Pasade Holdings Pty Ltd v Sydney City Council

5614/03 PASADE HOLDINGS PTY LTD v COUNCIL OF THE CITY OF SYDNEY JUDGMENT 1 HIS HONOUR: These are proceedings under s 88K of the Conveyancing Act 1919 ("the CA"). That section so far as material provides as follows: "(1) The Court may make an order imposing an easement over land if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement.

(2) Such an order may be made only if the Court is satisfied that: (a) use of the land having the benefit of the easement will not be inconsistent with the public interest, and (b) the owner of the land to be burdened by the easement and each other person having an estate or interest in that land that is evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act 1900 can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement, and (c) all reasonable attempts have been made by the applicant for the order to obtain the easement or an easement having the same effect but have been unsuccessful. (3) The Court is to specify in the order the nature and terms of the easement and such of the particulars referred to in section 88 (1) (a) - (d) as are appropriate and is to identify its site by reference to a plan that is, or is capable of being, registered or recorded under Division 3 of Part 23. The terms may limit the times at which the easement applies.

(4) The Court is to provide in the order for payment by the applicant to specified persons of such compensation as the Court considers appropriate, unless the Court determines that compensation is not payable because of the special circumstances of the case." 2 The land the subject of these proceedings has a curious history. The plaintiff owns the building at 65 - 69 York Street, Sydney. That is a multistorey building with art deco features that is the subject of a heritage order ("the building"). The eastern side of the building abuts York Street and the northern side of the building abuts Barrack Street. The western side of the building for part of its length abuts a lane 2.44 metres wide ("the eight foot lane"). For the whole of its southern side it abuts a laneway 3.66 metres wide ("the twelve foot lane"). Both these laneways have been the subject of proceedings for the imposition of easements in favour of the building under s 88K of the CA. Both sets of proceedings were heard by Bryson J. 3 In the first set of proceedings his Honour imposed easements for light and air over the eight foot lane: Pasade Holdings v Sydney City Council [2003] NSW SC 515 ("the first judgment"). In the second set of proceedings, his Honour imposed a similar easement over the twelve foot lane: Pasade Holdings v Sydney City Council [2003] NSW SC 584 ("the second judgment"). The reason there were two separate sets of proceedings was that at the time of the first set of proceedings the plaintiff believed that the twelve foot lane was in different ownership from the eight foot lane and was proposing to negotiate for an easement with that owner. In fact, it was subsequently discovered that the twelve foot lane was in the same ownership as the eight foot lane, so that the second application for the imposition of an easement was necessary. To the details of the ownership of those lanes I shall turn in due course. 4 The plaintiff is proceeding to develop the building by means of a strata subdivision by which the building will be divided into a number of commercial strata suites to which separate titles will be able to be sold. That subdivision can take place only with the approval of the Sydney City Council. The Council granted development approval for the subdivision but imposed conditions. Those conditions included the obtaining of an easement for light and air over the two laneways. The only alternative was for covenants to be imposed on the individual suites with windows overlooking those laneways that the owners would not object if those windows were required at some stage to be bricked up. This was obviously a commercially unpalatable and unsatisfactory solution. The development application also required an easement to be obtained of a right of way to permit egress from the building. However, apparently that requirement has been able to be satisfied without the intervention of the Court. 5 The reason why there is still another application to the Court, this time in relation again to the twelve foot lane, is because it has since been discovered that there has been a requirement of Land and Property Information NSW ("the LPI"), without which the LPI will not register the plan of strata subdivision, albeit the same was approved by the Council. That requirement is a requirement that the building owner obtain an easement for overhang, an easement for pipes and an easement for sprinkler systems benefiting the property and burdening the twelve foot lane. The content of the easements sought will be set out in more detail in due course. The only defendant to these proceedings is the Sydney City Council. The defendant is not the owner of the twelve foot lane, despite the fact that that lane is commonly in use by the public as a means of access. Other parties, being the owners of adjoining properties, were joined to the earlier proceedings, but they have not been joined in the present proceedings and I do not think they are necessary parties to these proceedings. 