence of the compulsory acquisition.

62. Ms Adamson said the best evidence of what the Applicant would have done if his licence was terminated by, for example, compulsory acquisition, is what he actually did. He stopped selling grain at Luddenham and started selling grain elsewhere. All he needed to do this was a truck. Although he found it convenient to rent a shed in Murrumbateman, this was not essential. He had previously sold lucerne hay to a Mr David Smith for on-sale in Murrumbateman, and had also sold lucerne direct to other customers.

63. With regard to the improvements to his shed at Forbes, including its expansion to accommodate the chaff mill, the Applicant operated without these improvements until 1994. They were not a direct, natural and reasonable consequence of the compulsory acquisition. In any event, he did the work himself and has not tendered any evidence as to the cost of materials used.

64. Ms Adamson commented on the paucity of the documentary evidence adduced by the Applicant. For example, the Applicant was unable to produce customer lists for his Luddenham business or evidence as to who his customers were and where they were located. The Applicant's profit and loss statements give no indication of the business attributable to the different locations of the properties, nor to the different business activities, for example grain, sheep and livestock etc. Moreover, in some years, for example in 1990 after the floods, the Applicant had to buy in produce from other farmers.

65. With regard to the quotations obtained by the Applicant, Ms Adamson noted that in many instances the Applicant obtained a quotation merely to substantiate his claim. Much of the work involved in the relocation he has undertaken himself, for example moving the chaff plant to Forbes and extending the shed at Forbes to accommodate it. But even where he has performed such work, he has not attempted to calculate how much he actually spent. Ms Adamson said the Applicant's expert witnesses, Mr Grigson and Mr Humphreys, prepared reports on inadequate and, in Mr Humphreys' case, erroneous information. Mr Grigson's calculations were unrealistic in the extreme and constituted an ambit claim. No reasonable businessman in the Applicant's position would have contemplated undertaking the transaction proposed by Mr Grigson.

66. With regard to other specific claims, Ms Adamson noted that the Applicant dismantled the weighbridge in about 1986/1987 but did not even transport it to Forbes until last year. Thus, it can be inferred that it is not important to the Applicant's business and could not reasonably have altered the profitability of his business. The Applicant has managed without connecting three phase electricity to his Forbes property by using a three phase generator. Ms Adamson noted that even though the Applicant was compensated for $5,400 in respect of removal expenses, he has moved his equipment himself, on one occasion with the assistance of a friend's crane for which the Applicant was not charged.

67. Ms Adamson submitted that the basis on which the Applicant claimed compensation for the silos and hay and machinery shed was mistaken. Because the Applicant was not the owner, he can only claim compensation if he has incurred expenditure or suffered loss as a direct, natural consequence of the loss of their use. If he cannot show that he was using them in the course of a profitable business, he will be unable to make a claim.

68. Ms Adamson noted that the Applicant has chosen to put his claim on a relocation basis rather than on an extinguishment basis. Ms Adamson submitted, in conclusion, that no reasonable business person spending his or her own money would spend the money which the Applicant seeks from the Respondent in order to relocate an unprofitable business.

APPLICATION OF THE LAW AND FINDINGS

69. Section 55(1) of the Act provides for the payment of compensation to a person whose interest in land is compulsorily acquired. The compensation payable "is such amount as, having regard to all relevant matters, will justly compensate the person for the acquisition".

70. Section 55(2) provides that the relevant matters to which regard shall be had include:

(c) any loss, injury or damage suffered, or expense reasonably incurred, by the person that was, having regard to all relevant considerations, including any circumstances peculiar to the person suffered or incurred by the person as a direct, natural and reasonable consequence of:

(i) the acquisition of the interest; ...

71. The facts of this case are materially similar to those in Banno (supra), a decision of Wilcox J in the Federal Court. The Tribunal is bound by that decision which involved the compulsory acquisition of a poultry farm owned by two brothers for the purpose of the proposed Badgery's Creek Airport. Wilcox J stated, at paragraph 34, that s 55(1) "does not limit recoverable compensation to that arising out of direct effects". Use of the phrase "justly compensate" requires that

If the circumstances are such that a claimant can be justly compensated only by reference to the cost of reinstating a business in another location this course must be taken.

