Clarebridge Holdings Pty Ltd v W Barry Holdings Pty Ltd

Land and Environment Court (NSW)|2011-03-21|Before: Biscoe J, Simos J

Judgment 1These are uncontested proceedings in Class 3 of the Court's jurisdiction. Pursuant to s 40 of the Land and Environment Court Act 1979 ( LEC Act ), the applicant seeks an order imposing a drainage easement over the respondents' lands. 2The applicant, whose land will be benefited by the easement, is Clarebridge Holdings Pty Ltd. The respondents, over whose lands the easement is sought to be imposed, are W Barry Holdings Pty Ltd, Owners Corporation Strata Plan 83227 and Owners Corporation Strata Plan 79150(which has filed a submitting appearance). The applicant, the first respondent and the third respondent seek consent orders to impose the easement and for compensation. 3The second respondent has not filed an appearance or taken any part in the proceedings. It is therefore necessary to deal with the application for the imposition of an easement over the second respondent's land on an ex parte basis.

Jurisdiction 4By its Class 1 application dated 29 April 2010, the appellant appealed against the Council's deemed refusal of its development application for: Demolition of the existing dwelling and out buildings and construction of a multi-unit housing development consisting of 5x two-storey townhouses with basement level car parking, site landscaping and ancillary works at 24 Park Street, Mona Vale. 5Those Class 1 proceedings then being pending, these Class 3 proceedings were filed on the same day pursuant to s 40(2) of the LEC Act. 6Development consent was subsequently granted by the Council on 5 July 2010. The consent was subject to a deferred commencement condition requiring (a) submission of written evidence that a stormwater easement burdening the first respondent's land and benefiting the applicant's land had been created and registered with the Land Titles Office; and (b) separate development consent for the construction of stormwater drainage works from the proposed development to the public drainage system. 7Consequently, the Class 1 proceedings were discontinued. The discontinuance does not affect the Court's jurisdiction to determine the Class 3 proceedings, which had earlier accrued. Pursuant to s 19(g5) of the LEC Act, the Court has jurisdiction to hear and dispose of that application . 8The Class 3 proceedings seek an order imposing a drainage easement in order to satisfy both the stormwater drainage requirements for the development and Council's deferred commencement condition. 9The proposed drainage easement would border land of the first respondent. In order to minimise the burden on that land, it would be confined within the part of that land already burdened by an existing easement which benefits the second and third respondents' lands.

The statutory context 10Sections 40 and 19(g5) of the LEC Act provide: 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. 19 Class 3-land tenure, valuation, rating and compensation matters The Court has jurisdiction (referred to in this Act as "Class 3" of its jurisdiction) to hear and dispose of the following: ... (g5) applications under section 40 (2) of this Act. 11Section 88K of the Conveyancing Act 1919 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. 12In Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd [2010] NSWLEC 2; 171 LGERA 286 at [67] -[83] Preston CJ made ten points about the exercise of the discretionary power in s 88K(1). The points relevant to the present case may be summarised as follows (omitting citations): (1)The power to impose an easement is made conditional upon satisfaction of the requirement in s 88K(1). Subsection (1) has been described as the "governing subsection", although the criteria in subsection (2) must also be met if an order is to be made. (2)The Court is required to stipulate in the order the nature and terms of the easement: s 88K(3). (3)The inquiry directed by s 88K(1) is whether the easement is reasonably necessary for the effective "use" or "development" of the benefited land. (4)The easement is to be reasonably necessary for the "effective" use or development of that land. "Effective" bears its ordinary dictionary meaning of "serving to effect the purpose; producing the intended or expected result". (5)The easement is to be reasonably necessary for the effective use or development of the land itself, not merely the current proprietor's enjoyment of that land. (6)The requirement that the easement be "reasonably necessary" does not mean that there must be an absolute necessity for the easement. Reasonable necessity should be assessed having regard to the burden which the easement would impose. Generally, the greater the burden, the stronger the case needed to justify a finding of reasonable necessity. (7)The precise consequence of applying the test of reasonable necessity to the effective use or development of the benefited land is not settled on the authorities. On one view, the court will take into account whether, and to what extent, use or development with the easement is preferable to use or development without the easement. (8)Reasonable necessity does not demand there be no alternative land over which an easement could be equally efficaciously imposed. Consequently, the Court may impose an easement even where an alternate route exists. (9)Reasonable necessity is to be determined in light of the circumstances at the time of the hearing of the easement application. (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.

The easement 13In terms of s 88K(1), the proposed easement is reasonably necessary, in my opinion, for the effective use and development of the applicant's land in accordance with the terms of its development consent . 14In terms of s 88K(2)(a), I am satisfied that the use of the applicant's land in accordance with the consent will not be inconsistent with the public interest. 15Although the requirement of reasonable necessity does not demand that there be no alternative land over which the easement could be equally efficaciously routed, alternative routes may be relevant to the ultimate exercise of the discretion: Khattar v Wiese [2005] NSWSC 1014; 12 BPR 23,235 at [60]. 16The deferred commencement condition requires, in substance, connection to the Council's stormwater system . Thus, in order to develop the applicant's land, in accordance with the Council consent, it is necessary to drain that land to the Council's stormwater system, which is located within the first respondent's land. 17There are a number of possible alternative routes, which have been canvassed by Mr Bewsher, the applicant's expert. The relevant alternative routes are: upstream to Park Street, or downstream to the Council's stormwater line running through the first respondent's land. 18According to Mr Bewsher, it is not appropriate to pump up to Park Street for a number of reasons: Council prefers gravity systems; Council will not permit mechanical systems (necessary to pump up to Park Street); and even if it were permissible to pump up to Park Street, that catchment already suffers from system deficiencies. 19For these reasons, I accept that the appropriate council stormwater system to connect to is that within the first respondent's land. 20Next, there are potential alternative routes to get the stormwater to that public drainage system (by gravity). 21A detailed analysis of those options is contained in annexure B to Mr Bewsher's statement of evidence. As a consequence of that analysis, Mr Bewsher's preferred option is Option 1, which follows the shortest route; impacts on one land owner only; provides for the most straightforward construction method; and does not risk impact upon trees or structures. That route includes passing through the route of an existing easement (the second and third respondents' easement). This is clearly beneficial to the first respondent's land, as it minimises the impact upon the current future use of its land. 22The second and third respondents already have a very large 450 millimetre pipe within that easement. Mr Bewsher says that that size has "large excess stormwater capacity" and "it is virtually inconceivable that a further stormwater pipe would ever be required to service the [second respondent's] site". Mr Bewsher has also considered the potential future impacts upon that pipe, including maintenance issues, and concludes that "the potential for the construction of the two new pipelines to have any material impact upon the use of the [second respondent's] easement by the [second respondent's] site is very small." 23Upon consideration of those alternatives, I am satisfied that the proposed easement is reasonably necessary for the effective use and development of the applicant's land, being the land that will have the benefit of the easement.

