Phillip Edward Lonergan v Roy Lewis

Factual background 10Mr and Mrs Lonergan bought their property on 25 August 2006 for $1,900,000.00. Earlier that year, they had made an offer to buy the property for $2,250,000.00. At that time, there was another purchaser also interested in the property. For reasons which are not clear from the evidence, Mr and Mrs Lonergan withdrew their original offer. They made a lower offer later in the year after Mr Lonergan noticed that the property was still for sale. The vendors' accepted that offer. It was suggested that Mr and Mrs Lonergan made the lower offer because of concerns they had about access to the property. There is, however, no evidence to support that suggestion. Rather, I accept Mr Lonergan's evidence that he made the lower offer simply because he thought that he could purchase the property for that price once the other potential purchaser withdrew. 11After buying the property, Mr and Mrs Lonergan leased the property out to two separate tenants over a period of approximately two years. They then renovated the property and put a swimming pool on it. Since that time, the property has been occupied by Ms Jacqueline Ashworth, Mrs Lonergan's sister, and Ms Ashworth's partner. During much of the time that Mr and Mrs Lonergan have owned the property, they have lived overseas - in Hong Kong and, more recently, London. They are considering returning to Sydney, possibly as early as the beginning of 2012, although their plans are uncertain. Their plans depend largely on Mr Lonergan's work commitments. From time to time, when Mr and Mrs Lonergan have returned to Sydney for holidays, they have stayed in the house located on their property. 12On 3 December 2009, the Lonergans' solicitors wrote to Mr Lewis asking whether Mr Lewis would be willing to grant an easement over his axe handle. The letter said, in part: Our clients have sought our advice in relation to requesting from you the grant of an Easement for them to use in an emergency circumstance part of the axe handle of your property from Seaforth Crescent to the area where they can access the set of stairs of their property. Our clients seek a restricted access as they do not consider it would be necessary to access your property on a regular basis and only to access your property in urgent circumstances. The letter went on to indicate that Mr Lonergan would be in Sydney in the week before Christmas and asked whether Mr Lewis was prepared to meet with Mr Lonergan to discuss the proposal. The letter also enclosed a proposed form of easement. 13At about this time, the Lonergans' placed the property on the market. Some time in 2010, the property was withdrawn from sale. It was put to Mr and Mrs Lonergan in cross-examination that they intended to sell the property once these court proceedings were resolved. They denied that and gave evidence that they had no present intention of putting the property back on the market. There is no reason to doubt that evidence and I accept it. 14Mr Lonergan and Mr Lewis met some time in December 2010. During the course of that meeting, Mr Lonergan asked for access. Mr Lewis replied in words to the effect that he was more than happy for the Lonergans to have emergency access to his staircase, but that he did not want that right of access to be written on his title deeds. 15There was a further meeting between Mr Lonergan and Mr Lewis in February 2011. At that meeting, Mr Lonergan offered Mr Lewis $50,000.00 for an easement. Mr Lewis rejected that offer, repeated that he did not want another easement on his title and repeated that he would not prevent anyone from using his stairs in an emergency. Mr Lewis says that, at that time, he assumed that Mr Lonergan was seeking access to the upper Lewis stairs only. 16In December 2009, the Lonergan/Anderson inclinator was damaged and, in March 2010 it broke down and required repair. It seems that both the Andersons and the occupants of the Lonergans' house used the upper Lewis stairs during that time without complaint from Mr Lewis. 17On 8 April 2010, there was a further meeting between Mr Lonergan, Mr Lonergan's solicitor, the surveyor engaged by Mr Lonergan (Mr Peter Graham), Mr Lewis and Mrs Anderson. At that meeting, Mrs Anderson suggested that a ladder could be erected which would permit the Andersons and Lonergans to scale the Andersons' garage wall next to the inclinator station so as to be able to use the narrow strip of land I have referred to earlier to gain access to Seaforth Crescent. Mr Lewis again rejected any proposal which would involve an easement being granted over the axe handle portion of his property. 