72. However, where a claim is made in respect of the relocation of a business, causation must be established. Wilcox J cited with approval the decision in Commissioner of the Highways v Ship Bros Pty Ltd (1978) 19 SASR 215 at 220 - 221, where Wells J stated:

Causation is, as always, the ultimate test - on the one hand, for example, the circumstances may be such that it would be wholly unreasonable for the claimant to do other than promptly to lay out moneys in order to effect a simple and inexpensive transfer to an immediately available and obviously appropriate alternative site. On the other hand, a proposal to relocate ... may lie uncomfortably close to the limits of acceptability ... if the costs of available relocation plainly and substantially would exceed the value of the business as a going concern .... It would not be the reasonable and natural consequence of expropriation to incur such costs, and hence compensation could not justifiably be assessed by reference to them ...."

73. However, Wells J went on to say, at 221 - 222, that a small family business:

may represent more than just a means of getting a living - it may represent, too, their chosen way of life

Thus:

a court may allow itself some latitude in approving the re-establishment of a family company's business, even though, as a matter of cold commercial judgment, an accountant would not recommend a client to invest in the same business.

Wilcox J cited with approval Brown Bros (Marine) Holdings Pty Ltd v. NSW Land and Housing Corporation (1991) 72 LGRA 50, where Hemmings J held, in the words of Wilcox J at paragraph 43, that:

where because of costs, it is not reasonable that the business be relocated and reinstated, compensation should be paid on the basis of extinguishment or destruction of the business

74. In Banno (supra), having rejected a reinstatement approach to the applicants' claims, Wilcox J went on to consider their claims for loss of profits. However, he emphasised, at paragraph 54, as a matter of principle, that no claim for loss of profits can be made after the date of the acquisition. If the claimant "chooses to stay on the land and incurs losses, those losses result from the choice not the expropriation".

75. Both parties in the current matter also cited the Privy Council decision in Shung Fung (supra). This case involved a claim in respect of a compulsory acquisition of a business's site made on a "relocation" basis. Lord Nicholls stated at 127:

Compensation is not intended to provide a means whereby a dispossessed owner can finance a business venture which, were he using his own money, he would not countenance. However, when considering these matters the tribunal or court might allow itself a moderate degree of latitude in approving as reasonable the relocation of a family business, for the reasons set out by Wells J in Commissioner of Highways v Shipp Bros Pty Ltd (1978) 19 SASR 215, 222.

76. In the current matter, the Applicant's father, Mr Cecil Mills, was notified on 25 February 1986 (A2) of the forthcoming compulsory acquisition of his property at Luddenham. The compulsory acquisition took place on 29 September 1989 (T7). The Applicant had a verbal licence from his father to use the property for his business, free of rent. From the early 1970s, the Applicant carried on a stock feed distribution business, but he also undertook repairs to trucks and farming plant, and built stock crates and grain angers. For his stockfeed distribution business, he installed grain silos, a roller mill and chaff cutter, a weighbridge and other associated plant.

77. In 1979/1980, the Applicant commenced farming at his Forbes property and, after his marriage in 1981, this property also became the family home, which he and his wife purchased in 1984/1985. The Applicant trucked grain and lucerne produced on the Forbes property for processing and distribution at Luddenham. After notification in February 1986 of the impending compulsory acquisition of the Luddenham property, the Applicant began to run down his business in Luddenham as sales declined with customers moving away. About the same time, he commenced deliveries in the Murrumbateman area, initially supplying a Mr Smith who retailed the Applicant's produce in the area. The Applicant said that within a few years, his Murrumbateman sales exceeded his Luddenham sales. From June 1991, the Applicant established his own outlet in Murrumbateman from rented premises which he maintained until June 2000. He operated this outlet on only two days a week, at weekends, diversifying the range of produce sold to include, for example, saddlery. The Applicant said it cost him about $5,000 to lay a proper access to the shed and for signage.

78. After the February 1986 notification, the Applicant purchased three replacement grain silos which he installed at his Forbes property. No evidence was adduced as to what these silos cost but the Applicant has included a claim for $16,400 based on a quotation from a silo manufacturer. He also dismantled the weighbridge but did not move this to Forbes until about 12 months ago, where it is awaiting reassembly. The Applicant said he had not organised the reassembly because of the cost involved. The weighbridge had been used at Luddenham to weigh stockfeed and trucks. Since dismantling the weighbridge, the applicant has operated his business without a weighbridge, using public weighbridges if required. The nearest to Forbes is 40 kilometres away.

