The Owners - Strata Plan No 61233 v Arcidiacono; The Owners - Strata Plan No 17719 v Arcidiacono

Procedural history

1. In October 2011, the defendants installed a gate at the York Street end of the Passage which was affixed to the walls of the buildings at 71 York Street and 65 York Street.
2. On or about 8 June 2016, the defendants locked the gate and placed a skip bin on the western end of the Passage and on the Dock. 71 York Street and Clarence House claimed that the locked gate and skip bin impeded rubbish removal and vehicle access to the rear area of their buildings.
3. On 20 June 2016, 71 York Street and Clarence House commenced these proceedings on an urgent basis seeking orders to restrain the defendants from obstructing access to the Passage and the Dock. Consent orders have been made which restrain the defendants from locking the gate and from placing skip bins or other items in the Passage or on the Dock which obstruct vehicular access until these proceedings are determined at first instance.
4. The York Street and Clarence House proceedings have since progressed by way of pleadings.
5. 71 York Street filed its statement of claim on 20 July 2016. It seeks declarations that it has rights of carriageway over the Passage and Dock. It also seeks declarations that it has the benefit of various easements arising by way of prescription over the Passage and the Dock which it claims were omitted from the Register when the Passage and Dock were brought under the provisions of the Real Property Act 1900 (NSW) and should now be registered. In the alternative, it seeks orders for various easements over the Passage and Dock pursuant to s 88K of the Conveyancing Act 1919 (NSW). It also seeks restraints in respect of the gate.
6. Clarence House filed an amended statement of claim on 12 March 2019 in which it seeks declarations that it has rights of way over the Passage and Dock, which are alleged to have arisen by reason of historical grants. In the alternative, it seeks orders pursuant to s 88K of the Conveyancing Act imposing easements over the Passage and Dock in the terms set out in Part 1 of Schedule 8 of the Conveyancing Act.
7. The defendants filed defences in the York Street and Clarence House proceedings on 12 August 2016.
8. On 20 June 2016, orders were made that the York Street and Clarence House proceedings be heard concurrently, and that the evidence in one proceeding be evidence in the other.
9. The hearing of both proceedings commenced on 18 March 2019. At the hearing, Clarence House was granted leave to amend and file a second amended statement of claim (2ASOC) to include claims for easements by prescription over the Passage and the Dock. Before dealing with other matters, I have provided further reasons for this decision, as I foreshadowed at the time I would do.

Clarence House amendment application

1. The amendment application was made in the following context.
2. On the first day of the hearing, Senior Counsel for Clarence House opened her case referring to a claim for easements by prescription (T23:37). The defendants' Senior Counsel asserted that such a claim was not part of Clarence House's case. After reviewing the pleadings, Senior Counsel for Clarence House accepted that a claim for easements arising by prescription had not been "formally pleaded" and foreshadowed a possible amendment application (T54:4).
3. A draft second amended statement of claim was served on the defendants and a formal application to amend was made by Clarence House at the start of the second day of the hearing. The amended pleading included three new prayers for relief ([4A], [4B] and [4C]) and three new paragraphs ([20B], [20C] and [20D]). Relying on the facts already pleaded, the new paragraphs asserted that the Clarence House land had the benefit of easements by prescription for rights of carriageway, those easements were omitted by the Registrar when the Passage and Dock were brought under the provisions of the Real Property Act, and the Register should now be corrected.
4. Senior Counsel for Clarence House submitted that it should be granted leave to rely on the amendments. She contended that no prejudice should be caused as the prescriptive easement claim was simply an alternative legal characterisation of factual matters already pleaded about the use to which the Passage and Dock has historically been put.
5. Senior Counsel for Clarence House indicated that no further evidence would be adduced from Clarence House as a consequence of the amendments and submitted that none should be required from the defendants. She submitted that an adjournment of the proceedings was unnecessary, although conceded that her client would not wish the hearing to be vacated if adjournment was the price for the amended pleading (T81:31-34).
6. Senior Counsel for the defendants submitted that leave to amend should not be granted and placed reliance on Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 with respect to the delay and likely prejudice.
7. He submitted that the new claim for easements by prescription was different in kind to the existing claims under s 88K of the Conveyancing Act as they rely on evidence of long-term use of land rather than evidence going to the reasonable necessity of the proposed easement over the land. This difference, he said, led to forensic decisions having been made as to the evidence the defendants adduced.
8. Senior Counsel for the defendants submitted that, if the amendments were to be allowed, his clients would require access to further documents to test the evidence of long-term use relied on by Clarence House, possibly going back to 1887 but, in particular, from 1927 as there was little evidence of use between then and 1981.
9. Subject to s 58 of the Civil Procedure Act 2005 (NSW), s 64(2) provides that all necessary amendments are to be made for the purpose of determining the real questions raised by the proceedings. Given the nature of the claims and pleaded facts already raised by Clarence House, the proposed amendments raised questions that were appropriate for determination in the proceedings. There was no submission made to the contrary. Nor was any submission made that the proposed amendments were futile.
10. It was self-evident that there had been significant delay by Clarence House in applying for the amendments. While not satisfactory and not clearly stated, it seemed the delay in doing so was due to a pleading oversight.
11. The key issue in relation to Clarence House's application was whether granting leave to amend would be likely to cause significant prejudice to the defendants which could not be overcome other than by way of an adjournment.
12. I declined to grant Clarence House leave to amend to claim easements by prescription based on use of the Passage and the Dock for the period prior to 1981. I accepted the defendants' submission that they may need access to documents relating to pre-1981 use. Obtaining access in a timely way was likely to be difficult and necessitate an adjournment. The statement of claim also appeared to plead use of an existing right of carriageway in general terms ([11]), but did not clearly plead use by the predecessors of title to the Clarence House land of the Dock prior to 1981 ([8]).
13. The position was different in respect of the proposed amendments which relied on use of the Passage and Dock for the period from 1981. I concluded that the likelihood of prejudice was low, should be able to be addressed without an adjournment, and that it was consistent with the just, quick and cheap resolution of the real issues in proceedings to grant leave to Clarence House to amend and file the second amended statement of claim to plead prescriptive easement claims limited to that period: s 56 and s 64 of the Civil Procedure Act 2005 (NSW).
14. The proposed prescriptive easement claims based on use from 1981 did not raise any new factual matters. The use to which the Passage and the Dock had been put by Clarence House from 1981 has been pleaded since the Clarence House proceedings began in 2016 and been disputed by the defendants since they filed their defence shortly thereafter ([16], statement of claim and [16], defence).
15. Clarence House's evidence of use had also been served since 2016 (affidavits of Anthony Bruce Cook dated 20 June 2016 and Jill Elizabeth Yates dated 29 June 2016). The defendants had had ample opportunity to adduce evidence in response. They chose not to do so although evidence of past use was relevant to the existing claim for easements under s 88K of the Conveyancing Act: Owners Strata Plan 13635 v Ryan [2006] NSWSC 221 at [67].
16. It was also relevant that the 71 York Street proceedings included claims based on easements by prescription. The legal issues raised by Clarence House's proposed amendments were, therefore, issues which the defendants had come to the hearing prepared to meet.
17. The defendants did not assert any need to lead further lay or expert evidence in response to the amendments. They sought the production of documents relating to the use of the rear area of Clarence House since 1981. They also wanted time to prepare for additional cross-examination, particularly of Mr Cook who had given evidence of the use of a roller door and the rear area for his business.
18. The defendants were given an opportunity to seek production of documents from Clarence House and Sydney City Council and time during the first week of the hearing, including during Court hours, to review the documents produced and prepare for additional cross-examination.
19. Documents were produced and reviewed by the defendants' legal team over a period of two days. The additional cross-examination of Mr Cook was relatively short and completed on the fifth day of the hearing.
20. The defendants also dealt with the issues raised by Clarence House's prescriptive easement claims in their written and oral closing submissions in a comprehensive manner.

Issues for determination and summary of conclusions

71 York Street proceedings

1. The issues for determination raised in the 71 York Street proceedings and a summary of my conclusions are: 1. Is 71 York Street entitled to a declaration that it has a right of carriageway over the Passage? As 71 York Street has an existing right of way over the Passage which is recorded on its title, the Court declines to grant declaratory relief that 71 York Street has a right of carriageway over the Passage. 1. Does 71 York Street have the benefit of an easement by prescription for a right of carriageway over the Dock? Yes, an easement by prescription for a right of carriageway over the Dock has arisen based on long open use in the years prior to 1927. The prescriptive easement should be recorded on 71 York Street's title in terms that provide for the right to pass and repass over the Dock by motor vehicles and reflects the use of the 71 York Street land for commercial activities, being office and retail space. 1. Have easements by prescription arisen over the Passage and the Dock to the benefit of 71 York Street in relation to the drainage of sewerage and water and for overhang and encroaching structures? No. The use of the Passage and the Dock by 71 York Street for drainage for sewerage and water and overhanging and encroaching structures was not sufficiently open or of a character to ascribe constructive knowledge of that use to the unknown owners in this case. The evidence relating to use for drainage for sewerage and water is also not sufficient to support an easement by prescription. 1. Should the Court make orders under s 88K of the Conveyancing Act imposing an easement for a right of carriageway over the Dock to the benefit of 71 York Street? It is not necessary to make an order under s 88K of the Conveyancing Act as the Court has concluded that an easement by prescription has arisen over the Dock. Had it been necessary, 71 York Street would be entitled to an order under s 88K of the Conveyancing Act for an easement over the Dock for a right of carriageway as defined in Part 1 of Schedule 8 of the Conveyancing Act, and the appropriate amount of compensation would be $6,000 (excluding reasonable legal costs). 1. Should the Court make orders under s 88K of the Conveyancing Act imposing easements over the Passage and the Dock to the benefit of 71 York Street for the drainage of sewerage and water, for overhang and encroaching structures to remain, for services and repairs and for light and air? Orders should be made under s 88K of the Conveyancing Act imposing easements over the Passage and the Dock for overhang and encroaching structures to remain and for services and repairs. The appropriate amount of compensation is $2,000 for each easement (excluding reasonable legal costs). 71 York Street has not established that easements over the Passage and the Dock in relation to the drainage of sewerage and water or for light and air are reasonably necessary. The Court declines to make orders under s 88K for those easements.

Clarence House proceedings

1. The issues raised for determination in the Clarence House proceedings and a summary of my conclusions are: 1. Were rights of way over the Passage and Dock created by historical dealings? Do those rights continue to benefit the Clarence House land today, and were those rights of way recorded on the title to Clarence House when it was registered in 1981? Clarence House does not have existing rights of way over the Passage or the Dock based on grants in the historical dealings. The rights of way created in the historical dealings over the Passage and the land of which the Dock was part were created to the benefit of land which, for the most part, is not now part of the Clarence House land. Those rights of way could not be conveyed to or acquired by Clarence House's predecessors in title, and do not benefit the Clarence House land today. To the extent the Clarence House land today includes small slivers of land which formed part of lots that had the benefit of rights of way created under Book 124, those rights of way are no longer of benefit to and do not accommodate the Clarence House land today. Rights of way over the Passage and the Dock were not recorded on the title to Clarence House when it was registered in 1981. 1. Does Clarence House have the benefit of easements by prescription for rights of carriageway over the Passage and the Dock based on user since 1981? Yes, easements by prescription for rights of carriageway over the Passage and the Dock have arisen to the benefit of the Clarence House land based on open user since 1981. The prescriptive easements should be recorded on Clarence House's title in the terms of Part 1 of Schedule 8 of the Conveyancing Act amended to reflect the use of the Clarence House land for commercial retail and residential purposes. 1. Should the Court make orders under s 88K of the Conveyancing Act imposing easements for rights of carriageway over the Passage and the Dock to the benefit of Clarence House? As the Court has concluded that easements by prescription have arisen over the Passage and the Dock, it is not necessary to make orders under s 88K of the Conveyancing Act. Had it been necessary, Clarence House would be entitled to orders under s 88K of the Conveyancing Act for easements over the Passage and the Dock for rights of carriageway as defined in Part 1 of Schedule 8 of the Conveyancing Act, and the appropriate amount of compensation would be $6,000 for each easement (excluding reasonable legal costs).

The gate

1. 71 York Street's statement of claim also includes claims for final injunctive relief in the form of restraints concerning the gate (at [xv] and [xvi]). During final closing submissions, Counsel for 71 York Street indicated that 71 York Street no longer pressed its claims for restraints as it accepted that "the gate as proposed wouldn't represent an improper impediment to the operation of the laneway, or at least the Passage" (T372:34-37).
2. Clarence House seeks no final relief in respect of the gate in the 2ASOC.
3. Accordingly, I have approached these reasons on the basis that there are no issues for final determination in respect of the gate. These reasons may also impact the existence and operation of any gate and the parties should have an opportunity to consider them.

History of the passage, the dock, and the relevant land - 1839 to today

1. The following sets out the history of the creation and ownership of the Passage, the Dock, the surrounding lands, the existence of the various rights of way and easements in respect of those lands, and the buildings on the surrounding lands.
2. As many of the historical deeds of conveyance and related documents are relied on by Clarence House in support of its claim for existing rights of way over the Passage and the Dock, it is necessary to set out the history and the terms of the documents in some detail.
3. Most of the matters referred to below are not in dispute. Where there are disputes, the following should be taken to be my findings in respect of those matters based on the evidence.

Evidence

1. The evidence includes extensive copies of old system deeds of conveyance and title manuscripts (some with transcriptions), plans of survey, title searches in relation to the Passage, Dock and other relevant land, council records and other documents. Most of these documents are annexed to affidavits and reports relied on at the hearing, including a number of affidavits from the plaintiffs' legal representatives. Some of the council records are contained in the exhibits.
2. An affidavit made by Gregory Michael Collyer on 7 June 2018, a registered land surveyor employed by the Office of the Registrar-General, annexes historical title searches relating to the Passage, the Dock, the 8ft lane and surrounding properties, and charting maps relating to the original crown grants of some lands. Mr Collyer's affidavit describes, amongst other things, the documentary titles in respect of land the subject of the proceedings from the date of the original crown grants, and as affected by the various subsequent deeds of conveyance. Mr Collyer's evidence was not challenged.
3. The history of the Passage, the Dock and surrounding land and buildings was also the subject of an expert report admitted into evidence prepared by Graeme Brooks and Dr Cameron Hartnell, from GBA Heritage Pty Ltd, Heritage Consultants Sydney dated October 2016 (Heritage Report). There were some objections made and upheld to the Heritage Report.
4. Rolf Kenneth Cambridge, a registered surveyor at the firm ATS Land and Engineering Surveyors Pty Ltd at West Ryde, Sydney who has practised for about 40 years, prepared a report dated 4 October 2016 which commented on some of the historical matters in issue and annexed some of the historical deeds of conveyance and plans. Mr Cambridge prepared a plan which depicts the current boundaries of the Passage, the Dock, 71 York Street and Clarence House overlain on boundaries of lots in the same location as those described in an historical deed of conveyance, being Deed of Partition and plan of subdivision, Book 124 No 952 (Book 124), using the metes-and-bounds description contained in Book 124 and taking into account the circumstances represented by an historical survey report (CB603) (Overlay Plan). Objections were made and upheld to some of the conclusions and recommendations made in Mr Cambridge's report. No objection was taken to the Overlay Plan and Mr Cambridge was not cross-examined.
5. In some cases, there are multiple copies of the same document in evidence. Where I refer to a document in these reasons, I refer to only one version of it by reference to its page number in the Court Book. Where I have included matters based on the evidence of Mr Collyer, Mr Cambridge or the Heritage Report, I also refer to the relevant pages in the Court Book.

Initial crown grants

1. The land which is now the Passage, the 8ft lane and some of 71 York Street, 65 York Street and 100 Clarence Street were all located within the metes-and-bounds description of land the subject to a Crown grant made in favour of Hugh McDonald on about 20 May 1819 (Allotment 2 land) (CB1269).
2. The land which is now the Dock and some of Clarence House were within the metes-and-bounds description of the land the subject to a Crown grant made in favour of John Terry Hughes on 10 May 1829 (Allotment 3 land) (CB1269).
3. The Allotment 2 land formed an "L" shape that ran through the entire block between York and Clarence Streets and is marked in yellow in the diagram at annexure 2 (CB672) (Plan 2). The Allotment 3 land faced Clarence Street and is marked in blue in Plan 2.
4. The description of the boundaries of the Allotment 2 and 3 lands in the 1819 and 1829 Crown Grants did not correspond, with a strip of land 4.88 metres long on the east boundary of the Allotment 3 land appearing to have been included in the metes and bounds of the Allotment 2 land (CB674). This strip of land was not developed, possibly because of the boundary issue (CB1512).
5. During the period from at least 1855 to the late 1880's, the strip of land was used as a lane between buildings located on the Allotment 2 and 3 lands (CB673 and CB1512).

The Passage: right of way created under Book 8

1. By an instrument made on 30 September 1839 and registered in Book 8 No 383 (CB152-CB168) (Book 8), Stephen McDonald (Hugh McDonald's oldest surviving son and sole trustee) and others related to Hugh McDonald (McDonald family) sold some of the Allotment 2 land, including that on which 71 York Street is now located, to Henry Macdermott.
2. Book 8 refers to the land conveyed as being bounded on the North by a "private road or passage twelve feet or thereabouts in width". This is a reference to the Passage. It is not clear when the Passage was first created. Book 8 is the first reference to it in a document in evidence.
3. Book 8 created a right of way over the Passage to the benefit of the land purchased by Mr Macdermott in the following terms: "Each of them doth grant ….a free and uninterrupted right of way and passage and liberty and privilege for him…his heirs and assigns and their Servants…. and others with our (sic read as 'or') without horse, sheep, surine (sic read as 'swine') or other animals and carriages carts wagons or other vehicles to pass and repass into along across upon and over the reserved Road or passage [Passage] hereinbefore mentioned and described or referred to…"
4. It is not in dispute that the 71 York Street land today has the benefit of the right of way over the Passage created by Book 8 (T25:15-21).