18On 3 December 2010, the Lonergans' solicitors wrote to Mr Lewis again requesting the grant of an easement, this time offering compensation of $5,000.00. Again, the letter enclosed the proposed form of the easement. The letter also enclosed a plan identifying the easement which was sought, which is the plan which forms Annexure A to this judgment. The proposed easement was described in the following terms: PART 1 Identity of Easement First referred Right of Footway variable to in abovementioned plan: width Schedule of Lots affected. Lots burdened Lots benefited Lot B DP 363093 Lot 22 DP 871376 PART 2 Terms of Easement referred to in the abovementioned plan: Full and free right for every person who is at any time entitled to an estate or interest in possession in the land herein indicated as the dominant tenement or any part thereof with which the right shall be capable of enjoyment, and every person authorised by that person, to go, pass and repass on foot at all times and for all purposes in emergency or exceptional circumstances with or without animals or vehicles or both to and from the said dominant tenement or any such part thereof. For the purposes of this Easement: "emergency" includes, without limitation, a medical emergency, whether actual, threatened or suspected. "exceptional" includes, without limitation, any actual, threatened or suspected mechanical breakdown of any inclinator, and the moving of furniture and goods, to and from the dominant tenement. It was also proposed that the easement be the subject of the following restrictions: In exercising those powers, the owner of the lot benefited must: (a) cause as little inconvenience as is practicable to the owner and any occupier of the lot burdened, and (b) cause as little damage as is practicable to the lot burdened and any improvement on it, and (c) restore the lot burdened as nearly as is practicable to its former condition, and (d) make good any collateral damage. 19Again, Mr Lewis rejected this offer and, on 11 February 2011, the Lonergans commenced these proceedings. 20On the morning of the second day of the hearing, Mr and Mrs Lonergan proposed an amendment to the easement they sought so that the easement included the following term: The owner of the dominant tenement shall do and be solely responsible for the costs of all acts to construct upon or in the land such improvements as he/she/it/they consider necessary to make the easement fully functional and safe for use by any person for the purpose specified in this Instrument including but not limited to the construction of a platform on either side of any inclinator track so as to permit a stepping over of any such inclinator track which traverses this easement AND the owner of the dominant tenement shall be responsible for maintaining at his/her/its/their cost that part of the easement that he/she/it/they construct to facilitate such use.

Section 88K of the Conveyancing Act 21Section 88K of the Conveyancing Act relevantly provides: (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. (5) The costs of the proceedings are payable by the applicant, subject to any order of the Court to the contrary.

Is the easement sought by the Lonergans reasonably necessary for the effective use or development of their land? 22The first question raised by s 88K is whether the easement sought by Mr and Mrs Lonergan is reasonably necessary for the effective use or development of their land. Whether an easement is "reasonably necessary" for that purpose is to be determined objectively having regard to the circumstances which exist at the time the case is heard: 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 at 511 per Hodgson CJ in Eq; Durack v de Winton (1998) 9 BPR 16,403 at 16,449; Etwell v Newcastle City Council [2006] NSWSC 1165 at [17] per Palmer J. The words "reasonably necessary" do not impose an absolute standard. They require the court to take account of all the circumstances including the benefits sought to be gained from the easement and the consequences the granting of the easement will have on the servient tenement. The greater the consequences for the servient tenement, the greater the need for the easement before it will satisfy the requirement that it be "reasonably necessary": Etwell [2006] NSWSC 1165 at [17]; Khattar v Wiese [2005] NSWSC 1014 at [24]-[27] per Brereton J. It is not necessary that the easement be essential. However, it must be more than convenient or desirable: Durack v de Winton (1998) 9 BPR 16,403 at 16,448. The court should approach any application with caution having regard to the confiscatory nature of s 88K and should require firm proof of the reasonable necessity for the easement: Khattar v Wiese [2005] NSWSC 1014 at [27] and the authorities cited there. 23It is not clear whether, in determining the question of reasonable necessity, the court should take into account the particular circumstances or conduct of the current owners of the relevant parcels of land. In my opinion, it should not. The characteristics of the land and the uses to which it can be put will determine what is reasonably necessary for the land's effective use and development, not the particular attributes or attitudes of the individuals involved, although those attributes and attitudes may be relevant to the exercise of the court's discretion whether to grant relief under s 88K. 24The only use to which the land is to be put in this case is as a residence and the question is whether the easement is reasonably necessary to permit that use. In answering that question, it is convenient to examine the easement in two parts. One is the easement insofar as it gives access to the upper Lewis stairs. The other is the easement insofar as it would permit the occupants of the Lonergans' land to obtain access to and use the red stairs.

