Acorp Developments Pty Ltd v HWR Pty Ltd

History

1. On 9 December 2016, this Court in Acorp Developments Pty Limited v City of Ryde Council [2016] NSWLEC 1650 ('the Class 1 proceedings') granted development consent to Acorp's development application for the demolition of all existing buildings and the construction of a mixed-use development consisting of 920 square metres of commercial floor space and 42 residential units on the Benefitted Land ('Development Consent').
2. The Development Consent was subject to a deferred commencement condition which required Acorp to demonstrate the registration of a drainage easement and to provide written evidence of a right of way. The Development Consent stipulates that both of these easements are to burden the Burdened Land. If the deferred commencement condition is not satisfied within 24 months, the Development Consent will lapse pursuant to (what was at the time the Development Consent was granted) s 95(6) of the Environmental Planning and Assessment Act 1979 (NSW) ('the EPA Act'). That section is now replicated in identical terms in s 4.53(6) of the EPA Act.
3. On 21 November 2016, and in response to a request made by Acorp's architect on 15 November 2016 for formal owner's consent to the construction of the carriageway easement over a proposed right of carriageway for which there was an in-principle agreement, HWR wrote to Acorp's urban design consultant to advise that owner's consent would not be provided.
4. On 23 December 2016, HWR lodged a development application with Ryde City Council in respect of the Adjoining Development Site ('HWR's DA'). HWR's DA sought consent for a new part three/part four-storey mixed-use development containing one commercial tenancy and 21 residential units over two levels of basement car parking.
5. HWR's DA also included a proposal for an access driveway 6.61 metres wide to service the proposed basement car park. This access driveway relies on the same access to College Street as a large portion of the proposed carriageway easement.
6. Acorp subsequently lodged a number of submissions with Ryde City Council objecting to HWR's DA, including an objection that the proposed landscaping in HWR's DA would obstruct the proposed carriageway easement.
7. On 24 February 2017, Acorp sent an offer to HWR to acquire the carriageway easement and the drainage easement for $175,000 plus payment of reasonable legal costs. The offer was open until 20 March 2017. HWR's then solicitor responded to the offer on 22 March 2017 without accepting it.
8. On 21 April 2017, Acorp sent an offer to HWR to acquire the easements for $220,000 plus payment of reasonable legal costs. The offer was open until 22 May 2017. On 25 May 2017, HWR's then solicitor responded to the offer without accepting it.
9. On 8 June 2017, Acorp sent a further offer to HWR which comprised a payment of $220,000; HWR's reasonable legal and valuation costs; extinguishment of an existing 3.67 metre wide right of carriageway over 2A College Street (owned by HWR) benefitting part of the Benefitted Land (being 6A Monash Road); reciprocal rights for garbage and deliveries onto HWR's property; and the cost of construction of the access way and drainage. The offer was open until 19 June 2017. On 18 June 2017, HWR's solicitor responded by letter which stated, inter alia, "our client will not be providing any easement or carriageway benefitting your client's property".
10. On 5 July 2017, the present proceedings were commenced.
11. On 8 August 2017, HWR's DA was approved by Ryde City Council subject to conditions ('HWR's Consent').

Relevant legislation

1. 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.
2. Section 88K of the Conveyancing Act 1919 (NSW) ('Conveyancing Act') 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. (5) The costs of the proceedings are payable by the applicant, subject to any order of the Court to the contrary. (6) Such an easement may be: (a) released by the owner of the land having the benefit of it, or (b) modified by a deed made between the owner of the land having the benefit of it and the persons for the time being having the burden of it or (in the case of land under the provisions of the Real Property Act 1900) by a dealing in the form approved under that Act giving effect to the modification. (7) An easement imposed under this section, a release of such an easement or any modification of such an easement by a deed or dealing takes effect: (a) if the land burdened is under the Real Property Act 1900, when the Registrar-General registers a dealing in the form approved under that Act setting out particulars of the easement, or of the release or modification, by making such recordings in the Register kept under that Act as the Registrar-General considers appropriate, or (b) in any other case, when a minute of the order imposing the easement or the deed of release or modification is registered in the General Register of Deeds. (8) An easement imposed under this section has effect (for the purposes of this Act and the Real Property Act 1900) as if it was contained in a deed. (9) Nothing in this section prevents such an easement from being extinguished or modified under section 89 by the Court.
3. Both the Burdened Land and the Benefitted Land are zoned B4 Mixed Use pursuant to the Ryde Local Environmental Plan 2014 ('RLEP 2014'). Also applicable to both the Burdened Land and the Benefitted Land is the Ryde Development Control Plan 2014 ('RDCP 2014').
4. HWR has conceded that the Development Consent is a reasonable development of the Benefitted Land. Additionally, HWR does not contend that the loss that would be suffered by the Burdened Land if the Easements were imposed is not compensable, nor that Acorp has failed to make all reasonable attempts to obtain the Easements.
5. Therefore, the questions remaining to be decided in this case are whether the Easements are reasonably necessary, whether the Court has the power to grant the Easements, and if those two questions are answered in the affirmative and the Court exercises its discretion to grant the Easements, what quantum of compensation should be paid.
6. For the reasons that follow, I find that the Easements are not reasonably necessary for the effective use or development of the site. Although that finding is dispositive of the application, I go on to consider the compensation that would otherwise be payable and whether the Court has the power to grant the Easements.

Evidence

1. The evidence included a bundle of documents tendered by Acorp which related to the Development Consent, and a further bundle of documents relating to the present Class 3 application. Acorp also relied on an affidavit of Thomas Messenger, dated 4 December 2017, and an attached exhibit.
2. The parties adduced evidence from experts relevant to the essential matters which remain in dispute.
3. The expert evidence included acoustic evidence given by Dr Renzo Tonin, called for Acorp; traffic evidence given by Mr Kenneth Hollyoak, called for Acorp, and Mr Andrew Morse, called for HWR; town planning evidence given by Mr Andrew Martin, called for Acorp, and Mr Kirk Osborne, called for HWR; quantity surveying evidence given by Mr Elie Awad, called for Acorp, and Mr Patrick O'Donnell, called for HWR; and valuation evidence given by Mr Kent Wood, called for Acorp, Mr Michael Dyson, called for HWR, and Mr Peter Dempsey, called as a single party expert. In addition to written reports, each of the experts apart from the quantity surveyors gave oral evidence during the hearing.

Acoustic evidence

1. Dr Tonin was briefed by Acorp to consider a discrete contention raised by HWR, which provided "the use of the Right of Carriageway in accordance with the development approved by the Development Consent will have unacceptable amenity impacts on the Respondent's use of the Burdened Land and in particular, on the inhabitants of the development approved by [HWR's Consent]".
2. In the circumstance that HWR's Consent was built, Dr Tonin considered the likely acoustic impacts use of the Easements would have on the Burdened Land (in effect the development approved by HWR's Consent) and what noise mitigation methods could be employed to reduce them. He measured the existing ambient noise levels at the Burdened Land and the Benefitted Land and recommended, amongst other things, that trucks be prohibited from using the carriageway easement between 10pm to 7am Monday to Saturday and 10pm to 8am Sundays and public holidays. He also recommended that signs be posted showing a speed limit of 10km/h for the carriageway easement.
3. If his recommendations were implemented, Dr Tonin opined that the adverse noise impacts would be limited to three units in the building approved in HWR's Consent. In Dr Tonin's opinion, the existing proposed glazing in HWR's Consent is sufficient to address noise concerns when the windows are closed and mechanical ventilation would only be required for one room in each of the two most affected units.
4. Two other mitigation measures considered by Dr Tonin were a three metre wide awning that would be placed on the south-western end of the building in HWR's Consent, and alternatively, a four metre wide awning in a similar position. Dr Tonin opined that the four metre awning would meet the day-time and evening Environment Protection Authority ('EPA') external noise targets ('EPA external noise targets'), but would have a visual impact, and that the three metre awning would satisfy the EPA external noise targets save for a minor exceedence in one unit and an insignificant exceedence (inaudible to the human ear) in another.
5. In the course of cross-examination by Mr Hall, senior counsel for HWR, Dr Tonin agreed to the proposition that the restriction on truck movements was recommended because he was unable to find a viable acoustic remediation technique that would satisfy the sleep disturbance targets in the circumstance of trucks travelling along the carriageway easement at night. He also agreed that the remediation options were only assessed from an acoustic rather than a visual perspective, as befitting his area of expertise.

