(2014) 205 LGERA 248
Arinson Pty Limited v City of Canada Bay Council [2015] NSWCA 199
(2015) 208 LGERA 418
Gordon v Lever [2018] NSWCA 43
Govindan-Lee v Sawkins
(2010) 171 LGERA 286
Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 1293
Shi v ABI-K Pty Ltd (2014) 87 NSWLR 568
Source
Original judgment source is linked above.
Catchwords
(2014) 205 LGERA 248
Arinson Pty Limited v City of Canada Bay Council [2015] NSWCA 199(2015) 208 LGERA 418
Gordon v Lever [2018] NSWCA 43
Govindan-Lee v Sawkins(2010) 171 LGERA 286
Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 1293
Shi v ABI-K Pty Ltd (2014) 87 NSWLR 568
Judgment (18 paragraphs)
[1]
Judgment
The applicant in these proceedings, A.T.B. Morton Pty Ltd ('ATB Morton') has the benefit of development consent DA 2013/1453 ('Consent') for the demolition of existing buildings; the erection of four new buildings, comprising workshop buildings with attached offices, a warehouse, and an office building; and site remediation of contaminated soils and filling on the land in Lot 1 in Deposited Plan 90824, known as 378 Maitland Road, Hexham ('ATB Morton site'). The Consent is subject to a deferred commencement condition which requires ATB Morton to obtain a "right of carriageway" over an existing private access road on an adjoining property.
The Consent was granted after a s 34 conciliation conference by order of this Court in A.T.B. Morton Pty Ltd v Newcastle City Council [2016] NSWLEC 1076 on 17 February 2016, thereby triggering the operation of s 40 of the Land and Environment Court Act 1979 (NSW) ('LEC Act') such that the Court can exercise the powers conferred by s 88K of the Conveyancing Act 1919 (NSW) ('Conveyancing Act').
Pursuant to s 40(2) of the LEC Act, ATB Morton seeks orders imposing an easement ('Proposed Easement') over the land in Lot 1 in Deposited Plan 270447 ('CA land'). The CA land is a community association lot owned by Community Association DP270447 ('CA'), the respondent in these proceedings, and forms part of a community title development comprising six lots in total developed as an industrial estate ('CA estate').
The Proposed Easement is in the following terms:
1. Full and free right for every person who is at any time entitled to an estate or interest in possession in the land identified herein as the dominant tenement or any part thereof with which the right shall be capable of enjoyment, and every person authorised by that person, to go, pass and repass at all times and for all purposes to and from the dominant tenement or any such part thereof provided that such use shall at all times be limited to use by heavy vehicles which exceed a height of 3.0 metres.
2. The owner or occupier of the dominant tenement and every person authorised by either the owner or occupier to use the right of carriageway must:
(a) not drive any permitted vehicle in a manner that is dangerous or creates excessive noise, emits excessive levels of exhaust or other fumes or nuisance to other motorists, pedestrians or owners or occupiers of the servient tenement;
(b) not drive at a speed in excess of 10 kilometres per hour; and
(c) not drive a permitted vehicle on the right of carriageway unless that vehicle is registered for use on public roads.
2A. The owner of the dominant tenement is required, at its cost, to install a gate at the northern end of the easement site at its junction with Old Maitland Road (north). A copy of the key to this gate must be provided to the owner of the servient tenement and the owners of Lot 2, 3, 4, 5, 6 in Deposited Plan 270447.
2B. The owner of the servient tenement may install and maintain (at its cost) locked gates at the southern end of the easement site provided that a reasonable number of copies, being at least 3, of the key (including an air key) are provided to the owner of the dominant tenement.
3. The owner of the dominant tenement must make good any damage caused to the right of carriageway by the owner or occupier of the dominant tenement or by any person authorised by the owner or occupier of the dominant tenement.
4. The owner of the dominant tenement is responsible for all costs associated with any road upgrade works to the easement site that may be required by Newcastle City Council as part of any development consent for the development and use of the dominant tenement.
4A. The owner of the dominant tenement is to contribute to the costs incurred by the owner of the servient tenement in maintaining the roadway within the easement site in the sum equivalent to 1/6th of the total cost incurred.
4B. The owner of the servient tenement is to provide written owner's consent to any development application or modification application to be lodged by the owner or occupier of the dominant tenement that requires works on the roadway within the easement site.
5. In the event that any part of the servient tenement (Lot 1 in DP270447) is proposed to be re-developed in a manner that would affect the rights of the dominant tenement under the terms of this instrument, the owner of the dominant tenement is to give its consent to the extinguishment of the right of carriageway provided that the owner of the servient tenement grants alternative access to the dominant tenement on terms and conditions no less favourable than the terms of this right of carriageway. All costs associated with the extinguishment and registration of a new right of carriageway is to be borne by the owners of the servient tenement.
For the reasons that follow, I have determined that the Court should make an order imposing an easement in the form of a right of carriageway over the CA land, and that ATB Morton should pay compensation to CA in the sum of $262,000.
[2]
Background and context
The ATB Morton site has an area of approximately 3.9 hectares. It is mainly vacant but contains a number of dilapidated buildings. It is located in the Local Government Area ('LGA') of the City of Newcastle. The City of Newcastle LGA is administered by the City of Newcastle Council ('Council').
The ATB Morton site's western and northern boundaries adjoin the Pacific Highway; its eastern boundary fronts what was sometimes referred to as the unnamed road and sometimes as Old Maitland Road (north) ('unnamed road'); its southern boundary adjoins the CA land, Lot 4 in Deposited Plan 270447, which is owned by P & R Slattery Pty Ltd ('Slattery land'), and Lot 2 in Deposited Plan 598846, owned by Stewart and Beverley Mehan ('Mehan land'). The unnamed road frontage provides access to the ATB Morton site but has a height restriction of 3.0 metres due to a bridge overpass ('Old Hexham Bridge') near the northernmost point of the site.
The Proposed Easement would only be used to access the ATB Morton site by trucks over 3.0 metres in height. All other vehicles would continue to use the present access via the unnamed road under the Old Hexham Bridge.
Lots 1 to 6 of Deposited Plan 270447, known as 230 Old Maitland Road, Hexham, make up the CA estate. The CA estate is a community title subdivision under the Community Land Development Act 1989 (NSW) ('CLD Act').
Each of the Lots 2-6 in Deposited Plan 270447 is currently occupied and used for a variety of industrial and ancillary uses including steel processing, mining and engineering equipment manufacturing, an auction centre, and a café.
Annexure A to this judgment is a coloured aerial photograph showing each of the ATB Morton site (styled "Applicant's Land Lot 1 DP90824"), the CA land (styled "Respondent's land Lot 1 DP270447"), the location of the Proposed Easement (styled "Proposed right of way"), the CA estate (styled "DP270447"), and the unnamed road.
Annexure B to this judgment is a "location diagram", being the first page of the CA estate Deposited Plan, which in addition to showing the various lots in the CA estate (including the CA land styled "PT1 Community Property"), also identifies the location of land adjoining the CA land including the Mehan land (shown as "2 DP598846") and land owned by Reliance Hexham Pty Limited ('Reliance Hexham'), being Lot 11 in Deposited Plan 855330 (shown as "11 DP855330") ('Reliance Hexham land').
The CA land (which is Lot 1 in the CA estate Deposited Plan) is currently improved by a driveway. It is an "open access way", which is a defined term in s 3 of the CLD Act. Pursuant to s 43B of the CLD Act, an "open access way" can be closed by the unanimous resolution of each of the CA members who are entitled to use the access way.
The Proposed Easement runs over the driveway on the CA land, as shown in Annexure A, giving rise to CA's concerns which will be articulated more fully below. Mr Ernest Roy Gavin gives evidence in these proceedings on behalf of CA. Further evidence is given by the owners of Lots 2-6 in the CA estate.
One of Mr Gavin's concerns and a concern of CA more generally, is that the Proposed Easement will impact upon the development potential of the CA land. Mr Gavin has proposed that the CA land could be developed to include a marina. Plans for a marina on the CA land have existed in various forms since 2007, and will be further explained below.
The Proposed Easement is approximately 370 metres in length and 10 metres in width. It is already constructed as a roadway, and is able to be used by the lot owners of the CA estate. Obtaining the Proposed Easement is a deferred commencement condition of the Consent on the ATB Morton site pursuant to Sch 1, Condition 2 of the Consent ('Condition 2') which provides:
A 'right of carriageway' is to be created over the existing access road located within DP270447 (Pt 1 Community Property) 1/230 Old Maitland Road and linking to Old Maitland Road in favour of Lot 1, DP90824 and such being registered with the Land Titles Office.
ATB Morton has proposed a number of differently worded easements to satisfy Condition 2. In A.T.B. Morton Pty Ltd v Community Association DP270447 [2017] NSWLEC 162, I granted leave to rely upon a further amended easement which is the Proposed Easement now before the Court.
[3]
Relevant statutory provisions
Section 40 of the LEC Act provides:
40 Additional powers of Court - provision of easements
(1) This section applies if:
(a) the Court has determined to grant or modify a development consent pursuant to proceedings on an appeal under the Environmental Planning and Assessment Act 1979, or
(b) proceedings on an appeal under the Environmental Planning and Assessment Act 1979 with respect to the granting or modification of a development consent are pending before the Court (whether constituted by a Judge or by one or more Commissioners).
(2) The appellant may make an application to the Court for an order imposing an easement over land.
(3) The parties to an application under this section include the owner of the land to be burdened by the easement, and each other person having an estate or interest in the land, as evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act 1900.
(4) In dealing with an application under this section, the Court may exercise the jurisdiction of the Supreme Court under section 88K of the Conveyancing Act 1919 and, in that event, section 88K of the Conveyancing Act 1919 applies to the Court's exercise of that jurisdiction in the same way as it applies to the exercise of that jurisdiction by the Supreme Court.
Section 88K of the Conveyancing Act relevantly provides:
88K Power of Court to create easements
(1) The Court may make an order imposing an easement over land if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement.
(2) Such an order may be made only if the Court is satisfied that:
(a) use of the land having the benefit of the easement will not be inconsistent with the public interest, and
(b) the owner of the land to be burdened by the easement and each other person having an estate or interest in that land that is evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act 1900 can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement, and
(c) all reasonable attempts have been made by the applicant for the order to obtain the easement or an easement having the same effect but have been unsuccessful.
(3) The Court is to specify in the order the nature and terms of the easement and such of the particulars referred to in section 88 (1) (a)-(d) as are appropriate and is to identify its site by reference to a plan that is, or is capable of being, registered or recorded under Division 3 of Part 23. The terms may limit the times at which the easement applies.
(4) The Court is to provide in the order for payment by the applicant to specified persons of such compensation as the Court considers appropriate, unless the Court determines that compensation is not payable because of the special circumstances of the case.
…
In a planning sense, the CA land and the ATB Morton site, as well as relevantly adjoining land including the Mehan land and the Reliance Hexham land, are governed by the Newcastle Local Environmental Plan 2012 ('NLEP'). The ATB Morton site and the CA land are each zoned "IN3 Heavy Industrial" under the NLEP. The objects of that zone are as follows:
To provide suitable areas for those industries that need to be separated from other land uses.
To encourage employment opportunities.
To minimise any adverse effect of heavy industry on other land uses.
To support and protect industrial land for industrial uses.
[4]
Issues
The issues that arise in these proceedings are whether the preconditions to the Court's exercise of power to order the Proposed Easement are met, and if so, whether it should exercise its discretion to do so.
[5]
Evidence
The evidence before the Court is extensive. The hearing was conducted over 11 days, and included a site view of the subject property and the surrounding area, and a view of factory premises at Old Punt Road, Tomago where ATB Morton presently conducts its operations. A Court Book was prepared by the parties containing over 2,000 pages of expert and lay evidence and the Court was provided with an additional bundle of documents comprising extensive background material, planning documents, traffic management documents, and legislation.
The Court received detailed expert evidence. Expert valuation evidence was given by Mr David Lunney retained for ATB Morton and Mr Robert Tew retained for CA. Mr Lunney and Mr Tew each prepared individual reports, participated in the production of a joint report, and gave oral evidence.
Expert town planning evidence was given by Mr Gary Fielding retained for ATB Morton and Mr Paul Mitchell retained for CA. Mr Fielding and Mr Mitchell each prepared individual reports, participated in the production of a joint report, and gave oral evidence.
Expert traffic engineering evidence was given by Mr Ken Hollyoak retained for ATB Morton and Mr Tim Rogers retained for CA. Mr Hollyoak and Mr Rogers each prepared individual reports, participated in the production of a joint report, and gave oral evidence.
Expert civil engineering evidence was given by Mr Matthew McNamara retained for ATB Morton and Mr Robert McCotter retained for CA. Mr McNamara prepared two expert reports and Mr McCotter prepared an individual report. Mr McCotter and Mr McNamara prepared two joint reports and gave oral evidence.
The expert evidence will be considered further below as it applies to my consideration of the issues raised by the parties.
ATB Morton calls lay evidence from Mr James McKee who gives evidence of ATB Morton's prior conduct in relation to the proposed development of the ATB Morton site including the lodgement of development applications with Council and various attendances with the Roads and Traffic Authority of New South Wales (now Roads and Maritime Services or 'RMS'). ATB Morton also relies upon evidence of Ms Michelle Mullard, ATB Morton's in-house legal counsel, who gives evidence in relation to dealings with Council in relation to various development applications; dealings with CA in relation to these proceedings; and the various "options" considered between CA and ATB Morton in relation to development of the ATB Morton site.