The upper Lewis stairs 25The answer to the question whether an easement that would permit use of the upper Lewis stairs in certain circumstances is reasonably necessary for the use of the Lonergan property as a residence turns on two issues. The first is whether access via the inclinator is adequate so as to make access via the stairs not reasonably necessary. The second is whether, assuming the answer to the first question is in the negative, there is an alternative means of access available so as to make access via the upper Lewis stairs not reasonably necessary. 26In answering those two questions, it is necessary to bear in mind the consequences for the servient tenement. In my opinion, those consequences are small. The purpose of the upper Lewis stairs is to provide access to the Wong, Richmond and Lewis properties. The Wong and Richmond properties already have easements in their favour to enable that to happen. The easement sought over the upper Lewis stairs by Mr and Mrs Lonergan is for the same purpose as the existing easements. I will say more about the restrictions on the proposed easement shortly. However, given those restrictions, it is difficult to see how the easement sought by Mr and Mrs Lonergan would add significantly to the use of the stairs or interfere with their use by others. Mr Barham, who appeared for Mr Lewis, submitted that at some time in the future the owners of Mr Lewis's land may want to extend his inclinator up to Seaforth Crescent and that the easement sought by Mr and Mrs Lonergan would interfere with that owner's ability to do so. However, any proposal to extend the inclinator would have to accommodate the easements in favour of the Wongs' land and the Richmonds' land. As I have mentioned, the upper Lewis stairs and the red stairs are the only means of access to the Richmonds' property. It is difficult to see why in those circumstances the construction of an inclinator that accommodated those easements would not also accommodate the easement sought by Mr and Mrs Lonergan. 27Mr Bedrossian, who appeared for Mr and Mrs Lonergan, submitted that some means of access to the Lonergan property other than by means of the inclinator is reasonably necessary for use of the Lonergans' property as a residence for three principal reasons. The first is that, on occasions, the inclinator may breakdown, as recent experiences have demonstrated. There was no real dispute that access to the Lonergans' property is required at all times. Nor could there be. Continuous access is part of the normal use of residential property. For that reason, it is reasonably necessary, particularly if the inconvenience it causes to others is small. 28Mr Barham sought to deal with this point in two ways. First, he submitted that, if the inclinator were properly maintained, it should breakdown rarely, if ever. Second, he pointed out that Mr Lewis had always been willing to permit the occupants of the Lonergans' property to use the upper Lewis stairs where that was necessary. In my opinion, neither of these points is an answer to the proposition that some other means of access is reasonably necessary. As to the first, over time, mechanical things wear and have a tendency to breakdown. Eventually, they need to be replaced. Sometimes, they are damaged accidentally. The evidence is that that has happened rarely in the case of Mr Lewis's inclinator and more frequently in the case of the Lonergan/Anderson inclinator. At those times, the occupants of the Lonergans' property have required some other form of access. The fact that that need may be infrequent in the future does not alter the need. 29As to Mr Barham's second point, there is no dispute that Mr Lewis has been very reasonable in permitting others to use the upper Lewis stairs where that has been necessary; and there is no suggestion that he has or will change his mind. However, as I have said, I do not think that Mr Lewis's attitude is relevant to the question of what is reasonably necessary, although it may be relevant to the question of discretion. 30The second point Mr Bedrossian made in relation to the need for alternative access was that the inclinator may not always be a suitable means of access where, for example, it is necessary to move large and heavy pieces of furniture or other materials and equipment that may be needed to carry out repairs or alterations to the house on Mr and Mrs Lonergans' land. Some evidence was lead on the suitability of the inclinator to move various types of furniture, equipment and materials. The evidence is that it has a maximum load capacity of 272 kilograms. Its roof can be removed to take large objects and there is evidence that specialist platforms can be hired to fit onto the inclinator to assist in moving substantial objects. The material used to construct the swimming pool on the Lonergans' property was taken to the site using the inclinator. Mr and Mrs Lonergan did not lead any evidence of particular objects or pieces of furniture that could not be transported in the inclinator. It was open to them to do so either from the inclinator's manufacturer or through removalists experienced in using inclinators. It also needs to be borne in mind that it is not reasonably necessary to use the property as a residence to be able to deliver to it anything that a residence might contain. Having regard to the location of the property, it simply may not be practicable to deliver to it everything that could be delivered to another residence located elsewhere. Taking these matters into account, I am not satisfied that alternative access is needed because some things cannot be moved by the inclinator. 