Debbula Pty Ltd v The Owners - Strata Plan 6964

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

5272/01 Debbula Pty Limited v The Owners - Strata Plan 6964 JUDGMENT 1 Master: This is an application by the plaintiff under section 88 K of the Conveyancing Act 1919 seeking the grant to it of an easement to drain water through land owned by the defendant. The plaintiff's land is known as 5 Glenview Crescent, Terrigal and is Lot 3 in DP 228166. It is shown on the plan which is annexed to this judgment and it is the block of land on the plan fronting on to Glenview Crescent which has the legend "collect stormwater and pipe to Campbell Crescent". 2 The land over which is the easement is sought is immediately to the north and shown by the legend "Surf and Sun" on the plan. The defendant Owners Corporation owns the land. The defendant opposes the application. 3 The matter came before me when I was an Acting Judge of the Court and I have continued to deal with the matter pursuant to s 37(3A) of the Supreme Court Act. Background facts 4 The plaintiff's land has erected on it a single story house the outline of which is shown in the attached plan. The plaintiff has lodged two development applications with the Gosford City Council in respect of proposals to demolish the existing house and erect in its place three units. The proposals occupy a substantial part of the site which has an area of 809 sq m. 5 The plaintiff's land falls away sharply on its northern side and any drainage from any redevelopment taken away by a gravity system must pass down to Campbell Crescent and the Council's stormwater system in that street. There is no fall from the plaintiff's land to Glenview Crescent and the Council opposes any mechanical system that relies on pumping of stormwater back to Glenview Crescent. 6 The plaintiff lodged its first application with Gosford City Council in 1998. The application attracted objections from ten owners from nearby properties and they together with their architects, urban planners and solicitors lodged objections with the Council. The objections were as to the height, interruption of views, privacy and the bulk of the development. 7 One of the matters that was raised was the issue of a drainage easement and by July 1999 there were negotiations between the plaintiff and the defendant for granting of a drainage easement. On 22 September 1999 the Development Assessment Unit of the Council resolved to refuse the development application for reasons that included that a satisfactory method of drainage of stormwater from the site had not been identified. This led to an offer by the managing agents of the defendant of an easement on a number of conditions including $6,000 compensation. This offer was apparently accepted and the plaintiff applied for a redetermination of the refusal of the development application on the basis that the easement had been agreed. It also addressed other concerns which had been expressed by the Development Assessment Unit of the Council. 8 On 17 November 1999, the Development Assessment Unit of the Council refused the development application for the following reasons: 1. The height of the proposed development is considered excessive and does not comply with the requirements of clause 28 of the Gosford Planning Scheme Ordinance. 2. The proposed variation to the height limit of clause 28 of the Gosford Planning Scheme Ordinance under the provisions of SEPP 1 is excessive and is not supported. 3. The proposed building does not comply with the maximum building envelope permitted by DCP 100. 4. Due to its height, bulk and scale, the proposed development would have an adverse impact on adjoining properties. 5. Approval of the application under the above circumstances would not be in the public interest. 9 Again, the plaintiff applied for a redetermination of Council's refusal. The matter was referred to a Council meeting for determination. Council staff reported to Council: "It is considered however that the applicant has not adequately addressed the reasons for refusal." 10 On 14 December 1999, the Council resolved to refuse the development application for the same reasons as those given by the Development Assessment Unit. This refusal was given notwithstanding that the stormwater drainage easement had at this time been resolved. 11 In March 2000 the plaintiff lodged another development application. Like its predecessor it was for three two-storey units and was for a building, which, unlike its predecessor, did not contain view corridors for those who would lose some views because of the building. 12 In May 2000 the Council drew the plaintiff's attention to a number of problems with the proposed development. Council noted the lodgement of a caveat by the owner of one of the units by the defendant, a Mr Joseph. That caveat claimed that the Owners Corporation could not grant an easement except by unanimous resolution. This contention was at that stage correct. At the next General Meeting of the defendant held in July 2000 it was determined by the Owners Corporation that because of the caveat the Owners Corporation could not decide the matter 13 On 31 August 2000 the Development Assessment Unit refused the development application for the following reasons: 1 The proposed development does not comply with the 7 metre height limit applying under Clause 28 of the Gosford Planning Scheme Ordinance and the 4 metre maximum distance between the top-most floor and the ground level below applying under the provisions of DCP 100. 