In response to evidence called for CA, ATB Morton relies upon evidence of Mr Allan Morton, a director of ATB Morton, and Mr Steven Dick, a real estate agent, regarding dealings between ATB Morton and CA over a number of years in relation to ATB Morton's desire to develop the ATB Morton site.
CA calls evidence from various owners of lots in DP270447 including Mr Gavin who gives evidence both on behalf of CA generally and on his own behalf as one of the registered proprietors of Lot 3 in DP270447. Mr Gavin's evidence on behalf of CA deals generally with negotiations from 2007 in relation to ATB Morton's desire to develop the ATB Morton site and its interest in obtaining an easement over the CA land and a number of "options" that had been considered for the location of an easement. He gives evidence of CA's objections to the Proposed Easement which include concerns regarding the terms of the Proposed Easement, the lack of control over the likely users of the roadway, the increase in traffic, security implications, and the effect upon future development opportunities of the CA land, in particular the posited marina development.
Mr Gavin also gives evidence of the impacts of the Proposed Easement on his property (shown as "PT3" in Annexure A and Annexure B), such concerns relating to the continuing tenure of the lot, and similar concerns to those he expresses on behalf of CA, being security concerns, traffic concerns, and concern as to whether the granting of the Proposed Easement may affect future development of the CA land.
CA calls evidence of Mr Hans Banek, a director of the registered proprietor of Lot 5 in DP270447 (shown as "5" in Annexure A and Annexure B), which is adjacent to the the Proposed Easement. Lot 5 is leased to Total Fabrication Services Pty Ltd ('Total Fabrication Services'), a steel manufacturing and engineering company. Mr Banek gives evidence of various "options", being possible alternative locations for an easement to benefit ATB Morton's site that had been discussed between CA and ATB Morton, and his concerns in relation to security issues, increased traffic, and a concern that CA will be prevented in the development of the CA land and land occupied by other members of the Association, including the development of a marina.
CA calls evidence of Mr Manfred Reis, who was a representative for Alloy Steel Australia Pty Ltd, the registered proprietor of Lot 6 in DP270447 (shown as "6" in Annexure A and Annexure B). Mr Reis gives evidence in relation to earlier options discussed between CA and ATB Morton and expresses concerns in relation to the impact of the Proposed Easement on his property, which is presently occupied by a steel processing company (in which Mr Reis has an interest) which produces 10,000 tonnes of steel per year and which receives steel product from six delivery trucks each day from Monday to Friday, with the trucks accessing Lot 6 over the CA land. Mr Reis expresses his concerns as to the likely impact of the Proposed Easement including security and traffic issues as well as a concern that the Proposed Easement may prevent CA from being able to develop its land.
CA calls evidence of Mr Patrick Joseph Slattery, a director of P & R Slattery Pty Ltd which is a registered proprietor of the Slattery land (Lot 4 in DP270447 and shown as "4" in Annexure A and Annexure B), which it purchased in 2006 (having rented the premises in the building for some years beforehand). Mr Slattery also gives evidence of "three alternate easement options" which had previously been "offered" by CA to ATB Morton. Two of those options involved an easement across the Slattery land to which he no longer consents.
Mr Slattery, similar to the other interested owners, does not consent to the grant of the Proposed Easement and is concerned that it will affect CA's ability to develop the CA land. He expresses concern in relation to the impacts on two businesses being conducted on Lot 4 being the operation of "Slattery Auctions", a business which auctions a variety of trucks, machinery, and motor vehicles; and a café (known as "Windsock Café"). Mr Slattery also has concerns in relation to a "heliport" (from which he previously operated a helicopter charter business). He expresses concerns particularly in relation to security issues that might eventuate if the Proposed Easement is granted and also on the impact on the CA land generally with emphasis upon an on-site sewerage facility, general public access, and the likely costs of the upkeep of the private road on the CA land.
CA calls evidence of Mr Bernard Patrick Cusick, who is a director of Total Fabrication Services, which leases both Lot 2 and Lot 5 in DP270447 (shown as PT2 and 5 respectively in Annexure A and Annexure B). Lot 2 is owned by Jesdan Engineering Pty Ltd ('Jesdan'), a company of which his wife is a director. Mr Cusick deposes that Jesdan does not consent to the Proposed Easement and he refers to three earlier "options" CA "offered" to ATB Morton.
Like Mr Banek, Mr Cusick expresses his concerns in relation to the impact upon Total Fabrication Services. His concerns are primarily in relation to security, giving evidence of an "arson attack" in February 2017 to a motor vehicle owned by Total Fabrication Services. He expresses concern that if the Proposed Easement is granted, the previous conduct in locking certain gates for "security reasons" will be affected and/or the gates will be removed such that the properties will become a "higher security risk". He also expresses concerns in relation to likely traffic issues and what he considers to be "lost opportunities for employment", as well as the Proposed Easement preventing CA from being able to develop its land.
CA calls evidence from Mr Stewart Alexander Mehan, one of the registered proprietors of the Mehan land (shown as "2 DP598846" in Annexure B), which although not within the CA estate (not being a lot in DP270447), is situated directly to the east of the Slattery land, shares a boundary with the ATB Morton site, and has frontage to Old Maitland Road. The site is occupied by a business that provides sales and servicing of earthmoving, construction, and mining equipment. Mr Mehan gives evidence of a conversation which he had with an employee of ATB Morton where he was asked whether he would "give ATB Morton Pty Ltd an easement over [his] land to give [ATB Morton] access onto Old Maitland Road?", to which he replied that his property "did not have sufficient room to allow the easement".
CA also calls evidence from Mr Bernie de Witt, a registered surveyor and town planner, who gives evidence of discussions with Mr Gavin in relation to a proposal to develop a marina on the CA land.
[6]
ATB Morton's position
ATB Morton submits that the test imposed by s 88K(1) of the Conveyancing Act requiring the Proposed Easement to be "reasonably necessary" does not mean that it must be absolutely necessary. ATB Morton notes that CA concedes that the development authorised by the Consent is an effective use and development of the ATB Morton site within the meaning of s 88K(1). ATB Morton submits that CA's submission that, notwithstanding this concession, the fact that there are uses permissible on the CA land that do not require heavy vehicle access to operate means that the Court should conclude that the Proposed Easement is not "reasonably necessary" should be rejected.
ATB Morton submits that there is "no doubt" that the Consent is consistent with the planning controls and strategic plans applicable to the ATB Morton site under the NLEP, and that it is agreed by the town planning experts that the ATB Morton site is suited to an industrial use.
In light of the fact that the test of "reasonable necessity" is not one of "absolute necessity", ATB Morton submits that the Court would not refuse to grant an easement merely because of the possibility of some permissible uses on the ATB Morton site not requiring heavy vehicle access in order to operate. Rather, it says it would be an effective use or development of the ATB Morton site for it to be developed for an industrial purpose (or any other permissible purpose requiring heavy vehicle access) given its zoning and the IN3 Heavy Industrial zone objectives.
ATB Morton further submits that the physical constraints of the ATB Morton site also need to be considered when determining whether an easement is "reasonably necessary". In this regard, it notes that the ATB Morton site's western and northern boundaries adjoin the Pacific Highway; its eastern boundary fronts the unnamed road; and its southern boundary adjoins the CA land, the Mehan land, and Lot 4 in the CA estate. RMS has indicated it would not support access being granted from the Pacific Highway and only advised it did not have an objection to the Consent on the basis that direct access from the Pacific Highway was not approved and the existing direct access was permanently removed.
ATB Morton submits that the position of RMS and Condition 2 in the Consent demonstrate the reasonable necessity of the Proposed Easement. It says Condition 2 was imposed by Council at the behest of RMS and that access from the Pacific Highway is not possible.
In respect of the alternative posited by CA that the ATB Morton site be accessed via the unnamed road, which would require the lowering of the road under the Old Hexham Bridge overpass, ATB Morton submits that Mr McNamara considers the lowering of this road to be a "very high risk undertaking" because of the issues and constraints particularly in relation to pavement construction, the high water table, and the proximity to the Hunter River.
Notwithstanding the conceptual possibility of lowering the unnamed road, ATB Morton submits it is an alternative to the easement that is costly (when compared to the costs of re-surfacing the site of the Proposed Easement which ATB Morton says would be in the order of $975,000 if it is necessary) and highly undesirable given the engineering constraints and unknowns.
ATB Morton submits that reasonableness is a matter of degree and that the relative advantages, convenience and the cost of alternatives are relevant considerations. It says that the fact than an alternative is "conceptually possible" does not mean that a less disadvantageous option is not reasonably necessary.
ATB Morton makes the same submissions in respect of three other access options to the ATB Morton site: an easement along the existing designated access way which "dog-legs" to the ATB Morton site rather than joining the terminus of the unnamed road ('Option 1'); an easement along part of the existing designated access way located between Lot 2 in Deposited Plan 270477 and the Slattery land and then continuing through the Slattery land ('Option 2'); and an easement wholly within the Slattery land ('Option 3').
ATB Morton says that the evidence of Mr Slattery is that he is not willing to give easements over the Slattery land and that options which require an easement over the Slattery Land are unworkable in any event given the presence of a high-pressure gas pipeline and other established improvements.
Additionally in respect of reasonable steps, ATB Morton submits that Option 1 conflicts with an existing carpark on the CA land. ATB Morton says that notwithstanding the fact that Option 1 is less advantageous to both ATB Morton and CA, it has attempted to negotiate the acquisition of an easement in the terms envisaged by Option 1 while pursuing the acquisition of the Proposed Easement without success.
In respect of the impact upon the CA land, ATB Morton notes that three "potential" impacts have been identified: the impact on the marina proposal; the impact of heavy vehicle traffic on operational matters, parking and pedestrian movements; and the impact on security. ATB Morton submits that none of these impacts is such that the Court would find it unreasonable to impose the Proposed Easement.
ATB Morton submits that even if it is accepted that a development application for a marina on the CA land is made, it is unlikely that such an application would be approved by Council. It further submits that even if the consequence of the grant of the Proposed Easement were to impact on the development potential of the CA land for the purpose of a marina, such impacts could be "readily" compensated.
In respect of CA's concern regarding increased traffic, ATB Morton submits that the Consent would only likely generate 22 truck movements per day. Even if a different party were to acquire the dominant tenement and the development on the ATB Morton site were intensified, ATB Morton says that the maximum number of daily truck movements expected to be generated is 70, an estimate based on the RMS's publication 'Guide to Traffic Generating Developments'. ATB Morton submits that 70 truck movements is not an unacceptable impost on the CA land. It further says that there is inherent in all easements a limit to their use such that remedies may be obtained in equity for excessive use.
ATB Morton says that it is unlikely that the "rat running" concern, which related to the prospect of cars using the unnamed road to bypass traffic on the Pacific Highway and which was one of two concerns raised by CA in respect of security, would come to fruition but that the Proposed Easement addresses the concern by proposing a gate at the northern end of the CA land such that there will be a physical restriction to stop unauthorised vehicles.
In respect of the second security concern, that the management of keys would not be capable of being controlled by CA, ATB Morton submits that Lots 2-6 and the Reliance Hexham land are each capable of managing their own security as the evidence from the view indicates that each lot is fenced and has security arrangements to varying degrees. ATB Morton says it simply seeks to maintain the status quo in respect of the management of keys and that the issue is not so significant as to warrant the refusal of the Proposed Easement.
In those circumstances, ATB Morton submits that the Court would be satisfied that the Proposed Easement is "reasonably necessary for the effective use or development" of the ATB Morton site.
ATB Morton submits that to the extent to which CA's evidence in respect of the public interest is directed to impacts on the amenity or use of land other than the ATB Morton site, such evidence is misplaced because consideration of the "public interest" for the purpose of s 88K(2) is directed to the use of the land to benefit from the easement, not the servient tenement. ATB Morton says that the public interest criterion is satisfied by the Consent on the ATB Morton site, and notes that it would not be in the public interest for the ATB Morton site to be unable to achieve at least half of the developments provided for in its IN3 Heavy Industrial zoning.
ATB Morton submits that it is not appropriate when determining compensation to assume that the Proposed Easement will not be lawfully used. It contends that the amount of compensation should be determined based on the evidence of Mr Lunney in respect of what the valuers referred to as factual Scenarios 1 or 2, being an amount of $262,000. The various valuation scenarios are dealt with below.
ATB Morton submits that it has made all reasonable attempts to obtain the Proposed Easement. It notes that it has been attempting to obtain access over the CA land since September 2010, and relies in this respect upon the evidence of Ms Mullard.
In respect of the Court's discretion, ATB Morton submits that the existence of Condition 2 in the Consent is a matter which would lead the Court to exercise its discretion in favour of granting the Proposed Easement. ATB Morton also notes that the Court has broad discretion to impose the Proposed Easement in whatever terms it thinks fit but does not contend that any modifications of the terms of the Proposed Easement are required.
[7]
CA's position
CA submits that ATB Morton has failed to address the judicial development of the principle of "reasonable necessity" with respect to the impact on a servient tenement arising from the imposition of an easement. It submits that reasonable necessity is not made out in the present case.