Traffic evidence

1. In a joint report dated 4 December 2017, Mr Hollyoak opined that the Easements are "reasonably necessary" for the development of the Benefitted Land. He noted that the provision of access in the location contemplated for the carriageway is marked in a Key Sites Map in the RDCP 2014 (extracted below) as a "potential accessway" and that access in that precise location is therefore contemplated by the planning controls.
2. Conversely, Mr Morse opined that access from College Street is not required for effective access to the Benefitted Land, and provided a diagram showing his proposed 6.1 metre vehicular opening on the Monash Road frontage of the Benefitted Land which he opined would provide adequate access and is similar in nature to what has been provided in other developments.
3. Mr Hollyoak opined that RMS would not grant concurrence to access for the Benefitted Land from Monash Road. He observed that Monash Road is a "classified road" for the purposes of State Environmental Planning Policy (Infrastructure) 2007 (NSW) ('Infrastructure SEPP'), and referred to cl 101(2)(a), which provides: (2) The consent authority must not grant consent to development on land that has a frontage to a classified road unless it is satisfied that: (a) where practicable, vehicular access to the land is provided by a road other than the classified road…
4. Mr Morse responded by saying that no "feasible alternative" to the Monash Road frontage is available such that the requirement in cl 101(2)(a) is met, and further that Mr Hollyoak's view that RMS would not grant concurrence does not take account of s 6(1) of the Roads Act 1993 (NSW), which Mr Morse noted the Infrastructure SEPP does not overrule, and which provides: The owner of land adjoining a public road is entitled, as of right, to access (whether on foot, in a vehicle or otherwise) across the boundary between the land and the public road.
5. Mr Hollyoak opined that the access from College Street complies with AS2890.1, which provides for the minimum required sight lines for pedestrians. Mr Morse agreed, but opined that any increase in vehicles (which would occur if College Street was used for access for both the Development Consent and HWR's Consent) leads to a slight increase in the risk of traffic conflict.
6. In cross-examination, Mr Galasso, senior counsel for Acorp, suggested to Mr Morse that it would not be an appropriate traffic solution for trucks to have to use the right lane in order to effect a left turn into Monash Road when exiting the development on the Benefitted Land. Mr Morse disagreed, and noted that appended to the joint report are several examples of recently approved developments which have these arrangements and include driveways of approximately six metres.
7. Mr Hall observed to Mr Hollyoak that several existing businesses on Monash Road have only Monash Road access, a proposition with which he agreed. Mr Hollyoak also agreed that many left in/left out properties (that is, properties which cannot be entered or exited by way of a right turn) are designed such that a truck cannot exit whilst a car is entering. However, Mr Hollyoak opined that this was not a good design principle if an alternative (such as the College Street access) exists, and was an approach that would be more commonly undertaken on a lower-order road.

Town planning evidence

1. Mr Martin and Mr Osborne produced a joint expert report dated 5 December 2017.
2. Mr Martin opined that the RDCP 2014 provisions are consistent with a strategic intent to activate the Monash Road frontage. He observed that the proposed carriageway easement is congruent with the Key Site Map in the RDCP 2014 and represented the best planning outcome. He stated that this was agreed by the experts and determined by the Court in the Class 1 proceedings.
3. Mr Martin opined that the carriageway easement is reasonably necessary in circumstances where: an 11 metre truck access from Monash Road results in an unsympathetic ground floor design; vehicle turning templates annexed to the joint report confirm the impost of an 11 metre truck manoeuvre onto Monash Road; the proposed carriageway easement is located within the same 6 metre vehicular setback area as the Burdened Land's currently approved vehicle access; Ryde City Council considered the impact on the Burdened Land's landscaping when approving that development; and there is public interest in achieving a better performing development on the Benefitted Land.
4. Mr Osborne opined that the Easements are not reasonably necessary for the effective use and development of the Benefitted Land. This was principally because the Benefitted Land enjoys access to Monash Road. He observed that an indicative alternative design for the Benefitted Land prepared by HWR's architects provides a six metre wide driveway on the Monash Road frontage whilst maintaining two commercial tenancies and a residential lobby on the ground floor, consistent with the Development Consent.
5. Whilst he acknowledged that the RDCP 2014 envisages the activation of the Monash Road frontage, Mr Osborne opined that the RDCP 2014 also contemplates car access points at two points along the Monash Road frontage between Victoria Road and College Street. In Mr Osborne's view, skilful design for the Benefitted Land would be able to address the objectives and controls of the RDCP 2014 whilst using the Monash Road frontage for vehicle entry.
6. Mr Martin opined that a superior design outcome is achieved by access from College Street as opposed to Monash Road. Mr Osborne was of the view that development with vehicular access from Monash Road would also be capable of achieving the orderly and economic use and development of the land.
7. Mr Osborne opined that any compensation should take into account the loss of the potential for amalgamation of the Burdened Land with 2A College Street, an adjoining site also owned by HWR. Mr Martin responded that such an amalgamation is already affected by an easement benefitting one of Acorp's lots and that the potential for amalgamation should not be taken into account in circumstances where the zonings between the two lots, being 2 and 2A College Street, are different.
8. Mr Osborne opined that if the carriageway easement were to be approved, it would result in a substantial increase of at least 200% in vehicle movements through the Burdened Land which, combined with the reduction of landscaped area, would significantly affect amenity on the Burdened Land. He agreed that the acoustic impacts could be ameliorated using noise attenuation measures.
9. Mr Martin opined that any impacts occasioned by additional vehicles and noise could be offset by compensation if necessary. He noted that the loss of landscaped area was considered as part of the Class 1 proceedings and was found to be acceptable.
10. Mr Osborne acknowledged that the proposed carriageway easement does not affect the development potential of the Burdened Land as envisaged by the RDCP 2014 and HWR's Consent. Mr Martin observed that the Development Consent had been assessed against s 79C (as it then was) of the EPA Act and was found to be in the public interest.
11. In cross-examination, Mr Galasso pressed Mr Osborne on whether there was an inconsistency on the part of HWR by including as part of its cl 4.6 variation request for HWR's Consent an assurance that the carriageway easement was consistent with the building proposed and then opposing the easement in the present proceedings. Mr Osborne did not concede that point.
12. Mr Hall observed that the cl 4.6 variation request, which was prepared by Mr Osborne for HWR's DA, did not expressly include any reliance on the access way envisaged by the RDCP 2014 continuing to be provided. He asked Mr Osborne if there was any reference to the access way in the cl 4.6 variation request which he had not identified, to which Mr Osborne replied there was none of which he was aware.
13. Mr Hall asked Mr Martin whether Monash Road was specifically identified as a restricted access road in the RDCP 2014. Mr Martin agreed that it was not so identified, but posited that there was a streetscape imperative to minimise vehicle access from Monash Road.
14. Mr Hall asked Mr Martin whether the Vehicular Access objective under the RDCP 2014 (Objective B under Pt 3.2.2) applied to properties which would otherwise have access from Victoria Road. Without agreeing at such a high level of generality, Mr Martin agreed that the access way on the Burdened Land depicted in the RDCP 2014 had the potential to serve properties which would otherwise only have access from Victoria Road.