The Dock: a remnant part of a Private Lane

1. The Allotment 3 land was conveyed by John Terry Hughes to David William Jamieson and George Cooper Turner on 16 and 17 June 1841 pursuant to Book W No 189 (CB173). On 12 and 13 August 1842, George Cooper Turner obtained the entirety of the interest in the Allotment 3 land pursuant to Book Y No 203 (CB173).
2. Mr Turner conveyed the whole of the Allotment 3 land to Patrick Erwin on 1 May 1847 pursuant to Book 18 No 13 (Book 18) (CB970-CB971).
3. Book 18 provided that the Allotment 3 land was conveyed to Mr Erwin "together with ….all ways, waters, water courses rights…and appurtenances to the said land and hereditaments hereby granted and released or intended so to be belonging or appertaining…" (CB974).
4. In addition to the Allotment 3 land, Mr Erwin acquired other land on Clarence Street to the north and south of the Allotment 3 land, including part of the north-western portion of Hugh McDonald's Allotment 2 land (CB705).
5. Mr Erwin developed his landholding into at least eighteen lots linked by three private lanes which connected with the Passage (CB674). One of those private lanes ran along the eastern boundary of Mr Erwin's Allotment 3 land as it adjoined the land then owned by Mr Macdermott, and was "five feet four inches" at its widest, but narrowed to "four feet wide" at its southern end (Private Lane) (CB674, CB607-CB633). Pausing here, it seems that the Private Lane is the strip of land the subject of the boundary issue referred to at [59] above (CB665).
6. In 1871, after Mr Erwin died, his land was the subject of a Deed of Partition and plan of subdivision, Book 124 No 952 (Book 124) (CB607-CB633).
7. Under Book 124, Mr Erwin's trustee and executor, Joseph Rose, conveyed most of Mr Erwin's land to his beneficiaries. The eight schedules referred to in Book 124 (numbered two to nine) described the particular lots conveyed to each beneficiary, some of whom were conveyed more than one lot.
8. Relevantly, Book 124 states: "Now this Indenture Witnesseth that in pursuance of the said direction and agreement He the said Joseph Rose does grant bargain sell alien release and convey unto the said William Maguire and his heirs all and singular the lands hereditaments and premises described and contained in the second third fourth fifth sixth seventh eighth and ninth Schedules hereunder written together with all messuages buildings and improvements erected and made on the said lands respectively and all roads rights of way watercourses fixtures rights easements advantages and appurtenances whatsoever to the to the said parcels of land hereditaments and premises pertaining or with the same held or enjoyed or reputed as part thereof or appurtenant thereto… … The Second Schedule to which the above written indenture refers All that piece or parcel of land with the dwelling houses erected and built thereon and appurtenances appertaining to situate and lying in being situated….and shown on the annexed Plan as lot numbered 4 lettered D commencing on the eastern side of Clarence Street…and bounded on the west by Clarence Street….. and use of all that piece and parcel of land with the dwelling house erected thereon, shown upon the said plan as Lot 4 lettered d commencing at the south east corner of Lot 6 lettered f on the said plan and bounded on the sought by a line bearing easterly twelve feet seven inches to the passage four feet wide on the east by that passage bearing northerly twelve feet [illegible] …with a right of way. … The Fifth Schedule to which the above written indenture refers All that piece or parcel of land with the dwelling houses erected and built thereon and appurtenances appertaining to situate and lying in being situated …and shown on upon the annexed piece of the subdivision of the late Patrick Erwin's property as Lot No 5 lettered E commencing on the eastern side of Clarence Street…And bounded on the west by Clarence Street…And also all that piece or parcel of land within the dwelling houses erected thereon shown upon the said plan as Lot No 5 and 5 lettered e and c commencing at…and bounded by…to a reserved passage…on the east by a reserved lane five feet four inches wide bearing southerly… The Eighth Schedule to which the above written indenture refers All that piece or parcel of land with the dwelling houses erected and built thereon and appurtenances appertaining to situate and lying in being situated…shown upon the annexed plan of subdivision of the late Patrick Erwin's property as Lot No 6 lettered F commencing…and bounded on the west by Clarence Street…and also all that piece or parcel of land with the dwelling houses erected thereon shown upon the said plan as Lots No 6 and 6 lettered ff commencing at…and bounded on…to the lane five feet four inches wide on the east by that lane…".
9. The plan referred to in Book 124 (CB620) is annexure 3 to these reasons (subdivision plan) and shows the subdivided deed boundaries of the land conveyed in Book 124. The subdivision plan describes the Passage as "LANE", the 8ft lane as a "RESERVED ROAD" (CB1276) and the Private Lane as the "Lane or Passage". Within the schedules to Book 124, the Private Lane is referred to as a "passage four feet wide" and as the "lane five feet four inches". The subdivision plan shows lots 5e, 6f and 4d [1] as abutting the Private Lane and lots 4D, 5E and 6F as facing Clarence Street.
10. The Dock is largely made up of land at the northern end of the Private Lane, as well as a small remnant sliver of lot 5e (Overlay Plan and CB600). The Private Lane was not conveyed to any of Mr Erwin's beneficiaries under Book 124 (CB600). Nor was the Dock, which remained in Book 18 No 13 (CB1276).
11. Clarence House contends that Book 124 should be interpreted as granting a right of way over the Dock to which it has the benefit today. I deal with that issue later in these reasons.

The Gardiner landholdings

1. From 1877 to 1886, William Gardiner acquired various parcels of land on York and Clarence Streets to create a landholding with access to both streets, including the lands which are now 71 York Street and Clarence House (CB676).
2. In 1878, Mr Gardiner acquired the south east portion of the Allotment 3 land (of which 71 York Street land is now part) under Book 181 No 693 (Book 181), together with "all fences ways paths….waters watercourses liberties privileges easements and appurtenances to the said land and hereditaments or any part thereof belonging or in anywise appertaining or therewith usually held used occupied or enjoyed" (CB172). Prior to its transfer to Mr Gardiner, the Post Office Hotel was located on what is now the 71 York Street land (CB673).
3. Mr Gardiner also acquired land from the beneficiaries of Mr Erwin's estate, including lots numbered 4d, 5e and 6f and lots numbered 4D, 5E and 6F. The instruments under which those lots were conveyed to Mr Gardiner relevantly provided as follows: 1. No 456 Book 220 dated 3 June 1881 (Book 220) by which Lots 5e and 5E were conveyed from Michael Erwin: "together with all houses buildings lights fences ways rights of way paths passages waters watercourses liberties privileges easement and appurtenances to the said land and hereditaments or any part thereof belonging or in anywise appertaining on therewith usually held used occupied or enjoyed and the reversions remainders rents issues and profits thereof and all the estate right title interest property possession claim and demand whatsoever both at law and in equity of him the said vendor in to and out of the same premises and every part thereof …"(CB211). 1. No 623 Book 172 dated 5 September 1877 (Book 172), by which Lots 4d, 6f and 4D were conveyed from Elizabeth Erwin and James Irwin "together with full and free liberty for the said William Gardiner his appointees heirs and assigns and all others authorised by him with or without horses and other animals carts and other carriages at all times to drive ride operate and labor up down to fro and upon all lanes, streets or ways adjoining or leading to the said lands and as the same are shown on the plan annexed to the said deed of partition together with the dwelling houses and buildings erected on the said land and all other the rights easements advantages and appurtenances to the premises belonging or appertaining or usually held or enjoyed …."(CB209); and 1. No 55 Book 171 dated 19 July 1877 (Book 171), by which Lot 6F was conveyed from P Dessaix and Susannah Dessaix (nee Erwin) together with: "rights of way easements advantages and appurtenances to the said lands and premises being…in anywise appertaining or therewith usually held occupied or enjoyed" (CB207).
4. In 1887, Mr Gardiner demolished the buildings on the land he acquired and constructed three large adjoining multi-story warehouse buildings, each with basements and a shared loading yard (CB677). Two warehouse buildings faced Clarence Street and is now Clarence House. The other building is now 71 York Street. The business that operated out of the warehouse buildings was styled "Importers and Warehousemen" and handled a variety of dry goods (CB677).
5. The Gardiner warehouse buildings were serviced from a common area at the centre of the landholding, which is the rear area or loading yard previously referred to in these reasons. The common loading yard was accessed from York Street via the Passage and the Dock. It could also be accessed from Clarence Street via a stone archway running to the north of the warehouse building facing Clarence Street (CB678). Each warehouse building had a goods lift adjacent to the loading yard (CB677). Fire escapes from the warehouses at 71 York Street and Clarence House opened onto the loading yard (CB677-CB678).
6. The layout of the warehouses, the area of the loading yard and surrounding laneways have not relevantly changed since 1919, as indicated in the plan at annexure 4 to these reasons (Plan 4). Plan 4 identifies a "LANE", which is now the Passage and the Dock, and a "YARD", which is the rear area behind the 71 York Street and Clarence House buildings (CB707).
7. On 14 March 1900, Mr Gardiner conveyed his lands to W Gardiner & Co Ltd (Gardiner & Co) pursuant to instrument No 496 Book 663 (Book 663) (CB1002-CB1014). Book 663 relevantly provided that the land was conveyed: '…together with the house outhouses ways rights of way rights easements and appurtenances to the said hereditaments or any of these belonging or …appertaining…"
8. During Gardiner & Co's ownership, the Passage was upgraded from dirt to iron tracks and cobblestone pavements to allow for the movement of heavily loaded carts that were brought into the Passage for the purposes of delivery of goods to the loading yard (CB678). The use of cobblestones stones and metal tracks is consistent with the Passage having been constructed and used as an integral part of the Gardiner & Co warehouse complex (CB682).
9. On 18 October 1922, Gardiner & Co entered into an agreement with adjoining landowners in respect of a gate located at the York Street end of the Passage (1922 agreement) (CB1383-CB1388). By 1940, the gate was gone (CB710).

Sale of Clarence House land in 1927

1. In 1927, by Deed registered in conveyance Book 1481 No 117 (Book 1481), Gardiner & Co (now called Sargood Gardiner Ltd) sold the land and warehouse which is now Clarence House to British Electric Company Ltd (British Electric) (CB1371-CB1374 and CB1376-CB1382). Book 1841 relevantly conveyed the land: "…hereinafter described Together with and subject to such rights of way as are hereinafter described… Together with a right-of-way in common with the Vendor and its assigns and all persons authorised by it or them over that piece or parcel of land edged blue on the said plan being part of allotment Three of Section Fifty two of the City of Sydney starting at a point on the South Eastern side of a wall fourteen inches wide said point being bearing and distant from the South Western corner of the land comprised… Together with the right to use in common with others having a similar right and the Vendor and its assigns and all persons authorised by it or them the private lane or passage leading from the lastly described parcel of land to York Street coloured yellow on the said plan … subject however to the terms of a certain agreement dated…18…October 1922…(together also with a right of use in common with the Vendor…of the wooden stage giving access to the lift well opening of the premises intended to be hereby conveyed as coloured buff on the said plan) Subject to and reserving out of the land first hereinbefore described and intended to be hereby conveyed AND the Purchaser hereby grants to the vendor and its assigns an easement of right-of-way appurtenant to all other adjacent land of the vendor having frontage to York Street known as Seventy One York Street…with or without horses carts carriages motor cars motor lorries or other vehicles laden and or unladen and to walk ride drive and operate to fro over upon All that piece or parcel of land "edged green" [hand insert - eligible (sic) but appears to be "edged green') starting at…"
2. Under Book 1481, the common loading yard at the rear of the warehouses was divided, with part being conveyed to British Electric, and the other part remaining with Gardiner & Co. Rights of way were granted by each of British Electric and Gardiner & Co to the other in relation of their respective parts of the loading yard. A right to use the wooden stage at the southern end of the loading yard (which remained in the land owned by Gardiner & Co), was also granted to British Electric under Book 1841.
3. The plan which formed part of Book 1481 (CB1373) is at annexure 5 (Plan 5). It shows the subdivided loading yard, with the part owned by Gardiner & Co (now 71 York Street) and over which British Electric was granted a right of way, edged in blue. It shows the part conveyed to British Electric (now Clarence House), and over which Gardiner & Co had a right of way, edged in green. It shows the wooden stage in orange. That loading yard reflects the boundaries of the rear area of the 71 York Street and Clarence House lands today.
4. Plan 5 also shows the Passage in yellow. The Dock is not separately identified in Plan 5 but appears to have been situated within the land which is the Passage (CB1273).
5. Book 1481 also purported to assign a right to use the Passage (and the Dock) in favour of the lands conveyed to British Electric "in common with others having a similar right". This is relied on by Clarence House in support of its claim for existing rights of way over the Passage and Dock. I return to that issue later in these reasons.
6. Following the sale of the land to British Electric, the warehouses no longer operated together (CB668).

Conversion of 71 York Street and Clarence House land to Torrens Title

1. In 1929, Sargood Gardiner Ltd lodged Primary Application 30148 to bring the land now known as 71 York Street under the Torrens Title system (CB680). The application was supported by a survey plan by H E Foxell, a licensed surveyor (CB1462), and four statutory declarations (CB221-CB231)
2. Mr Foxell's survey plan shows the Passage by reference to Book 8 as abutting the northern boundary of 71 York Street. It also shows the Dock by reference to Book 124 as abutting part of the northern and eastern boundaries of the 71 York Street land.
3. The statutory declarations included one dated 21 March 1927 from William Audsley, a clerk to William Gardiner, in which he describes the land acquired by Mr Gardiner and the construction of the warehouse buildings. He refers to a right of way leading from the loading yard (which Mr Audsley refers to as a cart-dock) to York Street being in existence when William Gardiner purchased the land. The right of way comprises the Passage and the Dock.
4. Mr Audsley's statutory declaration refers to the right of way having been used by William Gardiner since the building was erected, as well as by occupants of the adjoining building in Clarence Street. He states that the right of way and loading yard have been in "continuous and undisturbed occupation possession and enjoyment of William Gardiner, W Gardiner & Co and W Gardiner and Co Limited for over forty years". 71 York Street relies on this statutory declaration as evidence of use of the Dock as a right of carriageway until 1927.
5. Certificate of title volume 4493 folio 64 was issued in respect of 71 York Street on 20 July 1931 (CB1275). As a result of Primary Application 30148, the Private Lane (with the exception of the remnant Dock) was brought within the title to 71 York Street.
6. The land now known as Clarence House was brought under the Torrens Title system in two stages. First, by means of Primary Application 28983, from which certificate of title volume 4304 folio 41 was issued on 23 July 1929 (CB1276). Second, by means of primary application No 304409.
7. The survey plan which formed part of primary application No 28983 indicates that the Clarence House land does not abut the Passage or the Dock (CB1277).

71 York Street: 1928 - 1980's

1. Works were undertaken to the 71 York Street building sometime around 1928 or 1929 to convert it from operating primarily as a warehouse building to lettable space, and to incorporate fire escapes which exited onto the loading yard. From that time until the 1980s, 71 York Street was used as a building for a mixture of minor warehouse, office and manufacturing businesses (CB680).
2. As at 1931, the wooden stage and goods lift continued to form part of the loading facilities in the loading yard for 71 York Street. An access driveway from York Street to the basement of the 71 York Street building was constructed in the 1930's to create additional loading and parking access, although the rear loading facilities remained in place until the 1980's (CB680).
3. By 1940, fire stairs were located at the rear of the 71 York Street building, constructed in steel, and ran from 12 feet above the loading yard to the fifth floor of 71 York Street brackets (CB681).
4. In 1948, ownership of 71 York Street transferred to 71 York Street Pty Ltd.
5. Major works were undertaken to the 71 York Street building in the early 1980s to fully upgrade it for use primarily for office space, with some retail space available on the ground floor. Those works were likely the result of a 1976 fire upgrading order, and included reconfiguring the rear fire stairs with a new internal fire escape staircase from the first floor of the building into the rear loading yard (CB681).
6. From 1927 until the 1980's, when works were undertaken to upgrade the 71 York Street building, the Passage continued to be used and served as an access path to the rear area of 71 York Street. Over time, the use of the rear area for loading and unloading reduced, reflecting the evolution of 71 York Street's use from warehousing to light manufacturing and then to commercial office use (CB695).

Strata plans of Clarence House and 71 York Street

1. In April 1980, approval was sought from Sydney City Council for the strata subdivision of Clarence House.
2. Conditional approval was granted subject to evidence being provided to establish a right of unobstructed access through the "adjoining right-of-way and laneway discharging onto York Street" for fire egress (Condition B(3), exhibit 4A). Council accepted the condition had been satisfied based on a surveyor's letter dated 29 May 1980 which concluded that "it would appear that a Right of Way by prescription has been obtained over this passage" (part of exhibit 4A). The reference to the passage and the laneway is a reference to the Passage and the Dock.
3. An amended application for strata subdivision was made on 15 September 1981 and approved by Council on 23 October 1981. The amended application was the subject of a minute paper prepared by a city engineer to the town clerk dated 9 October 1981 which recommended approval of the application and noted that the main entry to the building is from Clarence Street and that "rear entry, accessible to all floors, is from York Street via a private laneway" (exhibit A4). The reference to the private laneway is a reference to the Passage and the Dock.
4. The plans that formed part of the amended application identified a "goods area" and an opening onto the rear area of Clarence House (exhibit A6). A photograph on the Council file identifies the existence of a roller shutter door at the rear of Clarence House, which I accept is the opening reflected on the plans (exhibit A4).
5. In 1981, SP 17719 was registered in respect of Clarence House (CB795-CB804). The title search of SP17719 relevantly records the following notifications: 1. BK 1482 no 117 right of way affecting the part shown so burdened in the title diagram - notification 2; 2. BK 1482 no 117 right of way appurtenant to the part of the land so shown benefited in the title diagram affecting the parts shown so burdened in the title diagram - notification 3; 3. BK 1482 no 117 right of user of the wooden stage appurtenant to the part of the land shown so benefited in the title diagram affecting the parts shown so burdened in the title diagram - notification 4.
6. The title diagram identifies two rights of way at "(X)" and "(Z)" ("VIDE Deed BK 1481") which relate to the rights of way over the loading yard, and a right of way of the wooden stage at "Y" (also VIDE DEED BK 1481"). The title diagram identifies the Passage and includes a reference within it to "PASSAGE (BK 1481)".
7. In 1999, SP 61233 was registered in respect of 71 York Street (CB136). The title search relevantly records the following notifications: 1. BK 1481 no 117 right of way affecting the part of the land above described shown so burned in the title diagram - notification 3; 2. BK 1481 no 117 right of user of the wooden stage affecting the part shown so burdened in the title diagram - notification 4; 3. BK 8 no 383 right of way appurtenant to the land above described affecting Lot 1 in DP 619464 - notification 5; 4. BK 1481 no 117 right of way appurtenant to the land above described affecting the land shown in plan with Book 1481 no 117 see request S630513 - notification 6.
8. The title diagram to SP 61233 identifies two rights of way at "[X]" and "[Z]" both of which refer to "Deed Book 1481…" and which relate to the rights of way over the loading yard. It also refers to a right of user of the wooden stage at "[Y]" and BK 1481. The title diagram also identifies the Dock with an arrow as "lane or passage in conv. BK. 124 no 952" and the Passage with the words "right of way".

Defendants purchase 100 Clarence Street

1. In September 2002, the defendants purchased 100 Clarence Street (CB92).
2. The land which is now 100 Clarence Street had obtained the benefit of a right of way over the 8ft lane when that land was conveyed by the McDonald family to Patrick Erwin pursuant to Conveyance Book 1 No 111 on 5 and 6 October 1841 (CB1368-CB1370).
3. Rights of way burdening the Passage and the 8ft lane were also created to the benefit of 100 Clarence Street for the purposes of fire egress and sub-division as a result of orders made under s 88K of the Conveyancing Act, in proceedings involving the defendants: Pasade Holdings Pty Ltd v Sydney City Council [2006] NSWSC 299.

