Developer suing Suburban Rail Loop for reneging on compensation

A Melbourne developer has accused the Victorian government of reneging on an agreement to pay compensation for the Suburban Rail Loop disrupting construction of a 12-storey apartment tower.

H1Land last month launched Supreme Court action after the government abandoned plans to compulsorily acquire land beneath the Highett development to work on the $34.5 billion rail line from Cheltenham to Box Hill.

The development site opposite Westfield Southland and the proposed Cheltenham SRL station.Credit: Simon Schluter

The Suburban Rail Link Authority in May 2024 served a notice of intention to acquire the underground land on the Nepean Highway, opposite the planned Cheltenham Station and the Westfield Southland, which needed to redesign its foundations to accommodate the SRL East.

Align Law’s Barnaby McIlrath, acting on behalf of H1Land, claims the developer and authority last September entered into an “advance payment agreement” worth $2.5 million “to be taken into account as part payment of any compensation” for the acquisition of the underground land.

“The plaintiff continued to incur the cost of progressing the development in the expectation that the authority would pay compensation, pursuant to the (Land Acquisition and Compensation) Act, in respect of the eventual acquisition of the underground land,” said the originating motion to the Supreme Court against the SRL Authority, SRL Minister Harriet Shing and Attorney-General Sonya Kilkenny.

But the site beneath the development was instead declared “project land”, the motion said, which does not result in a payout – unlike a compulsory acquisition.

“In the circumstances, the only plausible explanation … was to deny the plaintiff access to Land Acquisition and Compensation Act compensation,” McIlrath said.

But the SRL Authority said the developer started construction without amending the design of basement car parking in the path of tunnel boring machines due to begin next year.

H1Land had planning approval for the Southpoint development before the Labor government announced its vision for the SRL in 2018, and wants to build 217 apartments as well as three underground levels of parking.

An SRL Authority spokeswoman said it had worked with the developer since 2022 to achieve a practical solution to enable both the development and tunnelling for the rail line.

“We’ve sought to work constructively on the design of the building so the apartments can be safely delivered without impacting the underground tunnelling of SRL East – including supporting them to develop updated designs,” she said.

“Despite our engagement, the developers began construction on the site without taking tunnel protection requirements into account.”

H1Land’s team said the developer had been working with the authority on how to redesign the foundations of the apartments.

The government has re-branded the SRL as a housing project to encourage the development of 70,000 homes around the railway stations, due to open in 2035.

A Victorian government spokesman said it supported more homes being built on the site.

“But their current underground carpark designs are directly in the path of the [tunnel boring machines] and cannot be delivered,” he said.

“Early works, road diversions, tunnel boring preparations and essential services relocations have been underway across the sites since 2022, and by next year there will be 4000 workers delivering major construction as tunnel boring works also kick off.”

Opposition spokesman for major projects Evan Mulholland said the government couldn’t manage major projects or money.

“This case raises serious questions about whether the state is weaponising its own laws to avoid paying fair compensation,” Mulholland said.

“Labor is bulldozing through proper processes because they’ve run out of money to pay for Jacinta Allan’s vanity project.”

The Age on Thursday revealed that cancelling the project, as Opposition Leader Brad Battin has called on Premier Jacinta Allan to do, could cost Victoria billions. The more time passes, the more costly it would be to cancel, and Allan has made clear she’s not for turning.

On Friday, Allan said the SRL was too important not to build.

“The only people who don’t support the Suburban Rail Loop are the Liberal Party,” she said.

Infrastructure Australia last month warned it had low confidence in the $34.5 billion price tag for SRL East and recommended no further federal funding, beyond the $2.2 billion already committed, without updated costings and evidence the project stacks up on its own.

That report raised concerns Victoria will not be able fund a third of the railway with Commonwealth money as expected, with Opposition Leader Peter Dutton vowing to redirect the existing federal cash if elected.

H1Land wants the court to rule that the “project land” declaration was invalid and the decision to cancel the compulsory acquisition quashed. The developer claims these moves were “made for an improper purpose and were not authorised” under the legislation.

H1Land project director Sean Wang was contacted.

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