Arinson Pty Limited v City of Canada Bay Council

Land and Environment Court (NSW)|2014-04-10|Before: Biscoe J

Judgment TABLE OF CONTENTS Paragraphs INTRODUCTION 1-12 BACKGROUND 13-34 TRAFFIC ENGINEERS AND PLANNERS 35-39 SECTION 88K CONVEYANCING ACT 1919 40-42 REASONABLY NECESSARY: S 88K(1) 43-61 PUBLIC INTEREST: S 88K(2)(a) 62-64 CAN BE ADEQUATELY COMPENSATED: S 88K(2)(b) 65 ALL REASONABLE ATTEMPTS: S 88K(2)(c) 66-67 DISCRETION: S 88K(1) 68-71 NO COMPENSATION (SPECIAL CIRCUMSTANCES): S 88K(4)? 72-73 THE APPROPRIATE COMPENSATION: S 88K(4) 74-83 FORM OF REGISTRABLE INSTRUMENT: S 86K(3) 84 COSTS: S 88K(5) 85 ORDERS 86

INTRODUCTION 1This is a claim for orders pursuant to s 88K of the Conveyancing Act 1919 imposing easements of right of way and easements for services and drainage over the defendant's land and benefiting the three plaintiffs' adjoining lands. The proceeding was commenced in the Supreme Court, which recently transferred it to this Court pursuant to s 149B(1) of the Civil Procedure Act 2005 because of the complex town planning issues that it raised and the technical nature of the related expert evidence from valuers, traffic consultants and town planners: Arinson Pty Ltd v City of Canada Bay Council, unreported SC of NSW, Pembroke J, 21 February 2014. 2The defendant is City of Canada Bay Council (the Council). The plaintiffs are Arinson Pty Ltd, Omaya Investments Pty Ltd and Omaya Holding Pty Ltd. Each plaintiff has the same sole director and guiding mind, Mr Antoine Bechara. He is an experienced property developer in the Strathfield locale and a builder. The plaintiffs are closely related family companies. The sole shareholder of Omaya Investments Pty Ltd and Omaya Holding Pty Ltd is Mr Bechara's wife. The sole shareholder of Arinson Pty Ltd is Omaya Holding Pty Ltd. 3The subject land is in a 5.5 hectare area known as "the Strathfield Triangle" bound by Leicester Avenue, Parramatta Road and the main northern railway line. The Council land proposed to be burdened by the easements is known as 1A Chapman Street, Strathfield, being Lot 1 in Deposited Plan 1059024 (1A Chapman). It comprised most of Chapman Street before 1A Chapman was closed as a public road in 2003. 1A Chapman is roughly rectangular with a vehicular access handle to Cooper Street to its south. 1A Chapman is bound on its east by the plaintiffs' properties proposed to be benefited by the easements: 11, 13, 15, 17, 19, and 21 Chapman Street. 11-19 Chapman Street are landlocked. 21 Chapman Street was added to the plaintiffs' claim by an amendment granted during closing submissions. 1A Chapman is bound on its west by other properties owned by the plaintiffs: 2, 4, 6, 8, 10, and 12 Chapman Street. On its north it is bound by Bakers Lane, which is 6 metres wide and about 58 metres long running east-west from 21 Chapman Street to Cooper Street. On its south-east adjacent to its access handle to Cooper Street, it is bound by the remnant of Chapman Street. The improvements visible on 1A Chapman comprise an asphalt roadway, remnants of concrete gutters, timber poles supporting electricity and other wires on the eastern side, and cyclone wire perimeter fencing. Services exist beneath the surface. 4The proposed right of way over 1A Chapman is 6.65 metres wide, limited in height, and runs between Chapman Street and Bakers Lane along the eastern boundary of 1A Chapman. The plaintiffs' intention is that it would permit 11-21 Chapman Street to have access to the remnant of Chapman Street to the south and 19 Chapman Street to also have access to Bakers Lane. 21 Chapman Street already has access to Bakers Lane. The proposed right of way has a splay corner at Bakers Lane to provide access for medium sized rigid service vehicles. The proposed easement for services and drainage is 1.5 metres wide within the right of way and unlimited in depth. An unusual proposed term of the easements is that the grantor (the Council) may relocate them to another area on the lot burdened (1A Chapman) subject to the prior written consent of the grantee (the plaintiffs), which may not be unreasonably withheld or delayed, at the grantor's cost. 5Annexed hereto and marked as follows are copies of the following: "A" An aerial photograph on which is marked the subject land and environs. "B" A plan showing the subject land and environs. "C" A plan attached to the Second Further Amended Statement of Claim showing the proposed easements and proposed to be part of the registered instrument. It shows Lots 9-12 and 14 in DP 2409, which are 11, 13, 15, 17 and 21 Chapman Street; and Lot 13 in DP 589132, which is 19 Chapman Street. It would have to be amended to provide for easements in favour of 21 Chapman Street since that was informally added to the plaintiffs' claim in closing submissions.

6Details of the plaintiffs' properties on the eastern side of 1A Chapman to be benefited by the proposed easements are as follows: Chapman Street Area m2 Lot / DP Purchased Owner 11 436.3 9/2409 2003 Arinson Pty Ltd 13 436.3 10/2409 2001 Arinson Pty Ltd 15 436.3 11/2409 2004 Omaya Investments Pty Ltd 17 442.6 12/2409 2003 Omaya Holding Pty Ltd 19 328.8 13/589132 2003 Omaya Holding Pty Ltd 21 14/2409 2001 Arinson Pty Ltd

7Details of the plaintiffs' other properties on the western side of 1A Chapman are as follows: Chapman Street Purchased Owner 2 2001 Arinson Pty Ltd 4 2000 Arinson Pty Ltd 6 2001 Arinson Pty Ltd 8 2001 Arinson Pty Ltd 10 2001 Arinson Pty Ltd 12 2004 Omaya Investments Pty Ltd

8Whilst the plaintiffs' properties to be benefited by the proposed easements remain landlocked, they cannot be put to any effective use or development. If the proposed easements are granted they will cease to be landlocked. The proposed easements go a long way towards restoring the benefit that Chapman Street had afforded them before most of Chapman Street was closed as a public road. 9At the heart of the case are the following circumstances in which the plaintiffs' properties became landlocked, on which the plaintiffs rely to argue that they should have the easements without compensation. Until 2003, Chapman Street was a public road to which the surrounding properties had access. Between 2000 and 2009, the Council granted several development consents to Arinson Pty Ltd for a large multi-storey residential unit development on an amalgamated site comprising 1A Chapman - which constituted most of Chapman Street except for the south-eastern corner - and the plaintiffs' adjacent properties, with vehicular access to Cooper Street. The development consents and the parties contemplated that the Minister would close 1A Chapman under the Roads Act 1993 at the behest of the Council and with the consent of the adjoining land owners, thereby converting it into operational land; and that the Council would sell 1A Chapman into the amalgamated development site. In 2003, at the behest of the Council and with the consent of the adjoining land owners, which Mr Bechara arranged, the Minister closed 1A Chapman. Between 2000 and 2004, the plaintiffs purchased the properties adjoining 1A Chapman in order to develop them on the amalgamated site. The plaintiffs continued to use 1A Chapman until 2011, during which period and beyond Mr Bechara and the Council negotiated for the sale of 1A Chapman to one of the plaintiffs. However, they were unable to agree on a price. In 2011, the Council fenced off 1A Chapman. In consequence of all this, the Council has a valuable asset in 1A Chapman which it wishes to sell but not necessarily to any of the plaintiffs; and the plaintiffs' properties at 11-19 Chapman Street are landlocked and cannot be used or developed at all unless they obtain vehicular access to a public road. 10The main basis of the Council's defence is that the plaintiffs' properties to be benefited by the proposed easements should reasonably be developed as (or as part of) an amalgamated development site as contemplated by the relevant planning controls, whereby they should all access Cooper Street via Bakers Lane over No 21 through cross-easements benefiting each other, rather than over 1A Chapman. Alternatively, the Council contends that if a right of way is to be granted over 1A Chapman, it should be more limited than that which is proposed. 11The plaintiffs contend that the proposed easements over Council land should be ordered without compensation to the Council because of the "special circumstances" outlined above at [9]. If compensation is to be awarded, there is an issue as to its quantum. 12In my opinion, for the reasons set out below, the easements sought by the plaintiffs should be granted subject to some amendments to their provisions, with appropriate compensation.

