Shi v ABI-K Pty Ltd

Court of Appeal (NSW)|2014-08-15|Before: Basten JA, Barrett JA, Ward JA

(A) Order that there be imposed an easement to drain water 900 mm wide burdening Lot 4 in Deposited Plan 39083 known as 15 Blenheim Road, Carlingford in the State of New South Wales ("the servient tenement") and benefiting Lot 2A in Deposited Plan 161330 known as 50 Felton Road, Carlingford in the State of New South Wales ("the dominant tenement") as described in the dealing to be annexed hereto and marked "A".

(B) Direct that the easement so described - (a) run down the western boundary of the servient tenement; (b) have a width of 900mm, and (c) be limited to the soil and sub-soil of the area and not extend above the upper surface of the ground.

(C) Note that rights of access appurtenant to the easement do not extend to a height of more than 2.5 metres above the upper surface of the ground.

Direct the plaintiff to prepare annexure "A" and any accompanying documents to be executed by the defendant.

The defendant must execute a dealing in the form of annexure "A" and cause it to be returned to Madison Marcus Lawyers at Level 10, 1 Market Street, Sydney NSW or DX 13006 Sydney Market St, by 4.00pm seven days after the form and these orders have been personally served on the defendant.

If the defendant fails to comply with order 3 above, a Registrar in the Equity Division, Supreme Court of New South Wales, is to execute a dealing in the form of annexure "A" on behalf of the defendant, whereupon that dealing shall be deemed signed by the defendant.

Order that, if such payment has not already been made in accordance with the order (4) of the trial judge as varied, the plaintiff pay to the defendant compensation in the sum of $21,500.00, such payment to be tendered to the plaintiff with the form referred to in order 2.

With respect to the costs of the trial, order that the plaintiff repay to the defendant any costs paid by the defendant pursuant to order (5) of the trial judge and that the plaintiff pay the defendant's costs of the trial as a litigant in person as agreed or assessed.

In addition to the costs borne pursuant to order (6) of the trial judge, the plaintiff is to bear all other costs of obtaining registration of the dealing referred to in order 2 above.

(2) Grant liberty to either party to apply to the duty judge in the Equity Division on 3 days' notice in relation to the working out of these orders.

(3) Direct that, in the event the respondent appeals to the Land and Environment Court with respect to the grant or modification of a development consent with respect to the dominant tenement, the respondent may exercise its right to apply to that Court under s 40(2) of the Land and Environment Court Act 1979 (NSW) for an order under s 88K of the Conveyancing Act 1919 (NSW) and, if that Court makes such an order, the respondent shall release (or accept variation of) the easement imposed through the order of this Court so that an easement in the terms ordered by that Court may have effect in place of it.

(4) No order as to the costs of the parties in this Court.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: REAL PROPERTY - easements - power of court to impose order easement - requirements of drainage easement required by council - whether easement reasonably necessary for effective use and development of dominant tenement -Conveyancing Act 1919 (NSW), s 88K

REAL PROPERTY - easements - costs of proceedings for order imposing easement - costs payable by applicant subject to other order - pre-trial offers of compensation in excess of appropriate level of compensation found at trial - offer of compensation in the form of Calderbank offer - trial judge awarded costs against defendant on the basis that rejection of offer was unreasonable - whether costs should turn on rejection of compensation - land owner resisting imposition of easement - Conveyancing Act 1919 (NSW), s 88K(5)

PRACTICE AND PROCEDURE - procedural fairness - appellant self-represented litigant with limited command of English - respondent informed appellant of steps to be taken prior to hearing - timely service of evidence - fresh material served shortly before trial - no adjournment sought - whether trial judge failed adequately to assist an unrepresented party

WORDS & PHRASES - "reasonably necessary" - Conveyancing Act 1919 (NSW), s 88K Legislation Cited: Conveyancing Act 1919 (NSW), s 88K Environmental Planning and Assessment Act 1979 (NSW), ss 79C, 96 Land and Environment Court Act 1979 (NSW), s 40 Supreme Court Act 1970 (NSW), s 75A Cases Cited: 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445; 16 BPR 31,257 Rainbowforce Pty Ltd v Skyton Holdings Ltd [2010] NSWLEC 2; 171 LGERA 286 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6; 214 CLR 1 Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; 204 CLR 82 Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141 Texts Cited: K Gray and SF Gray, Elements of Land Law (OUP, 5th ed, 2009) at [5.1.50] Category: Principal judgment Parties: Frank Shi (Appellant) ABI-K Pty Ltd (Respondent) Representation: Counsel: Mr P E King (Appellant) Mr G A Moore (Respondent)

Solicitors: Etheringtons Solicitors (Appellant) Madison Marcus Lawyers (Respondent) File Number(s): CA 2014/154112 Decision under appeal Court or tribunal: Supreme Court Citation: ABI-K Pty Ltd v Frank Shi [2014] NSWSC 551 Date of Decision: 02 May 2014 Before: Kunc J File Number(s): SC 2013/269928

HEADNOTE [This headnote is not to be read as part of the judgment] The respondent, ABI-K Pty Ltd obtained development approval from Council with respect to the development of its land, subject to it obtaining a one metre wide drainage easement over a downhill property. The developer sought to negotiate an easement over the land owned by the appellant, Mr Shi. Consent not being forthcoming, the respondent brought proceedings under s 88K of the Conveyancing Act 1919 (NSW), seeking an order imposing an easement over Mr Shi's property. Section 88K(1) permits an order to be made if the easement is "reasonably necessary" for the effective use or development of the dominant tenement. The trial judge, Kunc J, made the order sought. Mr Shi challenged the orders made by the judge on three bases. First, he said there had been a denial of procedural fairness because the applicant had served expert reports only three days before the trial. Mr Shi had limited command of English, did not have legal representation and was assisted by his wife at the trial. His wife had indicated that she had not had an adequate opportunity to consider the new evidence. The trial was adjourned for three hours for other reasons, during which she had a chance to consider the new material identified by the applicant. She did not seek an adjournment. Secondly, Mr Shi (who was legally represented on the appeal) challenged the finding of the trial judge that the requirements of s 88K had been satisfied. He complained that the one metre wide easement exceeded the usual "set back" from the boundary, required by Council, and thus sterilised redevelopment of his own property. He also complained that although the Council would permit him to erect a building with eaves over the "set back" it would not permit eaves over an easement. Thirdly, Mr Shi complained that he should not have been ordered to pay the costs of the application to the Court, merely because he had not accepted offers of compensation. The Court (Basten JA; Barrett and Ward JJA agreeing) held, allowing the appeal in part: Denial of procedural fairness

No procedural unfairness arose from the failure to adjourn the hearing. Communications between the appellant and the respondent before the trial demonstrated that the appellant (despite his limited English) understood the nature of the proceedings and the steps he needed to take. Further, the appellant (as represented by his wife) had an opportunity at the trial to consider what material was relevant, what was new and what had been served some months before. No adjournment was sought: [54]-[55] Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141; Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6; 214 CLR 1; Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; 204 CLR 82 considered. Requirements of s 88K
A drainage easement along the boundary of the appellant's property was "reasonably necessary", but not one that exceeded 900mm in width, being the set-back area within which no building would be approved. Furthermore, there was no need for the easement to include an area above the ground. The order made by the trial judge should be varied: [87]-[90]
The trial judge did not err in finding there was no sensible alternative to the easement over the appellant's land. The development required a mechanism for disposing of stormwater that traversed one of the downhill properties and the alternative proposed by the appellant would have required an easement traversing two separate properties: [95]
There is no substance to the argument that the easement of the kind ordered could not be the subject of adequate compensation: [68]
The trial judge was entitled to rely on the development consent granted by the Council to establish that the proposed use of the dominant tenement was not inconsistent with the public interest under s 88K(2)(a): [70], [73]. Costs
The statutory scheme under s 88K is inconsistent with the proposition that an applicant can obtain an order for costs by offering more than the compensation ultimately ordered to be paid as a condition of the easement. There must be more than the rejection of reasonable offers of compensation to warrant the Court otherwise ordering. Payment of compensation is only one element in obtaining an easement over the land of another person: [98]