31The third point raised by Mr Bedrossian is that access may sometimes be required in emergencies. In relation to this point, it is worth observing that there is legislation that permits some emergency services to enter premises and protects those services from liability when exercising their statutory powers. In particular, s 22B of the Fire Brigades Act 1989 (NSW) permits a person to enter premises in order to comply with a direction given by the Commissioner under s 22A. The Commissioner may give a direction under that section if the Commissioner is satisfied that there are reasonable grounds for doing so for the purpose of protecting persons from injury or death or protecting property threatened by an actual or imminent emergency. In addition, at common law there is a defence to a claim of trespass where the trespass is reasonably necessary for the preservation or protection of life or property: Southport Corporation v Esso Petroleum Co Ltd [1953] 2 All ER 1204 at 1209-10; Board of Fire Commissioners (NSW) v Ardouin (1961) 109 CLR 105 at 127; [1962] ALR 719 at 732 per Windeyer J, citing Cope v Sharp (No 2) [1912] 1 KB 496. The inclinator may well be the best means of evacuating someone from the Lonergans' property in the case of a medical emergency. But even if that is not the case, or an alternative means of access is required because of a fire or some other emergency on the Lonergans' property, the defence of necessity is likely to be available. Moreover, in that event, some other form of access besides the use of the upper Lewis stairs may be necessary. For example, access may be required from Middle Harbour. Taking these matters into account, I am not satisfied that an easement needs to be granted in cases where there is an emergency. Such an easement may be neither necessary nor sufficient to deal with the types of emergency that might arise. 32That leaves the question whether there is some alternative means of access which means that an easement in respect of the upper Lewis stairs is not reasonably necessary at times when the Lonergan/Anderson inclinator has broken down. In my opinion, there is not. The only alternative is the narrow route adjacent to the inclinator. At present, that route cannot be used because access is blocked by the supporting wall of the apron in front of the garage and the garage wall. Mr Barham submitted that it would be possible to build a set of stairs from the landing at the bottom of the upper Lewis stairs to the carpark roof. However, from my inspection of the site, it is far from clear how that could be done. The available space is very narrow (approximately half a metre wide). The stairs would need to be very steep and it is not entirely clear how they would intersect with the carpark roof at a point which was still within the easement and did not interfere with access to the inclinator. In the absence of any expert evidence on how that could be done in a way which complied with applicable building codes, I am not prepared to conclude that that alternative is practical. 33It follows from what I have said that it is reasonably necessary for use of Mr and Mrs Lonergans' property as a residence that they have access to the upper Lewis stairs when the Lonergan/Anderson inclinator is not working.

Access to the red stairs 34The next question is whether an easement over the lower part of Mr Lewis's axe handle is reasonably necessary so as to permit the occupants of the Lonergans' property to use the red stairs. In my opinion, it is not. I say that for two reasons. 35First, the access that is sought itself gives rise to difficulties. As I have said, in order to obtain access to the red stairs, it is necessary to cross both inclinator tracks over rough and overgrown ground to get to the base of the red stairs. It appears that it would be possible to construct a path over the ground itself. However, it is not clear how the inclinator tracks themselves could be safely negotiated. Mr Bedrossian prepared sketches to show how platforms could be constructed so that it would be possible to step onto a platform and step across to a platform on the other side of the inclinator track. The platforms could be designed in a way which provided protection to the cable supplying power to the inclinator. Mr Bedrossian also submitted that the inclinator cars themselves did not pose a danger because they moved at such a slow speed (1.44 kilometres per hour). However, no evidence was led from an appropriate safety expert to the effect that what was proposed was appropriate and met applicable safety requirements. In addition, there is at least some risk that the inclinator track or cables could be damaged by people crossing the tracks. If that happened, that would cause serious inconvenience to the occupants of Mr Lewis's property. 36Secondly, there is an alternative means of access and that is by the middle stairs. As I have said, those stairs are poorly maintained and narrower than the red stairs. However, there is no reason why they could not be repaired or replaced and properly maintained; and the fact that that may involve expense does not seem to me to mean that they are not a reasonable alternative to the red stairs so as to make access to the red stairs reasonably necessary. 37It follows from what I have said that Mr and Mrs Lonergan are not entitled to an easement over the lower part of the Lewis axe handle.

