A benchmark Appeal Court decision has awarded lease relocation costs after it was refused because the tenant remained in occupation after resumption. Interpretation of Sec 18(3) Acquisition of Land Act was the key issue. The Department of Transport and Main Roads (DTRM) had successfully applied a ‘no-compensation’ policy for many years to other Lessees in similar circumstances.

The originating lease in the Coorparoo Shopping Mall was for a term of three years from 1 January 2003, with two options for renewal, each for a further term of three years. The property including the leased premises was resumed on 31 July 2009 and the Lessee remained in occupation.

The Lessee subsequently contacted DTRM complaining of the decrease in commercial activity in Coorparoo consequent on the announcement of the proposed Busway, seeking agreement to pay a lower rent while it continued in occupation of the premises, pending the negotiation of relocation costs. The parties agreed to a lower rental on a ‘month to month’ basis though DTRM stated the premises would not be required for works until mid-2012. Provision was also made for payments for outgoings, a bond, annual review of rental, the obtaining by the Lessee of public indemnity insurance, and the payment of rent from 1 September 2009. A draft Retail Shop Tenancy Agreement was prepared, but not executed.

The Land Court refused an application by the Lessee to determine compensation because of the provisions of Sec 18(3) Acquisition of Land Act:

“18 By whom compensation may be claimed
(1) Subject to subsections (2), (3), (4A) and (5) compensation whereto a right is had under section 12 may be claimed from the constructing authority under, subject to and in accordance with the provisions of this part.

(3) Compensation shall not be claimable by or payable to a person who is lessee, tenant or licensee of any land taken if the constructing authority upon written application allows the person’s estate or interest to continue uninterrupted.”

The Land Court concluded that “uninterrupted” in Sec.18(3) means that there was unbroken enjoyment of the estate or interest concluding that compensation shall not be claimable by or payable to the applicant.

Later, the Land Appeal Court held a different view:

“Section 18(3) is intended to restrict the right to claim compensation.”
“The language used in the subsection suggests something significantly different from merely permitting the former lessee to continue to occupy the land.”
“Provisions relating to compensation for the compulsory acquisition of land are intended to ensure that the person whose land has been taken is justly compensated; and such provisions should be construed with the presumption that the legislature intended the claimant to be liberally compensated. The considerations which underlie these principles would suggest that the meaning of a provision restricting a right to claim compensation, such as s 18(3), should not be extended, unless an extended meaning is clearly intended. This approach is consistent with the principle that, in the absence of clear words, legislation is not to be construed as intending to interfere with economic rights and principles without compensation.”
“In the present case, in the period immediately after 31 July 2009, Ostroco had no right to occupy shop. It was, at best, a tenant at will. That is not an estate.”
“It follows that Ostroco’s estate was not allowed to continue uninterrupted, and it was not precluded from claiming compensation.”

The determination of claim for compensation was remitted to the Land Court which subsequently awarded over $300,000 for relocation costs.

Ref: Ostroco v Department of Transport and Main Roads [2012] QLAC 006

Disclaimer : This publication is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render professional advice and neither purports nor is intended, to be advice on any particular matter. No reader should act on the basis of any matter contained in this publication without first obtaining specific professional advice. This article is copyright. For permission to reproduce this article please contact us.