It was the multimillion-dollar question at the centre of a protracted court fight in Sydney: how much is a prized site for motorists’ eyeballs worth?
Outdoor advertising company oOh!media had 18 lucrative billboards on a strip of land alongside Qantas Drive, the bustling road between Sydney Airport’s domestic and international terminals.
The billboards were dismantled when the state government acquired oOh!media’s lease of the publicly owned strip, and the company sought up to $52 million in compensation.
Transport for NSW compulsorily acquired the lease in September 2020 as part of the $2.6 billion Sydney Gateway motorway project connecting Sydney Airport to the WestConnex toll network.
At the time, oOh!media had a 10-year lease of the land with an option to renew in 2030 for a further 10 years.
The resumption of the lease triggered a years-long fight between oOh!media and the state government that culminated last week in a judgment of the state’s top appeal court.
Court challenge
The Valuer-General had determined compensation of $3.8 million was payable to oOh!media. The company challenged that determination in the NSW Land and Environment Court.
On its “preferred scenario”, oOh!media wanted $52.2 million, but it proffered a figure of $32.6 million as a fallback position.
The company’s legal manoeuvring backfired when the court shaved $1.1 million off the Valuer-General’s figure and quantified compensation at $2.7 million.
The appeal
The company sought to overturn that decision in the NSW Court of Appeal.
oOh!media retains a number of billboards around Sydney Airport. Credit: Steven Siewert
When the state government compulsorily acquires land or an interest in land, such as a lease, it is required to provide compensation “on just terms”. A range of factors must be considered, including the market value of the interest at the time of acquisition. Market value does not include any increase or decrease in the value of the land caused by the public purpose for which it is being acquired.
One of the issues in the appeal was how the market value of oOh!media’s lease should be assessed when it had previously planned to digitise some of its 18 static billboards on Qantas Drive by January 2020 to enable them to rotate multiple advertisements.
The digitisation plan was halted in May 2016 after oOh!media was told by Sydney Airport Corporation that the WestConnex project would throw a spanner in the works. Its lease was acquired by Transport for NSW four years later in September 2020.
Digitisation “has the potential substantially to increase the earnings a billboard can yield”, Court of Appeal Justice Jeremy Kirk said in a written judgment with which Justices Mark Leeming and Christine Adamson agreed.
“Exactly how many of the 18 billboards on Qantas Drive the appellant planned to digitise had it not learnt of TfNSW’s proposal to acquire the land was a matter of dispute in the [Land and Environment Court],” Kirk said.
Lawyers for oOh!media submitted it would have digitised six of the 18 signs, increasing the market value of the lease, while Transport for NSW contended the company would have digitised none.
Land and Environment Court Justice Timothy Moore had concluded oOh!media had no right to claim compensation for “hypothetical signs” that would have been digitised in the event the company had not discovered its lease was likely to be compulsorily acquired. The company would have needed development consent from the council for the digitisation in any case.
The appeal court rejected oOh!media’s argument that Moore had fallen into legal error.
“[It] is the land as it is on the date of acquisition which is valued in such cases, not the land as it would have been if development had been undertaken which was not pursued because of the proposed compulsory acquisition,” Kirk said.
He said the company was not entitled to be compensated for “a putative increase in market value not in fact achieved because of its own choices” before the lease was acquired.
The court dismissed oOh!media’s appeal.
In a forensic accounting report tendered in the Land and Environment Court, an expert said the billboards “accounted for around $1.5 million (2%) of the total revenue of $65.9 million” of the company in the 2019 calendar year.
‘The King’ unaffected
The compulsory acquisition did not affect all of oOh!media’s billboards around the airport. Its premier Sydney Airport billboard on nearby Joyce Drive, sometimes referred to as “The King”, was unaffected.
“The King” digital billboard in Joyce Drive.Credit: Steven Siewert
The company was contacted for comment.
Latest in series of fights
The state government has been locked in a series of fights over fair compensation for land acquired to realise a constellation of major infrastructure projects, including the Sydney Metro.
Earlier this year, Sydney Metro was ordered to pay $201 million to Parramatta City Council for a prime CBD spot for its planned underground station – more than double its initial offer.
Transport for NSW declined to comment.
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