CA says that whilst it accepts that the Consent is an effective use and development of the ATB Morton site within the meaning of s 88K(1), that factor alone would not satisfy the Court that the Proposed Easement is "reasonably necessary" for the purposes of s 88K having regard to the established line of authority which makes clear that:
1. The enquiry is directed to the concept of effective use of the land, not to use by a particular proprietor;
2. The issue is not whether the development of the land itself is reasonable but rather whether the proposal for the right of carriageway is one properly described as "reasonably necessary";
3. There are overlapping factors to be considered in the test of reasonable necessity and the identification of factors does not suggest that each factor is separate and distinct; and
4. The test of reasonable necessity calls for an assessment of that necessity having regard to all relevant matters according to the criterion of reasonableness, including matters beyond the relatively absolute necessity for the effective use or development of the dominant tenement.
In this respect, CA submits that ATB Morton's reliance on the grant of development consent to establish reasonable necessity is misplaced. CA submits that ATB Morton does not disagree that many of the uses envisaged for the ATB Morton site could be carried out without making provisions for heavy vehicle access, and the mere fact that the Consent has been granted does not make the Proposed Easement reasonably necessary.
CA makes reference to ATB Morton's submission that "it would be an effective use or development of the ATB Morton site for it to be developed for an industrial purpose (or any other permissible purpose requiring heavy vehicle access) given its zoning and the IN3 Heavy Industrial zone objectives". CA submits that ATB Morton's submission demonstrates that the Proposed Easement itself is not necessary but is merely "desirable" to achieve some (but by no means all) of the permissible uses in the IN3 zone.
CA further submits that having regard to the impacts of the Proposed Easement on the CA land, ATB Morton would be required to show a "strong case" of reasonable necessity.
In respect of alternative access options, CA submits that ATB Morton has failed to adequately investigate whether options other than the Proposed Easement would be viable. In that regard, CA submits that ATB Morton has failed to discharge its onus to investigate alternatives by failing to adequately consider lowering the unnamed road under the Old Hexham Bridge, which CA submits has been agreed to be "conceptually possible".
CA submits that the impact upon the CA land that would be occasioned by the imposition of the Proposed Easement is unreasonable and unacceptable. CA submits that the servient tenement will suffer effects in respect of:
1. The uncertainty as to the manner in which the Proposed Easement will be used, controlled, or enforced;
2. The ongoing burden to CA in terms of maintenance and ensuing costs;
3. The potential problems arising from greater traffic on the Proposed Easement causing operational conflicts; and
4. The loss of control over the use of the driveway, including the ability to obstruct the northern access (which CA has presently done to prevent locks being broken), as well as redevelopment options for the CA land.
CA further submits that the Proposed Easement could effectively preclude CA from achieving its proposed development and use of the CA land as a marina. CA submits that the Court has evidence before it to the effect that CA has proposed the construction of a marina on the CA land since mid-2007. It says that a development application has been prepared which has the unanimous support of the lot owners which make up CA. It rejects the submission of ATB Morton that the prospects of the marina being approved are remote.
With respect to the public interest, CA notes that s 88K(2)(a) is directed to the use of the land having the benefit of an easement. CA concedes that use of the ATB Morton site for the purposes of the Consent would not be inconsistent with the public interest. However, CA submits that the impact upon the use of the CA land with the Proposed Easement would be unreasonable and inconsistent with the public interest, a matter which CA says goes to the Court's discretion.
CA submits that s 88K(2)(b) is not satisfied as ATB Morton has not identified all of the persons with an interest in the land burdened by the Proposed Easement, and that even if that were done and the parties joined to the proceedings, there would be losses or other disadvantages suffered arising from the imposition of the Proposed Easement which are not capable of being adequately compensated.
CA relevantly says that ATB Morton has failed to identify Ausgrid (previously Energy Australia) which has an existing right of carriageway 3.0 metres wide over the CA land; Reliance Hexham, which has the benefit of a right of carriageway 8.9 metres wide over the CA land; and the lot owners of Lots 2-6 of Deposited Plan 270447.
In any event, CA says it cannot be adequately compensated for disadvantage in the circumstances that there is no limitation on the number of truck movements per day over the Proposed Easement; and that every member of CA has an interest in the CA land.
CA submits that ATB Morton has failed to take all reasonable steps to obtain the Proposed Easement as required by s 88K(2)(c) of the Conveyancing Act. Relevantly, it says there has been no offer of compensation made by ATB Morton in respect of the Proposed Easement in its present form; that insufficient information has been provided to CA for it to assess any loss or other disadvantage; and that insufficient information has been provided to CA to explain the operation of term 1 of the Proposed Easement.
In respect of discretion, CA's primary position is that it does not arise as neither s 88K(1) or (2) are met. If, contrary to those submissions, discretion does arise, CA submits that the Court would not make orders granting the Proposed Easement having regard to the unacceptable impact on the servient tenement. It submits in this regard that property rights are valuable rights which should not be lightly taken away.
CA submits that, in any event, the Court could not make orders for compensation because the application proceeds on the incorrect assumption that an individual lot owner is not a "specified person" within the meaning of s 88K(4) of the Conveyancing Act, meaning that each lot owner in the CA estate has been deprived of compensation. CA submits that this is fatal to the application. It says that even if it is wrong and the individual lot owners are not compensable under s 88K(4), this demonstrates that the Proposed Easement is unfair and means the Court should not impose the Proposed Easement as a matter of discretion.
CA submits it is entitled to its costs under s 88K(5) as CA is a reluctant litigant which has been forced to spend a large sum of money in the proceedings. CA accordingly seeks final orders dismissing the proceedings with costs.
[8]
Consideration
As foreshadowed above, the Court is essentially asked to answer two questions: whether it has the power to grant the Proposed Easement and, if it does, whether it ought to grant the Proposed Easement.
In order to find that the Court has the power to grant the Proposed Easement, I must be satisfied that it is reasonably necessary, will not be inconsistent with the public interest, whether those with interests in the CA land can be adequately compensated (which raises the discrete question of whether all of the necessary parties have been joined to the proceedings as well as consideration as to whether the loss suffered is compensable), and whether ATB Morton has made all reasonable attempts to obtain an easement.
If I am satisfied as to all of these matters, the Court then has discretion to order the Proposed Easement as it thinks fit. In the present case, there are issues that go to discretion with respect to the terms upon which the Proposed Easement should be granted, what compensation is payable, and to whom the compensation should be paid.
[9]
Reasonable necessity
The first criterion in s 88K of the Conveyancing Act about which the Court must be satisfied is that the grant of the easement is "reasonably necessary for the effective use or development of other land that will have the benefit of the easement". The reasonable necessity of an easement is an essential precondition of the Court's power to grant it.
The principles relating to reasonable necessity in the context of s 88K were summarised by Preston CJ of LEC in Rainbowforce Pty Limited v Skyton Holdings Pty Limited [2010] NSWLEC 2; (2010) 171 LGERA 286 ('Rainbowforce') at [67]-[83]. His Honour identified ten principles which apply to the Court's consideration of the s 88K criteria.
In the interests of brevity, I summarise those principles whilst omitting the references to the cases from which Preston J extracted them:
1. The power to impose an easement is conditional upon the Court's satisfaction that it is "reasonably necessary for the effective use or development of other land that will have the benefit of the easement". It is a precondition to the exercise of power which is to be determined objectively.
2. The requirement of s 88K(1) must be satisfied with respect to the particular easement which is to be imposed. The Court is required to specify in its order the nature and terms of the easement sought.
3. Section 88K(1) may be satisfied in respect of either the effective use or the effective development of the applicant's land.
4. The easement must be reasonably necessary to effect the purpose or produce the intended or expected result of the use or development. If use or development of the land for some planning purpose cannot be achieved without the creation and use of an easement, then the easement is reasonably necessary.
5. The easement must be reasonably necessary for the effective use of the development or land itself, not merely for any of the persons who are its proprietors from time to time.
6. The formulation reasonable necessity imports two requirements. Thus, the easement need not be absolutely necessary and an easement may be imposed notwithstanding that another means of right of way may exist, or possibly even when the land could be effectively used or developed without the easement.
7. The reasonable necessity must be in respect of all reasonable uses or developments of the land, or at least a use or development which is reasonable compared to other possible uses or developments. In order for an easement to be reasonably necessary, the use or development with the easement must be at least substantially preferable to the use without the easement.
8. The requirement of reasonable necessity does not require that there be no alternative land over which an easement could be equally efficaciously imposed.
9. The requirement of reasonable necessity is to be decided in light of the circumstances at the time of the hearing.
10. The requirement of reasonable necessity can be satisfied notwithstanding that some future action may be required in addition to obtaining the easement.
In Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445 ('Moorebank'), the Court of Appeal clarified, to the extent that there may have been some doubt, the application of Preston J's fourth principle. The Court held at [155] that it is not the case that if an easement is necessary for any development the easement will be reasonably necessary but rather that "where the easement is said to be necessary for the commercial development of the land, it is sufficient in our opinion to show that the proposed development is one which is appropriate to the area in which the land is situated and is at least an economically rational use of the land."
In the present case, two considerations in respect of reasonable necessity are of particular importance. The first is whether the development and use of the ATB Morton site provided for in the Consent is a substantially preferable use of the land such that the imposition of the Proposed Easement can be said to be reasonably necessary, and the second is whether the effect on the servient tenement is unreasonable such that the criterion of reasonable necessity is not met. I shall deal with each in turn.
In 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504; (1998) 98 LGERA 171 ('117 York Street'), Hodgson CJ in Eq said at 508-9:
It is clear that "reasonably necessary" in s 88K(1) does not mean "absolutely necessary", and thus that the requirement may possibly be satisfied even when the plaintiff's land could be effectively used or developed without the easement: Tregoyd Gardens v Jervis (Hamilton J, 25 September 1997, unreported); Goodwin v Yee Holdings Pty Ltd (Windeyer J, 6 November 1997, unreported); Re Seaforth Land Sales Pty Ltd's Land [No 2] [1977] Qd R 317.
In my opinion: (1) the proposed easement must be reasonably necessary either for all reasonable uses or developments of the land, or else for some one or more proposed uses or developments which are (at least) reasonable as compared with the possible alternative uses and developments; and (2) in order that an easement be reasonably necessary for a use or development, that use or development with the easement must be (at least) substantially preferable to the use or development without the easement.
The first of those requirements may seem contrary to a statement by Hamilton J in Tregoyd Gardens (at 14) that the Court "is not to judge upon the reasonableness of the particular development". However, that statement is qualified by the words "at least in this case". If there are some possible reasonable uses or developments of the land for which a proposed easement is not reasonably necessary, then it seems to me that the easement cannot be "reasonably necessary for the effective use or development" of the land, at least unless there is some proposed use or development, for which the proposed easement is reasonably necessary, which is itself a reasonable use or development. It may be that the particular proposed use or development would need also to be preferable to the alternatives; but whether or not that [is] so, it would in my opinion certainly need to be at least reasonable (emphasis in original).
It is conceded by CA that the Consent is a reasonable use of the land. I agree with the position of both parties and find that there can be little doubt that the Consent, having been approved by order of this Court (albeit without contested hearing), is appropriate to the area and an economically rational use of the ATB Morton site. The NLEP provides the following list of permissible uses in the IN3 zone:
Aquaculture; Boat building and repair facilities; Boat launching ramps; Car parks; Depots; Extractive industries; Flood mitigation works; Freight transport facilities; General industries; Hazardous storage establishments; Heavy industrial storage establishments; Heavy industries; Helipads; Jetties; Kiosks; Light industries; Marinas; Moorings; Neighbourhood shops; Offensive storage establishments; Open cut mining; Passenger transport facilities; Port facilities; Recreation facilities (indoor); Roads; Service stations; Sewerage systems; Sex services premises; Signage; Take away food and drink premises; Transport depots; Truck depots; Vehicle body repair workshops; Vehicle repair stations; Warehouse or distribution centres; Water supply systems; Wholesale supplies
I find that it is clear from the zoning of the ATB Morton site in the NLEP, and the fact that the Consent has been granted, that use of the land in accordance with the Consent is an appropriate and economically rational use of the ATB Morton site.
Therefore, according to the test proposed by Hodgson J in 117 York Street, the test becomes whether use of the ATB Morton site in accordance with the Consent with the Proposed Easement is substantially preferable to a similar use of the ATB Morton site without the Proposed Easement. However, before considering whether this test is met, I note that in order to find that the Proposed Easement is reasonably necessary, its impact on the servient tenement must also be taken into account.
The test articulated by Hodgson J has been cited with approval in many subsequent cases: Rainbowforce at [78]; Arinson Pty Limited v City of Canada Bay Council [2014] NSWLEC 43; (2014) 205 LGERA 248 at [44]-[45] (upheld on appeal in Arinson Pty Limited v City of Canada Bay Council [2015] NSWCA 199; (2015) 208 LGERA 418); Moorebank at [140]; and most recently by the Court of Appeal in Gordon v Lever [2018] NSWCA 43 ('Gordon') at [90].
ATB Morton submits that the use of the land in accordance with the Consent including the Proposed Easement is substantially preferable because the use of the ATB Morton site as a general or heavy industrial use cannot function without heavy vehicle access. CA submits that the Proposed Easement is not necessary for the effective development of the ATB Morton site because not all of the permissible uses in the zone require heavy vehicle access.