BACKGROUND 13In 2000, the Council resolved to sell its properties in Chapman Street for $1,200 per square metre 14In 2000, the Council granted Arinson Pty Limited development consent for demolition of existing buildings, consolidation of properties and erection of 146 units within three residential flat buildings over two basement levels of car parking for 163 vehicles on an amalgamated site comprising 1A Chapman and the adjoining properties on its eastern and western sides. The 2000 consent had a deferred commencement until 1A Chapman was closed and sold by the Council into a development site. Mr Bechara facilitated the Council's endeavour to have the Minister close Chapman Street under the Roads Act by arranging to provide written consents to the closure from the owners of the adjacent properties. 15As detailed above at [6]-[7], between 2000 and 2004 Mr Bechara caused the plaintiffs to purchase the adjoining properties on the eastern and western sides of 1A Chapman: 11, 13, 15, 17, 19, and 21 on its eastern side; and 2, 4, 6, 8, 10, and 12 on its western side. 16In 2002, a second development consent was granted to Arinson Pty Ltd for the construction of 170 units on the amalgamated site. It was subject to the same deferred commencement condition and required surrender of the 2000 consent. 17In 2003, the Council granted a further development consent to Arinson Pty Ltd for the construction of 158 units on the amalgamated site. It too was subject to the deferred commencement and required surrender of the earlier consents. One of the conditions of the 2003 consent was that Arinson Pty Ltd pay Council the fees incurred in closing Chapman Street, which it did. 18In October 2003, the Minister, by a gazetted proclamation under the Roads Act, closed 1A Chapman as a public road and extinguished all public rights of passage. Thus, the plaintiffs' properties at 11-19 Chapman Street became landlocked and 1A Chapman became operational land that the Council had power to dispose of. Money received by the Council from its sale can only be used to acquire land for public roads or for carrying out road work on public roads: s 43(4) Roads Act. 19In November 2003, the Council offered to sell 1A Chapman to Arinson Pty Ltd for $2,700,000 representing a rate of $1,612 per square metre. The offer was made in a context where during 2003 Arinson Pty Ltd had maintained a position (denied by the Council) that completion of the sale of 17 and 19 Chapman Street by the Council to Arinson Pty Ltd was contingent on the simultaneous completion of the sale of 1A Chapman by the Council to Arinson Pty Ltd. The Council terminated the contract for sale of 17 and 19 Chapman Street in December 2003 when Arinson Pty Ltd went into provisional liquidation and failed to comply with a notice to complete. Omaya Holding Pty Ltd stepped in to complete the purchase in place of Arinson Pty Ltd; but none of the plaintiffs took up the alleged entitlement to have completion occur simultaneously with completion of the sale of 1A Chapman. 20There is no evidence that the plaintiffs adopted any position with respect to the sale of 1A Chapman between December 2003 and February 2006, when Mr Bechara sought and obtained consent from the liquidator of Arinson Pty Ltd for Omaya Holding Pty Ltd to negotiate completion of the sale of 1A Chapman with the Council. At this time Mr Bechara insisted on a sale price of $1,200 per square metre but was prepared to pay $1,350 per square metre for a six months settlement and $1,500 per square metre for a 12 months settlement. 21In March 2006, in response to an approach made to it by Omaya Holding Pty Ltd, the Council offered to sell 1A Chapman to Omaya Holding Pty Ltd for $1,800 per square metre with a 12 months settlement. This led to negotiations between Mr Bechara and the Council where a position was reached in June 2006 that if there was no agreement on a selling price, the price would be determined by an independent valuer. 22In 2007, this Court declared the 2003 development consent invalid: F & D Bonaccorso Pty Ltd v City of Canada Bay City Council [2007] NSWLEC 159 per Biscoe J. Consequently, in January 2008, Omaya Holding Pty Ltd / Arinson Pty Ltd made a request to the Council that the 2003 development application be determined. 23In June 2009, the Council granted development consent, with a lapsing date of 2 June 2014, for a 4, 5 and 10 storey residential development containing 158 units and three levels of basement carparking containing 212 car spaces over an amalgamated site comprising 1A Chapman and the plaintiffs' adjoining properties. One of the approved plans shows vehicular access though the south-western handle of 1A Chapman leading to Cooper Street. This was amended by a condition of the consent that the vehicular access be redesigned to create a new vehicular access arrangement directly off Cooper Street across the proposed landscaping area in the south-western corner of the site. The new design was required to be submitted to Council for approval prior to the issue of a construction certificate. No such accessway redesign has occurred and the lapsing date of 14 June 2014 is now looming. 24In November 2009, the plaintiffs' solicitors wrote to the Council stating that while negotiations in the past were concerned with a monetary value per square metre for the land, the plaintiffs now proposed a transfer of 1A Chapman in exchange for transfer to the Council of various properties owned by the plaintiffs. The Council soon replied by letter stating that it would not enter into negotiations for the sale of 1A Chapman until the Strathfield Triangle Development Control Plan had been adopted. The plaintiffs' solicitors again wrote to the Council on 21 September 2010, this time referring to the 22 March 2006 offer, and proposing to enter into further negotiations for the sale of 1A Chapman. 25Notwithstanding the legal closure of 1A Chapman in 2003, the plaintiffs continued to use it until 2011 when the Council fenced it off. During this period and subsequently Mr Bechara and the Council negotiated unsuccessfully for the sale of 1A Chapman. He wished to buy at a price based on the $1,200 per square metre referred to in the Council's 2000 resolution; the Council wished to sell at a higher price which may have been the current market value. 26In August 2011, the Council wrote to Mr Bechara recounting that Chapman Street was legally closed in 2003; stating that he could access his properties from Bakers Lane and Cooper Street but the Council intended to close Bakers Lane and convert it into part of a new park, and that the Council would erect fences and other barriers necessary to close 1A Chapman by the end of the month. Correspondence ensued in which Mr Bechara objected to this course, contending that 11, 13, 15, 17, 19, and 21 Chapman Street would become landlocked if access over Chapman Street were denied. 27In September 2011, the plaintiffs' solicitor wrote to the Council's solicitors contending that the plaintiffs were entitled to easements of right of way and for services and drainage over Chapman Street. The Council disputed this by letter asserting that such easements would be "contrary to the public interest in light of the current and draft strategic plans document prepared for the Strathfield Triangle" and that "[a]ccess to the eastern side is available via Bakers Lane and an application for this would be dealt with on an urgent basis". 28The Council had received expressions of interest in purchasing 1A Chapman in 2007 from F & D Bonaccorso Pty Ltd, the owner of 5-9 Chapman Street, and in 2011 from J Cummins Pty Ltd, representing the owners of 1 and 3 Chapman Street. In October 2010, the Council's solicitors notified the plaintiffs' solicitors that the Council would not consider selling the site until the draft Strathfield Development Control Plan was adopted, and that any decision to enter into direct negotiations would be made after considering specific probity advice. This was formalised in a Council resolution in June 2011, which stated that any disposal of 1A Chapman should be guided by a probity plan. Probity advice was received by the Council in February 2012 and a probity plan was produced in April 2012, which makes provision for 1A Chapman to be sold by an expression of interest process. In April 2012, the Council resolved that its General Manager complete the probity plan for the sale of 1A Chapman by mid-May 2012, and that the General Manager defer the commencement of the sale process for 1A Chapman until the new planning controls for the Strathfield Triangle was approved. The Council wrote to Omaya Holding Pty Ltd at this time to inform it of this resolution. 29In August 2012, the Council's solicitors wrote to the plaintiffs' solicitors confirming that once the new planning controls for the Strathfield Triangle were approved, the sale of 1A Chapman would occur in accordance with the probity plan prepared for the site. 30In September 2012, the plaintiffs commenced this proceeding in the Supreme Court seeking, initially: (a) the transfer of 1A Chapman for $1,200 per square metre to one of the plaintiffs; (b) an easement "in equity", or alternatively under s 88K of the Conveyancing Act over 1A Chapman; or (c) "other equitable relief" or damages. By a Further Amended Statement of Claim served three days before the proceeding was due to be heard in the Supreme Court in February 2014, these claims were abandoned except for the claim for easements under s 88K. In closing submissions before me, the plaintiffs orally amended their pleading further, including extending the land to be benefited by the proposed easements from 11-19 Chapman Street to 11-21 Chapman Street and deleting the unlimited height provision for the services and drainage easement. Meanwhile in October 2012, the Council's solicitors wrote to the plaintiff's solicitors stating that in light of the current Supreme Court proceedings, the Council was no longer willing to agree to a licence agreement for access over 1A Chapman (the Council had raised that as a temporary possibility in an earlier letter in August 2012). The Council's solicitors wrote that Council had instructed it would however be willing to work with the plaintiffs to provide access to 21 Chapman Street via the end of Bakers Lane, which would enable the plaintiffs to access the remainder of their lots. 31Until his cross-examination, Mr Bechara's sworn evidence had been that it is his intention to develop his companies' properties in accordance with the development consent. After all, that was why he commenced this proceeding seeking as his primary relief the transfer of 1A Chapman to a plaintiff. However, in cross-examination, Mr Bechara said for the first time that he was no longer interested in purchasing 1A Chapman or in acting on the development consent due to bank financial pressure on Omaya Investments Pty Ltd, whose bank liabilities he and his wife had guaranteed whereby he said he stood to lose his home; and that he had decided that Omaya Investments Pty Ltd would now proceed to sell 17 and 19 Chapman Street. None of this was disclosed in his affidavit evidence sworn as recently as February 2014. He said in cross-examination that he was relying on oral information from his employed accountant as to the bank's attitude; he had not himself communicated with the bank; nor had he seen any written communications with the bank; nor had he told the plaintiffs' legal representatives about any of this because he had not had time to do so. He denied that this evidence was false and that what he really intended was to wait until the Strathfield Triangle Development Control Plan 2013 commenced in a few months time and then apply for a new development consent under its provisions because they would permit denser development on the amalgamated site. In my assessment, Mr Bechara's evidence in cross-examination is unsatisfactory because it came out of the blue, is inconsistent with his written evidence, is not substantiated by any documentary evidence, and is otherwise uncorroborated. However, I accept his concession in cross-examination that Omaya Investments Pty Ltd, at least, is not in any financial difficulties. I am not prepared to exclude the possibility that one of Mr Bechara's controlled entities might purchase 17 and 19 Chapman Street (assuming they are for sale) and 1A Chapman; and, if the current development consent lapses, might seek to obtain a new consent to take advantage of their denser development provisions.

