The penultimate paragraph in Westfield (see par 27 above) is conclusive of this view.
30 The High Court does not displace the proposition the Applicant derives from Cannon. If the proposition that objective facts (such as the physical state of the land) which existed at the time the easement was granted can be called in aid of construction was good law before Westfield, it has not been changed by anything said in Westfield. Having said that, the physical state of the land at the time of the grant of the easement (an objective fact) cannot be used to establish the subjective intention, contemplation or expectations of the parties to that easement. That would be contrary to what Westfield does stand for.
31 Turning now to the terms of the easement. The "notice" informs the public as to the nature of the interest taken. It talks of the "easement described in schedules 1 and 2 below". The use of the word "easement" (in the singular) is important; the "easement" being found in Schedules 1 and 2. Much is made by the Applicant of the word "are" (ie "the easement described in schedules 1 and 2...are acquired by compulsory process" (emphasis added)) appearing in the chapeau (as the Applicant's Counsel refers to it). Due regard must be had to Schedule 1 and 2 in an endeavour to see if that use of the word "are" is deliberate, as the Applicant contends, and what significance that has.
32 Schedule 1 describes the interest in the land as being for an "Easement for a Levee Bank described on DP 1082242" (Exhibit A5 - which is incorporated by reference) as "Proposed easement for support and right of carriageway variable width". The area this proposed easement covers is depicted as "E". Words of some importance in Schedule 1 are "within Lot 3, DP 775599", which differentiates Lot 3, as a whole, from area "E".
33 Schedule 2 has to be read in conjunction with Schedule 1. This is logical on its face, but is given support by the notice itself which states "the easement described in schedules 1 and 2 below...". Schedule 2 commences with the words "[t]he body having the benefit of this easement...". The words of importance are "this easement", the easement being the Support and Right of Carriageway as outlined in Schedule 1, which gets its location from what the plan so describes (ie area "E").
34 The powers of the "body having the benefit of" the easement are set out in Schedule 2. The Applicant submits that the reference to the "lot burdened" is an indication that the easement permits works to be undertaken outside of area "E", over the whole lot burdened (Applicant's Submissions, 10.12.07, pars 6-10). I do not think that is so. The lot burdened is Lot 3. Lot 3 is subject to an easement, defined in Schedule 1 by reference to the incorporated plan as area "E".
35 What the easement provides in Schedule 2(1) is that levee banks may be constructed (and subsequently maintained) "but only within the site of this easement" (emphasis added), which we know from Schedule 1 is area "E", in order to "drain water from any natural source through each lot burdened", the purpose being "to control flood waters". Schedule 2(1)(a) and (b) are read together, with the words of great importance being "but only". The construction and maintenance of "levee banks to control flood waters" is a right given to the "body having the benefit of this easement...but only within the site of this easement". This much is clear on the face of the words used. When Schedule 2(1)(a) and (b) are read in conjunction with the entire wording of the easement it is clear that water running across Lot 3, be it creek or rain water, may be re-directed via a levee bank(s) constructed on area "E", presumably to stop Manns Road being flooded.
36 The Applicant places reliance on the word "drain" to infer that this work itself is something different to that of constructing a levee bank which is a flood mitigation device. The Respondent submits that a levee bank can serve to drain water away from Lot 3, and I agree. Draining water is not necessarily something different from flood mitigation. When read in conjunction with the whole notice, the word "drain" does not infer that other works are permitted outside of area "E".
37 Subparagraph 1(c) of Schedule 2 sets out the incidental powers, ie to "do anything reasonably necessary for that purpose". These are the powers which are necessary for carrying out the work proposed in 1(a) and (b), that purpose being to drain water from the lot by way of whatever work is done within area "E", ie the construction and maintenance of levee bank(s). The first two powers in (c), "entering the lot burdened, and taking anything on to the lot burdened...", have emphasised the words "lot burdened". This is deliberate, and gives the body having the benefit of the easement the right to enter the lot, outside of area "E", carry anything thereover (including tools, machinery and materials) to reach area "E". It is conceivable that these tools, machinery and materials may be left on Lot 3, outside of area "E", in order to fulfil the purpose for which the easement was acquired, namely the construction and maintenance of levee banks. A very important limitation applies, in that the entering and taking onto the lot must be "reasonably necessary" for the carrying out of the purpose of the easement by the beneficiary of the easement. The power is not unlimited, as it must be "reasonable".
