Nahata v Robertson

Supreme Court of NSW|2023-05-24|Before: Peden J

JUDGMENT

The plaintiffs seek an order that the Court impose an easement pursuant to s 88K Conveyancing Act 1919 (NSW) over their neighbours' property.
In October 2021, the plaintiffs purchased a property in Dundas Valley, New South Wales, which I will refer to as "250".
Currently on 250 stands an older sing4le storey home, which is occupied by the plaintiffs' tenant. The plaintiffs wish to build a duplex at 250, but to comply with the conditions for development they require an easement for the drainage of stormwater that burdens the defendants' property.
250 is a roughly square-shaped corner parcel bordered by the defendants' property to the immediate north and the property numbered 248 to the west. The defendants' property occupies a wedge-shaped parcel which tapers on the western end.
The two properties share a dividing fence. The defendants' property also shares a boundary with properties running west from the plaintiffs' property, namely at 248, 246 and 244.
The defendants' property backs onto the backyard of another property (Summers) on a street that runs vertically and roughly parallel to the defendants' street to the west.
The route of the plaintiffs' proposed easement is explained further below, but it follows the northern boundary line of 250 between 250 and the defendants' property and would be one metre wide and located on the defendants' side of the dividing fence. The proposed easement then moves into the backyard of Summers and emerges at the front, where a point of discharge can be found for runoff and stormwater.
The proposed easement would also include a drainage inlet pit comprising 45 centimetres in length and width. The plaintiffs' proposal was that the pit would be installed along both sides of the plaintiffs' and defendants' sides of the fence. On the defendants' side, its proposed entry location is just outside the plaintiffs' laundry door.
The plaintiffs had also commenced proceedings against the Summers neighbours, whose property would also need to be subject to the proposed easement under the plaintiffs' drainage solution. Those proceedings were resolved a few days before the hearing on terms that involved an easement for drainage being granted, conditional upon the plaintiffs obtaining the easement sought.

Background

On 14 January 2021, before the plaintiffs purchased 250, Parramatta Council (the Council) rejected a development application to demolish the existing dwelling on 250 and construct a dual occupancy with subdivision. The reasons why the development engineer did not support consent being granted included that "an easement to drain water is required over downstream properties to a legal point of discharge", which was consistent with the Council's development control plan and policy.
In May 2021, a new development application was lodged with the Council with "concept plans" for a drainage system and easement.
On 24 March 2022, Council granted deferred consent to the application expiring on 16 March 2024, subject to the following condition inter alia: Submission to Council of suitable documentary evidence issued by the Department of Lands confirming the creation of an easement to drain water, variable width minimum 0.9m and 1m wide where not restricted by existing structures, over downstream properties benefiting the subject lot known as [250] and burdening the downstream properties known as [defendants' land] and [Summers] have been registered with the NSW Land and Property Information Service.
At various times between 4 December 2021 and the commencement of the proceedings on 24 August 2022, the plaintiffs sought the defendants' consent to the creation of an easement. The defendants did not consent and the plaintiffs commenced these proceedings.
The issue to be determined is whether the Court is satisfied that an easement ought be ordered, because the requirements of s 88K have been demonstrated and it is appropriate to impose an easement as sought. If such easement is granted, the appropriate amount of compensation to be paid by the plaintiffs to the defendants must be determined.

View

On the first day of the hearing the Court conducted a view of the relevant properties pursuant to s 53 of the Evidence Act 1995 (NSW) to assist with an understanding of the evidence. The parties, their solicitors, and counsel attended.
The view commenced outside the defendants' property and then proceeded to 250 and the rear of the property to view the location of the planned drainage inlet pit on the 250 side. The properties at 248 and 246 were viewed from the front. Some taller trees could be seen at the back of those properties.
The view then returned to defendants' property and to where the proposed easement affected the backyard. I observed that the distance between the side laundry door and the current retaining wall on the defendants' property (supporting the plaintiffs' land) was only about one metre of a concrete walkway. The drainage inlet pit under the plaintiffs' proposed easement would be located opposite the laundry door.
The backyard of 250 appeared to be slightly higher than the level of the land at the top of the defendants' retaining wall. I observed that the defendants' retaining wall was about 75 centimetres high from the walkway. On top of the retaining wall was a high boundary fence shared with 250.
The concrete walkway leads to paved entertaining area covered with a pergola and a swimming pool to the side. The area between the paved area and the western end of the backyard is mostly lawn and a shed is located at the very rear of the property.
Standing in the defendants' backyard, it is possible to identify the different boundaries with properties at 250, 248 and 246 by the different colours of the dividing fences. The proposed easement would run from an inlet pit opposite the laundry door and continue towards the rear of the property along or under the concrete walkway and paved outdoor area. I observed a plastic cap consistent with a cover over a sewer inlet in the paved area.
The easement would then proceed along near the defendants' western boundary with the rear gardens of 248 and 246 to the boundary with the Summers neighbours.
Tall trees in the rear gardens of 248 and 246 were pointed out to me. However, there was no evidence of their precise heights, type or root structure in evidence.
The view then proceeded to the front of the Summers property, where a legal point of discharge for stormwater could be observed, which would be the end point for the easement.

