M Salazar Properties Pty Ltd v Jeffs [2024] QCA 257

SUPREME COURT OF QUEENSLAND

CITATION: M Salazar Properties Pty Ltd v Jeffs [2024] QCA 257

PARTIES: M SALAZAR PROPERTIES PTY LTD / ACN 648 288 671 / (appellant) / v / JUSTIN NOEL JEFFS / (respondent)

FILE NO/S: Appeal No 3975 of 2024 / SC No 10187 of 2022

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: Supreme Court at Brisbane – [2024] QSC 9 (Hindman J)

DELIVERED ON: 17 December 2024

DELIVERED AT: Brisbane

HEARING DATE: 27 August 2024

JUDGES: Flanagan and Boddice JJA and Kelly J

ORDERS: The appellant’s application for leave to adduce further evidence filed 22 August 2024 is refused. The respondent’s application for leave to adduce further evidence filed 26 July 2024 is granted. The appellant’s appeal is dismissed. The respondent’s cross-appeal is allowed. The second amended originating application filed 21 August 2023 is dismissed. The orders dated 16 May 2024 be set aside, with the exception of order 17, which be varied by substituting the sum of $37,105.38 for the sum $40,000.00. The appellant pay the respondent’s costs of the appeal, the notice of contention and the cross-appeal.

CATCHWORDS: REAL PROPERTY – EASEMENTS GENERALLY – GRANT OF EASEMENT – STATUTORY RIGHT OF USER – where the appellant seeks to subdivide its property and therefore requires a drainage easement over an adjacent property belonging to the respondent – where the appellant requires approval from a local council before it can proceed with its subdivision – where the respondent refused to agree to grant an easement over his property, so the appellant brought proceedings under s 180 of the Property Law Act 1974 (Qld) – where the primary judge granted the appellant a statutory right of user in the form of an easement subject to the fulfillment of various conditions – where the appellant appeals against the conditions which were imposed – where the respondent cross‑appeals on the ground that the appellant’s application below lacked sufficient clarity so as to engage the Court’s jurisdiction under s 180 – where the respondent contends that the appellant sought, and continues to seek on appeal, an easement in dimensions and on conditions which are variable at the discretion of the local council – whether the appellant sought an easement in terms which lacked sufficient clarity / REAL PROPERTY – EASEMENTS GENERALLY – GRANT OF EASEMENT – STATUTORY RIGHT OF USER – where the appellant seeks to subdivide its property and therefore requires a drainage easement over an adjacent property belonging to the respondent – where the appellant requires approval from a local council before it can proceed with its subdivision – where the respondent refused to agree to grant an easement over his property, so the appellant brought proceedings under s 180 of the Property Law Act 1974 (Qld) – where s 180 requires as a pre‑condition that the respondent to an application has unreasonably refused to agree to the easement – where the primary judge found that the respondent’s refusal to accept the appellant’s final offer was unreasonable – where the respondent contends that his refusal was not unreasonable because the final offer continued to lack sufficient clarity as to the precise easement the appellant was seeking – whether the respondent’s refusal to agree to the appellant’s final offer was unreasonable / Property Law Act 1974 (Qld), s 180 / 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504, considered / 2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS 39149 [2016] QSC 40, considered / Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801, considered / Debbula Pty Ltd v Owners - Strata Plan No 6964 [2003] NSWSC 189, applied / Graham v Murphy [2013] QSC 21, cited / LPD Holdings (Aust) Pty Ltd v Phillips, Hickey and Toigo [2013] QCA 305, considered / M Salazar Properties Pty Ltd v Jeffs [2024] QSC 86, considered / Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445, cited / Naylor v Pierce [2010] QSC 399, cited / Pacific Coast Investments Pty Ltd v Cowlishaw [2005] QSC 259, cited / Peulen v Agius [2015] QSC 137, distinguished / Re Ellenborough Park [1956] Ch 131; [1955] EWCA Civ 4, cited / Re Seaforth Land Sales Pty Ltd’s Land (No 2) [1977] Qd R 317, considered

COUNSEL: S P Taylor for the appellant / R A Quirk for the respondent

SOLICITORS: Merlo Law for the appellant / Clinton Mohr Lawyers for the respondent

1. FLANAGAN JA: The primary issue in this appeal is whether a statutory right of user in the form of an easement, sought by the appellant, M Salazar Properties Pty Ltd (Salazar Properties) before the learned primary judge, was of sufficient clarity to engage the court’s jurisdiction under s 180 of the Property Law Act 1974 (Qld) (PLA).¹

2. The primary judge ordered that a statutory right of user in the form of an easement should be imposed subject to a number of conditions. Salazar Properties appeals various aspects of the decision, primarily relating to the conditions that were imposed by her Honour. The respondent, Mr Jeffs, is the owner of the servient land that was the subject of the statutory right of user. He cross‑appeals the decision on the basis that her Honour erred in granting a statutory right of user in the form of an easement, as it lacked sufficient clarity so as to enliven the operation of s 180. Mr Jeffs also challenges her Honour’s finding that his refusal of the final offer made by Salazar Properties was unreasonable for the purposes of s 180(3)(c)(i) of the PLA.

3. For the reasons which follow, the cross-appeal should be allowed and the appeal dismissed.

4. The issue arises in the following context, which is informed by the way in which Salazar Properties has conducted itself both at first instance and on appeal. The factual background and procedural history of the matter is only set out so far as is necessary to demonstrate that the easement which was sought lacked sufficient clarity to engage the court’s jurisdiction and enliven an exercise of its discretion under s 180.

Relevant Background

5. Salazar Properties is a company through which its director, Ms Salazar, carries on the business of property development.

6. Ms Salazar’s partner is Mr Merlo. Although Mr Merlo is a solicitor and acted on behalf of Salazar Properties in negotiations at various times leading up to and during the proceedings, he was not the solicitor on the record for Salazar Properties until after the commencement of this appeal, on 10 June 2024. At trial, the primary judge gave leave for Mr Merlo to appear for Salazar Properties.

7. The proceedings concern three adjacent residential lots which are located between Perdita Street and Rosemary Street in Bellbird Park, Queensland. Salazar Properties owns Lot 199, and Mr Jeffs owns Lot 197. A third party, Mr Pressler, owns Lot 200. The diagram below was included in her Honour’s reasons and depicts the lots in relation to each other:

8. Both Mr Jeffs’ Lot 197 and Mr Pressler’s Lot 200 have rear access to Perdita Street. The lot owned by Salazar Properties, Lot 199, fronts Rosemary Street, but has no access to Perdita Street.

9. Salazar Properties bought its lot in August 2021 with the intention of subdividing it to include additional residences.² After consulting a town planning expert, it became apparent that in order to facilitate the subdivision, the lot would require a roof water and stormwater solution, in order to deal with water collected and discharged from the proposed additional residences.³ Due to the gradient of the land, however, the water drainage would have to pass downhill from the proposed additional residences, from the direction of Rosemary Street through to Perdita Street.

10. Given Lot 199 has no rear access to Perdita Street, shortly after purchasing Lot 199, Salazar Properties (through Ms Salazar and Mr Merlo) commenced some preliminary discussions with both Mr Jeffs and Mr Pressler.