6 The curious facts about the title to the twelve foot lane are that there has been no act of dominion over it by anyone claiming to be an owner since 1839. In fact, the whole of the title in the laneway has not been dealt with by anyone since the original Crown grant in 1812. A body of evidence concerning search for the owners of the laneway has been laid before me. That body of evidence is the same as was laid before Bryson J and referred to in the first judgment relating to the eight foot lane. It is clear that the ownership of the eight foot lane and the twelve foot lane is the same. They are remnants that were left in the ownership of the original owners of a larger allotment, out of which pieces were gradually carved to create adjoining properties. The present ownership of those remnants remains unclear. In view of the identity of the evidence, I think the best way for me to frame my findings is to adopt the findings of Bryson J in the first judgment and then to adopt them for the purposes of these proceedings. 7 In the first judgment his Honour said: "4 The person whose interests are most affected by the plaintiff's application, whom one would expect to find as the first defendant in such an application, is the owner of freehold title to the passageway. However no person can be identified by searches in the General Register of Deeds or elsewhere who appears to have a documentary title to the passageway, and there is no person who in the present age is behaving as its owner by exercising or purporting to exercise acts of ownership. So far as evidence shows the last purported act of ownership was a grant of a right of way in 1839. Some lanes and passageways in the City passed into the ownership of the City Council under the 19th century legislation which I considered in Sydney City Council v Griffin Corporation [2003] NSWSC 26, but to establish that land vested in the City Council in that way it would be necessary to establish events which brought about a deemed dedication before 1 August 1879. The City Council has not in these proceedings made a claim to be the owner of the passageway, and such a claim would have to pass the difficulty of establishing public usage of the passageway at a remote time and the difficulty of private ownership of the strip connecting the passageway to York Street. I leave the possibility that the passageway is vested in the City Council unexamined. It should be assumed for present purposes that it is not. The City Council is the first defendant and the remaining defendants are the owners of land with frontage to the passageway to the north and the west, and one other owner of nearby land. No defendant opposed the plaintiff's application or claimed ownership of the passageway. The plaintiff's application then is not contentious but still requires to be examined carefully.

5 The first and the last registered document which purports to convey freehold title to the passageway is a grant by the Crown to Hugh Macdonald on 20 May 1819 of Allotment 2 of Section 52 of the Town of Sydney registered Serial 6 page 56. Allotment 2 is much larger than the passageway, which appears to be the residue after alienations of most of Allotment 2. Hugh Macdonald was Quarter Master of the 46th Regiment and made his last will on 8 September 1819; he gave devised and bequeathed all his real and personal estate to trustees who were to convert those assets into money and divide the proceeds in equal shares between his wife Mary Ann Macdonald and his four children; Stephen, Elizabeth, Macquarie and Campbell Leverstone. The will directed that the trustees 'do not dispose of any of my houses unless they can obtain fair and advantageous prices for the same.' The trustees named in the will were two army officers: they did not take out probate. His widow Mary Ann Macdonald obtained Letters of Administration with that will annexed from the (first) Supreme Court of Civil Judicature on 9 September 1820. By Lease and Release dated 13 and 14 January 1840 registered Book T No. 153 members of the Macdonald family conveyed to Moses Joseph a parcel of land with frontage to Clarence Street which appears with fair certainty to have been part of Allotment 2 granted to Hugh Macdonald. Together with the land conveyed they also granted a right of carriageway over land referred to as 'a reserved Road', which was 'the width of eight feet and the length of fifty six feet, two inches to its junction with another reserved Road leading into York Street twelve feet in width.' The conveying parties are recognisably the same members of the Macdonald family who received beneficial entitlements to Hugh Macdonald's assets under his will (with several changes due to marriages). By conveyance dated 30 September 1839 registered Book 8 No. 303 the same persons granted a right of way over the passageway 12 feet wide in favour of a parcel of land not presently relevant.