Judgment

BASTEN JA: The respondent ("the developer") sought development approval with respect to a property it owns at 50 Felton Road, Carlingford. Deferred approval was granted, contingent upon the developer obtaining a 1 metre wide drainage easement over a "downstream" property, 15 Blenheim Road, Carlingford. The appellant, Mr Shi, owns the downstream property.
The developer sought consent from Mr Shi for the drainage easement over his property. Consent not being forthcoming, the developer brought proceedings in the Equity Division seeking an order imposing an easement over Mr Shi's land, pursuant to s 88K of the Conveyancing Act 1919 (NSW). On 2 May 2014 the primary judge (Kunc J) gave an ex tempore judgment indicating that he would make the orders sought: ABI-K Pty Ltd v Frank Shi [2014] NSWSC 551. (The orders were made on 5 May and varied on 8 May 2014, but the variations were not significant for present purposes.)
Mr Shi appealed. Expedition was granted on 2 June 2014 and the Court noted arrangements between the parties that work would not be undertaken in exercise of any rights pursuant to the easement before the determination of this appeal. Further, although the easement was registered, there was also agreement that the registration would be removed by consent if the appeal with respect to the order imposing the easement were to be upheld.
The grounds relied upon at the hearing on 15 August 2014 were set out in an amended notice of appeal. They will be considered individually below. The appeal should be upheld in part and the judge's order varied. That will necessitate variation of the easement as registered.

Statutory scheme

The power of the Court to make such orders and the circumstances in which they can be made are set out in s 88K of the Conveyancing Act, which relevantly provides as follows: 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 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. … (5) The costs of the proceedings are payable by the applicant, subject to any order of the Court to the contrary.
The critical element in this provision is the requirement that the easement be "reasonably necessary" for the effective use or development of the land sought to be benefited ("the developer's land"). Whether or not the condition is satisfied in a particular case is likely to require consideration of the following factors: (a) the capacity of the developer's land for use or development of particular kinds; (b) the nature of the specific proposed development; (c) the manner in which the proposed development is to be effected; (d) the effect of the easement, if granted, on the servient tenement. That is not to suggest that each factor is separate and distinct; clearly they will overlap.

factors (a) and (b) - the dominant tenement

The need to have regard to the first two factors, (a) and (b), is implicit in the language of the chapeau of s 88K(1). These factors involve an assessment of the land and the proposed development. No doubt an easement could not be described as reasonably necessary if the proposed development to which it was appurtenant was not a reasonable use of the developer's land. In Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445; 16 BPR 31,257 this Court adopted a passage from the judgment of Hodgson CJ in Eq in 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 at 508-509. That passage read, in part: "In my opinion: (1) the proposed easement must be reasonably necessary either for all reasonable uses or developments of the land, or else for some one or more proposed uses or developments which are (at least) reasonable as compared with the possible alternative uses and developments; and (2) in order that an easement be reasonably necessary for a use or development, that use or development with the easement must be (at least) substantially preferable to the use or development without the easement."
The first proposition is stated in somewhat abstract terms which suggest an exercise of some breadth and complexity. It cannot be intended that an applicant provide evidence of (or the court consider) what might constitute all reasonable uses of particular land. Nor, which is presumably intended to be a less demanding test, is it likely that there will be several proposed developments, or at least ones involving more than variations on a theme. Where a particular proposed development has received planning approval, there will usually be an evidential burden on the owner of the servient tenement to demonstrate that the proposed development is not at least reasonable having regard to the capacity and zoning of the developer's land.
So far as the second condition is concerned, this is not a case in which the development (or any substantially similar development) would be permissible without some form of drainage. Accordingly the issue is not whether the development itself is to be described as "reasonable" but whether the proposal for drainage is one properly described as "reasonably necessary".
Hodgson CJ in Eq then turned to consider whether the two propositions he had articulated contradicted the statement in another case that it was not for the court to judge the reasonableness of the particular development, noting that that statement may not have been intended to be of general application. Hodgson CJ in Eq continued (at 509B): "If there are some possible reasonable uses or developments of the land for which a proposed easement is not reasonably necessary, then it seems to me that the easement cannot be 'reasonably necessary for the effective use or development' of the land, at least unless there is some proposed use or development, for which the proposed easement is reasonably necessary, which is itself a reasonable use or development. It may be that the particular proposed use or development would need also to be preferable to the alternatives; but whether or not that is so, it would in my opinion certainly need to be at least reasonable."
It seems likely that this second passage was intended to restate in slightly different terms the same two propositions which had been set out previously. It is not necessary for present purposes to consider that language further.
It is, however, necessary to refer to a passage in Moorebank Recyclers referring to a judgment of Preston CJ of LEC in Rainbowforce Pty Ltd v Skyton Holdings Ltd [2010] NSWLEC 2; 171 LGERA 286.
At [155] the Court said: "In Rainbowforce …, Preston CJ …, gave a relatively wide meaning to the concept of effective use and development (at [72]) stating that if use or development of land for some planning purpose such as residential, commercial or industrial cannot be achieved without the creation of the easement, the easement is reasonably necessary for such use or development to be effective. To the extent that Preston CJ was suggesting that subject to the other matters which he stated required consideration, an easement would be reasonably necessary for the effective use and development of the land if it was required for any proposed development, regardless of the development's desirability or economic effect, the proposition, with respect, is too wide. … In a case such as the present, where the easement is said to be necessary for the commercial development of the land, it is sufficient in our opinion to show that the proposed development is one which is appropriate to the area in which the land is situated and is at least an economically rational use of the land."
This passage contains two propositions which may be noted. First, the passage referred to in Rainbowforce was a statement that if "use or development of land for some planning purpose … cannot be achieved without the creation and use of an easement" apparently meaning, "if there is not any planning purpose which cannot be used without an easement", then the easement is reasonably necessary. That statement would be unimpeachable. The Court in Moorebank Recyclers appears to have read it as if "some" meant "some but by no means all" possible planning purposes. If that were the correct reading, the statement would indeed allow the imposition of an easement in too wide a category of cases. (Unsurprisingly, Hodgson CJ in Eq avoided such ambiguity.)
Secondly, the last sentence quoted was said to be consistent with the passage extracted from Hodgson CJ in Eq in 117 York Street. Accepting that to be so, the tests of "appropriate to the area" and "an economically rational use of the land" might appear to lower the hurdle somewhat, as they are tests which will be readily satisfied in the present case. Thus, it would be difficult to accept that a use which had been approved by a local council was not "appropriate to the area in which the land is situated". Further, it would be difficult to accept that a use which had been proposed by a commercial developer was not "at least an economically rational use of the land."

factors (c) and (d) - effect of proposed easement

The manner of carrying the proposed development into effect will engage a consideration of the need for the easement to allow for the "effective use or development", as identified, of the dominant tenement. That will mean having regard to the effect of the proposed easement on the servient tenement, as explained in Moorebank Recyclers at [117]. That principle was not challenged in the present case. The general principle is that "the greater the burden on the servient tenement, the stronger the case needed to justify a finding of reasonable necessity": at [156]. As the Court in Moorebank Recyclers further noted at [157]: "If the effect of the imposition of an easement was to effectively preclude a reasonably available development or use of the servient tenement appropriate to that land, then it would require a strong case of reasonable necessity before the easement would be imposed."
It is also not in doubt that the nature of the proposed easement must be considered, having regard to the possibility of other methods by which the proposed development could be achieved: Moorebank Recyclers at [158]. In the present case, the developer's land was a double block; the proposed development involved the demolition of existing structures and the construction of a townhouse development involving six units. There was no suggestion but that appropriate steps for drainage were reasonably necessary as an integral part of the proposed development. There was an issue as to whether there was any reasonable alternative form of drainage.