11. They enquired if Mr Jeffs would be interested in selling whole or part of his lot to them, which he was not.⁴ On 3 August 2021, they made a proposal to Mr Jeffs that included three alternative possible offers to sell a part or the whole of his property.⁵ He still was not interested. Mr Merlo discussed with Mr Jeffs the possibility of installing a granny flat arrangement instead. There was disagreement as to whether an enforceable agreement had been reached. The primary judge expressly refrained from making any findings in this respect, and observed that it was only relevant “because, unsurprisingly, [Salazar Properties’] conduct, through Mr Merlo, made [Mr Jeffs] cautious about [it] and its development plans … from at least that point onwards”.

The proceedings below

18. By the time the originating application was listed for hearing before the primary judge, Salazar Properties had filed two amended originating applications. The trial was determined on the basis of the second amended originating application filed on 21 August 2023. In terms of the relief sought, it relevantly provided:

“2. Upon development approval by Ipswich City Council for Development Application number 9877/2022/RAL, there be a statutory right of user in the form of easement in perpetuity, or otherwise as directed by the Court, to break the surface of, dig, open up and use the servient land to construct, lay down, deepen, widen, take up, use and manage, maintain, repair, relay, alter, renew, remove, replace or inspect drains or drainage pipes and access and inspection structures for the purpose of draining or to transmit, or permit to be transmitted, roof water and storm water and other utility, in, over, under and through the servient land at any time, and to enter (with or without a vehicle or equipment) to do so, for the purposes of Ipswich City Council Development Application number 9877/2022/RAL, imposed upon the servient land described as [Mr Jeffs’ Lot 197] … in favour of the dominant land described as [Salazar Properties’ Lot 199] in such terms and dimensions as approved by Ipswich City Council.”

(emphasis added)

19. In its further amended points of claim filed on the same day, the relief sought was particularised as follows:

“18. The relief claimed is sought in the draft orders particularised in [Salazar Properties'] Second Amended Originating Application as amended below:

…

b. Upon development approval by Ipswich City Council for Development Application number 9877/2022/RAL, there be a statutory right of user in the form of easement in perpetuity, or otherwise as directed by the Court, to break the surface of, dig, open up and use the servient land to construct, lay down, deepen, widen, take up, use and manage, maintain, repair, relay, alter, renew, remove, replace or inspect drains or drainage pipes and access and inspection structures for the purpose of draining or to transmit, or permit to be transmitted, roof water and storm water and other utility, in, over, under and through the servient land at any time, and to enter (with or without a vehicle or equipment) to do so, for the purposes of Ipswich City Council Development Application number 9877/2022/RAL, imposed upon the servient land described as [Mr Jeffs’ Lot 197] … in favour of the dominant land described as [Salazar Properties’ Lot 199] in such terms and dimensions as approved by Ipswich City Council.”

(emphasis added)

Salazar Properties did not seek to amend the relief sought at any point during the proceedings below.

20. The litigation history reveals that the statutory right of user sought by Salazar Properties, was always intended to take the form of an easement with dimensions that would be variable at the ICC’s discretion. The initial originating application by Salazar Properties, filed on 25 August 2022, had relevantly sought an easement “otherwise in accordance with a Deed of Agreement to Grant Easement …”.¹¹

21. The Deed of Agreement to Grant Easement¹² (the Deed) was in evidence before the primary judge. It was central to the first,¹³ second,¹⁴ third,¹⁵ fourth,¹⁶ and fifth¹⁷ offers, as each of those offers were made conditional on Mr Jeffs accepting the Deed. By the time Salazar Properties had made its sixth offer on 4 August 2023, it no longer relied upon the Deed. Instead, it sought an easement which would be both “on such terms as [the Court determined to be] just and fair” and “as required by ICC”.¹⁸ The operation of the Deed, however, remains informative of what Salazar Properties were truly seeking to obtain below.

22. As it appeared in its latest form in the fourth offer, the parties to the Deed were Mr Jeffs as “Grantor”, Salazar Properties as “Grantee”, and a mortgagee.¹⁹ It provided by way of background that “[Salazar Properties] wishes to have the benefit of the Easement, the Construction Zone and to give effect to the Permitted Purpose in accordance with the terms of this Deed”.²⁰

23. Clause 2.2 was the operative provision, providing that “[s]ubject to the terms of this Deed, [Mr Jeffs] agrees to grant the Easement to [Salazar Properties] from the date of this Deed”.²¹ The term “Easement” was defined in clause 1.1 to mean the easement over the “Easement Area”, which was itself defined as the part of the land that is identified in the relevant schedule of the Deed “as varied in accordance with clause 2.1 and/or 2.5 and/or 3.1”. The definition of “Easement Area” also provided that any inconsistencies should be read in favour of Salazar Properties.

“(d) [An] Authority may require [Mr Jeffs] and or [Salazar Properties] to enter into a New Grant of Easement Agreement in order to ensure that the Easement or Easement Area, is suitable for the Permitted Purpose, [Salazar Properties'] development application or development approval, or a lawful purpose, and [Mr Jeffs] will do all such things necessary to enter the New Grant of Easement Agreement and give effect to the Permitted Purpose within 30 business days.”²⁶

(emphasis added)

26. Clause 3.1 of the Deed, entitled “Variation of the Easement Area and Deed of Grant of Easement”, provided in sub‑clause 3.1(a) that an Authority may “require the Easement Area to be varied in order to ensure that the Easement is suitable for the Permitted Purpose, development application or development approval”. In these circumstances, if Salazar Properties or an Authority required that the easement area be varied, it had to provide Mr Jeffs with a plan of the Varied Easement Area. Further, cl 3.1(c) provided that if an Authority “in its absolute discretion decides that the Relevant Works are not (or are not to be) wholly comprised in the Easement Area… [Salazar Properties] may issue a notice … [and the Authority] may issue a notice to direct [that Mr Jeffs must] …enlarge the Easement Area as required”.²⁷ The clause also provided that Mr Jeffs must do various things associated with surrendering the original easement and registration of the new easement.²⁸ If Mr Jeffs failed to take any of these required steps, Salazar Properties would be entitled to take the steps on his behalf, and claim its costs from him.²⁹

27. This analysis demonstrates that each of Salazar Properties’ offers, until its sixth offer, required that the easement dimensions were to be subject to the ICC’s discretion, such that it could be increased if this were needed for the development application. This was not a part of the Deed which could be severed; it was inherent to its terms.

28. During the hearing below, Salazar Properties called Mr Tuxworth, a structural and civil engineer. Salazar Properties had previously engaged Mr Tuxworth to prepare an Expert Report and an Addendum Expert Report. He gave evidence as to what form of easement would likely be required by the ICC for the purposes of subdividing the lot owned by Salazar Properties.³⁰ During cross-examination, Mr Tuxworth accepted that there were effectively three possible dimensions which the easement could adopt, which were sourced from three different documents. The primary judge recorded these options as follows:

“(a) the Queensland Urban Drainage Manual recommended a minimum of a 3m wide easement;

the typical minimum width of an easement required by the local council (that would take precedence) was 2m wide;

certain council documents … indicate the required easement could be 2.7m wide…”

The Reasons

29. At Reasons [36]–[38], after having considered each of Salazar Properties’ first five offers in detail and referring to Mr Tuxworth’s evidence regarding the dimensions which would potentially be required for the easement, the primary judge observed:

“[36] The required easement width on [Mr Jeffs’ Lot 197] may also be affected by [Mr Pressler’s Lot 200] apparently having a sewer pipe in the general location of the proposed easement (albeit on Mr Pressler’s lot) … But the evidence about that is not presently clear, and ultimately the precise dimensions of the easement required on [Mr Jeffs’ Lot 197] will be for the ICC to determine as part of the development application for [Salazar Properties’ Lot 199].

