Property Partnerships Pacific Pty Ltd v The Owners of Strata Plan 58482

Property Partnerships Pacific Pty Ltd v The Owners of Strata Plan 58482 - [2006] NSWLEC 709 - NSWLEC 2006 case summary — Zoe

[29]

33 The plaintiffs consider that the Susan Street alternative is inferior, because it will involve a longer drain and easement (in the order of 70 metres and opposed to 30 metres) and a substantially greater cost (in the order of $19,000 as opposed to $10,000). In addition, the plaintiffs are concerned that such an easement would impinge much more closely on structures on the servient property or properties. The plaintiffs say that their cost estimates include provision for the protection and preservation of the trees in the site of the proposed easement. In those circumstances, I consider that the plaintiffs' preference for the proposed easement through Mrs Wiese's land over the Susan Street option is reasonable. 16 A closely analogous approach is warranted under s 40(2)(a) of the Land and Environment Court Act 1979 because it too contains the words "reasonably necessary" (or, if not warranted under s 40(2)(a), would at least be warranted in the exercise of the Court's discretion). Thus, it is not the intention of s 40 that if an easement would be equally efficacious over two pieces of land it cannot be granted over either because it cannot be said that it is necessary for it to be granted over one rather than the other. There can be no development on the applicant's land in accordance with the development consent which the Court has determined to grant without a drainage easement to the stormwater system in New Beach Road. It follows that an easement is reasonably necessary for the development to have effect in accordance with the development consent. This is not conclusive of whether the proposed easement over No 45 is reasonably necessary. There are several possible routes for an easement to satisfy the necessity. The question is whether the particular proposed easement is reasonably necessary. The applicant has selected No 45 as the land over which it desires to acquire an easement. This may require the Court to undertake some evaluation of the alternatives in order to be satisfied that the applicant's proposal is reasonable as between them, but it need not involve a precise assessment of their respective advantages and disadvantages nor acceptance that the applicant's preferred course is objectively superior, so long as it is reasonable.

[75]

I confirm my understanding as follows:

Work has currently stopped on site on account of a Demolition Order issued by Woollahra Council due to works constructed not being in accordance with approved plans.
As a result of boundary issues with your neighbour to the east (8 Annandale St), the building on your approved development needs to be 'compressed' by approximately 500mm along the east / west axis of the building.
You are currently preparing amended plans which you intend to submit by way of S96 application to obtain approval for the necessary changes noted in item 2 above.
Once the S96 application is approved and a new corresponding Construction Certificate is issued you intend to continue construction.
There is a section of unexcavated rock approximately 1.5m wide and of varying height (approximately 3.0m - 11.0m) located long your (northern) boundary with 45 New Beach Road. This section of rock supports a boundary wall to 45 New Beach Rd. In order to excavate the rock, the wall above (which it supports) needs to be demolished.
In order to fully complete your development (either in accordance with current approved plans or amended plans noted in item 3 above) the section of unexcavated rock noted in item 5 above needs to be removed. The rock needs to be removed to accommodate a fire escape passage necessary for your proposed development as well as a stormwater drainage line from 8 Annandale St which leads through to New Beach Rd.
The stormwater drainage line from 8 Annandale St which passes through your property is located within a drainage easement 1.0m wide located along your northern boundary. The easement is located wholly within the area of the unexcavated rock. In order to relocate the drainage easement you would need the consent of the owner of 8 Annandale St. You do not believe the owner of 8 Annandale St will agree to the easement being relocated.
You have had extensive negotiations over the past 12 months with the owners of 45 New Beach Road in an attempt to obtain their agreement to the removal of the unexcavated section of rock. These negotiations have failed.
Your current intention, once S96 plans are approved and a corresponding Construction Certificate has issued, is to construct that part of your development that can be constructed with the unexcavated section of rock remaining in place. Once you have completed construction, to the extent that you can, given the constraints imposed by the unexcavated rock, you will recommence negotiations with the owners of 45 New Beach Rd regarding the excavation of rock, demolition of existing boundary wall and construction of a new boundary wall.
Only once you have the necessary consent from the owners of 45 New Beach Rd and the rock has been excavated can you replace the existing temporary drainage line from 8 Annandale St with a permanent drainage line located within the existing drainage easement.

[102]