Planning controls 321A Chapman and the plaintiffs' adjacent properties are currently zoned 10(b) "Enterprise Area" under the Concord Planning Scheme Ordinance (CPSO). That zone permits a wide range of land uses with consent, including residential flat buildings, townhouses and dwelling houses. The subject properties are in the Strathfield Triangle. The Strathfield Triangle Development Control Plan 2002 (2002 DCP) identifies for amalgamation an area which includes 1A Chapman, the plaintiff's adjacent properties, Chapman Street and Bakers Lane. One of its guidelines states that: "Site amalgamations are required where necessary to implement precinct objectives and where it appears unlikely that a comprehensive DA could be lodged without amalgamation". Currently, the Strathfield Triangle is the subject of a Council planning proposal to the Director-General of the Department of Planning and Infrastructure under s 55 of the Environmental Planning and Assessment Act 1979 (EPA Act). A planning proposal is a condition precedent to the Minister making or amending a local environmental plan. The planning proposal proposes to rezone the subject properties, along with the great majority of land in the Strathfield Triangle, R4 High Density Residential under the Canada Bay Local Environmental Plan 2008 and repeal the CPSO as it applies to the Strathfield Triangle precinct. The uses permitted with consent in the R4 zone include residential flat buildings, multi dwelling houses and shop top housing. Dwelling houses will be prohibited in that zone. Residential flat buildings are the predominant envisaged development form under the desired future character for the Strathfield Triangle under both the current and proposed planning controls. Gazettal of the planning proposal is expected to occur later this year. 33A new Strathfield Triangle Development Control Plan (2013 DCP) was exhibited from October 2010 to February 2011 and adopted in April 2013. It is to commence on gazettal of the planning proposal for the Strathfield Triangle. A letter of 13 February 2014 from the delegate of the Minister to the Council stated that the planning proposal is to be completed by 31 July 2014, that an opinion is expected soon from Parliamentary Counsel, and that the plan will be made as soon as possible once the opinion is issued. The 2013 DCP provides for significantly higher multi-storey residential and retail development, including in the subject area, than its predecessor. Plans therein show Bakers Lane converted into the southern edge of a park; the part of Chapman Street that is still a public road (ie on the south-east) converted into a park; 1A Chapman and the plaintiffs' properties comprising most of an amalgamated development site; a new lane 7 metres wide running down the eastern side of the plaintiffs' properties located to the east of 1A Chapman and connecting with Leicester Avenue to the east; and access points to the amalgamated development site from its south west in Cooper Street and from the new lane to its east. Under these plans, if implemented, the plaintiffs' properties at 11-19 Chapman Street would cease to be landlocked. The 2013 DCP includes the following amalgamation provisions: 3.7 Site Amalgamation Aims A1 To encourage site consolidation of allotments for development in order to promote the efficient use of land and to avoid the creation of isolated sites; A2 To encourage the development of existing isolated sites in a manner that responds to the site's context and characteristics and that maintains a satisfactory level of amenity; and A3 To ensure adequate residential amenities are achieved. Controls C1 The redevelopment of allotments shown in Figure 8 must wherever possible conform to the amalgamation pattern illustrated; C2 Where a development may result in the creation of an isolated site, the applicant is required to demonstrate that negotiations between the owners of the properties commenced at an early state [sic] that was prior to the lodgement of the development application. Where no satisfactory result is achieved, the development application must include negotiations with the owners of the properties. These details must include offers to the owner of the isolated property. Such offers are to be reasonable and are to be based on at least one recent independent valuation and include other reasonable expenses likely to be incurred by the owner of the isolated property in the sale of the property. C3 Where a development may result in the creation of an isolated site the applicant must demonstrate that orderly and economic use and development of the separation sites can be achieved that is consistent with the planning controls. Such demonstration is achieved by the applicant providing an envelope for that site, indicating height, setbacks, resultant site coverage (building and basement), sufficient to understand the relationship between the development and that site, the likely impacts the development will have on each other, such as solar access, visual and acoustic privacy, impacts for residential development and traffic impacts if that site is on a main road. 34Amalgamation for development of 11-21 Chapman Street is an alternative potential amalgamation pattern to that shown in the current and proposed planning controls.