Rights of way to the benefit of 65 York Street and 5 - 7 Barrack Street

1. Rights of way over the Passage and the 8ft lane have also been created to the benefit of the land: 1. which is now 65 York Street as part of the transfer of that land from the McDonald family to Hugh Nolan pursuant to Book 13 No 293 dated 29 November 1839 (Book 13) (transcribed extracts of which are at CB373-CB378); and 2. now known as 5-7 Barrack Street when it was transferred from the McDonald family to Moses Joseph pursuant to instrument Lease and Release, Book T No 153 dated 13 January 1940 (Book 153) (CB1366-CB1368).
2. Other easements burdening the Passage and 8ft lane were created to the benefit of the 65 York Street land as a result of orders made under s 88K of the Conveyancing Act in proceedings: Pasade Holdings v Sydney City Council [2003] NSWSC 515 and Pasade Holdings v Sydney City Council [2003] NSWSC 1220. These easements are: 1. for light and air burdening the Passage and the 8ft lane; 2. for keeping in place sprinkler heads burdening the Passage; 3. for overhang burdening the Passage; and 4. for keeping in place a ventilation pipe burdening the Passage.

Transfer of the Passage and Dock to the defendants and notifications on titles

1. In 2007, the City of Sydney Council auctioned the Passage, the 8ft lane and the Dock for unpaid rates. They were purchased by the defendants for $170,000.
2. On 8 February 2008, ownership of the Passage, the Dock and 8 ft lane was transferred to the defendants pursuant to Deed of Conveyance Book 4543 Number 876 (CB830-CB833).
3. At the time of transfer, the Passage and the 8ft lane were both under old system title in the name of Hugh McDonald (CB413; CB1467).
4. At the time of transfer, the Dock was still held under old system title in the name of Patrick Erwin (CB1488-CB1597).
5. On 5 June 2008, the defendants took steps to bring the Passage, the Dock and the 8ft lane under the provisions of the Real Property Act by means of Conversion Action No 130431 (CB1395-CB1396).
6. On conversion, the Registrar General failed to register the right of way to the benefit of 71 York Street created by Book 8 or the rights of way purported to be created by Book 1481 on the title to the Passage or the Dock.
7. Following correspondence with the Registrar General, the Book 8 right of way in favour of 71 York Street was noted on the second schedule to the title of the Passage, as were rights of way created in favour of 65 York Street and 5 - 7 Barrack Street (CB1282).
8. The Registrar General concluded that Book 1481 did not create any rights of way in respect of the Passage or the Dock and refused to register them (CB1505-CB1506).
9. The title search of the Passage relevantly records the following notifications (CB1287): 1. Qualified Title, caution pursuant to s 28J of the Real Property Act, Book 4543 - notification 2; 2. Limited Title, being a limitation pursuant to s 28T(4) of the Real Property Act that the boundaries of the land had not been investigated by the Registrar General - notification 3; 3. a right of way pursuant to Book T No 153 - notification 4; 4. a right of way pursuant to Book 8 - notification 5; 5. a right of way pursuant to Book 13 - notification 6; and 6. rights of footway and carriageway and an easement for services in accordance with the s 88K orders obtained as referred to above.
10. The title search of the Dock relevantly records the following notifications (CB1294): 1. Qualified Title, caution pursuant to s 28 of the Real Property Act, Book 4543 - notification 2; and 2. Limited Title, being a limitation pursuant to s 28T(4) of the Real Property Act that the boundaries of the land had not been investigated by the Registrar General - notification 3.

The view

1. On the first day of the hearing, the Court conducted a view of the Passage, the Dock, 71 York Street and Clarence House.
2. The view commenced at the York Street end of the Passage. I observed the Passage was made of stone cobblestones and had metal tracks running down each side located about 1 metre from the buildings at 71 York Street and 65 York Street.
3. Along the northern wall of the 71 York Street building, I observed three downpipes. Some projecting cornices were pointed out to me, as were some sprinkler heads and fire drenchers which overlooked the Passage. I saw windows located at various levels of the northern wall of the 71 York Street building overlooking the Passage.
4. After walking up the Passage, I was shown the location of the Dock. From there I could observe the rear area of 71 York Street and Clarence House.
5. When standing at the end of the Passage, it was apparent that it was not physically possible to access the rear area of the 71 York Street and Clarence House land from that spot without crossing over the Dock.
6. On the 71 York Street side of the rear area, I observed some metal gates on the southern boundary of the building. This area was the location of the old wooden stage (referred to at [86] and [87] above). I also observed two sets of metal fire stairs external to the building which exited onto the rear area.
7. On the Clarence House side, I observed a roller shutter door on the north western wall of the building, which opens onto the rear area.
8. I observed a number of rubbish bins along the walls of the rear area of the 71 York Street and Clarence House buildings.
9. The view continued to the internal space on the first floor of the 71 York Street building. I observed two fire stairs, one which exits into the foyer of 71 York Street and the other onto the rear area.
10. I also observed the underground car park that services the 71 York Street building which can only be accessed via York Street.
11. After leaving the 71 York Street building, I entered Clarence House from Clarence Street. On the ground floor of Clarence House is a retail store, called Clarence Street Cyclery. At the rear of the store is a goods area which opens onto the rear area of Clarence House via a roller shutter door. Fire stairs are located at the rear of the store, which go down to a basement area and then exit onto the rear area of the Clarence House land.
12. The entrance for residents of the strata units located in Clarence House is from the southern side of Clarence Street. I observed a fire exit opposite a lift which services the residential units. That fire exit leads out onto the rear area.

Lay evidence: use of the Passage, Dock and rear area since 1981

1. Anthony Cook, Jill Yates and Graham Brooks are owners of strata lots or tenants of Clarence House and 71 York Street. Anton Peetz was the managing agent of 71 York Street. Together, they gave evidence of the use to which the Passage, Dock and rear area of the 71 York Street and Clarence House land have been put since 1981. A summary of their relevant evidence is set out below.

Anthony Cook

1. Anthony Cook is a registered proprietor of the lots that comprise the ground and lower ground floors of Clarence House. He and his wife, Christine Cook, have operated the Clarence Street Cyclery from within those lots from 1981 to 30 July 2018 (T274:17-24). He is a member of the Executive Committee of the Owners Corporation of Clarence House.
2. Since 1981, Mr Cook and his employees have used the Passage and the Dock to access the rear area of Clarence House by foot and by vehicles for the purposes of receiving and sending out deliveries on an almost daily basis, seven days a week ([10], [11] affidavit 20 June 2016 and [3] affidavit 30 June 2016).
3. He gave evidence that the Clarence Street Cyclery has owned a small van that regularly drove up and down the Passage and over the Dock to the rear area to access goods for delivery to customers from a loading dock area behind the roller shutter door at the rear of the store ([10] affidavit of 20 June 2016). Two to three times a week, the rear area was also used as the van was loaded with cardboard waste from the roller shutter or the fire exit ([14] affidavit 30 June 2016).
4. Mr Cook's evidence is that Clarence Street is a busy street, there is rarely any parking available within the vicinity of the front of his business and there is no off street parking at Clarence House. The only way for him and his business to access York Street by vehicle or foot to or from the rear area and his loading dock is via the Dock and Passage ([8] affidavit 20 June 2016, [12] and [13] affidavit 30 June 2016).
5. Mr Cook also gave evidence that his business uses the rear area of Clarence House to store garbage bins, which are collected by a private contractor on a weekly basis via the Passage and the Dock. Garbage bins that service the residential lots in Clarence House are also kept at the rear area and are collected by Council via the Passage ([12] and [13] affidavit of 20 June 2016).
6. Mr Cook's evidence is that the Passage is also used to gain access to rear area of Clarence House by tradespeople and the owners and occupiers of residential lots, for maintenance of services at Clarence House and for moving large items in and out of the building ([16] and [17] affidavit of 20 June 2016).
7. Mr Cook also observed things occurring when 71 York Street used the rear area and the Passage. Since he moved into the building in 1981, he has regularly observed vehicles and pedestrians using the Passage to access the loading and rear areas at the back of 71 York Street (T275:5-13, [14], affidavit 20 June 2016).
8. Mr Cook was cross-examined at the hearing. He confirmed that the photographs (exhibit 4) were of his van parked at the rear area of Clarence House and that it was only his business that used the roller shutter door (T275:30-35, 44-47).

Jill Yates

1. Jill Yates is the registered proprietor of Lot 9 in Clarence House. She has been on the executive committee of the Owners Corporation of Clarence House since the mid-1990s when she purchased her lot.
2. Her evidence is that she has used the Passage and the Dock to access the rear of Clarence House since the time she purchased her lot ([4] affidavit 29 June 2016).
3. She has also observed other owners and occupiers of Clarence House, as well as owners and occupiers of neighbouring properties, including 71 York Street, use the Passage and Dock for pedestrian and vehicular access to the rear of their properties ([4] affidavit 29 June 2016).
4. Ms Yates' evidence is that the Passage has been used for the purposes of garbage collection by Clarence House residents and, after negotiation with Sydney City Council, has also been used in the past for disposal of household items ([9] affidavit 29 June 2016).
5. Ms Yates was not required for cross-examination.

Graham Brooks

1. Graham Brooks, a co-author of the Heritage Report, has been a tenant of 71 York Street since 1995.
2. He gave evidence that he has observed occupants of 71 York Street using the "side laneway" (namely the Passage and then Dock) for egress since 1995 (T113:34; [12] affidavit 18 March 2019).
3. Mr Brooks also gave evidence that he had, since 1995, observed Quality Hi-Fi and the Papillion restaurant (both former ground floor retail tenants of 71 York Street) use the Passage for access to dispatch and deliver goods to the rear area of 71 York Street. He has also observed maintenance and repair tradesmen using the Passage to conduct external maintenance work on 71 York Street, and it being used for material deliveries using the rear fire stairs (CB666; [19] and [20] affidavit 18 March 2019).
4. Mr Brooks also gave evidence as to the existence and use of the external fire stairs that exit onto the rear area of 71 York Street and the use of the Passage and the Dock for access through to York Street (CB675-CB676; [28], affidavit 18 March 2019).
5. Mr Brooks was not cross-examined.

Anton Peetz

1. Anton Peetz was the strata managing agent for 71 York Street during the period from February 2004 to March 2019.
2. Mr Peetz gave evidence that 71 York Street used the rear area to store garbage bins along the back wall of the 71 York Street building (usually stored between the two fire exits), and that garbage had been collected on Monday, Wednesday and Friday nights at 9pm (T151:1-2, 17-18; [10] and annexure E, affidavit 28 June 2016).
3. He also gave evidence that 71 York Street's emergency ground floor procedures provide for the emergency exit to be onto the rear area and the Passage ([8] and annexure D, affidavit 28 June 2016).
4. Mr Peetz also gave evidence that Quality Hi-Fi had occupied a ground level retail store with a loading dock that was accessed at the rear area behind the 71 York Street building and was served by the Passage and the Dock. During cross-examination Mr Peetz gave evidence that Quality HiFi had been a tenant of 71 York Street until the previous week and he was not aware of any restaurant having been a tenant for many years (T150:9, T150:20-23, T151:2-24, [9] affidavit 28 June 2019).

Surveyor: Rolf Cambridge

1. As noted earlier, Mr Cambridge prepared a report and some plans relating to Book 124.
2. Mr Cambridge prepared another report dated 26 September 2016, which is relied on by 71 York Street and was not challenged. He was instructed to prepare a survey report to ascertain the position of the services and building elements constructed on the northern face of the 71 York Street building and whether they encroach upon the Passage and Dock. He was also asked to prepare an easement plan to encompass the encroachments.
3. Mr Cambridge attended 71 York Street and the adjoining sites on 25 August and 6 September 2016. He found there were a number of items that encroached upon the Passage and Dock and took steps to establish the extent of the various encroachments (CB562). He carried out survey works in respect of the services visible from outside 71 York Street and visible from inside the basement, but did not include the position of services within walls or underground or adjoining buildings (CB564).
4. Mr Cambridge's opinion of the nature and magnitude of the elements and services on the northern face of the 71 York Street building which encroach upon the Passage and the Dock is as follows: 1. four conductor boxes (rainwater heads) encroach from 0.3m to 0.335m upon the Passage and the Dock. Three encroach the Passage and one encroach the Dock (CB565); 2. three downpipes on the northern facing wall of 71 York Street encroach up to 0.18m upon the Passage and the Dock. Two on the Passage and one on the Dock (CB566); 3. five sets of windowsill mouldings encroach up to 0.8m upon the Passage and the Dock, four on the Passage and one partially over the Dock (CB567); 4. one vent pipe encroaches up to 0.135m upon the Passage (CB568); 5. the parapet at the top of 71 York Street encroaches up to 0.06m upon the Passage and the Dock (CB569); 6. electrical conduits encroach up 0.06m upon the Dock (CB570); 7. corbels (being decorative mouldings) encroach up to 0.18m upon the Passage (CB571); and 8. sprinkler heads and pipe work forming a fire system encroach up 0.06m to 0.175m upon the Passage and the Dock (CB572).
5. Mr Cambridge also identified three fire door exits, two of which are located on the western boundary of 71 York Street and one on the southern wall which require exits through the Dock and the Passage to York Street (CB574-CB575).

Traffic engineer: Ken Hollyoak

1. Ken Hollyoak prepared a report dated 13 January 2017 on which the defendants rely. He is a chartered professional engineer and has 35 years of experience in the road design, transportation and traffic planning field.
2. In his letter of instruction dated 20 December 2016, he was asked to provide his opinion as to whether the Dock and the Passage are large enough for vehicles to travel in and out, and turn around in the rear area behind 71 York Street and Clarence House, without passing over the land comprising 100 Clarence Street.
3. Mr Hollyoak attended the site and observed that 71 York Street had two doors leading onto the rear area and an additional gated access. He also observed two cars parked adjacent to the doors, garbage bins and other general garbage adjacent to the building. He also observed that Clarence House had a loading dock with a roller door and a simple door access with garbage bins located against the boundary wall.
4. Using a software program known as AutoTurn, Mr Hollyoak created and included in his report some diagrams which indicated it would not be possible for a truck, a B99 car or a B85 car to turn around within the available area behind Clarence's House and 71 York Street (CB1842). A B99 car is a design motorcar whose physical dimensions represent the 99.8% of all cars and light vans, whereas a B85 vehicle has the physical dimensions which represent the 85th percentile class (CB1842).
5. In his report, Mr Hollyoak expresses the opinion that: 1. there would not be sufficient room in the Passage and the Dock for vehicles to turn around without passing over the land known as 100 Clarence Street (CB1844); and 2. it would be possible for vehicles to drive on to the rear area behind 71 York Street and Clarence House in a forward gear but they would need to reverse back along the laneway and out onto York Street, which that would be dangerous notwithstanding compliance with AS 2890.1 was not required for the existing buildings (CB1845).
6. Mr Hollyoak was cross-examined. He accepted that he did not attempt to undertake an on-site three-point or five-point or any point turn in a car but used a bespoke software program, being AutoTurn (T210:23-25).
7. He also accepted that a B85 vehicle is equivalent to a Ford Falcon Sedan, a B99 is equivalent to a Ford Transit, being a medium wheelbase Ford transit van, and a SRV is a 6.4m long vehicle like a small vehicle truck that Coles would use to do home deliveries (T211:4-10).

Fire safety: Stephen Grubits and Allan Harriman

1. Clarence House and the defendants adduced evidence from fire safety experts. Clarence House called Stephen Grubits, a fire safety engineer who swore an affidavit dated 15 November 2016 attaching his report. The defendants called Allan Harriman, a fire safety engineer and building surveyor who provided a report dated 23 December 2016.
2. Mr Grubits and Mr Harriman produced a joint report dated 11 March 2019 relating to Clarence House. Given their joint report, I have not detailed the evidence they produced in their initial reports. Both were cross-examined as part of evidence which was given concurrently.
3. In the joint report, Mr Grubits and Mr Harriman agreed that: 1. Clarence House has two fire isolated exits discharging to the rear onto the loading yard behind Clarence House. One stair serves the upper residential level of the buildings whereas the other serves the lower ground floor and basement retailer; 2. from the point of discharge at the rear area of Clarence House, there needs to be a path to a public road. If that path is over an adjoining property, such as the Dock or Passage, there must exist a legal right of way or equivalent over the path; 3. the path of travel needs to be available and unobstructed at all times. A gate may be placed in the path with any locking or latching mechanism being able to be operated by single-handed action in accordance with clause D2.21 of the Building Code of Australia (BCA); 4. a right of way over the Passage and Dock would address any concerns with the definition of "open space", according to the BCA, for the purposes of the discharge to the public road; and 5. Clarence House may be altered to permit the discharge of the exit to be to Clarence Street but it would require the construction of a fire isolated Passage with consequent loss of rentable space and building frontage. Development and building construction consent would also be required from council.
4. The fire experts disagreed as to the consequences of undertaking alterations to Clarence House to construct a fire isolated passage. Mr Grubits considered that doing so would require a development consent which may trigger the upgrade provisions of clause 94 of the Environmental Planning and Assessment Regulation 2000 (NSW) and a fire safety upgrade to the existing building. Mr Harriman agreed that development consent would be necessary but was not briefed to assess the compliance of the building against the provisions of the existing or future BCA and so could not express a view on that issue.
5. Mr Harriman's report also dealt with 71 York Street (CB1807). The substance of his evidence is similar to that given in respect of Clarence House, although it only became clear on the fourth day of the hearing that his evidence regarding the construction of a fire isolated passage also related to 71 York Street (T206:4).
6. In cross-examination, Mr Harriman accepted that, while the current fire egress from the rear area of 71 York Street is non‑compliant because of the definition of open space which requires the path to travel to beyond the allotment, an easement over adjoining land is a common and quite frequent alternative solution (T270:28-36). He also accepted it would not be difficult to obtain approval for fire egress from the rear area of 71 York Street by way of a path over its own land and then over the Dock and Passage to York Street (T271:16-24).
7. Mr Harriman also accepted that he did not give any detailed consideration as to the ramifications to the internal structure of 71 York Street of building an internal fire isolated passage, that it would be "very difficult", and that he could only say it was "physically possible" (T270:40 - T271:13).

Valuations

1. 71 York Street and Clarence House each led valuation evidence in support of their claims for orders under s 88K of the Conveyancing Act. Each valuer prepared a report and was cross-examined. I deal with the submissions made by the defendants in relation to their evidence later in these reasons.
2. The defendants did not lead any valuation evidence.