38 The remainder of the incidental powers in 1(c) do not include the reference to the "lot burdened". Again this is deliberate. It means that those incidental powers are confined to the words of limitation set out in that clause, "for that purpose", that purpose being the construction of a levee bank described in Schedule 1, limited by that area designated on the incorporated plan (area "E"). This interpretation is entirely consistent when the notice is read in full.
39 Schedule 2(2) provides consequential protection to the owners and occupiers of Lot 3, as it sets out the things by which the beneficiary of the easement must abide, like ensuring the work is done properly, with little inconvenience, little damage, leaving the lot burdened in the condition that it was found (except for levee banks - the purpose for which the easement was taken) and making good any collateral damage. Again the words "lot burdened" are used. Those words make perfect sense in this context, as they are used to describe the lot to which the easement applies - the lot burdened.
40 In practice, if it is reasonably necessary to take tools, machinery and materials across Lot 3 to reach area "E", or to store them on Lot 3 whilst construction or maintenance of the levee bank(s) in area "E" is occurring, it must be done with the protection of the interests of the owner and occupier in mind, as set out in clause 2. The requirement for reasonableness in clause 1(c) dovetails into the requirement to "cause as little inconvenience as practicable", found in 2(b), meaning that the right to enter and take anything onto the lot is not an unlimited right.
41 Much is made of the use of the plural when referring to "levee banks" in Schedule 2 (see par [20] above). The Applicant asks the Court to infer that because the existing levee bank was in existence when the easement was taken, and the fact that that levee bank occupies most of area "E", then it is permissible to carry out work outside of area "E" over the whole of Lot 3. The physical state of the land is an objective fact in the factual matrix which may aid construction, in the case of ambiguity. However, it is quite another thing to use the existing physical state of the land at the time of the granting of the easement to interpret the intention of the parties. If the argument were phrased in terms of the Council, when it set out the boundaries of the easement as area "E", knowing that there was an existing levee that filled most of area "E", having intended, contemplated or expected that works would be undertaken outside of area "E", this would involve an impermissible use of an objective fact. Knowledge of the physical state of the land is one thing. Using that information to infer the intention, contemplation or expectation of the parties at the time the easement was entered into is another thing. This would involve the movement from permissible to impermissible use of evidence in the light of Westfield.
42 I do not believe that the existence of the levee bank in area "E" at the time of the grant of the easement is being relied on by the Applicant in any inadmissible way, in the light of what I have said in the preceding paragraph. However, it does not help the Applicant's case. There is nothing inconsistent between the grant of an easement affecting area "E" and the fact that the levee bank already existed in that area. The grant of an easement sets out the rights between the parties, not only at the time of the grant of the easement but for the life of the easement. I agree with the Respondent's submission that the easement contemplates the possibility of more than one levee bank, but only within area "E" (T(S)20.12.07, p.17, L.3ff). Over time the levee bank may be reconstructed, or even two banks may be constructed in the area, if that might be thought more appropriate or efficient. This reconciles the use of the singular in Schedule 1 and the plural in Schedule 2.
Conclusion on Market Value
43 I conclude that the works permitted in the easement for a levee bank (set out in par [14]) are confined to area "E" depicted in Exhibit A5 on Lot 3, DP 775599. Therefore, the claim for market value is determined as $45,000 (per par [13]).
Disturbance Claims
(a) Installation of scouring control measures to the creek (s.59(f))
44 The Western boundary of the subject property is the middle line of Old Narara Creek (sometimes referred to as the Eastern or Niagara Park Branch of the Narara Creek) being a non-tidal stream (above Manns Road) to which the ad medium filum aquae rule applies.