63 In Owners Strata Plan 13635 v Ryan [2006] NSWSC 221 at [85] Rein AJ summarised the compensation principles under s 88K as follows: (1) The compensation referred to in s 88K(4) is compensation for any loss or other disadvantage (as referred to in s 88K(2)(b)) caused by the easement: see Goodwin v Yee Holdings Pty Ltd ( 1997) 8 BPR 15,795 at 15,801 per Windeyer J. (2) Section 88K(2)(b) requires a causal relationship between the loss or disadvantage for which claim is made and the imposition of the easement: Mitchell v Boutagy (2001) 118 LGERA 249 at [26]. (3) Causation is to be ' determined by applying common sense to the facts of each particular case ': as set out in March v E & M H Stramare Pty Ltd (1991) 171 CLR 506 at 515; Mitchell at [27]. (4) Ordinarily compensation will have three elements: (a) the diminished market value of the affected land, including the potential use to which the land could be 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 will allow as an offset any compensating advantages: per Young J in Wengarin Pty Ltd v Byron Shire Council (1999) 9 BPR 16,985; [1999] NSWSC 485 at [26]. (5) There may be an exceptional case where it is extremely difficult to assess compensation and it is clear that the applicant is to derive a considerable benefit from the application, and where it may be appropriate to assess the compensation on a percentage of the profits that would have been made: Wengarin per Young J. (6) The Court ' should not err on the side of generosity or miserliness ', and leaving aside (5) above, the fact that the plaintiff ' may generate profit, substantial or moderate, from the development in connection with which the easement is sought, does not justify any departure from what would otherwise be the principles upon which adequate compensation is assessed ': Mitchell per Austin J at [31]. (7) Compensation under s 88K includes, in the case of a grant of a permanent easement, compensation for loss of proprietary rights taken by the grant of the easement and compensation for the disturbance effected by carrying out the initial work and the costs of subsequent repair and maintenance. The first aspect is often referred to as the ' blot on title ' and the second as ' disturbance ': Mitchell at [32]. (8) Loss or disadvantage does not include the loss of the bargaining position that the owner of the servient tenement would have if s 88K had not been enacted: Goodwin v Yee Holdings Pty Ltd ( 1997) 8 BPR 15,795 at 15,801; 117 York Street at 515, 516; Wengarin at 16,988. Loss of rent can be compensated: Goodwin. (9) The plaintiff has to establish what the relevant losses and disadvantages are as part of satisfying the Court that the persons affected can be adequately compensated: 117 York Street at 516, but onus should not be overemphasised: see Wilson v Forrester-Babcock (2000) 10 BPR 18,377; [2000] NSWSC 1208, and unfavourable inferences can be drawn where evidence of facts is peculiarly within the knowledge of the defendant: Mitchell at [34].

[112]

74 Mr Preston explained in oral evidence that he adopted 10 percent because of what he understood from Dr Robinson's report to be the compensatory benefit from the easement of mitigation of flooding in the rear void. Dr Robinson thought that the route through No 45 would mitigate or eliminate the present occasional flooding in the rear void of No 45 from No 10. I am not satisfied on the evidence that there would be any such betterment or, alternatively, that it would be caused by the easement over No 45. Mr Woods, an owner of one of the strata apartments in No 45, gave evidence that the "flooding" on No 45 in the rear void occurred because of the cutting and removal of downpipes from the existing flat building at No 10. I accept his evidence. Assuming this were to be remedied by the proposed easement over No 45, it would not be reasonable in the circumstances, I think, to offset this as a betterment when determining the statutory right to compensation. Further, as Mr Preston acknowledged in oral evidence, the alleged betterment does not result from the imposition of the proposed easement over No 45 but rather from the proposed development at No 10, regardless of whether or not there is an easement over No 45. Finally, there is no guarantee that the development will ever occur, and therefore no guarantee that the alleged betterment will ever occur. Whilst the consent (unless it lapses) will enure with the land, there is no requirement on the owner from time to time of No 10 to ever carry out the development. If it is not carried out, the easement will remain in place over No 45 and would be a blot on the title without the alleged betterment. Accordingly, Mr Preston's assessment of compensation as 10 percent of the market value of the easement area is not justified and should be increased to 25 percent. That element of compensation on his approach would therefore be $55,443 (25 percent of $221,772). Whether he would have added his rather arbitrary further sum of $20,000 to this figure, if it were adjusted in the way I have described, is unclear.

[124]

87 However, the weight of authority favours the award of costs to an applicant on the ordinary basis and not on an indemnity basis, unless the applicant has engaged in unreasonable conduct - which is not alleged in the present case. In 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 at 523 Hodgson CJ in Eq said: "The provisions of s 88K(5) are not such as to indicate that an indemnity costs order should be made as of course in favour of a defendant". In Mitchell v Boutagy (2001) 118 LGERA 249 at 262 [60] Austin J said: "Section 88K(5) states that the costs of the proceedings are to be payable by the applicant subject to any order of the Court to the contrary. That, it seems to me, reflects a legislative policy. The policy is that the Court should be empowered to require the defendant to grant an easement to the applicant against his or her will, but generally on the basis that the cost of obtaining the easement is to be borne by the applicant. It would only be if there were circumstances of unreasonableness on the defendant's part that the Court would exercise its discretion to make an order to the contrary under subs(5)". His Honour added at 263 [68]: "… It appears to me that the costs of the litigation should be ordered in accordance with the principles set out in s 88K(5) which says the costs of the proceedings are payable by the applicant, but does not stipulate that they must be on an indemnity basis". In Khattar v Wiese [2005] NSWSC 1014 at [77] Brereton J said: Section 88K(5) reflects a policy that while the court is empowered to require a defendant to suffer an easement against his or her will, that should generally be on the basis that the cost of obtaining it is borne by the applicant, and only in circumstances of unreasonableness on the defendant's part would the court exercise its discretion to make an order to the contrary [ 117 York Street , 523-524; Mitchell v Boutagy , [60]]. In several cases, the applicant has been required to pay the defendant's costs on an indemnity basis [see, for example, Tregoyd Gardens ], but this is not invariably so [ 117 York Street , 523-524; Mitchell v Boutagy , [68]], even when the application has failed [ Blulock , [23]].

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