Cuzeno Pty Limited v The Owners - Strata Plan 65870 - [2013] NSWSC 1385 - NSWSC 2013 case summary

Supreme Court of NSW|2013-08-28|Before: Darke J

Introduction 1The first plaintiff in these proceedings, Cuzeno Pty Limited ("Cuzeno"), became the owner of Lot 47 in Strata Plan 85102 in May 2011 pursuant to a transfer from the Owners of Strata Plan 65870. Cuzeno subsequently transferred ownership of Lot 47 in Strata Plan 85102 to a related company, Topdaze Pty Ltd ("Topdaze"), which is the second plaintiff in the proceedings. 2Lot 47 in Strata Plan 85102 ("Lot 47") is an area located on the ground floor of a mixed commercial and residential development in Belgrave Street, Kogarah. The development was a strata title development, the relevant Strata Plan being number 65870. The Owners - Strata Plan 65780 is named as the defendant to the proceedings. 3Lot 47 is located on the corner of Kensington and Belgrave Streets in Kogarah. Since early 2009 a café business has been carried on from the area which is now Lot 47. That business has made use of a grease arrestor trap, which is located in basement level one of the development and connected to Lot 47 by means of various pipes. The grease arrestor trap, together with its associated pipes and vents, is located on the common property of Strata Plan 65870. 4In these proceedings, the plaintiffs allege that the circumstances of the transfer of Lot 47 to Cuzeno gave rise to an implied easement, of the Wheeldon v Burrows-type, for the benefit of Lot 47 for the use of the grease arrestor trap and associated apparatus. Alternatively, an order is sought pursuant to s 88K of the Conveyancing Act 1919 imposing such an easement for the benefit of Lot 47.

The Grease Arrestor Trap 50There was a lack of precision in the evidence concerning the location of the grease arrestor trap and its associated pipes and vents. However, this situation was largely rectified on the second day of the hearing by a view of the site and the giving of evidence at the site by Mr Bruce Perry, a qualified plumber, drainer and gas fitter with experience in the installation of grease traps. Mr Perry was the plumber who installed the trap in late 2008. The holding of the view, and the giving by Mr Perry of his evidence on site, was a course which was undertaken with the consent of all parties. 51The evidence of Mr Perry clearly established that the trap and an associated pump were located close to a wall in basement level one across parts of two visitor car spaces. There are five visitor car spaces along that wall which runs along the Belgrave Street side of the development. The trap and pump encroach upon the second and third visitor car spaces from the right, as viewed when facing towards the wall. Plans of basement level one showing the car spaces can be found in exhibit A at pp 5,183 and 228. The plan at p 228 of exhibit A depicts the proposed easement area as an area 5.065 metres wide, with a depth of 0.5 metres to the inner face of the two structural concrete columns. The valuers who were called to give evidence agree that the depth of the proposed easement area is approximately one metre if measured all the way to the wall. Accordingly, the area of the proposed easement is approximately 5.065m2. 52The photographs which form exhibit 10 show the trap and associated pump as well as the various pipes which lead to and from the installation. Those pipes connect the installation to the café which is located on the ground level above (although not directly above), and to the sewer pipes located in the basement area. Mr Perry explained that the black pipes were HDPE pipes which take the hot water and grease from the café above. There are three points of connection between those black pipes and the café above. Those three points are located on the basement ceiling. 53Mr Perry also identified as vents the two white pipes which run away from the installation, pass into a nearby stairwell, and eventually extend up to the roof. 54Mr Perry stated that the location of the trap was the most practical place to put it as "it was as close to the café as we could get it". He said that he looked at other possible locations, including at the opposite (and lower) end of basement level one, but he concluded that they were "too far away". It was put to Mr Perry, and he agreed, that it may have been technically possible to locate the trap at the lower end of basement level one, but he also stated that the distance involved would raise a concern about the waste water and grease solidifying along the way. It was further put to Mr Perry that it may be possible to overcome that concern by the use of "electrified pipes". Mr Perry said that he was not sure whether that would overcome the problem. 55Mr Perry also gave evidence that, after the trap had been installed, it was inspected by a representative of Sydney Water and found to be acceptable. 56Nevertheless, there was also evidence that the clearance between the top of the trap and an air conditioning duct above it of approximately 300 millimetres was insufficient to comply with relevant regulatory standards. 57The Plumbing and Drainage Code of Practice for New South Wales provides in section 14.4.2 that, where required, arrestors and special units installed in internal locations shall, inter alia, "have internal measurements that will allow ready access to the arrestor or special unit for cleaning and maintenance and clearance above the arrestor equal to the depth of the arrestor". It is readily apparent that the requirement for clearance above the arrestor was not satisfied in this case. It was submitted on behalf of the defendant that the trap was thus an "illegal installation". In support of that submission reference was made to Sydney Water Regulation 2006 and in particular regulation 5 which mandates that a person must not do plumbing or drainage work otherwise than in accordance with the Plumbing and Drainage Code of Practice and imposes a penalty for contravention of its provisions. However, the commission of an offence against the regulation by a person doing plumbing work does not mean that the product of that work, in this case the trap, can itself be described as "illegal". 58In practical terms, the clearance above the trap is likely to impinge on the ease and efficiency with which the tasks of emptying and cleaning the trap can be undertaken. Mr Taylor, a plumber, drainer and gas fitter with experience in servicing and repairing grease traps, gave evidence concerning the size of the hoses needed for emptying and cleaning grease traps. He stated that he "couldn't guarantee" that there was adequate room above the grease trap to insert such hoses once the lid of the grease trap had been slid across, and did not agree that there is ready access for the purposes of cleaning and maintenance. However, he did concede that the hoses would probably fit inside the trap. There was no direct evidence concerning the actual emptying and cleaning of the trap, but in circumstances where the trap has been in satisfactory operation for approximately four and half years, I would infer that it has been periodically emptied and cleaned as required albeit that the ease and efficiency of such tasks is likely to be adversely affected by the restricted clearance.