[37] At it presently stands, the proposed length of the permanent easement sought is approximately 20.6 metres.

[38] The proposed easement (with a width of 1m) therefore is approximately 21 square metres in area. However, an easement area of 27 square metres was commonly referred to during the hearing (equating to an easement width of 1.3m), and I will take that as the easement sought.”

30. Her Honour’s finding that the easement sought by Salazar Properties was 27 square metres, based on it being commonly referred to throughout the hearing, was used for several purposes throughout the judgment. This finding was, with respect, erroneous. It was not the relief sought by Salazar Properties in either its second amended originating application, its further amended points of claim, or its oral submissions at trial. As discussed, at no point throughout the course of the proceedings below did Salazar Properties contend for anything other than an easement with dimensions to be determined at the discretion of the ICC. The fact that the Deed, which was at the core of all but one of Salazar Properties’ offers to Mr Jeffs, included an express mechanism for the ICC (or Salazar Properties) to amend the Easement Area at its sole discretion, confirms the true nature of what Salazar Properties was seeking to obtain from the court.

31. Based on this finding that the easement sought by Salazar Properties should be 27 square metres, the primary judge then determined the issues of both compensation and unreasonable refusal.

32. The sixth offer sought an easement in terms which were similar to the relief sought in paragraph 2 of the second amended originating application.³¹ In the context of finding that Mr Jeffs’ refusal to agree to Salazar Properties’ sixth offer was unreasonable, her Honour noted that the sixth offer was “in a substantially different form to the earlier offers”, and that it offered “a permanent easement take of 27 square metres”.³² While the structure in which the terms of the sixth offer were set out was confusing, the primary judge’s finding that it offered an easement take of 27 square metres did not capture the entirety of what it sought. Like all the previous offers, it was an integral term of the sixth offer that, in addition to being 27 square metres or in such terms as the court considered just and fair, the form of the easement proposed was subject to the words “as required by [the ICC]”.³³

33. In finding that Mr Jeffs’ refusal of the first five offers was not unreasonable, her Honour examined the compensation offered in those offers and found that they were unreasonable. Her Honour stated:

“[68] I mention specifically the proposed terms of the easement that was consistent across all five offers. When the precise terms of the easement then sought are considered, it is plain that the offers of compensation made were manifestly inadequate bearing in mind the onerous obligations of the easement sought to be imposed on the respondent.

[69] The draft deed of easement accompanying the first offer of compensation is at enclosure 4 of [the First Offer correspondence]. The easement at that time was contemplated to be a take of 27 square metres.”

34. None of the versions of the Deed of Agreement to Grant Easement, as it appeared in the First Offer through to the Fifth Offer, contained a reference to an easement area of 27 square metres.

35. It appears that her Honour’s finding that the easement at that time was to be a take of 27 square metres is sourced from one of the documents located in Enclosure 2 of the First Offer correspondence.³⁴ This was a valuation report by Herron Todd White dated 3 February 2022 entitled “Valuation Report, Easement over Residential Property”. The author of the report, Mr Hyne, was called by Salazar Properties during the hearing to give evidence.³⁵ It appears from the transcript of proceedings below that Mr Hyne’s evidence was the context in which the figure of 27 square metres was commonly referred to during the hearing.³⁶ Enclosure 1 of the First Offer correspondence, which was Salazar Properties’ “Offer of Reasonable Compensation”, also referred to “nominal value of 26.832m2 (27m2) of [Mr Jeffs’ land]” and appeared to be calculated based on the assumption that the easement area would be 27 square metres.³⁷ This offer appears to have been based on the Herron Todd White report by Mr Hyne.

36. Based on both the document entitled “Offer of Reasonable Compensation” and the Deed of Agreement to Grant Easement, her Honour made various criticisms of the terms of Salazar Properties’ First Offer and the amount of compensation that was being offered.³⁸ In light of these findings, her Honour held that, in relation to the First Offer, it “was not unreasonable for a statutory right of user in such terms, and with such compensation, to be rejected by the respondent”.³⁹

37. Her Honour then considered whether, in respect of the sixth offer, Mr Jeffs’ refusal to accept was unreasonable. At Reasons [104], her Honour observed that the sixth offer identifies:

“(a) a permanent easement take of 27 square metres;

a more extensive (temporary) construction zone;

the terms of the easement can be on terms the Court considers just and fair, and as required by the ICC;

compensation … comprising:

$225 per square metre for the easement take or such other amount as is assessed by the Court to be just;

$2,000 compensation for blot on title or such other amount as is assessed by the Court to be just;

$500 per 7 day period or part thereof whilst the construction zone is in use or such other amount as is assessed by the Court to be just;

such other amount as is assessed by the Court to be just.”

38. Her Honour, with reference to Peulen v Agius,⁴⁰ then observed:

“If the permanent easement is in fact restricted to the proposed 27m2, I do not think the imposition of the easement would cause any significant detriment, loss or harm to the respondent. The infrastructure sought to be constructed is mainly underground and is not otherwise overly obtrusive. It is not adequately demonstrated that there is a real risk the permanent easement sought would interfere with any future development that the respondent may wish to undertake on lot 2.”⁴¹

39. At Reasons [109], her Honour noted observations by Burns J in 2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS 39149 (Logan Road).⁴² Justice Burns considered that not only should the case in favour of an application for a statutory right of user under s 180 be “clear and persuasive”,⁴³ but the conditions that the applicant proposed to be attached to the making of an order should be presented with an “equal degree of clarity”.⁴⁴

40. In this respect, her Honour held:

“[110] Whilst there are gaps in a detail of what is proposed by the applicant (because it leaves some of the detail to the Court), I do not consider those gaps rise to the level that there is not an actual plan that can be assessed.

[111] Having said that, I would certainly not order an easement ‘on such other terms as the ICC may impose as part of a development application’ because that does lack sufficient clarity at the present time. The Court must be able to finalise the precise terms of the easement, including because the assessment of compensation depends on the terms of the easement.”

41. This finding by her Honour was an express disavowal of the form of the easement which had been sought in the second amended originating application. It was not a finding that was challenged by Salazar Properties on appeal.

42. Her Honour noted that Mr Jeffs understandably held concerns due to the way in which Salazar Properties, Ms Salazar, and Mr Merlo had dealt with him previously. It was also noted that the imposition of an easement in favour of Salazar Properties over his lot might adversely impact upon development opportunities in respect of his lot.⁴⁵ Her Honour found, however, that Mr Jeffs had no certain development plans and that it would be “speculation” that the easement proposed by Salazar Properties “would adversely affect a development of [Mr Jeffs’ lot] in some real way”.⁴⁶ Instead, by reference to Peulen v Agius,⁴⁷ her Honour held that this consideration was relevant to the assessment of compensation.⁴⁸

43. Her Honour had regard to the fact that Mr Jeffs did not wish to have any ongoing dealings with Salazar Properties, but held that there were conditions which could be imposed in order to minimise the impact of this consideration.⁴⁹ Her Honour, with reference to Pacific Coast Investments Pty Ltd v Cowlishaw,⁵⁰ found that in circumstances where Salazar Properties had made it clear that it was prepared to pay whatever compensation was assessed by the Court to be just (as was proposed in the sixth offer), Mr Jeffs’ refusal was unreasonable.