79. The Applicant transported other machinery, including the chaff plant, from Luddenham to Forbes. The chaff plant runs on three phase electricity which was connected at Luddenham but is not connected at Forbes. Instead, at Forbes, he runs the chaff plant on three phase power from a generator. There was no evidence adduced as to the costs involved or any disadvantage suffered as a result of the use of a generator.

80. In 1990, Forbes was badly affected by floods which wiped out the Applicant's lucerne hay and required that he re-seed. On 5 May 1991, he obtained a $60,000 loan from the NSW Rural Assistance Authority. This loan was not limited to use in relation to flood damage. The Applicant used part of the money to pay the costs associated with his Murrumbateman outlet, and part for the transport of the chaff plant from Luddenham to Forbes and for improvements to a large shed on his Forbes property to house the plant. The Applicant was unable to provide evidence of the cost of moving the chaff plant or of the improvements to the shed at Forbes, but the Tribunal notes that he did this work himself. The Applicant has not paid the interest on the loan nor has he repaid the principal sum. On 30 June 1997, his outstanding debt was $80,850 (A5).

81. With regard to the profitability of the Applicant's business, the Applicant provided copies of his Profit and Loss Accounts from 1972 to 1997. His evidence is that many of his financial records were either destroyed in the 1990 floods or later by termites. Thus, the financial information about his business that he was able to provide to the Tribunal was minimal and, for example, there is no indication as to profit/loss generated by his business in relation to Luddenham, Murrumbateman or Forbes. The Profit and Loss Accounts record the following:

YEAR PROFIT/(LOSS) NOTES

1984 ($4,344)

1985 ($587)

1986 $230 * Notification of Impending acquisition

1987 $80

1988 $509

1989 $11,177 * Compulsory acquisition

1990 $9,328 * Last sale of grain from Luddenham

* Forbes floods

1991 ($40,402)

1992 ($7,965)

1993 $15,259

1994 ($11,841)

1995 $16,967

1996 $7,108

1997 ($39,269)

82. Even a superficial analysis of these figures indicates the significant effect of the 1990 Forbes flood which, it would appear, impacted severely on the Applicant's profitability for the financial year ended 30 June 1991 with a likely ongoing adverse effect in the year end 30 June 1992. The Tribunal notes that the Applicant's expert witness, Mr Humphreys, was not made aware of the 1990 floods and acknowledged that they compromised his analysis. His previously expressed opinion (T54) was that the loss sustained by the Applicant's business as a result of the compulsory acquisition was "in the order of $65,000 to $68,500", plus interest on borrowings undertaken for the purpose of re-establishing the business of $28,050. Mr Humphreys also acknowledged that if evidence were available to show a decline in the business generated in Luddenham after 1986 and a start to sales in Murrumbateman, this would also make a difference to his analysis. In the Tribunal's view, it would therefore be unsafe to place any reliance on Mr Humphreys' report given these problems.

83. The first issue to be considered in determining whether the Applicant is entitled to an amount of compensation in respect of the relocation of his business is that of causation. Are the claimed costs associated with the relocation the direct, natural and reasonable consequence of the acquisition (s 55(2)(c))? The requirement of reasonableness means that a claim for costs which cannot reasonably be justified must fail. The question is what is reasonable in the Applicant's particular circumstances, allowing some latitude because the business is a small rural family business where lifestyle is a factor.

84. In the Tribunal's opinion, it was reasonable for the Applicant to establish an alternative outlet for his produce in Murrumbateman when faced with declining sales in Luddenham. From 1991, he leased a shed for this purpose in respect of which, according to the Applicant's evidence, he spent approximately $5,000 for access and signage. Bearing in mind the minimal profitability of the Applicant's business, such an outlay was reasonable and the Applicant should be compensated for this amount. It would not have been reasonable to spend the $66,060 claimed by the Applicant in the new claim schedule.