The EGM Held on 3 June 2006 59The defendant denies that the resolution as recorded in the minutes of the extraordinary general meeting of 3 June 2006 was validly passed, or even passed at all, at the meeting. Mr Sotirios Antonopoulos, who attended the meeting, deposes that the subject of the development application came up for discussion and that Mr Jabbour said words to the following effect: I want to change the use of the common garden and walkway area on the corner of Kensington Street and Belgrave Street. I want to build a coffee shop in that area. The area is currently used by vagrants or drug addicts. Having a coffee shop would be good for the building. I have applied to Kogarah Council for the development approval for the coffee shop. 60Mr Antonopoulos further deposes that there was some, albeit brief, discussion about the motion but it was never put to a vote. He also complains that there were insufficient owners present to constitute a quorum and that no valid proxies were given for voting. 61It was put to Mr Antonopoulos in cross-examination that the motion was in fact put to a vote at the meeting. Reference was made to a Statutory Declaration made by Mr Antonopoulos on 24 August 2012 which contains the following statement (in paragraph 24): I thought that I was voting to allow Cuzeno to submit a development application to Kogarah Council to obtain Council approval to build to the coffee shop but I did not believe that I was voting to approve the construction of the coffee shop itself (or anything else). I thought that Cuzeno would need to provide more detailed plans to the owners corporation and have a by-law passed in order for the owners corporation to approve the construction of the coffee shop. 62It was put to Mr Antonopoulos that, at the time of the making of the Statutory Declaration, he had a recollection of voting at the meeting. Mr Antonopoulos accepted that proposition. He also stated that he was not opposed to the objective of making the area a coffee shop, but he expected that more information would be provided before any approval could be given to actual construction. Other evidence given by Mr Antonopoulos suggests that he had no objection to the concept of the coffee shop itself but was concerned about matters such as the cost of the resultant electricity and water usage. 63The suggestion that the motion was not put to a vote at the meeting was put to Mr Jabbour in cross-examination. He maintained that the resolution was put to the meeting. The suggestion was not, however, put to Ms Philpott who was present at the meeting and signed the minutes as Secretary. 64The likelihood is that the motion, which was undoubtedly the subject of discussion, was put to the meeting for discussion, although not formally put to a vote, and that in the absence of any opposition to its substance it was then recorded as having been resolved unanimously. It seems to be the case that the notion of replacing the open area with a coffee shop was seen to be beneficial by all parties concerned. In essence, Cuzeno was given approval to proceed with the proposal at least to the point of obtaining a construction certificate. I agree with the submission made by the defendant that the approval did not extend so far as an approval for any particular construction.

Approval for the Grease Arrestor Trap 65The issue as to whether Cuzeno obtained any approval for the installation of the grease trap must be viewed in the context of the overall construction work for the café which was taking place during 2008. That construction, which was taking place on the common property of Strata Plan 65870, was obvious. It would also have been obvious, to anyone who gave any thought to the matter, that the construction of the coffee shop would require connections to existing services including electricity, water and sewage. 66It is clear that the installation of a grease trap to service the café was a matter being pursued by Cuzeno prior to the determination, made by Kogarah Council on 1 December 2008, to approve the modification of the development consent. It is likely that the installation of a grease trap was a requirement of Sydney Water in accordance with Standard Development Condition 12 of the original consent. Such a requirement would have been consistent with the Plumbing and Drainage Code of Practice (section 14.3.2.3) which was introduced in July 2006, and in accordance with Mr Taylor's experience. However, as noted earlier, the evidence as to what, if any, approval was obtained from the Owners Corporation was very confused. It can only be stated with confidence that Cuzeno did not obtain any written approval or formal resolution from the Owners Corporation concerning the installation of the grease trap. 67Mr Jabbour, in his affidavit, referred to the original plans for the building which showed a grease arrestor below the ground floor, but in a location well away from the area where the café is now located. He deposes that, after he sent the email of 29 October 2008 to Ms Philpott together with the plan of the location of the trap, he met with members of the Executive Committee of the Owners Corporation and Ms Philpott on the site and showed them where the trap was now to be located. He further deposes that he said to the members of the committee (which included Mr Antonopoulos) words to the effect: We can't get enough fall to locate it in the original location. If we locate it here behind the visitor car parking spaces it will not interfere with anything or anyone. Mr Jabbour states that no objection was raised at the meeting about the location of the grease trap and Cuzeno then proceeded to have the trap installed in its present location, which, according to the affidavit, is the location indicated in the plan which accompanied the 29 October 2008 email. As mentioned earlier, that is not correct. The trap is located to the left of the location depicted on the plan and occupies an area somewhat larger than that depicted on the plan. 68Mr Jabbour added to that account during the course of his cross-examination. He gave evidence that there had been a meeting with members of the Executive Committee prior to 29 October 2008 at which the trap and its location had been discussed and verbally agreed to by members of the committee. Mr Jabbour stated that he thought this meeting occurred in April 2008. Later Mr Jabbour gave evidence that there were several meetings with Executive Committee members at which the trap was discussed and that no objections were raised against it. He stated that he sought confirmation of the approval on 29 October 2008 for "abundant caution". He also stated that it did not occur to him that the approval of a general meeting would be required for the trap. 69Ms Philpott also gave evidence on this issue. She deposed that, during the course of construction of the café, she attended a meeting between Mr Jabour and members of the Executive Committee. She deposed that the participants assembled in the foyer of the building and then proceeded to the basement area. Once in that area Mr Jabbour indicated an area between some visitor car parking spaces and the wall of the basement and said words to the effect: We would like to put the grease trap there. It is out of the way and it will not interfere with the use of the car spaces. We can't put it where it is shown on the original plans. Ms Philpott deposes that there was no objection from any member of the Executive Committee to that proposal. 70However, during her cross-examination she stated that the members of the Executive Committee looked at a sloped driveway area of the basement as a possible location for the trap. She stated that some plans were shown to the Executive Committee by Mr Jabbour but not the plan which accompanied the 29 October 2008 email. She further stated that two locations along the driveway were looked at as possible locations for the trap. Mr Jabbour, in his cross-examination, stated that it was not the case that he showed members of the Executive Committee a location on an inclined driveway as a possible location for the trap. 71Mr Antonopoulos deposed that no approval for the installation (or use) of the trap was ever given by the Owners Corporation or its Executive Committee. He denied attending any meeting such as that described in Mr Jabbour's affidavit concerning the location of the trap. He also deposes that Mr Jabbour made no mention, during the Executive Committee meeting of 3 November 2008, that it was proposed to install a trap in basement level one. 72In his cross-examination he denied that he had been present with other members of the Executive Committee when Mr Jabbour pointed out an area next to visitor car spaces in the upper basement level and told those present that the trap was to be located in that area instead of the original location. 73The evidence of both Mr Jabbour and Ms Philpott on this issue was undoubtedly confused and to some extent inconsistent. Nevertheless, I am not persuaded that I should reject their evidence to the extent of finding that there was no discussion with members of the Executive Committee concerning the installation of a trap in basement level one. I formed the impression that Mr Jabbour, and also Ms Philpott, were attempting to give their honest recollections of the events of 2008. In addition, the terms of the email 29 October 2008 which speak of a confirmation of permission provides some support for the view that the location of the trap had at least been the subject of some earlier discussion, and is inconsistent with the suggestion that Cuzeno was completely ignoring the Owners Corporation on the issue. It was in Cuzeno's own interests to obtain the approval (even if only an informal or tacit approval) of the Owners Corporation to the location of the trap on the common property. Proceeding in any other way would only be likely to give rise to problems for Cuzeno. For these reasons, I conclude that there was an occasion when Mr Jabbour, accompanied by members of the Executive Committee and Ms Philpott, indicated in general terms that it was proposed that a grease trap be located near the wall near the visitor car spaces at or close to the position where the trap was actually installed. I further find that no opposition was voiced by any member of the Executive Committee on that occasion, and that Cuzeno was thus justified in proceeding on the basis that it at least had the informal approval of the Executive Committee for the installation of a trap in that area of basement level one for the use of the coffee shop. 74It is possible, and perhaps likely, that Mr Antonopoulos was not present on that occasion. However, if he was present it follows from my findings above that I would reject his evidence to the effect that such an event did not take place. 75It was clear to Mr Antonopoulos and presumably to other members of the Executive Committee in late November or early December 2008 that a grease trap was being installed on basement level one. There is no evidence of any complaint being made at the time by Mr Antonopoulos or any other member of the Executive Committee, or any other owner, about such installation. This further reinforces the view that members of the Executive Committee had at least given an informal or tacit approval to the trap.