44. The primary judge rejected criticisms by Ms Salazar that Mr Jeffs had not engaged in negotiations with her. This was because Salazar Properties had the burden to put forward a negotiation proposal that was reasonable; it was not the obligation of Mr Jeffs to come up with a proposal that he found acceptable.⁵¹ Her Honour stated her conclusion with respect to the element of unreasonable refusal as follows:

“I conclude that where the applicant has broadly identified the type of statutory right of user required and has otherwise offered to effectively leave it to the Court to determine appropriate terms and compensation, that the respondent’s refusal of that offer (the sixth offer) is unreasonable in the sense required by the Act. The requirement of s. 180(3)(c)(i) of the PLA is satisfied.”⁵²

45. At Reasons [118]–[121], her Honour dealt with the issue of whether an easement could be granted in circumstances where there was no certainty that the ICC would approve Salazar Properties’ development application. With reference to Peulen v Agius, her Honour held that “[t]he possibility that the ICC will refuse development approval without a wider easement does not preclude the imposition of the proposed easement (in the dimensions sought) at the present time”.⁵³ In relation to the possibility that the ICC might require a wider easement than 27 square metres, her Honour stated:

“To be clear though, if any wider easement were required and then sought by the applicant, that would more sharply bring into issue the impact that a wider permanent easement may have on the development potential for [Mr Jeffs’ lot], which might in turn lead to the rejection of any application for a wider easement, or significantly increased compensation.”⁵⁴

46. Her Honour considered that, in contrast to Salazar Properties’ sixth offer, it should be a condition of any imposed easement that Salazar Properties maintain insurance for the benefit of Mr Jeffs.⁵⁵ Finally, her Honour considered the issue of whether the court should exercise its discretion not to grant the statutory right of user despite finding that the elements were made out.⁵⁶ Her Honour observed that although the manner in which Salazar Properties (through Ms Salazar and Mr Merlo) had dealt with Mr Jeffs was, described kindly, “heavy-handed”, it did not “rise to the level of the disgraceful conduct of the applicant in the case of Naylor v Pierce,⁵⁷ so as to disentitle [Salazar Properties] to the discretion being exercised in its favour”.⁵⁸

47. Each of the conclusions set out above were predicated on her Honour’s finding that the easement sought by Salazar Properties was 27 square metres. The determination by her Honour of the appropriate compensation payable to Mr Jeffs was, likewise, predicated on the finding that the easement sought was 27 square metres.

The Second Reasons

48. The subsequent judgment of M Salazar Properties Pty Ltd v Jeffs⁵⁹ (Second Reasons) dealt with both the final form that the orders were to take and the issue of costs. Salazar Properties had lodged a notice of appeal in respect of her Honour’s Reasons over a month prior to the delivery of this judgment, and this fact is acknowledged in the Second Reasons at [3].

49. With respect to costs, her Honour referred to her preliminary view expressed in the Reasons at [163]–[167], and noted that the only evidence of legal costs incurred was by the respondent in the amount of $40,000.00. After rejecting Salazar Properties’ submissions that Mr Jeffs should pay its costs, the primary judge found that it was appropriate to fix the amount of costs payable by Salazar Properties to Mr Jeffs in the amount of $40,000.00.⁶⁰ By Ground 4 of Mr Jeffs’ Further Amended Notice of Cross Appeal, he contends that the amount of $40,000 was incorrect, as it is more than the amount which was actually incurred by him.⁶¹ Salazar Properties does not oppose this aspect of the cross-appeal.⁶²

50. Her Honour noted that s 180(5)(e) of the PLA did not technically require the court to order costs on any particular basis (such as standard or indemnity costs), but found that if it were necessary to conclude, it would have been appropriate in the circumstances to order indemnity costs against Salazar Properties, given its conduct as set out in the Reasons.⁶³

51. The primary judge then considered whether, in addition to ordering costs against Salazar Properties, there should also be an order for costs made against either or both of Ms Salazar and Mr Merlo personally.⁶⁴ With reference to Knight v FP Special Assets Ltd,⁶⁵ her Honour observed that the “prima facie general principle is that an order for costs is only made against a party to the litigation”,⁶⁶ and that, consequently, “exceptional circumstances are required to justify an order for costs being made against a non-party”. In finding that it was, in the circumstances, just and equitable to award costs personally against Ms Salazar, her Honour had regard to various factors, as follows:

“(a) there is reason to believe that [Salazar Properties] is not a company of substance;

Ms Salazar has played an active role in the conduct of the litigation;

Ms Salazar has an interest in the outcome of the litigation;

the specific unreasonable conduct of Ms Salazar referred to in the reasons for judgment;

[Salazar Properties] was on notice of security for costs being an issue in the proceeding from 7 September 2022. A fair estimate of standard costs was provided to the applicant on 28 September 2022;

in response to the request for security for costs, Ms Salazar expressly recognised that an answer to any such application might be personal undertakings by writing in her letter of 31 October 2022 – ‘The provision of personal undertaking by those who stand behind the company (irrespective of whether the persons have sufficient means to meet an adverse costs order) is a material factor in the discretionary balance which may ‘weigh heavily’ in the discretionary balance’ (footnotes omitted). She went on later, ‘For the avoidance of any doubt the applicant and persons behind [Salazar Properties] are ready willing and able to consider the question of security for costs should your client properly particularise its request.’

both Ms Salazar and Mr Merlo were expressly advised by the respondent that a non-party costs order would be sought against them on the indemnity basis shortly prior to the trial commencing (letter dated 2 September 2023).”

52. With respect to Mr Merlo, the primary judge considered that although “finely balanced”, it was not appropriate that a costs order should be made against him personally. This was because:

“Whilst Mr Merlo has some indirect interest in outcome of the litigation through Ms Salazar, was a director of [Salazar Properties] for a time and played an active role in the conduct of the litigation, I think overall his conduct should be viewed in the context of informally performing the role of a solicitor, acting on instructions. His conduct, although concerning at times, did not rise to the level where if he had been a solicitor acting that a non-party costs order would have been made against him.”

There is no appeal against her Honour’s finding that an order for costs should be made against Ms Salazar personally.

Conduct of the appeal

53. The fact that Salazar Properties was seeking an easement of dimensions required by the ICC is not only evident by the way it conducted its application before the primary judge but also in the way it conducted the present appeal.

54. On 10 July 2024, Salazar Properties filed a Further Amended Notice of Appeal. Ground 1 sought to challenge her Honour’s finding that the easement was limited to an easement of not more than 20.6 metres in length and 1.3 metres in width; that is, an easement 27 square metres. The asserted error was a failure by the primary judge to take into account a relevant consideration, namely that the easement should be upon “such terms and dimensions as approved by the [ICC]”. The Further Amended Notice of Appeal filed 10 July 2024 also sought to replace order 3 made by the primary judge on 16 May 2024, which granted an easement of not more than 27 square metres, with an order that the easement “is to have the dimensions of not more than those dimensions required by the [ICC] in the approval of the lawful development of the dominant land…”.