6 Except for this one document creating an easement, searches including a Registrar General's Official Search have not located any registered document dealing with title to the passageway after the Grant. It is not possible to establish rigorously that there is no such document because of the nature of the register which is indexed to names of parties to documents. Macdonald, in various spellings, was a very common name in 19th Century Sydney as it still is. There are untraceably numerous possibilities about the names of persons who may have conveyed interests in the land, whether the five members of the Macdonald family referred to by name in the will or executors, administrators or other successors in title of any of them. Those five members of the Macdonald family (with the husband of one of them) purportedly dealt with title to the land when they granted the easement. Their interests under the will were equitable interests; under the law as it was in 1820, the legal estate in Hugh Macdonald's land passed to the trustees to whom it was devised in his will whether or not they took out probate; army officers may have soon left New South Wales; they may have done nothing in the estate, but they were entitled to deal with land devised to them even if they did not administer personal assets. The interests of Mary Ann Macdonald and her children were equitable interests and they could not convey the legal estate. Registration of deeds was not essential for validity in the absence of some competing dealing. Interests in land may have been conveyed by sheriffs under executions, or by bankruptcy receivers or like officers; the possibilities are endless. Under the law of that time husbands could, in some circumstances, effectually convey real property vested in their wives. All that can be said is that searches which appear to me to be reasonably complete show no registered dealings. I find that no owner of the passageway can be identified and I will deal with the application on that basis. " 8 I respectfully adopt the findings made by his Honour in that judgment. Similarly, in the second judgment his Honour explained the misapprehension felt at the time of the first judgment concerning the ownership of the twelve foot lane and indicated that his findings in the first judgment concerning the ownership of the eight foot lane extended to the ownership of the twelve foot lane. It is quite clear that the owner of the twelve foot lane cannot be located. As Bryson J has indicated, there is no basis on which it can be found that the defendant is the owner of the lane. No finding one way or the other is made on that matter, save for the finding that the owner cannot at the present time be identified or located. The question of the ownership of the lanes is left entirely open by me, as it was by Bryson J. 9 It must also be borne in mind when proceeding to consider the matter further that, as I have earlier said, Bryson J has already imposed an easement for light and air in favour of the building over the twelve foot lane. 10 The vital finding that must be made before an easement can be imposed under s 88K of the CA is a finding that the easement is reasonably necessary for the effective use or development of the land that will have the benefit of the easement. Bryson J made this finding in relation to the easements that his Honour granted in the first judgment and the second judgment, namely, that those easements were required for the effective use or development of the building, the relevant use or development being its use or development as commercial strata lots under the proposed plan of strata subdivision. The concept of reasonable requirement has been discussed in a number of cases. These include my decision in Tregoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15,845; the decision of Hodgson CJ in Eq (as his Honour then was) in 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504; and see my decision in Woodland v Manly Municipal Council [2003] NSWSC 392 [6] ff and other cases there cited. One must also bear in mind when making a determination under s 88K the confiscatory nature of the statute: see Re Worthston Pty Ltd [1987] 1 Qd R 400; Tregoyd Gardens supra at 15, 854; and Woodland supra at [15] - [18] and the cases there cited. 11 The three easements sought in these proceedings all relate to small encroachments by the building or attachments to it upon the twelve foot lane. As I have said, the LPI has indicated that the title situation in respect of these encroachments must be regularised by the acquisition of easements before it will register the plan of subdivision. The encroachments are described in detail in a report of Mr Wager of Davenport Campbell, Architects. 12 The first encroachment is by part of a sprinkler system designed to give fire protection to the windows of the building overlooking the twelve foot lane. In the upper floors of the building, the sprinklers are outside the windows but within window recesses and therefore do not encroach on to the lane. However, in relation to the row of windows second from the ground in the southern wall of the building, there are seven sprinkler heads above windows, each projecting approximately 0.15 metres from the exterior of the wall. Each sprinkler and its head is approximately 0.10 metres long and 0.07 metres high. The sprinklers are located approximately 10 metres above the ground. 