Wheeldon v Burrows 76The plaintiffs allege that the circumstances of the transfer of Lot 47 to Cuzeno in May 2011 gave rise to an implied easement for the benefit of Lot 47 for the use of the grease arrestor trap and associated apparatus. It is contended that the implied easement arose in accordance with the first rule laid down by Thesiger LJ in Wheeldon v Burrows (1879) 12 Ch D 31 at 49 where it was stated: The first of these rules is, that on the grant by the owner of a tenement of part of that tenement as it then used and enjoyed, there will pass to the grantee all those continuous and apparent easements (by which, I mean, quasi easements), or, in other words, all those easements which are necessary to the reasonable enjoyment of the property granted and which have been and are at the time of the grant used by the owners of the entirety for the benefit of the part granted. 77In Campbell v McGrath [2005] NSWSC 496 Barrett J said (at [44]) that this rule: ... operates where the following elements exist: first, the grant by the owner of a tenement of part of that tenement; second, grant of the part "as it is then used and enjoyed"; third, the existence of "continuous and apparent easements" or "quasi-easements"; fourth, that those easements "are reasonably necessary to the property granted"; and fifth, that the easements "have been and are at the time of the grant used by the owners of the entirety for the benefit of the part granted". 78An appeal from the decision of Barrett J in Campbell v McGrath (supra) was allowed, but the Court of Appeal accepted his Honour's analysis of what may described as "the first rule in Wheeldon v Burrows" (see McGrath v Campbell (2006) 68 NSWLR 229; 2006 NSWCA 180 at [34]; see also McKeand v Thomas [2006] NSWSC 1028 at [64] - [65] per Campbell J). 79The plaintiffs submit that each of the five elements identified by Barrett J in Campbell v McGrath (supra) is present in this case. In my view, however, at least the fifth element is not satisfied in this case. Even if it is assumed that the use of the grease trap since early 2009 amounted to a "continuous and apparent easement" or "quasi-easement" I do not think it can be said that such easement had been, and was at the time of the grant of Lot 47 to Cuzeno, "used by the owners of the entirety for the benefit of the part granted". The giving by the Executive Committee of the Owners Corporation of an informal or tacit approval to the construction and subsequent use of the trap by the operator of the café business does not amount to use of the easement by the Owners of Strata Plan 65870. 80Professor Butt in Land Law (6th ed, 2010) in the course of discussing the rule in Wheeldon v Burrows states at [16 56]: The principle assumes that, at the time of the severance, the land is not only in common ownership but also in common possession. It does not apply, for example, where the land granted is held under a lease and the tenant is exercising rights over the part retained. 81Professor Butt cites Kent v Kavanagh [2007] Ch 1 in support of that proposition. In that case Chadwick LJ at [44] - [46] touched upon the question of whether the rules identified in Wheeldon v Burrows can have any application in a case where, at the time of the conveyance, the land conveyed and the land retained, although in common ownership, were not in common occupation. At [45] Chadwick LJ, after referring to s 62 of the Law of Property Act 1925 (UK) (which may be compared to s 67(1) of the Conveyancing Act 1919), stated: It seems to me an unnecessary and artificial construct to hold that the grantor, as common owner and the landlord of the land conveyed, is himself using the rights over the retained land which his tenant enjoys under the lease. 82In the present case, there was of course no lease over that part of the common property upon which the café had been constructed. Rather, that area was the subject of By-law 25 which operated to confer upon Cuzeno the exclusive use of the area. Despite that difference, I do not think that it can be said in the circumstances of this case that the owner of the common property had been, or was at the time of the grant of Lot 47 to Cuzeno, using any quasi-easement for the use of the grease arrestor trap. It is not sufficient in my view, that the owners may have, in an indirect sense, obtained some benefit from the use of the grease arrestor trap by the operator of the café business. 83In addition to that point, the defendant raised numerous matters in submissions in opposition to the contention that a Wheeldon v Burrows easement arose in this case. 84These submissions included contentions to the effect that a Wheeldon v Burrows-type easement was incompatible with the statutory scheme for land held under strata title; that there could be no in personam exception to the indefeasibility provisions of the Real Property Act 1900 in circumstances where the beneficial ownership of the common property of the strata scheme has altered since the date of the grant of Lot 47 to Cuzeno; that the suggested easement was not reasonably necessary to the property granted, namely Lot 47; and that the principle could not operate in this case because the circumstances showed that it could not have been the intention of the parties to the grant that the grant would carry with it the suggested easement. 85It is not necessary to deal with each of those submissions. I have concluded that, in addition to the inability to satisfy the fifth requirement for the implication of such an easement, the principle does not operate in the present case because the circumstances surrounding the making of the grant make it impossible to conclude that the parties must have intended that the grant would carry with it an easement for the use of the grease arrestor trap. 86The first rule in Wheeldon v Burrows is essentially founded upon the principle that a grantor shall not derogate from his grant. Thesiger LJ stated as much in Wheeldon v Burrows itself (at 49). 87In considering whether the rule applies it is necessary to identify the presumed intention of the parties to the grant. In McGrath v Campbell (supra) Tobias JA (with whom Giles JA and Hodgson JA agreed) stated at [75]: ... the rule in Wheeldon v Burrows by which a grantor is bound, when he retains the putative servient tenement, to recognise any implied easement over that retained land in favour of the grantee of the land benefited, is based upon the presumed intention of the grantor to transfer to the grantee "all those continuous and apparent easements" which the grantor has himself created when the putative dominant and servient tenements were in the one ownership. The grantor is thus not permitted to derogate from his own grant, and, accordingly, the provision of the easement is an implied term of the grant. 88In this context, it is permissible, in ascertaining the presumed intention of parties to the grant, to have regard to the circumstances surrounding the grant. In Horsfall v Braye (1908) 7 CLR 629 Griffith CJ (with whom Barton J agreed) stated at 645: There was much discussion at the bar on the question of admissibility of evidence of the surrounding circumstances for the purpose of interpreting the contract and the conveyance. First with respect to the contract: - That document is silent as to any incorporeal rights. It is clear, therefore, that any rights which can be founded upon it are based upon implication. Now the foundation of the doctrine of implied contract or grant is that the stipulation set up must necessarily have been intended by the parties, so that without the implication the manifest intention would be defeated. If, then, it appears from admitted or proved facts that the implication set up is inconsistent with the actual circumstances attendant on the making of the contract the implication is excluded. This is very clearly pointed out in the case of Birmingham, Dudley & District Banking Company v Ross 38 Ch D 295. 89It should be noted, however, that Horsfall v Braye (supra) was not a case concerning a Wheeldon v Burrows-type implication, but was rather concerned with an implication arising from the terms of the contract and the conveyance itself. Nevertheless, in Nelson v Walker (1910) 10 CLR 560, Isaacs J in the course of discussing Wheeldon v Burrows stated at 583 that: The next case I shall refer to is Beddington v Atlee 35 Ch D 317 where Chitty J indicates how an implied grant arises. He says: - "Now I go to the question which has been so much argued, as to the grant to be implied on the conveyance. The first observation I make is this: on reading the conveyance no implication whatever arises. It is not like the case of an implied grant when, upon reading the instrument, you say the terms employed mean so-and-so; and it is necessary, in order to give effect to the intention, as manifested by the deed, to imply something which is not expressed in so many words. In this case, in order to raise any implied grant, it is necessary to look outside the deed of conveyance, and to consider the surrounding circumstances;" and then he proceeds to illustrate his meaning. Then comes the leading case of Birmingham, Dudley and District Banking Company v Ross 38 Ch D 295 at 308 - 309, in 1888, where Cotton LJ in a passage which I read during the argument, and which is ever since the decision recognised at law, states the true meaning and foundation of the "implied obligation" to which he referred in Rigby v Bennett 21 Ch D 559. Bowen LJ confirms that statement of the law in language conspicuous for its clearness. He says of this obligation that it is not an express obligation at all, and proceeds: - "It is not an obligation that arises simply from the interpretation of the deed as read by the light of the circumstances outside. It is a duty that arises from the outside circumstances having regard to the relation of grantor and grantee which the deed creates. Supposing you take the deed alone, no amount of construction could evolve from the deed itself the protection which the grantee of the deed desires ... It is only by looking outside the deed that the implication of a duty arises." 