Are the conditions set out in s 88K(2) satisfied? 38Section 88K(2) requires three conditions to be satisfied before the court can make an order imposing an easement. Those conditions are that the court be satisfied that: (a) the use of the land having the benefit of the easement will not be inconsistent with the public interest; (b) those persons with an interest in the land to be burdened by the easement can be adequately compensated for any loss or other disadvantage that will arise from the imposition of the easement; (c) the applicant's have made all reasonable attempts to obtain the easement or an easement having the same effect, but have been unsuccessful. 39There is no question that the first of these conditions is satisfied in this case. Moreover, subject to one qualification that I will come to, there was no real dispute that the second condition was also satisfied at least so far as an easement which would permit access to the upper Lewis stairs is concerned. Having regard to the easements which already exist over that part of the Lewis axe handle, the granting of a further easement to similar effect will not cause Mr Lewis any significant loss or other disadvantage. Mr Lewis was not able to point to anything other than the fact that a further easement represented another blot on his title. To the extent that that is a disadvantage, Mr Lewis can be compensated for it. 40As to the third condition, I am satisfied that reasonable attempts have been made by Mr and Mrs Lonergan to obtain an easement to the same effect as the one now sought. The Lonergans have made a number of offers to obtain an easement over Mr Lewis's axe handle. In some cases, it may not have been entirely clear as to the nature of the easement that was being sought. Mr Lewis understood that at least one of the requests related to an easement that would have permitted use of the upper Lewis stairs only, although the written offers made by Mr and Mrs Lonergans' solicitor were broader in form. It is clear, however, from Mr Lewis's responses that he was not and is not prepared to grant an easement in any form. In those circumstances, the requirement of s 88K(2)(c) is satisfied.

Should the court refuse to grant an easement in the exercise of its discretion? 41Mr Barham advanced two reasons why the court should refuse to grant an easement which would permit the occupants of the Lonergans' property to use the upper Lewis stairs. First, he submitted that that easement would affect the Richmonds and the Wongs and they were not joined as parties. Second, he submitted that the easement was unnecessary because Mr Lewis was prepared to permit access in any event. 42It is not strictly accurate to treat Mr Barham's first point as going to the court's discretion. If the orders sought by Mr and Mrs Lonergan affected the rights or interests of the Richmonds and the Wongs, then they were necessary parties to the proceedings and the court should not make those orders without giving them an opportunity to be heard. As McHugh J said in State of Victoria v Sutton [1998] HCA 56; (1998) 195 CLR 291 at [77]: The rules of natural justice require that, before a court makes an order that may affect the rights or interests of a person, that person should be given an opportunity to contest the making of that order. Because that is so, it is the invariable practice of the courts to require such a person to be joined as a party if there is an arguable possibility that he or she may be affected by the making of the order. That practice also assists in avoiding duplication of hearings on the same issues and in avoiding the spectre of inconsistent decisions by courts or the judges of the same court. ... [footnote omitted] That proposition was cited with approval by French CJ, Gummow, Hayne, Heydon and Kiefel JJ in John Alexander's Clubs Pty Ltd v White City Tennis Club Limited [2010] HCA 19; (2010) 241 CLR 1 at [131]. In that case, the plaintiff sought relief in the form of a constructive trust over land owned by the defendant. The relief was refused by the trial judge. The plaintiff appealed that decision. Walker Corporation sought to be joined as a respondent to the appeal on the ground that it had an equitable interest in the relevant land of which the plaintiff had notice. That application was refused and the Court of Appeal, overturning the trial judge, granted the relief sought by the plaintiff. The High Court overturned that decision. It did so on various grounds. One was that Walker Corporation was a necessary party to the proceedings. In reaching that conclusion, the court said (at [133]): The relief claimed and granted - a constructive trust and a transfer of the land subject to the trust to the [plaintiff] so as to make the interest transferred indefeasible on registration - directly affects the interests of any other person, like Walker Corporation, claiming an interest in the land, because orders in the [plaintiff's] favour would, to a corresponding extent, be detrimental to those other persons. ... 43It might be said that the present case is distinguishable from John Alexander's Clubs because it cannot be said that any easement granted in favour of the Lonergans' property would, to a corresponding extent, be detrimental to the easements in favour of the properties owned by the Richmonds and the Wongs. Although the easements in favour of their properties were not in evidence, there is no reason to think that, if the court granted an easement benefiting the Lonergans' property, the enjoyment of those easements would be affected. In addition, Mr Bedrossian pointed out that Mr Richmond gave evidence for Mr Lewis. He, at least, was on notice of Mr and Mrs Lonergan's claim. Moreover, he gave no evidence to suggest that the easement sought by Mr and Mrs Lonergan would affect the easement for the benefit of his property. The evidence he gave was to the effect that, if the easement were granted, it would affect the enjoyment of his land because occupants of the Lonergan property who used the red stairs may disturb his children when they were sleeping because the windows of their bedrooms faced onto the red stairs. Mr Richmond said nothing about the use of the upper Lewis stairs. 