Paul Dale

1. Paul Dale gave evidence on behalf of 71 York Street. His report is dated 24 October 2016. Mr Dale is a fellow of the Australian Property Institute and has more than 34 years' experience of assessing the market value of commercial property.
2. By letter dated 13 September 2016, Mr Dale was asked by 71 York Street to prepare a valuation report setting out his opinion as to what the defendants, as owners of the Passage and Dock, should be compensated (if any), for any loss or other disadvantage that will arise from imposition of easements pursuant to s 88K of the Conveyancing Act over the Passage and Dock.
3. In Mr Dale's opinion, the development potential of the Passage and the Dock is significantly constrained as a result of their size and shape, the existing title encumbrances and their historic use, and would be best realised through the transfer of their available floor space ratio (FSR) to one of the adjoining land owners who might be able to use the FSR as part of the development of the adjoining property (CB749). As 71 and 65 York Street are heritage listed, he is of the opinion that they are unlikely to require additional FSR for any development. The limited utility and range of prospective purchasers would, in his opinion, adversely impact upon market value of the Passage and the Dock (CB749).
4. Mr Dale analysed the sales of other properties in the CBD with development potential, to identify capital rates per square metre of improved site area and per square metre potential GFA. He made explicit adjustments to each property to facilitate a comparative analysis with the Passage and the Dock that took account of what he considered to be their limiting factors.
5. Mr Dale calculated the improved site area capital rates for each property and adjusted them to come to a figure which he considered reflected the factors constraining development of the Passage (CB754).
6. In Mr Dale's opinion, the Passage would command the following market values: 1. $1,627,000 based on the range of 15,000 to 20,000m² of improved site area, using a capital rate of $17,000 (CB755); and 2. $1,531,500 based on the range of 1,500 to 1,700m² of potential gross floor area (GFA), adopting a capital rate of 1600 GFA (CB755).
7. Mr Dale adopts the same capital rates for the Dock notwithstanding its smaller size and absence of street alignment. While the Dock is not burdened with easements, in his view its historic use indicates that its development potential is also severely constrained and its highest use pertains to the utility of the available floor space on an adjoining property (CB759).
8. Mr Dale approaches his market value methodology in accordance with the API Professional Practice Standard and takes into account a number of key influences on the respective parcels of land (CB757). He assesses the value of the Passage and the Dock before and after the imposition of the easements on the basis that the highest and best use of the Passage and the Dock is as use as a laneway with limited potential for amalgamation with an adjoining property and for the floor space to be utilised in the redevelopment of that adjoining property (CB757).
9. In his opinion, the market value of the Passage in the before scenario is $1,580,000 and the market value in the after scenario is the same (CB759).
10. In relation to the Dock, Mr Dale considers that the market would not differentiate in capital rates notwithstanding the different features of the lot because the utility of the Dock is fundamentally tied to the provision of floor space to an adjoining property. He adopts a market value in the before scenario of $97,750 based on a capital rate of 17,000m² of improved site area and $92,000 based on a capital rate of 1,600m² of potential GFA (CB759).
11. In Mr Dale's opinion, the market value of the Dock in the before scenario was $95,000 and the market value in the after scenario is also $95,000 (CB760).
12. In his opinion, the proposed easements would not adversely impact upon the market value of 100 Clarence Street. He assesses compensation for loss of market value and/or any proprietary rights as zero for both the Passage and the Dock. His assessment of compensation for loss of proprietary rights incorporates loss associated with having "a blot on title", through the registration of encumbrances (CB760).
13. He assesses compensation for disturbance at $6,000, on the basis that the defendants may have their enjoyment of the Passage and Dock disturbed periodically in the future when the proposed easements are utilised to maintain the heritage listed building at 71 York Street, although noting that this is likely to be minimal in the context where the Passage and Dock have been historically used for access and maintenance purposes (CB760).
14. Mr Dale accepts that the defendants may incur cost for legal and valuation advice relating to the imposition of the easements and his compensation assessment assumes these costs will be reimbursed by 71 York Street where reasonable (CB761).
15. In summary, in Mr Dale's opinion, a fair and reasonable compensation for the imposition of all the proposed easements is $6,000 in total (CB762).
16. Mr Dale was cross-examined. He was asked about his opinion as to the highest and best use of the Passage and he confirmed his opinion that it would be to contribute to the floor space ratio of the redevelopment of an adjoining site, with the most obvious adjoining property being 100 Clarence Street (T125:1-15).
17. Mr Dale accepted that his approach did not undertake a valuation of the Passage and the Dock on the basis of their development potential in conjunction with other adjoining properties, noting that their highest and best use is to use their floor space to contribute to the floor space of the development of an adjoining property (T135:8-16).
18. During cross-examination, he accepted that it would be necessary to come to a commercial arrangement with the lot owners of the two other properties if there was to be redevelopment of 100 Clarence Street together with 65 and 71 York Street, (T126:20-35).
19. Mr Dale did not accept that the concept of a special value to an owner of property, being the additional amount that a prudent person would pay for land rather than lose it, is applicable to assessing a market value of property (T129:25-30).
20. Mr Dale did not accept that his adjustments of between 60 to 80% in respect of the comparable sales made his valuation of the Passage to be less likely to be accurate than that of Ms Marshall (who adopted a 50% discount rate) as he considered that the Passage and Dock were in a unique proposition by virtue of their configuration and size of the title encumbrances (T133:39-T134:6).

Dimity Marshall

1. Dimity Marshall swore an affidavit dated 20 October 2016. She is a practising property value certified with the Australian Property Institute and employed by Preston Rowe Patterson New South Wales Pty Ltd. As at the date of her report, she had over six years' experience in the property valuation industry.
2. By letter of instruction dated 9 September 2016, Ms Marshall was asked by Clarence House to provide a valuation report to assess the potential loss in value of the Passage and the Dock from an imposition of an easement for carriageway to the benefit of Clarence House and the appropriate amount of compensation, if any, that should be paid to the defendants for any loss or disadvantage that would arise for the imposition of the easement.
3. In Ms Marshall's opinion, the potential loss in value to the Passage and the Dock from the imposition of an easement for carriageway was zero dollars. While her assessment of the market value did not result in any loss in value, she considered it to be good practice for a nominal sum to be paid to reflect a blot in title which amount would not likely exceed $5,000 (CB1662).
4. Ms Marshall was provided with copies of documents filed in proceedings in which the defendants were involved, being 2003/2610 Pasade Holdings v Sydney City Council, including a valuation report prepared on behalf of the defendants by Stephen Eccleston of BEM Property Consultants Pty Ltd. Ms Marshall used that report as a reference although she provided her assessment of the potential loss based on her opinion only.
5. Mr Eccleston's report concluded that, due to the Passage's narrow width and the necessity to maintain it clear of any obstructions to ensure access, it would not be possible to erect any structure on the Passage and it would be most unlikely that it would be possible to utilise the airspace above and comply with Building Order of Australia fire ordinance. He considered that the Passage could not be developed in isolation but could be amalgamated with adjoining properties and its development potential could then be unlocked by incorporating the potential floor space into one of the adjoining allotments. He concluded that the additional easements would not reduce the value of the Passage and that a nominal sum of one dollar was appropriate as consideration for the easements sought (CB1719).
6. Ms Marshall considered six other property sales which had development potential, which indicated a range of $22,102/m² to $60,125/m² and $2,009/m² to $4,630/m² of FSA (CB1658).
7. Ms Marshall applied a discount factor of 50% to the Passage and 75% to the Dock to the adopted rate of $30,000/m² of land area, based on the constraining factors and restricted market potential of the Passage and Dock (CB1659 and CB 1660). In her opinion, adopting a before and after approach, there is a zero dollar difference in the value before an easement for carriageway is imposed on the Passage and the Dock compared to after (CB1660).
8. Ms Marshall does not refer to the best and highest use of the Passage and Dock but gives evidence as to their realisation potentials.
9. In her opinion, it would not likely be possible for the erection of any structures on the Passage or the Dock nor could they be developed in isolation. She recognises the possibility they could be amalgamated with the adjoining landowners (69 and 71 York Street and 100 Clarence Street) to utilise the airspace above and retaining the ground floor access currently in use, with a need to effectively cantilever the stratum space. In her opinion, these types of developments are limited in number and any realisation from the stratum lot would most probably be significantly discounted relative to a more typical sale of the land on a freehold basis, given the increased construction cost to support a structure of this type (CB1661).
10. Notwithstanding the realisation options she identified, in Ms Marshall's opinion, there would be no loss in value pertinent to the Passage or the Dock from an imposition of an easement for carriageway to the benefit of Clarence House (CB1662).
11. Ms Marshall was cross-examined during which she accepted that: 1. if there were to be an amalgamation of properties and the Passage, it would be necessary for the owners of 69 York Street, 71 York Street and 100 Clarence Street to enter into a commercial arrangement to enable the development (T155:28-32); 2. the impediment of the Dock being landlocked had no force if it was part of an amalgamated site which included 100 Clarence Street, but could not answer whether her discount of 75% would no longer be appropriate (T157:5-13); and 3. if an easement over the Passage to the benefit of Clarence House was granted, Clarence House would receive a very valuable commercial advantage as any redevelopment that involved 69 and 71 York Street and 100 Clarence Street would then need to reach accommodation with Clarence House, which advantage she did not take into account that in her valuation of the Passage (T159:1-15).

Existing rights of way over passage and dock: by historical grant

Clarence House: existing rights of way over the Passage and Dock

Clarence House's submissions

1. Clarence House submits that, by tracing though the historical instruments in evidence, the Court should conclude that rights of way over the Passage and Dock were created and later conveyed with land to Clarence House's predecessors in title, and that those rights continue to benefit the land which is now Clarence House. It also submits that the rights of way were recorded on its title in 1981.
2. Clarence House traces its entitlement to a right of way over the Passage commencing from when Hugh McDonald granted a right of way under Book 8 in 1839. It submits that this right of way was acquired by William Gardiner in 1878 under Book 181, by Gardiner & Co in 1900 under Book 663, and finally by British Electric in 1927 under Book 1481 ([26(b)] closing submissions).
3. Clarence House relies, in particular, on Book 663, under which Mr Gardiner conveyed his lands on which sat the warehouses at 71 York Street and Clarence House to Gardiner & Co.
4. It submits that Book 663 consolidated the parcels of land, "accumulated" the rights of way that existed to that point in time and effected a transfer of all the land together with all the rights of way that were appurtenant to the land (T380:33-40 and T386:1).
5. Clarence House submits that the consolidation of land and rights of way under Book 663 enabled and entitled Gardiner & Co's successor in title, Sargood Gardiner, to subsequently convey part of the consolidated land (being the Clarence House land) with the benefit of the right of way over the Passage (and the Dock) (T386:4-11 and [78] written submissions).
6. Clarence House traces its entitlement to a right of way over the Dock commencing from when it says that Patrick Erwin granted a right of way in 1871 under Book 124, which right was acquired by Mr Gardiner in 1877, by Gardiner & Co in 1900, and by British General Electric & Co Ltd in 1927 ([26(a)] closing submissions).
7. Clarence House submits that the Court should construe Book 124 as creating a right of way over the Private Lane (which includes the land which is now the Dock) to the benefit of those lots which now comprise the Clarence House land ([60] closing submissions).
8. Clarence House submits that lots 4d, 5e and 6f are particularly relevant as they are comprise the northern portion of the Clarence House land and are adjacent to the Private Lane of which the Dock is a remnant (T20:1-5 and [55] written submissions). Clarence House also submits that Book 124 created these land locked lots which did not have any direct street frontage and the Private Lane provided these lots with access to the Passage through to York Street ([57] and [59] closing submissions).
9. Clarence House traces its entitlement to a right of way over the Dock to various conveyances of land after Book 124. In particular, it relies on the purchase by William Gardiner of various lots created by Book 124, including lot 5e which is bounded on the east by the Private Lane. Clarence House submits that William Gardiner not only acquired the fee simple in the lots but also acquired a right of way over what is now the Dock via his purchase of lot 5e as it was conveyed together with "rights of way, paths and passages", which was a right of way over the Private Lane ([61] and [63] closing submissions).
10. Similar to its submissions in relation to the Passage, Clarence House contends that William Gardiner's rights of way over the Dock (and Passage) were also conveyed when he sold all his land to Gardiner & Co under Book 663, and that Sargood Gardiner was entitled to convey those rights of way (which included the right of way over the Dock) to British Electric when he sold what is now the Clarence House land under Book 1481 ([68] and [78] written submissions).

Defendants' submissions

1. The defendants dispute that Clarence House has the benefit of rights of way over the Passage or the Dock by reason of express grants. They also dispute that rights of way to the Passage and Dock are registered on the strata plan for Clarence House.
2. The defendants submit that there is no evidence that any rights of way existed at the time of the dealings relied on by Clarence House in which the land that is now Clarence House was the dominant tenement.
3. The defendants acknowledge that Book 1481 purports to convey the Clarence House land together with a right of way over the Passage and the Dock to the benefit of Clarence House's predecessor in title, British Electric. But they submit that Sargood Gardiner had no entitlement to convey those rights.
4. In relation to the Passage, the defendants submit that the land over which the right of way was created is not part of the land owned by Clarence House, but was created to the benefit of the land which is now 71 York Street. That right of way attaches to the land and is not something that could be acquired by William Gardiner, and later dealt with and conveyed by Sargood Gardiner to the owner of another parcel of land ([8], [9] and [10] closing submissions).
5. The defendants rely on Westfield Management Limited v Perpetual Trustee Company Limited (2007) 233 CLR 528 for the proposition that the owner of a dominant tenement is not entitled to transfer or extend the benefit of an easement to other land, even if that other land is owned by the owner of the dominant tenement.
6. As to the Dock, the defendants submit that the terms of Book 124 did not create any new right of way, but simply conveyed whatever rights already existed ([12], [13] and [14] closing submissions).
7. Even if Book 124 can be construed as creating a right of way over the Dock, they submit such a right did not extend to the Clarence House land. They reject Clarence House's submission that lots 4d, 5e and 6f comprise the northern portion of SP 17719, relying on the Overlay Plan which indicates that the boundaries of those lots fall within the 71 York Street land, not the Clarence House land ([15] closing submissions).
8. In oral reply submissions, Senior Counsel for Clarence House responded to the defendants' contention that the lots in question did not fall within the Clarence House land, noting that lots 5E, 4D and 6F all became part of the Clarence House land. She stated it was those lots which were the foundation of Clarence House's submission ([55] closing submissions) as to the land and rights which were ultimately passed through the series of dealings to Gardiner & Co and then to British Electric (T379:5-18).
9. Pausing here, Clarence House's written submissions ([55]) do not refer to lots 5E, 4D and 6F, but refer to lots 5e, 4d and 6f being adjacent to the Private Lane and comprising the northern portion of the Clarence House land.
10. Mr Cambridge's first report (CB600) and the Overlay Plan confirm that lot 4d and the substantial portion of lots 5e and 6f do not comprise the northern portion of the Clarence House land. Rather, lot 4d and the substantial portions of lots 5e and 6f (and parts of lots 6F and 5E) are now all contained within the boundaries on which 71 York Street is situated. Only very small slivers of lots 5e and 6f are contained within the Clarence House land. These matters are relevant to the construction of Book 124 and what land has the benefit of any rights of way, as discussed below.

Consideration

1. As there is no dispute that Book 8 granted a right of way over the Passage to the benefit of what is now the 71 York Street land ([47] and [48] CH closing submissions; [3] and [4] defendants' closing submissions), I will determine first whether rights of way were created in relation to the Dock by reference to Book 124 and, if so, whether they benefit the Clarence House land today. I will then consider whether any rights created over the Passage and the Dock were conveyed or passed so as to give rise to existing rights of way to the benefit of the Clarence House land today.

Did Book 124 create a right of way over the Private Lane?