I note that in ING Bank (Australia) Ltd v O'Shea [2010] NSWCA 71 ('O'Shea'), Giles JA, with whom Campbell JA agreed, said at [53]:
In my opinion, in 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 Hodgson CJ in Eq was not saying that it was sufficient that use or development with the easement was substantially preferable to use or development without the easement. That appears in particular from the parenthetic "at least". The words of s 88K(1) must be applied, rather than some substituted words. Although qualified by "reasonable", the requirement is necessity, and I respectfully agree with Young J's emphasis on (reasonable) necessity. In my opinion, reasonable necessity can not be reduced to substantial preference.
In his judgment in O'Shea, Young JA also placed some emphasis on the requirement of necessity. His Honour commented at [160]-[161]:
[160] Mr Robinson says that it is just wrong to emphasise the fact that property rights are sacred. The whole purpose of the legislation is to override property rights so long as adequate compensation can be awarded.
[161] However, when compensation for loss of land rights is being considered, one must always bear in mind the aphorism of Lord Sumner [in Leeds International Co-Operative Society Ltd v Slack [1924] AC 851 at 872] cited by Campbell JA during the oral argument:
"I doubt …whether it is complete justice to allow the big man…to have his way, and to solace the little man for his darkened and stuffy little house by giving him a cheque that he does not ask for."
It is clear that reasonable necessity is not a low bar, but it is also clear from subsequent consideration by the Court of Appeal that the effect of O'Shea was not to move away from the approach of Hodgson J in 117 York Street, but rather to emphasise that his Honour provides guidelines which should not be mistaken for the statutory test.
In Moorebank, at [155], the Court commented that:
… To the extent that Preston CJ [in Rainbowforce at [72]] was suggesting that subject to the other matters which he stated required consideration, an easement would be reasonably necessary for the effective use and development of the land if it was required for any proposed development, regardless of the development's desirability or economic effect, the proposition, with respect, is too wide… it is sufficient in our opinion to show that the proposed development is one which is appropriate to the area in which the land is situated and is at least an economically rational use of the land. That in our opinion is consistent with what was said by Hodgson J in 117 York Street… (emphasis added).
As the Court went on to explain at [156], a finding that such a use is substantially preferable with the easement is not sufficient on its own to demonstrate reasonable necessity:
That is not to say that an easement will always be granted in these circumstances. As we have indicated the authorities have established that the concept of reasonable necessity requires consideration of the effect of the grant of the easement on the servient tenement. Further, it is correct in our opinion, that the greater the burden on the servient tenement, the stronger the case needed to justify a finding of reasonable necessity (citations omitted).
The Court went on to apply the "substantially preferable" test at [163]-[164] in the following terms:
[163] The next question is whether the easement is reasonably necessary for that use and development. As Hodgson J pointed out in 117 York Street supra, the development with the easement must be substantially preferable to development without the easement. This is particularly the case if the grant of the easement would cause significant detriment to the servient tenement.
[164] This raises the issue of whether access from the Tanlane land to Davy Robinson Drive is a viable alternative to the grant of the easement. In our opinion this question should be answered in the negative. First and most importantly, as we have said, the Development Control Plan makes it clear that the link road to Brickmakers Drive is a necessary precondition of the subdivision, the Development Control Plan stating that the link road was required to be a minimum of 20 metres wide and able to accommodate a bus route. The reason for this, it was stated, is to provide flood free access. As we have pointed out, the Development Control Plan emphasised that Davy Robinson Drive was not to be a shortcut onto Newbridge Road. In this context the evidence of Mr Mitchell to the effect that Davy Robinson Drive was adjacent to the Georges River and highly flood prone is of particular relevance.
It is difficult to reconcile the submission of CA that the Proposed Easement cannot be said to be reasonably necessary because uses which do not require heavy vehicle access remain available in the zone with the approach of the Court in Moorebank. The effect of that approach is that once the use is accepted as being appropriate to the area and an economically rational use of the land, the comparison required by s 88K is between the use with and without the easement, not between that use and other permissible uses.
However, CA submits that the approach of the Court in Moorebank was criticised by the Court of Appeal in Shi v ABI-K Pty Ltd (2014) 87 NSWLR 568; [2014] NSWCA 293 ('Shi'). At [15], Basten JA, with whom Barrett and Ward JJA agreed, said:
… [T]he test of a proposed development being required to be appropriate to the area and an economically rational use of the land] was said to be consistent with the passage extracted from Hodgson CJ in Eq in 117 York Street. Accepting that to be so, the tests of "appropriate to the area" and "an economically rational use of the land" might appear to lower the hurdle somewhat, as they are tests which will be readily satisfied in the present case. Thus, it would be difficult to accept that a use which had been approved by a local council was not "appropriate to the area in which the land is situated". Further, it would be difficult to accept that a use which had been proposed by a commercial developer was not "at least an economically rational use of the land" (emphasis added).
CA says that the Court of Appeal implicitly criticised the lowering of the hurdle in Shi. Even if that submission were to be accepted, it would not alter the fact that Moorebank is binding authority. However, I do not consider that the Court in Shi criticised the test in Moorebank. The fact that the Court at [75] approved of the primary judge's finding (as a result of applying the Moorebank test) that the development was "economically rational" in that case lends comfort to that view.
It follows therefore, that the Consent with the Proposed Easement must be compared to a similar development without the Proposed Easement to determine whether it is "(at least) substantially preferable". Contrary to the submission of ATB Morton, I do not consider this to be a fait accompli because of the requirement of heavy vehicle access for use in accordance with the Consent. It is true that the Consent requires heavy vehicle access to the ATB Morton site, but three alternative options were proposed in these proceedings by CA which would allow heavy vehicle access to the ATB Morton site without the imposition of the Proposed Easement: access via the Pacific Highway; access via Old Maitland Road/the unnamed road with excavation works to lower the road under the Old Hexham Bridge; and access via an alternative easement. The Proposed Easement must be found to be substantially preferable to each of these alternatives.
The option of access via the Pacific Highway can be dealt with shortly. I accept the evidence of ATB Morton that RMS is unlikely to grant concurrence to access from the Pacific Highway given that its support and approval of the Consent was contingent first upon access not being from the Pacific Highway and secondly upon the current access to the Pacific Highway being permanently closed. Further, RMS's position is consistent with the position (and consistent with that of the Hunter Regional Development Committee) adopted in relation to earlier development applications concerning the ATB Morton site in 2007 and 2009.
Even if, as CA submits, there is doubt about RMS's position in the event that the Proposed Easement is refused, and noting that this Court could exercise the RMS's functions in any appeal from a refusal of a development application, I consider it appropriate to take into account the evidence of the traffic engineers that given the sight lines and speed of vehicles travelling off the Old Hexham Bridge, access to the Pacific Highway is dangerous in any event. In those circumstances, I find that the Proposed Easement is a substantially preferable alternative.
The option of lowering the portion of the unnamed road which passes under the Old Hexham Bridge raises a slightly more difficult question and was the subject of detailed traffic, engineering, and planning evidence. It is agreed by the traffic experts first that the current 3.0 metre clearance limit precludes the necessary heavy vehicle access and secondly that if the road were lowered to provide a clearance height of 4.5 metres, then heavy vehicle access to the ATB Morton site could be provided from the unnamed road.
In Govindan-Lee v Sawkins; Sawkins v Govindan-Lee [2016] NSWSC 328 ('Govindan-Lee'), Darke J commented at [49]:
The plaintiff bears the onus of showing reasonable necessity and is best placed to adduce evidence about this alternative. It is unsatisfactory that the plaintiff has failed to bring forward evidence that would facilitate a more comprehensive assessment of this alternative, including of any difficulties or uncertainties involved in it.
Govindan-Lee concerned a proposed easement that would allow vehicular access to a battleaxe block in Frenchs Forest. An alternative route of access was proposed which involved extending an existing concrete driveway on the applicant's land and associated works. At [59], his Honour held:
It may be accepted that vehicular access is something that is reasonably required for the effective use of Lot 4 - a residential, battleaxe block, where the house is situated a considerable distance away from the street. The proposed easement would secure that access. Nevertheless, there appears to be an available alternative that would secure vehicular access to Lot 4. The alternative appears to be technically feasible (on the evidence available before me) and the plaintiff has not shown that it is not feasible or justifiable for financial reasons, or for any other reason. It has not been shown that use or development of Lot 4 with the proposed easement is substantially preferable to the use or development of Lot 4 without the proposed easement.
It is agreed by the civil engineers, Mr McNamara and Mr McCotter, that the lowering of the unnamed road under the Old Hexham Bridge is "conceptually possible". They also agree that a final determination of the feasibility of this course would require consideration of "amongst other things, stakeholder approvals, buildability issues, further geotechnical input, economic issues and management of construction risk".
Mr McNamara opines that the lowering of Old Maitland Road is a "very high risk undertaking" because of various issues and constraints, principally in relation to pavement construction, the high water table, and the proximity of the overpass to the Hunter River.
After assessing the reconstruction of approximately 70 metres of the unnamed road, which he opines would be necessary in order to meet Australian Standards relating to longitudinal grade requirements, Mr McNamara assesses construction costs of lowering the road to be $973,284.76 before GST. ATB Morton notes that this cost does not include costs of soil disposal, which the quantity surveyor engaged by Mr McNamara advises, would cost in the vicinity of $450,000 plus GST. ATB Morton further notes that no allowance has been made in the cost estimate for any services protection, diversion or support; general cost escalation; or authority requirements.
The traffic experts, Mr Hollyoak and Mr Rogers, agree that lowering the unnamed road would require approval from the relevant roads authorities and consultation with any service providers with utilities that may be affected. In this case, the roads authorities would be Council as owner of the unnamed road and RMS as owner of the Old Hexham Bridge, which is part of the Pacific Highway.
CA submits that given no application has been made in respect of the option of lowering the road, neither RMS nor Council could be said to have expressed a view as to whether it is desirable. ATB Morton submits that both Council and RMS have given a clear indication that their preference is for heavy vehicle access to be via the Proposed Easement rather than by a lowered unnamed road. ATB Morton says if Council and RMS were willing to grant approval for that option, it is reasonable to expect that it would have been reflected in their correspondence.
CA submits that given it is accepted that the lowering of the unnamed road is conceptually possible and in circumstances where ATB Morton has failed to provide any further material responding to the concerns raised by Mr McNamara, and the costs of the road lowering are estimated at less than 10% of the full project cost of the Consent, ATB Morton has not satisfied its burden of showing that the Proposed Easement is reasonably necessary.
In order to show that the costs of lowering the road under the Old Hexham Bridge are unreasonable, ATB Morton says that the estimated cost of resurfacing the road to be used in the Proposed Easement, if it is necessary, is in the order of $975,000. CA notes that the Supplementary Engineering Joint Report estimates this cost at $3,250,000 should unfavourable subgrade conditions be encountered.
Whatever the costs of these respective works might prove to be, it is clear that there is potential for an increase in the cost of either the road lowering or the road resurfacing should unfavourable conditions eventuate. I do not consider this is decisive evidence either way as I consider that the cost of an alternative is only one factor in assessing whether it is substantially preferable. This is consistent with the approach of Darke J in Govindan-Lee.
ATB Morton notes that Mr Fielding previously held a senior town planning position at Council. His evidence was that Council would be unlikely to approve road lowering under the bridge, in no small part because of Council's controls to avoid the use of pumps to control flooding.
I do not consider Mr Fielding's previous employment determinative, but I do find his evidence compelling. Whilst I accept that the engineering evidence is that the lowering of the road is "conceptually possible", that evidence does not persuade me that it is a desirable course.
Given that the Old Hexham Bridge passes over the Hunter River, it is unsurprising that the portion of the road in question is particularly close to the riverbank. I find on the evidence before me even if relevant approvals were to be granted for the road lowering, which I consider doubtful, there would be a significantly increased risk of flooding both during construction and after completion. Council's controls to avoid the use of pumps are understandable and I consider this is also an appropriate consideration.
This is very different to the situation in Govindan-Lee where the alternative option had no such manifest defects. In those circumstances, I am satisfied that the Proposed Easement is a substantially preferable option to the lowering of the unnamed road, the latter being a course which I find has substantial attendant risks.
Although it was not raised on this basis, CA submits in respect of what it says is ATB Morton's failure to take all reasonable steps to acquire the Proposed Easement, that alternative easements having the same effect should have been considered. It particularly says that further steps should have been taken to acquire an easement over the Mehan land.
For completeness, I note that I am not satisfied that any alleged failure to acquire an easement over the Mehan land means that the Proposed Easement is not reasonably necessary. This is because the requirement of reasonable necessity does not demand that there be no alternative land over which an easement could be equally efficaciously imposed (Rainbowforce at [81] and the cases cited therein).
Moreover, I would not be satisfied on the evidence before me that an easement over the Mehan land would be equally efficacious when compared to the Proposed Easement. This is because the shape of the Mehan land, and in particular its narrow frontage which is shown clearly in Annexure B, combined with Mr Mehan's expressed reluctance to allow an easement across the land, makes it at least dubious that such an easement would be an appropriate alternative.
For those reasons, I find that the Proposed Easement satisfies the test of being substantially preferable to the alternatives.
Put another way and simply stated without the nomenclature employed in 117 York Street, I find that there is no reasonably possible method of access for large trucks to the ATB Morton site absent the Proposed Easement. Having regard to the fact that large trucks are required for the majority of permissible uses, although not all permissible uses, on the ATB Morton site, I find that large truck access is reasonably necessary.