44On the basis of the material before me, there is considerable force in the proposition that the easement sought by the Lonergans would have no practical effect on the Richmonds or the Wongs. However, the question is whether they should have been given an opportunity to make submissions on that issue. In my opinion, they should have. It is a precondition to the court's power to make an order under s 88K that the court be satisfied that the Richmonds and the Wongs can be adequately compensated for any loss or other disadvantage that will arise from the imposition of the easement, since they have an estate or interest in the relevant land. If the court is so satisfied, they fall within the class of persons who are entitled to compensation under s 88K(4). How, in those circumstances, can the court be satisfied that the precondition is met without giving the Richmonds and the Wongs an opportunity to be heard on that question? In the particular circumstances of this case, there may be nothing that the Richmonds and the Wongs could or would want to say. But that is not a reason for denying them the opportunity of saying something if they wish to; and it may be that there is something about their easements that would alter the conclusions that I have reached. 45There is also considerable force in Mr Barham's second point. However, I have concluded that it does not provide a sufficient reason for refusing to grant an easement in respect of the upper Lewis stairs. The difficulty is that, leaving aside anything that the Richmonds and Wongs may say and subject to the payment of proper compensation, on the findings I have made, the occupants of the Lonergans' property should be entitled to use the upper Lewis stairs in the event that the Lonergan/Anderson inclinator is not working; and it is difficult to see how things might change, at least in the foreseeable future. In those circumstances, it is difficult to see why the parties' respective titles should not reflect that reality. Mr Lewis, sensibly, appreciates that the occupants of the Lonergans' and Andersons' properties require access to the upper Lewis stairs when their inclinator breaks down and is willing to permit them to have that access in those circumstances. But the relevant titles do not reflect that fact. A purchaser of either the Lonergans' property or Mr Lewis's property may misapprehend the position and, to that extent, be misled. It is not unreasonable of the Lonergans to want to clear up the position before an actual dispute arises. If a dispute ever does arise, it is likely to do so when the Lonergan/Anderson inclinator has broken down. Then the matter will be urgent and will not be capable of resolution before the occupants of the Lonergans' property are put in a position where they cannot have access to their home without trespassing on Mr Lewis's land. Mr Lewis says that he would prefer not to have the blot on his title. But, as I have said, the absence of that blot does not reflect the true position of the parties and is likely to mislead potential purchasers on their true rights and obligations. 46The question remains what should be done having regard to the conclusions I have reached. One possibility is to dismiss the current application on the basis that the Richmonds and Wongs were not joined although they were necessary parties. However, I do not think that that is an appropriate course in this case. On the material before me, the likelihood is that the Richmonds and Wongs will not be affected by the easement sought by Mr and Mrs Lonergan. Mr Barham accepted that, if the current proceedings were dismissed, there would be nothing to prevent Mr and Mrs Lonergan from commencing further proceedings in the future, although there may be a question whether issue estoppels operate and whether fresh proceedings would be an abuse of process. Mr Barham's concession was made on the assumption that Mr Lewis changed his mind and was no longer willing to permit access. But it may be that Mr and Mrs Lonergan would be entitled to bring further proceedings in the future to which the Richmonds and the Wongs were joined. Having regard to what I have said, it would not be in the interests of a just and cheap resolution of the dispute to put Mr and Mrs Lonergan in a position where they had to commence proceedings in the future if the matter is capable of being resolved now. 47In those circumstances, what I propose to do is to stand the matter over until a time that is convenient to the parties, approximately 3 weeks from the date of this judgment, and to direct that within 7 days Mr and Mrs Lonergan's solicitors write to the Richmonds and the Wongs explaining that the matter has been stood over until that time to give them an opportunity to consider whether they want to make an application at that time to be joined as defendants in the proceedings and to lead evidence or make submissions on why the court should not grant an easement over the upper part of the Lewis axe handle to permit the occupants of the Lonergans' property to use the upper Lewis stairs in the event that the Lonergan/Anderson inclinator is not working or to apply for compensation if an order is made. The letter should make it clear that the Richmonds and the Wongs need only attend if they wish to make an application of that type. It should also enclose a copy of this judgment.