2 The external cut and fill is excessive and unsatisfactory in terms of the provisions and objectives of DCP 122 - Cut and Fill Restrictions. 3 The proposed development will have an unacceptable impact on the views from adjoining properties and it is not consistent with the principles of view sharing. 4 A method for the satisfactory disposal of stormwater from the proposed development has not been identified. 5 Approval of this application under the above circumstances would not be in the public interest. 14 On 6 June 2001 the plaintiff's solicitors asked the Council: "Please advise whether Council is prepared to support our client's application [to the Supreme Court] by way of an affidavit indicating that the easement is the only satisfactory way of disposing of the storm water from our client's property in the event of the approval of our client's development application." 15 Council replied as follows on 29 June 2001: "This application was refused on 31 August 2000 on a number of issues which included the satisfactory disposal of stormwater not being identified. Council is unable to support your client's application to the Supreme Court for the granting of a drainage easement pursuant to s. 88K of the Conveyancing Act . It is the responsibility of your client to engage a hydraulic engineer to examine all options to ensure satisfactory disposal of stormwater from the site." The relevant legal principles 16 Section 88 K 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…" 17 The evidence discloses that the parties are agreed that the plaintiff has made all reasonable attempts to obtain an easement from the owners but has been unsuccessful. So far as compensation is concerned the evidence on this aspect is not yet complete as the plaintiff had served some fresh affidavits just before the commencement of the proceedings. The parties are agreed that the question of compensation can be addressed once I decide the matter of principle, namely, whether the easement should be granted. This is one of a class of cases where there can be adequate compensation for any loss or other disadvantage that will arise from the imposition of the easement. 18 The remaining questions which arise are:

1. Is the easement reasonably necessary for the effective use or development of the plaintiff's land?

2. Is the use of the land, having the benefit of the easement, inconsistent with the public interest? 19 The first question is the subject of a number of decisions of this Court. A leading one is a decision of Hodgson CJ in Equity in 117 York Street Pty Ltd v Proprietors of Strata Plan 16123 (1998) 43 NSWLR 504. In that case the plaintiff owned property on 117 York Street on which it wished to erect a twelve storey commercial building. The defendant owned the common property of an adjoining seven storey block of residential units. The easement was sought for the tail of a crane to pass across the common property in order to construct the development and for an overhanging gutter. His Honour held (at 508-509): "What does "reasonably necessary" mean? It is clear that "reasonably necessary" in section 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 (1997) 8 BPR 15,845; Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15,795 … 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 of the 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 was some proposed use or development, for which the proposed easement is reasonably necessary, which is itself a reasonable use or development. It may be that the particular proposed use or development would need also to be preferable to the alternatives; but whether or not that is so, it would in my opinion certainly need to be at least reasonable." 20 That passage has been quoted with apparent or express approval in a number of subsequent judgments: Durack v De Winton (1998) 9 BPR 16,403 at 16,448 - 16,449; Grattan v Simpson (1998) 9 BPR 16,649 at 16,651; Hanny v Lewis (1999) NSW Con VR 56,872 at 56875; Kent Street Pty Ltd v Council of the City of Sydney (2001) 10 BPR 18,757 at [11], [12]; Blulock Pty Ltd v Majic (2001) 10 BPR 19,143 at [14]. 21 In Busways Management Pty Ltd v Milner [2002] NSWSC 969 His Honour Justice Hamilton referred at 12 to the comments of Hodgson CJ in Equity in these terms: "It is not necessary for me in this case to express a concluded view as to the degree of my agreement with his Honour's analysis in all its detail. I have some reservations. One is as to the posing of a bipartite rather than a single test (if that is the effect of what his Honour said, which, properly read, it may not be). The other is as to whether it is really necessary for a conclusion of the reasonable necessity of the easement that the proposed use or development "must be ( at least ) substantially preferable to the alternative situation or situations" (my italics). I am, however, content on this occasion to determine the matter on the basis of his Honour's analysis as set out above." 