Quantity surveying

1. The quantity surveying experts agreed that the cost and therefore saving to HWR of the driveway that would otherwise be built as part of HWR's Consent would be approximately $32,000 excluding GST. They further agreed that if the construction of the Easements was commenced prior to the commencement of works on HWR's Consent, there would be an increase to the construction costs of HWR's Consent, which they estimated to be between 1.5% and 3%, giving a range of $99,000 to $198,000. There were no substantive areas of disagreement between the quantity surveyors.

Valuation evidence

1. The parties called valuation experts to address the question of how the Burdened Land could be "adequately compensated" for the imposition of the Easements in the circumstance that the Court finds they are reasonably necessary. For the purposes of the valuation, the valuers treated the Burdened Land as being the Adjoining Development Site.
2. The valuers prepared a joint report dated 8 December 2017 in which they agreed that the small landscaping area provided for in HWR's Consent which would be removed from the Burdened Land as a result of the Easements would have no material effect on amenity.
3. The valuers also agreed that the appropriate valuation methodology to adopt in the circumstances is the "before and after" method, and that no regard should be had to the value of any benefit which might accrue to the Adjoining Development Site.
4. Furthermore, the valuers agreed that compensation for the drainage easement should be in the sum of $10,000; that there are offsetting compensatory advantages, namely the cost of funding the driveway at $32,000 and ongoing maintenance obligations which experts were yet to value; that accordingly a deduction of $32,000 should be applied to the (disputed) loss of market value of the Adjoining Development Site; and that $99,000 to $198,000 should be added reflecting the additional development cost, determined by the quantity surveyors, on the Adjoining Development Site as a result of the Easements being imposed.
5. In determining compensation for the Easements, having adopted the before and after approach, the valuers disagreed on the diminution in value to be applied to the before value of the Adjoining Development Site, which was agreed at $5,800,000. Mr Dempsey adopted a diminution percentage of 10%, giving $580,000; Mr Wood adopted 3.5%, giving $203,000; and Mr Dyson adopted 11.2%, giving $650,000.
6. Mr Dempsey considered that the most significant loss of amenity would be reflected in a loss of sale revenue from the units in HWR's Consent which would be most affected by the increased traffic on the site. Of the proposed 21 units on the site, he stated that two would be most affected by the Easements. He reached a figure of 10%, opining that 5% was too little and that a 15% adjustment would be excessive.
7. Mr Wood opined that a percentage reduction is very subjective. Initially, Mr Wood assessed a diminution of value only on the Burdened Land (that is, 2 College Street), and gave a figure of 7.5%. However, considering that the Adjoining Development Site should be considered as a whole, Mr Wood adjusted the 7.5% figure to take into account the diminution across both lots, and opined that the other lot constituting the Adjoining Development Site, 10 Monash Road, was not affected at all. Therefore he adjusted the value to 3.5%.
8. Mr Wood opined that the reduction percentages given by Mr Dempsey and Mr Dyson are grossly excessive. He attributed this excess to their inclusion of a component for "injurious affection". Mr Dempsey did not distinguish between the land component and injurious affection and provided an all-inclusive amount, whilst in adopting 11.2%, Mr Dyson assessed the land component at 4.5% ($260,000) to which he added injurious affection assessed at 6.7% ($400,000).
9. Mr Wood opined that there are offsetting compensatory advantages accruing to the Adjoining Development Site as a result of the Easements and that a claim for injurious affection is therefore not supportable. He listed amongst the advantages: the total site area inclusive of the proposed carriageway easement was addressed when determining the gross floor area of HWR's Consent; the cost of the roadway and ongoing maintenance is to be borne by the Benefitted Land; and the proposed carriageway would provide ingress and egress not only to the Benefitted Land but also to the development on the Adjoining Development Site.
10. Mr Dyson opined that the market value of the carriageway easement should be assessed as being the sum of the diminution in the value of the land constituting the easement (50% of the value of what he called "the easement land") and the effect or diminution in the value of the remainder of the Adjoining Development Site.
11. Mr Wood opined that the method adopted by Mr Dempsey of compensating the loss in value of the units affected by the amenity impacts served to illustrate that his figure of 10% was manifestly excessive. He observed that both Mr Dempsey (in a check calculation for his 10% figure) and Mr Dyson adopted a completed unit value of $1,000,000 for each of the 21 units from which they discounted 10% for each of the two units abutting the carriageway easement and other adjustments for the remaining 19 units (Mr Dempsey adjusting these by 2%, Mr Dyson by 1%).
12. Mr Wood opined that it was inappropriate to compensate the Burdened Land based upon improvements which at the date of assessment were non-existent and had not attracted capital expenditure. Further, he repeated his position that part of the carriageway easement would also be used for HWR's Consent and opined that the 19 units not abutting the carriageway easement would be unaffected by the Easements. Furthermore, in accordance with Young J's dictum in Wengarin Pty Ltd v Byron Shire Council [1999] NSWSC 485 at [26] that "it may be appropriate to assess the compensation on a percentage of the profits that would be made", Mr Wood noted that Mr Dempsey and Mr Dyson calculated their percentages on the prices that would be expected for HWR's completed development rather than the profit.
13. Mr Dyson accepted that the loss of value in potential units was a simplified method of assessing the diminution in the value of the remainder of the Adjoining Development Site but was the best method available in lieu of carrying out a full residual method of assessment based on a quantity surveyor's assessed costs of the proposed development.
14. In cross-examination, Mr Galasso suggested to Mr Dyson that he was overcompensating HWR because the value of the land in the B4 Mixed Use zone was principally connected to the ability to develop it, and the land over which the Easements would run could still be used in the calculation of the floor space ratio of any development on the Burdened Land (or Adjoining Development Site). Mr Dyson accepted that to the extent his calculations related to a loss in development potential of the land, there may be an element of "double-dipping" in his assessment.
15. Mr Hall asked Mr Dyson to consider the value of the land dedicated to the carriageway easement separately from the rest of the land. Mr Dyson opined that the land immediately affected by the easement would be worth less and posited that this reduction in value of the land over which the carriageway easement would pass was true irrespective of whether it could still be used to calculate the floor space ratio of a development.
16. Mr Galasso suggested to Mr Dyson the proposition that the EPA external noise targets, which in HWR's Consent had originally been met with the windows closed, would continue to be met with the windows closed, and that therefore his 10% reduction in price based on amenity effects was exaggerated. On the assumption that what Mr Galasso had put to him was correct, Mr Dyson was prepared to accept that the noise impacts would be the same with the windows closed, but did not recant from his view that a 10% reduction was appropriate to reflect the loss in amenity.
17. Mr Hall asked Mr Dyson whether he had relied on any specific noise criteria in reaching his assessment. Mr Dyson replied that he had not, and posited that the carriageway easement would have an effect on amenity notwithstanding the fact that particular noise criteria had been met. In Mr Dyson's view, the market would put a price on that amenity impact.
18. Mr Dyson also accepted on the assumption that Mr Galasso was correct in suggesting to him that there would be a minimal amount of traffic and no issue with sight distances when exiting the driveway, that $10,000 was an excessive reduction in value of each of the 19 units not directly affected by the carriageway easement.
19. Mr Hall suggested to Mr Wood that a reduction in the price of units at a particular site would in effect be deducted from the land value of the site in question. Mr Wood disagreed, and opined that it would be necessary to go through a hypothetical calculation which would show that there is a lesser reduction in the value of the land component than the gross realisation of the finished commodity.
20. Mr Hall challenged Mr Wood that none of the supposed benefits (outlined in [65]) to HWR of the Easements were in fact benefits that HWR would not enjoy without the Easements being in place. Mr Wood agreed that, save for the $32,000 which would have been spent on constructing the driveway for HWR's Consent, there was no advantage to the Burdened Land occasioned by the Easements.
21. Subsequently, Mr Galasso suggested to Mr Wood, and Mr Wood agreed, that the ongoing maintenance of the carriageway easement was a cost to be borne by Acorp which would represent an advantage to HWR as a result of the Easements.