55. On 22 August 2024, which was five days prior to the hearing of the appeal, Salazar Properties filed a Further Amended Notice of Appeal. Whilst this notice of appeal omitted Ground 1, it still sought this same order.

56. In its Amended Outline of Argument filed on 22 July 2024, Salazar Properties made specific reference to the primary judge erring by granting an easement of 27 square metres “[p]articularly where the Applicant sought an easement on terms which were ‘just and fair, and as required by [the ICC]’”.⁶⁸

57. At the appeal hearing on 27 August 2024, Salazar Properties withdrew its application for leave to file its Further Amended Notice of Appeal dated 22 August 2024 after it had been brought to counsel’s attention that the order sought could not be granted in light of Salazar Properties abandoning Ground 1 of that Further Amended Notice of Appeal. In the result, Salazar Properties applied for leave to amend in terms of the Further Amended Notice of Appeal filed 10 July 2024, which contained both Ground 1 and the order seeking an easement of not more than those dimensions required by the ICC.

58. The Court made it clear to counsel for Salazar Properties that if, consistent with Ground 1 and the orders sought in the Further Amended Notice of Appeal filed 10 July 2024, it had in fact applied to her Honour for an easement the dimensions of which were to be determined by the ICC, there was no challenge to the primary judge’s finding that her Honour “would certainly not order an easement ‘on such other terms as the ICC may impose as part of a development application’”.

59. In light of this indication from the Court, Salazar Properties sought leave to further amend the Further Amended Notice of Appeal filed 10 July 2024 to remove Grounds 1 and 2, as well as the proposed new order 3.

“c. As to order 5:

The owner of the dominant land and their servants or agents may interfere with the existing draining of the servient land in the construction zone and easement zone generally as required to effect the new draining infrastructure (‘the Required Drainage Infrastructure’) and must maintain or otherwise facilitate the continued drainage of the servient land in those areas.

d. As to order 6:

The Required drainage infrastructure permitted within the easement is to be no more than that drainage infrastructure required by [the ICC] in the approval of the lawful development of the dominant land by the Applicant.”

62. The fact that even on appeal Salazar Properties still seeks an easement which permits infrastructure interference with Mr Jeffs’ drainage “as required by the ICC”, betrays the fact it is not content with the easement imposed by her Honour.

The statutory right of user sought by Salazar Properties was not of sufficient clarity to permit an exercise of discretion under s 180 PLA (Grounds 2 and 3 of the cross-appeal)

63. Section 180 provides:

“180 Imposition of statutory rights of user in respect of land

Where it is reasonably necessary in the interests of effective use in any reasonable manner of any land (the dominant land) that such land, or the owner for the time being of such land, should in respect of any other land (the servient land) have a statutory right of user in respect of that other land, the court may, on the application of the owner of the dominant land but subject to this section, impose upon the servient land, or upon the owner for the time being of such land, an obligation of user or an obligation to permit such user in accordance with that order.

A statutory right of user imposed under subsection (1) may take the form of an easement, licence or otherwise, and may be declared to be exercisable—

by such persons, their servants and agents, in such number, and in such manner and subject to such conditions; and

on 1 or more occasions; or

until a date certain; or

in perpetuity or for some fixed period;

as may be specified in the order.

An order of the kind referred to in subsection (1) shall not be made unless the court is satisfied that—

it is consistent with the public interest that the dominant land should be used in the manner proposed; and

the owner of the servient land can be adequately recompensed in money for any loss or disadvantage which the owner may suffer from the imposition of the obligation; and

either—

the owner of the servient land has refused to agree to accept the imposition of such obligation and the owner’s refusal is in all the circumstances unreasonable; or

no person can be found who possesses the necessary capacity to agree to accept the imposition of such obligation.

An order under this section (including an order under this subsection)—

shall, except in special circumstances, include provision for payment by the applicant to such person or persons as may be specified in the order of such amount by way of compensation or consideration as in the circumstances appears to the court to be just; and

may include such other terms and conditions as may be just; and

shall, unless the court otherwise orders, be registered as provided in this section; and

may on the application of the owner of the servient tenement or of the dominant tenement be modified or extinguished by order of the court where it is satisfied that—

the statutory right of user, or some aspect of it, is no longer reasonably necessary in the interests of effective use of the dominant land; or

some material change in the circumstances has taken place since the order imposing the statutory right of user was made; and

shall when registered as provided in this section be binding on all persons, whether of full age or capacity or not, then entitled or afterwards becoming entitled to the servient land or the dominant land, whether or not such persons are parties to proceedings or have been served with notice or not.

The court may—

direct a survey to be made of any land and a plan of survey to be prepared; and

order any person to execute any instrument or instruments in registrable or other form necessary for giving effect to an order made under this section; and

order any person to produce to any person specified in the order any title deed or other instrument or document relating to any land; and

give directions for the conduct of proceedings; and

make orders in respect of the costs of any of the preceding matters and of proceedings generally.

In any proceedings under this section the court shall not, except in special circumstances, make an order for costs against the servient owner.

In this section—

owner includes any person interested whether presently, contingently or otherwise in land.

statutory right of user includes any right of, or in the nature of, a right of way over, or of access to, or of entry upon land, and any right to carry and place any utility upon, over, across, through, under or into land.

utility includes any electricity, gas, power, telephone, water, drainage, sewerage and other service pipes or lines, together with all facilities and structures reasonably incidental to the utility.

This section does not bind the Crown.”

64. In SZTAL v Minister for Immigration and Border Protection, the plurality set out the modern approach to statutory interpretation:⁶⁹

“The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.

65. Section 180 seeks to balance competing interests of landowners, where one party refuses to consent to something to which they ought to consent, and their refusal to do so prevents the effective use by the other party of the other party’s land. The section empowers the court to resolve this issue by diminishing the property rights of the servient landowner insofar as the statutory right of user applies. It permits the court to alter the property rights of servient landowners against their will. This construction is reinforced by the use of the words, “Imposition” in the section’s heading,⁷⁰ and “impose” in s 180(1). By this section the court may impose upon the servient land or upon the owner for the time being of the servient land, an obligation of user or an obligation to permit such user.⁷¹ These words demonstrate that something negative – that is, a burden or “obligation” of user – is being laid on the servient landowner.⁷² This view is reinforced by the fact that an order under s 180(1) cannot be made, unless the owner of the servient land can be adequately recompensed: s 180(3)(b). Further, pursuant to s 180(4), an order under s 180(1) requires, except in special circumstances, a provision for the payment of just compensation or consideration. Because of the section’s impact on servient landowners, in Re Seaforth Land Sales Pty Ltd's Land,⁷³ Douglas J observed that in embarking upon a consideration of s 180, “the premise [is] that one should not interfere readily with the proprietary rights of an owner of land sought to be made the subject of a right of user…”.⁷⁴

66. In its report preceding the PLA’s enactment, the Queensland Law Reform Commission similarly recognised that because s 180 permits interference with property rights, it is also “necessary to surround the power to impose … statutory rights of user with adequate safeguards”.⁷⁵ These safeguards are the subject of ss 180(3), (4) and (6).

