WA case notes: June 2025

By Christopher Taylor-Burch

In response to a number of novel claims, the Court of Appeal in DBW Reynolds Pty Ltd v Public Transport Authority [2025] WASCA 43 has further developed the principles relevant to the assessment of compensation for land taken under the Land Administration Act 1997 (WA) (LAA). In particular, the Court concluded:

• A court may value taken land on a higher ‘value to the owner’ basis, rather than at its market value, under LAA s 241(2). However, a court must first be satisfied that the land has a special value arising from some attribute, from some use made or to be made of it, or from some advantage derived or to be derived from it, and that that is peculiar to the owner and not captured by the market value. Simply owning and leasing land which has been improved for a particular advantageous use is not enough to justify any extraordinary valuation.
• In assessing loss or damage sustained by reason of disruption and reinstatement of a business under LAA s 241(6)(b), a court will not accept that a claimant who is part of a ‘single economic unit’ has sustained the combined losses of all the members of that unit regardless of the legal relationship between them. Instead, the relationship must, in effect, mean the claimant’s interest in taken land encompasses those other members’ interests. That two companies share directors will not be sufficient for one to claim the other’s losses where only the first has the relevant interest in the land.
• Further, in assessing that loss or damage, any benefit or saving conferred by the disruption and reinstatement of a business is to be taken into account, and only the totality of any loss or damage awarded as compensation under s 241(6)(b).
• The loss of a commercial opportunity may be loss ‘sustained’ within the meaning of LAA s 241(6). However, the Court left open whether such claims are compensable as ‘loss and damage’ at all, or, if they are compensable, the head of compensation in LAA s 241 under which they should be claimed.

Accordingly, while the approach to follow in claiming compensation for land taken under the LAA is now clearer, uncertainty remains about how particular claims for compensation for business disruption and reinstatement should be pleaded and pursued.

How did the appellants’ claims for compensation arise?

The first appellant, DBW, owned land in High Wycombe, which the second appellant, Century West, leased from it and used to carry out a transport haulage and storage business.

The land had three road frontages, which Century West used to reduce the space needed for large vehicles to turn on the land. That allowed more of the land to be used for the storage business.

The appellants each had Mr and Mrs Reynolds as their directors, and the Reynolds were involved in managing the appellants’ daily operations.

In 2015, after the Forrestfield airport link railway project was authorised, the respondent Authority registered a taking order for DBW’s land for the purposes of the railway.

That had the effect of terminating the appellants’ interests in the land and converting them into claims for compensation under LAA pt 10.

After the land had been taken, Century West leased a new temporary location from a third party. The rent payable for that new location was less than the rent Century West had been paying to DBW, which had been set by reference to the mortgage repayments DBW had been making for the land. The new lease was, though, less tax efficient than the beneficial leasing arrangement that the appellants had had over the taken land.

The appellants claimed compensation under LAA s 241. Relevantly, DBW claimed compensation for the ‘value of the land [taken] with any improvements’ under s 241(2). Century West claimed compensation for the ‘loss or damage, if any, [it] sustained … by reason of … disruption and reinstatement of a business’ under s 241(6)(b).

The Authority did not dispute the appellants’ entitlement to compensation, but did dispute the amount claimed, which the trial judge determined. DBW and Century West appealed, relevantly on grounds that, in effect:

in relation to DBW’s claim for compensation:

• the value of the land taken should have been assessed on a higher ‘value to the owner’ basis, not at its market value.

in relation to Century West’s claim for compensation:

• it ought to have been entitled to compensation for losses caused by disruption to the appellants’ business by reference to the overall performance of the appellants as a combined economic unit.
• loss of an opportunity to enter a future profitable contract was ‘loss or damage … sustained’ for which compensation ought to have been awarded.

When will a court value taken land on a ‘value to the owner’ rather than a market value basis?

Among a number of errors alleged by the appellants, DBW argued that because the transport haulage and storage business was being operated on the land, the trial judge ought to have valued the land by asking ‘what would a claimant with full knowledge of the precise use of the land and the business conducted thereon reasonably pay, rather than fail to gain it’.

The Court began by identifying that s 241(2) required, in determining the amount of compensation to be awarded, regard to be had to the value of the land with any improvements, discounting any change in value attributable to the proposed public work. That is, the exchange value of the land.