Grounds of appeal; further evidence

The appellant commenced his argument with ground 8, which alleged procedural unfairness in failing to adjourn the hearing on 2 May 2014 to allow the "appellant a reasonable opportunity to read and comprehend the material in the Court Book." The submissions (though not the ground of appeal) raised a further complaint, namely that the trial judge had failed in his obligation to assist an unrepresented party with respect to the steps to be taken in the course of a hearing.
For the purpose of addressing this ground, the appellant sought to read two affidavits of Ms Aven Shi (the appellant's wife) and short passages from three affidavits of the appellant's solicitor, Ms Candice Lau. Ms Lau's first affidavit was tendered on an interlocutory application seeking a stay and expedition of the hearing of the appeal.
Ms Lau's second affidavit identified grounds for the application to receive additional evidence, being the circumstances demonstrating want of procedural fairness at the trial and the availability of material evidence that, in her opinion, "would have affected the outcome of the hearing." Ms Lau's third affidavit annexed a letter from the senior town planner of the Hills Shire Council, dated 16 June 2014. All of the proffered evidence, from which irrelevant material had been excised, should be admitted. Further reference will be made below to its content.
The remaining evidence was contained in the two affidavits of Ms Shi. In part her evidence sought to establish the basis for Mr Shi's complaint of procedural unfairness. The second part of that evidence concerned the ongoing proceedings with respect to a development application that Mr Shi had lodged with the Council which, it was submitted, was directly affected by the easement. Some of this evidence (including the development application itself) was not fresh evidence, as it was in existence at the time of the trial. However, it is convenient to admit the evidence for the purpose of determining whether the trial was infected by procedural unfairness.
At trial, no evidence was proffered from Mr Shi himself as to his competence in English. In the course of the hearing in this Court, after the tender of evidence had been completed, I remarked on separate occasions, first at Tcpt, p 19(22): "When Mr Shi writes his own letter of response at p 28 of the blue book it is in very professional terms, as was the statement prepared by Ms Shi for the judge." And at Tcpt, p 22(30): "There's no affidavit evidence as to what he understood. Given the letter which he wrote to the plaintiff's lawyers himself, I would not make any assumptions about what he did and didn't understand about the commercial aspects of this matter."
At an early stage in the hearing of the appeal, a question was raised as to whether Mr Shi required leave. After lunch, counsel for Mr Shi handed up a notice of motion seeking leave to appeal, with an affidavit from Mr Shi asserting a value of the affectation of the easement imposed on his land, which would render leave unnecessary. The affidavit, in a passage not noted by counsel, stated that Mr Shi "did not prepare or dictate" the letter of 24 July 2013, which was prepared by a lawyer. Mr Shi said he signed it. There was no suggestion he did not understand or adhere to its contents.
The developer sought to tender evidence in response, indicating what documents had been served on Mr Shi and when, in order to rebut the suggestion that there had not been proper notice given to Mr Shi of the case sought to be run by the developer in seeking the easement. There was some limited further material, being correspondence between the Council and the solicitors for the developer, which post-dated the trial. All of this material should be admitted on the same basis as that tendered by the appellant, namely as relevant to the question of procedural fairness.
The other grounds of appeal all related either to the preconditions or the factors to be evaluated in considering whether to make an order imposing an easement. The form of the grounds was somewhat confusing and it is convenient to identify the issues in the following way, which follows the structure of s 88K: (a) adequacy of compensation - (i) whether the appellant could be adequately compensated, and (ii) whether the court ordered an appropriate amount for compensation; (b) consistency with the public interest; (c) whether the easement was reasonably necessary for use of developer's land having regard to - (i) the deleterious consequences for the appellant's land; (ii) the adverse effects on the appellant's current development application, and (iii) the finding that there was no practical alternative to the proposed easement; and (d) the order that the appellant pay the developer's costs.
These matters can be addressed in turn, in accordance with the principles set out above, after disposing of the challenge alleging breach of procedural fairness. However, it should be noted that the oral submissions (other than by reference to procedural fairness) focused on the adverse impact of the easement on the appellant's development application. The ground relating to costs will depend in part on any success on the substantive issues and will be addressed last.