However, reasonable necessity also requires consideration of the impact on the servient tenement. This is made clear in O'Shea at [48]-[49], where Giles JA, with whom Campbell JA agreed, said:
[48] "Reasonably necessary" is a composite phrase, in which the necessity is qualified so that it must be a reasonable necessity. Necessity is quite an absolute concept. The qualification is not of the use or development, so that it must be reasonable, although no doubt reasonableness of the use or development comes into reasonable necessity for that use or development. It is of the necessity.
[49] A qualification which did no more than reduce the necessity to a less absolute level is unlikely, and if that were intended some other word could have been used such as "convenient". Qualification whereby the necessity must be reasonable is apt to, and in my opinion does, permit regard to matters beyond the relatively absolute necessity for the effective use or development of the dominant tenement. It calls for an assessment of that necessity having regard to all relevant matters, according to the criterion of reasonableness. The impact of the easement on the servient tenement, and the fact that ordering an easement detracts from the property rights of the owner of the servient tenement, are matters readily to be taken into account in that assessment. It is difficult to see how reasonable necessity for an easement for the use or development of a dominant tenement, as distinct from necessity, can be arrived at without regard to the effect on the enjoyment of the servient tenement and on the property rights of the owner of the servient tenement.
Writing separately, Young JA reached the same conclusion. At [155]-[156], his Honour held:
[155] …It seems to me that one cannot assess what is reasonably necessary unless one considers the whole picture including the effect of the proposal on the servient land.
[156] A good illustration as to why this is so is provided by those cases where in a closely settled area, a person builds on the whole of his or her land and then seeks an access strip over neighbouring land (see eg Hanny v Lewis (1998) 9 BPR 16,205). Although, if considered by itself, the grant of access might be considered "reasonably necessary" for the use of the applicant's land, in my view the court would take into account the effect on the neighbour and the fact that the necessity was created by the applicant himself.
This approach from O'Shea has been cited with approval in Moorebank at [116] and [156], Shi at [6], and Gordon at [91].
CA contends that the impact on the CA land of the imposition of the Proposed Easement would be "unreasonable and unacceptable". CA says there are four headings under which the impact can be characterised: the uncertainty as to the manner in which the Proposed Easement would be used; the ongoing burden of maintenance; problems arising from the greater traffic on the existing right of way including operational conflicts and impacts on amenity; and loss of control over the use of the driveway, which includes both security concerns and redevelopment options for the CA land including a proposed marina.
ATB Morton identifies the potential impacts of the Proposed Easement and divides them somewhat differently into three headings: the impact on the marina proposal; the impact of heavy vehicle traffic on operational matters, parking, and pedestrian movements; and the impact on security. None of these are precisely coterminous with the matters raised by CA, but all of them fit comfortably within the four headings that CA proposes.
Therefore, I shall consider each of the impacts raised by CA in turn.
In respect of uncertainty as to how the Proposed Easement would be used, CA submits that the traffic experts have agreed that the Proposed Easement "provides for full and free use of the ROW [right of way] with no limit on the number or size of vehicles or details on how traffic flow will be controlled", and further, that if the Proposed Easement is left unrestricted in terms, the total flow on the CA land would potentially increase from 30 vehicles per hour to approximately 150 vehicles per hour in the midweek morning and afternoon peak hours.
CA submits that the traffic experts are agreed that the effect on the CA land arising from the traffic and access impacts that would be generated by the Proposed Easement are so unacceptable that if the Proposed Easement is approved by the Court it should contain limits on use. CA also notes that the Consent was given on the basis that 22 truck movements were envisaged, but that no limitation to that effect is found in the terms of the Proposed Easement.
ATB Morton submits that Mr Rogers in cross-examination admitted that even if the number of heavy vehicle movements on the Proposed Easement site was increased to 70 movements a day (which is the estimate of trucks pursuant to the RMS Guidelines to be generated by the whole of the ATB Morton site assuming a similar density of development as that under the Consent), this would be noticeable but not unreasonable for an industrial road and that the impact on the amenity would be "minimal" in "the current circumstances".
ATB Morton further says that it does not resile from the estimate of 22 truck movements per day which it says is a fair estimate based on the use envisaged in the Consent. It says that the higher numbers it considers are reflective of the possible position in the circumstance that another purchaser may acquire the dominant tenement. In any event, ATB Morton submits that there is inherent in all easements a limit to their use such that remedies may be obtained in equity for excessive use.
In Maher v Bayview Golf Club [2004] NSWSC 275, Campbell J at [40] summarised the law in respect of excessive use in relation to expressly granted easements as follows:
Where there is an expressly granted easement, the scope of the rights of use permitted by it is ascertained as a matter of construction from the words in the grant, taking into account facts which were known to the parties at the date of the grant. Because the use of the servient tenement which is permitted by an express grant of easement depends upon the construction of the grant, it is possible for the nature and extent of use actually made of such an easement to alter quite significantly with time: eg Dand v Kingscote (1840) 6 M&W 174; 151 ER 370 (right of way to a colliery able to be exercised by railway, even though railways not invented at time of grant); Attorney-General v Hodgson [1922] 2 Ch 429 (grants of "a right of carriage horse and footway" made between 1853 and 1861 not restricted to carriages drawn by horses, but can apply to motor vehicles); Jelbert v Davis and Another [1968] 1 WLR 589 (express grant of right of way "at all times and for all purposes", but "in common with all other persons having the like right" to land used for agricultural purposes at time of grant allows user of the right of way with caravans, so long as it is "not in such manner as to cause substantial interference with the use of the right of way by [others entitled to use it] or to cause a nuisance to [owners of the servient tenement]") (emphasis in original, some citations omitted).
In Perpetual Trustee Company Limited v Westfield Management Limited [2006] NSWCA 337, Hodgson JA, with whom Beazley JA (as her Honour then was) and Tobias JA agreed, said at [25]-[26]:
[25] In Gallagher v Rainbow (1994) 179 CLR 624 at 640, McHugh J stated that "the Court will not construe the grant in a way that would enable an easement to be used in a manner that goes beyond the use contemplated by the parties at the time of the grant". I believe this proposition needs to be applied with care, because it could be taken as suggesting two related propositions that are, in my opinion, incorrect. First, it could be taken as suggesting that consideration of what is "contemplated by the parties" is a separate exercise from construing the grant, whereas in my opinion it is not; and secondly, it could be taken as suggesting that the investigation of what is contemplated by the parties can be pursued in some way beyond the appropriate method for determining what was the intention of the parties as manifested by the grant itself, considered having regard to the circumstances in which the grant was made.
[26] In my opinion, there is just one question, what does the grant authorise; and that question is to be determined by construing the grant. One way of posing the question is to ask, what use was intended to be authorised by the grant; but no separate investigation into the use contemplated by the parties is either necessary or permissible. However, in determining this question, regard may be had to surrounding circumstances, including the physical circumstances of the dominant and servient tenements and the use actually being made of them at the time of the grant.
In Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 1293, Brereton J said at [88]:
In the case of an easement created by express grant or reservation, the scope of the right of way is prima facie a matter of construction of the words of the grant, although this may be influenced by the circumstances surrounding the grant. A grantee is not confined to the user prevailing at the time of the grant, but may use the right of way for any lawful purpose within the terms of the grant; thus if the grant is in general terms, it can be used for all purposes for which the dominant tenement can lawfully be used, so far as they are compatible with the physical nature of the servient tenement… (Citations omitted.)
CA submits that given the Proposed Easement is an express grant with broad wording, it is unable to rely upon equitable remedies to restrain its future use. ATB Morton submits that whilst term 1 of the Proposed Easement is in broad terms, it must be read having regard to the other terms of the instrument. Moreover, ATB Morton says that term 4B of the Proposed Easement is intended to restrict its use to an acceptable level and the Court can exercise its discretion to alter its terms if it considers that other wording would better give effect to that intention.
I consider that equitable remedies for excessive use of an easement constitute a somewhat blunt tool and it might properly be said that CA derives little comfort from that doctrine in light of the principles extracted above. However, it is important to remember that the CA land and the ATB Morton site are zoned for industrial uses. The effect of truck movements must be seen in that context.
First, I find that anyone who acquired an interest in the CA estate would take on notice that they would be unable to exercise control over the traffic generated by the other lot owners in the estate. Given that the CA estate is zoned for heavy industrial use, it follows that any purchaser of a lot in the CA estate would understand the potential traffic increase to include a potential increase in heavy vehicle access.
Secondly, whilst I note that if the ATB Morton site were to be more heavily developed than provided for in the Consent, there is the potential for an increase in traffic to more than 22 trucks per day, I do not consider this to be an unacceptable impact. It is in the nature of easements that the level of their use alters with the use of dominant and servient tenements. Assuming an increase to 70 truck movements per day, which I accept is a reasonable assumption having regard to the RMS Guidelines, I do not consider, given the expert evidence, such an increase is a saturation of the existing access way, or an unacceptable impact in the context of an industrial site.
Thirdly, I do not consider that an increase to 70 truck movements per day would significantly affect the traffic arrangements of the other lot owners in the CA estate or pedestrian movements. In that regard I have considered, and I accept, the evidence of Mr Rogers.
Fourthly, I note that any further development of the ATB Morton site other than that provided in the Consent would require approval from Council in the ordinary way. Such a process would consider any risk of the saturation of the access way and the entitlement of the proprietors of the dominant tenement to develop their land to an appropriate level.
For those reasons, I do not consider that the unknown future use of the Proposed Easement is an unacceptable impact upon the servient tenement such as to warrant the Proposed Easement's refusal.
In respect of the ongoing burden of maintenance, I note that this was a matter of some contention between the parties, but I consider that any concerns are capable of being properly dealt with in the course of the Court's exercise of discretion to formulate the terms of the Proposed Easement.
With respect to the impact of the increased truck activity on the existing access way, and noting the concerns of CA particularly with respect to operational conflicts, I consider that the evidence of Mr Rogers that even 70 to 80 truck movements per day would not inhibit pedestrian activity on the road is such as to satisfy me that the effects of increased traffic are not unreasonable.
The loss of control of the CA land gives rise to two principal concerns. The first relates to security. This is a significant concern of CA which I consider understandable in light of the evidence of various lot holders and the particular incidents which have taken place on the property.
The security concerns of both CA and various of the lot owners relate to possible trespass and "rat running", which it is suggested may result from the Court granting the Proposed Easement. The Court's view of the site indicated that a number of the lots were surrounded by security fences. I accept the submission of ATB Morton that it was obvious that each lot is fenced and the lots have varying security arrangements. Moreover, I am of the view that the terms of the Proposed Easement which provide for the installation of a gate at the northern end of the easement (with provision of keys or other devices) which would be provided to CA and the owners of Lots 2, 3, 4, 5, and 6 in the CA estate and the ability of CA to install and maintain a locked gate at the southern end of the easement (with the proviso that operational keys or devices are provided to the owner of the dominant tenement) sufficiently address the concerns in relation to security.
The traffic experts, Mr Hollyoak and Mr Rogers, specifically considered whether "rat running" traffic will result from the Proposed Easement. They agreed that it was unlikely that through traffic on the Pacific Highway would divert to use the proposed right of way through the CA land, however they agreed that some traffic within the Hexham industrial precinct (and the ATB Morton site) would use the Proposed Easement as a "rat run" to avoid the highway if there was no restriction on its use. Mr Hollyoak considered that, ordinarily, there would be no temporal advantage gained by use of the rat run except during a brief window between 8am and 8.15am and he opined that any concern could be dealt with by way of a boom gate at the southern end of the access way.
ATB Morton submits that the concern in relation to "rat running" is addressed by the proposed gate at the northern end which would be a physical restriction to stop unauthorised vehicles and that, in any event, this concern is not so significant to outweigh other considerations in favour of the grant of the Proposed Easement by the Court. CA submits that, even if there is a gate, there is no necessary or legal obligation to keep it locked and in those circumstances, the access way could become a rat run, as was suggested by the lot owners had been the case before CA had blocked the access way at the northern end at or about the time of these proceedings.
In the circumstances, based upon the expert evidence, I consider that the provision of the northern gate (subject to proper management of keys considered below) is sufficient to address the concern raised by CA.
The second principal concern in relation to loss of control relates to a loss of development potential on the CA land, and in particular a marina which is proposed for the site but for which a development application has not yet been made.
CA submits that the effect of the imposition of the Proposed Easement would effectively be to preclude the reasonably available development of a marina on the CA land and that this requires a "strong case" of reasonable necessity.
Plans for a marina on the CA land have existed since 2007. Evidence before the Court indicates that the business name "Hexham Bridge Marina" has been registered; town planning advice has been obtained; plans for the marina have been prepared; and consultation regarding the proposal on behalf of CA has taken place with other relevant bodies and organisations.
CA says that each of the lot owners that make up CA supports the proposed marina development and that there is evidence the development application has been put on hold as a direct consequence of the Proposed Easement and these proceedings.
Although there is disagreement between Mr Mitchell and Mr Fielding as to the likelihood of the marina development being approved, they agree that the granting of the Proposed Easement would make the prospects of approval more remote.
