Kent Street v Sydney City Council [2001] NSWSC 268 | Case summary

HIS HONOUR: 1 These proceedings concern a narrow strip of land, generally rectangular in shape, which is the site of a dead-end laneway running off the northern side of King Street, Sydney in a northerly direction so as to be abutted on three sides by the back walls of buildings. The plaintiff is the owner of one such building, being No 171 Clarence Street, situated at the south-western corner of the intersection of Clarence and King Streets. I shall refer to that property as "the plaintiff's property". 2 The plaintiff has contracted to sell the plaintiff's property to Asel Property Group Pty Ltd under a contract requiring completion on 24 April 2001 and authorising the making of this present application in the name of the vendor but for the benefit of the purchaser. 3 The purchaser intends to effect a strata subdivision of the plaintiff's property. This will involve some refurbishment including work on the facade facing the laneway. The City Council has granted a conditional development approval for this. One of the conditions requires that the rights the plaintiff seeks to establish through these proceedings be shown to exist. 4 The plaintiff seeks an order under s.88K of the Conveyancing Act 1919 imposing easements over the laneway site in favour of the plaintiff's property. The easements sought are a right of carriageway, an easement to drain water and an easement for light and air. 5 There are nine defendants. They are, the plaintiff says, all the persons who might be thought to have an interest in the application, being the Council of the City of Sydney (first defendant), the five companies which are the owners of the other properties abutting the laneway (second to sixth defendants) and three individuals who may have an interest in the laneway itself (seventh to ninth defendants). I am satisfied that these parties were duly notified of the proceedings and that all have expressed a willingness for the plaintiff's application to proceed in their absence, reserving their position however as to any costs. 6 I have referred to the seventh to ninth defendants as persons who may have an interest in the laneway. Although all the surrounding properties have been brought under the provisions of the Real Property Act 1900, the laneway is still under Old System Title, being part of Allotment 1 of Section 53, Town of Sydney, granted to one Arthur Little by the Crown on 23 September 1839. According to the affidavit of Mr Bragg, a title searcher of thirty-five years experience, there is no available evidence of its having passed into other ownership, save in consequence of the death of Arthur Little which occurred in 1862. 7 The seventh to ninth defendants were applicants in District Court proceedings commenced in 1992 in which they asserted an interest in the laneway as trustees of the estate of Edward George Neaves who, they said, was the last surviving trustee of the estate of James Marks, who in turn was the last surviving trustee of Arthur Little. The validity of these claims has not been established and the District Court proceedings have not been prosecuted. In any event, the seventh to ninth defendants have, by a letter sent by their solicitors to the plaintiff's solicitors as recently as yesterday, indicated that they consent to the orders the plaintiff now seeks. 8 As for the Council of the City of Sydney, there is nothing to suggest that the laneway has been dedicated to the public, whether in the manner examined in Tomark Pty Ltd v Bellview Crescent Pty Ltd [1999] NSWCA 347 or otherwise. To the contrary, the City Council has by a letter of 15 March 2001 sent by its solicitors to the solicitors for the third defendant, given notice of its intention to approach this Court for a declaration that the laneway is a public road. That of course would not be inconsistent with the creation of the easements sought in these proceedings. 9 The plaintiff thus comes to Court today in circumstances where the identity of the owner of the laneway can fairly be said to be unknown but all persons who can reasonably be ascertained as potentially having an interest in the laneway have been given notice of the proceedings and are not opposed to the grant of the relief the plaintiff seeks. 10 As I have said, the laneway lies at the rear of the plaintiff's property. Photographs in evidence show that a vehicle entrance to the plaintiff's property is so situated that vehicles using that entrance must cross part of the laneway. The photographs also show emergency fire exit doors at the back of the plaintiff's property which open on to the laneway. There is also photographic evidence that windows of the plaintiff's property overlook the laneway and that a downpipe, which appears to be for roof water from the plaintiff's property, opens on to the laneway. 11 It is against this background that I turn to s.88K of the Conveyancing Act which came into operation in February 1996. The rationale for that provision is discussed in the judgment of Hamilton J in Tregoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15,845 where reference is also made to decisions under equivalent legislation introduced some years earlier in Queensland. As Hamilton J pointed out, the first and most important question for the Court in a case such as this is that posed by s.88K(1), namely, whether the easement the applicant asks the Court to create over the land to be burdened is "reasonably necessary for the effective use or development of other land that will have the benefit of the easement". 12 Two points may be made here. First, the "reasonably necessary" criterion does not direct attention to what is indispensable. Rather, "use or development with the easement must be (at least) substantially preferable to the use or development without the easement": 117 York Street Pty Ltd v Proprietors of Strata Plan 16123 (1998) 43 NSWLR 504 per Hodgson CJ in Eq. Second, the relevant reasonable necessity is one related to the use or development of the land, not the enjoyment of it by the owner for the time being: Hanny v Lewis (1998) 9 BPR 16,205. 13 It is clear in this case that the building on the plaintiff's property, in common with the other buildings surrounding the laneway, has been constructed and is used on an implicit assumption that the laneway is to all intents and purposes a public road. The vehicle entrance, fire exit doors, windows and roof water drainage system of the plaintiff's property have been installed and are used on that footing. It was only recently, as I understand it, that the true status of the laneway title was ascertained by adjoining building owners. When I say recently, I mean only in the last ten years or so and certainly since the buildings on the sites adjoining the laneway were erected. 14 It would be a very heavy burden indeed for the owner of the plaintiff's property now to have to rearrange things so as to avoid using the laneway in the way in which it is currently used. The use of the plaintiff's property with the current arrangements for vehicle access, emergency egress, natural light and roof water drainage must be substantially preferable to its use without those arrangements. 15 I am satisfied therefore that in terms of s.88K(1) the easements the plaintiff seeks are "reasonably necessary for the effective use or development of other land that will have the benefit of the easement", that other land being the plaintiff's property. 16 Having reached that point I must decide whether any of the factors in paras (a) to (c) of s.88K(2) precludes the making of the orders which prima facie my finding in relation to s.88K(1) allows me to make. 17 Paragraph (a) requires the Court to be satisfied that use of the land having the benefit of the easement, that is the plaintiff's property, will not be inconsistent with the public interest. The use of the plaintiff's property is of course regulated by local government legislation and there is in evidence a requirement of the City Council arising from an application of the purchaser from the plaintiff to effect the strata subdivision, that steps be taken to put beyond doubt the existence of the legal rights which the plaintiff now seeks to have the Court create. It may be said that there is some kind of a public interest in seeing such conditions satisfied. In any event, there is nothing to suggest that impairment of the public interest in a way relevant to para (a) of s.88K(2) is likely here. The position here is very much as described in Marshall v Council of the City of Wollongong [2000] NSWSC 137: "The grant of the easement will not prevent or impact adversely upon any activity of any member of the public or the public generally, which has taken place or is likely to, or on any likely activity of the Council. The grant of the right of way will continue the status quo of many years."