22 The difference in approach may become important given the circumstances of the present case but I will first address the way in which the plaintiff and the defendant approach the question. 23 The plaintiff's first submission was that the easement was necessary for all reasonable uses or development of the land. It submitted that because the land was zoned residential 2 (b) in the Gosford Planning Scheme which allows residential flat buildings, in contrast to residential 2 (a) which only allowed single buildings, that the present existing use of the subject property, namely, a single dwelling was not a reasonable use or development of the land. 24 It submitted that the following facts which are established in the present case supported the submission; (a) The plaintiff's land is in the dress circle of Terrigal with ocean views. (b) At present there is an old single dwelling on the land. The land has an area of 809.3 square metres (see DAU report of 4/8/2000). It has a depth of approximately 50m and a width of approximately 15m. (c) The land is zoned residential 2(b) under the Gosford Planning Scheme Ordinance. Residential flat buildings are permitted in that zone. Under clause 28 of the PSO, four medium sized units are permitted or three large units. This is to be contrasted with the 2(a) zone where residential flat buildings are not permitted. (d) There are strong pressures for redevelopment in the 2(b) zone generally. The land is clearly undeveloped and ripe for redevelopment as a unit development. (e) The address of the land is 5 Glenview Crescent. From Glenview Crescent the land slopes down to the northeast and east towards the defendant's land in Campbell Crescent. The land at Glenview Crescent is approximately RL 23. The land at the boundary with the defendant's land is approximately RL 12. Thus there is a fall of 11 metres. (f) Any redevelopment, and particularly a unit development, requires a means of discharging storm water from the site. This can be done by: Discharge uphill by pump into Glenview Crescent, or, Discharge by gravity along natural contours through the defendant's land. (g) The Council will not permit discharge of storm water up to Glenview Crescent. It requires discharge by means of an easement through the defendant's land as suggested by the engineer, Mr Argue, as being the only practical means. (h) The Council will not grant development consent unless and until such an easement is granted. (i) The form of the easement is reasonable. It is a drainage easement 2 metres wide that would be underneath the site of an existing, if slightly dilapidated, dish drain which discharges water from both the defendant's land and other uphill land, including that of the plaintiff. The drainage system through the defendant's land will be below ground (below the driveway), adjacent to the common boundary, and will carry the storm water from the defendant's land so that the existing dish drain will no longer be required. A replacement concrete driveway will be constructed. There will be no disadvantage to the defendant and arguably there will be considerable improvement having regard to the current condition of the driveway as shown in the video of the site. 25 In particular the plaintiff submitted that the question should be approached in a generic way by having regard to any possible uses permitted by the zoning of the site. This could include residential units, dual occupancy and other similar forms of approval all of which involved different levels of development of the site. In this regard it pointed to the evidence of Mr Ingham, the defendant's town planner, at transcript 37, 38 and 43 to the effect that all types of such development would require an easement. 26 In the alternative, the plaintiff submitted that even if one assumes there is an alternative use for land in respect of which the proposed easement is not required. it is appropriate in this case to grant the easement. It submitted that, in the circumstances. the present development is reasonable as compared with the possible alternative uses and developments. This submission relies upon the second part of the formulation of Hodgson CJ in Equity in 117 York Street Pty Ltd v Proprietors of Strata Plan 16123. It involves the Court considering the merits of the present development proposal and whether consent will be obtained. It effectively moves the Council's town planning task to this court. That this has happened in this case is evident from the fact that adjoining owners are apparently funding the defendant's defence of the present action and thus in one sense the present application is a fight about the development itself rather than whether the easement should be granted. To move this task to the Court involves the Court in what has been described as a difficult and delicate task in exercising a discretionary power to grant approval when it has to balance the interests of one owner of land against those of another. That task is particularly difficult where one is considering views from properties. See generally, Commonwealth Oil Refineries Limited v North Sydney Municipal Council 2 LGRA 217 and Wright v Manly Municipal Council 4 LGRA 29. 