1. Clarence House relies on Book 124 as creating a right of way over the Private Lane, of which the Dock is now a remnant ([57] and [60] closing submissions).
2. Book 124 is an instrument which conveyed old system land. It uses general words when referring to rights of way and does not expressly state the nature and extent of any rights of way to be passed, granted or created.
3. Clarence House did not address the Court on the appropriate principles to be applied when construing a deed of old system land which purports to create rights of way using general words, or refer to any authorities to assist the Court with that task. Nor did the defendants. I have approached the task of construing Book 124 having regard to the following principles.
4. An easement can be created over old system land by an express grant in an instrument. Whether there is an express grant of an easement is a question of construction of the relevant instrument according to the natural meaning of the words contained in the document as a whole, read in light of the surrounding circumstances at the time of its execution. No particular words are necessary for a grant and any words, including general words, which show an intention to grant an easement, which by law is grantable, is sufficient: Dabbs v Seaman (1925) 36 CLR 538; Bayley v Great Western Railway Co (1884) 26 Ch D 434 at 453.
5. A grant of a right of way may also be implied from general words used in a conveyance. An intention to grant may be inferred from the language used, the surrounding circumstances and the fact of the grant, from necessity or from the way a parcel of land is described in the conveyance. For example, where the conveyance includes a description by words or by a plan of land being bounded or abutted by a lane or passage owned by the vendor, the grantor may be regarded as having impliedly agreed to grant a right of way over the land forming the lane or passage: Bayley v Great Western Railway Co (1884) 26 Ch D 434 at 453; J Gaunt, Gale on Easements (20th ed, 2012, Sweet & Maxwell); A Bradbrook, S MacCallum, Bradbrook and Neave's Easements and Restrictive Covenants (3rd ed, 2011, LexisNexis Butterworths) at [4.41].
6. The hearing and the defendants oral and written submissions proceeded on the assumption that Clarence House's claim was based on an express grant (see pages 1-2 defendants closing submissions and T73:34-T74:15).
7. That said, the 2ASOC and Clarence House's closing submissions do not explicitly state whether the right of way over the Dock was created by way of an express or implied grant. Rather, they refer to Book 124 having "granted rights of way" and "creating a right of way" ([7D(c)] 2ASOC and [60] closing submissions). The closing submissions refers to facts relating to the creation and location of lots and the Private Lane, the Overlay Plan and the Book 124 subdivision plan, which might suggest a grant by implication.
8. I have, therefore, considered whether a right of way was created by Book 124 by express grant or by implication based on the principles outlined above.
9. No issue has been taken (and I consider it to be correct) that the grantor under Book 124, being Mr Erwin's trustee, had the power to create and grant a right of way over the Private Lane. The Private Lane formed part of the Allotment 3 land owned by Mr Erwin. It was not conveyed under Book 124 and remained vested in Mr Erwin's trustee, who was capable of granting a right of way over it to the benefit of other land.
10. The starting point is the language used in Book 124.
11. The initial section of Book 124 grants and conveys the land described in the second to ninth schedules "together with all … roads rights of way watercourses fixtures rights easements…. whatsoever to the said parcels of land hereditaments and premises pertaining or with the same held or enjoyed or reputed as part thereof or appurtenant thereto". Those words could, as the defendants submit, be interpreted as passing on existing rights of way enjoyed with the land being conveyed: Dabbs v Seaman (1925) 36 CLR 538 at 574.
12. But the evidence does not indicate there were any rights of way accommodating the Book 124 land in existence at the time of that instrument. Book 18, which conveyed the Allotment 3 land to Mr Erwin, also included general words that the land was conveyed "together with…all ways…to the said land and hereditaments hereby granted and released or intended so to be belonging or appertaining…", but could not have created a right of way over the Dock as the Private Lane was part of the Allotment 3 land conveyed under that book (CB1274).
13. The question is, therefore, whether the general words in the initial section and the other language used in Book 124, when read in light of the surrounding circumstances, created a right of way over the Private Lane. In my view they do, but only to the benefit of lots 4d, 5e and 6f.
14. The language in Book 124 does not suggest an intention and should not be regarded as an implied agreement on the part of the grantor to create a right of way over the Private Lane to the benefit of all the land conveyed under Book 124 which is now part of the Clarence House land, including lots 4D, 5E and 6F.
15. The rights of way referred to in the initial section of Book 124 should, in my view, be read as relating the rights of way to particular lots only and not to the entirety of the land conveyed under that instrument. The words "to the said parcels" link the rights of way to specific lots that are later described in each of the second to ninth schedules. The words "pertaining or with the same held or enjoyed or reputed" are also indicative of a nexus between the right of way and a particular lot later described.
16. The second schedule in Book 124, which identifies lots 4D and 4d as those being conveyed, does not describe lot 4D as being bounded by the Private Lane. In contrast, it describes lots 4d as "shown on the said plan as Lot 4 lettered d…bounded by…passage four feet wide on the east". At the end of the description of lots 4d are the words "with a right of way".
17. Given the proximity of lots 4d to the Private Lane and the references to the passage "four feet wide on the east" and "with a right of way", Book 124 should, in my view, be interpreted as an express grant of a right of way over the Private Lane to the benefit of lots 4d, but not to lot 4D: Bayley v Great Western Railway Co (1884) 26 Ch D 434.
18. Lots 5e and 6f are also described in Book 124 as being bounded by the Private Lane but lots 5E and 6F are not. Lots 5E and 5e are described in the fifth schedule, with lots 5e as being bounded "…on the east by a reserved lane five feet four inches wide". The eighth schedule identifies lot 6F and lots 6f, with lots 6f described as bounded on "…to the lane five feet four inches wide on the east by that lane".
19. Given the proximity of lots 5e and 6f to the Private Lane and the description of those lots, in my view, Book 124 could be construed as creating a right of way by implication to the benefit of lots 5e and 6f, but not to lots 5E and 6F: Roberts v Karr (1809) 1 Taunt 495; 127 ER 926 .
20. Under Book 124, each of lots 4D, 5E and 6F were conveyed together with the corresponding lots numbered 4d, 5e and 6f to the same beneficiary. The authorities referred to earlier do not support general words in a conveyance being interpreted as granting rights of way to multiple lots based on unity of ownership of the conveyed lots.
21. The surrounding circumstances that existed at the time of Book 124 also support rights of way over the Private Lane having been created to the benefit of lots 4d, 5e and 6f only, and do not suggest any intention on the part of the grantor to create rights to the benefit of the lots which faced Clarence Street or any other lots conveyed under Book 124 which now comprise the Clarence House land: Bayley v Great Western Railway Co (1884) 26 Ch D 434. The circumstances also indicate there was no necessity for a grant of a right of way over the Private Lane to the benefit of lots other than lots 4d, 5e and 6f: Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 129, at [45].
22. The relevant surrounding circumstances are as follows: 1. the Private Lane was part of the Allotment 3 land acquired by Mr Erwin under Book 18 (CB1269); 2. the Private Lane was likely created during Mr Erwin's ownership of the Allotment 3 land and provided access for five small buildings located near the eastern boundary of the Allotment 3 land to the Passage and York Street: (CB674 and CB676); 3. only lots numbered 4d, 5e and 6f abutted the Private Lane and were landlocked, in the sense there was no apparent route to a public road to or from those lots other than by the Private Lane (and other lanes) and the Passage to York Street, or across other lots which faced Clarence Street (such as lots 4D, 5F and 6E) (CB620 and Overlay Plan); 4. based on location, the Private Lane was likely visible to and used for the purpose of the small buildings on lots 4d, 5e and 6f gaining access to a public road before they were conveyed under Book 124 (CB674 and CB 676); and 5. all of the lots conveyed by Book 124 which form part of the Clarence House land today (other than very small slivers of lots 5e and 6f) face Clarence Street (CB620 and Overlay Plan).
23. Book 124 does not specify the nature of the rights of way created and granted and does not expressly identify the dominant tenement, being the Private Lane, to which the rights of way relate. But so far as the general law is concerned, an instrument creating a right of way does not need to expressly identify the dominant tenement: Re Maiorana and the Conveyancing Act [1970] 1 NSWR 627 at 630.
24. It is open to the Court to construe general words as reflecting an intention to create or to grant by implication a new right of way as appurtenant to the use and enjoyment of particular land: Barkshire v Grubb (1881) 18 Ch D 616 at 622; Bayley v Great Western Railway Co (1884) 26 Ch D 434 at 455.
25. Endeavouring to judge what was intended by the grantor based on the language used in Book 124, the subdivision plan and the circumstances as they existed at the time of the conveyance, I conclude that Book 124 created rights of way over the Private Lane (as opposed to passing any existing right of way) as appurtenant to the use and enjoyment of those lots which abutted the Private Lane and described as lots 4d, 5e and 6f, but not to any other land.

Do the rights of way created by Book 124 continue to accommodate the Clarence House land?

1. It follows from the above that I do not accept Clarence House's submission that Book 124 created a right of way over the Dock to the benefit of all the land which is the Clarence House land today, or the northern portion of its land.
2. The only land which had the benefit of rights of way over the Private Lane was lots 4d, 5e and 6f. Those lots do not comprise the Clarence House land today, other than very small slivers of lots 5e and 6f as identified by the Overlay Plan.
3. Clarence House and the defendants did not address the Court on whether Clarence House retains the benefit of rights of way because the small slivers of land that were originally part of lots 5e and 6f are within its boundaries. In my view, it does not.
4. An easement benefitting a dominant tenement is presumed to benefit each and every part of it. If a dominant tenement is subdivided, the easement continues to benefit the subdivided parts unless the terms of the conveyance prohibit it: Gallagher v Rainbow (1994) 179 CLR 624; [1994] HCA 24 (Gallagher v Rainbow). This presumption may be rebutted if, as a matter of fact, the easement no longer accommodates the subdivided part, or renders the easement of no value to the land in its subdivided form: Gallagher v Rainbow at 633; B Edgeworth, Butt's Land Law (7th ed, 2017, Lawbook Co) at [9.120].
5. The relevant dominant tenements are lots 5e and 6f. Those lots have been divided since being created under Book 124, with most of the land within them now forming part of the 71 York Street land and only very small slivers of them forming part of the Clarence House land.
6. The rights of way to the benefit of lots 5e and 6d were initially created to enable those lots to have access to the Private Lane. The Private Lane no longer exists, other than the remnant Dock. The remaining subdivided portions of lots 5e and 6f which form part of the Clarence House land (being the small slivers of lots 5e and 6f) are no longer bounded by or abut the Dock (see Overlay Plan). In my view, the rights of way originally created cannot be said to continue to benefit those slivers of land which are now part of Clarence House.
7. Put another way, any presumption that the small slivers of lots 5e and 6f which now form part of the Clarence House land today continue to have the benefit of rights of way has been rebutted. Those slivers of land are very small and are not physically connected to the Dock. Given their size and location, a right of way over the Dock is of no value and cannot accommodate those slivers of land that are part of Clarence House. No evidence was led or submission made to the Court to suggest otherwise.
8. If I am wrong and the presumption was to stand (such that the rights of way would continue to benefit those slivers of land), the inclusion of those small slivers within the land now comprising Clarence House would not have the effect of 'extending' the rights of way to the entirety of Clarence House's land. This is because, upon the amalgamation of two lots, an easement or way appurtenant to one lot endures for the benefit of that part of the amalgamated lot (and only that part) which corresponds to the previous dominant tenement: Re Eddowes [1991] 2 Qd 381, at 383; Plumpton Park Developments Pty Ltd v SAS Trustee Corp [2018] NSWSC 461 at [57]; and B Edgeworth, Butt's Land Law (7th ed, 2017, Lawbook Co) at [9.130].

Do any rights of way over the Passage and Dock exist for the benefit of the Clarence House land today?

1. Clarence House's claim to existing rights of way relies on submissions that those rights could be acquired, consolidated and conveyed by various landholders under various instruments and pass to its predecessor in title. Specifically, by William Gardiner to Gardiner & Co under Book 663 and then by Sargood Gardiner to British Electric under Book 1481 to the benefit of the land on which Clarence House now sits.
2. As Clarence House noted in its closing submissions, the essential characteristics of an easement, as set out in Re Ellenborough Park [1956] 1 Ch 131, are that: 1. there must be a dominant and a servient tenement; 2. an easement must "accommodate" the dominant tenement; 3. the dominant and servient owners must be different persons; and 4. a right over land cannot amount to an easement unless it is capable of forming the subject matter of a grant.
3. As a general rule, an easement will benefit and bind the successors in title to the dominant and servient tenements respectively: Gallagher v Rainbow (1984) 179 CLR 624. When Mr Gardiner acquired the 71 York Street land under Book 181, he did so with the right of way appurtenant to that land, being a right of way over the Passage.
4. When Mr Gardiner acquired the various parcels of the Book 124 land from Mr Erwin's beneficiaries under Books 171, 172 and 220, he did so together with all existing rights of way appurtenant to those lands. As I have concluded, those existing rights included rights of way over the Private Lane to the benefit of lots 4d, 5e and 6f, but not to lots 4D, 5D and 6F. In my view, the terms of Books 171, 172 and 220 are consistent with that conclusion.
5. Book 172, by which lots 4d, 6f and 4D were conveyed to Mr Gardiner, included general words that the lots were conveyed with "all rights easements advantages and appurtenances to the premises belonging or appertaining or usually held or enjoyed".
6. Book 172 also included an express grant of a right of way to Mr Gardiner over the Private Lane as it conveyed the lots together with "full and free liberty for the said William Gardiner his appointees heirs and assigns and all others authorised by him to….drive ride operate and labor up down to fro and upon all lanes, streets or ways adjoining or leading to the said lands and as the same are shown on the plan annexed c". The Private Lane was shown on the plan contained in Book 172 as adjoining lots 4d and 6f only, with lot 4D facing Clarence street (CB210).
7. Similarly, Book 220, which conveyed lots 5e and 5E to Mr Gardiner, included general words that the lots were conveyed together with "all ….ways rights of way paths passages…. easement and appurtenances to the said land and hereditaments or any part thereof belonging or in anywise appertaining on therewith usually held used occupied or enjoyed". The plan contained in Book 220 shows the Private Lane abutting lots 5e and 6f but not lot 5D (CB214).
8. Book 171 conveyed lot 6F together with "rights of way easements advantages and appurtenances to the said lands and premises being…in anywise appertaining or therewith usually held occupied or enjoyed". There is no transcription of Book 171 before the Court, but the plan contained in that instrument identifies lot 6F as facing Clarence Street and not abutting the Private Lane.
9. Mr Gardiner acquired the other parcels of land on which Clarence House now sits with the benefit of whatever easements and rights of way existed or were granted as appurtenant to those lands. There is no evidence that those lands enjoyed rights of way over the Passage or the Private Lane.
10. Mr Gardiner physically consolidated the 71 York Street land (which had the benefit of the right of way over the Passage), lots 4d, 5e and 6f (which had the benefit of the rights of way over the Private Lane) and the Clarence House land by building three warehouses on them. He subsequently conveyed all that land together to Gardiner & Co under Book 663.
11. I do not accept Clarence House's submission that the rights of way which attached to the relevant parcels of land owned by Mr Gardiner were accumulated and acquired by Gardiner & Co to the benefit of all the consolidated land.
12. Where an easement is created to the benefit of a dominant tenement which is subsequently consolidated with other land, the easement continues to benefit only that part of the land that was the former dominant tenement. It does not benefit the whole of the consolidated land: Re Eddowes [1991] 2 Qd R 381 at 383.
13. When the land was acquired by Gardiner & Co, the rights of way continued to inure to the benefit of the dominant land in respect of which they were created. In the case of the rights of way over the Passage, that dominant land was not the Clarence House land, but land which is now part of 71 York Street's land. Similarly, with the rights of way over the Private Lane.
14. The terms of Book 1481, by which Sargood Gardiner (the subsequent name for Gardiner & Co) conveyed the Clarence House land to British Electric includes language that purports to convey a right of way over the Passage (and seemingly the Dock) to the benefit of British Electric. As noted earlier, it stated that the land was conveyed "Together with the right to use in common with others having a similar right and the Vendor and its assigns and all persons authorised by it or them the private lane or passage leading from the lastly described parcel of land to York Street coloured yellow on the said plan". The yellow passage comprises what are now the Passage and the Dock.
15. I accept the submissions of the defendants that Sargood Gardiner did not have any entitlement to convey or grant a right to use the Passage and the Dock to the benefit of land owned by Clarence House's predecessor in title.
16. An easement is a charge imposed upon the servient tenement for the advantage of a dominant tenement. Unity of ownership of a dominant tenement and other land does not create an easement over the servient tenement in favour of all the land owned.
17. The owners of the dominant tenements in this case, Mr Gardiner, Gardiner & Co and then Sargood Gardiner, could not unilaterally 'assign', 'convey', 'transfer', 'grant' or 'extend' the rights of way over the servient tenements (the Passage and the Dock) to the owner of other land, relevantly to British Electric.
18. As owners of the dominant tenements, Mr Gardiner, Gardiner & Co and then Sargood Gardiner could not deal with interests over servient tenements that they did not own. As the Western Australian Court of Appeal expressed in Kitching v Phillips (2011) 278 ALR 55; [2011] WASCA 19 (at [42]): "An easement does not, however, create an estate in the servient tenement - an easement is a privilege without profit, and relates only to the user of the servient tenement; it confers neither seisin nor possession in the servient tenement: Parramore v Duggan (1995) 183 CLR 633 at 642; 132 ALR 40 at 46 (Parramore). It is not possible to assign an easement apart from the dominant tenement to which it is appurtenant: Tuckett v Brice [1917] VLR 36 at 57; 23 ALR 85b."
19. At no time did Mr Gardiner, Gardiner & Co or Sargood Gardiner own the Passage or the Dock. They owned some land which had the benefits of rights of way attaching to that land. Those rights of way could not be acquired by or subsequently conveyed to British Electric as it did not acquire the land to which those rights were attached. Nor could Sargood Gardiner grant a new right to use the Passage and the Dock to British Electric.
20. The rights of way obtained by British Electric under Book 1481 were limited to those that were already in existence to the benefit of the Clarence House land, together with the new rights which Sargood Gardiner was in a position to grant, being the right of way over that part of the loading yard on the 71 York Street land and the right to use the wooden stage.

Were rights of way over the Passage and Dock recorded on the title of SP17719?

1. I do not accept Clarence House's submission that rights of way over the Passage and the Dock were recorded as arising from Book 1481 on its title at the time SP17719 was registered.
2. The notifications recorded on title at the time of registration concerned rights of way over the loading yard and a right of user of the wooden stage.
3. The reference on the plan diagram of SP17719 to "passage (BK 1481…)" (noted on the location of the Passage) is not listed as a notification on title. There is no reference on the plan diagram to "passage (BK 1481…)" being a right of way and it is not marked in a manner to suggest a notation of a right of way to the benefit of Clarence House, unlike the other rights of way over the loading yard.

Conclusion on Clarence House claim

1. For the above reasons, Clarence House has not made out its claim that the Clarence House land today has the benefit of existing rights of carriageway over the Passage and the Dock created in historical dealings.

71 York Street: right of carriageway over the Passage

1. 71 York Street relies on its existing right of way under Book 8 in support of a claim for a declaration that it has a right of carriageway over the Passage (T372:39). It submits that the Court should make a declaration to that effect given the defendants' submission that the right of way under Book 8 does not extend to motor vehicles ([32] defendants' written submissions; T373:1-10).
2. I do not accept that it is necessary or appropriate to grant declaratory relief that 71 York Street has a right of carriageway over the Passage, in the general terms as sought in paragraph [(i)] of the relief claimed in the statement of claim or in the terms of Part 1 of Schedule 8 of the Conveyancing Act.
3. As noted earlier, there is no dispute that 71 York Street has the benefit of an existing right of way over the Passage in the terms of the express grant contained in Book 8, which easement is recorded on its title (T73:5-12). There is also no dispute raised by the pleadings that a right of carriageway was granted over the Passage to the owners of land which is now 71 York Street, on the terms of Book 8 ([8b] of defence).
4. There is no utility in granting declaratory relief to confirm the existence of an easement in the terms of Book 8 when an easement in those terms is recorded on title already.
5. To the extent that 71 York Street seeks declaratory relief for a right of carriageway in terms that reflect Part 1 of Schedule 8 of the Conveyancing Act, such a claim does not reflect its pleading or how it presented its case, which is that its right of carriageway was granted under Book 8 (at [8(1)], including particulars, of statement of claim). The terms of Book 8 set out the nature and scope of the right of way over the Passage which is appurtenant to the 71 York Street land today, not the Conveyancing Act.
6. There is no dispute raised by the pleadings as to the interpretation and meaning of the grant of the right of way under Book 8. In any event, the terms of Book 8 are clear. Book 8 provides for the right for "…animals and carriages carts wagons or other vehicles to pass and repass into along across upon and over the [Passage]". There are no words in Book 8 which limit "other vehicles" to non-motorised vehicles.
7. The Court will not grant declarations that are hypothetical or not based on agreed or found facts: Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334.
8. The statement by Senior Counsel for the defendants might suggest an issue may in the future be raised as to the use by 71 York Street of motor vehicles over the Passage. That debate (to the extent any arises) should be had in the relevant context, taking into account the type of vehicle, when and how it was used to pass over the Passage, and whether the complaint is of excessive user or simply the use of a motor vehicle on a particular day or time. That debate is not, in my view, one on which the Court should or can seek to adjudicate in these proceedings.