Terms of development consent

The development application, as lodged, was not in evidence.
The deferred development consent at Schedule 1 provides: Pursuant to the provisions of Section 80(3) of the Environmental Planning and Assessment Act, 1979, the development application be granted a Deferred Commencement Consent subject to the completion of the following: Submission to Council of suitable documentary evidence issued by the Department of Lands confirming the creation of an easement to drain water, variable width, minimum 0.9 and 1m wide where not restricted by existing structures, over downstream properties benefiting the subject lot known as [250] and burdening the downstream properties known as [defendants' property and Summers] have been registered with the NSW Land and Property Information Service. The easement to drain must facilitate both piped drainage and surface drainage. The above requirement(s) must be satisfied within 24 months of this determination or the consent will lapse.
At Schedule 2, Part A - General Conditions relevantly provides: 1. The development is to be carried out in accordance with the following plans endorsed with Council's stamp as well as the documentation listed below, except where amended by other conditions of this consent and/or any plan annotations: … Civil Drawings/Stormwater (Project No. 3477) prepared by Consulting Design and Inspection Engineers Pty Ltd.
The approved "Civil Drawings/Stormwater" documents were described as "Issue F" drawings for "easement details and sediment control" and "storm water disposal and sediment control plan" dated 7 July 2021
Schedule 2, Part B, sets out the applicable conditions before a construction certificate can be issued and relevantly include: All roof water and surface water is to be connected to an operable drainage system. Details are to be shown on the plans and documentation accompanying the application for a Construction Certificate. Reason: To ensure satisfactory stormwater disposal. ... Full engineering construction details of the stormwater system, including OSD structures, pipe networks and calculations as per following points, shall be submitted for the approval of the PCA prior to release of the Construction Certificate for any work on the site.

Section 88K Principles

Section 88K of the Conveyancing Act relevantly provides: 88K Power of Court to create easements (1) The Court may make an order imposing an easement over land if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement. (2) Such an order may be made only if the Court is satisfied that - (a) use of the land having the benefit of the easement will not be inconsistent with the public interest, and (b) the owner of the land to be burdened by the easement … can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement, and (c) all reasonable attempts have been made by the applicant for the order to obtain the easement or an easement having the same effect but have been unsuccessful. (3) The Court is to specify in the order the nature and terms of the easement and such of the particulars referred to in section 88(1)(a)-(d) as are appropriate and is to identify its site by reference to a plan that is, or is capable of being, registered or recorded under Division 3 of Part 23. The terms may limit the times at which the easement applies. (4) The Court is to provide in the order for payment by the applicant to specified persons of such compensation as the Court considers appropriate, unless the Court determines that compensation is not payable because of the special circumstances of the case. (5) The costs of the proceedings are payable by the applicant, subject to any order of the Court to the contrary.
The terms of s 88(1), referred to in s 88K(3) should also be noted: 88 Requirements for easements and restrictions on use of land (1) Except to the extent that this Division otherwise provides, an easement expressed to be created by an instrument coming into operation after the commencement of the Conveyancing (Amendment) Act 1930, … shall not be enforceable against a person interested in the land claimed to be subject to the easement or restriction, and not being a party to its creation unless the instrument clearly indicates - (a) the land to which the benefit of the easement or restriction is appurtenant, (b) the land which is subject to the burden of the easement or restriction… (c) the persons (if any) having the right to release, vary, or modify the restriction, other than the persons having, in the absence of agreement to the contrary, the right by law to release, vary, or modify the restriction, and (d) the persons (if any) whose consent to a release, variation, or modification of the easement or restriction is stipulated for.
The granting of s 88K relief is contingent on the satisfaction of the requirements of s 88K(2). However, courts retain a residual discretion not to grant s 88K relief, having regard to the purpose of s 88K as "facilitating the reasonable development of land whilst ensuring that just compensation be paid for any erosion of private property rights": Khattar v Wiese (2005) 12 BPR 23,235 at 23,250; [2005] NSWSC 1014 at [60] (Brereton J, as his Honour then was). To a similar effect, Bryson AJ observed in Stepanoski v Chen [2011] NSWSC 1573 at [14]: As shown in the words of section 88K, that the proposed easement is reasonably necessary for the effective of use or development of the dominant land is not enough to produce a positive exercise of the discretion in section 88K(1); There is discretion, and the effect on the servient land is also relevant and important.
Further, as noted by Sackville AJA in Gordon v Lever (2018) 97 NSWLR 90 at 108-109 (McColl and White JJA agreeing): [97] This emphatic language of s 88K(3) makes it clear that the court lacks power to make an order imposing an easement unless the terms of the easement are specified in the order itself. The purpose of the statutory requirement is to ensure that an easement imposed in the exercise of the power conferred by s 88K(1) will be registered in a form that includes all particulars of the easement, as envisaged by s 88K(7). Those particulars may have a marked impact on the respective rights and obligations of the owners of the dominant and servient tenements. … [98] When s 88K of the Conveyancing Act is read as a whole it is evident that the reference to 'an easement' in s 88K(1) is to an easement the 'nature and terms' of which are specified by the Court. This follows from the conferral of power on the Court to make an order imposing an easement, coupled with the requirement that the Court is to specify in the order the nature and terms of the easement. The terms include any limitation on the times or circumstances in which the easement 'applies'. In the case of an easement of carriageway, the relevant terms will include any constraint on the times or circumstances in which the owner of the dominant tenement can use the carriageway.
In Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd (2012) 16 BPR 31257; [2012] NSWCA 445 at [99], the Court (Bathurst CJ, Beazley and Meagher JJA) stated: …Although an easement can be subject to conditions and restrictions on its enjoyment, these conditions must in our opinion be specified in the order imposing the easement and not in an order or undertaking independent of the easement…. There is good reason for this. The easement will take effect on registration and persons dealing with the dominant and servient tenement will only be bound by what appears on the register, not by some extrinsic order or undertaking which is made between parties to litigation.
The necessity for certainty of a proposed easement was emphasised in Studholme v Rawson (2020) 102 NSWLR 490. There the plaintiffs/respondents had sought and obtained an interlocutory injunction and the imposition of an easement pursuant to s 88K granting them rights to a strip of land three-foot wide next to a six-foot wide right of way that had existed since 1947. The defendant/appellant was the registered proprietor of the burdened land.
In that case, shortly before trial, the appellant consented to an order imposing an easement over an area extending the right of way by 800 millimetres. However, the Court was required to resolve the appropriate conditions of easement, and in particular, an issue of whether the trial judge erred in ordering engineering works to address the appellant's concern that the extended right of way that had been concreted by the respondents was causing rising damp in her property.
On that issue on appeal, Basten JA (with whom Bell P and Gleeson JA agreed) explained the way the plaintiff seeking s 88K orders had presented the case at [88]: The summons … claimed an order imposing an easement "on such terms and conditions as the Court thinks appropriate in the circumstances over the land of the defendant … as shown on the annexed plan". No plan was annexed. There were no pleadings to further define the issues to be resolved by the court.
The expert engineering evidence at the trial did not provide any details on the appropriate terms or conditions of an easement involving a laneway, but instead addressed the issue of whether rising damp was caused by the concreted extension of the right of way. That problem was not said to be inherent in the use of the laneway. Order six made by the trial judge concerned the engineering works, and were an amended form of "option 1" proposed by the engineers. Basten JA at [102] explained: Order 6 made by the trial judge did not condition registration of the easement upon the carrying out of the designated works; rather, the plaintiffs were required to carry out the works within six months of the date of registration of the easement. Although order 8 required that they obtain any necessary consent or approval from the Council "upon the public land within Heights Crescent", there is no provision for the possibility that such approval will not be given, nor for the possibility that consent may be required for the whole of the works.
There were other issues with the orders made, including for example, that there was no provision for the maintenance of the drainage system to be placed on the easement.
By way of introductory conclusion on this question, Basten JA stated at [46]: …if this Court cannot be satisfied as to the appropriate engineering works, it cannot identify the terms and conditions of the easement and therefore whether it is reasonably necessary.
Basten JA also stated at [108] that "there are serious doubts as to whether [an order about engineering works] is capable of being imposed as a condition of the easement".
Order six of the primary decision was set aside and the issue of appropriate orders concerning the engineering works and the appropriate conditions of easement was remitted.