(a) factual background

As the developer noted, the first limb of this complaint (the failure to adjourn) must be assessed by reference to the procedural history of the matter. The summons seeking the order was filed on 5 September 2013. At the first return date, on 29 October, the appellant appeared with his wife and was granted a period of some five weeks to serve his evidence. On 5 December the matter came back to fix a date for hearing. That date, 2 May 2014, was five months in the future. On 15 April 2014 the appellant advised the Court that he would not appear at the hearing; when told that the hearing would proceed in his absence, he told the Court, on 28 April 2014, that he would appear. He appeared with his wife. She made submissions on his behalf, which were addressed by the primary judge.
The appellant complained that, only three days before the trial, he received a voluminous court book which contained "new expert reports and both new [and substituted] material not previously served", amounting to "what was in substance a new case". As will be seen, there was some material which was new but it was not accurate to describe it as a new case. The developer's case was simple and straightforward.
In order to complete the picture, it is necessary to refer to steps taken before the commencement of the proceedings. The first formal communication between the parties appears to have been a letter from solicitors for the developer dated 10 May 2012 seeking a drainage easement approximately 1.2 metres wide to run along the western boundary of Mr Shi's property. Compensation in an amount of $15,000 was offered. It appears that informal communications may have followed, and on 16 July 2012 the developer's solicitors wrote again proposing amendments to the width of the easement, reducing it to 750mm. A new plan was attached. The offer of compensation in an amount of $15,000 was confirmed. Both letters referred to the power of the court to impose an easement in the event that no agreement could be reached between the parties.
On 5 September 2012 a third letter was sent noting that no response had been received, referring to an enclosed valuation assessing the value of the easement at $19,000 and offering the sum of $25,000 by way of compensation. On 18 September Mr Xu of Lawside Lawyers, solicitors engaged by Mr Shi, responded briefly noting Mr Shi's strong objection to the easement and rejecting the offer of compensation. A further letter repeating the offers was sent by the developer's solicitors to Mr Shi's solicitors on 8 October 2012. A lengthy reply was sent on 9 October 2012 which did not contribute much by way of rational discourse.
The material before the Court did not disclose further communications until 11 July 2013, two days after council approved the developer's development application. The approval, communicated to the developer in writing on 12 July 2013, constituted a deferred commencement consent granted subject to the following condition, namely "[t]he creation of a 1 m wide drainage easement over the downstream property [at] 15 Blenheim Road."
On 11 July 2013 the developer's solicitors wrote again to Mr Shi's lawyers noting the grant to their client of development consent, subject to obtaining the proposed easement. The offer of compensation was increased to $35,000. A further letter from Lawside Lawyers dated 12 July 2013 advised that "new instructions" would be sought but made "a few initial points" in advance of those instructions. For the purpose of obtaining instructions, "all documents in relation to the consent from Hills Shire Council for the proposed development" were sought. However, three days later, a brief letter advised that Mr Shi would now deal with the matter directly.
On 24 July 2013 Mr Shi wrote personally to the developer's lawyers. He referred to previous correspondence between his solicitor and the developer's lawyers. He suggested that other properties could provide the relevant easement. He stated that he was a builder and had plans to develop his property that did not require the land of adjoining landowners to be used. He continued: "These plans would be adversely impacted if the easement sought is granted to your client. I have never been offered sufficient compensation to grant the easement sought by your client considering the amount of the land covered by the easement, let alone the impact the grant of easement would have on the capacity to develop my property and maximise its value." A number of alternative proposals were put, including a payment of compensation of $250,000 plus costs. Mr Shi also offered to purchase their client's property or to sell his property to them. He asked that the developer "reverse it's [sic] refusal to develop the land together due to greater public interest", noting that he was "willing to accept proper compensation to resolve these issues" whilst reserving his rights with respect to satisfaction of s 88K.
This was an articulate and businesslike letter, from a person having good command of the English language. There was no evidence that it was written by anyone other than Mr Shi; nor that, if he did obtain assistance in writing it, its contents were not well understood by him. Further, in April 2014, in the two weeks prior to the hearing, there were email exchanges between the Registrar of the Equity Division and Mr Shi giving every appearance that he had an adequate command of English, being sent at a time when he was unrepresented.
In an affidavit filed for the purpose of this proceeding and dated 30 May 2014, Ms Shi asserted that her husband's English was "very poor." She described herself as "proficient in basic English." She noted that she and her husband had retained a solicitor, Mr Xu, who "wrote several letters on our behalf to the plaintiff's solicitor" and advised us that we could "refuse the plaintiff's easement." She said that after Mr Xu sent the letters they did not hear from the plaintiff's solicitor for a few months, nor receive any letters. Notably, she did not refer to her husband's letter of 24 July 2013, nor to the reply from the developer's lawyer of 1 August 2013. That letter set out all of the matters which had been dealt with in the solicitors' correspondence prior to that time. It included an offer of compensation in the sum of $40,000. It further stated that, in the absence of consent by Friday, 9 August 2013, the solicitor had instructions to commence proceedings.
Ms Shi stated that she and her husband attended court in December 2013. She apparently understood the plaintiff's solicitor to have sought time "to do something", but did not understand any requirement that she and her husband "file any documents." She said that she did not understand what it meant "to serve evidence." The narrative in the affidavit then picked up the chronology at 15 April 2014.
This history was selective. It did not state how the Shis came to attend court. It did not refer to the personal service of the developer's summons, which occurred on 18 October 2013. It did not refer to the letter of 23 October 2013 which stated: "We confirm that the matter is listed for directions in the Supreme Court of New South Wales at 9:00am on Tuesday, 29 October 2013 at the Law Court Buildings, Queens Square Sydney NSW 2000. In this regard, your appearance is required on this date. In the event you fail to appear, the Court may make orders in your absence, which may include setting the matter down for hearing. If you have any trouble understanding the Summons or require assistance in replying, we recommend that you obtain legal advice as soon as possible."
Ms Shi's affidavit did not refer to a letter dated 5 December 2013 sent to her husband by the developer's solicitors, immediately following the hearing in the Supreme Court before the Registrar on that date, setting out the orders made, including that the matter was listed for hearing on 2 May 2014 at 10am. The letter continued: "We also note that your wife submitted to the Registrar that the parties should be provided with an opportunity to attend an informal settlement conference. In an attempt to resolve this matter quickly, justly and cheaply, our client intends to have all of its evidence in reply served on you by 13 December 2013. This additional evidence will address the issues raised in your letter dated 27 November 2013. Accordingly, we propose to convene an Informal Settlement Conference at our office for approximately one (1) hour between 16 December 2013 and 20 December 2013." There was no letter of 27 November 2013 in evidence: it is possible the writer was referring to the letter of 27 July 2013 in which Mr Shi raised a number of issues, noted above.
Although Ms Shi, later in her first affidavit, implied that nothing had been received between the hearing on 5 December 2013 and a letter of 15 April 2014, in her second affidavit (sworn the following working day) she attached a copy of a letter dated 24 December from the developer's lawyers to Mr Shi and the annexed draft affidavit of Ms Wehbe and Mr Staltari, together with the sworn affidavit of Mr Mark Yum (solicitor) which was "re-sworn" in May 2014.
The only explanation given for Mr Shi appearing unrepresented before the trial judge was that, in July 2013, his then solicitor Mr Xu had said to Ms Shi, "I can not help you anymore with this matter." Although Ms Shi said she did not know "how to find legal help", she (or her husband) had found Mr Xu when they needed him and found the solicitors acting on the appeal and had given instructions within 16 days of the judgment being delivered. She also asserted in her affidavit, somewhat inconsistently with the suggestion that she and her husband had been unwillingly deprived of legal assistance, "I thought that I could rely on the judge to help me run the case." That proposition was also inconsistent with the statement that she did not realise that the final hearing was the hearing at which evidence and argument would be presented. She did not say that she did not understand the content or the significance of the expert reports served on her husband: rather, she said that she hoped they "would have another chance to get our own reports." That statement was entirely consistent with an understanding of a "chance" foregone. Her second affidavit continued, stating that if she had known then what she now knows she would have "asked for an opportunity to reply to the experts" on the following issues: "a. An engineer to answer Ms Wehbe's report, and to demonstrate that it was possible to place an easement over 17 Blenheim Road, 17A Blenheim Road or possibly over all three (3) properties to reduce the impact of the easement on our property. b. A valuer to answer Mr Staltari's report including the 90% factor adopted at page 12 of his final report and the date and sample of comparison properties used. c. A town planner to answer Mr Byrnes' report and to show that there was a reasonable alternative development of 50 Felton Road without the easement over our property."
Despite this being an appeal by way of rehearing, no evidence of this kind was presented to this Court. The significance of its omission will be addressed below.
In addition to the material sent in October and December 2013 to Mr Shi, Mr Yum sent a letter dated 11 April 2014 which read as follows: "We refer to the above matter and reiterate to you that the matter is listed for one (1) day hearing on 2 May 2014, where these proceedings will be heard to finality. We will be preparing a court book which will contain all pleadings and evidence relied upon by each party. … Accordingly, please confirm whether or not you intend to rely upon any additional evidence in these proceedings, other than the documents you send [sic] to us in November 2013, by no later than Tuesday 15 April 2014. Any Application to adjourn or release the hearing date will be vigorously opposed in circumstances where this matter has been in Court since September 2013, and you have been provided with ample opportunity to put further evidence on."
On 15 April 2014 Mr Yum wrote again enclosing a copy of the index of the court book and stating: "We note you have not indicated that you intend to rely upon any additional evidence in these proceedings nor served any defence in this matter. Accordingly, we propose to file the Court Book in the Court by 17 April 2014. If you require any further documents to be included, please advise before 10am on Thursday, 17 April 2014." The letter repeated the final paragraph set out above from the letter of 11 April.
On 24 April 2014 Mr Shi was sent a copy of the plaintiff's outline of submissions of the same date. A hard copy was sent four days later.
On 3 April 2014 Mr Yum sent copies of the Wehbe and Staltari affidavits, sworn on 2 April and 5 March 2014 respectively, noting that they did not differ in content from the unsworn affidavits served in December 2013.
On Tuesday, 29 April 2014, three days before the hearing, three further affidavits were served, being a supplementary affidavit of Mr Staltari; an affidavit of Mr Byrnes and a supplementary affidavit of Ms Wehbe. Mr Staltari had provided an assessment of reasonable compensation. The variations to his original report were more by way of clarification than providing any different outcome or methodology. The original calculation had been based upon a one metre wide easement, the 2014 valuation used a 900mm easement alongside the wall of the existing dwelling with one metre thereafter or a 900mm easement throughout the course of the property. The calculations differed by $100: the trial judge adopted the earlier (and higher) calculation.
Ms Wehbe's supplementary opinion of 29 April 2014 was a brief eight paragraph document which noted that the one metre easement was a minimum size for 150mm pipe, as provided by the council's "design guidelines", a copy of which was attached. Ms Wehbe expressed an opinion that eaves "over the airspace of the stormwater easement" would encroach. She also expressed a view that the granny flat would also "technically encroach". None of this was significant. An engineer's opinions as to matters of law could not be helpful and certainly did not call for contradiction.
Mr Byrnes' report was new. He was a town planner. His affidavit and related material extended over 100 pages. Of those, approximately 90 pages constituted a "brief". Most of that material appears to have been irrelevant. Mr Byrnes' opinion was sought with respect to two questions: the first was whether the proposed easement affected the development potential of Mr Shi's property. He referred to the plans for the "granny flat" (which had already been constructed) and Mr Shi's current proposal before Council. He expressed the view that "the proposed easement is appropriately located and will not effect [sic] the development potential of 15 Blenheim Road". The second question posed for Mr Byrnes was whether the proposed use of the developer's land was "consistent with the public interest". He noted the steps, including public exhibition and community consultation through which the development application had proceeded, noted that the land was zoned for medium density development and that there was other medium density development within close proximity and concluded that the proposed use was in the public interest.
In short, there was nothing in the new documents which could not have been identified and considered in the time available to Ms Shi.