To what compensation is Mr Lewis entitled? 48The question of compensation does not arise unless and until I make an order under s 88K(1). Whether I do so or not depends on whether the Richmonds and the Wongs wish to make any submissions on whether they can be adequately compensated for any loss or other disadvantage that will arise from the imposition of the easement that I have indicated that I would be prepared to grant absent any such loss or disadvantage and, if they do, whether they can satisfy me that they cannot be adequately compensated. However, the question of compensation was argued before me and nothing the Richmonds or the Wongs might say could affect the quantum of that compensation if an order is made. Consequently, it is desirable that I express a view on that question now. 49Neither party led expert evidence on the amount of compensation that should be paid to Mr Lewis for the easement sought by Mr and Mrs Lonergan, let alone the one that I have indicated that I would be prepared to grant subject to the qualifications I have referred to. Mr and Mrs Lonergan's primary position is that no compensation is payable because of the special circumstances of this case and, in particular, the fact that easements already exist over the upper part of the Lewis axe handle, and an additional easement would not affect Mr Lewis's use of the land. Mr Lewis's position, on the other hand, was that no easement should be granted. Both parties left it open that, if the court concluded that an easement should be granted, it could seek further evidence and submissions on the question of compensation. I am, however, reluctant to adopt that course in this case. Although, for reasons I will explain, I have concluded that Mr Lewis is entitled to some compensation. I do not think that compensation should be large. Moreover, it is not at all clear that, given the particular circumstances of the case, expert evidence could provide much assistance to the court. Taking those matters into account, I do not think that the court should put the parties to the additional costs of preparing further evidence and making further submissions when they chose not to obtain that evidence and have already made (brief) submissions to the court on the question. 50There is a question of how compensation is to be assessed under s 88K(4). In considering whether the condition set out in s 88K(2)(b) is satisfied, the court is required to consider whether 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 the imposition of the easement. The focus is on the question whether the owner will suffer a loss or other disadvantage. If the owner will and if the owner cannot be adequately compensated for that loss or disadvantage, then no easement can be granted. In contrast, s 88K(4) is expressed more broadly. The compensation that is payable is "such compensation as the Court considers appropriate". Nonetheless, there are a number of decisions in which the court has sought to limit the compensation payable under s 88K(4) to compensation for the loss or other disadvantage referred to in s 88K(2)(b), at least in the absence of exceptional circumstances. 51That was the approach adopted by Windeyer J in Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15,795, which appears to be the first case that deals with the question following the introduction of s 88K by the Property Legislation Amendment (Easements) Act 1995 (NSW) (which commenced on 12 February 1996). In that case, Windeyer J said (at 15,801) in relation to subs (4): To put it simply, what this [that is, the argument of counsel] does is to compensate the servient owner for his loss of opportunity to extract money which would have been available had s88K not been enacted. That is not the compensation to which s88K(2) and s88K(4) refers. Clearly what is to be compensated is the loss arising from the compulsory acquisition or imposition of the easement; that is the loss of property arising from the taking out of the freehold estate the incorporeal proprietary interest of the easement. It is not compensation to be equated with or apportioned out of the gain to the dominant owner as a result of the imposition. It is not necessary to go into this matter further. 52The approach adopted by Windeyer J was qualified slightly by Young J (as he then was) in Wengarin Pty Ltd v Byron Shire Council (1999) 9 BPR 16,985. In that case, Young J said (at [26]): (4) Ordinarily the compensation will be: (a) the diminished market value of the affected land (including what is sometimes called the hope value, that is the potential use to which the subject land could have been put: Re Bowden's Application (1983) 47 P&CR 455 at 457); (b) associated costs that would be caused to the owner of the affected land: Tregoyd at 15,856; (c) an assessment of the compensation for insecurity, loss of amenities such as loss of peace and quiet: Tregoyd at 15,856; SJC at 326; and see Preston and Newsom, Restrictive Covenants Affecting Freehold Land , 8th ed, Sweet & Maxwell, London, 1991, p 284; (d) the compensation is to be less compensating advantages, if any. (5) There may be some exceptional cases which fall outside the net of s 88K(2)(b) yet are cases where it is extremely difficult to assess the compensation, but it is clear that the applicant is to derive a considerable benefit from the application. In such circumstances it may be appropriate to assess the compensation on a percentage of the profits that would be made. 53The principles stated by Young J have been approved in a number of subsequent cases: see, for example, Mitchell v Boutagy (2001) 10 BPR 19,187 at [28]ff per Austin J; Owners Strata Plan 13635 v Ryan [2006] NSWSC 221 at [85] per Rein AJ. 54In this case, it is difficult to see what loss Mr Lewis suffers if the easement is granted. On the other hand, any increase in value of the Lonergan's land