45 A short distance upstream of the subject property, water in the Old Narara Creek has been diverted to flow into a larger and deeper creek known as the Narara Creek. Below this point of redirection the Old Narara Creek is described as an unconfined alluvial stream and resembles a channel carrying an intermittent and minor base flow, generally well below its capacity, except during major storm events.
46 Extending across the subject property and generally parallel to the Old Narara Creek, in its northern section, is a depression variously described as a flood runner or an ephemeral stream. The source of flow is either a breakout of the Old Narara Creek, upstream of the subject property, and/or water arising from a different catchment. For this reason the Old Narara Creek may, at a particular time, carry a low volume of water while the ephemeral stream may be in flood. No doubt, the reverse could apply, but it is the former situation which is of importance as the ephemeral stream is at a height above that of the banks of the Old Narara Creek.
47 Much evidence has been tendered in these proceedings demonstrating the awareness by Council of flooding issues within this area. Such evidence includes the 'NSW Government Floodplain Development Manual' (December 1986) (Exhibit A9), the 'Lower Narara Creek Floodplain Management Plan' (prepared by Kinhills for Gosford Council and dated September 1991) (Exhibit A10), and a Kinhill review of this plan (prepared for Council in December 1993) (Exhibit A11). The levee bank that was constructed on Lot 3 is part of the design to control flood waters, envisaged in the Management Plan of September 1991. Channel works and scour protection works were also proposed in an area which appears to encompass part of Lot 3 (see Exhibit A10, p.37, Fig NC.6). All of this work has not been completed, possibly due to Council budgetary constraints. This material, being extrinsic material, could not be called in aid to demonstrate the Council's intentions, contemplation or expectations when acquiring the easement affecting Lot 3 (see par 23-30, 41-42 for the interpretation of the easement in light of Westfield).
48 The effect of the levee has been to contain floodwaters from the Old Narara Creek and water in the ephemeral stream (which waters previously flowed across Manns Road and re-entered the Old Narara Creek below the culvert on this road) within the subject property so that these waters are discharged via the Old Narara Creek through the Manns Road culvert.
49 On the 8th and 9th of June 2007 the most significant flood event since completion of the levee occurred. It was described as a one in 10 year episode. On that occasion the water level in the Old Narara Creek was below its banks while the ephemeral stream carried a significant body of water, which was diverted by the levee towards the Old Narara Creek, and then cascaded down the near vertical banks causing scouring or slumping of the Creek in an area opposite the middle of the northern section of the levee, as seen on the DVD tendered in evidence and shown to the Court (Exhibit A7).
50 One of the features of an unconfined alluvial stream is that, over time, as erosion takes place, the actual position of the stream moves. Where the velocity and volume of water in a stream remain unchanged, this movement must be regarded as a natural occurrence.
51 The diversion of a significant quantity of water from the ephemeral stream, consequent upon construction of the levee, into the Old Narara Creek, has made changes in that Creek which may not be regarded as a natural occurrence, raising the question of the need for remedial work.
52 Mr Tilley, the engineer relied upon by the Council, expressed the view that, with the exception of some remedial work to the toe of the levee, at its southern end (estimated to cost $5,000), no such work was required. He came to this conclusion based on modelling of both flood levels and velocity in pre and post levee flood situations for 5 year, 20 year and 100 year episodes, taking into account the work undertaken by the Council, prior to the construction of the levee, in constructing the Manns Road culvert and widening and re-grading of the channel downstream of it. He allowed for the fact that, over time, the vegetation in and along the channel downstream of Manns Road will grow back to the pre-works extent. His calculations showed very small reductions in flood levels in all situations, while velocity was reduced in 13 of 15 simulations and increased marginally in the other 2.