Reasonable necessity

1. 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.
2. The principles relating to 'reasonable necessity' in the context of s 88K have been extensively considered by the courts and 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.
3. In the interests of concision, I summarise those principles without the references to the cases from which Preston J extracted them: 1. The power to impose an easement is made conditional upon 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 demand 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 of the application of the order. 10. The requirement of reasonable necessity can be satisfied notwithstanding that some future action may be required in addition to obtaining the easement.
4. In Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445 ('Moorebank'), the Court of Appeal discussed Preston J's fourth principle at [155], restricting on one view the generality of the proposition posited therein: In Rainbowforce supra, Preston CJ of the Land and Environment Court, gave a relatively wide meaning to the concept of effective use and development (at [72]) stating that if use or development of land for some planning purpose such as residential, commercial or industrial cannot be achieved without the creation of the easement, the easement is reasonably necessary for such use or development to be effective. To the extent that Preston CJ 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. That approach would not take adequate account of the word effective. Equally, we do not believe, as suggested by Moorebank, that it is necessary to show that the easement is necessary to achieve the highest and best use of the land. In a case such as the present, 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. That in our opinion is consistent with what was said by Hodgson J in 117 York Street supra in the passage which we have cited above (see also Lonergan v Lewis [2011] NSWSC 1133 at [22]).

Submissions

1. Acorp submits that the proposed orders imposing the Easements specify the nature and terms of each easement. Further, it says the Court can be satisfied that the Easements relate both to the development and use of the Benefitted Land. With respect to whether the Easements are reasonably necessary to effect the intended or expected result of the use or development, Acorp submits that the Court will be satisfied that the Easements are necessary to give effect to a development "which is appropriate to the area in which the land is situated and is at least an economically rational use of the land" (Moorebank at [155]).
2. Acorp also makes reference to the comments of the Court in Moorebank at [156]-[158]: [156] 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: O'Shea supra. 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: Rainbowforce supra at [77]; Khattar v Wiese supra at [27]; Woodland v Manly Municipal Council, supra at [12]; Lonergan v Lewis supra at [22]. [157] As we indicated earlier (par [131]) in Bloom v Lepre supra, Young J stated that where the effect of the easement was to sterilise the servient tenement insofar as the person's own development or use is concerned, the Court is not necessarily quite so favourable to the application. We would put the proposition more strongly. If the effect of the imposition of an easement was to effectively preclude a reasonably available development or use of the servient tenement appropriate to that land, then it would require a strong case of reasonable necessity before the easement would be imposed. [158] The determination of whether an easement is reasonably necessary for the use or development of the land also involves consideration of the alternative methods by which such use or development could be achieved. That is implicit in the concept of reasonable necessity. In the present case it involves the consideration of whether there is alternative access to give effect to the development.
3. Acorp submits that consideration of the sterilisation point is not engaged in the circumstances of this case as the Burdened Land cannot be said to be sterilised by the Easements. Acorp acknowledges that there is an alternative to the Easements insofar as the Benefitted Land has a frontage to Monash Road, but submits that nothing in par [158] of Moorebank means that the Court's attention should be directed away from the question of whether the Easements are reasonably necessary.
4. Acorp submits, relying on Rainbowforce at [78] and 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504; (1998) 98 LGERA 171 ('117 York St') at 508-9, that the test is not that an easement must be absolutely necessary but rather that "the use or development with the easement must be (at least) substantially preferable to the use without the easement". Acorp submits, and I accept, that this test is critical to the present case.
5. Acorp refers to Arinson Pty Ltd v City of Canada Bay Council [2014] NSWLEC 43; (2014) 205 LGERA 248 ('Arinson') (upheld on appeal: Arinson Pty Limited v City of Canada Bay Council [2015] NSWCA 199; (2015) 208 LGERA 418), a case in which Biscoe J, after discussing the authorities, concluded at [52] "it is clear from the decisions referred to above that s 88K(1) and (2) are to be construed and applied in the context of, and as far as possible in harmony with, relevant legislative planning controls".
6. In this regard, Acorp places reliance on the fact that the RDCP 2014 contemplates a right of way in the location proposed for the Easements, and the fact that Monash Road is a classified road for the purposes of the Infrastructure SEPP.
7. Acorp submits that nothing in the Easements prevents the Burdened Land from being developed in accordance with its highest and best use. To the extent that the highest and best use is that provided for in HWR's Consent, Acorp submits that the Easements are consistent with it, and do not require any reduction in the gross floor area provided for in HWR's Consent.
8. Acorp says that in the present circumstances, due to the RDCP 2014, it does not necessarily follow that even if HWR succeeds in the present case there will not be an access way in the proposed location of the Easements in the future and further that HWR's land would not be sterilised by the granting of the Easements. In view of all of those factors, Acorp submits that the Easements are reasonably necessary.
9. HWR emphasises that the requirements of s 88K must be judged at the time of the hearing (Moorebank at [97]; 117 York St at 511). Consequently, HWR submits that the reasonable necessity of the Easements cannot be assessed on the basis that certain events will occur in the future. Relevantly to the present case, HWR contends that the reasonable necessity cannot be assessed on the basis that the Benefitted Land will be consolidated into one lot.
10. HWR also submits that the impact of an easement on the servient tenement is a factor in assessing reasonable necessity and that this impact extends to diminution in the property rights of the owner as well as the physical impact on the land (ING Bank (Australia) Ltd v O'Shea [2010] NSWCA 71 ('O'Shea') at [48]-[49]; Moorebank at [113]).
11. HWR submits that the requirement of reasonable necessity means more than a course which is "desirable" or "preferable" (Rainbowforce at [76]; Moorebank at [154]). HWR says that the test has been described as requiring a "considerable advantage" over the alternative (Grattan v Simpson (1998) 9 BPR 16,649 ('Grattan') at 16,651, cited with approval in Woodland v Manly Municipal Council [2003] NSWSC 392; (2003) 127 LGERA 120 at [11]). HWR submits that ultimately the test is that articulated in 117 York St, the effect of which it says is that where the easement proposed is only reasonably necessary for one use or development, that use or development must be "at least" reasonable compared to other uses or developments and that that use must be "at least" substantially preferable with the easement as opposed to without the easement.
12. In HWR's submission, in circumstances where it is common ground that an alternative method of access exists which would allow Acorp to substantially achieve its development as approved, the factors in favour of the College Street access over the Monash Road access are not sufficient to overcome the Court's reluctance to grant an easement where there is a viable alternative.
13. In this respect, HWR submits that the indications in the RDCP 2014 that a preference for limited access from Victoria Road do not apply directly to Monash Road and are preferences rather than requirements in any case. Similarly, it submits that the Infrastructure SEPP expresses only that access from a local road is to be provided "where practicable" and that it is not practicable where private land is located between the site and the local road and the owner of the private land objects to its use for the purpose of access.
14. HWR submits that the question of reasonable necessity cannot be answered as if it were a merits question in a development application. To this extent, HWR says that Acorp's reliance on the desirability of the "activation" of the Monash Road frontage is irrelevant and merely a surrogate for its (commercially understandable) desire to maximise its commercial space and thereby its return.
15. HWR submits that it is "remarkable" that Acorp disputes the Easements will have a significant impact on the Burdened Land. It submits that the loss of landscaping/green space in the south-west corner of the Burdened Land, the intensification of traffic, increased noise impacts, the change in nature of the traffic using the proposed driveway including garbage trucks four days a week, the loss of control that would prevent HWR closing the driveway for some temporary purpose without Acorp's consent, and the impact on property rights cumulatively give rise to impacts such that the Court would not be satisfied that the Easements are reasonably necessary where an alternative exists.
16. Furthermore, HWR rejects the proposition that this impact on the Burdened Land is inevitable having regard to the potential access way shown on the RDCP 2014. HWR submits that no such application for an access way has been made, nor is there evidence that one is likely to occur. HWR submits that the properties on Victoria Road which could be benefitted by the potential access way presently have unencumbered vehicular access and are traffic-intensive businesses. Further, they are situated outside of the town centre precinct and as such cl 3.2.1 of the RDCP, which sets an objective to limit vehicular access from Victoria Road in the town centre precinct, does not apply.
17. HWR also submits that if an application were to be made to give effect to the "potential accessway" in the RDCP 2014, it is anticipated by the RDCP 2014 itself that such an application would be for a public laneway. As such, HWR submits that an entirely different legal regime would apply, giving rise to different rights of objection and compensation.
18. In response to HWR's submissions, Acorp submits that the Easements do represent a "considerable advantage" in the sense contemplated by Grattan, and that planning considerations are of some relevance where they are reflective of the planning controls and insofar as the second limb of the test from 117 York St is concerned.
19. Further, Acorp submits in respect of the test in the Infrastructure SEPP that a situation where a neighbour is unwilling to give consent to access a road is the kind of problem which s 88K of the Conveyancing Act is designed to overcome.