90Griffith CJ had earlier stated in Nelson v Walker (supra) at 572: The foundation of the doctrine of implied grant in the case of a conveyance of part of a parcel of land, the vendor retaining the rest, is that, having regard to all the circumstances of the case it must (not may) have been in the contemplation of the parties that the grantor should not use the land which he retains in such a way as to preclude any use of the land which he sells, or that use for which he knows he is selling it to the purchaser: Broomfield v Williams (1897) 1 Ch 602. 91In reaching my conclusion that the Wheeldon v Burrows principle does not operate in this case, I have assumed that in determining whether a Wheeldon v Burrows-type easement has arisen it is legitimate, in ascertaining the presumed intention of the parties, to take into account relevant circumstances surrounding the making of the grant. That approach is supported by the statements quoted above from Horsfall v Braye and Nelson v Walker and does not appear to be foreclosed by the decision of the High Court in Westfield Management Ltd v Perpetual Trustee Company Ltd (2007) 233 CLR 528; [2007] HCA 45. 92The latter case concerned the construction of a registered easement over Torrens system land. The Court stated at [37] that the rules of evidence concerning the construction of contracts inter partes of the nature explained by cases such as Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 did not apply to the construction of the easement. The Court proceeded (at [38]) to again stress the importance, in litigation respecting title to land under the Torrens system, of the principle of indefeasibility. However, those considerations do not have direct application to a case such as the present which concerns an implied easement that, if established, might give rise to rights which may be enforced in personam by the grantee against the grantor (see McGarth v Campbell (supra) at [4] and [108], where it is made clear that the circumstances which at general law would give rise to a Wheeldon v Burrows easement do not necessarily amount to a personal equity enforceable against the registered proprietor of land under the Real Property Act 1900). 93There are unresolved questions in this area concerning the extent to which implied easements, including Wheeldon v Burrows-type easements, are capable of enforcement as in personam exceptions to the indefeasibility provisions of the Real Property Act. That was a question which was left open in McGrath v Campbell (supra) at [118], although Tobias JA said that there was much force in Professor Butt's observations to the effect that if, as held by the Court of Appeal in Williams v State Transit Authority (NSW) (2004) 60 NSWLR 286, prescriptive easements do not overcome the indefeasibility provisions, then there must logically be some doubt about the in personam enforceability of implied easements. Nonetheless, I have proceeded on the assumption, favourable to the plaintiff, that implied easements of the Wheeldon v Burrows-type are capable of enforcement as in personam exceptions to the indefeasibility provisions of the Real Property Act. 94The provenance of the grant of Lot 47 to Cuzeno lies in the Heads of Agreement which the company entered into with certain of the lot owners on 22 April 2010. The Owners Corporation was not a party to the agreement, but the agreement contemplated that resolutions would be put to an Extraordinary General Meeting of the Owners Corporation, and that if such resolutions were passed the Owners Corporation would take certain steps in relation to the common property, including the registration of a plan of subdivision and the execution and registration of a transfer of the newly created lot. 95After the passing, in May 2010, of the requisite resolutions, Cuzeno and the Owners Corporation dealt with each other through their respective solicitors Mr Shehadie and Ms Crittenden. On 10 August 2010, the latter requested the former to submit "a form of Transfer Granting Easement concerning the grease trap on common property which you wish the Owners Corporation to consider". On 30 September 2010, Mr Shehadie forwarded to Ms Crittenden a "draft form of exclusive use by-law in respect of the grease trap for your client's consideration." 96On 23 December 2010, after the Owners Corporation had passed further resolutions to enable registration of the plan of subdivision, and when the Owners Corporation was pressing for completion of the transfer of the new lot, Mr Shehadie informed Ms Crittenden that Cuzeno was ready to proceed to completion subject to certain matters including receipt from Ms Crittenden of "written confirmation of your verbal assurance" that no additional payment would be demanded by the Owners Corporation for the granting of a by-law to allow Lot 47 to use the grease trap. On 25 January 2011, Ms Crittenden responded in terms that made it clear that no assurance was given by the Owners Corporation about the terms of any special resolution concerning the grease trap which may be put to a general meeting. 97The communications of 10 August, 30 September, 23 December 2010 and 25 January 2011 are not in the nature of negotiations. Neither are they mere statements of subjective intention. In my view they form part of the circumstances, outside the grant itself, which, in accordance with the authorities cited earlier, may be taken into account in ascertaining the presumed intention of the parties to the grant. These communications are consistent with the notion that the question of rights to use the grease trap was one which the parties expected would be the subject of consideration and decision by Owners Corporation, and that, if such rights were to be conferred, it would be done through either a Transfer Granting Easement or an exclusive use by-law. The parties were at all relevant times proceeding on the basis that any rights which may be conferred on the owner of the newly created lot as to the use of the grease trap were not to be conferred by the transfer itself, but were rather to be conferred (if at all) by other means. In the circumstances, a refusal by the Owners Corporation to allow Lot 47 the benefit of the use of the grease trap would not amount to a derogation from the grant of Lot 47. The facts do not establish that the parties must have intended that an easement to use the grease trap would pass, in the absence of further action on the part of the Owners Corporation, with the grant of Lot 47. For this reason also, the plaintiffs' claim based on Wheeldon v Burrows is not made out. 98As noted earlier (at [93] above), even if a Wheeldon v Burrows easement would have been implied at general law, a question would remain as to whether a personal equity would arise which could be enforced against the defendant as the registered proprietor of the common property. It is not necessary to answer that question, but I think that it must be considered doubtful that the conduct of the Owners Corporation in this case would give rise to a personal equity in favour of Cuzeno (and its successor, Topdaze). It is true that the Owners Corporation at least initially supported the concept of the coffee shop and, as I have found, its Executive Committee gave an informal or tacit approval to the installation of the grease trap in basement level one. When that approval was given it must have been contemplated, at least in general terms, that once the café business commenced the operator of the business would make use of the grease trap. However, the terms upon which such use would take place was not the subject of discussion, and none of the formal steps required under the applicable strata titles legislation for the creation of easements or exclusive use rights were ever embarked upon. In addition, when the subject of rights to use the grease trap was raised in the period prior to the transfer of Lot 47 to Cuzeno, the position of the Owners Corporation was that it would give consideration to the grant of an easement or the passing of an exclusive use by-law, but no assurances were given. In these circumstances, it is difficult to see why it would be unconscionable on the part of the defendant to subsequently to insist upon its legal rights and assert that the owner of Lot 47 did not have the benefit of any easement to use the grease trap.