27 In circumstances such as the present it is normally preferable for a council to deal with the question of an easement by way of deferred condition under section 80 (3) of the Environmental Planning and Assessment Act 1979. That section is as follows: (3) "Deferred commencement" consent A development consent may be granted subject to a condition that the consent is not to operate until the applicant satisfies the consent authority, in accordance with the regulations, as to any matter specified in the condition. Nothing in this Act prevents a person from doing such things as may be necessary to comply with the condition. 28 Such a deferred consent allows the appropriateness of the development to be debated before the Council and on appeal to the Land and Environment Court until finality is achieved on that aspect. This court can then deal with the necessity for an easement without having to second guess whether the Council will approve the development in due course. 29 The defendant's submissions raised two major matters. The first concerns the question of whether approval of Council to a proposed development is basic to whether an easement is necessary. There were three strands to this submission which were as follows. 30 The first strand was simply that there must be a need for the easement and that can only arise if, in fact, there is an approved development. In this regard the defendant pointed out that 117 York Street Pty Ltd was a particular special circumstance which was concerned with temporary matters and not ones which led to a substantial permanent impairment of the defendant's land. It was also a case where the easement was made conditional upon the consent being obtained. 31 The second strand rested upon the opinion of Mr Ingham that the nature and extent of the development influences the nature of the need. At transcript 43 he said; "Q. You were asked also some questions about a requirement for drainage or the dealing with stormwater from any redevelopment within the sloping areas of the Terrigal basin. Do the drainage requirements differ according to the nature of the development? A. The drainage requirements generally differ in relation to an increase in density of development, so if there is an increase in density then a council would normally require some drainage provision. Or even if a dwelling house were made into - a small dwelling house into a very large dwelling house, so that the hard paved areas, the roof and the hard paved areas of the site brought about a significant increase in run off from the site, then council would be concerned to ensure that drainage was properly provided for. Q. So the size of the building is an integer in the calculation of the nature and extent of drainage required? A. Or whether it would be necessary to do it at all." 32 It was submitted that the nature of development must at the very least be defined by reference to the need sought to be satisfied. This requires a development consent before one could determine the engineering which will be necessary. 33 The third strand was related to the possibility that, in the present circumstance where there has been no development approval, there might in fact be no approval granted in the future. This once again involves the Court in determining the intentions of the developer, the attitude of the Council and the ultimate decision on the town planning matter. It relied on the analogy with an implied grant that the need must exist at the time of the grant. 34 The next matter which the defendant raised was the question of public interest. In particular, reference was made to what was said by Mr Justice Hamilton in Busways Management Pty Ltd in these terms;: "The second requirement is of lack of inconsistency with the public interest. What I have already said about the present and contemplated uses of the building, the fact that strata subdivision consent has already been granted conditionally for the development, and the material generally available about the uses of the properties, shows that there is no inconsistency of the grant of the easement with the public interest." 35 It was submitted that in the present case the statutory authority charged with the question of deciding whether the development should be approved refused the development on two occasions and held that it was contrary to the public interest. Is the easement necessary for all reasonable uses or development of the land? 36 I have earlier set out in detail the substance of the plaintiff's submissions on this aspect. Acceptance of those submissions means that use of the land in its present form, as a single dwelling, is not a reasonable use of the land. It is not a question of who is the owner of the land and what the owner might think was a reasonable use. In 117 York Street Pty Ltd and in Hanny v Lewis the court has made it plain: "that what is reasonably necessary use is use or development of the land itself, not the enjoyment of the land by any of the persons who, for the time being, are the proprietors" 37 Clearly there is no need for the easement if the existing use of the land is to continue. There is no suggestion that the existing drainage from that land, whatever it might be, which does not use an easement, is under challenge. 