53 Mr Boyden, the engineer relied upon by the Applicant, gave evidence that substantial works were required to maintain the integrity of the Old Narara Creek following construction of the levee, which will cause local scour of the Creek bank, and of the adjacent flood plain at the various points where water re-enters the Creek. Mr Boyden did not undertake any modelling exercises and, amongst other things, had regard to the movement of water in the June 2007 flood and the effect on the Creek banks and adjoining land. Mr Boyden prepared two proposals, the first was estimated to cost $350,000, and the second $130,000, both estimates being inclusive of GST.
54 The report of Mr Dupont, Valuer for the Applicant, stated: "However, when taking into account the overall value of the property, the current and continued use of the area most likely affected, ie extreme southern flood prone land, any expenditure towards the top end of the quoted prices would be uneconomic." Mr Jones, Valuer for the Council, in response to a question put to him in cross examination, said that it would be "quite unreasonable" for someone to contemplate carrying out expensive creek scouring works in the circumstances of this case (presumably because the current and permitted uses of the land, and the scour protection works would have nil or nominal effect on market value) (T11.12.07, p.18, L25).
55 In their joint report the valuers agreed "that this report does not address all items of disturbance, and [we] understand that the parties intend to make further submissions in relation to all disturbance items at a later date" (Exhibit R4, fol 3). It was for this reason that their "before and after" valuations addressed only compensation under sub sections 55(a), (c) and (f) of the JTC Act. It is clear that it was their intention that the question of compensation relating to possible engineering works would be determined by the Court as disturbance under s.59 of that Act.
56 Mr Dillon agreed that the works proposed by Mr Boyden, at an estimated cost of $130,000, would have a nil or nominal effect on the value of the subject property. However, Mr Dillon considered it important to undertake the works for four reasons: the subject property was his home; he was keen to preserve the rain forest at the southern end of the property where his cattle congregate in hot weather; the maintenance of fencing; and to preserve trees that are growing on the land. Notwithstanding those intentions Mr Dillon had not, previously, taken any steps to lodge an application to obtain the requisite approvals.
57 During the course of the hearing Mr Dillon lodged an application with the Council and with the State Department of Water and Energy, for approval to carry out works on and adjacent to the banks of the Old Narara Creek opposite the levee bank, with similar works to be carried out to the bank of the creek upstream of the Manns Road culvert and the area north of that section along the meandering section of the Creek. The costs of the works, as shown on the application, was $120,000, but a quotation obtained subsequently was in the sum of $134,827. Both figures are inclusive of GST. The necessary approvals have not yet been obtained (Exhibit A23).
58 The Respondent submits that the scour protection works are not recoverable under s.59(f) for the following reasons:
i. "'the land' in that phrase [s.59(f)] is a reference to the land acquired. It doesn't refer to the whole of the land of the owner and that needs to be borne in mind clearly." (T10.03.08, p60, L34);
ii. the need or potential need for the scour works is a result of the carrying out of the public purpose rather than the "direct and natural consequence of the acquisition";
iii. the costs of the scour protection works could not be said to be "reasonably" incurred.
59 Dealing with the first submission of the Respondent (see par [58(i)]), the Court of Appeal in Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66 ("Peak"), held at [71] (per Beazley and Tobias JJA):
"In our view, if the actual use of the residue land is so intimately connected with the actual use of the acquired land so that use of the one is dependant on use of the other, then that is sufficient to bring it within s 59(f)".
60 The Court of Appeal was dealing with the actual use of the acquired land by the dispossessed owner, not the acquiring authority. This is plain from the Court's preceding discussion of the relevant authorities (see Peak at [56]ff). However, I do not believe that the decision has limited such actual use to only the dispossessed owner, especially in the light of N Stephenson Pty Ltd v Roads and Traffic Authority of New South Wales (1994) 83 LGERA 248. In that case, when talking about "actual use" under s.59(f), Talbot J stated (at 261):
"I am not attracted to the narrow meaning which Mr Hemmings attributed to the words 'the actual use of the land'. His contention was that the use referred to is the use of the acquired land by the authority. I am satisfied that the expression refers only to the land acquired.