Consideration

In the amended statement of claim filed on 21 September 2022, the plaintiffs seek only the following relief: The named plaintiffs claim relief in the form of a Section 88K order under the Conveyancing Act 1919 (NSW) by the Supreme Court of New South Wales. This serves the purpose of granting the named Plaintiffs permission to install the drainage easement in contention.
Paragraph 5 of the pleading states: The plaintiffs have set out to the Defendants what easement is required from them more than once: Particulars Architecture plans for the proposed development at [the Property] (including Stormwater and easement plans with all details) together with an Easement request letter.
The defendants denied the plaintiffs were entitled to an easement. I note there is no suggestion by the defendants that s 88K(2)(a) is in issue; it is admitted that use of the land having the benefit of the easement will not be inconsistent with the public interest. Council's development consent is also consistent in its note that "the development will be compatible with the merging and planned future character of the area".
Further, the defendants accept that it is possible to determine appropriate compensation for the purposes of s 88K(2)(b), if an easement is otherwise ordered by the Court.
The issues to be determined are whether the proposed easement "is reasonably necessary for the effective use or development of other land that will have the benefit of the easement" (s 88K(1)), and whether the plaintiffs have made "all reasonable attempts … to obtain the easement or an easement having the same effect but have been unsuccessful" (s 88K(2)(c)).
The determination of the question whether an easement is reasonably necessary for the use or development of land involves consideration of any alternative methods by which such use or development could be achieved: Moorebank Recyclers Pty Limited v Tanlane Pty Limited at [158].
I consider that the plaintiffs' claim must fail for the following reasons.

No easement identified with precision

First, and fundamentally, the plaintiffs did not provide the defendants or the Court with an instrument in registrable form with the details of the easement that complied with the development consent.
The only evidence of the easement sought in the amended statement of claim was the "concept plan" for "storm water disposal and sediment control plan" dated 24 April 2021, marked "Issue E" and submitted to Council as part of the development application lodged in May 2021. The stormwater concept plan identifies a "1m wide easement" on the defendants' land, commencing in the north-west corner of 250 where it meets the defendants' land. It proposes to run along the southern boundary of the defendants' land to Summers.
However, as noted above, the approved drawings were "Issue F" and they were not in evidence.
Therefore, the Court does not have the version of drawings approved by Council, from which conclusions about the proposed easement could be drawn. If an easement was granted on the basis of the "Issue E" drawings it would not satisfy the development consent and therefore would be futile.
Further, the plaintiffs never provided the Court with any document in registrable form, nor terms of the proposed easement nor submission as to how those terms ought to be framed. I note that in the plaintiffs' other proceedings against the Summers neighbour, the parties agreed details of the easement, type of pipes, and 2 pages of detailed terms of easement. The plaintiffs did not make an application for an adjournment to attempt to correct these issues, even after the defendants identified them.
Therefore, it is not possible for the Court to determine whether the easement sought is "reasonably necessary".
It is not possible on the evidence to evaluate the plaintiffs' proposed easement, including the question of whether the easement is reasonably necessary.

Plaintiffs have not made all reasonable attempts and easement having same effect

In addition, I am not satisfied on the evidence that the plaintiffs have made "all reasonable attempts … to obtain the easement or an easement having the same effect but have been unsuccessful" (s 88K(2)(c)).
Whether an applicant has established that all reasonable attempts have (unsuccessfully) been made to obtain the easement is a question of degree. Generally a court will be satisfied if, viewed objectively, the applicant's negotiations for an easement have proved fruitless and it is "extremely unlikely" that future negotiations will produce a consensus: Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14,638 at 14,654 (Simos J); Tregoyd Gardens Pty Ltd v Jervis (NSWSC, Eq, 25 September 1997); (1997) 8 BPR 15,845 at 15,855 (Hamilton J); Smith v Woodley-Beattie [2009] NSWSC 380 at [72], [73] (Smart AJ).
Whether reasonable attempts have been made will turn on the particular circumstances. Where alternative easements are sought and declined, the question is whether those reasons for declining are valid and substantiated on the evidence. Austin J, in Sodhi v Stanes [2007] NSWSC 177 at [140] said: [W]here there are two alternative properties over which a satisfactory easement could be obtained, and the plaintiff has approached the second landowner and has been firmly rebuffed for apparently valid reasons to do with disruption and costs, the plaintiff need not push the matter further against that landowner (Tregoyd Gardens at 15,856). The issue is whether the attempts that have been made constitute all of the attempts that are reasonable in the circumstances.
In considering whether reasonable attempts have been made, it is open to consider facts at the time of hearing, including facts arising after the commencement of proceedings: Studholme v Rawson (2020) 102 NSWLR 490 at 511-512 (Basten JA).
In this case two matters must be considered. First, whether the plaintiffs have made reasonable attempts to obtain another possible alternative easement to the same effect, and second, whether the defendants have unreasonably refused to agree to the easement sought on particular terms, such that further attempts at negotiation by the plaintiffs would be fruitless.