67. Given s 180 aims to protect the interests of servient landowners by applying safeguards to the court’s power, before any order is made under the section, the court must be in a position to ensure its requirements are met. The court must consider all the circumstances of the case, and the effect that the particular facts of the case have on the application of the section. For example, s 180(1) draws a distinction between statutory rights of user that are granted to “the land” which forms the dominant land, against those which are granted to “the owner of such land”. This demonstrates a temporal aspect to the obligation of user sought to be imposed upon the servient land, being either permanently attached to the land itself, or temporarily imposed solely in respect of the landowner personally. Categories of the latter case might include a licence imposed for the purposes of temporary scaffolding. In the present case, the drainage easement sought by Salazar Properties constituted a permanent easement. This permanency is a factor that warrants greater protection of the interests of Mr Jeffs, as the servient landowner, to be afforded by the safeguards in ss 180(3), (4) and (6).

“Subsection [180(3)(a) provides] that an order shall not be made granting the right unless the Court is satisfied that it is consistent with the public interest that the dominant land should be used in the manner proposed. These last words “in the manner proposed” contemplate that the applicant will come to the Court with a particular proposal—a proposal to use the land in a particular manner; and it appears to me that it is this manner which is referred to in subsec. (1). The applicant must show that in the interests of effective use of the land in this particular manner, the grant of statutory right of user in some form is reasonably necessary.”

(emphasis added)

70. More recently, in 2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS 39149,⁷⁹ Burns J observed:

“As Andrews J held in Ex parte Edward Street Properties Pty Ltd,⁸⁰ in order to justify the imposition of a statutory right of user, the case in favour of the applicant should be ‘clear and persuasive’.⁸¹ Furthermore, such a case must establish the conditions for the making of an order with an equal degree of clarity. If the applicant does not discharge that burden then ‘the occasion to include in any such order terms and conditions that are just does not arise’.

This does not mean that every detail of an applicant’s proposal must be worked out in a final way or that every necessary approval or permission is obtained in advance of the hearing of the application, but it does mean that matters of substance are satisfactorily defined and established by the evidence. If otherwise then the court cannot properly assess the merits of the application, let alone settle on conditions to accompany the grant. The words in s 180(3)(a) PLA, ‘in the manner proposed’, contemplate that an applicant for relief ‘will come to court with a particular proposal — to use the land in a particular manner’,⁸² and that expectation will not be met where, as here, there are substantial gaps in the detail of what is proposed.’”

(citations in original)

71. Importantly, while s 180 permits the court to impose various types of “obligations of user”, including an easement, it must be remembered that any easements imposed under the section are solely creatures of statute, not the common law. At common law, it has long been established that an easement must be sufficiently definite, so that it is capable of forming the subject matter of a grant.⁸³ Those common law requirements for easements to have definitiveness, however, do not necessarily translate into the equivalent requirements for an application under s 180. The need for clarity in such applications is informed solely by the requirements of the section. The requirement for clarity in an application under s 180 arises solely because the subsections, which safeguard the servient landowner, are inherently interlinked with the need for an easement to be definite.⁸⁴ This is consistent with the above observations of Burns J that, in order to be successful, a proposal must have sufficient clarity to allow the court to be able to “properly assess the merits of the application” and to “settle on conditions to accompany the grant”. Referring to the common law requirement for easements to have clarity – which is framed more vaguely – is liable to distract attention from this statutory task.

72. As noted at [45] above, the primary judge relied on the case of Peulen v Agius⁸⁵ in concluding that the mere possibility that the ICC would refuse Salazar Properties’ development application without a wider easement did not necessarily preclude the court from imposing the easement sought by it.⁸⁶

73. In Peulen v Agius, Carmody CJ made the following observations, which were (substantially) set out in her Honour’s judgment:⁸⁷

“[56] The Court should not grant a statutory right of user where the subject use is absolutely unlawful or there is no real chance of obtaining approval necessary to render the relevant use lawful.⁸⁸ However, where there is a real chance of obtaining the required approval, the Court is not precluded from granting the statutory right of user merely because of the possibility – or in some cases, the probability – that the required approval may not be obtained.⁸⁹

[57] Although the Court need not be satisfied that all obstacles to the imposition of the statutory right of user have been removed, it retains a residual discretion to refuse a statutory right of user despite the existence of a ‘real chance’ of success in obtaining regulatory approval.⁹⁰ The Court may, in appropriate circumstances, enquire into the probability of success of any application for approval in determining whether the proposed use of the land is use in a ‘reasonable manner’.

[58] However, this enquiry should not be treated as a substitute for the overarching test, which is whether it is ‘reasonably necessary’ in the interests of ‘effective use’ of the land in a ‘reasonable manner’ that the statutory right of user is granted as proposed by the applicant.”⁹¹

(citations in original)

74. In the context of modern planning law, wherein local councils are the authority required to consent to any proposed developments, it is inevitable that where s 180 is used to facilitate a development application it will give rise to an interplay between the courts and the councils. As recognised by Hodgson CJ in Equity in 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123:⁹²

“a project … 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.”

This fact, however, does not obviate the need for clarity in the application.

75. In Peulen, the s 180 applicants sought an easement over a driveway on the respondents’ land. The driveway had been used for many years by the previous owners of the applicants’ lot, but following settlement, the respondents no longer wished for the applicants to use it. The relevant council in that case had granted an approval for a development application by the respondents several years earlier in 2001, which included a condition that the driveway could not be used for that lot. There was no evidence adduced as to whether this was an essential and indispensable condition of the 2001 approval, and the parties advanced divergent expert evidence as to whether the council would approve a new development application in respect of the driveway.

76. Even though council approval had not been sought in that case, there was technically clarity in the s 180 application before the court, as there was no doubt in relation to the precise dimensions and nature of the application that would eventually be made to council. The above observation, that the court is not precluded from ordering a statutory right of user “where there is a real chance of obtaining the required approval”, ought to be construed in this context. Conversely, in the present case, Salazar Properties has effectively approached the court seeking an easement in whatever form the ICC requires to facilitate its subdivision; no final dimensions or conditions were put before the court with certainty as to what would be required by the ICC.

77. In Debbula Pty Ltd v Owners - Strata Plan No 6964,⁹³ the case relied upon by Carmody CJ for the propositions set out at [73] above, the applicant wanted to develop a one-storey dwelling into multi-level units, which (like the present case) required an easement over an adjacent set of units as a drainage solution.

78. Debbula Pty Ltd applied (under the NSW equivalent to s 180) for the granting of an easement, so that it could succeed on its development application to council. The applicant in that case had previously applied to the council for approval of its proposed development, but each of these had been refused. The lack of an easement was only one of several reasons why council had refused to grant the development application. In the context of determining whether the easement sought was reasonably necessary for the “effective use or development of the land”,⁹⁴ Macready M observed:

“[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.”

79. His Honour then referred to incoming legislative reforms (that were implemented in New South Wales shortly after the case⁹⁵), which would have allowed the Land and Environment Court to determine questions of easement imposition at the same time as determining appeals from a council’s refusal of a development application. His Honour held, however, that despite these reforms:

“[51] … 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 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:

the size of the development may possibly affect the extent of the easement in terms of its size;

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

any consideration of the public interest would be on a superficial level unrelated to the actual effect on the adjoining properties.”

Those observations are apposite to the present case. The legislative reforms referred to by his Honour further demonstrate the extent to which the issues of council decision-making and involuntarily imposed easements are intertwined.