(b) legal principles

Before assessing the significance of the circumstances set out above, it is necessary to address two issues of principle. The first is that the relevant aspect of procedural fairness called in question on this appeal is the right of a party to be given an opportunity to be heard. That includes prior notice of the issues to be addressed, an opportunity to call evidence, an opportunity to make submissions and the right to have his or her evidence and submissions given appropriate consideration by the decision-maker. Whether such opportunities have been made available is a different question from whether they have been availed of. A party who has a reasonable opportunity to present his or her case and fails to make the most of it cannot later be heard to complain that there has been procedural unfairness.
Different considerations may arise where, for example, the judge has misled a party into a false assumption that a particular point would be decided in his or her favour. That leads to the second point of principle, relied on by the appellant, and derived from the judgment of the High Court in Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141. The point relied on was that where one party has been denied procedural fairness, that party will not be denied relief unless the court is satisfied that "a properly conducted trial could not possibly have produced a different result": Stead at 147. This point was relied upon in the present case to deny the relevance of the appellant's failure to proffer expert evidence to contradict the developer's experts, where that omission suggested that there was no procedural unfairness in a practical sense. That challenge echoed the language of Gleeson CJ in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6; 214 CLR 1, noting that "the concern of the law is to avoid practical injustice" and that in the circumstances of that case, "[n]o practical injustice has been shown": at [37]-[38].
However, with respect to both authorities, it is important not to take statements made in the High Court out of context and apply them in situations to which they were not intended to operate. Stead did not involve judicial review of an administrative decision, nor even an appeal limited to a question of law, being the usual categories of case in which procedural unfairness is relied upon. Rather, it involved an appeal by way of rehearing, as did the present case. Procedures available on an appeal by way of rehearing include the tender of further evidence, not necessarily limited to "fresh evidence", the latter being evidence not reasonably available at the trial: Supreme Court Act 1970 (NSW), s 75A(7) and (8). However, Stead was not a case in which further evidence was omitted because one party was reassured by a statement by the trial judge that such material was not necessary: cf Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; 204 CLR 82, where a statement by the Tribunal that certain material was before it misled the claimant into believing that he did not need to present that material. In Stead the question was whether a motor accident had triggered a psychiatric condition. A practitioner, Dr Scanlon, called by the defendant said that the accident had not triggered the condition. The judge told counsel for the defendant that he thought causation was established. He then told counsel for the plaintiff that he did not accept Dr Scanlon. Plaintiff's counsel accordingly addressed no further on the acceptability of that evidence. In giving judgment, the trial judge did, however, accept that evidence. Because acceptance of the testimony was self-evidently contestable and contested, the question as to what arguments counsel might have put if not deflected by the trial judge was not the focus of consideration. Rather, the point highlighted by the High Court was that the Full Court of the Supreme Court of South Australia on appeal was not in a position to assess the acceptability of the witness' testimony, not having heard or seen the witness give evidence. Referring to the reasoning of the principal judge in the Full Court, the High Court said at 146: "It is significant that Bollen J, after referring to 'the forcefully and attractively presented arguments' of Mr Anderson for the appellant, made this comment: '... they were arguments fit for offering to the trial judge but not on appeal. There was evidence which could have led to the rejection of Dr Scanlon's opinion. But it was for the trial judge to say. He had the inestimable advantage of seeing and hearing the witnesses.'"
In Stead, there was no question but that there had been procedural unfairness: the trial judge had effectively stopped counsel from addressing on a point, indicating that he was in the plaintiff's favour on that question, only to find against him in his judgment. The question was whether relief should nevertheless be refused. On the other hand, where one party has made a forensic decision not to call evidence, but in circumstances where such evidence might be tendered on appeal, the failure to proffer any evidence on appeal is not simply a ground for refusing relief, it is a ground for rejecting the proposition that there has been procedural unfairness.

Chronologically, the first basis of complaint was that Mr Shi did not know what was required of him prior to the hearing on 2 May 2014. The only basis upon which that contention could be supported was the evidence of Ms Shi. However, on the basis of the material set out above, that contention cannot be accepted. The solicitors for the developer were meticulous in giving written notice of the steps being taken in the proceedings, the directions given, the fact that the hearing was a final hearing and the need to provide evidence in advance, not the least for inclusion in the court book. The vague statement by Ms Shi that her husband's English was "very poor" is not sufficient to establish that he did not understand (a) the nature of the proceedings, (b) what was required of him if he were to defend the proceedings and (c) the times at which such steps needed to be taken. Although in his affidavit prepared during the hearing in this Court Mr Shi asserted he does not "speak English well or read it well" (or, it may be inferred, write it well) that did not affect the conclusions noted above. Nor can it be accepted that he did not have the ability to obtain such legal advice as he wanted. If he were misled by legal advice into a belief that the Court would simply not make the order sought in the circumstances of the case, he gave no evidence to that effect. Nor did his wife expressly state what legal advice they had been given. The fact that Mr Shi was not fluent in English (if that be the case) is no answer to the lack of evidence from him. Evidence is given in the courts on a daily basis through interpreters. Furthermore, the letter he signed on 25 July 2013 and the emails between the Registrar and him demonstrate a sufficient understanding of the issues and the procedures to contradict any complaint of procedural unfairness on the basis of pre-trial ignorance.
The history set out above demonstrates that the appellant had every opportunity to obtain such advice as he required and, if he did not, take such steps as he saw fit to prepare for the trial. That he did not avail himself of that opportunity does not demonstrate that there was any procedural unfairness. The matter was entitled to a degree of expedition, although it did not come on for hearing until six and a half months after the proceedings were commenced. Both before and after the commencement of the proceedings, there was a series of communications between the lawyers for the developer and lawyers then acting for the appellant and, later, from the appellant himself.
The second stage at which unfairness is said to have arisen is in the course of the trial. There were a number of passages in the transcript relied upon as support for the proposition that Mr Shi was given inadequate assistance by the trial judge. When he attended at Court, Mr Shi identified himself as the defendant; when asked whether he spoke English he said "A little bit" but indicated that his wife was with him: Tcpt, 02/05/14, p 2. The judge asked if she would be translating for her husband to which she replied: "We do it together. I just interpreting, we can discuss together. I can talk."
Counsel for the developer said that it appeared to be "a Mackenzie friend situation" which they did not oppose. The judge then asked Ms Shi if she had received the court book: she said they had received it on Tuesday afternoon, "so I didn't have enough time to go through this one." The judge then suggested that the papers had been received on earlier occasions to which Ms Shi was able to respond, "Yes, some of them. But some of them is the first time": Tcpt, p 3(4). The judge then noted that counsel for the developer would be able to identify for both Ms Shi and the Court which material was new and noted that he proposed to adjourn at 10.30am until 1.30pm, which would allow her a chance to look at the new material. The judge then said (referring to counsel for the developer): "Mr Parsons is giving you his outline of submissions, which you can read. What I suggest you do Mrs Shi is just listen to what Mr Parsons has to say until we adjourn this morning, and then you have from 10.30 until 1.30 to continue to look through that document to the extent you need to, and to look at Mr Parsons' submissions, but you will be able to listen to everything Mr Parsons has to say and then I will give you an opportunity to respond. So you won't have to say anything until after we come back at 1.30, but if you or your husband have any questions about what is happening, or you do not understand something, would you please let me know. Just simply interrupt Mr Parsons, in a polite fashion, and let us know so we can explain, so you and your husband can understand what is happening."
In telling Ms Shi that she would have an opportunity to read the outline of submissions for the developer, the judge spoke in ignorance of the fact that the document had been sent to Mr Shi in advance of the hearing. Before the Court adjourned, the judge asked Ms Shi if she had any evidence, any affidavits or other material that she wished the Court to look at, to which she replied, at Tcpt, p 10(45): "I prepared a statement, but probably if I just go through this document for a while during the break, and then come back."
Immediately before the adjournment, Mr Parsons noted that Ms Wehbe had been in attendance, as she was thought to be the most significant witness, although they had received no notice for cross-examination. The judge (at p 11(25)) then asked Ms Shi, "Do you want to ask any questions of any of the witnesses from the plaintiff?" Ms Shi responded: "I just base on their report, so that will probably - if they want to leave, that's okay."
Ms Shi's evidence in this Court did not state that she did not at that stage understand what was going on: in light of her responses to various questions, it is implausible that she did not. Nor did she say that she did not have ample opportunity to discuss what was being said with her husband over the adjournment. The following exchange took place on return to Court, at Tcpt, p 12: "HIS HONOUR: Firstly, I should ask Mr and Mrs Shi, is there any part of the evidence which the plaintiff proposes to rely upon to which you object? Is there any part of this material you say I should not read? MRS SHI: For this one I think they are all the same because they repeatedly state the same statement. So knowing that is wrong and also the valuation always very low and that they never mention they tried other options. So very consistent in all the reports and I think there is some misleading the Court and they also have - they knew the facts already. They didn't tell the facts. HIS HONOUR: Mrs Shi, what I understand you are saying at the moment to me is why you oppose the orders. But I will take it that you don't actually object to my reading their material, but you don't agree with it? You do not agree with what they say? MRS SHI: Yes, I don't agree. We don't want them to build easement."
There is a complaint that, immediately the trial judge was told that they had not had a sufficient opportunity to read the material in the court book, they should have been offered the opportunity to seek an adjournment. However, as can be seen from the matter set out above, that issue simply did not arise. First, Ms Shi was already conscious of the fact that some material was new and some was not. As has been explained, very little was new in terms of substance, although it may have taken a few minutes to work out where, in the annexures to Mr Byrnes' affidavit, his short report was to be found. Nevertheless, at no stage did Ms Shi indicate that she was confused about that. Nor did she say that she did not know what was happening. The short extracts from the transcript set out above indicate that the trial judge was conscientious in giving Ms Shi an adequate opportunity to represent her husband. Ms Shi did not give evidence in this Court that she did not understand she could seek an adjournment if she wanted one. Indeed, such an explanation would have been implausible because the correspondence from the solicitors for the developer had anticipated that possibility on more than one occasion (and indicated that any application would be opposed).
Counsel for the defendant addressed the Court on the evidence and the issues, up to Tcpt p 32(45). The judge then turned to Mr and Ms Shi and gave them an opportunity to say why they opposed the grant of the easement. With discussion between the judge and both parties, Ms Shi's submissions continued to Tcpt p 43. Following further submissions by counsel for the developer, an undertaking was offered to support any development application put to Council by Mr Shi seeking to build up to 900mm from the boundary. Both Ms and Mr Shi then expressed their concerns about the easement regardless of support for their development application, on the basis that it would inflict costs upon them, that there would be arguments in the future, that there would be leakage and questions of responsibility: Tcpt, p 50. At the end, after judgment was delivered ex tempore, Ms Shi was invited to address on the question of costs.
At the end of her submissions to the trial judge, Ms Shi made a final statement about the court book and the fact that she "did not have any chance to look through this document" which she received on Tuesday and she "did not have enough time to go through it": Tcpt, p 42(40). Again the judge checked that the affidavits had been served much earlier than last Tuesday to which Ms Shi replied, "Yes. Some of the documents, yeah, they provided before but there was some recent, I didn't go through as I didn't have the time to go through it. I just didn't have the time to go through it."
Again the submission for Mr Shi in this Court was that the judge should have understood this as a request for an adjournment which should have been granted. However, by that stage the judge, as well as Ms Shi, had had ample opportunity to consider what material was relevant, what was new and what had been served some months before. Further, the complaint was one to which the judge had been alerted at the outset of the hearing. In the circumstances which have already been outlined, there was no unfairness in failing to offer Mr Shi an adjournment at that stage.
For these reasons, the complaint of procedural unfairness has not been made good. Ground 8 must be rejected.