TRAFFIC ENGINEERS AND PLANNERS 35Traffic engineers who gave evidence were Mr Geoffrey Morris for the Council and Mr Craig McLaren for the plaintiffs. I accept the following evidence: (a)Their agreement that a right of way easement over 1A Chapman would be required in favour of 11-19 Chapman Street if developed as individual residential lots, but 21 has direct access from Bakers Lane. (b)Although they did not agree with respect to the need for a separate footpath along the 6 metre wide Bakers Lane and Mr Morris thought it would be suited to a shared zone treatment, I consider that a separate footpath is highly desirable from a pedestrian safety perspective based on Mr McLaren's following evidence, which I accept. Bakers Lane, which is 6 metres wide and about 58 metres long, is a service lane that serves the rear of properties facing Hilts Road and was never intended to be used as a formalised pedestrian access corridor. An Australian Standard requires the vehicular carriageway to be a minimum of 5.5 metres wide (excluding pedestrian access). With the addition of a minimum one metre wide footpath, the overall minimum width of a right of way is required to be 6.5 metres. If the proposed right of way connects with Bakers Lane, a widened splay generally of the dimension proffered will be necessary. A safety conscious planning / best practice approach as authorised in Austroads "Guide to Road Safety" Part 6, requires the provision of a separate footpath for vulnerable users particularly children (walking and on bicycles), and the elderly (including wheelchair and motion scooters), who will need to traverse along Bakers Lane and conflict with travelling vehicles and reversing vehicles from properties fronting Bakers Lane. 36Planning experts who gave evidence were Mr Bernard Gallagher for the Council and Mr Robert Chambers for the plaintiffs. The planners agreed and I accept that: (a)If 21 Chapman Street were to be amalgamated with 11-19, the amalgamated site would have a frontage of 6 metres to the eastern end of Bakers Lane. (b)Under the current planning controls under the CPSO, Bakers Lane is intended to be incorporated into an amalgamated development site which includes the subject properties. Under the Council's pending planning proposal, Bakers Lane is intended to be incorporated into a new park as the park's southern edge. 37Under the draft planning controls, the required minimum size for multi-welling housing (townhouses) is 1,500 square metres. This would require amalgamation of at least four of the lots at 11-21 Chapman Street. Mr Gallagher therefore opined that access to each individual lot is unnecessary; and that the alternative of development on individual lots was irrational given the high yield on an amalgamated development. However, I note that this assumes internal roadworks within the hypothesised amalgamation site, which would sacrifice some of its development potential. 38Mr Gallagher suggested that alternative smaller access could be provided to an amalgamated 11-19 or 11-21 Chapman Street via a small corner easement on the north-eastern corner or the south-eastern corner of 1A Chapman. Mr Chambers did not favour the north-eastern corner suggestion because under the Council's planning proposal Bakers Lane was to become part of a park and, in any case, be considered it was highly likely that the Council would not approve a residential flat building on 11-21 Chapman Street with all access via Bakers Lane since, among other things, it was of insufficient width to provide for two way vehicular traffic and pedestrian traffic as detailed by Mr McLaren, and would not be considered safe given that it would be around 58 metres long and 6 metres wide. As to the south-eastern corner of 1A Chapman, he said that it would be most unusual for redevelopment of 11-19 to be approved with reliance for all access solely on such a small corner easement. 39I accept Mr Chamber's criticisms of the use of Bakers Lane as an access. The other suggestion of a small corner access in the south-eastern corner leading to Chapman Street is a possibility; however I accept, based on his evidence, that it is improbable that development consent would be given for a substantial residential flat building on an amalgamated 11-19 Chapman Street if that were to be the sole access.

SECTION 88K CONVEYANCING ACT 1919 40Section 88K of the 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. 41Section 88K(3) refers to s 88(1)(a) - (d), which provides: 88 Requirements for easements and restrictions on use of land (1) Except to the extent that this Division otherwise provides, an easement expressed to be created by an instrument coming into operation after the commencement of the Conveyancing (Amendment) Act 1930, and a restriction arising under covenant or otherwise as to the user of any land the benefit of which is intended to be annexed to other land, contained in an instrument coming into operation after such commencement, shall not be enforceable against a person interested in the land claimed to be subject to the easement or restriction, and not being a party to its creation unless the instrument clearly indicates: (a) the land to which the benefit of the easement or restriction is appurtenant, (b) the land which is subject to the burden of the easement or restriction: Provided that it shall not be necessary to indicate the sites of easements intended to be created in respect of existing tunnels, pipes, conduits, wires, or other similar objects which are underground or which are within or beneath an existing building otherwise than by indicating on a plan of the land traversed by the easement the approximate position of such easement, (c) the persons (if any) having the right to release, vary, or modify the restriction, other than the persons having, in the absence of agreement to the contrary, the right by law to release, vary, or modify the restriction, and (d) the persons (if any) whose consent to a release, variation, or modification of the easement or restriction is stipulated for. 42For an easement to be imposed, s 88K(1) and (2) require affirmative answers to five question, of which the first four are preconditions to the exercise of jurisdiction and the fifth concerns the Court's discretion: (1)Is the proposed easement "reasonably necessary for the effective use or development" of the applicant's land: s 88K(1)? (2)Is the Court satisfied that the use of the applicant's land "will not be inconsistent with the public interest": s 88K(2)(a)? (3)Is the Court satisfied that the owner of the servient tenement can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement: s 88K(2)(b)? (4)Is the Court satisfied that the applicant has made all reasonable attempts without success to obtain the easement or an easement having the same effect: s 88K(2)(c)? (5)If the above four preconditions are established, should the Court exercise its discretion to impose an easement: s 88K(1)?