ATB Morton submits that even if it were accepted that a development application for the posited marina on the CA land is actually going to be made, it would be unlikely to be approved by Council. ATB Morton says that the Court would prefer Mr Fielding's evidence in this regard and notes that whilst it accepts that a marina development would be permissible with consent on the servient tenement, it would not be consistent with the objectives of the zone if its consequence was to conflict with the use of the ATB Morton site or the balance of the CA land for industrial purposes. ATB Morton submits that this would be so even in the absence of the Proposed Easement.
ATB Morton points to the evidence of additional difficulties in that a number of easements to Ausgrid (for substations and power supply) would need to be accommodated by the marina development, and that any development consent would need to consider the impact of the removal of mangroves, the use of foreshore land (for which the NSW Department of Primary Industries approval would be required), potentially the use of the Council-owned road reserve for parking, and an approval under s 138 of the Roads Act 1993 (NSW). ATB Morton notes that the evidence of Mr Fielding was that such a use would be unlikely to be approved. ATB Morton submits that in light of those factors, the prospect of the marina development should not be given any significant weight.
Even if the Proposed Easement had the effect of impacting the availability of a marina development, ATB Morton submits that this could be readily compensated. In that regard, it says it is "telling" that the valuers have not ascribed any premium value to the prospect of a marina and that in their view a prospective purchaser would only apply an industrial value for the CA land.
I have also had regard to a further difficulty raised by ATB Morton in respect of the marina proposal proceeding on a community parcel under the terms of the CLD Act. ATB Morton submits that for the marina to proceed, it would be necessary first to acquire a unanimous resolution of the lot owners to close the access way which has not been achieved, and secondly to subdivide the community lot which could only be achieved by applying for a variation of the scheme in the Supreme Court of New South Wales pursuant to s 70 of the CLD Act.
Considering all of those matters and despite noting there has been interest expressed by CA (and individual lot owners) in relation to development of a marina since 2007, I accept the evidence of Mr Fielding that any such application would be subjected to "the highest level of assessment under Part 4 of the EPA Act". Whilst the matter is not without some doubt, I accept that because the ecological and flooding impacts, the need for multiple approvals, the fact that the marina is designated development, and the likely inconsistency of a marina development with the primary IN3 zone objectives, it is unlikely that a marina would be approved.
Further, as noted above, apart from the zone objectives, it is clear that various other applicable planning policies attest to the strategic location of Hexham for the support and protection of industrial uses which are otherwise promoted under the zone objectives. These include Council's Newcastle Employment Lands Strategy 2013 and Newcastle Local Planning Strategy 2015. It is clear that both strategies seek to preserve industrial areas such as Hexham for the accommodation of large industrial floor plates well connected to the main road and rail networks.
In addition, although there was draft documentation including "concept plans" prepared for a marina development in 2008, it is clear that the marina would be located within the Hunter River floodway, which itself would be contrary to controls in the Newcastle Development Control Plan 2012 as noted by Mr Fielding. Further, at least in March 2008, the NSW Department of Primary Industries provided commentary (in response to inquiries made by Mr Gavin), expressing concerns in relation to a marina proposal causing an impact on the "flooding regime" as well as concerns in relation to the presence of mangroves.
Although Mr Mitchell opines in some detail as to the prospect of the marina being approved, given the general strategy in the NLEP (in relation to the IN3 zone), the Newcastle Local Planning Strategy 2015, and the Newcastle Employment Lands Strategy 2013, the fact that the proposed marina would require a controlled activity approval under the Water Management Act 2000 (NSW) and a permit pursuant to the Fisheries Management Act 1994 (NSW) (in relation to harm to mangroves or other marine vegetation), and seen in the light of Hexham location's strategic importance in accommodating industry connected to the main road network and rail, I consider that the posited marina on the CA land is unlikely to receive approval.
Therefore, I do not consider loss of control, either in respect of security or loss of development potential, to be such a severe impact on the CA land as to warrant a finding that the Proposed Easement is not reasonably necessary.
Consequently, and for the foregoing reasons, I find that the Proposed Easement is reasonably necessary.
[10]
Public interest
It is agreed by the parties, in my opinion correctly, that the reference to "public interest" in s 88K(2)(a) refers to the use of the dominant tenement. In that regard, it is further agreed that use of the dominant tenement is in the public interest. As Basten JA observed in Shi at [70]-[71]:
[70] … Where there is an existing consent given, it may be assumed in the absence of evidence to the contrary, after consideration of the matters set out in s 79C of the Environmental Planning and Assessment Act, that would usually be a highly material and possibly decisive factor demonstrating that the proposed development was not inconsistent with the public interest.
[71] If that were wrong, it would raise significant concerns as to coherence within planning law. As stated in a leading English text, K Gray and SF Gray, Elements of Land Law (OUP, 5th ed, 2009) at [5.1.50]:
"The insistence on strict definitional parameters in the law of easements tends to conceal, just as effectively today as it did over a century ago, that the crucial issue at stake is often the boundary of permissible commercial initiative in the exploitation and development of land resources. The recognition of easements of a vague or unlimited character threatens to impose significant limitations on the entrepreneurial exploitation of areas of servient land and, for this reason, may once have seemed contrary to the public interest."
Despite conceding this point, CA says that the public interest of the Proposed Easement itself arises as a consideration in the context of discretion. It submits that the Court would not be satisfied that the Proposed Easement is in the public interest, taking into account the deleterious effects its imposition would have on the CA land.
I find that the use of the ATB Morton site for the Consent is an appropriate development of the land and that providing heavy vehicular access to the ATB Morton site, particularly having regard to its zoning, is in the public interest.
[11]
Ability to be compensated
Section 88K(2)(b) requires the Court to be satisfied that both the owner of the servient tenement and "each other person having an estate or interest in that land that is evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act 1900 can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement". In the circumstances of this case, s 88K(2)(b) requires the Court to make two separate findings: first, whether the Court can compensate each person who has an interest in the CA land; and secondly, whether the loss or other disadvantage suffered by said persons is compensable.
I proceed to consider whether each relevant person has been adequately identified in the present proceedings.
In this regard, CA identifies the following "other persons" who many suffer "loss or other disadvantage" as a result of the imposition of the Proposed Easement and who have not been joined as parties to the proceedings:
1. Ausgrid, which has the benefit of a right of carriageway 3.0 metres wide over the CA land which CA says would be affected by the Proposed Easement;
2. Reliance Hexham, which is the registered proprietor of Lot 11 DP855330 (shown in Annexure B) and has the benefit of a right of carriageway 8.9 metres wide over that part of the CA land between that lot and Lot 6 of the CA estate, such right of carriageway allowing the dominant tenement to have "full and free right"; and
3. The lot owners of Lots 2-6 of the CA estate.
CA submits that Mr Lunney was told to only assess loss or disadvantage suffered by CA as the owner of the CA land rather than to apply the test in s 88K(2)(b). CA submits that Mr Lunney conceded in cross-examination that, in forming his opinion as to compensation, he had not previously seen the terms of Ausgrid's easement and he did not know whether the Proposed Easement would impact on the right to park a vehicle on the right of carriageway. He further conceded that it is possible that the value of the other land in the CA estate could be affected if their maintenance costs of the driveway increase as a consequence of the grant of the Proposed Easement, but that he had not previously considered this.
CA further submits that Ausgrid and Reliance Hexham are parties who should have been joined to the proceedings pursuant to r 6.24 of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR') and that the failure to join them is fatal to ATB Morton's application.
With respect to Ausgrid and Reliance Hexham, ATB Morton submits that the Court has the benefit of correspondence between itself and both Ausgrid and Reliance Hexham in which they were both notified of these proceedings and invited to advise whether they wished to be a party or to be heard. ATB Morton says each was provided with a proposed easement similar in terms to the Proposed Easement now sought, a plan showing the location, and a copy of s 40 of the LEC Act and s 88K of the Conveyancing Act.
Reliance Hexham advised, by letter dated 3 November 2017, that provided plans for a boom gate at the southern end of the site of the Proposed Easement were not proceeded with and its rights were not adversely affected, then it did not consider it necessary to be a party.
Ausgrid advised, by email dated 1 November 2017, that it had not identified any concerns with the Proposed Easement and stated that it did not consider it necessary for it to be a party to these proceedings.
ATB Morton also submits that the valuers are agreed that any possible effect on either party's easement would give rise to nil or nominal compensation. Even if the Court disagrees with this position, ATB Morton says that the Court has the power (as well as sufficient information before it) to determine the extent of the "nominal compensation" otherwise payable.
CA criticises the letter ATB Morton sent to Reliance Hexham on the grounds that it does not provide details of the number of truck movements expected, and does not draw Reliance Hexham's attention to its possible entitlement to compensation.
The valuers each gave evidence in relation to the Ausgrid easement. Mr Lunney indicated that apart from the conceptual difficulty of quantifying any value for Ausgrid's interests, the effect would in any event be "nil or nominal". Mr Tew accepted that Ausgird would continue to be able to exercise its rights.
With respect to the Reliance Hexham easement, Mr Lunney again expressed a view that there would be "nil or nominal" impact on Lot 11 in DP855330 by the grant of the Proposed Easement although Mr Tew indicated that there may be some diminution in value if there was a "complication to the operational use".
On the basis of this evidence, I am satisfied that if any effect was suffered by Ausgrid or Reliance Hexham, it would be capable of being compensated. Moreover, whilst there was some difference between the valuers in relation to possible diminution, I prefer the evidence of Mr Lunney. This is because I take into account that as things stand, that is absent the Proposed Easement, Reliance Hexham presently enjoys access over the CA land, and my view is that any possible "operational impact" which was raised by Mr Tew, but not fully explored, does not alter this primary position. I find that neither Ausgrid's or Reliance Hexham's interests in the CA land will suffer as a result of the imposition of the Proposed Easement.
Moreover, the correspondence from each of Ausgrid and Reliance Hexham satisfies me that each has been appropriately informed in relation to the matter that is before the Court and has chosen not to participate for the reasons noted above in correspondence received from each. As such, I do not consider that the joinder of Ausgrid and/or Reliance Hexham is necessary or proper pursuant to r 6.24 of the UCPR and that, in any event, each has been given the opportunity to participate.
With respect to the other lots in the CA estate, ATB Morton submits that the Court would not be satisfied that there has been an impact upon them which would warrant compensation being paid, but that even if there had been such an impact, the Court would find they only had an equitable interest and not an "estate or interest" in the CA land for the purposes of s 188K(2)(b).
I accept that submission. In order to have a compensable interest in the CA land, the lot owners of the CA estate would need to demonstrate "an estate or interest in that land that is evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act 1900". This is not an ambiguous requirement, and it is not met by any of the individual lot owners.
The fact that CA holds the interest of the individual lot owners as agent pursuant to s 31 of the CLD Act does not elevate the individual interests to a relevantly compensable one. Some comfort may be derived in this regard from the decision of Sheahan J in Owners Corporation of Strata Plan 30859 v Roads and Traffic Authority of NSW [2009] NSWLEC 135; (2009) 168 LGERA 30. The case concerned the compulsory acquisition of common property in a strata scheme, a situation which engages different statutory constructs but which represents a similar factual scenario to the present proceedings. At [57], his Honour held that the individual lot owners did not have a compensable interest:
However, the lot owners in this case have not had any of their property (apart from their interest in the common property, catered for under s 34) acquired, such as to give them an entitlement to claim under the JTC Act, either directly or via the corporation, compensation beyond what is properly payable to the corporation in respect of the common property.
To the extent that the lot owners in the CA estate have lost control over the CA land, they are able to be compensated for that in their capacity as forming part of CA, the registered proprietor. However, to the extent that they suffer any other deleterious effects on their particular lots from the imposition of the Proposed Easement, they are not eligible for compensation under the Conveyancing Act.
The situation of the lot owners in the CA estate in this respect is no different to that of a lot owner whose land adjoins a lot a portion near the boundary of which becomes burdened by an easement. It may be that the neighbouring lot suffers similar amenity impacts to the servient tenement, but the Conveyancing Act does not contain provisions which entitle the owner of a neighbouring lot to be compensated.
The Court is also required under s 88K(2)(b) to make a finding as to whether the loss suffered by CA is compensable. In this regard, CA makes two submissions. First, it says that there is no limitation on the number of truck movements per day over the Proposed Easement which means the impact cannot be calculated and therefore cannot be compensated. Secondly, it repeats that the individual lot owners in the CA estate have a proprietary interest as CA holds the CA land as agent for the lot owners. However, CA submits that if the statutory scheme by operation of s 88K(2)(b) does not permit the individual lot owners to claim compensation for the decrease in the value of their lot by reason of the grant of the easement, this is justification for not granting the Proposed Easement.
In respect of the traffic effect occasioned by the additional truck movements, ATB Morton submits not only that it is compensable but also that any purchaser of a lot within the CA estate would have recognised that other lot owners would be free to use the access way on the CA land as much as they wished (subject, of course, to the ability of CA to control the access way through the Community Management Statement). Therefore, it says that it can only be considered an impact if the use was such as to saturate the access way, and that the evidence of the traffic experts make it clear that this is not the case.
I accept the submissions of ATB Morton in this regard. Individual lot owners in the CA estate, apart from their ability to influence the decision making of CA through the Community Management Statement, have never been in the position of being able to control the traffic flow through the CA land. In those circumstances, it is difficult to accept that the loss of control that CA will suffer cannot be compensated.
Loss of any proprietary right is a serious matter, and the Court does not consider it lightly. However, in the context of an industrial estate, I do not consider a loss of control to allow heavy vehicle access to be a consequence for which money is inadequate compensation.