Adequacy of compensation

Ground 6 complained that the judge erred in holding that the appellant "can be adequately compensated for any loss or other disadvantage that would arise from the imposition of the easement". It further alleged that he had erred in determining the quantum of compensation.
Section 88K(4), as the judge noted, requires a finding of the kind made: s 88K(2)(b). The assessment of compensation is to be made in such amount as the Court considers appropriate: s 88K(4).
The appellant's submissions did not ultimately provide any substantial reason for thinking that an easement of the kind ordered could not be the subject of adequate compensation. They turned on an assumption that the proposed easement would "sterilise" his land, or at least significantly diminish his capacity to develop it profitably. The trial judge was not satisfied that that was the case, based on his understanding of the effect of the easement, which may not have been shared by the Council's senior town planner, but was correct as a matter of law. For reasons explained below, the degree of adverse affectation, and the scope for misunderstanding can (and should) be reduced. Further, on the evidence before the Court, the judge was entitled to award compensation in the amount he did. Ground 6 lacked substance.
The developer's expert valuation evidence supported the same award being made for an easement with the reduced width proposed below.

Not inconsistent with public interest

Ground 4 challenged the finding that the development of the dominant tenement was "in the public interest", based on the Council's grant of consent, so that s 88K(2)(a) was satisfied: at [25]. In fact, the finding made by the trial judge, reflecting the statutory test, was that the use of the developer's land "will not be inconsistent with the public interest". An applicant may seek an order imposing an easement in circumstances where a particular use or development has not been considered by the relevant consent authority under the Environmental Planning and Assessment Act 1979 (NSW). However, that was not this case. Where there is an existing consent given, it may be assumed in the absence of evidence to the contrary, after consideration of the matters set out in s 79C of the Environmental Planning and Assessment Act, that would usually be a highly material and possibly decisive factor demonstrating that the proposed development was not inconsistent with the public interest.
If that were wrong, it would raise significant concerns as to coherence within planning law. As stated in a leading English text, K Gray and SF Gray, Elements of Land Law (OUP, 5th ed, 2009) at [5.1.50]: "The insistence on strict definitional parameters in the law of easements tends to conceal, just as effectively today as it did over a century ago, that the crucial issue at stake is often the boundary of permissible commercial initiative in the exploitation and development of land resources. The recognition of easements of a vague or unlimited character threatens to impose significant limitations on the entrepreneurial exploitation of areas of servient land and, for this reason, may once have seemed contrary to the public interest."
As the authors go on to note, "the community interest in industrial or commercial development is counterbalanced by a wider concern for the enhancement of the environment and the preservation of residential amenity." Nevertheless, it is precisely these conflicting interests which are to be resolved by the institutions and according to the scheme enacted by the Environmental Planning and Assessment Act. There is no reason to suppose that a court exercising powers under s 88K is required to reconsider any conclusion reached as part of that process, or to anticipate the appropriate conclusion in circumstances where development consent has not yet been given.
There was no material placed before the primary judge to warrant a finding that a well-known form of residential development, within an appropriate area, would be inconsistent with the public interest. It followed that the judge was entitled to find, as he did at [25], that the approval of the consent authority supported that state of satisfaction.

Whether easement "reasonably necessary"