Consideration

1. In 117 York St, 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).
2. Those comments have been cited with approval in many subsequent cases: Rainbowforce at [78]; Arinson at [44]-[45]; Moorebank at [140]; and most recently by the Court of Appeal in Gordon v Lever [2018] NSWCA 43 ('Gordon') at [90].
3. I consider that the Benefitted Land could be reasonably used or developed without the Easements. The fact that it has frontage to Monash Road makes that conclusion inescapable. I also consider that Acorp's Development Consent is a reasonable, "economically rational" use of the land (117 York St at 508; Moorebank at [155]). It would not have been granted consent by this Court if it were otherwise.
4. Therefore, and subject to my further findings below with respect to the impact of the Easements on the Burdened Land, I consider that Hodgson J's test from 117 York St at 509, which invites consideration of whether the Development Consent with the Easements is "(at least) substantially preferable to [a similar development] without the easement", provides guidance to the Court in respect of whether the Easements are reasonably necessary.
5. That dictum of Hodgson J was considered by Brereton J in Khattar v Wiese [2005] NSWSC 1014 ('Khattar'). At [29], his Honour said: [29] For Mrs Wiese, Mr Potts submits that there is no cogent evidence why the proposed use and development of the plaintiffs' properties is substantially preferable to their current use. There are at least two answers to this. The first is that it is not necessary that the plaintiffs show that the proposed development is substantially preferable to the current use, but only that it is reasonable; the question of "substantially preferable" arises when evaluating the posited use with, as against without, the easement. The second is that there is evidence which warrants the conclusion that the proposed development is, in the language of valuers, a "higher and better" use than single residential dwellings: the emergence in the area over recent years of medium density and villa developments is a strong indication that such development is a superior use; the plaintiffs' desire to proceed in accordance with their proposals, and Mrs Wiese's wish to sell her property for redevelopment, supports an inference that the higher unit yields which can be derived under a medium density or villa development are economically more advantageous uses of the properties than their existing uses as separate residential dwellings; indeed, it might be said to be self-evident that eight dwellings on the same land is likely to be a more valuable use than three dwellings. Accordingly, the plaintiffs' proposed development is a reasonable use or development of the plaintiffs' properties (emphasis added).
6. Emerging from that discussion is the principle that in reaching a conclusion about 'reasonable necessity' in the context of a specific development or use, once it has been established that the development or use is a reasonable and economically rational use of the land, one does not need to be concerned about its merits against the merits of other uses. The sole value judgment as to the desirability of that specific development against others is in the comparison between the development or use with the easement, and the development or use without it.
7. Further, it is not enough that the development with the easement merely be preferable with the easement, it must be "(at least) substantially preferable" (emphasis added).
8. This terminology has been the subject of some consideration by the courts. In D & D Corak Investments Pty Ltd v Yiasemides [2006] NSWSC 1419 ('Yiasemides'), Young J (as his Honour then was) commented at [13]: The cases indicate that the word "necessary" does not mean absolutely necessary, but it does mean more than something that is convenient or nice to have and that one must look for a requirement that is far closer to necessity than it is to convenience.
9. In O'Shea, Giles JA, with whom Campbell JA agreed, said at [53]: [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 Yiasemides]. In my opinion, reasonable necessity can not be reduced to substantial preference (emphasis added).
10. 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."
11. Donnellan v Woodland [2012] NSWCA 433 ('Donnellan') was an appeal against a finding that a solicitor had been negligent in giving advice about the operation of s 88K. Given that the Court of Appeal was therefore not making a binding decision in respect of the operation of the section, it may be said that its comments in that regard are not binding. Nevertheless, obiter from the Court of Appeal is persuasive authority in this Court. At [99]-[100], Beazley JA (as her Honour then was), with whom Basten, Barrett, Hoeben JJA and Sackville AJA all agreed on this point, said: [99] R S Hulme J considered that the test of reasonable necessity was a stringent one and this has now been confirmed in ING Bank (Australia) Ltd v O'Shea [2010] NSWCA 71; 14 BPR 27,317. However, at the time Mr Donnellan was giving advice, not only was there a decision of the then Chief Judge in Equity, later a judge of appeal, that indicated a more flexible approach to the application of s 88K was appropriate, in addition all of the case law indicated that whether an easement would be granted by the court depended upon the court's assessment of all of the circumstances. In this regard, the case law was consistent in that the test did not mean "absolutely necessary". Even in Tregoyd Gardens Pty Ltd v Jervis, where Hamilton J had applied the section more narrowly than Hodgson CJ in Eq in 117 York St v Proprietors of Strata Plan 16123, Hamilton J accepted an easement might still be granted under the section, notwithstanding that there was an alternative right of way available. Other cases had also accepted the relevance of financial factors in the determination of whether an easement was "reasonably necessary": see Goodwin v Yee Holdings. [100] The meaning of "reasonably necessary" in s 88K and the considerations relevant to the statutory test had not been the subject of any appellate determination in New South Wales until the decision of this Court in ING Bank (Australia) Ltd v O'Shea. There, Giles JA emphasised the importance of necessity in the statutory test and either explained or perhaps implicitly rejected the approach of Hodgson CJ in Eq in 117 York Street v Proprietors of Strata Plan 16123 (emphasis added).
12. Whether Giles JA in O'Shea implicitly rejected the approach of Hodgson J or not, and the fact that the 117 York St test is referenced in Moorebank and Gordon indicates that he did not, it is clear from O'Shea, and the commentary on that decision in Donnellan, that the Court of Appeal in O'Shea was recalibrating the test to focus upon the requirement of 'necessity'. Indeed, this recalibration was arguably foreshadowed in the test in 117 York St itself by the inclusion of the parenthetical comment "at least".
13. In Moorebank at [116], the Court refused leave to argue that O'Shea had been incorrectly decided, albeit without making reference to Giles JA's comments at [53] in O'Shea. At [155], the Court made the following comment (already extracted at [78] above) in respect of the way the test was formulated in Rainbowforce: …To the extent that Preston CJ 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. That approach would not take adequate account of the word effective. Equally, we do not believe, as suggested by Moorebank, that it is necessary to show that the easement is necessary to achieve the highest and best use of the land. In a case such as the present, 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…
14. Also in Moorebank, at [163], the Court applied the test from 117 York St in the following terms: 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.
15. In Shi v ABI-K Pty Ltd (2014) 87 NSWLR 568; [2014] NSWCA 293 ('Shi'), Basten JA, with whom Barrett and Ward JJA agreed, at [14]-[15] commented on the Court in Moorebank's clarification at [155] of the Rainbowforce test: …[T]he last sentence quoted 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."
16. To the extent the hurdle was lowered in Moorebank, however, and consistently with the extract above from Shi, it is only lowered in respect of the test as to whether a development on land is "reasonable". It was not suggested in Shi that the hurdle was lowered with respect to the question of whether or not a particular development or use is "(at least) substantially preferable" with the easement, at which point it becomes necessary to judge the reasonable, economically rational use or development of the land with the easement and without it.
17. There are a number of matters which were relied upon by Acorp to show that the development with the Easements was "substantially preferable" to the development without it. For the reasons that follow, I am not satisfied that the development with the Easements satisfies that threshold in the circumstance that another access road is available.
18. Acorp placed significant reliance on the terms of the RDCP 2014. Development Control Plans, whilst undoubtedly important in a planning sense (see Zhang v Canterbury City Council (2001) 51 NSWLR 589; [2001] NSWCA 167 at [75]), are not environmental planning instruments in the strict sense. Moreover, this is not a case like Moorebank where the DCP purported to make the provision of a particular access way a necessary precondition of the development (see Moorebank at [264]), but rather one where the Development Consent with the Easements is said to more consistent with particular planning objectives.
19. That being the case, some discussion of the RDCP 2014 and the planning and traffic evidence before the Court is necessary.
20. Part 4.6 of the RDCP 2014 deals with the "Gladesville Town Centre and Victoria Road Corridor". Section 2.2.1 of that Part provides: 2.2.1 Monash Road Precinct The northern precinct at Monash Road is to maintain its local retail role, whilst gaining additional retail, commercial and residential development. The precinct's heritage items and main street retail character are to be protected and enhanced with narrow frontage shopfronts and built forms that relate to the scale and character of existing buildings. The precinct will provide local shopping within a more cohesive built form and an improved public domain.
21. The Key Site Map of the Monash Road Precinct, referred to in detail by the experts and considered by the parties in submissions, is Figure 4.6.23 in the RDCP 2014. I extract it below:
22. Monash Road is designated as a road to which the Active Street Frontages objectives found in cl 3.1.2 of Pt 4.6 of the RDCP 2014 apply. Those objectives are as follows: 1. To reinforce the commercial uses that currently exist in the town centre. 2. To avoid privacy problems for residential buildings built on or close to the street frontage. 3. To allow for a wide range of retail, commercial, entertainment and community uses at ground floor level. 4. To promote appropriate residential development. 5. To enhance personal safety and security. 6. To promote the commercial viability and function of the centre/corridor.