Ordinarily, the Court considered, that will be the market value of the land as outlined in Spencer v The Commonwealth (1907) 5 CLR 418(ie, the price that would be agreed between a hypothetical seller and buyer who are prudent and willing, but not anxious, to complete the exchange).

That assessment of market value assumes the hypothetical seller and buyer are ‘perfectly acquainted’ with the land and aware of all circumstances and features that might affect its value, and that the buyer would purchase it for its most advantageous (or ‘highest and best’) use.

However, the Court acknowledged that s 241(2) might, instead of market value, require a higher ‘value to the owner’ to be used to determine the amount of compensation to award. That is, the amount which a prudent person in the position of the owner would have been willing to give for the land, over and above its market value, rather than fail to obtain it.

That would be the case where the land has a special value arising from some attribute, from some use made or to be made of it, or from some advantage derived or to be derived from it, which is peculiar to the owner and would not be captured by its market value.

The Court, though, agreed with the trial judge that there was no difference between the market value and the value to DBW where the Spencer test took full account of all the features of the land and improvements. That was because:

• the market value had been assessed on the basis that the highest and best use of the land was its existing use.
• the particular features of the land, including its use, were not peculiar or unique to DBW, but would exist in the case of a hypothetical owner and purchaser scenario.
• DBW was not in a position where because of the use being made of the land, or some advantage being derived from it, there was a greater value to DBW than was already accounted for in the land’s market value.

Can compensation be assessed by reference to the loss of a ‘combined economic unit’ rather than the loss of particular claimants?

The Court rejected Century West’s argument that in assessing loss for the disruption to the transport haulage and storage business under s 241(6)(b), regard should have been had to the effect on the overall performance of the appellants as a combined economic unit.

The appellants had argued that they had jointly conducted the business on the taken land, so that it was necessary to take the business as it had been ‘operated or conducted or structured’ by them, and to have regard to all its aspects in assessing loss from its disruption and reinstatement, including particularly the loss of the beneficial leasing relationship between DBW and Century West.

The loss of that relationship did not fall within the scope of loss or damage ‘sustained’ within the meaning of s 241(6)(b) due to the ‘disruption and reinstatement of a business’ where:

• the plain language of ss 223(8)(a) and 241(1) identifies that what is required to be assessed is the compensation to be paid to a claimant for their interest in taken land; both the claimant and their interest in the land taken must be identified.
• section 241(6)(b) requires regard to be had to any loss or damage sustained by ‘the claimant’, so that the reference to ‘a business’ must be understood as referring to a business of that claimant or in which they have a legal or equitable right or entitlement, and which is associated with the claimant’s interest in the taken land.
• nothing in the LAA enables a court to have regard to loss or damage sustained by someone other than the claimant, or to a different interest in the taken land from the interest of the claimant.
• section 241(6) does not require a court to have regard to the loss or damage suffered by any claimant; the statutory task is to determine the amount of compensation payable to the claimant in relation to their specific interest in the taken land.
• accordingly, the question is whether the losses suffered by another entity could be construed as being losses suffered by the claimant entitled to compensation.

The appellants were not helped by other cases, including one in which a claimant was the parent company of the company that operated a business from the land taken, acted as agent of the parent company and passed through all profits to the parent company. The legal relationship in that case meant the claimant’s interest in the land encompassed its subsidiary’s interest.

That did not involve the Court assessing the compensation owed to one claimant by reference to loss or damage suffered by a different claimant in relation to a different interest in taken land, nor the Court considering the losses suffered by the claimant as part of a single economic unit irrespective of the legal form and structure that existed between the claimant and the other members of that unit.

In DBW and Century West’s case, it was insufficient that they shared directors where they were separate legal entities with separate taxation arrangements. While DBW owned the land and leased it to Century West, and had obtained and was responsible for repayment of the loans, it was Century West that operated the transport haulage and storage business. The appellants maintained separate books, and Century West’s profits were not the profits of DBW.

Those were not sham arrangements, and the evidence had not been that the appellants jointly ran the business, but that Mr and Mrs Reynolds jointly ran both appellants.

Therefore, the relevant claimant for the purposes of assessing compensation was Century West. And, in having regard to the loss or damage Century West sustained by the disruption and reinstatement of the business, regard could not be had to losses sustained by DBW.