Section 88K of the Conveyancing Act 99By s 88K(1) of the Conveyancing Act 1919 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. Such an order may be made only if the Court is satisfied of the matters set out in s 88K(2) of the Act. Those matters may be summarised as: (a)the use of the land having the benefit of the easement will not be inconsistent with the public interest; (b)the owner of the land to be burdened by the easement 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 person seeking the easement to obtain the easement (or an easement having the same effect) but have been unsuccessful. 100The relevant principles concerning whether an easement is "reasonably necessary" within the meaning of s 88K(1) were considered by the Court of Appeal in Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445 at [154] - [159]. The Court of Appeal there stated: [154] The requirement that the easement be reasonably necessary for the effective use and development of the land means something more than mere desirability or preferability over the alternative means available: Rainbowforce Pty Ltd v Skytone Holdings Ltd [2010] NSWLEC 2 at [76]. However, reasonable necessity does not mean absolute necessity. The correct approach to the question, in our opinion, was stated by Hodgson J (as his Honour then was) in 117 York Street Pty Ltd v Propritors of Strata Plan No 16123 (1998) 43 NSWLR 504 as follows: "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. In my opinion: (1) the proposed easement must be reasonably necessary either for all reasonable uses or developments of the land, or else for some one or more proposed uses or developments which are (at least) reasonable as compared with the possible alternative uses and developments; and (2) in order that an easement be reasonably necessary for a use or development, that use or development with the easement must be (at least) substantially preferable to the use or development without the easement. The first of those requirements may seem contrary to a statement by Hamilton J in Tregoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15,845 that the Court 'is not to judge upon the reasonableness of the particular development'. However, that statement is qualified by the words 'at least in this case'. If there are some possible reasonable uses or developments of the land for which a proposed easement is not reasonably necessary, then it seems to me that the easement cannot be 'reasonably necessary for the effective use or development' of the land, at least unless there is some proposed use or development, for which the proposed easement is reasonably necessary, which is itself a reasonable use or development. It may be that the particular use or development would need also to be preferable to the alternatives; but whether or not that is so, it would in my opinion certainly need to be at least reasonable." [155] In Rainbowforce above, Preston CJ of the Land and Environment Court, gave a relatively wide meaning to the concept of effective use and development (at [72]) stating that if use or development of land for some planning purpose such as residential, commercial or industrial cannot be achieved without the creation of the easement, the easement is reasonably necessary for such use or development to be effective. To the extent that Preston CJ was suggesting that subject to the other matters which he stated required consideration, an easement would be reasonably necessary for the effective use and development of the land if it was required for any proposed development, regardless of the development's desirability or economic effect, the proposition, with respect, is too wide. That approach would not take adequate account of the word effective. Equally, we do not believe, as suggested by Moorebank, that it is necessary to show that the easement is necessary to achieve the highest and best use of the land. In a case such as the present, where the easement is said to be necessary for the commercial development of the land, it is sufficient in our opinion to show that the proposed development is one which is appropriate to the area in which the land is situated and is at least an economically rational use of the land. That in our opinion is consistent with what was said by Hodgson J in 117 York Street above in the passage which we have cited above (see also Lonergan v Lewis [2011] NSWSC 1133 at [22]). [156] That is not to say that an easement will always be granted in these circumstances. As we have indicated the authorities have established that the concept of reasonable necessity requires consideration of the effect of the grant of the easement on the servient tenement: ING Bank Australia Ltd v O'Shea [2010] NSWCA 71 above. Further, it is correct in our opinion, that the greater the burden on the servient tenement, the stronger the case needed to justify a finding of reasonable necessity... [158] The determination of whether an easement is reasonably necessary for the use or development of the land also involves consideration of the alternative methods by which such use or development could be achieved. That is implicit in the concept of reasonable necessity. In the present case it involves the consideration of whether there is alternative access to give effect to the development. [159] None of the factors to which we have referred above can be considered in isolation from the others. Ultimately the question of whether an easement is reasonably necessary for the use or development of the land will be determined by an evaluation of those factors in conjunction with each other. 101The reference to the earlier Court of Appeal decision in ING Bank (Australia) Ltd v O'Shea [2010] NSWCA 71 was to the judgment of Giles JA (with whom Campbell JA agreed) at [48] - [49] where the point was made that it was the necessity of the easement, not the use or development of the land, which was subject to the qualification of reasonableness. At [49] Giles JA continued: [49] ... Qualification whereby the necessity must be reasonable is apt to, and in my opinion does, permit regard to matters beyond the relatively absolute necessity for the effective use or development of the dominant tenement. It calls for an assessment of that necessity having regard to all relevant matters, according to the criterion of reasonableness. The impact of the easement on the servient tenement, and the fact that ordering an easement detracts from the property rights of the owner of the servient tenement, are matters readily to be taken into account in that assessment. It is difficult to see how reasonable necessity for an easement for the use or development of a dominant tenement, as distinct from necessity, can be arrived at without regard to the effect on the enjoyment of the servient tenement and on the property rights of the owner of the servient tenement. 102More recently, that portion of the judgment of Giles JA was cited and relied upon by the Court of Appeal in City of Canterbury v Saad [2013] NSWCA 251 at [29]. 103In support of the submission that the requirement of reasonable necessity was satisfied in this case, it was contended on behalf of the plaintiffs that the use of the grease trap was reasonably necessary for the operation of a café from Lot 47. A number of items of evidence were relied upon, including Condition 3 of the modified development consent issued by Kogarah Council on 1 December 2008, the Plumbing and Drainage Code of Practice (section 14.3.2.3), and the evidence given by Mr Taylor in cross-examination to the effect that it was consistent with his experience that a café or restaurant which operates a commercial kitchen is required to have a grease trap that complies with the minimum requirements set out in the Sydney Water document concerning trade wastewater (exhibit E at page 21). Reference was also made to paragraph 4 of a written submission made by the defendant in October 2012 to the CTTT to the effect that the grease trap was "an integral part" of the business operated by El Greco. 104The defendant, for its part, submitted that the requirement of reasonable necessity was not met in circumstances where the plaintiffs did not lead any evidence of alternative uses (that is, uses other than a café) so as to establish that use of Lot 47 with the easement is substantially preferable to its use without the easement, and also failed to adduce evidence to show that possible alternative easements were not viable. 