Other possible easements

I do not accept that the plaintiffs have demonstrated that they have made all reasonable attempts to obtain another possible easement "having the same effect".
In Govindan-Lee v Sawkins (2016) 18 BPR 35,883; [2016] NSWSC 328 at [49], Darke J stated (emphasis added): The plaintiff bears the onus of showing reasonable necessity and is best placed to adduce evidence about this alternative [easement]. It is unsatisfactory that the plaintiff has failed to bring forward evidence that would facilitate a more comprehensive assessment of this alternative [easement], including of any difficulties or uncertainties involved in it.
It is not sufficient for a plaintiff in s 88K proceedings, who bears the onus, to simply leave the merits (or lack thereof) of any alternative easement to the defendant to establish. This was the approach taken by the plaintiffs in this case.
On 16 September 2022 the plaintiffs' solicitor emailed the defendants' solicitor and asserted: … the easement of water drainage is 'reasonably necessary' and is of 'reasonable necessity'. There is no other option or alternative solution for our clients for the development and construction of their duplex.
However, there is no evidence to support the assertion of "no other option or alternative solution". Instead, it appears that there are various possible alternative easements. First, a drainage easement could possibly run from 250 through the backyards of 248, 246, 244 and possibly 242 into the Summers property and out to the discharge point, and therefore avoid the defendants' property all together. Second, the defendants also suggested that a stormwater system could run from 250 into 248 and 246 and then enter their property, which would avoid any interference with their retaining wall.
The defendants' expert structural and civil engineer, Mr Stephen Healey, considered one of those alternatives preferable to the "Issue E" concept plan. Mr Healey's report dated 2 February 2023 was admitted into evidence without objection and he was not required for cross-examination. No submission was made that his evidence ought not be accepted, and I do accept it.
Mr Healey raised the following concerns about the uncertainty of the easement proposal in the Issue E drawings: 1. The Issue E "concept plan" identified a pit to be installed on the plaintiffs and defendants' land at the same height, whereas he had observed that there were in fact height differences between the properties. 2. The concept plan did not include the locations of buildings, retaining walls, services and other matters that may impact on the location of the easement. 3. An engineered design would be needed to ensure that the retaining wall on the defendants' land was not compromised by the stormwater system. This could be achieved, but would require details of the retaining wall footing to understand its depth and width and to ensure its structure would not be "undermined". This ought to be assessed by a suitably qualified structural engineer. The soil and fence supported by the retaining wall would need to be protected. 4. An arborist's report would be needed to ensure that trees within the area and on neighbouring properties would not be impacted by a stormwater piping system. 5. A shed on the defendants' land may need to be moved. 6. A detailed survey plan would be necessary identifying the easement. 7. Other services on the defendants' land would need to be protected, including Sydney Water sewer line, existing stormwater pipes, onsite detention tank and garden bed. This would also require "as executed or as built" plans for the existing sewer system. I note the plaintiffs relied on the location of a sewer line as a reason to reject an alternative easement over other properties, which is discussed further below.
The plaintiffs did not challenge these opinions with any expert evidence.
As to the issue of concerns about the retaining wall, the plaintiffs' evidence rose no higher than Mr Nahata's lay opinion that horizontal directional drilling or "HDD" could be employed rather than a traditional trench method to reduce impact on the retaining wall. On 28 November 2022, Mr Nahata wrote to Mr Robertson: Please highlight to your engineer that we will be using Directional drilling to install the pipe as against the traditional trench method to limit the disruptions during the construction of the easement. … They will drill from [250] all they [sic] way to Summers
In cross-examination, the plaintiffs' solicitor asked Mr Robertson whether he had sought an expert opinion regarding horizontal direct drilling as requested by Mr Nahata, and Mr Robertson raised the lack of information and documentation about the proposed engineering solutions: Q. … Having received that text message [on 28 November 2022], may I ask you whether you have consulted so-called an expert constructure (as said) to see whether this will affect your retaining wall or something that will perhaps save your retaining wall? In other words, have you considered asking an expert to convince yourself that the easement that's presented by Mr Nahata is actually quite reasonable? Have you tried that? A. Mr Lee, when I've mentioned this sort of thing to engineers the general fact is there is no documentation around what is proposed that they can offer an opinion on. That's what I've been told, anyway. We don't have actually anything. … Q. Mr Robertson, horizontal direct drilling could have been a question you asked to the expert evidence via your lawyer, isn't it, and did you do it? A. I think I mentioned that the only information that passed on that was whether or not there was any plan related to the - or information given on the direct drilling. We had none in order to assess that. So when I say I don't know what direct drilling is, yes, I understand there is a concept called direct drilling, but it's another thing to say I understand what the implications are for this for how it's to be installed on my site or the implications for construction on my site.
The plaintiffs' submissions to the effect that the defendants' retaining wall would not be negatively impacted pointed to incomplete quotations from Mr Healey's report to suggest that Mr Healey "agreed" that horizontal directional drilling was available and would not require the removal of the retaining wall. However, Mr Healey did not give such an opinion. Further, the plaintiffs did not adduce any admissible evidence that such a technique was available in this particular situation to construct the Issue F drawings, and how such a technique would impact on the defendants.
The following exchange took place during Mr Lee's submissions: LEE: … I suppose my simple point is HDD or horizontal direct drilling these days is common. That's only my submission. HER HONOUR: If I accept that for a moment, then what am I meant to do with that? LEE: I wanted to make the point that the retaining wall of defendant Robertson may not even be disrupted because of HDD.
When questioned about the evidence, Mr Lee provided the following response: HER HONOUR: How do I know? LEE: This is like HDD. How do we know about HDD? HER HONOUR: Correct, how do we know-- LEE: HDD is obvious. HER HONOUR: All right. Well, it's not obvious to me, I'm sorry. LEE: Yeah, okay. This is why I'm trying to explain to you how it works. But, your Honour's not allowing me because you say it's not in evidence. HER HONOUR: Correct. LEE: Yes.