Given that the proposed development satisfied the preconditions in s 88K(2), it is convenient to turn next to the question as to whether the easement was "reasonably necessary" for the proposed development. That issue was tangentially addressed in two grounds of appeal: ground 5 merely stated generically that the judge erred in holding that the proposed easement was reasonably necessary for the effective use or development of land having the benefit of the easement. Ground 7 did no more than generically assert error in imposing the easement. It did not raise any separate issue and did not enjoy separate consideration in the appellant's submissions. However, ground 4 stated: "4 The primary judge erred in holding that the fact of council consent is a basis for concluding that the proposed development is appropriate and/or an economically rational use of the appellant's land…."
It is true that the primary judge accepted that the development was an appropriate one, referring to the standard fixed by Moorebank Recyclers at [155], on the basis that the council had given its consent: at [11]. Section 88K(1) requires that the easement be reasonably necessary "for the effective use or development of" the developer's land. The kind of factors which may indicate that a particular proposal will not give rise to an effective use or development of land would need to have regard to planning standards, development controls and similar considerations. The fact that a responsible consent authority had considered and approved the proposal was a legitimate fact to be taken into account in making that assessment. There was nothing before the primary judge which cast doubt upon that basis of satisfaction.
It is convenient to turn next to the first two grounds of appeal which may be thought to encapsulate the real basis of the challenge to the decision below. They may be set out in full: "1 The primary judge erred in finding that there is no significant deleterious consequence for the appellant's land if the proposed easement is granted and/or in failing to have any or any sufficient regard to the impact of the order proposed on the appellant's reasonable property rights with respect to his land. 2 The primary judge erred in finding that there is no reason that the proposed easement should prevent the appellant from being able to build in accordance with his current development application."
It is not in doubt that the primary judge had regard to the foreseeable adverse consequences to the appellant consequential on the imposition of the easement. Quite apart from any other consideration, he set out and accepted the calculation by an expert valuer of the appropriate compensation payable for the easement, being an amount of $21,500. While the amount of compensation or the ability of the appellant to be adequately compensated was subject to challenge in ground 6, the fact that a significant amount was awarded contradicted the assertion that the judge had concluded there was no significant deleterious effect.
At the heart of the appellant's substantive case was the complaint that the judge had misunderstood the consequences of the easement for the proposed development of Mr Shi's land. In particular issue was taken with the statement that "it is difficult to identify any significant deleterious consequence for 15 Blenheim Road if the proposed easement is granted": at [14]. The judge continued: "The proposed easement will relate only to the surface of the land and the subsurface. It will not impinge upon the use of the set back area for any other purpose. In particular, because (but for 100 millimetres) it is confined to the set back area, it will not be sterilising a part of 15 Blenheim Road which would otherwise have been available for building development."
The trial judge set out, at [15], advice given by the council to Mr Shi's wife with respect to the possible consequences of the proposed easement, in the following terms: "What happens at the Court hearing will definitely impact on how your current DA proceeds…. If the easement is granted by the Court over your property, the dwelling at the front will need to be amended to ensure it does not encroach (this includes the eaves)."
The judge inferred that the council would take the easement into account in considering the appellant's development application but did not take it as proof of anything much more than that: at [16]. Contrary to the appellant's submissions, he inferred that it would be possible to avoid any need to amend the application. He considered that the adverse effects on the application would be accommodated by an indication of support from the developer which was proffered (and imposed as a condition of the grant) in the following terms, at [19]: "The Plaintiff undertakes to the Court that it will support to Hills Shire Council the approval of the scheme of Development contained and shown in the attached drawing, notwithstanding that it may encroach on the strip of land affected by an easement for drainage 1 m wide at the western Boundary of 15 Blenheim Street, Carlingford."
The form of the orders did not include the requirement for the undertaking, but noted that the undertaking had been given to the Court on 2 May 2014 in the form set out above.
In support of the challenge to these findings, Mr Shi tendered evidence of an email from the senior town planner, dated 24 June 2014, to the following effect: "Further to recent correspondence I wish to advise that your application was put before an internal review panel yesterday. Given the current status of the drainage easement, you have two options for the DA: 1. Have the DA determined in its current form which will be a recommendation for refusal 2. Amend the plans so that no proposed works encroach into the easement (Note. The existing dwelling to the rear can remain as is)."
As to the finding set out at [78] above, the appellant submitted that this conclusion was dismissive of the adverse effects of the easement so far as it impinged on the strip 100mm wide beyond the set back area. Further, he submitted that the trial judge had similarly been dismissive of the consequences of the easement for his own development application.
There is some merit to the appellant's complaint that he is caught between the court order and the apparent position of the council, at least as reflected in the views of its senior officer responsible for town planning. However, in a sense it is a dilemma also faced by the developer. These circumstances might be avoided if the issue had arisen in a forum in which the validity of a council imposed condition of consent could be challenged before a court capable of dealing with an application for an easement under s 88K. In fact the Land and Environment Court has power to undertake both exercises: Land and Environment Court Act 1979 (NSW), s 40. However, that is not available in the present circumstances.
The appellant's concerns as to the effects of the easement on his land were based on two circumstances. The first was that, on the rear portion of his block abutting the developer's land, Mr Shi had a "granny flat". That structure extended a distance of 900mm from the western boundary of his land. That distance reflected the compulsory "setback area" required by the council in respect of residential development. Mr Shi was concerned that the existing building would therefore impinge on the easement. Secondly, he had a development application of his own before the council which involved the construction of "garages, a hardstand and some other structures" on his land. Again, the proposed structures would extend to 900mm from the boundary, and would impinge on the proposed easement.
As the trial judge expressly noted, he was required to address the issue with limited information as to how the council would address the issue: at [18]. Further, he treated the developer's offer to "support" the approval of the scheme of development proposed by Mr Shi as dealing with Mr Shi's concern. If the development proposed by Mr Shi were to impinge on the easement, it may well be that the developer's consent as a co-owner would be required in any event. What would be constituted by the promise of "support" is by no means clear. Nor is it clear how the "support" of the present owner of the dominant tenement could affect the rights and interests in property created by the easement.
There is, however, a different mechanism for addressing each of the concerns expressed by Mr Shi. The first relates to the width of easement. As one of Ms Wehbe's reports indicated, in order to lay a drainage pipe of 150mm (as proposed) an easement of 750mm would suffice. There was, in engineering terms, no suggestion that an easement in excess of 900mm was reasonably necessary. The seeking (and grant) of an easement of one metre appears to have resulted from Ms Wehbe's evidence that such a width was required by the council for the purpose of granting the development application. The basis for this is only available to this Court in the form of a statement by Ms Wehbe in her second supplementary report of 29 April 2014, par 3, in the following terms: "The minimum easement width is 1 metre for a 150mm pipe diameter as stated by Council (refer to attached extract from the Hills Shire Council Design Guidelines subdivision/developments September 2011 Table 4.2)."
The table which is attached supports the statement: its regulatory effect is not known. For example, the terms of the relevant Development Control Plan 2012 do not contain such detail. Once satisfied that such an easement over land is, in broad terms, reasonably necessary, there would need to be persuasive evidence that a regulatory requirement that it be no less than one metre in width had effect in order to justify an easement in excess of 900mm, or even 750mm, which the engineering evidence would consider sufficient.
The second issue for Mr Shi is the question of overhanging eaves. It is clear from the "support" to be given to the current development application lodged by Mr Shi that the developer does not require an easement which would extend to the height of the eaves. On the other hand, the trial judge considered that the easement affected only the surface and subsurface of the strip of land. While an easement for drainage of water allows the owner of the dominant tenement to drain water "through each lot burdened, but only within the site of this easement", the entitlement to do anything necessary for that purpose, including entering the servient tenement, is not restricted to the site of the easement. Accordingly, there is no need for the easement to include an area above the ground where it is not intended that any pipes will run. So far as it is possible to read the plans, the distance from the ground to the eaves is approximately 2.8 metres. Any concern that the eaves impinged on the easement could be resolved by identifying the easement as not extending above ground level and the need for access as not exceeding a height of 2.5 metres above the easement.
Whether such a condition is necessary is by no means clear: the belief of the engineer and the council that eaves overhanging an easement for drainage would infringe such an easement would appear to be legally erroneous. The trial judge appears to have assumed that they were erroneous. Certainly it could not be concluded that an easement extending above that height was reasonably necessary. Accordingly, in each of these respects, the order made by the trial judge requires variation.

Absence of practical alternative

Ground 3 stated that the judge erred in finding that there was "no sensible alternative from a practical point of view to the proposed easement running down the western boundary of the appellant's land."
This matter was dealt with by the trial judge at [21]-[23]. The judge had before him evidence from a planner and an engineer in support of the proposition that there was no reasonable alternative to the proposed easement proceeding along the western boundary of Mr Shi's land. The judge noted the state of development on both the eastern and western boundaries of the adjoining blocks being 17 and 17A Blenheim Road. There were structures in the path of a pipeline being laid on either boundary, which were absent from the western boundary of number 15, which was therefore the preferred site.
Submissions for the appellant suggested that the judge had in fact adopted views of Preston CJ in Rainbowforce which had been rejected in Moorebank Recyclers in this Court. However, in relation to this issue, the discussion of Rainbowforce set out above was inapposite. On the evidence before the trial judge the conclusion reached was correct.
There is, of course, a sense in which, where there are feasible alternative courses available to the developer, neither is reasonably necessary. However, that is an impractical result which does not accord with the purpose of the statute. On the evidence before him, the primary judge drew the correct conclusion.
Apart from concerns as to the effect on his own development application, the suggestion that the trial judge erred in finding there was "no sensible alternative" lacked substance. The evidence before the judge, which in this respect was unchallenged, concluded that any multi-dwelling development of the developer's land would require a mechanism for disposing of storm water to the closest downstream council drain. That required traversing one of the downhill properties. The alternative proposed by Mr Shi was traversing two separate properties. There was no evidence to suggest that, apart from the difficulties of negotiating with two owners instead of one, the physical constraints, given the existing state of development of those properties, would be any the less. In the absence of such evidence, the judge did not err in thinking that the location of the proposed easement was to be preferred.