105In my opinion, for the reasons which follow, the easement sought by the plaintiffs is reasonably necessary for the effective use of Lot 47 within the meaning of s 88K(1). 106It is clear that the use of Lot 47 for a coffee shop is at least a reasonable and appropriate use of the land as compared with possible alternative uses. The valuation evidence establishes that the relevant area is zoned "B4 - Mixed Use" under the Kogarah Local Environmental Plan 2012. Mr Keen, the valuer called by the defendant, expressed the opinion, in relation to Lot 47, that whilst there are alternative retail uses for which Lot 47 could be used without a grease arrestor connection, "the best use of the premises is for a coffee shop with grease arrestor connection". 107There can be little doubt that an easement of the type sought is reasonably necessary for the use of Lot 47 as a coffee shop. The terms of Condition 3 of the modified consent of 1 December 2008 require a "Sydney Water approved grease trap", and it is likely, having regard to Mr Taylor's evidence as well as section 14.3.2.3 of the Plumbing and Drainage Code of Practice, that the provision of a grease arrestor trap for the use of the coffee shop was also required pursuant to the terms of the original consent. It was not practical to place the grease trap in Lot 47 itself. Mr Perry gave evidence to the effect that, due to space restrictions and the need for gravity to assist draining, it was not practical to locate the grease trap on the ground floor. Put simply, the use of Lot 47 as a coffee shop without an easement of the type sought would not comply with the applicable planning requirements. 108Moreover, the effect which the grant of the proposed easement would have upon the servient tenement (that is, the parts of the common property affected by the grease trap and its associated apparatus) is in my view relatively minor. This case is a long way away from a situation where the imposition of the easement would sterilise the servient tenement so far as its development or use is concerned (see Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd (supra) at [157]; Bloom v Lepre [2008] NSWSC 70 at [38]). The grease trap itself takes up part of the area of two visitor carapaces in basement level one. In essence, the presence of the trap reduces the effective length of each of those car spaces from approximately 5.5 meters to approximately 4.5 meters. 109That reduction was brought to the attention of Kogarah Council by the defendant's solicitors in July 2013. It was suggested that the reduced length of the spaces contravened relevant parking codes. However, on 26 July 2013 Kogarah Council replied, stating that a Council Traffic Engineer had inspected the area in question and advised that the visitor parking spots adjacent to the grease trap "are considered to be satisfactory, as the manoeuvring space to the rear of the spots have ample room and still meet the objectives of the code". The reply also stated that the Council has "no reasonable grounds to take any action in relation to the grease trap as currently installed". 110The photographs which were in evidence (exhibit D) show that there is sufficient space in an affected parking bay to satisfactorily accommodate a commercial delivery van. In addition, there was evidence given by Mr Doncas, the valuer called by the plaintiff, to the effect that the reduction in the length of the spaces was to some extent ameliorated by the fact that the aisle which runs past the spaces is about 1.4 meters wider than the width specified in the applicable Australian Standard. It was the opinion of Mr Doncas that the affectation brought about by the presence of the grease trap did not impinge on the utility of the affected car spaces in a significant way. Mr Keen expressed the opinion that the car spaces "remain functional but have reduced amenity due to the reduced length". In the course of his cross-examination, he was shown the photographs (exhibit D) and he agreed that a standard-sized van would fit comfortably in one of the affected spaces. In re-examination, he made the point that vans of a larger size would protrude into the aisle, thereby posing something of a safety risk. 111There is no evidence that the pipes and vents associated with the grease trap (all of which are upon the common property) restrict or inhibit the use of the common property in any significant way. Mr Keen stated that the pipe work linking the grease trap to Lot 47 did not inhibit the functional use of the area "on a day to day type basis". There was no evidence that the vents, which pass out of basement level one into a stairwell, and then proceed up to the roof of the building, brought about any deleterious effect. 112There was evidence, of a limited nature, going to the question of possible alternative means by which Lot 47 could be used as a coffee shop. In practical terms, such alternative means would have to be an alternative grease trap, given that the provision of such is a condition of the development consent. 113The defendant adduced some evidence, through Mr Taylor, to the effect that it might be feasible to locate a grease trap in some privately owned car spaces at the lower end of basement level one. Those car spaces, which are owned by Cuzeno, are adjacent to the wall which is opposite the wall where the grease trap has been located. These car spaces are a considerable distance from that part of the basement ceiling which is directly below the café area. Accordingly, if a grease trap was located in those car spaces the pipes which connect the café to the grease trap would have to be much longer than the pipes that are presently in place. There was no evidence of the actual measurements that would be involved, but an indication of the greater length of pipes required can be gained from the floor plans of basement level one. 114Mr Taylor gave evidence that he was aware of the existence of grease traps which were connected to pipes of lengths greater than 50 metres. He also stated that it is possible for an electric current to be put through pipes in order to increase their temperature and thus facilitate the flow of grease through the pipes. He also made mention of the availability of decongestants or solvents which can be used to break down solidified fat within pipes. 115Mr Perry explained in his evidence that he installed the grease trap in its present location because: It was the most practical place to put it. It was as close to the café as we could get it. 116He stated that other locations were considered "right down the bottom" but these were "too far away". It was put to him in cross-examination that it would be possible to run the pipes to a grease trap at the lower end of basement level one and overcome problems concerning solidified grease by using electrified pipes. Mr Perry was not sure whether that would be a solution to such problems. He maintained that the present location is the most practical and most convenient place for the grease trap. He also stated that Sydney Water recommends that a grease trap be installed as close as possible to the source of the grease to minimise the possibility of grease clogging the pipes before reaching the grease trap. 117It should also be noted that Mr Jabbour gave evidence that he sought technical advice about the location of the grease trap and was told that it had to be as close as possible to the draining area. It is not clear whether the technical advisor he was referring to was Mr Perry or someone else. 118It seems to me that whilst it may be possible to locate the grease trap in the car spaces at the lower end of basement area one, and connect the café with such trap by means of lengthy pipes which may need to be electrified, that alternative is both technically inferior and undoubtedly more costly than the existing trap. The intrusion (such as it is) brought about by the pipes which travel along the ceiling of the basement would also be increased. Against that, however, the useable length of the two visitor car spaces at the upper end of basement level one would be increased by approximately one metre. Overall, given that a one metre increase in the length of the visitor car spaces would bring about only a small increase in the utility of those spaces, I do not think that the possible availability of an alternative location for a grease trap for use by the café is a factor of much significance. 