13 The second form of encroachment is by window ledges above the windows in the southern wall. There are 11 rows of ledges containing three ledges in each row. Each ledge is approximately 5.5 metres wide, 0.02 metres high and protrudes approximately 0.05 metres beyond the southern wall. The rows of ledges are located immediately above each window cavity. In a way these constitute the feature which it would probably be most difficult to deal with in any other way than by the grant of an easement. The reason for that is that they are an integral part of the fabric of the building and cannot be removed without damaging the fabric. That is important for two reasons. They are designed to flow rain water away from the window head and there may be the risk of water penetration if they are removed. Secondly, and probably more important because the building is listed on the State heritage inventory, the removal of the window ledges would require the approval of the New South Wales Heritage Council. The listing in the inventory requires the preservation of the external fabric and finishes of the building. It is dubious whether the permission of the Heritage Council could be obtained. In any event, there is a case arising from the heritage nature of the building, quite apart from the attitude of the Heritage Council, against the fabric of the building being interfered with in this way. 14 The third feature is the pipe. This is a single ventilation pipe. It is approximately 0.03 metres in diameter, commences about one metre above ground level and ends about four metres above ground level. It is located about five metres from the western edge of the southern side of the building. It is necessary to provide adequate ventilation for the gas meter room. Such ventilation is normally required by the service provider which employs persons to inspect the gas meters. 15 It may be that the sprinkler heads and the ventilation pipe could be more easily be removed or replaced than the window ledges could, for the reasons that I have set out above. Nonetheless, any of these alterations would interfere in some way with the heritage fabric of the building. The encroachments have existed for years or decades. The twelve foot lane is abandoned by the owner to the intent that the owner cannot be identified or located. The land is already burdened with the easement for light and air imposed by Bryson J, which would substantially interfere with its use or development, if development were possible, bearing in mind its nature as a twelve foot isolated strip of vacant land amongst city buildings. As Bryson J came to the conclusion that the imposition of the easement for light and air was reasonably necessary for the effective use or development of the building, I come to the same conclusion in respect of the three easements sought before me. 16 There is a requirement in subs (4) of s 88K of the CA for the provision in the order imposing the easement for payment by the applicant of such compensation as the Court considers appropriate, unless the Court determines that compensation is not payable because of the special circumstances of the case. Bryson J dispensed with the need for compensation in both the first judgment and the second judgment. He did so on the basis of a valuation report that indicated that the subject land had in each case not been diminished in value by the imposition of those easements. I have before me in respect of the imposition of these easements the evidence of Mr S S Eccleston, a registered valuer. Mr Eccleston gives evidence that the imposition of these easements would not diminish the value of the land. I have some scepticism as a non expert as to whether a restriction on the use of a narrow laneway in the central business district might not in the long run diminish its value by making its development less viable. Whilst obviously no development of such a small piece of land by the erection of a substantial building is viable, it seems to me there is always the possibility of a neighbouring owner acquiring such land and amalgamating it with another piece. However, as I have said, I am not the expert. I have no reason to doubt that Mr Eccleston has taken into account in an appropriate way all relevant considerations. There is no expert evidence to contradict his evidence that the value is not diminished. In these circumstances, for the same reasons as Bryson J gave in the first judgment and carried over into the second judgment, I determine that compensation is not payable because of the special circumstances of this case. 17 Bearing in mind again the confiscatory nature of the statute, it is important in my view that the easements should be restricted to the minimum necessary to accommodate the existing encroachments. I am not minded, for instance, to grant an easement over an envelope extending for some distance out from the southern side of the building to accommodate some future sprinkler or fire protection system. As I had indicated this to the plaintiff's representatives during the course of submissions, they have brought for filing a further amended summons in a form which attempts to meet this requirement by limiting the easements to the actual sites of the present encroachments, which they have had minutely described by Mr Wager. I should add that the nature and extent of those sites is further illustrated by photographs which have been appended to Mr Ireland's most recent affidavit. The precise relief as prayed for in the further amended summons is close to the form in which I am prepared to make orders, but I shall ask the plaintiff to bring in a minute of orders incorporating orders essentially in the form of the prayers of the further amended summons, with some amendments which I shall indicate, to permit orders to be made in accordance with the decision I have enunciated in these reasons.

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