REASONABLY NECESSARY: S 88K(1) 43The first precondition for the making of an order imposing an easement is that it is "reasonably necessary for the effective use or development" of the land to be benefited by it: s 88K(1). 44In 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504, the plaintiff sought an easement under s 88K for the tail of a crane (to be used in the construction of a multi-storey building) to pass through the air space of land being common property of a strata title building owned by the defendants. It was proposed to erect the crane on a public street but consent to do so from the relevant consent authority was not forthcoming without owner's consent from the defendants. Hodgson CJ in Eq granted the easement on terms including a term that the defendants, on the written request of the plaintiff or its solicitors, forthwith given their written consent to the making of a development application under the EPA Act to erect the crane in the public street referred to in the easement and its use within the airspace of the defendants' land in the manner contemplated by the easement: at 522. His Honour ordered that the plaintiff not commence to erect the crane in the public street referred to in the easement until development consent was achieved for such erection: at 522. His Honour said at 508-509: What does "reasonably necessary" mean? 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. ...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 it so, it would in my opinion certainly need to be at least reasonable. 45His Honour held at 511-512: I turn to the question of illegality. If use of a proposed easement would be absolutely illegal, or (probably) if it were shown that there was no chance of obtaining a consent necessary to make it other than illegal, then this would in my opinion prevent the Court from finding that the easement was reasonably necessary. However, I do not think that the proposed use in this case is absolutely illegal, nor do I think that there is no chance of obtaining consent. 46In Khattar v Wiese [2005] NSWSC 1014, (2005) 12 BPR 23,235 at [32] Brereton J held: ...the purpose of s.88K would be defeated if, it being equally efficacious to obtain an easement over either of two lots, it could then be said that it was not necessary for it to be obtained over one or the other of them. In such a situation, the applicant may, within reason, select that lot over which it desires to acquire an easement. This may require the court to undertake some evaluation of the alternatives, in order to be satisfied that the applicant's proposal is reasonable as between them, but this need not involve a precise assessment of the respective advantages and disadvantages of each course, nor necessarily acceptance that the applicant's preferred course is objectively superior to the alternatives, so long as it is reasonable. In this, the court may be guided by the inference that an applicant will ordinarily pursue that course which offers the greatest practical and economic advantages for the development, and incur the least liability to pay compensation: a developer's economic interests will powerfully influence it to select the most reasonable course. 47In Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd [2010] NSWLEC 2, (2010) 171 LGERA 286, a council granted development consent to Rainbowforce for a high density residential development subject to a condition that it was not to operate until Rainbowforce satisfied the council that a right of carriageway had been created over adjoining land owned by the respondents. Pursuant to s 40 of the Land and Environment Court Act 1979 (under which the Land and Environment Court may exercise the jurisdiction of the Supreme Court under s 88K of the Conveyancing Act), Preston CJ of LEC granted such an easement of carriageway. His Honour at [68] - [83] by reference to the authorities identified the following principles concerning the s 88K(1) precondition that the easement sought must be reasonably necessary for the effective use or development of the land which will have the benefit of it: (1)A finding that this pre-condition is met is to be determined objectively and involves the making of a value judgment. (2)The requirement in s 88K(1) is to be satisfied with respect to the particular easement that the Court is considering ordering to be imposed. Section 88K(3) requires the Court to specify in the order the nature and terms of the easement. The proposed easement will accord with the easement which the applicant has made all reasonable attempts to obtain, or have the same effect as that easement, so as to satisfy s 88K(2)(c). The Court's power to impose an easement under s 88K(1) would extend to amending the proposed easement of the applicant, including so as to ensure the easement which the Court orders to be imposed satisfies the requirement in s 88K(1). (3)The "other land" referred to in s 88K(1) is the land of the applicant for the order. The easement may be reasonably necessary for either the effective use or the effective development or both of the applicant's land. The Court's power to impose an easement is enlivened not only if the easement is reasonably necessary for a particular development or use proposed by the applicant but also if the easement is reasonably necessary for any development or use of the applicant's land, which is within the law. (4)If use or development of land for some planning purpose, such as residential, commercial or industrial purposes, cannot be achieved without the creation and use of an easement for, say, access to the land or services to the land or for drainage of the land, the easement is reasonably necessary for such use or development to be effective. (5)The easement is to be reasonably necessary for the effective use or development of the land that will have the benefit of the easement; it is not sufficient for the easement to be reasonably necessary for the enjoyment of the land by any of the persons who, for the time being, are the proprietors. Accordingly, evidence as to the particular problems that one of the existing proprietors may have, or the hardship suffered as a result of those problems, would not be relevant. (6)The requirement that the easement be "reasonably necessary" does not mean that there must be an absolute necessity for the easement. An easement may be able to be imposed although another means of right of way may exist or possibly even when the land could be effectively used or developed without the easement. There needs to be something more than mere desirability or preferability over the alternative means available. In general terms, the greater the burden which the easement would impose the stronger the case needed to justify a finding of reasonable necessity. (7)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 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. (8)The requirement of reasonable necessity does not demand that there be no alternative land over which an easement could be equally efficaciously imposed. It cannot be the intention of the s 88K that if an easement would be equally efficacious over two pieces of land it cannot be granted over either because it cannot be said that it is necessary for it to be granted over that piece of land as opposed to the other. (9)The requirement of reasonable necessity is to be decided in light of the present circumstances at the time of the hearing of the application for an order. Hence, it would not matter for the purposes of deciding whether the easement is reasonably necessary that the present circumstances were due to the applicant for the order taking a gamble. However, if such reasonable necessity for an easement as presently exists arose from previous unreasonable conduct from the applicant, that could be a discretionary factor counting against the granting of relief. (10)The requirement of reasonable necessity can be satisfied notwithstanding that some future action may be required, in addition to obtaining the easement, for the effective use or development of land, such as obtaining some statutory consent. For example, if an easement in the form of a right of carriageway is created, it may be necessary to obtain development consent under the EPA Act to construct the road in the right of carriageway. The requirement in s 88K(1) does not require that all other obstacles to the proposed use or development of the land that will have the benefit of the easement must have been overcome before the Court has power to grant an easement. Only if use of the proposed easement would be absolutely illegal and there was no chance of obtaining a consent necessary to make it other than illegal, would the Court be precluded from finding that the easement was reasonably necessary. 48In Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445, (2012) 16 BPR 31,257 the Court of Appeal (Bathurst CJ, Beazley & Meagher JJA) qualified Rainbowforce proposition (4) above by stating at [155]: 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... 49Otherwise, the Court of Appeal in Moorebank confirmed the following principles in relation to the requirement of reasonable necessity in s 88K(1): (1)The requirement of reasonable necessity is to be decided in light of the circumstances that exist at the time of the hearing: at [96]. (2)"Reasonably necessary" for the effective use or development of the applicant's land does not mean absolute necessity but means something more than mere desirability or preferability over the alternative means available: at [154]. (3)In a case where the easement is said to be necessary for the commercial development of the land, it is sufficient 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: at [155]. (4)That is not to say an easement will always be granted in these circumstances. The concept of reasonable necessity requires consideration of the effect of the grant of the easement on the servient tenement. Further, the greater the burden on the servient tenement, the stronger the case needed to justify a finding of reasonably necessity: at [156]. If the effect of the imposition of an easement was to effectively preclude a reasonably available development or use of the servient tenement, then it would require a strong case of reasonable necessity before the easement was imposed: at [157]. It is also necessary to consider the alternative means (such as alternative access) by which use or development of the land can be achieved: at [158]. Ultimately, the question whether the easement is reasonably necessary for the effective use or development of the applicant's land will be determined by an evaluation of the above factors not in isolation but in conjunction with each other: at [159]. (5)For the easement to be "reasonably necessary" for that use and development, 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 raise significant detriment to the servient tenement: at [163]. (6)The importance of a development control plan affecting matters such as access for a development cannot be underestimated. It is a focal point or fundamental element to be taken into account in the decision whether or not to grant development consent: at [165] citing the well known decision in Zhang v Canterbury City Council [2001] NSWCA 167, (2001) 51 NSWLR 589 at [75]-[77] per Spigelman CJ. 50In City of Canterbury v Saad [2013] NSWCA 251, Mr Saad was the owner of vacant undeveloped residential zoned land, which was landlocked by a park owned by the City of Canterbury (the Council) and by neighbouring houses. The park was classified as community land. The park was used by the public for unstructured and informal passive and active recreation. The Council's power to consent to development of Mr Saad's land was conditional upon the Council being satisfied that there was adequate vehicular access. The primary judge made a s 88K order granting a right of way easement over the park. In determining under s 88K(1) whether the easement was reasonably necessary, the primary judge had regard to the effect it would have on the park land and found that it would have minimal adverse impact: at [26]. 51In dismissing the Council's appeal, the Court of Appeal (Beazley P, Meagher and Leeming JJA agreeing) upheld that finding notwithstanding that pedestrian members of the public would have to move when a motor vehicle was driven along the driveway proposed to be built over the easement. In upholding the primary judge's decision under s 88K(2) that use of the dominant tenement would not be inconsistent with the public interest, the Court of Appeal observed that the land was zoned residential and that an owner is entitled to use land in accordance with its zoning provided development consent is obtained, which in that case required satisfactory access arrangements to be made because the land was landlocked: at [56]. An easement that permitted vehicular access to a residence was consistent with the public interest in the use or development of the land for its designated purpose: at [58]. On the issue of discretion under s 88k(1), it was held that the court is not concerned with whether an applicant for an easement took a gamble in acquiring the property: at [68] citing Rainbowforce at [82]). The primary judge determined that Mr Saad's knowledge that the land was landlocked when he purchased it was not a factor that was adverse to the grant of the easement. The Court of Appeal held that that view was plainly open to the primary judge: at [70]. The Court of Appeal observed that the exercise of a judicial discretion requires the court to have regard to all relevant circumstances. It noted that in an earlier case the Court had regard to the applicant's knowledge of limited vehicular access to the property as a relevant consideration: at [72]. Mr Saad had attempted to find alternative means of access. The Council had zoned the land residential knowing it was landlocked. The local ordinance required access to be provided as part of any residential, development. The easement over the Council's land was the only feasible way to gain access. The Council must have foreseen the possibility of an application as made for an easement: at [72]. 52It 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.