Legal principles

1. In NSW, easements by prescription arise at common law under the doctrine of lost modern grant. By continued use for at least 20 years, a trespasser may acquire rights in respect of land, by way of an easement, consistent with that use. The law creates a fiction that requires a court to presume, even if contrary to the truth, the existence of an express grant allowing such use which has been lost: Williams v State Transit Authority of NSW (2004) 60 NSWLR 286; [2004] NSWCA 179 (Williams v State Transit Authority) at [79].
2. The presumed grantor must have had legal capacity to have executed the grant: Williams v State Transit Authority at [79]. Short of impossibility or illegality, evidence that no grant was made does not prevent a court presuming a lost modern grant: Tehidy v Minerals v Norman [1971] 2 QB 528 at 552.
3. The use giving rise to an easement by prescription must be "as of right": Hamilton v Joyce [1984] 3 NSWLR 279. It must be of a nature that would alert a reasonable person in the position of the servient owner to the fact that a continuous right of enjoyment was being asserted and ought to be resisted if such a right is not recognised and if resistance to it is intended: Williams v State Transit Authority of NSW at [80]; Laming v Jennings [2018] VSCA 335.
4. Central to the concept of an easement by prescription is that the use must occur with the acquiescence of the owner of the servient tenement. If the use of an easement is forcible, secret, surreptitious, or with the permission of the owner of the servient land, the doctrine of lost grant will not operate: Milne v James (1910) 13 CLR 168.
5. It is for the party seeking to assert the right by way of prescription to demonstrate the acts of user of the requisite character and the circumstances which show that the owner of the servient tenement acquiesced in the use as an established right. As Parker J stated in Mills v Silver [1991] 2 Ch 271 at 290: "The true approach is to determine the character of the acts of user or enjoyment relied on. If they are sufficient to amount to an assertion of a continuous right, continue for the requisite period, are actually or presumptively known to the owner of the servient tenement and such owner does nothing that is sufficient"
6. If the servient owner has no actual or constructive knowledge of the user, a prescriptive right will not arise. The test of constructive knowledge is objective: was the use of a kind that an owner, reasonably diligent in the protection of his or her interests, would or should have discovered? See generally Fernance v Simpson [2003] NSWSC 121; Gangemi v Watson (1994) 11 WAR 505; Milne v James (1910) 13 CLR 168. The doctrine does not reward inactivity: R (Beresford) v Sunderland City Council [2004] 1 AC 889, approved in Williams v State Transit Authority at [85].
7. Where there has been long open use, the law will presume that the owner of the servient tenement had knowledge of that use. In such a case, the owner of the servient tenement must establish that it did not have the requisite knowledge to rebut the presumption at law and may do so by evidence as to the owner's lack of knowledge: Diment v NH Foot Ltd [1974] 1 WLR 1427 at 1434; Pugh v Savage [1970] 2 QB 373 at 384; Sunshine Retail Investments Pty Ltd v Wulff [1999] VSC 415 at [92] - [94], [99].
8. Easements by prescription generally do not arise after property is registered under the Real Property Act: Williams v State Transit Authority of NSW.
9. In the case of qualified title (such as the Passage and the Dock), if an easement by prescription was in the course of being acquired when the land was being brought under the Real Property Act or arose prior to that time, the easement can still be registered: s 42(a1) of the Real Property Act. In this case, the defendants accept that the qualified titles to the Passage and the Dock mean that use that begins at least 20 years prior to 6 June 2016 (being when the defendants advised they were closing off the Passage by the gate) can be relied on for prescriptive easements to arise ([25] closing submissions).

Prescriptive easements over the Passage and the Dock

71 York Street proceedings: submissions

1. 71 York Street claims an easement by prescription for a right of carriageway over the Dock has arisen given the continuous use of the Dock since at least 1877. It relies on the evidence of use contained in the statutory declaration of William Audsley and Mr Brooks' Heritage Report for the period from 1877 to 1927, Mr Brooks' Heritage Report for the period from 1927 to 1981, and the evidence of use given by lay witnesses, including Mr Cook and Mr Brooks, for the period since 1981.
2. 71 York Street submits that use of the Dock at all times was open and of the type that a diligent owner would and should be taken to have been aware notwithstanding the identity of the owner of the Dock was unknown until the defendants acquired it in 2008. It relies, in particular, on this Court's decision in Fernance v Simpson [2003] NSWSC 121 (Fernance v Simpson) in support of the submission that an easement by prescription may arise where the owner of the servient tenement is not identified.
3. The defendants accept that Mr Gardiner and his companies used the Dock to obtain access for carts and wagons to what is now the rear of 71 York Street for a sufficient period prior to 1927, being in excess of 20 years, to give rise to an easement by prescription in favour of the 71 York Street land.
4. They contend, however, that the Court should not find that 71 York Street has a right of carriageway by prescription based on use to 1927, or use after that time.
5. The defendants primarily submission is that the necessary acquiescence to use as of right required for an easement by prescription cannot exist as the owner of the Dock was unknown. They submit that any presumption that the owner of the servient tenement had knowledge of use based on long user has been rebutted in this case as the only available inference is that the owner was unaware they owned the Dock and could not have known it had been used by 71 York Street and its predecessors in title.
6. They submit that Fernance v Simpson is unsupported by authority and difficult to reconcile with decisions such as Sunshine Retail Investments Pty Ltd v Wulff [1999] VSC 415 (Sunshine v Wulff), Hamilton v Joyce [1984] 3 NSWLR 279, Gangemi v Watson (1994) 11 WAR 505 and Laming v Jennings [2018] VSCA 335.
7. The defendants also submit that if a prescriptive easement arises based on use of the Dock during the period to 1927 it should be limited to the use by carts and wagons (as occurred at that time), and cannot extend to use of the Dock by motor vehicles today.
8. They also submit that an easement by prescription cannot arise based on use of the Dock since 1927 as there is no evidence of the use that was made of the Dock between 1927 and 1981, when the 71 York Street building converted to office space, and that inferences cannot be drawn from the pictures and plans included in Mr Brooks' Heritage Report that the Dock was crossed by motor vehicles.
9. As to the period since 1981, the defendants submit that Mr Cook's evidence is too vague to ground an easement by prescription.

Clarence House proceedings: submissions

1. Clarence House claims easements by prescription for rights of carriageway over the Passage and the Dock based on continuous user since 1981 when SP 17719 was registered.
2. Clarence House relies on the evidence of Mr Cook and Ms Yates which, it submits, indicates that the Passage and Dock have been openly and continuously used by vehicles and pedestrians to gain access to the rear area of Clarence House for a range of purposes. Those purposes include receiving and sending out deliveries, for trades and service people to do work on Clarence House, for removalists when residents move in and out of Clarence House, for the collection of garbage stored in the loading yard and for fire exit egress.
3. Clarence House submits that its use of the Passage and the Dock involved no illegality which would negate a prescriptive easement as Sydney City Council approved SP 17719 having been satisfied that Clarence House had rights to access the Passage and the Dock for the purpose of egress from the fire exits at the rear of Clarence House through to York Street.
4. Clarence House also submits that its use of the Passage and the Dock has been open, as of right and that any owner, taking reasonable care of their interests, would have been aware of Clarence House's use of the Passage and Dock since 1981. Like 71 York Street, Clarence House relies on Fernance v Simpson and contends that an easement by prescription may arise even though the owners of the Passage and the Dock were unknown until the defendants purchased the title in 2008.
5. The defendants make the same submission in relation to Clarence House's claim as that made in the 71 York Street proceedings, which is that no easements by prescription can arise as the owners of the Dock and the Passage were unknown until 2008.
6. The defendants also submit that the evidence as to use by or for the residents of Clarence House is too vague and of a nature that cannot support an easement by prescription. The defendants submit that the Court cannot rely on Mr Cook's evidence as he did not indicate when and how frequently the residents used the Passage or Dock. Ms Yates' evidence is also said to be too vague given it was use that took place "since the mid-1990s".
7. The defendants also submit that Clarence House's use of the Passage and the Dock has been of a nature that would not alert a reasonable owner that a continuous right of enjoyment was being asserted. They point to the lack of physical indicia of use of the Passage or the Dock. They also contend that Clarence's House use was indistinguishable from the use by those who had existing legal rights of way given the proximity of the Passage and Dock to adjoining buildings. They rely on Hedigan J's observation in Sunshine v Wulff, at [111]: "Most of the cases about constructive knowledge of user by the owner are not cases of blocks of flats surrounded by open common property, nor large residential properties right in the heart of a busy urban environment".
8. The defendants submit that, in those circumstances, the Court should be reluctant to ascribe constructive knowledge of use by Clarence House to the unknown owners of the Passage and the Dock in this case.

Easement by prescription where unknown owner of servient tenement

1. It is convenient to deal first with the issue raised by both 71 York Street and Clarence House's claims for easements by prescription as to whether the owners of the Passage and the Dock could possess the required knowledge and acquiesce to use of their land in circumstances where their identity was not known during the period from the late 1880s to 2008.
2. As noted above, 71 York Street and Clarence House rely, in particular, on the reasons of Windeyer J in Fernance v Simpson.
3. In Fernance v Simpson, the plaintiff claimed a right of way by prescription over old system land which had been purchased by the current owner from the local council under a statutory sale for unpaid rates. The plaintiff established that the owners of the dominant land had openly used the land over which the right of way was claimed for over 20 years. The history of the title to the servient land was complex and it was unclear who had owned it for most of the 20-year use period. This raised the question about how the owner of the servient land could have "acquiesced" in the use if their identity was unknown.
4. Windeyer J, at [28], recognised that knowledge of the servient owner was relevant to acquiescence and that actual knowledge was not required. His Honour concluded that the Court should look to the means of knowledge, which was to be assessed based on whether the use by the claimant has been open and of such a character that an ordinary owner, diligent in the protection of his or her interest would have, or must be taken to have, reasonable opportunity of becoming aware of that enjoyment, citing Romer LJ in Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557 (Union Lighterage) at 570-571.
5. Windeyer J was satisfied that the use of the right of way was of the requisite character concluding at [29]: "…there can be no doubt whatsoever as to the means of knowledge as the fact that the lane was being used as an access way by the owners of the three properties in question would and must have been obvious to any reasonable observer".
6. The Court had before it evidence of ownership through to 1939 in the form of grants. Also in evidence was a letter from Perpetual Trustee Co Ltd which stated that the company had no record of any dealing with the land in its capacity as executor of the will of the trustee in whom the land was thought to have been last vested. Windeyer J concluded that the land in question likely remained in legal ownership of the trustee company. His Honour noted that no attempt had been made to find out how the estate had dealt with the land: at [25]. He also stated that the defendants had not proved, and could not prove, that there was no person to whom the legal estate in the land was not vested: at [36].
7. Windeyer J proceeded to grant easements by prescription. His Honour concluded that the servient owner had the means of knowledge of use and the presumption of knowledge from long use had not been displaced by the current owners of the land raising doubts as to the identity of the previous owners, stating, at [33] and [39]: "On the facts of the instant case, it is my opinion that any owner of the subject property taking reasonable case for his or her interest, would have been aware of the use of the land. If such an owner abandons the land then it seems to me that it would be entirely illogical to hold that abandonment results in some benefit. But in any event the defendants bore the onus and did not discharge it. Producing grants of representation up to 1937 is no evidence of subsequent grants or lack of grants or ownership. Neither is the letter to which I have referred... …. The fact which makes this case different from the many other cases which I have read is that legal ownership of the lane in the period of twenty years prior to ownership being vested in the first defendants is not clearly proved. Nevertheless, there was an owner, probably Perpetual Trustee Company Limited and that owner, exercising any obligation or care of ownership must have known of the use at least until the contrary is established the onus being on the defendants to so establish."
8. The defendants seek to distinguish the case of Fernance v Simpson, noting it is a decision of a single judge sitting at first instance and is not binding on this Court. They submit it should not be followed given other decisions which they contend should make it difficult for the Court to accept the approach of Windeyer J in Fernance v Simpson.
9. The defendants submit that Windeyer J's finding that the owner of the land had actual knowledge and his statement that the owners "must have known" of the use of the land are a logical fallacy ([38] and [41] closing submissions). They contend that the only conclusion that could have been made in that case (as they submit should be made in these proceedings) is that, as a matter of fact, the owners did not know of their ownership of the land or its use. This is because, they say, the only reasonable inference available where the owner of the servient land is unknown is that the owner is unaware of their rights and do not know of the use ([41] closing submissions).
10. Pausing here, Windeyer J did not hold that the owners had actual knowledge of use, nor state that the 'owners must have known' of the use of the land as a matter of fact. His Honour concluded that exercising any obligation or care of ownership, an owner must have known of the use: at [39]. That conclusion is not a logical fallacy as it considers, objectively, what the knowledge of the owner would have been based on the test espoused in Union Lighterage. That test has long been accepted and followed by Australian courts: Milne v James (1910) 13 CLR 168; Gangemi v Watson (1994) 11 WAR 505; Williams v State Transit Authority of NSW; Laming v Jennings [2018] VSCA 335.
11. The defendants also submit that the Court should conclude that the presumption that the owners of the Dock and Passage had knowledge of use has been rebutted because the position of an unknown owner is akin to that of an absentee owner who is not in possession of their servient tenement at the time of the use relied on, as was the situation in Sunshine v Wulff, or to a non-occupying owner where there were doubts about the title to the servient tenement, as was the situation in Hamilton v Joyce [1984] 3 NSWLR 279 (Hamilton v Joyce), ([42] closing submissions).
12. In Sunshine v Wulff, tenants of property asserted a prescriptive easement over a walkway. The Court accepted there had been long use but found there was no actual or constructive knowledge on the part of the previous owner because the managing agent's knowledge of use could not be imputed to the often absentee owner.
13. Relevantly, the Court in Sunshine v Wulff applied the test from Union Lighterage (as applied by Windeyer J in Fernance v Simpson) by considering whether it must have been apparent to an ordinary diligent owner that the walkway was being used by the tenants. The Court determined that it was not apparent, based on evidence from the previous owner that she did not know whether people she had seen using the walkway were the tenants, strangers or other residents in the surrounding street (at [123] and [124]).
14. The Court in Sunshine v Wulff also considered that the claim for an easement by prescription faced difficulties because the servient tenement had been leased out from the start of the period of use relied on and user must be against the fee simple owner. It also noted that non-occupation by an owner may be an insuperable obstacle to a claim for a prescriptive easement, citing Hamilton v Joyce (at 291), another case relied on by the defendants as being preferable to and inconsistent with Windeyer J's decision in Fernance v Simpson.
15. In Hamilton v Joyce, two easements were alleged to exist under the doctrine of lost modern grant and both were rejected by the Court. In relation to the first claimed easement, the servient owner believed the land over which the right of way asserted belonged to the local council. There were also questions raised as to the exact location and extent of the servient land and its title. The Court concluded that no easement by prescription arose, with Powell J stating at 290-291: "It seems to me that, where there are serious doubts as to the true state of the title of the owner of 'the servient tenement', the failure of the owner to assert a claim can hardly be regarded as acquiescence so as to permit a presumption of a lost grant. Since…[the third defendant]believed "the right of way" to be a public thoroughfare, and since even now, the exact location and extent of the "right of way" remains a question of doubt, I am, I believe, bound to hold that the facts necessary to permit the presumption of lost grant to arise have not been made out".
16. Powell J concluded that the second claim also failed because there was no evidence that permitted him to infer that an easement had ever been granted over the paddock, the owner had not relevantly occupied the adjoining properties, and the user had not been of right as the occupants of the properties over which the easement had been claimed had been pursuant to express or implied permission (at 291).
17. The defendants submit there are strong parallels between the situation in Hamilton v Joyce, where there were serious doubts about the title of the owner of the servient tenement and a non-occupying owner, and the situation in these proceedings where the owners of the Passage and Dock were unknown and an inference should be drawn that they were unaware of their ownership.
18. I am not persuaded by the defendants' submissions that the decisions in Hamilton v Joyce and Sunshine v Wulff cannot be reconciled with Fernance v Simpson and create insuperable obstacles to prescriptive easements arising in the current proceedings.
19. In Hamilton v Joyce and Sunshine v Wulff, the owners of the servient tenements were known and gave evidence. It was that evidence which rebutted any presumption from the existence of long user.
20. In the current proceedings, as was the case in Fernance v Simpson, there is no evidence that the "unknown owners" of the Passage or Dock believed that the land belonged to others or was not held by them. Nor is there any question as to the exact boundaries of the titles to the Passage and the Dock. The only unknown is the identities of the particular beneficiaries in whom title in the Passage and the Dock resided over the years of use relied on.
21. Windeyer J considered Hamilton v Joyce in Fernance v Simpson, concluding that it did not stand for the proposition that it is not possible to establish a prescriptive easement if the legal owner was unaware of their ownership. His Honour also noted, at [35] that the lack of occupation by the owner considered in Hamilton v Joyce was during a period when the servient land had been tenanted.
22. In these proceedings, the beneficiaries of the estates in which title to the Passage and the Dock were held were entitled to possession, although they were not actually in occupation: Gangemi v Watson (1994) 11 WAR 505 at 515 (Gangemi v Watson).
23. Gangemi v Watson was a case in which land had been divided up and sold with the exception of a laneway, to which the estate of the original owner retained title, and over which a prescriptive easement was claimed. The original owner's daughter (and executor) gave evidence that she was unaware she owned the laneway for many years after her father's death.
24. The defendants rely on the Court's conclusion in Gangemi v Watson that the daughter's evidence was sufficient to discharge the evidential burden of both actual and constructive knowledge (at 516) in support of their submission that the presumptions of knowledge in these proceedings have been rebutted as inferences should be drawn that the owners of the Passage and the Dock were unaware of their ownership.
25. I do not consider that the decision of Gangemi v Watson assists the defendants in the way they contend. The West Australian Court of Appeal accepted the daughter's evidence in circumstances where the trial judge's finding of fact that she had neither actual nor constructive knowledge was not challenged on appeal. The acceptance of her evidence was also held to be sufficient to discharge the evidentiary burden in relation to her knowledge only.
26. The reasoning of the Court in Gangemi v Watson is, in my view, not inconsistent with the reasoning in Fernance v Simpson. The Court of Appeal held that an easement by prescription had arisen because there was sufficient evidence to establish constructive knowledge on the part of the original owner even though the evidence indicated he had forgotten he owned the laneway and it had, in effect, been abandoned from 1912 until 1990. The Court concluded that the original owner had the necessary means of knowledge of the use relied on, and noted that (at 515-516): "An owner acting diligently does not put his ownership out of mind for a quarter of a century with the result that he never visits his land and therefore never observes the evidence of an adverse claim."
27. This is consistent with Windeyer J's reasoning in Fernance v Simpson at [33]: "If such an owner abandons the land then it seems to me that it would be entirely illogical to hold that abandonment results in some benefit."
28. The defendants also rely on the reasoning in Laming v Jennings [2018] VSCA 335 (Laming v Jennings), in support of their submission that this Court should not follow the approach in Fernance v Simpson.
29. In Laming v Jennings, the Victorian Court of Appeal considered whether the presumption of knowledge could be attributed to an owner of a servient tenement based on knowledge of the owner's agent (at [114]). The Court concluded that presuming an owner had actual or constructive knowledge merely on the basis of the existence of the relationship between it and its agents and employees would be an impermissible extension of the doctrine (at [114]).
30. Like Sunshine v Wulff, the Court of Appeal in Laming v Jennings ultimately concluded that no prescriptive easement could arise as the use relied on was not of a nature that could put a reasonable and diligent owner on enquiry (at [110]). Many of the acts of user relied on were transient and sporadic, left very few permanent features that would suggest to an observer that the disputed land had been used in a particular way and that the claimants were asserting a right to use for that purpose (at [109]). The Court's conclusion was also based on findings that the agent was not under any duty to communicate to the owner of the servient tenement their knowledge or potential signs that the disputed land was being used for recreation, and the owner had no written record of the use of the disputed land by the claimant or his predecessors in title (at [114]).
31. As noted earlier, knowledge of and acquiescence by an owner of a servient tenement is a critical aspect of the existence of an easement by prescription. As Professor Butt identified in his article Use "As of Right" (2004) 78 ALJ 162 at 166: "When it is said that "acquiescence" lies at the root of prescription, what is meant is that the servient owners - whoever they are - have the means of knowing of the use being exercised but do not interrupt it."
32. In my view, the correct approach, as applied by Windeyer J and in the other cases relied on the defendants, is for the Court to consider whether the unknown owners of the Dock and Passage, acting diligently and taking reasonable care for their interests, would have been aware of the use to which the land has been put, based on the evidence of use relied on by 71 York Street and Clarence House. If the Court concludes that the owners would have become aware, then the presumption is satisfied and the burden shifts to the defendants to establish there was no knowledge on the part of the owners.
33. I do not accept the defendants' submission that where the evidence indicates that the identity of the owners of the Passage and the Dock at the time of the use is unknown, the presumption is rebutted as the only reasonable inference is that the owner was unaware of their rights and did not know of the use. Approaching the presumption of the knowledge required for a prescriptive easement in that way is not supported by any authority referred to by the defendants. To the contrary, the authorities relied on by the defendants seem to me to support the approach of Windeyer J in Fernance v Simpson, rather than undermine it.
34. The position in Fernance v Simpson is very similar to the position in these proceedings.
35. While the identity of the particular persons who owned the Passage and the Dock may have been unknown during the periods of use relied on by the parties, the legal estates must have been vested in some persons until the defendants acquired them in 2008: Fernance v Simpson at [36]. Based on the evidence before the Court, those persons were the beneficiaries of the estates of Messrs McDonald and Erwin.
36. The Dock was in the name of Mr Erwin when it was sold to the defendants. It was part of the land acquired by him under Book 18. Book 124 conveyed most of Mr Erwin's land to his beneficiaries but left the Private Lane undistributed. Most of the Private Lane became part of the 71 York Street land when it converted to Torrens title in 1927 as part of Primary Application 30148. The remnant of the Private Lane, being the Dock, was not part of Primary Application 30148, was not conveyed to Mr Erwin's beneficiaries under Book 124 and, therefore, remained undistributed as part of Mr Erwin's estate.
37. The identity of some of Mr Erwin's beneficiaries was known during the period from 1877 to 1881, when land was conveyed by them under Books 220, 172 and 171. Presumably one or more of them may have still been alive when the use relied on by 71 York Street commenced in the late 1880's or during the 20 year period up to 1927.
38. The Passage was in the name of Mr McDonald when it was sold to the defendants. Darke J considered the question of who owned the Passage at the time of Book 8 in The Owners - Strata Plan No 61233 v Arcidiacono [2018] NSWSC 1260. His Honour concluded that the legal interest in the Passage resided in Stephen McDonald (Hugh McDonald's son and surviving trustee) and the other beneficiaries named in Book 8 at the time the right of way was created under Book 8 (McDonald beneficiaries) (at [26] and [30]).
39. There is evidence that Stephen McDonald had died by 1841 and that all of Hugh McDonald's lands which had vested in Stephen McDonald's wife were transferred to Campbell McDonald under Book X No 438 on 19 September 1841 (CB2305). It is not clear whether Book X conveyed the Passage to Campbell McDonald or whether the last known dealing in relation to the Passage by a McDonald beneficiary was the grant of a right of way to the land that is now 5-7 Barrack Street in 1840 under Book 153. Either way, the Passage appears to have remained undistributed as part of Mr McDonald and his beneficiaries' estate.
40. The defendants did not seek to adduce any evidence of the identity of the McDonald beneficiaries at the time of the use relied on by Clarence House, being from 1981. Nor did they seek to adduce evidence that the legal owners of the Dock and the Passage were not capable of making grants of rights of way.
41. The defendants have not established possession in anyone who would defeat the claims of 71 York Street and Clarence House. They rely on the submission that the presumption of knowledge is rebutted as the owners of the Dock and the Passage were unknown, and rely on the inference that they must not have known of their ownership or the use.
42. In my view, it would be inconsistent with the rationale behind the courts' continual recognition of easements arising from long use under the doctrine of lost modern grant to accept the defendants' submission that the presumption of knowledge has been rebutted in these proceedings.
43. A justification for the doctrine of lost modern grant is that the servient owner would not have allowed the open use of their land for that period of time unless they intended to permit said use. As the English Law Reform Commission (Fourteenth Report on Acquisition of Easements and Profits by Prescription, (1966)) noted, the doctrine of lost modern grant: "gives legal recognition and effect to various kinds of de facto situations in which the relevant state of affairs has continued unchallenged for so long that to deny it legal recognition would, it is said, amount to injustice".
44. As the Victorian Court of Appeal noted in Laming v Jennings at [82]: "The underlying rationale is that the courts presume a long assertion of right as having a proper legal foundation and that the owner, by its acquiescence in the face of an assertion of title, must be taken to have conferred the interest by grant. As Lord Herschell said in Philipps v Halliday, 'the Courts will presume that those acts were done and those circumstances existed which were necessary to the creation of a valid title.' The legal fiction upon which the precept of lost modern grant depends is that the paper owner has conferred a right by grant but that the grant is lost."
45. To allow the defendants to negate easements by prescription being recognised because the identity of the owners of the Dock and Passage was unknown would, in my view, amount to an injustice if there is evidence of sufficiently open use that the owners - whoever they were - being reasonably careful of their interests, would have known about and could have put a stop to if they had wished.
46. It follows that I do not accept the submissions of the defendants on this issue and will proceed to consider both plaintiffs' claims on the basis that the inability to identify the owners of the Passage and the Dock (beyond the fact that the title remained with the beneficiaries of Messrs McDonald and Erwin until 2008) does not rebut the presumptions of knowledge that would arise from evidence of long open use and prevent any easements by prescription from accruing.
47. While not determinative, I also note that the defendants were aware that the Passage had been used by other surrounding owners since 2004 (CB2008; [13] affidavit John Arcidiacono 13 September 2004). They appear to have taken a known risk that the lands they acquired in 2008 might be subject to claims of rights of way by prescriptive easements. In those circumstances, a decision which confirms the existence of prescriptive rights of way to the benefit of 71 York Street and Clarence House based on open use as of right would not suggest any significant injustice to the defendants.
48. Next I consider whether the use of the Dock and the Passage by 71 York Street and Clarence House was open and of such character that the unknown owners, being diligent and taking reasonable care, would be taken to have had reasonable opportunities of becoming aware of that use and constructive knowledge.