In respect of the argument that the inability of the lot owners in the CA estate to be compensated individually goes to the Court's discretion, ATB Morton submits that CA's reasoning is somewhat circular in that it acknowledges the lot owners in the CA estate are not compensable parties by the operation of s 88K(2)(b), and then submits that it is unreasonable to impose the Proposed Easement because they are not compensated. ATB Morton says there is no previous case in which a court has considered it appropriate to award compensation to a party which did not have an interest as defined in s 88K(2)(b).
ATB Morton submits that when regard is had to the nature of the CA land, and the fact that until shortly before the hearing of this case the access way therein was open during the day, the effect on the servient tenement arising from the Proposed Easement is in fact "minimal".
In view of my finding above about the operation of s 88K(2)(b), I consider that it is often the case that the imposition of an easement will cause some amenity effect to a lot which cannot recover compensation under the Conveyancing Act. I do not consider that this is a reason for an easement not to be granted provided the other matters in s 88K are satisfied. I also do not consider that it is a matter which would alter my state of satisfaction under s 88K(2)(b), as the lot owners in the CA estate are not "persons" to whom that provision applies.
For the reasons above, I have reached the state of satisfaction required by s 88K(2)(b) that adequate compensation can be paid to CA as the registered proprietor of the servient tenement and that there is no "other person" to whom consideration should be given. I am also satisfied that there is nothing in the evidence that suggests that money cannot be sufficient compensation for the imposition of the Proposed Easement.
[12]
Reasonable steps
The Court may only grant an easement if "all reasonable attempts have been made by the applicant for the order to obtain the easement or an easement having the same effect but have been unsuccessful": s 88K(2)(c).
In Rainbowforce at [128], Preston J said:
The easement referred to in s 88K(2)(c) is the easement the applicant has applied to the Court to impose. An easement having the same effect as that easement can be in respect of the same land but it is not limited to that land; it can also be an easement over other land having the same effect as the easement over the land the subject of the application: Tregoyd Gardens Pty Ltd v Jervis at 15,855; Khattar v Wiese at [54], [58] and Gordon v Gioia [2007] NSWLEC 509 at [18].
Relying on s 88K(2)(c) and the above principle from Rainbowforce, CA submits that reasonable steps have not been taken by ATB Morton in the following circumstances:
1. There has been no offer of compensation made by ATB Morton to CA based on the terms of the Proposed Easement, notice about the amendment of which was given for the first time in Court at the pre-trial mention at 4.15pm on 3 April 2017. CA says that the Proposed Easement as amended includes substantial changes to the effect of the easement by the requirement for the installation of gates at both the northern and southern ends of the easement and with respect to contributions for maintenance of the easement;
2. Insufficient information has been provided to CA by ATB Morton in respect of the effect of the Proposed Easement. CA says that ATB Morton has not provided CA with a plan setting out the location of the proposed gates and has expressly denied a request to do so;
3. Insufficient information has been provided to CA to explain how the restriction in term 1 of the Proposed Easement to limit access to "authorised persons" and to "use by heavy vehicles which exceed a height of 3.0 metres" is proposed to be effected; and
4. Alternative locations have not been adequately investigated nor have relevant landowners been reasonably pursued to provide consent to such an easement. CA says the evidence shows at best a "perfunctory" attempt to obtain an easement over the Mehan property when efforts of considerably greater substance were warranted.
ATB Morton submits that it has been attempting to obtain access over the CA land since September 2010. It says there has been a series of meetings and correspondence exchanged since that time and that alternative locations, terms, and compensation have been discussed. Further, ATB Morton notes that the parties engaged in a formal mediation in June 2016 in an effort to reach agreement.
In this respect, ATB Morton relies upon the two affidavits of Ms Mullard, its general counsel, dated 2 December 2016 and 22 March 2017. These affidavits detail the attempts ATB Morton says it has made to acquire the Proposed Easement.
ATB Morton also submits that s 88K(2)(c) requires it take all reasonable steps to acquire an easement "having the same effect" and that the easements proposed in different locations do not come under this category. It says its preferred option has always been to seek a right of carriageway over the existing road which forms an access way through the CA land, and says that the other proposed locations affect other owners' land and do not come within the purview of s 88K(2)(c).
As Hamilton J said in Tregoyd Gardens Pty Limited v Jervis (1997) 8 BPR 15,845 at 15,856, in this context, reasonableness is a matter of degree, and the relative advantages, convenience, and costs of various options are relevant. I am satisfied that ATB Morton has undertaken all reasonable attempts to obtain an easement, or at the least an easement to a similar effect as the Proposed Easement. My reasons may be shortly stated.
ATB Morton purchased the ATB Morton site in April 2006 and relatively soon thereafter, consequent upon attendances upon Council and the Roads and Traffic Authority (now RMS), ATB Morton commenced discussions with CA seeking the grant of a right of way or easement over the CA land. A number of meetings have taken place since that time, in accordance with the evidence of Ms Mullard, the applicant's legal counsel, and the evidence of a number of the lot owners referred to above at [30]-[38]. A valuation report was provided to CA in April 2011 and thereafter, further correspondence took place and it is clear that there were a number of alternative routes for the requested right of way discussed between the parties.
Correspondence and discussions between the parties continued in 2011, 2014, 2015, and 2016. Relevantly, by letter of 8 May 2015, ATB Morton canvassed the prospect of an easement generally similar to that which is presently the subject of these proceedings and the "easement site" was described as being "the area designated to be used as an Open Access Way" and making an offer of monetary compensation. It also set out terms of the easement which are not dissimilar to the Proposed Easement presently before the Court. More recently, by letter of 21 September 2016, forwarded after commencement of these proceedings, ATB Morton again made an offer of compensation in the sum of $150,000 and referred to the terms of the easement attached to the Class 3 application.
As noted above, the proposed terms have been varied somewhat since the commencement of these proceedings however, to the extent necessary, I find that the terms of the Proposed Easement are not relevantly different to that which was attached to the initial Class 3 application and not dissimilar to that which had been the subject of the intercourse between the parties prior to the commencement of proceedings.
After commencement of proceedings, and prior to the commencement of the hearing, the parties engaged in formal mediation.
In the circumstances, I am satisfied that in accordance with s 88K(2)(c) that ATB Morton has taken all reasonable attempts to obtain the Proposed Easement but has been unsuccessful.
[13]
Discretion
In Khattar v Wiese [2005] NSWSC 1014 ('Khattar'), Brereton J said at [59]-[60]:
[59] The granting of relief under s.88K is discretionary: s.88(1) is expressed in terms which confer a discretion to make an order imposing an easement when the relevant considerations are satisfied. Thus, notwithstanding satisfaction of all the requirements of s.88K(1) and (2), it still remains in the discretion of the court to grant or withhold relief [cf Tregoyd Gardens; 117 York Street, 517-518; Blulock, [20]].
[60] That discretion is to be exercised having regard to the purpose of the section, which might be summarised as facilitating the reasonable development of land whilst ensuring that just compensation be paid for any erosion of private property rights [Second Reading Speech, Legislative Council, 4 December 1995]. Consideration of exercise of the discretion will only arise once the court is satisfied that the servient owner can be adequately compensated, but will often be informed, if not determined, by a finding that there can be adequate compensation [Blulock, [20]]. While the confiscatory nature of the section may be relevant, and likewise the extent of the burden which would be imposed on the servient land, the mere reluctance of the servient owner to accept an easement is not relevant [Tregoyd Gardens]. The existence of a superior alternative might well remain at least a relevant discretionary consideration, if it is not determinative of "reasonable necessity".
Despite reaching a state of satisfaction in relation to each of the matters in s 88K(1) and (2), I note that CA submits that I would not exercise my discretion to grant the Proposed Easement even in these circumstances owing to the effect on the servient tenement, and the effect on the other lot owners in the CA estate.
Although I have found there is some effect on the servient tenement, I do not find CA's submission persuasive in light of my finding that the effect is compensable. I again acknowledge that property rights are valuable and not to be lightly taken away, but I balance that consideration against the facultative operation of s 88K to allow the orderly development of land in the public interest.
Given that I have found the individual lot owners in the CA estate do not have a compensable interest, there is some force in CA's submission that I should not order the Proposed Easement because they will suffer a loss which will go uncompensated. However, I have found that this is not uncommon to the extent that lots adjacent to a servient tenement suffer some amenity impact from the imposition of an easement. To find that any loss to a lot other than the servient tenement is a reason not to order the imposition of an easement would greatly restrict the operation of s 88K. Moreover, I am not persuaded that the impacts upon the other lots in the CA estate are unreasonable in the context of an industrial area where heavy vehicle access is to be expected.
Therefore, I conclude there are no discretionary considerations which persuade me that I should not order the imposition of the Proposed Easement.
In addition to the broad discretion as to whether or not the Court should grant the Proposed Easement, it is also necessary for me to decide as a matter of discretion the terms upon which the Proposed Easement should be granted and what quantum of compensation should be paid.
[14]
Terms
There has been considerable debate and evidence in relation to the terms of the Proposed Easement. The Court has broad discretion in this regard and is not bound by the terms proposed by the parties (Moorebank at [183]-[184]). The Court has heard evidence of the concerns, more particularly through Mr Gavin on behalf of CA, and of a number of the lot owners. These concerns mainly relate to the uncertainty as to the manner in which the proposed right of carriageway will be used, controlled and enforced, and concern in relation to the burden on CA in terms of ongoing maintenance and costs. The concerns are understandable and I consider are able to be mitigated by amendment to the present form of the Proposed Easement.
I have dealt above with evidence in relation to possible operational and other conflicts resulting from greater traffic and the loss of control over the use of the access way including the right to obstruct the road at the northern part of the access way, a right which CA is presently exercising.
At present, the terms do not provide for a limit to the number of truck movements. The traffic experts have opined on the likely impacts and agreed that there would be minimal impact upon parking, safety, and amenity on the CA land if use of the Proposed Easement was limited to 22 relevant truck movements per day. They also agreed that an appropriate "mechanism" should be used to provide the limit on the number or size of vehicles and that further development on the ATB Morton site could generate up to 70 truck movements per day. Relevantly, they further agreed that measures to limit the use of the right of way are not included in the terms of the Proposed Easement and that further information was required (such as a "management plan") setting out details such as where the controls are located, how they will operate, and how ATB Morton will maintain and monitor the selected control system.
Despite the agreed position of the traffic experts, evidence at the level of detail they proposed should be provided is not before the Court. Moreover, the Consent (which has to some extent driven these proceedings) does not limit the number of large truck movements, despite the fact that it apparently was determined on an assumption of 22 relevant truck movements per day.
I am conscious of the fact that development similar to that provided in the Consent could be provided in greater density on the ATB Morton site, and that if that were to occur, it is likely that up to 70 relevant truck movements could be generated (albeit that any such further development would require further consideration by Council and development consent). I am also conscious that the expert traffic evidence is that 70 truck movements per day would not lead to "saturation" of the access way. However, in the absence of a "plan" as recommended by the traffic experts, I consider that some limitation should be placed upon the number of truck movements in circumstances where any easement imposed by the Court will enure (albeit may be subject to later modification) irrespective of the development on the ATB Morton site.
Moreover, in light of my finding at [137] above that a remedy in equity for excessive use is a blunt tool, I do not consider that it provides sufficient comfort to CA. Bearing in mind that the Proposed Easement will enure with the land irrespective of whether the ATB Morton site is developed in accordance with the Consent or otherwise, I consider that the terms should reflect a balance between the parties' interests.
I find that a limit in the number of relevant truck movements is warranted and, doing the best I can, I find that 50 is an appropriate number which I consider balances the respective interests of the parties as well as lot holders who may be affected.
To the extent that there may be some concern about the ability of this term to be policed, I am confident that ATB Morton or any future owner of the dominant tenement will have the capacity to control the number of heavy vehicles which access the ATB Morton site as such vehicles are not likely to arrive unplanned.
In relation to the security concerns regarding the CA estate generally, particularly at night, and concerns in relation to "rat running" during the day as noted at [54] and [146]-[147] above, I find that, despite CA's submissions, term 2A of the Proposed Easement, providing for the installation of a gate at the northern end of the Proposed Easement is appropriate and that the provision of the key to that gate (or other automated access arrangement to the same effect) should be provided as set out in that term. However, given the expressed concerns in relation to the operation of a gate at the northern end, I find that there is need for further qualification of term 2A such that the northern gate should be kept locked except when in use by trucks authorised to use the carriageway, or unless otherwise permitted by CA in writing. In effect, this wording would leave the discretion to leave the gates open in the hands of the servient tenement, where it lies now.
In relation to the southern end of the carriageway, I consider that term 2B of the Proposed Easement is appropriate.
In relation to costs to be incurred by CA in maintaining the roadway within the easement area, term 4A, which proposes that the dominant tenement be required to contribute 1/6th of the cost of ongoing maintenance, requires consideration. There was no apparent justification for this figure. The evidence of the traffic engineers in relation to proportional responsibility for such costs varied and neither accepted that 1/6th was the appropriate formula for the cost of ongoing maintenance.
The difficulty for the Court is that the evidence does not allow for a comparison of the relative use of the Proposed Easement between either ATB Morton in accordance with the Consent (estimated at 22 truck movements per day) or the use of the whole of the ATB Morton site if and when further developed (estimated at up to 70 to 80 truck movements per day), and the traffic generated (or to be generated) by Lots 2-6 of the CA estate and/or traffic generated by Reliance Hexham (which enjoys a right of way over the southern section of the easement area).