In submissions, the plaintiffs also referred to McGrath v Mestousis [2017] NSWSC 995, where Darke J was provided with expert evidence about a horizontal direct drilling technique. His Honour accepted the expert evidence given about the application of that technique in that situation, and made an order under s 88K. However, it is not permissible for me to rely on Darke J's findings in another case: see s 91 Evidence Act 1995 (NSW). Had the plaintiffs wished to make submissions on engineering techniques that could be employed to overcome issues identified by Mr Healey concerning the integrity of the retaining wall, then it was incumbent on them to have led evidence to that effect. Eventually, the plaintiffs' solicitor accepted that "HDD is also not in evidence".
The plaintiffs' submission that "Plaintiffs will attempt to use Horizontal Direct Drilling Method where possible" therefore goes nowhere and cannot be accepted with any degree of certainty.
The plaintiffs further submit that the existing utility lines on the defendants' land "could be dealt with in construction stage. Excavation could be done to ascertain location of services, just work out how to fit new stormwater pipe in". However, the same could be said of installing a drainage system across the properties at 248 and 246, which would equally avoid issues with the defendants' retaining wall and paved areas.
I accept that an easement may be granted, even where further council consents may be necessary: see, eg,117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 at 512 (Hodgson CJ in Eq). However, here the deferred development consent is framed as conditional upon the registration of particular easements, rather than the easement being conditional upon further council consent.
While I accept that a change to the easement required in the development consent would likely require an application to the Council, there is no evidence that the proposed easement itself will not require an application to the Council, for example, if the defendants' existing retaining wall, which is 750 millimetres high, requires removal to facilitate the proposed easement. The development consent states at paragraph [11]: If no retaining walls are marked on the approved plans no approval is granted as part of this approval for the construction of any retaining wall that is greater than 600mm in heigh or within 900mm of any property boundary. The provision of retaining walls along common boundary lines shall not impact on neighbouring properties. If impact upon neighbouring properties (including fences) is anticipated, then written approval from the affected neighbour shall be obtained and submitted to the certifying authority prior commencement of the works. Structural details, certified by a practicing structural engineer, shall accompany the application for a Construction Certificate for assessment and approval by the certifying authority.
As to the alternative possible easement through 248 and 246, Mr Healey concluded: …the easement on the southern side of the boundary alignment is more feasible than the proposed easement on the northern side of the boundary alignment.
The plaintiffs contended there was no viable alternative easement. However, the plaintiffs' only evidence in response to Mr Healey's expert opinion was Mr Nahata's lay opinion that it "might not be possible to have an easement" through other properties. That amounts to a bare assertion, upon which I can place no weight, and which in any event would not be sufficient to contradict unchallenged expert opinion.
The plaintiffs submitted that a letter dated 20 October 2022 from Frawley Design Services "said building the stormwater drains along the rear boundaries of 240-248 not feasible as that space is occupied by Sydney Water sewer manholes". That is not accurate. In fact, the letter states: The proposal to create an easement for stormwater purposes 1 meter wide in favour of [250] abutting the rear boundaries of properties Nos. 240 to 248 inclusive is not feasible. As shown on the accompanying engineering drawing this space is already occupied by a Sydney Water sewer pipe that incorporates two maintenance structures approximately 1.4 meters wide at their base. The proposal would be totally unacceptable to Sydney Water.
However, the plaintiffs' proposal to Sydney Water was not included in evidence. Further, the "accompanying drawing" supposedly attached to the Frawley Design Services letter was not included in evidence. Mr Healey did not agree with the conclusion of the letter and provided reasons, which were not contradicted by the plaintiffs by evidence or submission.
For completeness, I note the plaintiffs' solicitor, Mr Lee, also sought to rely on evidence given from the bar table on various occasions. For example, Mr Lee asserted the plaintiffs made an application to Frawley Design Services and was informed of certain matters including the operation of "manholes" by Sydney Water. However, the nature of that application and any advice or response from Sydney Water was not in evidence.
On the evidence available, it is not possible to conclude, as the plaintiffs submit, that the existence of the sewer line in properties 248-244 was an impediment to any easement.
There was scant evidence as to the plaintiffs' attempts to obtain the consent of the neighbours in 248 and 246 beyond broad assertions by the plaintiffs' solicitor including: My client bought this property in 2021, December. Today it's May 2023. Between 2021, December and May 2023 he has undergone tremendous difficulty in trying to get the easement from his neighbours. He has in fact approached so many neighbours around his area, and I tried to put that in my evidence, he has learnt so much about tree roots affecting easements, he has learnt so much about Sydney Water has an impact, man holes, or service holes, he has, my client, Himanshu Nahata, has learnt so much about what easements is about. … [W]e all know in this Court all reasonable attempts have been made is contacting neighbours, contacting other ways of getting the easement. My goodness, my client, Himanshu Nahata, spend so much time approaching all his neighbours for alternatives and I tried very, very hard to show evidence to the Court that this neighbours - some of them were very unfriendly. One of them said, "I'm selling the property." I think it was 246, "I'm selling the property." How can anyone get an easement from somebody who's selling a property is impossible.
The plaintiffs' solicitor also made sweeping and misconceived assertions about the test in s 88K as not requiring the plaintiffs to approach other neighbours about alternative easement routes due to the costs and "difficulty" involved: To get a survey for each of these five properties my client has to approach them for permission, firstly. Secondly, the surveyor is going to cost $1,400 per survey. The section 88K says to plaintiff, like Himanshu Nahata, to obtain five surveys in order to convince defendant Robertson that the other properties are not suitable. I don't think so, your Honour. … My friend has tried to inform the Court by using Court decisions from other, even Court of Appeal decisions, but section 88K in general should not be this hard to obtain from a neighbour … … I am submitting that if section 88K is so difficult that where I - if I was - not my client by myself - wanted to build a duplex and I had approached many, many people, how am I going to get this many people to give an affidavit that says, yes, they had refused to give me an easement. Do I have to get them to subpoena them - to subpoena five different neighbours to come to court so that they call the Court, "No, I'm not giving you an easement." That is a mere impossibility, with respect, your Honour. I am convinced that my clients have made every effort in the last one and a half years to obtain this easement from..(not transcribable).. parties, one party has given, the second party has not given, if the second party doesn't give, party one will not - it's got no bearing on my client's application anymore and it's going to waste all his money. I am disappointed that the evidence is not enough for the Court today. However, s 88K, in my submission, should not be so difficult.