as a consequence of the granting of the easement will be directly attributable to the easement. This is not a case where the value of the easement lies in the fact that it permits the person seeking it to develop land in a way that it could not otherwise be developed and what is sought is compensation by reference to the value of the development rather than by reference to the value of the easement itself. Taking those matters into account, in my opinion, this is a case that falls within the exception referred to by Young J. 55One measure of the amount of compensation that should be awarded to Mr Lewis on the basis that he is entitled to an amount representing a proportion of the increase in the value of Mr and Mrs Lonergan's property as a result of the easement is the offers made by Mr and Mrs Lonergan for it - one for $50,000 and the second one for $5,000. It is clear that Mr Lonergan is an astute businessman and would not have made his first offer if he did not believe that the amount of the offer reflected a fair apportionment of the value he and his wife expected to receive from the easement. Indeed, in the normal course of events, it might be inferred from the fact that it was a first offer that Mr and Mrs Lonergan were prepared to pay more for the easement they sought. Mr Bedrossian submitted that that offer provided an inappropriate benchmark. It was made before Mr and Mrs Lonergan had incurred significant legal fees in connection with the current application. In addition, it was made to obtain a broader easement than the one that I have indicated I would be prepared to grant. Even the second offer was made before court proceedings were commenced and for a broader easement, and that was for only $5,000. 56I accept that Mr Lonergan's first offer does not provide an accurate benchmark for the compensation that should be awarded to Mr Lewis. That is because built into that offer was the value of avoiding the inconvenience and costs of court proceedings. It was also for a broader easement, although I place less weight on this second consideration. The real value of the easement to Mr and Mrs Lonergan is that it permits occupants of their property to obtain access when the inclinator is not working; and that value is derived from an ability to use the upper Lewis stairs. In my opinion, the removal of any uncertainty concerning the ability to obtain access is of significant value. The fact that Mr and Mrs Lonergan's second offer was for a much lower amount does not affect the position. I would not infer from that offer that Mr and Mrs Lonergan had reduced the value that they placed on access. The fact that they pursued these proceedings suggests the opposite. Rather, in my opinion, the second offer is better seen as part of a strategy to persuade Mr Lewis that the first offer was a generous one and that he risked obtaining much less if he did not accept it on the basis that the court would only be prepared to compensate Mr Lewis for the loss or other disadvantage he will suffer. 57The assessment of appropriate compensation is necessarily rough. Mr Lonergan's first offer provides some evidence of the value of the easement, but it is hardly an accurate guide; and it needs to be discounted for the reasons I have given. Taking these matters into account, in my opinion, the appropriate compensation payable to Mr Lewis is $30,000. I have arrived at that figure by taking Mr Lonergan's first offer and discounting it to take account of the matters I have referred to. However, in fixing an appropriate discount, I have treated Mr Lonergan's offer as a conservative one, given that it was the first he made.

On what terms should the easement be granted? 58I have already indicated the land over which the easement should be granted and some of the terms relating to the easement. One remaining, question, however, is whether it should be a condition of the easement that the owners of the Lonergan property should contribute to the costs of maintaining and, if it ever becomes necessary, replacing the upper Lewis stairs. In my opinion, it should be. The whole purpose of the easement is to permit those persons to use those stairs. There is no reason why they should not contribute towards their upkeep if an easement is granted. The stairs are available for use by the occupants of Mr Lewis's property, the Richmonds' property and the Wongs' property. They are also likely to be available for use by the occupants of the Andersons' property. In addition, if the easement is granted, it will only be for a limited use. Consequently, the occupants of the Lonergans' property should pay a smaller proportion towards their upkeep. However, I do not think that that proportion should be fixed simply by reference to the use that each party will make of the stairs. The principal source of wear and tear on the stairs is likely to be the weather, not their use. Their value to the occupants of the Lonergans' property arises from the fact that they are available, as well as the fact that they may, on occasions, be used. Taking these matters into account, in my opinion, an appropriate proportion is 10 percent.

Orders 59The matter should stand over until a date to be fixed. The plaintiffs should give notice to the Richmonds and the Wongs in accordance with paragraph 47 of this judgment. If there is no appearance by the Richmonds or Wongs on the adjourned date, I will make orders under s 88K for the granting of an easement for the benefit of the Lonergans' land. The parties should bring in proposed short minutes of order to give effect to this judgment. Again, if there is no appearance by the Richmonds or the Wongs on the adjourned date, I will deal with any outstanding issues in relation to the form of the orders at that time. 60I will hear the parties in relation to costs.

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