Given my determination that 50 truck movements per day is an appropriate limit and absent details regarding truck traffic generation by Lots 2-6 (and to a lesser extent Reliance Hexham), and, again doing the best I can, I consider that the contribution to maintenance costs in term 4A should be varied from 1/6th to 50%. This is similar to the submissions made by ATB Morton who, despite initially proposing a 1/6th contribution, suggested two approaches. First, considering the relative "scale" of each of the existing industrial buildings on the CA estate, Lot 11, and the buildings the subject of the Consent, a 47% contribution is appropriate. Secondly, based upon the discrete unit entitlements and contributions made by each of Lots 2-6 in accordance with the Community Management Statement in the CA, which are determined by the area of each of Lots 2-6 as a percentage of the whole Community Association scheme (excluding the CA land), if the Court notionally considered the ATB Morton site as part of the community scheme, it would occupy approximately 42% of the area and therefore a 42% contribution would be appropriate.
In relation to term 5 of the Proposed Easement, whilst I accept that it was intended by ATB Morton to facilitate modification of the Proposed Easement in the event that CA decides to redevelop the community parcel, I do not consider that it is appropriate or necessary to impose such a requirement.
[15]
Quantum of compensation
In Khattar, at [65]-[66], Brereton J said:
[65] The onus of proof in a case for compensation under s.88K is borne by the applicant. This compensation is the same compensation "for any loss or disadvantage that will arise from imposition of the easement" as is referred to in s.88K(2)(b). The court's task, therefore, is to assess appropriate compensation for the imposition of the easement, measured as adequate compensation "for any loss or other disadvantage that will arise from the imposition of the easement". That test involves a causal relationship between the imposition of the easement and the loss or other disadvantage, in which respect the common law of causation - that it is a question of fact to be determined by applying common sense to the facts of each particular case - is applicable.
[66] In Wengarin Pty Limited v Byron Shire Council (1999) 9 BPR 16,985, 16,989, Young J (as the Chief Judge then was) said that ordinarily compensation would include the diminished market value of the affected land (including the potential use to which it could have been put), associated costs caused to the owners of the affected land, and provision for insecurity, and loss of amenities such as peace and quiet. In Tregoyd Gardens, Hamilton J identified, in the case of grant of a permanent easement such as one to drain stormwater, that compensation will normally include compensation for loss of the proprietary rights taken by the easement, and compensation for the disturbance effected by carrying out the initial work and subsequent repair and maintenance. In Mitchell v Boutagy, Austin J held that provision was to be made both for initial disturbance (upon installation of the pipes) and future disturbance (least in the future there was a need to service and maintain the pipes). Ultimately, His Honour allowed $2,600 (being the rental value for four weeks during which the initial works would take place), and a further $2,000 (about three weeks) for future disturbance (some citations omitted).
The question of compensation was also considered by the Court of Appeal in Moorebank. At [244], the Court said:
That does not mean that merely because valuation is possible, an easement will be imposed. The effect of s 88K(4) is that it is necessary for the Court to be in a position to order appropriate compensation at the time of ordering the grant of the easement. If it does not have sufficient evidence to carry out that task, an easement will not be imposed.
The Court continued from [247]:
[247] The onus is on the party seeking the easement to establish what relevant losses and disadvantages will be suffered by persons having an interest in the servient tenement, as part of satisfying the Court that the persons affected by the easement can be adequately compensated: 117 York Street supra at 516-517; Rainbowforce supra at [116]. Nonetheless the courts have taken a relatively liberal approach to assessing compensation when faced with a paucity of evidence.
[248] In Swann v Spiropoulos [2006] NSWSC 860; (2006) ANZ ConvR 496 Campbell J, as his Honour then was, faced with a paucity of evidence, stated that the appropriate approach was to put himself in the position of a juror and assess as best as he could what was the compensation payable. In Evans v Cornish Nominees Pty Limited supra, White J agreed that such an approach was appropriate. His Honour made the following remarks at [110]:
"[110] The result is that I find neither valuer's evidence persuasive. Although they reached agreement as to the current value of the defendant's land, their reasons, so far as they concern the value of the aggregated portions which would form a 40-hectare area for a new building site, are widely different. I am not able to accept either valuer's approach to assessing the effect on land value of the imposition of an easement. There is no certain answer to that question. I approach the question as did Campbell J (as his Honour then was) in Swann v Spiropoulos [2006] NSWSC 860 where his Honour said (at [108]):
'It is necessary, it seems to me, to put myself into a position like that of a juror, and simply assess, as best I can, the amount of compensation that would be payable on that head. I recognise that I have criticised the valuers' evidence because they in effect acted as jurors. There is, however, a critical difference between the way in which expert evidence should proceed, - calling on expertise to produce a reasoned conclusion, where premises of the argument and steps of the reasoning can be evaluated by the court, - and the way in which the tribunal of fact at a court hearing can proceed. In this case I am the tribunal of fact, and so am entitled to proceed in the way a juror would.'"
[249] It does not seem to us that this approach can extend to the situation where there is no evidence from which compensation can be assessed. In that case no order granting the easement should be made…
Whilst I am conscious of what was stated by the Court of Appeal in Moorebank, I am of the view that there is sufficient evidence before the Court to determine appropriate compensation.
The determination of the amount of compensation to be paid to CA requires consideration of the valuation evidence. In their initial reports, each valuer undertook an assessment of compensation by measuring the diminution in the value of the CA land which will result from imposition of the Proposed Easement applying the piecemeal valuation method (with Mr Tew then adding further amounts as considered below). Mr Lunney first determined the unaffected fee simple value of the CA land in the whole at $60 per square metre and considered that the area of the Proposed Easement would be diminished by 50%, and thus applied $30 per square metre to the 3,595 square metres ('easement area'), giving $108,000.
Mr Tew applied a value at $60 per square metre to the easement area (adopting $217,000), then added his assessment of the diminution in value of the balance of the CA land, being the 14,405 square metre area outside the Proposed Easement at $9 per square metre and adopting $130,000, and then added an amount which he estimated reflected the anticipated diminution in the market value of Lots 2-6 in DP270477 (adopting $970,000), giving a total of $1,317,000.
In their joint report the valuers explained that the "significant disparity" between their assessments was based upon different assumptions made in relation to the use of the proposed right of way, as a result of a "significant body of additional non-valuation expert evidence" prepared after their initial reports. Therefore, they undertook further assessments based upon six alternative factual scenarios.
The six scenarios may be briefly described. Scenario 1 assumes that the Proposed Easement will be lawfully used such that it would only be used by vehicles over three metres high accessing the ATB Morton site and no other vehicles and that the only physical controls would be the locking of gates at the northern and southern end of the Proposed Easement after hours. Scenario 2 also assumes lawful use but additionally assumes other physical controls to restrict the vehicle movements. Scenario 3 relates to an earlier proposal involving a "dog-leg" option which was suggested by the traffic engineers and which is not the Proposed Easement. Scenario 4 is based upon the same assumptions as Scenarios 1 and 2 above but with truck movements limited to 22 trucks per day. Scenarios 5 and 6 each assume that the Proposed Easement site would be "potentially used unlawfully" and that this would include "rat running". Scenario 5 assumes the locking of gates at the northern and southern ends of the Proposed Easement and Scenario 6 assumes there is no physical impediment, meaning an unrestricted number of vehicles could potentially use the Proposed Easement each day, there being no ability to lock security gates or any other physical controls to restrict vehicular movements.
As noted above, the essential difference between the parties in respect of the amount of compensation is the relevant consideration of the diminution in market value of Lots 2-6. I have found that the individual lot owners do not fall within the purview of s 88K(2)(b), but putting this legal issue to one side, the valuers made different assumptions for the purpose of undertaking their assessments of loss or other disadvantage suffered in relation to those lots. Mr Lunney made the implicit assumption that the Proposed Easement would only be used in the manner which was authorised by its terms, whilst Mr Tew expressed concern that there was no explanation within the terms of the Proposed Easement which provide in his view how the use "would be physically restricted". He relied upon other expert evidence (of Mr Mitchell and Mr Rogers) that the Proposed Easement would be potentially used in a manner which exceeded that for which it was approved.
Although Mr Lunney did not initially consider the loss or disadvantage which may be suffered by the proprietors of Lots 2-6, in the joint report Mr Lunney provided a further assessment on the basis that the Court may consider it appropriate and necessary to consider any such losses.
In summary, Mr Lunney was of the opinion that Scenarios 1, 2, 3 and 4 result in no diminution in the market value of Lots 2-6 based upon his assumption that the proposed security gates would be maintained and used in each of those scenarios; that limited additional traffic movements would be expected in each scenario; that there would be no material impact on vehicular access and egress to Lots 2-6; that there would not be any likely impact on the operational use (or potential) of Lots 2-6; and that there would not be requirement for additional security measures that would fall for the expense of the owners of Lots 2-6.
As noted above, Mr Lunney's assessments in relation to Scenarios 1 to 4 were made at $162,000 whilst Mr Tew's varied from $1,186,150 to $707,200. In relation to Scenario 5, Mr Lunney deduced $665,075 and Mr Tew again, assessed $1,186,150. In relation to Scenario 6, both valuers deduced $1,186,150.
CA submits that both valuers made incorrect assumptions, that is whether the right of way will be "lawful" and whether or not unauthorised access can be controlled in any event.
I have already found above that CA will not suffer any loss that cannot be compensated by monetary payment. In addition, I do not consider that compensation should be determined on the basis that the Proposed Easement will be unlawfully used. To the extent that there is use or manner of use that may be "unlawful", CA would have the right to remedy the breach either as a result of non-compliance with the terms of the easement and/or other relief such as trespass. I consider that the provision of gates would, in any event, address a number of the security concerns raised by the members of the Community Association.
In the joint report, the valuers agreed that the appropriate rate per square metre market value of the easement area was $90 per square metre to which a 50% diminution was applied, resulting in a determination of compensation for the area of the Proposed Easement in an agreed sum of $162,000. They also undertook an assessment of the impact of the Proposed Easement on the residue of the CA land and agreed that a 7.5% diminution in the value of that land (14,405 square metre area outside the Proposed Easement) gave the sum of $100,000, giving a total of $262,000.
CA submits that neither valuer has properly considered "loss or disadvantage" and, as noted at [171] above, Mr Lunney, in particular, has undertaken an assessment of the diminution in the market value of the CA land which is not the "test" in s 88K, which calls up compensation for "other disadvantage". For example, CA points to the oral evidence of Mr Lunney that a requirement in the Proposed Easement for gates to remain locked is itself a disadvantage in relation to security for the various lot owners and his concession that it was "possible" that the value of the various lot owners' land could be affected if their maintenance costs of the driveway increases in consequence of the grant of the Proposed Easement.
I am not persuaded by the submission of CA that the evidence of the valuers is defective such that the Court's ability to fix an amount of compensation for the Proposed Easement is compromised.
However, given that I have found that the interests of the individual lot owners in the CA estate are not compensable interests within the terms of s 88K(2)(b), I have not found the various scenarios used by the valuers to be of great assistance as the differences in values reached were largely differences that related to the effect on the other individual lots.
Given that I have also found that compensation should not be assessed on the basis that the Proposed Easement will be used unlawfully, the scenarios which I consider reflect appropriate compensation for an easement in the terms that I have proposed are Scenarios 1 and 2. I find that the compensation proposed by Mr Tew for the diminution of value in the lots in the CA estate other than the CA land should not be made, and therefore that the amount proposed by Mr Lunney of $262,000 is appropriate.
I note that this is also the amount proposed by Mr Tew under Scenarios 1 and 2 if regard is not had to the amounts he considered for the impact upon the other lots in the CA estate. In all of the circumstances, I consider it appropriate compensation for the loss suffered by CA.
[16]
Conclusion
In the circumstances, I have determined that an easement should be granted generally in accordance with the terms of the Proposed Easement, subject to the changes which I have found should be made.
In those circumstances, I consider the most appropriate course is for the Court to direct the parties to prepare agreed short minutes of order reflecting my findings, particularly my findings at [219], [221], [222], [225], [226], and [245], and attaching proposed terms for an easement requiring the applicant to pay 50% of the ongoing maintenance costs and limited in use to 50 heavy vehicle movements per day.
I note that the parties have not been heard on the question of costs. Pursuant to s 88K(5), CA is prima facie entitled to its costs and I would be inclined to make an order accordingly. However I reserve the question to allow ATB Morton to make any application for an alternative order should it wish to do so.
[17]
Directions
The Court directs that:
1. The parties are to prepare agreed short minutes of order and the terms of an easement reflecting the Court's findings and to file these documents with my associate by close of business 21 June 2018.
2. If the parties comply with the terms of direction (1), the Court will make final orders in chambers accordingly.
3. If agreement cannot be reached, the matter will be listed for further mention on 28 June 2018.
4. Costs are reserved.
[18]
Annexure A (276 KB, pdf)
Annexure B (222 KB, pdf)
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Decision last updated: 08 June 2018
Parties
Applicant/Plaintiff:
A.T.B. Morton Pty Ltd
Respondent/Defendant:
Community Association DP270447
Legislation Cited (7)
Community Land Development Act 1989(NSW)ss 3, 43B, 70