Mr Lee also submitted that the plaintiffs have "the onus to prove that we tried very, very hard."
I do not accept those submissions.
Here, the defendants made the plaintiffs aware of uncertainties or difficulties concerning their proposed easement. Despite that, the plaintiffs determined not to attempt to satisfy the onus placed on them by s88K by demonstrating to the Court that the proposed easement was the only, or superior, easement for drainage.
There is no evidence of what information, if any, the plaintiffs provided to the neighbours at 248-244, such as plans and details of the proposed easement.
Further, it appears that the owner of 246 did not refuse to consent to an easement. For instance, the owner of 246 indicated in a text message to the defendants that he had been asked by the plaintiffs to provide an easement and responded: Yes he did ask some time back and I said I won't block his plans if it's done in the least damaging way to our property.
The plaintiffs' submissions were only that owner "raised concerns over the big trees at the rear of his property. He has put up his property on sale recently". While at the view, the plaintiffs pointed out the trees in the yards of 248 and 246, as seen looking over the boundary fence between the defendants' property, there was no evidence as to the exact location of those trees, their root formation and what engineering solutions may or may not be possible to accommodate a drainage system. Mr Healey had recommended an arborist report be obtained to determine the appropriate way the stormwater system could be installed; the plaintiffs did not investigate such an option. It is not apparent whether 246 has sold the property.
On 31 July 2022, it appears that the neighbour at 248 rejected "the easement going through [248]". However, there was no evidence of the proposal the plaintiffs provided to the owner of 248 that was rejected, nor any reasons given for the rejection. There was no evidence of the substance of any further negotiations or engagement with the owner of 248. The entirety of the owner of 248's response is set out below: Hi Amit, this is Bogdan from 248 Kissing Point Road, I'm sorry but I'm just not interested in the easement going through your property.
Although the plaintiffs' text message refers to "the easement request [the owners of 248] have declined", there was no completed easement request form in evidence in relation to 248; it is not possible to know what easement was sought from 248.
A bare refusal by an owner to agree to an unidentified easement does not mean that the negotiations had been exhausted and the opportunity to obtain an alternative easement had been extinguished.
The plaintiffs also made a bare assertion that obtaining an easement from the defendants is "quicker, more efficient, cheaper and less legally cumbersome" than the alternative through 248-242. However, there is no evidence to support that submission. There is no evidence about the cost of the proposed easement as compared to an easement through 248-246.
The plaintiffs rely on Stepanoski v Chen [2011] NSWSC 1573 for the submission: … [there] the judge ruled against an alternative route over 2 lands (or more lands) vs 1 land (where it is doable and adequate).
However, there are many differences in fact between that case and that here. First, while those plaintiffs also had a deferred development consent contingent on an easement being registered concerning the drainage works, they had provided the defendant and the court with expert evidence on how the construction of the works would be carried out. Further, the proposed plan of the easement was annexed to the summons and supported by a survey plan.
Secondly, there was evidence of the two different routes and the engineering work involved in both. The route that was rejected involved cutting into rock and fixing a pipe to rock, which would have an adverse aesthetic impact. Here, if the retaining wall has to be moved closer to the defendants' home, that will be a reason why the plaintiffs' proposed easement has a negative aesthetic and practical impact and ought to be rejected. That case also involved a concern about works impacting on trees, but that was where there was a tree preservation order in place. Here, there is no evidence about the actual impact of any drainage works on any trees in any neighbouring properties.
In that case, Bryson AJ concluded that the defendant's alternative proposed easement "is remarkably clumsy and presents no advantages in terms of land use or engineering work over the plaintiffs' proposal." His Honour further stated at [37]-[38]: [37] The alternative drainage methods discussed, pump out and easements through [other properties] have far less to commend them in terms of practicality than the plaintiffs' proposal. They fail in terms of relative costs, feasibility and expense. There are good reasons why [the plaintiff] did not put them forward when he made his development application; they are both far less likely to commend themselves to town planners than a metre easement and drainage through the defendant's land. [38] The plaintiffs' proposal is the shortest and simplest and involves the least engineering work and it is unlikely to involve significant long-term expense. It will function through gravity and will not require significant use of machinery or maintenance. It will have no adverse aesthetic impact. It will have markedly less impact on the utility of the defendant's land than an easement through the land of [other property] would have on that land.
Here, it cannot be concluded that the plaintiffs' proposed drainage system is less clumsy than the defendants' suggestions, which appear to present some advantages in terms of "land use or engineering work".
Instead, the impact on 248 and 246 would appear less significant, as the stormwater system would run through the very back of their yards, rather than requiring drilling and/or removal of the defendants' retaining wall and digging up paved areas. It is likely that maintenance of the stormwater system would be less complicated if located in 248 and 246, where there are no hard surfaces. There may also be some benefit to the owners of 248 and 246 in the storm water system being placed through their properties, for example, if they were to develop their land and require stormwater solutions. The defendants obtain no benefit from the installation of the system in their property because they have an independent complete stormwater drainage system.
It follows this is not a case where there are "equally efficacious" easements, to employ the language of Hamilton J in Tregoyd Gardens Pty Ltd v Jervis (NSWSC, Eq, 25 September 1997); 8 BPR 15,845 at 15,854.
Therefore, the plaintiffs have failed to demonstrate that they have satisfied s 88K(2)(c) and have made "all reasonable attempts … to obtain… an easement having the same effect but have been unsuccessful". To the contrary, insufficient attempts have been made to investigate two alternative possible easements.

