Fresh feud people: Woolworths sues Suburban Rail Loop for $70 million

Woolworths is suing the Suburban Rail Loop Authority for more than $70 million over the compulsory acquisition of the retail giant’s warehouse facility in Melbourne’s south-east.

The retail giant has taken action in the Victorian Supreme Court following a series of financial offers for the land from the rail loop authority, which the retailer has rejected as too low and failing to compensate for commercial losses and costs.

Woolworths has launched a two-pronged legal attack on Victoria’s Big Build, the first for $40.7 million via its wholly owned property development arm Fabcot Pty Ltd, which owns the land in Notting Hill. The second, related action is via the retailer itself for $29.6 million for losses suffered.

The SRLA first told Woolworths in 2023 that the land was to be compulsorily acquired as part of the Suburban Rail Loop East development project, and the warehouse facility was to be vacated by February last year.

The offer to Woolworths for the Howleys Road site was originally from the Department of Transport and Planning, which has been facilitating compulsory acquisition for the SRLA.

The authority’s first offer to Fabcot of $35.2 million for the Woolworths land was made in July 2023 and was based on an assessment from Victoria’s Valuer General.

Fabcot rejected that offer in November 2023, and based on its own valuations, sought $40.7 million from the SRLA for the land.

In February this year, the authority made a revised offer of $32.1 million – $3.1 million less than its original offer.

In April, Woolworths rejected that revised offer and told the authority it would pursue the matter in the Supreme Court.

The second part of the wider $70.3 million claim is for $29.6 million and relates to Woolworths as the leaseholder of the warehouse facility. The retailer is claiming compensation for commercial losses and costs it says the business has suffered because of the compulsory government acquisition.

Woolworths’ Supreme Court claim is supported by a range of reports from experts with accounting and property expertise.

In response to that almost $30 million claim, the SRLA in February offered $60,000, which Woolies formally rejected in April.

The site, which is close to Monash University in Clayton, comprises two freestanding warehouse facilities, one of which was being used as an online customer fulfilment centre for the Woolworths supermarket operations in Melbourne’s south-eastern suburbs. That warehouse had been leased by the internal property arm of the $43 billion company to the group’s wider supermarket operations.

A second Fabcot-owned warehouse on the site was empty at the time of the acquisition notice, with the third-party tenant having previously vacated the property on hearing the facility was to be acquired by the SRLA.

The retail group, which is led by chief executive Amanda Bardwell, kicked off its court action at the end of last week following months of negotiations with the rail loop authority, which forms part of the Allan government’s Big Build.

The authority is responsible for planning and delivering the Suburban Rail Loop, the largest infrastructure project in Victoria’s history and the state’s biggest investment in transport and precinct development.

The rail loop is a $35.4 billion project comprising a 60-kilometre network of underground railway tunnel running from Box Hill to Cheltenham.

Woolworths declined to comment on its unfolding legal action. “As the matter is before the courts, it is not appropriate to comment,” a spokesperson said.

A spokesperson for the SRLA said the land had been acquired “to help build the new underground Monash station ... paying compensation for the property as determined by the valuer general”.

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