119It is appropriate to evaluate all of the above matters in conjunction with each other (see Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd (supra) at [159]; see also ING Bank (Aust) Ltd v O'Shea (supra) at [146] per Young JA). In my view the above matters, including the appropriateness of the use of Lot 47 as a coffee shop, the requirement of a grease trap for such use, the limited effect which the grease trap and its use has upon the common property, and the appropriateness of the location of the grease trap, lead me to conclude that an easement for the use of the grease trap is reasonably necessary for the effective use or development of Lot 47. 120I turn now to the matters specified in s 88K(2). In my opinion the use of Lot 47 as a coffee shop having the benefit of the proposed easement will not be inconsistent with the public interest. It is not clear whether the defendant's submission that the grease trap was an "illegal installation" was relied upon in support of a submission to the contrary. There was no other suggestion that the use of Lot 47 as a coffee shop with the benefit of the proposed easement would be inconsistent with the public interest. It seems to me that such use would be quite consistent with the public interest given that such use is a lawful and appropriate use of the land and, further, that the grease trap serves to protect the environment generally. 121I am also of the opinion that the defendant, as the owner of the land to be burdened by the easement sought, can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement. It was submitted on behalf of the defendant that the location of the grease trap on common property gives rise to the possibility that the Owners Corporation may face an indeterminate liability to third parties who may be injured or suffer loss as a result of a malfunction, and that in the absence of some form of indemnity from the plaintiffs "no adequate compensation is possible". However, in my view, that issue can be dealt with appropriately through the terms of any easement imposed. 122The evidence given by the valuers clearly shows that, aside from that issue, compensation for the imposition for the easement sought is capable of calculation. The question of appropriate compensation is dealt with separately below. 123The third matter referred to in s 88K(2) is whether all reasonable attempts have been made by the applicant to obtain the easement sought (or an easement having the same effect) but have been unsuccessful. The defendant submitted that this requirement had not been satisfied because the plaintiffs had not identified, with sufficient particularity, the terms upon which use of the trap and its associated apparatus was sought. I do not accept that submission. On 28 November 2012, Mr Shehadie sent a letter to Mr Mueller, which enclosed a draft plan of easement showing the area in basement level one where the grease trap is located. The letter also contained suggested terms for an easement to allow use of a grease trap in that area. Those terms included: 2. The grantor may make reasonable rules about the use of the easement site by the grantee and authorised users, such rules to be not inconsistent with the grant of this easement. 3. The grantee must at its cost a. Operate, maintain, repair and replace the grease arrestor; b. Arrange for regular pump outs of the grease arrestor; and c. Comply with the requirements of government agencies for grease arrestors. ... 5. The grantee and authorised users must repair damage which they cause to the grease arrestor or the easement site. 6. The grantee and authorised users must not a. Obstruct the use [of] the lot burdened; or b. Litter, soil or damage the easement site. 124That offer, to which the Owners Corporation did not respond, provides a reasonably detailed description of the easement sought. Certainly it was a more than adequate basis upon which negotiations could have proceeded further. 125It was also submitted by the defendant that the Court should not be satisfied that the plaintiffs had made all reasonable attempts to obtain the easement in circumstances where more appropriate dispute resolution procedures are available under Chapter 5 of the Strata Schemes Management Act. By way of example, s 158 of that Act provides that an Adjudicator is in certain circumstances empowered to make an order prescribing the making of a by-law which gives rights of exclusive use and enjoyment over the common property. However, I do not think that the failure of the plaintiffs to pursue that path means that they have not made all reasonable attempts to obtain the easement they seek. It was not unreasonable for the plaintiffs to come to this Court following the break down of negotiations in November 2012, particularly in circumstances where the plaintiffs also had a claim that a Wheeldon v Burrows-type easement had arisen by implication and was enforceable against the defendant. 126In my opinion all reasonable attempts have been made by the plaintiffs to obtain the easement sought (or an easement having the same effect), but without success. The position of the Owners Corporation appears to have been (during the period from July 2011 to at least November 2012) that it would be prepared to accept an easement provided that it received in return a weekly fee of $110 (including GST), such fee to be increased annually by an amount of 5%. The value of such an income stream would appear to vastly exceed the amounts of compensation assessed by both of the valuers called to give evidence in this case. 127According to the affidavit sworn by Mr Antonopoulos, the Executive Committee was not prepared to recommend that the Owners Corporation accept the easement as proposed in Mr Shehadie's letters of November 2012 because: (a) inadequate compensation was offered; (b) there was a failure to specify the precise terms of the proposed easement; and (c) the site of the proposed easement (which I take to be a reference to the easement depicted on the draft plan submitted) did not refer to the pipes which service the grease trap. 128As noted earlier, it is my view that the offers made in November 2012 provided sufficient detail to amount to a firm basis upon which to continue negotiations. The inadequacies perceived by the Executive Committee are unconvincing. 129It follows from the above that I am satisfied as to each of the matters referred to in s 88K(2). 130It is next necessary to consider whether the Court should proceed to exercise the discretion it has to make an order imposing the easement sought. 131On the question of discretion, the defendant submits that the discretion should not be exercised in favour of the plaintiffs because they have acted unreasonably and illegally. It is put that Cuzeno installed the grease trap and associated apparatus on common property without the defendant's approval and thereby contravened By-law 5(1) which provides that an owner must not damage or deface any structure that forms part of the common property except with the written approval of the Owners Corporation, and also s 65A of the Strata Schemes Management Act which states that an owner may alter the common property only if a special resolution has first been passed authorising the alteration. It was also submitted that Cuzeno acted unreasonably by permitting El Greco to use the grease trap without obtaining any approval from the Owners Corporation. 132It is true that Cuzeno did not obtain any formal (or written) approval from the defendant for the construction of the café or the grease trap itself. At most, Cuzeno had the benefit of the authority, given at the Extraordinary General Meeting of 3 June 2006, to lodge applications for development approval and a construction certificate in respect of the proposed coffee shop development. At least initially, the proposed development was seen as beneficial by all parties concerned. The fact that Cuzeno was pursuing that proposal became obvious (if it was not already so) when construction commenced in about June 2008. As far as the evidence discloses, Cuzeno was openly building upon the defendant's property in pursuit of the proposed development and no objection to this course was raised by the defendant. Moreover, as I have found, Cuzeno at least obtained tacit or informal approval from the Executive Committee of the Owners Corporation to the installation of the grease trap on basement level one. 133Cuzeno undoubtedly proceeded in an informal manner, but it was not, in my view, acting in either a high handed or underhand manner. It was openly pursuing the coffee shop proposal and in doing so was incurring expenditure and making improvements to the property of the defendant. Given the absence of any objection to Cuzeno's conduct I do not think its failures to obtain formal (or written) approval from the defendants affords a good reason to decline to exercise the discretion in favour of imposing the easement sought. Rather, in circumstances where the requirements of s 88K(1) and (2) have been satisfied, and bearing in mind the legislative purpose of facilitating the reasonable development of land whilst ensuring that just compensation is paid for any erosion of private property rights, the Court should exercise its discretion in favour of imposing an easement as sought by the plaintiffs. 