Did defendants' unreasonably refuse the easement?

I do not accept that the defendants unreasonably refused to agree to an easement. At all times the defendants engaged in respectful communication with the plaintiffs.
A brief chronology of the parties' interactions is outlined below.
In December 2021, Mr Nahata first contacted the defendants about an easement, by dropping an "easement request letter" and some unidentified "stormwater plans" in the defendants' letterbox. The letter explained Mr Nahata's development goals and made an offer of $10,000. Mr Nahata also noted: There are additional benefits to you in providing the drainage easement to me. I will design the drainage system in the property downstream of you to be big enough to convey all your water as well as the water from the proposed development and provide you with an inlet pit so that your stormwater can be connected to it once completed.
At that time, the development application had not been approved; as noted above, an earlier version had been rejected for want of appropriate stormwater drainage solutions.
On 19 December 2021, Mr Robertson on behalf of the defendants responded to Mr Nahata explaining why he would not agree to the easement proposed. Mr Robertson set out several reasons: 1. The plan suggested the ground levels of 250 and the defendants' property were identical, but they were not. 2. The concrete path by the side of the defendants' house and the outdoor paving area would need to be dug up if stormwater pipes were to be placed on the defendants' land as proposed. 3. There would be limited room for machinery to access the site and carry out the work, with the possible risk of damage to the defendants' property. 4. The defendants' sewer line ran along the area where the easement was proposed. 5. There were likely other possible routes, including through 248, 246, and 244, or detention tanks on 250.
Mr Robertson also offered to discuss the matter further and show the easement site to the plaintiffs.
As noted above, the defendants would not derive any benefit from the easement for their own drainage, as they had an operating system in place and so Mr Nahata's suggested benefit did not exist.
On 26 April 2022, Mr Nahata wrote to the defendants asserting that a drainage inlet pit needed to be placed on the defendants' land and the retaining wall may be removed and replaced to allow that to occur.
On 21 June 2022, Mr Nahata sent a text message to Mr Robertson indicating that he was attempting to obtain the contact details of the neighbours at 248, 246 and 244. He also offered $20,000 to the defendants by way of compensation if they would agree to the easement.
On 15 May 2022, Mr Robertson emailed Mr Nahata and indicated: I'm getting some professional advice on what options are available. I expect to progress that over the next week or so. At this stage, I'm still opposed to granting an easement. I consider the inconvenience, damage and loss of amenity to my property greater than the loss of a few bushes. … What remains is to get proper information and proceed from there.
On 21 June 2022, Mr Nahata sent a text message asserting that Sydney Water would not allow an easement across 248, 246 and 244 because of an existing sewer line: Apart from trees at 248. There is a Sydney water manhole at [244]. So technically we can't have a easement along the back boundaries of 248,246 and 244 as Sydney water doesn't permit to dig along their asset path.
The offer of compensation was increased to $25,000.
On 26 June 2022, Mr Robertson emailed Mr Nahata again refusing the proposal and suggesting an alternative route that would not interfere with the defendants' retaining wall, concrete path and paving. The alternative route would enter the defendants' backyard at a point further west of the proposed easement through 246. Like the proposed easement, it would then continue to Summers and the outlet.
On and from 28 June 2022, the plaintiffs instructed their solicitor, Mr Jeffrey Lee, of Comasters Law Firm, to communicate with the defendants, who made repeated demands for the same proposed easement.
On 7 July 2022, Mr Robertson emailed the plaintiffs' solicitor rejecting the easement and setting out over three pages the concerns with the plaintiffs' proposal, including the retaining wall, the paving, concerns about the drainage system fitting in the space available, the issue of the location of the existing sewer, the fact the ground level of the properties was not level as the concept plans suggested, and proposing the alternative through 248 and 246.
On 12 July 2022, the plaintiffs' solicitor responded. However, the responses to the concerns were written by Mr Nahata. Those responses included offers to maintain the stormwater system and stated that "it might not be possible" to have an easement over 244.
On 5 August 2022, the plaintiffs increased their offer of compensation to $27,000.
On 17 August 2022, Mr Robertson emailed the plaintiffs' solicitor explaining his refusal to the proposed easement, and suggesting an easement through 248 and 246 be considered because it would eliminate problems caused by the proposed easement with the retaining wall and other features on the defendants' property including the noise of the drainage inlet pit, the cosmetic appearance of existing paths. Mr Robertson also reiterated: I thank the owner of 250 … for the increased offer, but money is not my main consideration and does not alter the position, ie I must reject the current proposal as is.
Notwithstanding Mr Robertson's reply, it appears the plaintiffs made further offers of compensation for consent to the same proposed easement, including after proceedings were commenced.
On 24 August 2022, the defendants' solicitor wrote to the plaintiffs' solicitor repeating some concerns already raised by Mr Robertson and raising some new concerns about the easement proposal. The defendants' solicitors also suggested that alternatives be considered, including seeking s 88K relief from the owner of 248.
On 24 August 2022, and possibly before receiving the defendants' letter, the plaintiffs commenced proceedings against the defendants. The owners of 248 and 246 were not joined in the alternative. The only easement sought by the plaintiffs was one that would burden the defendants' land.
There was further inter-solicitor correspondence. On 24 October 2022, the defendants' solicitor requested: A detailed survey plan of the proposed easement including properties on both sides of the boundary of the proposed route, extending a minimum of 7.5m from the boundary line (15m total). This survey should include all structures, shrubs/trees, drainage systems (including pits, pipe sizes, invert depths, etc.), surface finish details, fence alignments & construction details, retaining wall details & construction materials, etc.
On 25 October 2022, at 9.55am the plaintiffs' solicitor replied: There are no survey details of the said properties. Property access is required to conduct a survey. The owner of [248] has rejected our clients' Easement request and the owner also mentioned he is not interested in co-operating with our clients to conduct any survey to check the easement feasibility on his property.
On 25 October 2022, at 4.57pm the defendants' solicitor emailed the plaintiffs' solicitor: We note that the long section of the proposed stormwater pipe along the proposed drainage easement is not available yet. When do you think this will be available?
On 26 October 2022, the plaintiffs' solicitor responded to the defendants' solicitor: This would be available when the easement has been given voluntarily by your clients or imposed by the court; the long section is only required before applying for the Construction Certificate and not at the DA stage.
I do not accept that the defendants unreasonably refused to agree to the easement that was being proposed. Various concerns were expressed to the plaintiffs, including through the report of Mr Healey. Those concerns were never addressed by the plaintiffs; the only responses were unsubstantiated assertions. As noted above, there was no real engagement with the alternative proposed by the defendants, namely to access the defendants' property through 246, rather than directly from 250.