Premature? 53The Council makes the threshold submission that the proposed easements are not reasonably necessary for the effective development for the plaintiffs' properties because the application is "premature" so long as the possibility of their development in accordance with the current development consent remains; and that the Court should not act on Mr Bechara's evidence in cross-examination that he does not propose to use the development consent and now proposes to sell at least 17 and 19 Chapman Street. The Council's proposition is that a s 88K application is premature until 1A Chapman is sold - to anyone. 54There is no escaping that the second part, at least, of this submission tests the principle that a finding that this precondition is met is determined objectively. If it is relevant, then it is possible that a Bechara controlled entity will buy 1A Chapman and (assuming they are for sale) 17 and 19 Chapman Street and proceed with an amalgamated development as contemplated by the existing development consent or similar under a new development consent, as discussed above at [31]. However, I do not think that the Council's wait and see approach is justified in terms of s 88K(1). For more than a decade 1A Chapman has been closed as a public street, the plaintiffs' properties have consequently been landlocked, and the sale into an amalgamated development site as contemplated by the development consent has not occurred (due to inability to agree a price). It is not known when a sale to anyone might occur. It would be open to the Council to postpone a sale or even to change its mind and decide not to sell. On a wait and see approach, if the purchaser is a third party, then the third party and not the Council would be the target of a s 88K proceeding and visited with the prospect of the blight of an easement over the land. A decision whether to grant an easement over 1A Chapman in the ownership of a third party might be different to a decision whether to do so whilst it is owned by the Council. That is because of the circumstances discussed earlier in which 1A Chapman was closed, the Council came to own it as operational land that it could sell, and the plaintiffs' properties came to be landlocked. Those circumstances tend to weigh in favour of the grant of easements whilst the Council is the owner but may be of no or less significance once it is owned by a third party. A wait and see approach also creates uncertainty in the market as to whether a third party purchaser might thereafter end up with land subject to the blight of a s 88K easement. If, as the Council hypothesises, as a possibility, a Bechara company were to buy 1A Chapman, the Council would get its money in two tranches: compensation under s 88K and then on sale of 1A Chapman at a reduced price because of the easements. Therefore, the Council will be no worse off if the easements are granted with compensation. In the circumstances, I do not think that the application is premature such as to bar a finding of reasonable necessity.

Other considerations 55The Council submits that the proposed easements to provide access and services individually to each of 11-21 Chapman Street are not reasonably necessary for the effective use or development of the plaintiffs' properties within the meaning of s 88K(1) for the following reasons: (a)They could be developed as part of an amalgamated site without the need for a right of way over 1A Chapman. According to the Council's planner, Mr Gallagher, an amalgamated block could be accessed via Bakers Lane. Although the plaintiffs' traffic engineer, Mr McLaren, considered that the 6 metre width of Bakers Lane is insufficient for access purposes given that 6.5 metres is needed in order to accommodate a separate footpath, he said that the requirement for a separate footpath is "best practice". Even if a separate footpath were required, it could be accommodated in ways that did not involve an easement over the whole of 1A Chapman. One way (as Mr McLaren accepted) is to widen Bakers lane by 0.5 metres to the south. It is said that none of this undermines the proposal under the draft planning controls for a park that includes Bakers Lane, for the park absent Bakers Lane could still be delivered. Alternatively, as Mr Gallagher suggested, access could be obtained to the amalgamated lot by a small triangular easement in the south-eastern corner of 1A Chapman adjacent to 11 Chapman Street. Alternatively, Bakers Lane could be used for vehicular access only and separate pedestrian access provided by a small triangular easement over 1A Chapman adjacent to 11 Chapman Street. (b)The premise of the plaintiffs' proposed easements is that individual access is required to each of 11-19 Chapman Street on the basis that they will be developed as townhouses on separate allotments. This is not an effective development compared with the available alternative of developing 11-21 Chapman Street as an amalgamated parcel. That is because the current and anticipated development controls for the Strathfield Triangle contemplate the use of the plaintiffs' properties for medium to high density residential development by undertaking site amalgamations; and an amalgamated development is economically rational because of the higher yield that can be obtained compared with the alternative. Development of the plaintiffs' properties as separate parcels is inconsistent with this. In any event, the only form of development as separate parcels that Mr Chambers proposed is construction of townhouses. Townhouses would be subject to the minimum lot size of 1,500 square metres under the draft controls. On this basis, according to Mr Gallagher, individual vehicular access to each townhouse is not required; and at least four of the existing lots would need to be amalgamated, so they would not require individual access in any event. Moreover, the planners agreed that residential flat buildings are the likely predominant form of development. Irrespective of whether development as separate parcels is a reasonable use, it is not a substantially preferable use to development as part of an amalgamated site. (c)If individual access is required to each of 11-21 Chapman Street, it does not follow that this must be by means of the plaintiffs' proposed easements. An obvious alternative is for the plaintiffs to procure that those properties grant each other cross-easements to provide access to a public road - either via Bakers Lane, or (with a small corner easement over the south-eastern corner of 1A Chapman) Chapman Street. Even if the easements were to run along the eastern boundary of 1A Chapman, sufficient access could be provided, as the plaintiff's traffic engineer Mr Morris suggested, by a 3 metre wide easement with a 5.5 metre wide passing bay at its centre. (d)The effect of the grant of an easement 6.65 metres wide over 1A Chapman would leave the remaining site with an effective width of only 13.47 metres. That is likely to restrict the development uses to which the Council or any purchaser of 1A Chapman can put 1A Chapman. A very strong case of reasonable necessity is required before the Court would grant an easement having that effect: Moorebank at [157]. 56There can be no effective use or development at all of 11-19 Chapman Street without vehicular access to a public road. Hence, use or development of the plaintiffs' land with the proposed easements, if they are reasonably necessary to obtain vehicular access, is substantially preferable to use or development without the easements. The requirement that the easement be "reasonably" necessary is not one of absolute necessity. 57An owner is ordinarily entitled to utilise land in accordance with its zoning. The reasonable necessity requirement of s 88K(1) does not necessarily require any specified development. It is sufficient that it is reasonably necessary for any lawful use or development, which does not have to be the highest and best use: Rainbowforce at [71]-[72]; provided regard is had to the development's desirability or economic effect: Moorebank at [155]. Development of the plaintiffs' land is economically desirable. The current and future development controls indicate that development consent is only likely to be obtained for an amalgamated development of some sort, and that the development of a single lot in isolation is irrational and therefore unlikely, given the yield compared with an amalgamated development. 58Even for an amalgamated development on 11-21 Chapman Street, the question remains whether, in all the circumstances, access to a public road via an easement over 1A Chapman is reasonably necessary. 59A matter to be considered is whether the plaintiffs proposed easements are reasonable compared with the alternative easements suggested by the Council, which include the following: (a)For an amalgamated site on the plaintiffs' properties proposed to be benefited by the easements: (a)Access from the north via Bakers Lane to 21 Chapman Street without the need for any right of way over 1A Chapman; (b)Alternatively access from the south via a small triangular easement over 1A Chapman opposite 11 Chapman Street providing access to Chapman Street; (c)Alternatively, access from the north via Bakers Lane and 21 Chapman Street, utilising Bakers Lane for vehicular access only with separate pedestrian access to the south to Chapman Street via a small triangular easement over 1A Chapman adjacent to 11 Chapman Street. (b)If individual access is required to each of 11-19 Chapman Street: (a)the plaintiffs should procure that they grant each other cross-easements to provide access to Bakers Lane via No 21, or to Chapman Street with a small corner easement over the south-eastern part of 1A Chapman. (b)Alternatively, an easement running the length of the eastern boundary of 1A Chapman but only three metres wide with a 5.5 metre passing bay at its centre. 60In my opinion, the easements proposed by the plaintiffs are reasonable compared with the alternatives for a number of reasons: (a)Insofar as the Council's suggested alternatives propose access via Bakers Lane, in my view the 6 metre width of Bakers Lane would give rise to unacceptable safety risks because 6.5 metres is needed in order to accommodate a separate footpath: see above at [35]. This might be overcome, as the Council suggests, by widening Bakers Lane by 0.5 metres. But this poses difficulties. If the idea is that the widening is to be effected by a 0.5 metre wide easement along the northern edge of 1A Chapman from 21 Chapman Street, then it would also be necessary for there to be an easement 0.5 metres wide over the northern edge of 12 Chapman Street, which is on the corner of Bakers Lane and Cooper Street. The variant that Bakers Lane be confined to vehicular traffic with pedestrians accessing Chapman Street by a small triangular easement to the south-east poses problems of compliance, policing, and inconvenience. (b)The Council's alternatives (other than the one for a narrower right of way along the eastern boundary of 1A Chapman) assume cross-easements between 11-21 Chapman Street, which would substantially reduce the width and developable area of those relatively small lots. (c)The Council's suggested alternative of a 3 metre wide easement along the eastern boundary of 1A Chapman with a central passing bay eliminates convenient two way traffic and may present risks for pedestrians. (d)As I later conclude, the Council can be adequately compensated for any loss or other disadvantage arising from imposition of the plaintiffs' proposed easements (s 88K(2)(c)) and provision should be made in the orders for the payment of appropriate compensation to the Council (s 88K(4)). (e)Insofar as they are relevant to the first precondition in s 88K(1), the circumstances referred to above at [9] fortify the conclusion that the plaintiffs' proposed easements are reasonable compared with the alternatives. By reason of those circumstances, the plaintiffs' lots which previously had a guarantee of access under the Roads Act have lost that right, whilst the Council has come out of it advantageously with a valuable asset that it can sell and proposes to sell. The plaintiffs' valuer considered that the market value of 1A Chapman is $2.13 million, the respondent's valuer considered that it is $3.68 million. Those circumstances, even assuming an amalgamated development of the plaintiffs' lots, suggest that it would be an unreasonable double burden to force the plaintiffs to create cross-easements over their relatively small lots between 11 and 21 Chapman Street in order to access Bakers Lane or Chapman Street (the latter requiring a small triangular easement over the south-east corner of 1A Chapman) rather than over their more natural and historical place on 1A Chapman. A right of way across the plaintiffs' relatively small lots would further reduce their area available for development. Even if they were all to be treated as owned by one entity, that proposition would hold good. 61In my opinion, in the circumstances the plaintiffs' proposed easements are reasonable compared with the alternatives, and are reasonably necessary for the effective use or development of the plaintiffs' land that will have the benefit of the easements.