Accordingly, DBW’s losses flowing from the end of its beneficial relationship with Century West were not losses of Century West attracting compensation. Where the new lease entered by Century West was at a lower rent, it had itself suffered no loss in that respect from the disruption and reinstatement of its business.

In short, the Reynolds could not, having put in place a particular corporate structure, have the Court disregard that structure for the purposes of considering Century West’s claim for compensation under s 241(6)(b).

Is the loss of an opportunity to enter profitable contracts something for which compensation can be awarded?

Despite dismissing ground 4, the Court accepted (as the Authority conceded) that the loss of a future profitable business opportunity from an established customer could be loss ‘sustained’ for the purposes of s 241(6). However, the Court expressly did not decide whether loss of such a commercial opportunity was ‘loss or damage’ within the meaning of the subsection. Instead, the Court considered there simply was no loss in the circumstances.

In reasoning to that conclusion, the Court rejected the trial judge’s construction of ‘sustained’, instead considering:

• the text, context and purpose of the LAA supports the ordinary meaning of ‘sustained’ being applied, which includes ‘to undergo or experience or suffer injury, loss, damage’.
• damages for a loss of a chance or an opportunity to obtain a commercial benefit can be awarded in the context of breach of contract, tort, and misleading or deceptive conduct claims.
• in those cases, causation must be established on the civil standard, and the value of the lost opportunity is then ascertained by reference to the Court’s assessment of the prospects of success of that opportunity had it been pursued.
• there is no reason why LAA s 241(6)(b) should exclude loss or damage for the loss of a commercial opportunity as loss or damage ‘sustained’ or ‘suffered’.
• nor is there anything inherent in the nature of a claim for compensation which suggests loss which is sustained in the context of a breach of contract, in tort or as a result of misleading or deceptive conduct should not also be a loss ‘sustained’ in the context of s 241(6)(b).

Accordingly, loss of an opportunity by Century West to win additional storage contracts could have been loss or damage ‘sustained’.

The respondent contended, though, that the reduction in rent payable by Century West should be taken into account in determining the amount of any loss that Century West sustained in losing out on potentially profitable storage contracts.

The Court agreed that s 241(6)(b) requires consideration to be given to any benefits or savings that have resulted as part of the disruption and reinstatement of a business, where:

• the subsection requires there to be a causal nexus between the loss or damage and the disruption or reinstatement.
• the disruption or reinstatement may produce discrete items of loss or damage, but also of benefits and savings.
• however, the text of s 241(6)(b) is not concerned with discrete items but the totality of any loss or damage, and requires all discrete items of loss or damage and of benefits or savings to be brought to account.
• that consideration must be given to any benefits or savings is also implicit in s 241(6)(b), which requires the identification of any loss or damage claimed to have been sustained, the demonstration of the causal connection between that loss or damage and the disruption or reinstatement, and the valuing of that loss or damage.
• establishing that loss or damage has been suffered as a result of the disruption or reinstatement requires the entire position of the claimant, including any benefits or savings conferred, to be considered.
• that task is not one of setting off benefits or savings but is instead the calculation of loss or damage, so the absence of the language of set-off in s 241(6)(b) is not material.
• that result is consistent with the scheme of the LAA, which provides for an award to ensure a claimant is compensated for any loss caused by the taking and associated public work — any positive impact also caused must be either disregarded or taken into account.

Therefore, the Court had to take into account the reduced rent payable by Century West, where that saving had occurred because of the disruption to the business and its reinstatement at new premises that could not accommodate the same storage as the taken land.

That reduction in rent more than cancelled out the claim maintained on appeal for the loss of an opportunity to enter into a profitable storage contract, so that no different result could flow.

Accordingly, the Court expressly refrained from deciding whether the loss of a commercial opportunity is ‘loss or damage’ within the scope of s 241(6)(b), including whether such loss arises because of the ‘disruption and reinstatement of a business’, is something properly assessed in the context of s 241(6)(b), or is instead a component of the value of the interest in land taken and to be assessed under s 241(2).

A cautious approach in pleading and pursuing compensation claims?

In the end, while the Court developed the principles that will now apply in assessing compensation for taken land, it left open the precise scope of the loss or damage that may be recovered as a result of the disruption and reinstatement of a business. Whether the loss of commercial opportunities is to be compensated, and, if so, under which head of s 241, will await a future case. For now, care might be taken in how such claims are pleaded and pursued.