71 York Street: prescriptive easement over the Dock

1. The defendants accept that in the period up to 1927 Mr Gardiner and his companies used the Dock to obtain access for carts and wagons to what is now the rear area of 71 York Street.
2. I am satisfied that such use was sufficiently open and of a character that the owner of the Dock at that time, being reasonably diligent and careful about their interests, could and should have been aware of the use by the predecessor in title to 71 York Street. Crossing the Dock from the Passage to gain access to the rear area and loading yard at the back of the warehouses to load and unload wagons must have been obvious to any reasonable observer. No submission was made by the defendants to the contrary.
3. Adopting the approach of Windeyer J in Fernance v Simpson, I have, therefore, concluded that the continuous open use by 71 York Street's predecessors in title gives rise to the presumption of grant and that 71 York Street's claim to an easement by prescription for a right of way has been made out on the basis of use up to 1927.
4. As to the nature of the right of way, I do not accept the submission of the defendants that it is limited to the use of the Dock by horse and cart and does not extend to use by motor vehicles, by foot or other modes of transport.
5. The evidence of use of the Dock during that period is not limited to use by carts and wagons but is of a more general nature, referring to the constant and continuous use as a right of way by William Gardiner and occupants of the 71 York Street and adjoining buildings (CB726). I infer such use would have included crossing the Dock by foot and would also have been obvious to any reasonable observer.
6. As to the use of motor vehicles, in Lock v Abercester Ltd [1939] 1 Ch 861 (Lock v Abercester Ltd), the Court concluded that the claimed right of carriageway was not limited to carriages drawn by particular kinds of animal, as was typical during the period over which the use was established, but extended to the use of motor vehicles. As Bennett J said, at (864): "The law must keep pace with the times. As a matter of law I propose to decide that, where proof is given of the user of a way by carriages drawn by horses for the required period so as to establish the right to an easement for a carriageway, the right so acquired is one which enables the owner of the dominant tenement to use the way with mechanically propelled vehicles."
7. The defendants questioned the status of Lock v Abercester Ltd as it is a single UK decision and because they were unable to find any instance of it being referred to by an Australian court.
8. Lock v Abercester Ltd has been cited with approval and applied in numerous Australian decisions: see Walker v Bridgewood [2006] NSWSC 149 at [55]; Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 1293 at [92]; Timpar Nominees Pty Ltd v Archer [2001] WASCA 430 at [37]; Archer v Timpar Nominees Pty Ltd [1999] WASC 20 at [39]; Sunset Properties Pty Ltd v Johnston (1975) 3 BPR 97,173 at 7.
9. In Maher v Bayview Golf Club [2004] NSWSC 275 (Maher v Bayview Golf Club), Campbell J referred to Lock v Abercester Ltd at [48]. His Honour's conclusion in that case is consistent with the approach in Lock v Abercester Ltd, as his Honour looked to the general nature of the activities and use carried out on both the dominant and servient tenement, rather than matters such as the mode of transport, to determine the character and measure of the prescriptive easement (at [57]).
10. Between 1887 and 1927, the general nature of the use to which the Dock was put was to obtain access from the Passage to the rear area of 71 York Street for a variety of purposes related to the commercial activities undertaken at the building, including the delivery of goods to the warehouse and to provide egress from fire escapes. The mode of transport over the Dock does not define that use.
11. In my view, the easement by prescription that arose and to which 71 York Street now has the benefit extends to crossing over the Dock by foot, by cart or by other vehicles, similar to the terms of the right of way over the Passage created by Book 8.
12. There was some suggestion in opening submissions by Senior Counsel for the defendants that granting a right of carriageway over the Dock which extended to motor vehicles might raise issues of excessive user (T27:25-41).
13. Excessive user was not pleaded in the defence, nor was it raised in the defendants' written or oral closing submissions. Raising it as an issue in relation to whether the easements extends to motor vehicles also appears to be contrary to the submissions made when he objected to a declaration that 71 York Street has a right of carriageway over the Passage (T373:24-28).
14. In the event the defendants have concerns about excessive user, they may be raised with 71 York Street in the future in the usual way. The possibility that such an issue might arise does not, in my view, negate the conclusion that the prescriptive easement is in the nature of a general right of carriageway based on use to 1927.
15. If I am wrong about a prescriptive easement extending to motor vehicles based on use during the period to 1927, I am satisfied there is sufficient evidence of use of the Dock since 1981 by vehicles and pedestrians for the purpose of accessing the rear area of 71 York Street to support an easement be prescription, based on the evidence of Mr Cook, Mr Brooks and Mr Peetz.
16. There is some material from which it might be inferred the Dock continued to be crossed for the purpose of accessing the rear area of the 71 York Street during the period between 1927 and 1980, including by motor vehicles (Heritage Report, CB707 and CB709). I am not satisfied that this material is sufficient evidence of use to support an easement by prescription arising during that period. It is not direct evidence of use or of persons having observed that use, but requires conclusions to be drawn based on photographs and plans which indicate the Passage, the rear loading yard, and cars were in existence during those years.

Clarence House: prescriptive easements over the Passage and Dock

1. I am satisfied that the evidence of use relied on by Clarence House is sufficient to support the grant of prescriptive easements over the Passage and the Dock. The use has been continual and of a character that was sufficiently open and as of right that an owner being reasonably careful and diligent of their interest would have been on notice of that use.
2. The evidence of actual use since 1981 comes from Mr Cook and Mrs Yates.
3. Mr Cook's evidence is that the Passage and the Dock have been used by Clarence Street Cyclery on a daily basis from 1981 for the purposes of receiving and sending out deliveries via the roller door at the goods area at the back of his business. Given the regularity of that use, the ground floor location of the Clarence Street Cyclery and the regular presence of the small van in the rear area outside the roller shutter door at the back of Clarence House, any owners of the Passage and the Dock, being diligent and taking reasonable care, would have had reasonable opportunities to become aware and should be taken to have been on notice of that use.
4. Mr Cook also gave evidence that the residential occupants and tradespeople used the Passage and Dock to access the rear of Clarence House. While that evidence was more general in nature, it was consistent with the evidence of Ms Yates which went unchallenged.
5. I do not accept the defendants' submission that Mrs Yates' evidence is of little assistance because she referred to use of the Dock and Passage "since the mid-1990s" and is too vague to be taken as evidence of anything before June 1996, being the cut-off year of the minimum 20 year period. Her evidence is useful even if it were to be limited to the period from 1996 as it provides detail as to the nature of the use of the Dock and Passage by residents of Clarence House.
6. In my view, when considered together, the evidence of Mr Cook and Mrs Yates is sufficient for the Court to conclude that the Dock and Passage were used by residential occupants of Clarence House for 20 years prior to the installation of the gate in 2006.
7. I also do not accept the defendants' submission that the use by Clarence House of the Passage would be indistinguishable from use by those with legitimate rights of way or that the absence of some sort of indicia on the Passage and the Dock (such as a fixed gate) is reason not to fix constructive knowledge on the absent owner.
8. The nature of the use of the Passage and the Dock by the occupants of Clarence House was open and would have been apparent to any reasonable observer.
9. The Passage is a clearly marked laneway which leads, at its most western end, to the Dock and thence to the rear area of Clarence House. Neither the Passage or the Dock could be described as open ground that requires some other indicia to identify the way on and over them, such as a gate, as was the situation in Laming v Jennings.
10. It was apparent from the view that a person or vehicle accessing the Passage and the Dock from and to the rear area of Clarence House could easily be viewed by a person standing on the Dock or part way up the Passage. That is to be contrasted with the environment in Sunshine v Wulff, where the relevant walkway was surrounded by large open common property and a busy urban environment.
11. I am, therefore, satisfied that the use of the Passage and the Dock by Clarence House since 1981 justifies making a finding of constructive knowledge of use on the part of the unidentified owners.
12. Further, Mrs Arcidiacono's evidence also suggests that the use of the Passage and the Dock by occupants of Clarence House was discernible to a reasonable observer. Her evidence is that she has observed vehicles parked in the loading yard near Clarence House, she was aware that members of Clarence House used the Passage and Dock frequently and that the majority of the traffic in the Passage and Dock was from occupiers of Clarence House and 71 York Street (CB1761, [13] and [23] affidavit sworn 23 June 2016; T252:3-9 and CB1785; [14] affidavit sworn 30 June 2016).
13. The development application lodged by the defendants to install a new gate also indicates that the defendants were aware that the occupants of Clarence House used the Passage and Dock for vehicle and pedestrian access, and required it for emergency egress (CB452).
14. Actual knowledge on the part of the current owners of the type of past use relied on by Clarence House also makes it difficult to accept the defendants' submission that the Court should conclude that the use by Clarence House in the past would not have been discernible to the prior owners.

Conclusion on easements by prescription over the Passage and Dock

1. I have concluded that prescriptive easements have arisen in favour of 71 York Street in relation of the Dock and in favour of Clarence House in relation to the Passage and Dock.
2. As to the terms of the easements, 71 York Street and Clarence House seek rights of carriageway.
3. Schedule 8, Part 1 of the Conveyancing Act provides a form of words for a right of carriageway as follows: "Full and free right for every person who is at any time entitled to an estate or interest in possession in the land herein indicated as the dominant tenement or any part thereof with which the right shall be capable of enjoyment, and every person authorised by that person, to go, pass and repass at all times and for all purposes with or without animals or vehicles or both to and from the said dominant tenement or any such part thereof."
4. Where a prescriptive easement is claimed, the scope of the right must reflect the use to which the servient tenement was put and the purpose of use of the dominant tenement: Maher v Bayview Golf Club at [132]. An appropriate description involves looking at the nature of the activities carried out on the servient and dominant tenements, although the activities can be described in a general way and not too precisely: Maher v Bayview Golf Club at [57].
5. The purpose of 71 York Street's use of the Dock was to cross it as part of the path from (and to) the Passage to (or from) the rear area of 71 York Street. Similarly, the use of the Passage and the Dock by Clarence House was to pass and repass as part of a path from York Street to access the rear area of Clarence House.
6. In my view, the Conveyancing Act form of words which provides for the right "to go, pass and repass at all times with or without animals or vehicles or both to and from the said dominant tenement or any such part thereof" reflects the uses to which the Dock and Passage have been put by 71 York Street and Clarence House.
7. The Conveyancing Act form of words also provides for the right of carriageway to be "for all purposes". Consistent with the approach in Maher v Bayview Golf Club, that language is too broad as it does not include, as part of its formulation, the purpose of use of the dominant tenements (at [132]).
8. The activities carried out at 71 York Street at the time the relevant use of the Dock was accruing were commercial activities relating to a warehouse facility. 71 York Street has continued to be used for commercial activities, with most of the building now being used for office space with some ground floor space available for retail businesses.
9. While its use today suggests that the loading dock in the rear area of 71 York Street is less likely to be used as it was in the past, I do not consider the overall character of the activities and purpose of the building to be so different as to impact on the description of the prescriptive easement to be granted. The purpose of the use of the dominant tenement remains as use for commercial activities, relevantly commercial office and retail space.
10. As for Clarence House, it continues to be used for commercial retail and residential purposes. Those purposes should be reflected in the terms of the prescriptive easements to be recorded on title.
11. I will give the parties an opportunity to confer and agree on the precise terms of the prescriptive easements over the Dock and Passage to reflect these reasons and the other ancillary orders to be made in relation to the omission of the easements and for the correction of the Register.

Other prescriptive easements claimed by 71 York Street

Easements for drainage of water and sewerage

1. 71 York Street also claims that easements exist over the Passage and the Dock for drainage of water and sewerage on the basis of prescriptive rights.
2. 71 York Street submits that the Court should conclude it has been draining water and sewerage beneath the Passage and the Dock for a considerable period, and longer than twenty years. It relies on a sewerage and drainage diagram (Sewerage Diagram) which, it submits, indicates the existence of a sewer vent pipe on the northern wall of 71 York Street immediately adjacent to the Dock and a sewer pipe travelling to the main sewer from the Dock underneath the Passage (CB247). This, it contends, is sufficient for the Court to be satisfied that easements by prescription for drainage of water and sewerage have arisen.
3. The defendants submit that that 71 York Street has failed to establish the requisite use of the Passage and the Dock for the purposes of an easement by prescription because the Sewerage Diagram does not clearly indicate the existence of relevant drainage on the northern side of the building. They also submit that a reasonable owner would not have known of the existence of the pipes to the extent they are located near the boundary of 71 York Street and the Passage.
4. I am not persuaded by 71 York Street's submissions or its reliance on the Sewerage Diagram in support of its claim for easements by prescription for drainage of sewerage or water.
5. The Sewerage Diagram is exhibited to an affidavit sworn by the solicitor for 71 York Street. It is not the subject of Mr Cambridge's evidence and no explanation has been given in the evidence as to how it should be interpreted. I accept the defendants' submission that it does not make clear what parts of the Passage or Dock are being used for the purpose of drainage.
6. There is a discrepancy between the Sewerage Diagram and the evidence of Mr Cambridge as to the location of the soil vent pipe. The Sewerage Diagram suggests it is at the north western end of the 71 York Street building, whereas Mr Cambridge's report suggests it is at the north eastern end (CB584).
7. The sewer pipe relied on by 71 York Street is identified on the Sewerage Diagram by a dotted line, as compared to solid lines elsewhere. Relevantly, the notes to the Sewerage Diagram say that the diagram identifies existing sewerage services as well as the availability of a sewer, which leaves open the question of whether the dotted line is an existing service or one available for use in the future.
8. Even if I were to accept that the Sewerage Diagram or Mr Cambridge's report is evidence of use of the Passage and the Dock for sewerage and drainage of water purposes for more than 20 years prior to 2006, I conclude that such use was not sufficiently open or of a character that diligent owners looking after their interests in the Passage and the Dock would have been aware of it.
9. The position of 71 York Street is to be contrasted with the applicant in Williams v State Transit Authority of New South Wales who led evidence from a plumber as to the visually apparent inspection points and manholes used for maintaining the sewer line, evidence of where the sewer line led and traversed, and that the plumber had, since 1982, undertaken regular maintenance work on it. Based on that evidence, the Court of Appeal accepted the trial judge's conclusion that there had been sufficient user for the requisite period which amounted to an assertion of a right to use and granted an easement by prescription.
10. In Liverpool Corporation v H Coghill & Son Ltd [1918] 1 Ch 307, the defendants had discharged waste fluids into the plaintiff's sewers for more than twenty years. The Court concluded that the enjoyment of the alleged easement was not of such a character as would establish a prescriptive right as the discharge was intermittent and generally made at night, and the use of surface water gullies and drains were not sufficient to bring home, to the owners of the land, what the claimants of the prescriptive right were doing. As the Court noted, at 313: "there has been no assertion by conduct or otherwise on the part of the defendants that they claim to do these things as of right, nor have they produced any evidence to prove any notice of their acts to the corporation of the predecessors, or establish the existence of any state or things from which such notice could legitimately be inferred."
11. Accordingly, 71 York Street's claim for a prescriptive easement for drainage of sewerage and water over the Passage and the Dock fails.