PUBLIC INTEREST: S 88K(2)(a) 62The second precondition for an order imposing an easement is that the use of the land having the benefit of the easement will not be inconsistent with the public interest: s 88K(2)(a). The words "not...inconsistent" suggest that the requirement is less exacting than it would be if the requirement were that it be "consistent". However, even if it be assumed that it is no less exacting, I consider that it is satisfied in this case. 63The provision in s 88K(2)(b) of the payment of compensation to the owner of the servient tenement provides for a balancing of competing private interests as well as promotion of the public interest: Rainbowforce at [95], City of Canterbury v Saad at [45]. Whether the use of land having the benefit of the easement will be inconsistent with the public interest will depend upon the facts of each case, as will the manner in which the court exercises the discretion: City of Canterbury v Saad at [54]. The public interest is in favour of land being able to be used for a permissible purpose: Evans v Cornish Nominees Pty Ltd [2009] NSWSC 1295, (2009) 14 BPR 27,257 at [63] per White J; Moorebank Recyclers Pty Ltd v Liverpool City Council (No 2) [2013] NSWLEC 93 at [163] per Biscoe J. An owner of land is entitled to utilise land in accordance with its zoning provided development consent is obtained: City of Canterbury v Saad at [56]. The fact that an applicant for an easement may still have to fulfil other requirements before the land can be utilised in accordance with the zoning, such as obtaining development consent, is not a bar to the grant of the easement: City of Canterbury v Saad at [57]. The provision of an easement that permits vehicular access to a permissible development on landlocked land is entirely consistent with the public interest in the use or development of land for a designated purpose: City of Canterbury v Saad at [58]. In that case the Court of Appeal, in considering whether the provision of a proposed right of way was inconsistent with the public interest, had regard to its impact on the community land servient tenement, and concluded that it was not significant: at [54]-[56]. 64In the present case, the plaintiffs' properties at 11-19 Chapman Street are landlocked. The provision of a right of way easement for their benefit over 1A Chapman would impact on 1A Chapman by significantly reducing its developable area and market value. However, as I later conclude, the Council can be adequately compensated and should be appropriately compensated. In my opinion, the provision of the proposed easements for access to the plaintiffs' properties is not inconsistent with the public interest in their use and development for a designated purpose. It is unnecessary to go further, but the circumstances discussed above at [9] in which they came to lose access to 1A Chapman reinforce that conclusion.

CAN BE ADEQUATELY COMPENSATED: S 88K(2)(b) 65The third precondition for an order imposing an easement is that the Court is satisfied that the Council "can be adequately compensated for any loss or other disadvantage that will arise from the imposition of the easement": s 88K(2)(b). This precondition must be satisfied regardless of whether (as the plaintiffs submit in this case) the Court pursuant to s 88K(4) ultimately does not order compensation because of the special circumstances of the case. In my opinion, there is no doubt that the defendant "can" be adequately compensated for any such loss or other disadvantage. I do not understand a contrary submission to have been made. That precondition is therefore satisfied.

ALL REASONABLE ATTEMPTS: S 88K(2)(c) 66The fourth precondition for an order imposing an easement is that the Court is satisfied that all reasonable attempts have been made by the plaintiffs to obtain the easements or easements having the same effect but have been unsuccessful: s 88K(1)(c). It is not a requirement that such attempts had to have been made before the proceeding was commenced. The plaintiffs submit that the Court would be so satisfied. On 24 October 2012 Council's solicitors wrote to the plaintiffs' solicitors stating that in light of the current Supreme Court proceedings, they were no longer willing to agree to a licence agreement for access over 1A Chapman, a possibility raised in the former's earlier letter of 29 August 2012. 67The Council submits that it is not clear that the plaintiffs have made all reasonable attempts to obtain the easements they seek within the meaning of s 88K(2)(c) because although they have demanded access to 1A Chapman, including by asserting entitlement to easements, no offer to pay compensation has ever been made; and, further, the form of easements sought has varied significantly over time. I do not accept the submission. At least from the time this proceeding was commenced in 2012, the plaintiffs have accepted that they have to pay compensation if ordered to do so. I am satisfied that the plaintiffs have made all reasonable attempts to obtain the easements or easements having substantially the same effect, but have been unsuccessful.

DISCRETION: S 88K(1) 68The preconditions having been met, the discretion under s 88K(1) to order imposition of the easements is to be exercised having regard to the circumstances which exist at the time of the hearing: Moorebank at [96]. 69The Council submits that the discretion should be exercised adversely to the plaintiffs because there is no evidence that they propose to use 11-21 Chapman Street for any purpose which would require easements of the kind sought. In particular, Mr Bechara's previously disclosed intention was to deal with them in accordance with the existing development consent, a use which requires the plaintiffs to own 1A Chapman. Assuming (contrary to the Council's submission) that development as separate lots is an effective use or development of the land, the Council submits that the Court would not be satisfied that the plaintiffs will use the properties for that purpose given the very substantial yield that a developer could obtain from a multi-storey building on an amalgamated site. 70I have substantially dealt with the matters referred to in this submission earlier in the context of rejecting the Council's submission that this application is premature: above at [52]-[53]. 71Access to a public road is required for any purpose for which the plaintiffs' properties can be lawfully used or developed. It may be accepted, as discussed earlier, that 11-21 are likely to be developed as part of an amalgamated site by reason of the planning controls and the economic advantages of such a development compared with the alternative. The circumstances referred to above at [9] by which the plaintiffs' properties lost access to 1A Chapman and 11-19 Chapman Street became landlocked strengthen my conclusion that the discretion should be exercised in the plaintiffs' favour. The Council should have foreseen that the sale of 1A Chapman into the amalgamated development contemplated by the development consents might fall through and the possibility of an easement application thereafter such as that made by the plaintiffs. The imposition of the easements will have a significant impact on 1A Chapman but the Council can be appropriately compensated for that. I conclude that the discretion should be exercised to order imposition of easements.