Conclusion

I do not accept the plaintiffs' submission that the "development would have to be shelved" if the easement sought is not granted. I accept that, through no fault of the plaintiffs themselves, they are placed in a position where they are not able to progress their development as they would wish, because they require a stormwater drainage solution, which is not being ordered through this litigation. I accept that this is a disappointing outcome for the plaintiffs. However, on the evidence presented to the Court on behalf of the plaintiffs and the submissions made, no order can be made in the plaintiffs' favour.

Compensation

If the Court ought instead to have made an order under s 88K, then it would be necessary to make an appropriate compensation order in favour of the defendants, in circumstances where the defendants accept that compensation is possible. Such compensation usually includes (a) the diminished market value of the affected land (including what is sometimes call the hope value, that is, the potential use to which the subject land could have been put); (b) associated costs that would be caused to the owner of the affected land; (c) an assessment of compensation for insecurity, loss of amenities such as loss of peace and quiet; and (d) the compensation is to be less than compensating advantages, if any.
The parties relied upon competing expert valuations. The defendants' valuer, Mr Angelo Konidaris, prepared a report dated 2 March 2023. The plaintiffs' valuer, Mr Michel Hermiz, prepared a report dated 13 March 2023. A joint report was also prepared on 18 April 2023.
Both experts agreed broadly on the approach to the valuation of the imposition of an easement, adopting the "piecemeal approach": see, eg Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd (2010) 15 BPR 29,367; [2010] NSWLEC 2, and the cases referred to by Preston CJ at 29,396.
Both experts considered two possible scenarios, namely: Scenario 1 - The value of the land assuming the easement can be constructed in its current design and there is no impact to improvements over the servient land as a result of the imposition. More specifically, the existing retaining wall will be maintained in situ, existing footpath, covered outdoor area and garden shed is maintained as is and there is no visible impact to the land as a result of the imposition of the proposed easement. Scenario 2 - The easement will require relocation of the existing retaining wall inward (by approximately 1 metre), resulting in a loss of access to the existing side (laundry door), concrete footpath and covered outdoor entertainment area will be interrupted and no longer consistent with the existing design. Neither valuer had the expertise to determine whether the retaining wall would need to be moved and which scenario was appropriate. That fact demonstrates that it is not possible to determine with any certainty the appropriate compensation, because it is not known how the drainage system will be constructed and the actual impact on the defendants' retaining wall and therefore their property.
The defendants' valuer, Mr Konidaris, valued the appropriate compensation: 1. If the retaining wall did not need to be moved then the compensation was $37,800, with an additional $20,000 for disturbance while the work was being carried out and the contingency of future work being needed. 2. If the retaining wall was moved, then the compensation was $78,000 with the same additional $20,000 for disturbance.
The plaintiffs' valuer, Mr Hermiz agreed with Mr Konidaris' compensation amounts, but valued disturbance at only $1000 and allowed nothing for the contingency of the impact of future work.
Had it been necessary to decide, I consider that Mr Konidaris' opinion ought to be preferred. As quite extensive work is required on the defendants' land, and there will be some work on the retaining wall, whether or not it is moved, and also work to the concrete path and paving, there is a reasonable prospect that future maintenance will be required: see Mitchell v Boutagy (2001) 10 BPR 19,187 at 19,194-19,195; [2001] NSWSC 1045 at [44]-[48]. That work will be very close to the defendants' home and impact on their use of their laundry door and paved entertaining areas. Furthermore, access for maintenance would traverse the residential property, because there is no direct street access for machinery to the southern boundary of the defendants' property. As compensation under s 88K is ordinarily "once and for all" absent exceptional circumstances, I consider that favours accounting for future maintenance costs: see, eg, 117 York St Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 at 516 (Hodgson CJ in Eq).
Were it necessary to decide, I would have found $20,000 compensation for disturbance is appropriate.

Orders

While often in s 88K applications, a plaintiff will pay the defendant's costs, no easement is being ordered in this case. I will therefore order: 1. The plaintiffs' amended statement of claim is dismissed; 2. I will hear the parties on costs.

Endnotes

Extracted from the Engineering Report of Mr Stephen Healey, prepared on 2 February 2023 for the defendants, p 3.
Extracted from "Issue E" "concept plan" for "storm water disposal and sediment control plan" dated 24 April 2021 and submitted to Council as part of the development application for 250 lodged in May 2021.

Amendments 22 June 2023 - Amendments made to cover sheet and paragraph [87] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 June 2023

Conveyancing Act 1919(NSW)ss 88(1), 88K

Evidence Act 1995(NSW)ss 53, 91

(2020) 102 NSWLR 490

At a glance

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