Costs

Ground 9 challenged the order of the trial judge that Mr Shi pay the developer's costs of the application. As the judge noted, s 88K(5) provides that "the costs of the proceedings are payable by the applicant, subject to any order of the Court to the contrary." In support of an order to the contrary, the developer tendered the correspondence discussed above, making various offers of payment of compensation to Mr Shi in respect of the proposed easement. The last offer before the commencement of the proceedings was in an amount of $40,000, which was followed by a Calderbank letter offering $30,000, shortly after the proceedings were commenced.
The judge considered that the refusal of these offers, which were significantly in excess of the amount determined in the proceedings as payable by way of compensation, warranted an order that Mr Shi should pay the applicant's costs on the ordinary basis: at [44]-[45]. In reaching that conclusion he accepted a submission by the developer's counsel that the power recognised in s 88K(5) to order otherwise "can be exercised by parity of reasoning with the way the Court would approach costs against the background of the general rule … that costs follow the event but a Calderbank offer has been made": at [43]. Applying that analogy, he concluded that Mr Shi's refusal of the offers was unreasonable.
The analogy proposed by counsel should not have been accepted. This proceeding was not a claim for damages, or any analogous form of compensation: it was a claim for an interest in property, for which appropriate compensation was required to be paid. The ordinary rule, that the applicant pay the costs of any proceeding, reflects the fact that an applicant for such an order has no right to the grant of an easement over the property of another. Further, the rule that the applicant pay the costs relates to proceedings which could only be brought after all reasonable attempts had been made (presumably by seeking agreement) but have been unsuccessful. The statutory scheme is not consistent with the proposition that an applicant can obtain a right to costs by offering more than the compensation ultimately ordered to be paid as a condition of the easement. The property owner is entitled to refuse to consent to the easement, thereby requiring the applicant to satisfy a court as to the various preconditions, including questions of the public interest, and that the grant of the easement is reasonably necessary in the sense provided by the section. Unless it has done more than reject reasonable offers of compensation, the property owner should not be put at risk of an adverse costs order in those circumstances. The proper order was to require the applicant to pay Mr Shi's costs of the proceedings, limited to the costs recoverable by a litigant in person. Those costs would not extend to the legal costs incurred prior to the commencement of the proceedings.

Costs of the appeal

While Mr Shi has obtained a degree of success in having the costs order against him set aside and in having the terms of the easement varied, he has failed in having the orders set aside entirely. The only orders sought in the notice of appeal (otherwise than as to costs) were that the appeal be allowed and the proceedings brought by the developer be dismissed. Given that each party has been successful in part, it is inappropriate to make any order as to the costs of the appeal.

Conclusions

The proposed variation would reduce the easement to 900mm, which would fall within the "setback area" on the boundary of Mr Shi's land within which, it was common ground, the council would not have granted development consent for building works. It appears that the council would approve a building with eaves overhanging the setback area; however, according to the senior town planner, it would not approve a development where the eaves impinged on an easement for drainage. The developer did not contend that (apart from compliance with the condition of council's consent) it required a one metre easement to carry out the drainage works, nor would such a width be required for maintenance and repair to the drain once installed. Further, it had no objection to Mr Shi constructing a building, the walls and footings of which did not impinge on the easement, but which had overhanging eaves. Accordingly, the terms of the order make clear that the easement does not extend to a height at which the eaves would impinge.
One consequence of this result is that the developer will not have complied with the terms of the development consent. It may need to return to the Council to seek a variation under s 96 of the Environmental Planning and Assessment Act. If it fails to obtain a relevant modification, it may need to bring proceedings in the Land and Environment Court. That Court would have had power to determine the appropriate terms of a development consent and to impose an appropriate easement, consistent with those terms: Land and Environment Court Act, s 40. Further, that Court may have been better placed to assess whether a one metre easement was reasonably necessary than this Court is: the parties did not provide any evidence demonstrating that one metre was required, rather than 900mm. It would obviously have been desirable for the one court to have been in a position to vary the development consent (if necessary) and to determine what was a reasonably necessary easement in the circumstances.
Hopefully, this matter can proceed rapidly to a resolution of the issues without further litigation. However, to avoid the need for further bifurcated proceedings, the order of this Court should be made subject to variation by the Land and Environment Court. In other words, if outstanding issues remain, the parties should not be forced to the expense of returning to this Court to seek a variation of its orders.
In these circumstances, the Court should make the following orders: (1) Allow the appeal in part and set aside the orders made in the Equity Division on 5 May 2014 as varied on 8 May 2014. In lieu thereof, make the following orders:
(A) Order that there be imposed an easement to drain water 900 mm wide burdening Lot 4 in Deposited Plan 39083 known as 15 Blenheim Road, Carlingford in the State of New South Wales ("the servient tenement") and benefiting Lot 2A in Deposited Plan 161330 known as 50 Felton Road, Carlingford in the State of New South Wales ("the dominant tenement") as described in the dealing to be annexed hereto and marked "A". (B) Direct that the easement so described - (a) run down the western boundary of the servient tenement; (b) have a width of 900mm, and (c) be limited to the soil and sub-soil of the area and not extend above the upper surface of the ground. (C) Note that rights of access appurtenant to the easement do not extend to a height of more than 2.5 metres above the upper surface of the ground.
Direct the plaintiff to prepare annexure "A" and any accompanying documents to be executed by the defendant.
The defendant must execute a dealing in the form of annexure "A" and cause it to be returned to Madison Marcus Lawyers at Level 10, 1 Market Street, Sydney NSW or DX 13006 Sydney Market St, by 4.00pm seven days after the form and these orders have been personally served on the defendant.
If the defendant fails to comply with order 3 above, a Registrar in the Equity Division, Supreme Court of New South Wales, is to execute a dealing in the form of annexure "A" on behalf of the defendant, whereupon that dealing shall be deemed signed by the defendant.
Order that, if such payment has not already been made in accordance with the order (4) of the trial judge as varied, the plaintiff pay to the defendant compensation in the sum of $21,500.00, such payment to be tendered to the plaintiff with the form referred to in order 2.
With respect to the costs of the trial, order that the plaintiff repay to the defendant any costs paid by the defendant pursuant to order (5) of the trial judge and that the plaintiff pay the defendant's costs of the trial as a litigant in person as agreed or assessed.
In addition to the costs borne pursuant to order (6) of the trial judge, the plaintiff is to bear all other costs of obtaining registration of the dealing referred to in order 2 above. (2) Grant liberty to either party to apply to the duty judge in the Equity Division on 3 days' notice in relation to the working out of these orders. (3) Direct that, in the event the respondent appeals to the Land and Environment Court with respect to the grant or modification of a development consent with respect to the dominant tenement, the respondent may exercise its right to apply to that Court under s 40(2) of the Land and Environment Court Act 1979 (NSW) for an order under s 88K of the Conveyancing Act 1919 (NSW) and, if that Court makes such an order, the respondent shall release (or accept variation of) the easement imposed through the order of this Court so that an easement in the terms ordered by that Court may have effect in place of it. (4) No order as to the costs of the parties in this Court.
BARRETT JA: I agree with Basten JA.
WARD JA: I agree with Basten JA.

Amendments 28 August 2014 - In order (1) 3. and 4. amending "plaintiff" to "defendant" and in 4. correcting order number referred to. Amended paragraphs: Coversheet Decision, [103] 05 June 2015 - [13] - inserted "use" after "effective" in the second sentence of the quote.

[35] - Amended " hear not" to "not hear" and amended "received" to "receive".

[92] - Deleted the comma after "easement". 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: 05 June 2015

At a glance

Court

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Judgment (37 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (7)