Metro Tunnel land row: Luxury apartment developer sues state for $20 million

The developer behind a luxury apartment tower next to Melbourne’s Metro Tunnel rail project is suing the Allan government for $20 million in compensation after part of its land was acquired for the new Anzac train station.

Developer Peter Devitt is one of the founders of Melbourne building giant L.U. Simon and, with son Kane, now runs a company developing the $300 million project on the corner of Toorak and St Kilda roads.

The $300 million, 15-storey luxury apartment complex The Muse.Credit: Joe Armao

Their plans for the project – known as The Muse, being built by L.U. Simon – were hit by the Metro Tunnel project in 2020 and they claim it has cost them millions of dollars in construction costs.

The Victorian government used its compulsory acquisition powers to purchase about 450 square metres of below-ground land off the project. The project sits on a block totalling 3549 square metres.

Trains will run on the new $14 billion metro line next year. Since building began on the nine-kilometre tunnel in 2018, the government has spent hundreds of millions of dollars buying land surrounding the rail corridor.

The Devitt family claims, in documents filed this month in the Supreme Court, that the government ignored their requests for four years over the value of the land taken from their site.

A source close to the dispute, who requested anonymity as the matter is before the court, said taking the land has delayed construction on the 45 “ultra-exclusive” apartments in the 15-storey building.

Renderings of the project, first proposed in 2017 and finally approved in 2020, feature gold-plated garage doors, a wellness centre and 25-metre lap pool.

Court documents show that, after requesting a series of extensions to lodge its claim, the property group in November 2023 demanded the state pay it $32 million for the land.

The developers argued the land was worth nearly $16 million and the disturbance to the construction had cost them an additional $15 million.

The remaining $2 million was for other costs, including legal fees.

The Devitt family reduced the demand to $20 million in June, lowering the disturbance cost to about $3.5 million.

Peter Devitt in 2018.Credit: Josh Robenstone

According to the court filings, the developers eventually declined a government request for a time extension, and the government has still not made an offer for the land. The government declined to comment on Monday night.

Peter Devitt became managing director of construction giant L.U. Simon in 1986 and has been a director ever since.

L.U. Simon has built more than 900 developments, worth more than $12 billion. Peter Devitt declined to comment.

Opposition transport infrastructure spokesman David Southwick said the government must prioritise resolving the dispute.

“Compulsory acquisitions for major projects must be conducted in a fair, transparent and timely manner,” he said.

“Labor cannot manage money, cannot manage major projects and Victorians are paying the price.”

The Muse will be among Melbourne’s most lavish apartment buildings, with homes in the development selling for more than $20 million already.

The Devitt family purchased the block – which backs onto the heritage-listed Fawkner Park – in 2003 for $14 million. The Muse complex’s estimated end value is now $300 million.

Owners of a neighbouring apartment building took the project to the state planning tribunal in 2020, arguing it would badly overshadow the park. The tribunal overruled their complaint.

The 2022 state budget approved $715 million for land acquisition related to construction of the Metro Tunnel.

A review this year by the Victorian Auditor-General’s Office found the government’s final forecast for land acquisition this year was under budget for $658 million. However, it noted these figures were out of date due to the project’s delays.

The Metro Tunnel was to cost $11 billion when the government signed a deal with its builders seven years ago.

But since then, costly changes to designs and unforeseen problems have added another $3 billion to the cost.

Leaked contract documents obtained by The Age earlier this year showed almost $1 billion had been quietly added to the cost in an agreement negotiated with the builders in June. The extra costs were not revealed until September when a final deal was signed by Transport Infrastructure Minister Danny Pearson.

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