23. Notwithstanding these objectives, I note that Control (d) in cl 3.1.2 of Pt 4.6 provides that "Vehicle access points may be permitted where Active Street Frontage is required if there are no practicable alternatives".
24. Whilst it can be seen from the Key Site Map that a "potential accessway" is envisaged in the area proposed for the Easements, I find that it is not the case that the Key Site Map envisages an end to vehicular access from Monash Road. Indeed, four vehicle entry points from Monash Road are shown on the Key Site Map in the vicinity of the site.
25. There is also doubt about whether the potential accessway was envisaged to provide principal access to the Benefitted Land or alternative rear access to properties fronting Victoria Road. Clause 3.2.2 objective (a) provides: Ensure as few driveways as possible off Victoria Road in order to promote public transport (bus priority lanes) and road safety.
26. Moreover, and as HWR submitted, mechanisms exist for compulsorily acquiring land and these could be utilised to create a public laneway at the place indicated in the Key Site Map if it was considered that sufficient planning purposes exist to make that a reasonable course. That would be a very different proposition to the current application which is an application for a private right of access over private property.
27. Nevertheless, the RDCP 2014 clearly contemplates and I accept, that there are planning benefits in minimising vehicular access from Victoria Road and in activating the Monash Road street frontage. However, in the Joint Town Planning Report, Mr Osborne noted that an indicative design, prepared by HWR's architects, shows that an access driveway can be provided in the location proposed for "car access" on Monash Road by the Key Site Map in the RDCP 2014. Moreover, Mr Osborne was of the view, which I accept, that the provision of a driveway, especially in a location anticipated by the RDCP 2014 itself, does not preclude the achievement of an active street frontage.
28. I note that Mr Martin did not agree and opined that the carriageway easement provides a superior planning outcome and observed that this was the opinion reached by the experts in the Class 1 proceedings. He further opined that there was a strategic imperative to consider all practical options to revitalise streetscapes and activate the Monash Road frontage. Mr Martin estimated that only 13% of the ground floor façade could be active retail frontage if vehicular access was provided at Monash Road. He opined that this was unacceptable from a public interest perspective given the revitalisation imperative contained in the RDCP 2014.
29. Whilst there may be some impact on the activation of the street frontage if access to the Benefitted Land were to be imposed from Monash Road, I do not find this to be "unacceptable" given my finding that access from Monash Road can be provided whilst achieving an active street frontage.
30. In that regard, I note and accept that the indicative design prepared by HWR's architects provided a six metre wide driveway with a 4.5 metre height clearance whilst maintaining two ground floor commercial tenancies and a residential lobby. The design provided a six metre wide access, which is approximately 25% of the width of the Monash Road frontage of the Burdened Land. Mr Obsorne noted that taking into account the provision of fire stairs, over 60% of the frontage could be active uses. I find that something similar to the indicative design could be provided on the Burdened Land. Such a development would meet the planning desire to provide an activated street frontage.
31. In relation to the traffic implications of a Monash Road access, I accept Mr Morse's evidence that the Benefitted Land, absent the carriageway easement, could be developed in a traffic engineering sense in a not dissimilar fashion to that which is proposed in the Development Consent. In other words, I accept that Acorp is able to provide acceptable vehicular access on the existing street frontage on Monash Road.
32. Further, I find that cl 101(2)(a) of the Infrastructure SEPP is not determinative of the access position. This is because it is clear that absent a lawful right of carriageway, a consent authority would not be satisfied that "…practicable, vehicular access to the land is provided by a road other than the classified [Monash Road] road…" I am fortified in this view by the correspondence of 4 December 2017 from RMS to Mr Hollyoak as to its likely position in that scenario. Further, I accept Mr Morse's evidence regarding the application of s 6(1) of the Roads Act.
33. To the extent that reliance was placed by Acorp on this Court's decision in the Class 1 proceedings, I am not of the view that Commissioner Brown made any finding which indicated that the Easements were necessary for the development of the Benefitted Land in the sense required by s 88K. He considered the access arrangements at [11]-[14]: Access arrangements [11] The access issue relates to the need to acquire an easement over other land without owner's consent. The plans lodged with the council originally included this land for access (Exhibit A). During the hearing, leave was granted to amend the application (Exhibit C) to exclude this land, but subject to a deferred commencement condition that required a Right of Way over the land to be obtained prior to the activation of the consent. [12] While the terms of the deferred commencement condition were accepted by the council, and that it could legally be achieved, the approach was not accepted by the council on the basis that it was uncertain whether the easement would be granted under either s 88K of the Conveyancing Act 1919 or s 40 of the Land and Environment Court Act 1979. [13] In response, I am satisfied the approach adopted by the applicant is acceptable in the circumstances for a number of reasons. First, the owners have not unequivocally denied that an easement could be granted in the future; second, DCP 2014 appropriately anticipates some form of rear access to the site, fronting Monash Road, and thirdly, the authorities provided by Mr Staunton for the applicant clearly provide a warrant for such an approach. [14] I also accept the applicant's submission that the deferred commencement condition should have a time limit of 24 months rather than the 18 months proposed by the council.
34. It appears from that discussion that Commissioner Brown appropriately reserved the question of whether the Easements could be imposed.
35. Moreover, whilst I am of the view that the Easements suggested do provide at least a somewhat superior planning outcome having regard to the objectives of the RDCP 2014, it is important to remember that the present proceedings are not Class 1 proceedings where a superior planning outcome may be determinative. The Court must rather look to the statutory test imposed by s 88K of the Conveyancing Act.
36. Therefore, I do not consider that a superior planning outcome, especially when it is not substantially superior, is enough to warrant a finding that the Development Consent with the Easements is "substantially preferable", let alone "(at least) substantially preferable" to a similar development without the carriageway easement.
37. In reaching that conclusion I have given some consideration to the Court of Appeal's judgment in O'Shea at [53], the importance of individual property rights, and Brereton J's comment in Khattar at [27] that "the authorities repeatedly point to the confiscatory nature of s 88K as requiring firm proof of the reasonable necessity for the easement, and that the court bear in mind that property rights are valuable rights not to be lightly taken away".
38. Even if I had been minded to take a more lenient view of the requirement in 117 York St, the Court of Appeal made it clear in O'Shea that the question of reasonable necessity does not merely relate to the development of the dominant tenement. At [48]-[49], 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.
39. This approach was cited with approval in Moorebank at [116] and [156] and Gordon at [91].
40. The comments of Young JA in O'Shea are also pertinent. At [155]-[156], his Honour said: [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.
41. The hypothetical situation considered by his Honour at [156], though not precisely the circumstances of the present case, is clearly of some relevance.
42. In this regard, I have considered and adopt the submissions of Mr Hall in relation to the deleterious effects he submits that the Burdened Land will suffer if the Easements are imposed. Whilst none of these are close to what some cases have described as the possible "sterilisation" of the servient tenement (see, for example, Moorebank at [68]), I consider as a whole that they represent a not insignificant impost on the Burdened Land, particularly having regard to the fact that an alternative street frontage is available.
43. First, the loss of green space is an amenity impact, albeit a relatively minor one, for residents in Units 104 and 207 of HWR's Consent who will have their outlook transformed from one overlooking a garden to one overlooking a roadway.
44. Secondly, there will be an intensification of traffic. Mr Hall submits that this increase will amount to a 200% or threefold increase compared to what would be expected from HWR's Consent alone.
45. Thirdly, the nature of the traffic will be such as to include garbage trucks moving across the carriageway easement four days a week, which does not include any increase that may be necessitated by the commercial activities which may be undertaken on the Benefitted Land in the future.
46. Fourthly, there is the question of the (as yet unknown) precise nature of the commercial use of the Benefitted Land. Mr Hall notes that Mr Osborne opined that the Benefitted Land might be appropriate for a gym, fitness centre, medical centre, or veterinary hospital which could mean an unknown increase in the use of the carriageway easement and possibly a variation in the hours of operation.
47. Fifthly, HWR will suffer a loss of control of the Burdened Land such that if they ever wanted to close or partially obstruct the driveway for repairs, painting, or large deliveries, they could not do so via strata resolution but would need to do so by way of Court order or neighbour permission.
48. Sixthly, there will be an acoustic impact, which although in the circumstance that Mr Tonin's recommendations are implemented, may not result in a numerical breach of the EPA external noise targets, will mean that the units closest to the carriageway easement will be subject to more noise than they otherwise would have been.
49. Seventhly, the Easements and in particular the carriageway easement represent an impact on property rights which could affect future development potential at the time when the Burdened Land is ripe for redevelopment again.
50. For all the reasons above, I am not satisfied that the Easements are reasonably necessary.