134As to the terms of the easement to be imposed, the plaintiffs submit that the terms (apart from the question of compensation) be those proposed in Mr Shehadie's letter of 28 November 2012. However, as the defendant has pointed out, the proposed plan of easement deals only with the grease trap itself, not the associated pipes and vents. I agree that it is necessary to properly identify the site of the easement which in this case includes the pipes and vents. 135I referred earlier to the concern expressed by the defendant about possible liabilities to third parties arising out of the grease trap. I agree that the terms of the easement should include appropriate protection for the defendant in this respect, either by an agreement to provide insurance or else a direct indemnity. 136Otherwise, it seems to me that the terms of the easement should be substantially in accordance with the indicative terms set forth in Mr Shehadie's letter of 28 November 2012. I do not accept the defendant's submission that such a grant would be tantamount to a conferral of exclusive possession of part of the common property, such that it is not truly an easement. 137I will direct the parties to bring in short minutes of order which reflect these reasons and include a draft order which satisfies the requirements of s 88K(3). In drafting the terms of the easement the parties should consider the provisions of Schedule 1B to the Strata Schemes (Freehold Development) Act 1973 concerning easements for services. 138I turn now to the question of appropriate compensation for the imposition of the easement. 139Mr Doncas approached the question of compensation under three heads, namely, loss of proprietary right, compensation for blot on title, and disturbance. He assessed total compensation at $4,930, this amount being made up of $2,026 for loss of proprietary right, and $2,904 for disturbance. No compensation was allowed for blot on title. 140Mr Keen assessed compensation at $12,210, this amount being made up of $8,800 for diminished value, $2,860 for disturbance, and $550 for blot on title. 141The main difference between the valuers concerned the assessment of the effect on value which would be caused by the imposition of the easement. Mr Doncas, by reference to three sales in developments in Kogarah in 2010, applied an amount of $4,000/m2 to the easement area (5.065m2) to arrive at a figure of $20,260. To that figure he applied a 10 per cent "affectation rate" to reach his valuation of $2,026. 142Mr Keen, by reference to five sales of car spaces in nearby suburbs in 2012 and 2013, adopted a rate of $2,200/m2, which he applied to an easement area of 5m2, resulting in a figure of $11,000. Mr Keen expressed the opinion that the proposed easement diminishes the value of the easement area by 80 per cent, which percentage, when applied to the $11,000, results in a valuation of $8,800. 143I do not regard either approach as entirely satisfactory. When it comes to the rate per square metre I prefer the rate adopted by Mr Keen, given that it is based upon sales of car parking spaces. The approach taken by Mr Doncas is, as he stated in cross-examination, "more than fair and reasonable". However, I do not think that it would be appropriate to adopt Mr Keen's figure of 80 per cent for diminished value. As the evidence discussed earlier shows, a loss of about one metre from the length of each of the visitor car spaces does not significantly detract from the utility of those car spaces. It was put to Mr Keen in cross-examination, but not accepted by him, that a figure closer to 50 per cent would be reasonable. In my view, and bearing in mind the point made by Mr Doncas in cross-examination that the two visitor car spaces are unlikely to ever be sold, it would be appropriate to apply a figure of about 50 per cent rather than the 80 per cent used by Mr Keen. On that basis, Mr Keen's figure for diminished value would be $5,500. 144Mr Keen would allow a further nominal amount of $550 for blot on title. The evidence of Mr Doncas was that because the easement only affected the common property, namely, two visitor car spaces, no allowance should be made for blot on title. I agree that no allowance should be made in that respect. An allowance of $2,900 should be made for disturbance. 145I conclude, therefore, that appropriate compensation to take into account both diminished value and disturbance would be $8,400. An order for compensation to be paid in that amount by the plaintiffs to the defendant will be made pursuant to s 88K(4). 146That leaves the issue of the costs of the proceedings. The plaintiffs failed on their primary case based on Wheeldon v Burrows, but suceeeded in having an easement imposed pursuant to s 88K. Section 88K(5) provides that the costs of the proceedings (for the imposition of an easement) are payable by the applicant subject to any order of the Court to the contrary. 147In Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd (supra) at [254] it was stated by the Court of Appeal that s 88K(5) has been construed as creating an entitlement on the part of the person affected by the imposition of the easement to have the costs of the court determining whether circumstances appropriate to the grant of the easement have been made out, together with the costs of assessing the appropriate compensation. The Court of Appeal further stated that the entitlement is only lost by unreasonable conduct. 148The plaintiff submitted that the conduct of the defendant was sufficiently unreasonable as to justify a departure from the usual order under s 88K(5). It was submitted that it was unreasonable of the defendant to demand a weekly fee of $110 in return for the easement in circumstances where the easement would only have a minimal impact on the common property, and where there was no objective justification for such a fee. It was also submitted, that as late as the commencement of the hearing, the defendant was unreasonably maintaining that the pipes and vents associated with the grease trap might impinge upon the property of other lot owners. 149I do think that the defendant's attitude to the negotiations in respect of the easement borders on the unreasonable. In particular, the weekly fee it sought has no apparent justification as a measure of reasonable compensation, and in November 2012 it effectively walked away from further negotiations for reasons which I find unconvincing. It is also true that the point taken about the pipes and vents possibly intruding upon the property of other lot owners was readily abandoned once the view of the basement area was undertaken. It became clear very quickly at the view that the pipes and vents were located only on the common property. Nonetheless, I do not think the taking of that point added any significant time to the hearing. The need for a view was largely the result of deficiencies in the plaintiff's evidence concerning the grease trap. 150It should also be noted that a great deal of the evidence which was relevant to the s 88K case was also relevant to the Wheeldon v Burrows case. 151Overall, given that the aspects of the defendant's conduct which might be described as unreasonable did not cause the hearing of the proceedings to be any more difficult or lengthy than would have otherwise have been the case, I decline to make any order to the contrary pursuant to s 88K(5). Accordingly, the appropriate order is that the plaintiffs pay the defendant's costs of the proceedings. 152I direct the parties to bring in short minutes of order which reflect these reasons for judgment. 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: 24 September 2013

Cuzeno Pty Limited v The Owners - Strata Plan 65870

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Judgment (7 paragraphs)

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Cases Cited (16)

Cited By (5)