38 The existing use is not in any sense a sterilisation of the land as the use can continue indefinitely and as it is likely to find favour with those sections of the public who prefer to live in single houses rather than in a unit block. In my view the existence of pressures for development that is permitted by the zoning does not prevent the existing use being a reasonable use of the land. Accordingly one must consider whether the proposed development is reasonable and, in the formulation of Hodgson CJ in equity, is substantially preferable to the existing use. The matters referred to in the plaintiff's submissions on this aspect are of course highly relevant to whether the development is substantially preferable to the existing use as such a question will involve debate about the best economic use and development of the land. Is the plaintiff's proposal a reasonable use or development? 39 This question assumes that there will be a particular use or development that the court must consider. This requires the court to consider whether or not the Council is likely to grant consent to the proposed development. If the Council will not it may well be that the easement is not necessary. 40 The court was asked to find that in due course development consent along the lines applied for by the plaintiff would be granted provided this court granted the appropriate easement. To this end there was tendered evidence by Mrs Slater who had qualifications as an architectural draughtsman, building foreman and clerk of works. Her experience included drawing numerous plans for developments of a similar size and nature to the present case and dealing with Councils in the approval process. 41 Some of the matters she addressed, such as the compliance with levels, could be ones which she may be able to persuade the Council to agree with her submissions. There was one matter however which is at the heart of the refusal of the Council on which there was differing evidence and this concerned the impact on the view from adjoining properties and thus the public interest. 42 The essence of Mrs Slater's evidence was that redesign of the roof for the existing proposal could overcome the issue of the potential loss of views from adjoining properties. She suggested that there be a flat roof development. Without redesign it is abundantly clear that the proposed development has a very substantial impact on the views of other properties over the ocean at Terrigal. Exhibit J is a photomontage in which there has been superimposed the proposed development (shown by a building of a green colour). If the development was completed that clearly indicates the extent of the interference with the views from the buildings behind the development which currently enjoy substantial views out to the ocean at Terrigal. 43 Mr Ingham gave evidence for the defendants. He is a town planner with extensive experience in dealing with councils and others concerning development applications. In paragraph 11 of his affidavit he indicates the extent of the interference with the views from 22 Campbell Crescent, 1 Glenview Crescent and 3 Glenview Crescent. There is no doubt that there would be this interference and it is clear from his evidence that any flat roof on the proposed development would still have adverse effects on views from the other properties. 44 It is perfectly apparent that the proposed development that was refused by the Council was one which endeavoured to maximise the development on the site. As Mr Ingham points out, if the application merely falls within the maximum limits prescribed by the development control plan, that does not guarantee the likely approval by the Council of the development. In paragraph 15 of his affidavit Mr Ingham referred to the various effects that the granting of the subject development would have on the adjoining properties. He dealt with Mrs Slater's modified design in paragraph 11. In my view he is right that there is a substantial impact on the properties nearby and, accordingly, I am not satisfied that there is any reasonable likelihood of the Council granting the development consent for this development even in the way Mrs Slater would modify it. 45 On the evidence before me I can only conclude that such consent that might be granted by the Council will be for a substantially smaller development. It may be by way of single story units, duplexes or some other form of development but there is nothing in the evidence that would enable me to determine what will be the likely development which will be consented to by the Council. In these circumstances it is appropriate to consider whether the easement is necessary. Is the easement necessary?