Can the respondents be adequately compensated? 24In terms of s 88K(4), the Court must be satisfied that the respondents can be adequately compensated for "any loss or other disadvantage that will arise from the imposition of the easement". That requires a causal connection between the imposition of the easement and the compensation: Mitchell v Boutagy [2001] NSWSC 1045; 118 LGERA 249 at [27]. That is a question of fact to be determined in each case. 25In terms of s 88K(2)(b), I am satisfied that the respondents can be adequately compensated for any loss or other disadvantage that will arise from the imposition of the easement. 26As a result, and as required by s 88K(4), it will be necessary to determine the appropriate amount of compensation.

Compensation 27The amount of compensation that the applicant is to pay the first and third respondents has been agreed between those parties and appears in the orders set out at the end of this judgment. It remains for me to determine the appropriate compensation to be paid to the second respondent. 28In the opinion of the applicant's valuer, Mr Large, the impact upon the second respondent's "easement interest" will be "nominal only". Mr Large has assessed compensation at 5% of the land value of the area of the easement (using comparable sales to determine land value), in an amount of $2,772. I consider this amount of compensation to be appropriate to award to the second respondent.

All reasonable attempts 29In terms of s 88K(2)(c), the Court must be satisfied that "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." 30The reasonableness of those attempts is to be assessed objectively in all the circumstances. It includes the circumstances up to, and including, the date of the Court making the order: Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (Supreme Court of New South Wales, Simos J, 19 March 1996, unreported); and Goodwin v Yee Holdings Pty Ltd (1997) BPR 15,795. 31The applicant has attempted to negotiate the easement with the second respondent for many years. Between October 2003 and October 2004 there were negotiations (and in fact agreement) with the developer of the second respondent's land. From October 2004 to August 2006 there were ongoing negotiations with Ms Romeo, the then owner of the second respondent's land. Ms Romeo, offered the easement upon the payment of compensation in the amount of $117,000. 32More recently there have been attempts to acquire the easement from the current owner of the land. On 23 August 2010 an offer was made to acquire the easement with the payment of compensation and costs in the amount of $5,000. By letter dated 27 August 2010, that same offer was forwarded to the second respondent's Building Management Committee. 33No response was received. On 8 September 2010 the second respondent was served with a motion to be joined in the proceedings. The second respondent made no appearance. On 14 September 2010 the second respondent was joined to the proceedings. 34By email dated 12 October 2010, Ms Kalarostaghi emailed Ms Gosnell, the second respondent's strata manager. Among other things, Ms Kalarostaghi inquired as to whether the Owners Corporation would accept compensation offered by Clarebridge. 35Ms Gosnell is the strata manager for both the second and third respondent. By email dated 14 October 2010, Ms Gosnell acknowledged that the third respondent accepted the offer but that the second respondent wished to decline. 36There followed correspondence between Ms Gosnell and the solicitors for the applicant. Upon being served with materials for the proceedings or being informed as to steps in the proceedings, Ms Gosnell, on behalf of the second respondent, informed the applicant on three occasions that the second respondent did not wish to be part of the case. 37There was a great deal of correspondence which passed between the applicant and the second respondent. An offer to acquire the easement was made, repeated and declined. It is apparent that after the years of negotiation to attempt to acquire the easement, or one having similar effect, the applicant is now met by the owner of an interest in land who will neither negotiate, nor take any part in the proceedings. 38I am satisfied that all reasonable attempts have been made by the applicant to acquire the easement or an easement having the same effect, but have been unsuccessful so far as concerns the second respondent. 39In these circumstances it is appropriate to order the imposition of the easement.

ORDERS 40The orders of the Court are as follows: (1)Order imposing an easement to drain water over Lot 10 in Deposited Plan 586794 in accordance with the attached instrument under s 88B of the Conveyancing Act 1919. (2)The applicant is to pay the first respondent compensation in the amount of $60,000. (3)The applicant is to pay the first respondent's costs in the agreed amount of $117,905. (4)The applicant is to pay the second respondent compensation in the amount of $2,772. (5)As between the applicant and the second respondent, no order as to costs unless the second respondent applies for a costs order within 7 days. (6)The applicant is to pay the third respondent compensation in the amount of $5,000. (7)As between the applicant and the third respondent, no order as to costs. (8)Liberty to apply. (9)The exhibits may be returned

Annexure One 30320-10 Clarebridge Holdings v Barry Holdings s88B Instrument Annexure Two 30320-10 Clarebridge Holdings v Barry Holdings Plan 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: 06 April 2011

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