A major Melbourne hotel is suing the state government for millions in extra compensation after its rights to land in City Square were taken over by the Metro Tunnel, threatening to blow out the rail project’s hit to taxpayers even further.
The Westin Hotel launched Supreme Court action earlier this month, demanding $17.3 million for easements that were compulsorily acquired for the new Town Hall station entrance.
The station’s new roof, lifts and fire control room at the Collins Street end of City Square intrude on space that the Westin Hotel had previously protected for air, light and fire escape access.
A new visitor kiosk near Flinders Lane has also eaten into the hotel’s former easement.
The Department of Transport and Planning last year offered the hotel’s owners, TA Covenant Pty Ltd, $1.8 million in compensation while committing to providing an alternative fire escape.
However, the hotel is now seeking almost 10 times the money offered.
A disputed claim referral filed to the Supreme Court on March 3 includes a request for $17 million for the acquired easements, as well as an additional $337,482 for legal, valuation and administrative expenses.
The Westin’s light and air rights were removed where they intersected with three Town Hall station structures, and easements remain active above the new infrastructure.
The hotel has already received compensation for the adjoining City Square being turned into a worksite in 2018. The plaza’s Mockridge fountain, Burke and Wills statue and the Brunetti cafe are now all gone.
Its legal bid threatens to add to hefty compensation payouts already made to build the $15 billion Metro Tunnel, which opened in November.
A state government report leaked in August 2024 revealed that delays in finishing Town Hall station meant the Westin was “entitled to support for longer than anticipated, which may have further cost implications”.
A spokeswoman for TA Enterprise, the Malaysian company that bought the hotel in 2008, did not respond when asked how much compensation they had received from the Metro Tunnel, but acknowledged that its Australian subsidiary recently filed a claim over easement changes at City Square.
“As the matter is now referred to the courts, it would not be appropriate for us to comment on the details of the case,” she said.
Fast-food giant McDonald’s previously tried to claim $70.7 million in compensation after its Swanston Street restaurant was demolished to make way for another Town Hall station entrance closer to Flinders Street.
The developers of a luxury apartment tower on St Kilda Road also sued the Allan government in 2024 for $20 million after part of its land was acquired for the new Anzac train station. That land was among almost 100 property titles the government expected to acquire to build the Metro Tunnel through the heart of Melbourne.
Despite cost blowouts on other parts of the project, expenditure on land acquisition has been under-budget.
An auditor-general’s report revealed the forecast cost for land acquisition in 2024 was $658.2 million, which was $57.3 million (8 per cent) less than the 2022 approved budget of $715.5 million.
The Metro Tunnel was originally budgeted to cost $11 billion. But design changes and other unforeseen problems led to a dispute with builders and costs going beyond $15 billion.
A Metro Tunnel project spokesperson insisted the recent Westin Hotel claim would not push the tunnel project further over budget.
“As the matter is before the courts, it would be inappropriate to comment,” they said.
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