80. Ultimately, the court’s power under s 180 cannot be vested in any other authority, such as a council. The legislature did not intend for such a significant power to be capable of delegation to the discretion of a local council. This has increased importance having regard to the fact that applications under s 180 generally involve neighbours who “are at loggerheads and, very likely, at the point of intense dislike”,⁹⁶ and that there is often a “history of acrimony between the parties”.⁹⁷

81. For this reason, in most cases where there is a proposed development for which council approval is required, to ensure sufficient clarity in an application under s 180, one would ordinarily proceed by obtaining a development approval from council which is conditional upon the grant of a specific order being made by the court.⁹⁸ At the very least, as was the case in Peulen v Agius, one could approach the court with a definite proposal of what council is likely to require. What is not appropriate is to apply for a right of user which is variable at the discretion of a third party. By seeking an easement in terms which were effectively left to the ICC’s discretion, Salazar Properties left the court with no foundation upon which it could properly assess, in the circumstances, whether the safeguards imposed by the section had been satisfied. Consequently, the court’s jurisdiction under s 180 was not engaged.

82. The primary judge’s finding that her Honour “would certainly not order an easement ‘on such other terms as the ICC may impose as part of a development application’ because that [would] lack sufficient clarity”, was entirely correct.⁹⁹ It is evident on appeal, however, that this was in fact the actual relief sought by Salazar Properties below. It is evident from a reading of each of its originating applications, points of claim, and written and oral submissions (both at first instance and on appeal) that Salazar Properties’ intent was for an easement to be imposed in dimensions and on conditions that could be varied at the ICC’s discretion.

83. The primary judge’s reasoning throughout the judgment was predicated on the assumption that the easement sought had dimensions of 27 square metres, as this was the figure “commonly referred to” during the hearing below.¹⁰⁰ Salazar Properties has now departed from its original position on commencing its appeal, and no longer seeks to challenge the dimensions assumed by her Honour on appeal. The assumption, however, was incorrect. It reflects neither the proposals that Salazar Properties put to Mr Jeffs, nor what it sought in its application before the court below. Each of the references to a dimension of “27 square metres”, in written and oral submissions below, was intended to remain subject to variation at the ICC’s discretion. A proposal in these terms was inadequate. It was not incumbent upon the primary judge to alter Salazar Properties’ proposal or to attempt to fashion an acceptable proposal out of the arguments and evidence that it put before the court.

“The owner of the dominant land and their servants or agents may interfere with the existing drainage of the servient land in the construction zone and easement zone generally as required to effect the new drainage infrastructure … and must maintain or otherwise facilitate the continued drainage of the servient land in those areas.”

(emphasis added)

In oral submissions before this Court, counsel for Salazar Properties went so far as to assert that:

“…it’s not for the Court, with respect, to fetter the planning discretion or the planning authority. [The] making [of] an order which does not entitle inference with the existing draining infrastructure in effect, potentially frustrates the very purpose of granting a statutory right of easement under section 180.”¹⁰⁸

This again betrays the substance of what Salazar Properties was truly seeking below, and what it continues to seek on appeal, in that it seeks to permit interference to the extent that this is required by the ICC in order to approve its development application. It is, in effect, seeking an order whereby the court defers its discretion under s 180 to that of the ICC. Such a submission must be rejected.

The refusal of the sixth offer by Mr Jeffs was not unreasonable (Ground 4 of the cross-appeal)

88. Mr Jeffs submits that in finding that his refusal of the sixth offer was unreasonable for the purposes of s 180(3)(c)(i) of the PLA, the primary judge failed to take into account a relevant consideration; namely, that the terms of the proposed easement were too broad or insufficiently detailed.

89. For reasons set out at [30], [32] and [83] above, this error has been established. It was an integral term of the sixth offer that, in addition to being 27 square metres or in such terms as the court considered just and fair, the form of the easement proposed was subject to the words “as required by the [ICC]”¹⁰⁹

90. This was specifically noted by her Honour at Reasons [104](c). At Reasons [106], her Honour considered the application of s 180(3)(c)(i) expressly on the assumption that what was being sought was in fact restricted to an easement of 27 square metres:

“[106] If the permanent easement is in fact restricted to the proposed 27m2, I do not think the imposition of the easement would cause any significant detriment, loss or harm to the respondent. The infrastructure sought to be constructed is mainly underground and is not otherwise overly obtrusive. It is not adequately demonstrated that there is a real risk the permanent easement sought would interfere with any future development that the respondent may wish to undertake on lot 2.”

(emphasis added)

91. As discussed, this assumption was incorrect.

92. The uncertainty as to what was proposed in the sixth offer flowed through to what conditions the ICC may have imposed. This was recognised by the primary judge in the Second Reasons, where her Honour observed:

“[12] That [Salazar Properties] made its application in the proceeding in circumstances where it appears it does not have complete certainty as to the local council’s precise requirements for the drainage infrastructure is an issue of its own making. I am not prepared to leave details such as these to the discretion of the local council as different infrastructure may justify different compensation.”

The uncertainty also flowed through to any assessment of compensation.

93. Where it was uncertain as to what the sixth offer actually proposed, the refusal of the imposition of an obligation of user by Mr Jeffs was not unreasonable. Ground 4 of the cross-appeal is established.

Salazar Properties’ appeal against costs

94. By Ground 4(c)(iii) of the Final Notice of Appeal, Salazar Properties seeks to challenge her Honour’s order in respect of costs of the proceedings made pursuant to s 180(5)(e) of the PLA. There is no dispute that the correct amount of legal expenses incurred by Mr Jeffs is either $39,788.28, or in the alternative, $37,105.38 (Ground 5 of the cross-appeal).

95. Mr Jeffs was represented by HWL Ebsworth Lawyers (HWL) until about 12 June 2023. Thereafter, he was represented by his brother. The difference between the two amounts referred to in Ground 5 of the cross-appeal is that the amount of $39,788.28 includes two tax invoices for HWL dated 29 April 2022 and 31 August 2022, for work prior to Salazar Properties commencing the Supreme Court proceedings. The amount of $37,105.38 constitutes the legal expenses incurred by Mr Jeffs after the commencement of the proceedings.

96. As legal costs are generally only awarded for costs incurred after the commencement of proceedings, Order 17 of her Honour’s orders made 16 May 2024 should be varied by substituting the sum of $37,105.38 for the sum of $40,000.00.

97. Salazar Properties submits, however, that the legal expenses incurred by Mr Jeffs are not costs for the purposes of s 180(5)(e) of the PLA. This submission cannot be accepted, as the amount of $37,105.38 was incurred by Mr Jeffs after the commencement of the proceeding.

98. As correctly identified by the primary judge, s 180(5)(e) provides the court with a wide discretion as to the costs order it may make and does not restrict it in any way.¹¹⁰ In the present case, there were no “special circumstances” that would permit the court, pursuant to s 180(6), to make an order for costs against Mr Jeffs.

99. By Ground 6 of the Final Notice of Appeal, Salazar Properties further asserts that the primary judge erroneously applied incorrect principles to the facts in determining that the costs of the proceeding be recoverable by Mr Jeffs on an indemnity basis.