NO COMPENSATION (SPECIAL CIRCUMSTANCES): S 88K(4)? 72The plaintiffs submit that the Court should determine that no compensation is payable because of the "special circumstances" of the case: s 88K(4). The plaintiffs submit that the circumstances referred to above at [9] are "special" given that the Council obtained the windfall benefit of 1A Chapman as a commercial asset, such that the council should not be given the further benefit of compensation. 73In my opinion, there are no special circumstances of the case sufficient to justify not awarding compensation. The plaintiffs relied on the road closure to obtain development consent for the amalgamated site, and knew they had to purchase 1A Chapman. Until recently, the plaintiffs' primary claim was for the transfer of 1A Chapman at a rate per square metre derived from a resolution of the Council in 2000. Abandonment of that case is not indicative of the absolute removal of a possibility of a plaintiff or a related company purchasing 1A Chapman for an amalgamated development. The Council is free to, and wishes to, sell 1A Chapman, consistently with the planning controls. The easements to be imposed would be a blight which would reduce the purchase price. A plaintiff or a related entity is a potential purchaser of 1A Chapman given that the plaintiffs own all the surrounding land. If the purchaser is one of the plaintiffs or a related entity and if the plaintiffs have been granted the easements without compensation, they will then be benefited to the extent of the blight because they have not had to pay the value of the easements. The plaintiffs would therefore receive a windfall gain. If the amalgamated development contemplated by the development consent does not eventuate, then the plaintiffs should reasonably have foreseen that their land would be developed as an alternative amalgamated development for which they would have to acquire easements such as those that have been granted and for which they would be required to pay compensation.

THE APPROPRIATE COMPENSATION: S 88K(4) 74The Court is required to provide in the order for payment by the plaintiffs to the Council for such compensation as the Court considers appropriate: s 88K(4). 75Mr Walter Dobrow, the plaintiffs' valuer, assessed the compensation payable at $117,000. Mr George Veris, the Council's valuer, assessed the compensation payable at $550,000. 76The plaintiffs' submissions do not engage with the valuation evidence other than to suggest that the Court may have to "cut and paste" between the valuers. 77The difference between the valuers is explained by two principal factors. First, in assessing comparable sales Mr Dobrow applied a discount factor to the comparable sales of 30 or 40 percent on account of "restrictive town planning". Secondly, Mr Dobrow discounted the value of the affected land by 15 percent to take account of the effect of the right of way and 8 percent to take account of the effect of the easement for services, while Mr Veris applied a higher discount of 50 percent for the affectation of the easements. I would accept the other adjustments by Mr Veris.

Restrictive town planning 78Mr Dobrow said that the "restrictive town planning" for which he discounted consists of the following: (a)Amalgamation patterns shown on Map 8 in the future DCP indicating a requirement to amalgamate 1A Chapman. I note that redevelopment must comply with the amalgamation patterns only "wherever possible". More importantly, in my view and as Mr Dobrow accepted in cross-examination, an amalgamation requirement exists under the current DCP as well as the future DCP, and the three comparable sales to which he applied a 30-40 percent discount factor were all required to be amalgamated under the current DCP. Each comprised a group of properties sold by different vendors and thus came to the purchaser as effectively already amalgamated sites. It is therefore difficult to see a basis for applying any discount factor to these sales in order to compare them to 1A Chapman by reason of a requirement under the future DCP to amalgamate 1A Chapman. (b)The closure of Bakers Lane and Chapman Street and their conversion into parkland envisaged by the future DCP, rendering 1A Chapman landlocked. I accept Mr Gallagher's evidence that this plan for Bakers Lane to be incorporated into a new public park is predicated on the assumption that it is no longer required for access purposes. Whilst Chapman Street would be closed, part of 1A Chapman directly accesses Cooper Street and, with the contemplated widening of the latter, the width of that access should increase. Hence, 1A Chapman has, and will maintain, direct street access to Cooper Street. (c)Preferred access points shown on Map 6 in the future DCP. However, I note that the future DCP states that access points are to be provided "generally" in accordance with the locations shown on Map 6: they are therefore not inflexible. They are shown as preferred access points for an amalgamated lot. The preferred access points on Map 6 contemplate that 1A Chapman will be part of an amalgamated lot with access to Cooper Street to the west and to a new 7 metre wide lane to the east. If amalgamation does not occur it does not follow that access to 1A Chapman can only be given from the access point to Cooper Street shown on Map 6. Map 7 shows that as a result of a widening of Cooper Street, 1A Chapman will have direct access to that street. 79In the result, I am not persuaded that a discount on account of "restrictive town planning" is appropriate.

15 percent v 50 percent discount 80The requirement to provide vehicular access along a stretch 6.65 metres wide (taking up some 30 percent of the width of the land) will seriously constrain the ability of the owner of 1A Chapman to carry out development on that land. The valuers disagreed as to the appropriate discount to apply to reflect the impact of the easements on the value of 1A Chapman. Mr Veris assessed the discount at 50 percent, Mr Dobrow assessed it at 15 percent. The dispute between the valuers is narrowly confined. Mr Dobrow accepted in cross-examination that 50 percent is the discount he would typically apply. However, he maintained that there were special circumstances in the present case which made a lower discount of 15 percent appropriate. The special circumstances were said to comprise the fact that the proposed registered instrument is to include a provision that the easements are to be moveable by agreement between the servient and dominant tenements, and the fact that they could have residential flat buildings built above them in such a fashion that they could be used as a shared access point for development on both the servient and dominant tenements. 81I accept the Council's submission that there are serious difficulties in Mr Dobrow's reliance on these features. First, there is no certainty that the agreement that is an essential prerequisite to the moving of the easements will ever be attained (even applying a requirement that consent not be unreasonably withheld). Secondly, Mr Dobrow thought that if the easement were moved, their impact on 1A Chapman could be reduced if they crossed 1A Chapman in order to reach Cooper Street via one or more of 2-12 Chapman Street, rather than running along the eastern side of 1A Chapman to its southern end. However, as he accepted in cross-examination, such a move would require a further easement over one or more of 2-12 Chapman Street. Thirdly, Mr Dobrow accepted that his 15 percent discount depends on an assumption that 1A Chapman will be amalgamated with some other adjoining properties. That would lead to an easement in a different form to that which the plaintiffs currently seek. Fourthly, Mr Veris considered that the existence of such a "floating" easement is more likely to be perceived by the market as a risk than a benefit. 82Having regard to these considerations, I am not satisfied that the degree of affectation caused by the easements should be assessed as less than 50 percent.

Conclusion 83In my opinion, for these reasons compensation should be ordered in the sum assessed by Mr Veris, $550,000.

FORM OF REGISTRABLE INSTRUMENT: S 86K(3) 84The proposed form of registerable instrument annexed to the Second Further Amended Statement of Claim should be amended in at least the following respects: (a)The amendments thereto made on the plaintiffs' application during closing submissions but not made formally (including adding 21 Chapman Street as a lot to be benefited) and deleting the unlimited height requirement of the services easement should be formalised. (b)The Council having successfully argued that the provisions for relocatable easements are not beneficial, those provisions should be deleted. (c)The proposed registered instrument (including the plan therein) should provide for 21 Chapman Street to be benefited by the easements, it having being informally added to the plaintiffs' claim during final submissions.

COSTS: S 88K(5) 85Where an easement is granted, s 88K(5) provides that the costs of the proceedings are payable by the applicant, subject to any order of the Court to the contrary. In my opinion, the plaintiffs should pay the Council's costs of the proceedings.

ORDERS 86The orders of the Court are as follows: (1)The parties, having conferred beforehand, are to email to Biscoe J's Associate their agreed or competing draft orders consistent with these reasons for judgment by 1 May 2014. (2)The proceedings will be listed before Biscoe J on 2 May 2014 to make final orders. (3)The plaintiffs are to pay the defendant's costs of the proceedings. (4)The exhibits may be returned. ANNEXURE A ANNEXURE B ANNEXURE C

Amendments 12 May 2014 - Typographical errors in paras [1] and [65]. Amended paragraphs: [1], [65] 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: 12 May 2014

(2010) 171 LGERA 286

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