Compensation

1. Although I have found that the carriageway easement is not reasonably necessary, for completeness, and noting that the question of compensation was fully argued, I note that had I been persuaded that the carriageway easement was reasonably necessary, I find that HWR could be adequately compensated for the "loss or other disadvantage" that would arise from the imposition of the Easements and, for reasons below, the appropriate compensation would be the sum of $563,000. This amount would include my acceptance of the valuers' agreement that compensation for the loss or other disadvantage relating to the drainage easement was in the sum of $10,000.
2. Some caution notwithstanding, I accept the agreed position of the valuers that consideration of compensation should take into account the effect of the Easements upon the Adjoining Development Site as a whole. This is despite the fact that at the date of the hearing the Burdened Land (the servient tenement) was 2 College Street. Put simply, I find that determination of compensation requires consideration be given to the fact that 2 College Street will be consolidated with 10 Monash Road to form the Adjoining Development Site.
3. In relation to the compensation ordinarily payable under s 88K, Young J (as his Honour then was) in Wengarin Pty Ltd v Byron Shire Council [1999] NSWSC 485 noted at [26] (citations omitted): … (3) The compensation is not just the diminished value of the affected land. (4) Ordinarily the compensation will be: (a) the diminished market value of the affected land (including what is sometimes called the hope value, that is the potential use to which the subject land could have been put); (b) associated costs that would be caused to the owner of the affected land; (c) an assessment of the compensation for insecurity, loss of amenities such as loss of peace and quiet; (d) the compensation is to be less compensating advantages, if any. …
4. As noted in Moorebank at [235], the dictum of Young J has been followed on a number of occasions including Mitchell v Boutagy [2001] NSWSC 1045; (2001) 118 LGERA 249 at [28]; Lonergan v Lewis [2011] NSWSC 1133 at [52]; and Khattar at [66]. I also respectfully adopt his Honour's comments.
5. Given the various approaches that have been adopted both by the valuers in this matter and by the courts on previous occasions and noting the agreement between the valuers, I find that compensation for diminution in the value of the Burdened Land, together with any additional cost incurred as a result of the imposition of the Easements is the appropriate measure for compensation.
6. A further matter for consideration is the amount of additional cost of the development of HWR's Consent on the Adjoining Development Site as a result of the Easements being imposed which the quantity surveyors estimated as between $99,000 to $198,000.
7. Generally speaking, I would be minded to favour the upper end of that range in order that the servient tenement should not be undercompensated for any increased cost occasioned by the imposition of the Easements. In the present circumstances, however, I note that there would be some uncertainty including as to the extent of the costs that would be incurred and indeed whether they would be incurred at all depending on when HWR began construction. In those circumstances, I find $150,000 is an appropriate sum.
8. In relation to the carriageway easement, the before and after method referred to at [59] above is not an uncommon approach in a matter such as the present where consideration is given to what would be paid by a willing but not anxious buyer to a willing but not anxious seller before and after the grant of the easement (following Spencer v The Commonwealth (1907) 5 CLR 418).
9. As noted above at [61], the essential difference between the valuers, in adopting the before and after approach, is the diminution in the value to be applied to the (agreed) before value of $5.8 million.
10. In relation to the differences in diminution percentages (Mr Dempsey 10%, Mr Wood 3.5%, Mr Dyson 11.2%), the differences were self-evidently subjective as no valuer had prepared a detailed residual method. Further, there were differences in approach to the determination of the percentage diminution, with Mr Dempsey adopting 10% with no reference to injurious affection, and Mr Dyson adopting 11.2% based upon a land component of 4.5% to which he added an injurious affection component of 6.7%.
11. I find that determining compensation based upon a reduction in purchase price of completed units in HWR's Consent, in circumstances where there has been no capital expenditure, is a necessarily unsophisticated approach. It is also clear that when determining HWR's Consent (and the number of units which are to be built), the floor space ratio was determined on the land area of the Adjoining Development Site obviously including the area of land over which the Easements will be located, and unless this fact is considered, there is a risk of overcompensating as submitted by Acorp. Despite this, it is clear that there is likely to be some reduced amenity to at least two of the proposed units. However, determination of compensation based upon a simple reduction in purchase price, absent a full residual valuation method, is a matter of some concern.
12. In view of those considerations, I apply the before and after method in the manner adopted by Mr Dempsey. He gives a diminution value of 10% to reach total compensation for the carriageway easement of $580,000. However, having regard to Dr Tonin's expert acoustic evidence, I consider that Mr Dempsey has placed too much weight on the acoustic impacts of the carriageway easement. I also consider that some of the effects on the Burdened Land over which the Easements would be imposed were overstated. Taking these matters into account, and doing the best I can, I would therefore adopt a value in the order of 7.5%, which would give compensation for the carriageway easement alone in the sum of $435,000.
13. I am comforted in this figure by reaching a similar conclusion having regard to the approach of Mr Dyson. Mr Dyson's before and after discount figure of 11.2% was reached in a piecemeal manner, whereby he adopted a figure for the land directly affected by the imposition of the carriageway easement and then added a figure for the effect on the rest of the Adjoining Development Site. I consider that approach is not unreasonable. I adopt his figure of 4.5% for adjustment of the land value, noting this is 50% of the value of the carriageway easement land only, being $260,000.
14. To the $260,000 amount is added a figure for the effect on amenity (or what was styled "injurious affection"). Having regard again to Dr Tonin's evidence, I consider that Mr Dyson has, like Mr Dempsey, overestimated the amenity effect of the carriageway easement on the units in HWR's Consent. Therefore under Mr Dyson's approach, I would adopt a diminution of 7.5% instead of 10% for the two units most affected, and no discount for the other 19 units. This gives a sum of $150,000. The total compensation adopting Mr Dyson's approach with my adjustment would therefore be $410,000 for the carriageway easement alone.
15. I do not accept the position of Mr Wood that no compensation should be paid for injurious affection and do not consider that any benefits are occasioned to the Burdened Land by the imposition of the Easements, apart from the agreed $32,000 reduction for the construction of the driveway and its ongoing maintenance.
16. The imposition of the carriageway easement clearly has some amenity effect on the units in HWR's Consent and, in any event, would be seen to have an amenity impact on any development to be constructed on the Burdened Land. It is therefore appropriate that this be reflected in the after value of the Burdened Land.
17. Moreover, contrary to Acorp's submissions, I am not persuaded that the land affected by the carriageway easement should be discounted because part of it would be used to access HWR's Consent. That use is currently available to HWR without the attendant loss of control and future development potential which would be occasioned by the imposition of the carriageway easement. Consequently I find that the figure suggested by Mr Wood is too low to reflect the loss of value occasioned to the Burdened Land.
18. Therefore, I find that compensation for the carriageway easement would be $435,000, to which would be added $10,000 for the drainage easement, $150,000 for the increased costs of constructing HWR's Consent, less $32,000 for the cost of building the driveway. This would mean total compensation for the Easements in the sum of $563,000.