46 The plaintiff's submissions were that the obtaining of a development consent was a necessary precondition to the exercise of the court's discretion. That is not a view that was adopted by Hodgson CJ in Equity in 117 York Street Pty Ltd. At page 512 he said the following: "In my opinion also, nothing said or done by the council in this case shows that there is no chance of obtaining necessary consents. Although the council has grounded its refusal to date on the lack of consent by the defendant, it has not yet been asked to consider whether or not it would adhere to that requirement if the plaintiff has an easement over the defendant's property. In my opinion, even if the use of the proposed easement would be illegal without consents, and those consents have not been obtained, the easement may still be "reasonably necessary for the effective use or development of the land", at least so long as the use is not absolutely illegal or there is no real chance of consent. Having regard to my interpretation of the meaning of "reasonably necessary" in the section, there is no inconsistency in this view. A project like the present one may involve dealing with a number of adjoining properties, and perhaps with other government authorities, as well as with a local council. It may be that some necessary consents will not be available unless the court has already granted an easement. Having regard to the remedial nature of the section, I do not think it should be interpreted in such an inflexible way as to require that all other obstacles to the proposed use must have been overcome before the Court has power to grant an easement." 47 I agree with His Honour's comments that the discretion of the court should not be confined. This is also apparent from the requirement for the court to consider the public interest. 48 The plaintiff has tried twice to obtain development consent and has been refused on both occasions. It has not taken refusal of that consent on appeal to the Land and Environment Court and it obviously will not do so now as the time for appeal has expired. In the circumstances of the present case it would always have been open to the plaintiff to appeal to the Land and Environment Court and in that process, in addition to dealing with the planning matters, seek a deferred condition as to the grant of the easement. If it had been successful in due course this court could have dealt with the question of the easement untroubled by the difficulty caused by the absence of development consent in respect of planning matters. 49 Fortunately the problem with which I am faced should hopefully be avoided in the future. Section 40 of the Land and Environment Court Act 1979 previously provided a very limited right for the Land and Environment Court when dealing with an appeal under section 97 of the Environmental Planning and Assessment Act 1979 to grant a drainage easement. In the circumstances of the present case the powers there given may not have been sufficient to allow the grant of the relevant easement. That section has been replaced by new section 40 that took effect from 10 February 2003. The new section gives the Land and Environment Court powers that are generally similar to the powers that this court has under section 88 K of the Conveyancing Act 1919. The court is limited to the situation where the court has determined to grant development consent on appeal under section 97 of the Environmental Planning and Assessment Act 1979. In such a case the section allows the appellant to apply for an order for the grant of an easement. 50 Although this may seem to be somewhat limiting it is apparent that the Land and Environment Court has under s 39 (2) all the functions and discretions of the Council in determining whether to grant consent. Thus it could grant consent subject to a deferred condition concerning the granting of the easement under section 80 (3) of the Environmental Planning and Assessment Act 1979. There is thus the mechanism for the appeal process in the Land and Environment Court to deal with the planning aspects of the appeal which would be done in the first instance and, subsequently, the grant of any easement that was necessary and which was the subject of a deferred condition. 51 Be that as it may I am faced with a situation in the present case where there has been no consent given by the Council and I have found that consent is unlikely to be given to this development or any modification which the plaintiff's suggested in evidence could be made to the present development. The matter cannot be considered on the basis of the plaintiff's principal submission concerning the zoning of the land because that requires a consideration of the matter in the abstract without any particular use or development proposal being before the court. That is because:-

1. The size of the development may possibly affect the extent of the easement in terms of its size.

2. There may be, for one reason or another, no new development for quite some time or, indeed, at all. This would lead to interference with property rights for no reason, and

3. any consideration of the public interest would be on a superficial level unrelated to the actual effect on the adjoining properties. 52 In my view a grant of the easement sought by the plaintiff is not necessary and, accordingly, I dismiss the summons with costs. **********

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