I am therefore satisfied in terms of that para (a). 18 Turning to para (b) of s.88K(2), the Court must be satisfied that the owner of the land to be burdened by the easement (here, the laneway) and every other person having an estate or interest in that land evidenced by a registered instrument, can be adequately compensated by any loss or other disadvantages that will arise from imposition of the easements sought. This raises two issues, first as to who those persons are and second as to the possible extent of any such compensation. 19 As to identification of the persons concerned, the search evidence shows to my satisfaction that all persons readily ascertainable from registered instruments as having an interest in the laneway have been identified and have notice of these proceedings, although that of course is not precisely what para (b) is focusing upon. Its concern rather is that the Court be satisfied that the persons can be adequately compensated, which leads to the value question. 20 On that I have before me a report of Mr Eccleston, a certified practising valuer with twenty-eight years experience. He says that he has been given particulars of the easements sought, as well details of the laneway site and surrounding properties. He expresses the opinion that the grant of the easements would not detrimentally affect the value of the laneway site, particularly in light of the fact that that site could not be independently developed because it is so narrow and would be of interest from a purchasing viewpoint only to one of the five adjoining owners. He then assesses the price or value of the proposed easements at the nominal sum of one dollar. 21 Mr Stevenson, counsel for the plaintiff, drew my attention to a decision of the present Chief Judge in Equity involving circumstances somewhat similar to those before me here, namely Re Permanent Trustee Australia Ltd (1997) 8 BPR 15,551. Hodgson J there dealt with para (b) of s.88K(2) and s.88K(4) together and I shall now refer briefly to the latter provision. Section 88K(4) requires the Court, if it does make an order, to make provision in the order for payment by the applicant 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. 22 In the Permanent Trustee case Hodgson J took the view that the impossibility of identifying anyone as having an interest in the land to be burdened, which as here was a city laneway, together with the minimal value impact, constituted special circumstances warranting a determination that compensation was not payable. His Honour was however conscious of the possibility that someone might establish ownership, or some lesser interest, and might also show that there was some value impact. He therefore thought it appropriate to require an undertaking to the Court from the plaintiff to the effect that if any person could establish an interest in the land and could establish any loss or other disadvantage from the grant of the easements, the plaintiff would pay adequate compensation to that person. He also reserved leave to any such persons to make an application for such compensation in those proceedings. 23 In the present case a written undertaking of the kind suggested by the decision in Re Permanent Trustee has been proffered to the Court by Asel Property Group Pty Ltd, the purchaser from the plaintiff under the contract now on foot which is expected to be completed on 24 April. 24 I propose to follow the course that Hodgson J took in Permanent Trustee but before doing so I must return to the last element of s.88K(2), that is para (c) which requires the Court to be satisfied that all reasonable attempts have been made by the applicant for the order to obtain the easement or an easement having the same effect but have been unsuccessful. Given the absence of anyone to whom the plaintiff could confidently look as a reliable source of any such grant, I have no hesitation in expressing myself satisfied in terms of para (c). 25 The plaintiff has thus made out a case for the relief it seeks and I therefore make an order in the terms in para 1 of the Summons, that is, an order pursuant to s.88K of the Conveyancing Act 1919 for a right of carriageway, easement to drain water and an easement for light and air over the land known as part of Allotment 1, Section 53 of the Town of Sydney in favour of the land comprised in Certificate of Title Lot 1 in Deposited Plan 573366 in accordance with the easements set out in the draft s.88B instrument annexed to the affidavit of Sevag Chalabian sworn 2 March 2001 and marked "T" and a plan in accordance with exhibit "GAC1" annexed to the affidavit of Geoffrey Allan Cook sworn 27 February 2001. 26 In making that order I note that the references to the annexures to the affidavits of Mr Chalabian and Mr Cook ensure, in the light of the content of those annexures, that the order satisfies the requirements of s.88K(3). 27 I note that Asel Property Group Pty Ltd has furnished to the Court a written undertaking that it will pay to the owner of the land known as part of Allotment 1, Section 53 of the Town of Sydney such compensation as may be awarded by the Court under section 88K of the Conveyancing Act 1919 (NSW) or ancillary to the granting of the orders sought by the Plaintiff in these proceedings. 28 I reserve leave to the owner of the land the subject of that undertaking or any part of it to apply in these proceedings for compensation for any loss or other disadvantage which arise from the imposition of these easements. 29 I make no order as to costs. ******

Kent Street v Sydney City Council

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