100. In the Second Reasons at [24] her Honour identified that she was actually fixing the costs, rather than awarding costs on the indemnity basis:

“[24] I am satisfied that the applicant’s conduct about the proceeding, and the nature of the proceeding, is such that fixing the costs in the amount actually incurred by the respondent is appropriate. I note that s. 180(5)(e) PLA does not restrict me to ordering costs on any particular basis (such as standard or indemnity costs); but if it were necessary to so conclude, I would have allowed costs on the indemnity basis given the conduct of the applicant that I have already explained in the reasons for judgment. I have carefully considered by reference to the available evidence the work carried out in respect of the legal fees charged to the respondent and the fees do seem to me to be reasonable for the work performed, properly recoverable on the indemnity basis.”

101. Even if there was doubt that in fixing the costs under s 180(5)(e) of the PLA, her Honour was in fact awarding costs on the indemnity basis, no error has been demonstrated. Her Honour was correct to consider that an indemnity costs order against Salazar Properties would be appropriate.

102. In Ground 5 of the Final Notice of Appeal, Salazar Properties asserts that the primary judge made various adverse reputational findings of fact about Ms Salazar. While originally the complaint was directed toward her Honour’s reputational findings ipso facto, during the course of the appeal, counsel for Salazar Properties accepted that the findings can only be relevant to the appeal insofar as they are a factor which argues against the costs order made by the primary judge.¹¹¹ For that reason, Grounds 5 and 6 should be dealt with together.

103. In Colgate Palmolive Co v Cussons Pty Ltd,¹¹² Sheppard J set out the principles relevant to the ordering of indemnity costs:

“Notwithstanding the fact that [the categories are not closed], it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud …; evidence of particular misconduct that causes loss of time to the Court and to other parties …; the fact that the proceedings were commenced or continued for some ulterior motive … or in wilful disregard of known facts or clearly established law …; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions …; an imprudent refusal of an offer to compromise … and an award of costs on an indemnity basis against a contemnor … Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

104. In LPD Holdings (Aust) Pty Ltd v Phillips, Hickey and Toigo,¹¹³ while agreeing with the Sheppard J’s summary of the circumstances in which an indemnity costs order should be made, the court cautioned:¹¹⁴

“Whilst the awarding of costs on an indemnity basis will always ultimately depend upon the exercise of a discretion in the particular circumstances of each individual case, the justification for an award of indemnity costs continues to require some special or unusual feature of the particular case. As was observed by Basten JA in Chaina v Alvaro Homes Pty Ltd,¹¹⁵ the general rule remains that costs should be assessed on a party and party basis, and the standard to be applied in awarding indemnity costs ought not ‘be allowed to diminish to the extent that an unsuccessful party will be at risk of an order for costs assessed on an indemnity basis, absent some blameworthy conduct on its part’.”

105. In the present case, the proposals to Mr Jeffs and the eventual application to the court, as framed, were incapable of succeeding. The conduct of Salazar Properties and its representatives, Ms Salazar and Mr Merlo, further reinforces a finding that an indemnity costs order constituted a proper exercise of discretion under s 180(5)(e).

106. In the Reasons,¹¹⁶ the primary judge set out in detail the correspondence sent by Salazar Properties (through Ms Salazar and Mr Merlo) to Mr Jeffs.

107. Her Honour observed the following in relation to the First Offer through to the Fifth offer:¹¹⁷

“There are many criticisms that can be made of the first five offers of compensation made by the applicant to the respondent and [Salazar Properties’] conduct towards the respondent at the time of those offers being made. [Salazar Properties’] correspondence and conduct demonstrate an entitled and bullying attitude by both [it] and its representatives, which persisted even at the trial.”

108. Her Honour continued to make similar findings as to the conduct of Ms Salazar and Mr Merlo throughout the Reasons, including:

“[74] …

Upon the first offer of compensation being rejected, Ms Salazar was of the view that the respondent was ‘unreasonable, intransigent and un-neighbourly and attempting to ransom me for the easement the Applicant seeks’.

[75] Ms Salazar’s correspondence of 7 September 2022 that responded to correspondence from HWLE about how the originating application ought to proceed again reveals her attitude to any person who did not agree with her … It is an extraordinary piece of correspondence – discourteous in the extreme.

[76] Ms Salazar was an unimpressive witness. She was evasive and argumentative. She was unduly critical and dismissive of the respondent and demonstrated no real insight into the bullying nature of her dealings with the respondent. She would not make appropriate concessions, and she advocated for her position rather than just answering the questions directly asked of her.”

109. Further examples of such behaviour throughout the correspondence were identified during the appeal hearing, including:

“I suggest you seek legal advice from better specialised experts who will put your interest before their fees”.¹¹⁸

…

“You have wasted enough of my time and money. … I am not prepared to enter into any negotiation concerning my offer which is more than reasonable. … Do not presume to have your Lawyers write back to me other than to accept the offer unconditionally”.¹¹⁹

110. At the hearing of the appeal, counsel for Salazar Properties contended that the primary judge had effectively selected isolated extracts of the correspondence out of their proper context. When viewed as a whole, he submitted, the tone of the correspondence was not as damning as it was found to be by the primary judge. It was also submitted that the Court, in considering the nature of the correspondence, should have regard to the fact that Ms Salazar was a layperson rather than a lawyer.

111. Both submissions should be rejected. It is to be expected that applications under s 180 will often involve a degree of animosity between the applicant and respondent. This is a natural consequence of the tension that arises between the applicant’s desire for a statutory right of user, and the impact that an involuntarily imposed right of user has on the servient landowner’s property rights. This fact does not mean, however, that an applicant has free rein in relation to how they conduct themselves when seeking an easement for the benefit of their property.

Disposition

112. As the cross-appeal should be allowed and the appeal dismissed, it is unnecessary to consider Mr Jeffs’ amended notice of contention. Counsel for Salazar Properties also abandoned an application to adduce further evidence filed 22 August 2024 and did not oppose Mr Jeffs’ application to adduce further evidence filed 26 July 2024 in relation to the issue of costs.

113. I would order that:

The appellant’s application for leave to adduce further evidence filed 22 August 2024 is refused.

The respondent’s application for leave to adduce further evidence filed 26 July 2024 is granted.

The appellant’s appeal is dismissed.

The respondent’s cross-appeal is allowed.

The second amended originating application filed 21 August 2023 is dismissed.

The orders dated 16 May 2024 be set aside, with the exception of order 17, which be varied by substituting the sum of $37,105.38 for the sum $40,000.00.

The appellant pay the respondent’s costs of the appeal, the notice of contention and the cross-appeal.

114. BODDICE JA: I agree with Flanagan JA.

115. KELLY J: I agree with the reasons of Flanagan JA.

Footnotes

1. It should be noted that this Act has recently been replaced by the Property Law Act 2023 (Qld). ↩

2. Reasons, [12]. ↩

3. Reasons, [13]–[14]. ↩

4. Reasons, [15]. ↩

5. Reasons, [17]. ↩

6. Reasons, [18]–[19]. ↩

7. Reasons, [21]–[22]. ↩

8. Reasons, [42]; RB, vol 4, page 1066. ↩

9. See RB, vol 2, page 111. ↩

10. Reasons, [117]. ↩

11. RB, vol 1, page 94, para 1. The points of claim in relation to this originating application, filed on 29 October 2022, were in substantially identical terms. ↩

12. RB, vol 4, page 1121; RB, vol 6, page 2168; RB, vol 8, page 2972. ↩

13. RB, vol 4, page 1088. ↩

14. RB, vol 6, page 2139. ↩