Whether the Court has the power to impose the Easements

1. Although it is again not necessary to decide, for completeness, I deal with the issue of appurtenance.
2. Emphasising that the Court must decide upon the grant of an easement having regard to the facts as they presently stand, and noting that at present the Benefitted Land has not been consolidated into one lot, HWR submits that the Court does not have the power to grant the Easements because the benefitted land is not appurtenant.
3. Acorp submits that in the circumstances of the case, there is no appurtenance issue. It observes that the proposed orders (being the Proposed Orders - Exhibit F) are self-executing in the sense that they propose the Easements be granted upon the consolidation of the lots, that the terms of the Easements anticipate the consolidation of the lots, and, further, that the Development Consent requires all land titles comprising the Benefitted Land to be consolidated into one lot before an occupation certificate is issued.
4. To adequately understand these positions, it is necessary to briefly set out the authorities to which the Court was taken with respect to appurtenance.
5. In Clos Farming Estates v Easton [2002] NSWCA 389, Santow JA, with whom Mason P and Beazley JA agreed, said at [43]: …It may be granted that physical contiguity of lot 86 to the servient tenement is not necessary, if (as here) sufficiently close to be sensibly described as appurtenant. But here any supposed connection between lot 86 and the supposed servient tenement went no further than to render the latter but "a convenient incident to the exercise of the right", were it exercised at all, yet constituted incongruously by that vastly expansive congeries of entitlements.
6. In Effeney v Millar Investments Pty Ltd [2011] NSWSC 708, Ward J (as her Honour then was) said at [79]: Even if the grant in favour of Lot 16 could be said implicitly to confer a right to use the easement in order for the owner of Lot 16 to cross over Lot 15, that does not seem to me to be a right appurtenant to Lot 15. It does not seem to be necessary for the enjoyment of the right in favour of Lot 15 that the owner of that lot be permitted to use the easement in order to gain access to lots beyond Lot 15 (including that of Lot 16), such that once the ownership of those lots passed into different hands there would be no reason to suppose that the owner of Lot 15 would continue to have a right to use the easement over Lot 12 to travel across Lot 15 for the purpose of access to other lots…
7. In Westfield Management Limited v Perpetual Trustee Company Limited (2007) 233 CLR 528, Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ said, at [24]: It should be added that if the construction of the Instrument urged by Westfield were accepted, and the grant extended to permit use of Glasshouse to pass across Skygarden to other parcels of land, then a further question would arise. This would be whether a grant in those terms would be appurtenant to Skygarden in the sense of the authorities, or be but a personal advantage accruing to Westfield as the present owner of Skygarden. It is unnecessary to determine such a question. This is because the Easement, upon the proper construction of the terms of the grant, does not extend to user of the type for which Westfield contends.
8. HWR submits that it is clear from those comments that the High Court entertained doubts about whether such an easement could be said to be appurtenant.
9. Given those statements of principle, I consider that there is a very real difficulty in terms of appurtenance absent the consolidation of the lots which make up the Benefitted Land.
10. Moreover, concerns relating to premature declarations in the context of s 88K have been given further weight by the recent Court of Appeal decision in Gordon. In that case, the primary judge made a declaration in circumstances where the precise terms of the easement were yet to be agreed by the parties. On appeal, Sackville AJA, with whom McColl and White JJA agreed, held at [122]: …I do not think that the primary Judge was in a position to make a declaration that finally resolved the issue of whether the easement of carriageway he proposed to impose was reasonably necessary for the effective use or development of Lots 40 and 7. It was necessary for further findings of fact to be made and for the terms of the proposed easement to be formulated with greater precision before a final determination could be made as to whether s 88K(1) of the Conveyancing Act was satisfied.
11. The present case raises somewhat different concerns, as it was not argued by HWR that the Easements suffered from a lack of specificity but rather that they assumed a state of affairs, the consolidation of the lots, which was still hypothetical at the time of the hearing.
12. In the circumstances, I consider that the issues raised by HWR in respect of appurtenance are matters of concern. However, had I otherwise been minded to order the Easements, I do not consider this difficulty would have been fatal to the application. I note Mr Galasso's submission that the orders were self-executing in any event, but in the interest of caution, had I been satisfied that the Easements were reasonably necessary, the approach I would have adopted would have been to publish my findings to that effect but decline to make final orders or any declarations until such time as the Benefitted Land was consolidated into one lot.

Conclusion

1. For all of the reasons above, I have determined that the application should be dismissed. I consider that in the circumstances of the case it is appropriate that Acorp pay HWR's costs.
2. Given my findings in relation to the carriageway easement, I have assumed that there remains little utility in the relief sought regarding the drainage easement. To the extent that my assumption is incorrect, I shall delay the making of final orders for 14 days and give leave to the parties to approach the Court to make any further submissions in relation to the drainage easement. Such submissions may, by agreement between the parties, be provided in writing. Absent such agreement, leave is granted to approach the Court for a date for the receipt of further oral submissions.

Directions

1. The Court directs that: 1. Any further submissions in relation to the relief sought in regard to the drainage easement be provided on or before 24 May 2018. 2. In the event that no further submissions are received within 14 days, the Court will make final orders dismissing the application and ordering that the applicant pay the respondent's costs.

Annexure A - [2018] NSWLEC 68 (482 KB, pdf) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 May 2018