85. The Tribunal notes that the Applicant diversified the range of produce available at Murrumbateman beyond what he produced at Forbes, and that he could have continued to distribute produce through an agent, as he did prior to 1991, or by direct sale. Nevertheless, in the Tribunal's view it was not unreasonable to do as he did. However, the Tribunal rejects the specific claim made by the Applicant on the ground that it bears no relation to reality and is way outside the limits of acceptability. The Tribunal therefore allows $5,000 in respect of establishment costs for Murrumbateman but rejects any claim in respect of rent for the Murrumbateman shed noting that the Applicant had already been selling produce in the area since 1986 and could have chosen to continue with the previous arrangement with Mr Smith or made direct sales to larger customers such as riding stables.

86. While the Applicant used the Murrumbateman shed as a distribution outlet, he transferred other parts of his operation formerly undertaken at Luddenham, to Forbes. In the Tribunal's view, it was reasonable for the Applicant to dismantle the plant he had at Luddenham, transport it to Forbes, and re-assemble it there. The Applicant dismantled and transported the plant and equipment himself on his own truck. There was no evidence as to the costs involved. Nor was there any evidence as to the costs involved in the Applicant improving his Forbes shed to house his chaff plant, or for the purchase of the three phase power generator. In the Tribunal's view, it would be reasonable to compensate the Applicant for the costs he actually incurred which were directly attributable to the relocation of his plant and equipment. The Tribunal notes, however, that the Applicant has already received $5,400 in respect of removalist costs as part of the "without prejudice" payment of $6,754, together with interest, made by the Respondent to the Applicant on 29 June 1992. Given the lack of evidence as to the costs incurred by the Applicant, the Tribunal is neither able nor prepared to nominate any amount of compensation under this head, especially given the $5,400 already paid.

87. With regard to the grain silos, the Tribunal notes that Mr Ceil Mills was compensated for the value of these as part of his settlement. There is no evidence as to the cost incurred by the Applicant in installing three silos at his Forbes property in 1986 but the Tribunal does not accept that there is a special value to the Applicant beyond the depreciated value for which Mr Cecil Mills was compensated. As to the weighbridge, the Tribunal notes that this was dismantled, perhaps prematurely, in 1986. The Applicant has operated without a weighbridge since. In the Tribunal's view, it would not be reasonable given the minimal profitability of the Applicant's business, to spend $24,400 on re-installing the weighbridge when the Applicant has demonstrated that he can operate without it and has not provided any evidence to demonstrate that his business has suffered as a consequence. Thus, no compensation should be paid in respect of the weighbridge.

88. With regard to loss of profits, as already stated, in the Tribunal's view it would be unsafe to place any reliance on Mr Humphreys' report given his lack of awareness, in particular, of the 1990 Forbes floods and their effect on the Applicant's business. Even a superficial analysis of the Applicant's Profit and Loss Accounts suggests they had a severe adverse impact. With this in mind, and the well known uncertainties associated with farm income, given the lack of any specific information as to the profit/loss attributable to the Applicant's Luddenham, Murrumbateman and Forbes operations, the Tribunal is unable to make any sensible determination as to whether the compulsory acquisition caused a loss of profits for the Applicant's business. The Tribunal also notes the possible influence on the Luddenham business of encroaching urbanisation.

89. With respect to the interest on the NSW Rural Assistance Authority loan, the Tribunal is also unable to attribute any interest on the "flood loan" to the relocation. The lack of specific evidence as to how the $60,000 was spent and over what period, when seen against the background of flood damage and the necessity and costs of the Applicant re-seeding to re-establish his lucerne production, makes it impossible to establish a causative link.

90. The Tribunal recognises that s 55(1) requires a payment of compensation that "will justly compensate" for loss, injury or damage or expense reasonably incurred. The Tribunal also recognises the need for some latitude, given the nature of the Applicant's business and his lifestyle. In the Tribunal's view, a reasonable outcome in this case, given the paucity of the evidence, discussed above, is to vary the Respondent's offer of compensation by increasing that offer by an amount of $5,000 in respect of the re-establishment costs related to the Applicant's Murrumbateman outlet.

91. The Tribunal therefore varies the decision under review by increasing the final offer of the Respondent to $11,754.

I certify that the 91 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President RP Handley.

Signed: .....................................................................................

Associate

Date/s of Hearing 11 February, 12 February,

13 February and 18 April 2002

Date of Decision 26 June 2002

Counsel for the Applicant Ms A Stenmark

Representative for the Respondent Ms C Adamson