Encroachments and overhang

1. 71 York Street also seeks easements by prescription over the Passage and the Dock for encroachments and overhang of the following items ([12.1] closing submissions): 1. firewater head; 2. downpipes; 3. windowsill moulding; 4. vent pipe; 5. parapets; 6. electrical conduit; 7. corbel; and 8. fire system.
2. 71 York Street relies on the expert report of Mr Cambridge, which indicates that each of those elements encroach onto the Passage and Dock to a certain extent.
3. 71 York Street submits that all of the elements identified by Mr Cambridge have been on the 71 York Street building for many years and that they are necessary to be kept and maintained.
4. The defendants submit that prescriptive easements cannot arise as the encroachments are of such a small size that the owners of the Passage and the Dock could not be expected to identify and have knowledge of them, and because they do not constitute the type of use of the land recognised by the authorities.
5. It may be inferred that the elements identified by Mr Cambridge have been on the 71 York Street building for many years and, for some elements, possibly since it was constructed in the early part of the 20th century. But I am not persuaded that prescriptive easements arise as a consequence.
6. 71 York Street did not identify any authority in support of its submission that easements by prescription should be recognised for the type of encroachments or overhang in this case. The defendants referred the Court to Union Lighterage, which considered a claim for easements for support.
7. In Union Lighterage, the Court concluded that no prescriptive easement arose because the use of the servient land for supports was not of a nature which the owners of the land might have discovered by the existence of reasonable diligence (at [653]). The visible signs of the non-concealed supports could reasonably have been regarded as having formed part of the claimant's property rather than over or on the property of the servient owner.
8. As indicated by Mr Cambridge's report, all of the elements intrude onto the Passage and the Dock by matters of centimetres. I accept the defendants' submission that, in the absence of a surveyors report, diligent owners could not reasonably be expected to have identified that the overhang and encroaching elements on 71 York Street were using the Passage or the Dock.
9. Simply put, the appearance and existence of the encroachments and overhang elements on the 71 York Street building would not have made it sufficiently clear to a diligent owner that they intruded over or onto the Passage and the Dock and that the servient land was, as a result, being used by 71 York Street as of right.
10. Accordingly, I do not ascribe constructive knowledge of use to the unknown owners in this case and refuse 71 York Street's claim in respect of easements by prescription for encroachments and overhang.

Alternative claims: rights of carriageway over the Passage and Dock under s 88K Conveyancing Act

1. As I have concluded that 71 York Street and Clarence House are entitled to easements by prescription, it is not strictly necessary for me to deal with their alternative claims for orders pursuant to s 88K of the Conveyancing Act for rights of carriageway over the Dock and the Passage.
2. However, given the detailed evidence and submissions made by the parties and in case I am wrong about the claims for prescriptive easements, I have set out my reasons in relation to the issues raised by the alternative claims and why I would have granted orders under s 88K of the Conveyancing Act if they had been needed.

Relevant legislation

1. The Conveyancing Act relevantly provides that: 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. (3) The Court is to specify in the order the nature and terms of the easement and such of the particulars referred to in section 88(1)(a)-(d) as are appropriate and is to identify its site by reference to a plan that is, or is capable of being, registered or recorded under Division 3 of Part 23. The terms may limit the times at which the easement applies. (4) The Court is to provide in the order for payment by the applicant to specified persons of such compensation as the Court considers appropriate, unless the Court determines that compensation is not payable because of the special circumstances of the case.
2. There is no dispute that all reasonable attempts have been made by 71 York Street to obtain the easements sought and that those attempts had been unsuccessful (T183:18-35).
3. There also seems to be no dispute in respect of Clarence House that all reasonable attempts have been made and have been unsuccessful ([134], closing submissions). To the extent that matter is disputed, I am satisfied that Clarence House made all reasonable attempts to obtain the easements sought, based on its 17 June 2016 letter in which it requested the defendants propose terms on which they would be willing to grant easements over the Passage and Dock and a figure for compensation (CB2296) and it has been unsuccessful in obtaining them.
4. Accordingly, the questions for determination are as follows: 1. are the proposed easements reasonably necessary for the effective use or development of 71 York Street and Clarence House's land: s 88K(1)? 2. will the use of 71 York Street and Clarence House's land in accordance with the easements be not inconsistent with the public interest: s 88K(2)(a)? 3. can the defendants be adequately compensated for any loss or other disadvantage that would arise from the grant of the easements: s 88K(2)(b)? 4. if yes to the above, should the Court exercise its discretion to impose the easements: s 88K(1)?; and 5. if easements are to be granted, what is the level of compensation and on what terms: ss 88K(3) and (4)?

Are rights of carriageway over the Passage and the Dock reasonably necessary?

Legal principles

1. The requirement for easements to be reasonable necessary for the effective use or development of land means something more than mere desirability or preferability over the alternative means available, but does not mean absolute necessity. Nor does it mean that the easements are reasonably necessary for the best and highest use of the land: Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445 (Moorebank Recyclers) at [154] - [155]; Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 1293, at [104]; Rainbowforce Pty Limited v Skyton Holdings Limited (2010) 171 LGERA 288; [2010] NSWLEC 2; at [76].
2. The requirement of reasonable necessity may be satisfied even if the claimant's land could be effectively used or developed without the easement. 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 alternatives. In order for an easement to be reasonably necessary for a use, the use with the easement must be at least substantially preferable to the use without the easement: 117 York Street Pty Ltd v Proprietors of Strata Plan 16123 (1998) 43 NSWLR 504 (117 York Street), per Hodgson J at 508, cited with approval in Moorebank Recyclers at [154].
3. The concept of reasonable necessity also requires consideration of the effect of the grant of the easement on the servient tenement. The greater the burden on the servient land, the stronger the case required to find that the easement is reasonably necessary. A strong case of reasonable necessity is required if the effect of the imposition of the easement would be to effectively preclude a reasonably available development or use of the servient tenement: Moorebank Recyclers at [156] - [157]; Khattar v Wiese [2005] NSWSC 1014 at [27]; Lonergan v Lewis [2011] NSWSC 1133 at [22].
4. The availability of a viable alternative to the easement sought is also relevant to whether the easement is "reasonably necessary". Where there are alternate means, the Court may be required to evaluate the options by reference to the cost, delay or inconvenience. This does not need a precise assessment of the respective advantages and disadvantages of each course, nor necessarily acceptance that the applicant's preferred course is objectively superior to the alternatives, so long as it is reasonable: Khattar v Wiese [2005] NSWSC 1014 at [32].
5. Whether an easement sought is "reasonably necessary" for the effective use of the dominant land is a question of fact, to be determined objectively at the time of making the order and not just at the time the proceedings were commenced: 117 York Street at 511 per Hodgson J
6. Ultimately, what is reasonably necessary cannot be assessed in isolation. It must be assessed by reference to the "whole picture", taking into account all relevant factors in conjunction with each other: Moorebank Recyclers at [159]; Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 1293 at [105]; ING Bank (Australia) Ltd v O'Shea [2010] NSWCA 71 at [155].

71 York Street: is a right of carriageway over the Dock reasonable necessary?

1. Applying the above principles, I have concluded that a right of carriageway over the Dock is reasonable necessary for the effective use of 71 York Street's land.
2. The 71 York Street land relevantly comprises the building and the rear area onto which two sets of fire stairs exit and a loading dock/lockable gated area opens: (CB574-CB575, CB1840). The land is used for commercial activities, being office and retail businesses, which are undertaken by occupants of the building.
3. The rear area of 71 York Street is used for a variety of purposes, such as fire egress, deliveries and dispatch of goods and materials, access for tradespeople to undertake maintenance and repairs, and for garbage storage and collection (Mr Cook at T275:5-13; [14] affidavit 20 June 2016; Mr Brooks at T113:34; [12], [18], [19] and [28] affidavit 18 March 2019; Heritage Report, CB666; CB675-CB676; Mr Peetz T150:9; T150:20-23; T151:1-24; [8], [9] and [10] and annexures D and E, affidavit 28 June 2016).
4. The defendants submit that a right of carriageway over the Dock for fire egress is not reasonably necessary as compliance with fire regulations under the Building Code of Australia might be achieved by building a fire isolated passage through the 71 York Street building, based on Mr Harriman's evidence (CB1807), and that building such a passage is "just a matter of cost" for 71 York Street.
5. I do not accept that constructing a fire isolated passage in the 71 York Street building as an alternative means of fire egress is a reasonably viable option or substantially preferable to using the Dock and the Passage as the path for fire egress.
6. When asked in cross-examination about the prospect of a fire isolated passage being built through the building at 71 York Street, Mr Harriman accepted that he had not given any great consideration to the option (T271:44; T272:7-9). He also accepted that it would be "extremely difficult", involve a "difficult process" (T271:47-50), and that he couldn't say with any certainty whether it was a likely mechanism or not, only that it was "physically possible" and there would be "ramifications" (T272:11-14).
7. Even if an internal fire isolated passage could be built, doing so would involve not insignificant delay, cost and inconvenience given the need for council approval, the heritage nature of the 71 York Street building and Mr Harriman's evidence.
8. 71 York Street requires a path from the fire escape stairs that exit onto the open rear area of its land to a public road: BCA D1.10. In my view, the only current and reasonably viable means of achieving that path is utilising the existing route over the Dock and the Passage through to York Street, which renders a right of carriageway over the Dock as being reasonably necessary for that purpose: Re Permanent Trustee Australia Ltd (1997) 8 BPR 15,551.
9. The need for fire egress over the Dock and down the Passage is also supported by Mr Brooks' evidence that the internal fire stairs that exit onto the open rear area of 71 York Street was constructed as part of the 1980's refurbishment following a 1976 fire upgrading order issued by Sydney City Council ([13] - 17] affidavit 18 March 2019).
10. The defendants also submit that 71 York Street has not shown why it is reasonably necessary for it to obtain an easement for a general right of carriageway over the Dock. They contend the evidence of use for purposes other than fire egress is sparse and based, in part, on use by tenants who are no longer in occupation. They also submit that access to the 71 York Street building is available from the underground car park from York Street, and use of the rear area for garbage collection purposes is a matter of convenience rather than being a reasonable necessity.
11. I do not accept the defendants' submission that the use of the rear area of 71 York Street for dispatch and delivery purposes of former tenants, such as Quality HiFi and Papillion restaurant, is not relevant to the assessment of whether the easement over the Dock is reasonably necessary.
12. While reasonable necessity needs to be assessed in the light of the facts that exist at the time of the hearing, evidence of past use of many years can be taken into account as it can shed light on what might be considered to be reasonably necessary: Kent Street Pty Ltd v Council of City of Sydney [2001] NSWSC 268; B Edgeworth, Butt's Land Law (7th ed, 2017, Lawbook Co) at [16.540].
13. In any event, the use by Quality HiFi is very recent. Mr Peetz observed that Quality HiFi had vacated 71 York Street one week before the trial (T151:35). The nature of its tenancy and past use of the loading dock at the rear area is instructive as to the effective use of the 71 York Street land today and into the future. While Papillion restaurant has not been a tenant of the building for some years, the evidence of their past use for dispatch and delivery purposes is also consistent with the evidence given by Mr Peetz, Mr Brooks and Mr Cook that the rear area of the 71 York Street land has been used for those purposes.
14. I accept that it may be possible for the car park to be used to gain access to the inside of the 71 York Street building. It may also be possible to store garbage in the car park as well, although there was no evidence led by either party as to whether that is, in fact, a viable option. But to my mind, those possibilities do not render a right of carriageway over the Dock as being not reasonably necessary for the effective use of the 71 York Street land. The reasonable necessity criterion does not require that which is indispensable: Kent Street Pty Ltd v Council of the City of Sydney [2001] NSWSC 268 at [12].
15. That rear area of 71 York Street has been used for over 120 years. The evidence is that the rear area of the 71 York Street land continues to be used for a variety of purposes which, in my view, are reasonable uses of that land.
16. 71 York Street has had a legal right of way over the Passage, which it has also used, for over 150 years. The Dock stands between the Passage and the rear area of the 71 York Street land. The Dock has also been used by 71 York Street for over 120 years in order to pass from and to the Passage and that rear area. It maybe that 71 York Street has done so in the past on the implicit assumption that the Dock was, for all intents and purposes, part of the Passage over which 71 York Street had a right of way. The loading dock for goods on the southern wall, the fire exits and rear area all appear to have been used on that footing and it is only since the defendants acquired title to the Dock that this understanding seems to have changed.
17. Without a right to pass and repass over the Dock, 71 York Street has no alternative means of access from the western end of the Passage to the rear area of its building. Put another way, and as 71 York Street submits, a right of carriageway over the Dock is reasonably necessary for it to utilise its right of way over the Passage to access the rear area of its land. As described by Counsel for 71 York Street, the Passage is a "right of way in a sense to nowhere" unless the Dock can be accessed (at T6:6-7).
18. Given the Dock's small size, landlocked nature and the existing rights of way over the passage, I also accept 71 York Street's submissions that there will be negligible, if any, imposition on the defendants if a right of carriageway over the Dock was granted. Although the Dock is currently unencumbered, no evidence was led by the defendants to suggest that the imposition of a right of carriageway over the Dock to the benefit of 71 York Street would create a significant burden on them.
19. The courts have recognised that property rights are valuable and are not to be taken away lightly. But the extent of the burden of the proposed easement on the defendants in this case is minimal, which means the case for justifying a finding of reasonably necessity is not as high as it would otherwise be: Moorebank Recyclers at [156]; Woodland v Manly Municipal Council [2003] NSWSC 392 at [12].
20. Taking the whole picture into account, in my view, the use of the rear area of the 71 York Street building for a variety of purposes (eg deliveries, fire egress, access for tradespeople and garbage storage and collection) is reasonable as compared to not being able to access and use the rear area of the 71 York Street land at all via the Passage.
21. I also consider that use of the rear area with a right of carriageway over the Dock is substantially preferable to use without that right. Not granting a right of carriageway over the Dock would prevent 71 York Street from accessing the rear area of its land via the Passage which, not only would negate the benefit of its right of way over the Passage but, would also limit the uses to which the rear area of land can be put.
22. It follows that I do not accept the defendant's alternative submission that an easement over the Dock is only reasonably necessary for fire egress and should be limited in those terms, rather than for a general right of carriageway.

Clarence House: are rights of carriageway over the Passage and Dock reasonably necessary?

Submissions

1. Clarence House submits that rights of carriageway over the Passage and Dock are reasonably necessary for the effective use of the Clarence House land as it provides a fire egress path from the fire stair exits at the rear of Clarence House through to York Street in the event of an emergency.
2. It also submits that rights of carriageway are necessary to enable the continued use of the loading area at the rear of Clarence House for the delivery and dispatch of goods and collection of rubbish by Clarence Street Cyclery, as well as for other purposes related to the residential occupants of Clarence House, being for the delivery of goods, rubbish collection, access by tradespeople, couriers, deliveries and removalists.
3. The defendants accept that the ability of the occupants of Clarence House to safely exit in the event of fire or other emergency is important but contend there is no need to use the fire exits at the rear of Clarence House as an alternative in the form of an isolated fire passage could be constructed through to Clarence Street.
4. The defendants also submit that easements for pedestrian and vehicle access for the other uses raised by Clarence House are matters of convenience, rather than of reasonable necessity, as Clarence House led no evidence to indicate that it could not make alternative arrangements to have its garbage collected from Clarence Street. They also submit that deliveries can be made to, and tradespeople can access, the building by parking in the loading zone in Clarence Street, and it is not a long walk from the entrance of Clarence House to the point where the Passage meets York Street.
5. The defendants also contend that vehicular use of the rear area of Clarence House cannot be reasonably necessary today in circumstances where Council did not require parking and approved plans as part of the 1980 development application of the strata plan of Clarence House which did not include a clearly marked loading dock.
6. In relation to vehicle access, the defendants also submit that an easement is not reasonably necessary in circumstances where any vehicle would inevitably trespass on 71 York Street's land in a manner inconsistent with Clarence House's right of way over the loading yard, and would also encroach on 100 Clarence Street's land, relying on Mr Hollyoak's evidence.

Consideration

1. The question of whether rights of carriageway over the Dock and the Passage are reasonably necessary for the effective use of the Clarence House land is determined based on the current circumstances of Clarence House and the use of its land. One of those circumstances is that there are two fire isolated exits discharging into the rear area of Clarence House.
2. Sydney City Council approved the strata plan for Clarence House on condition that the occupants could get away from the rear area of the building over the Dock and Passage through to York Street (exhibit A4). The fire experts also agreed there needs to be an available and unobstructed path of travel from the discharge area at the rear of Clarence House through to York Street. There is, therefore, a clear current need for legal rights of way over the Dock and the Passage for fire egress from the rear of Clarence House (CB1866).
3. As to the possibility of an alternative path, the construction of a fire isolated passage within the building to permit discharge from fire exits onto Clarence Street would, in my view, present significant disadvantages to Clarence House and is not substantially preferable to using the existing path over the Dock and the Passage.
4. The fire experts agreed that construction of a fire isolated passage through Clarence House would require council consent and would result in a loss of rentable space and building frontage (CB1866). According to Mr Grubits, the works would also involve substantial cost, may require the acquisition of other land and may also prompt council to require additional works to comply with the BCA's 2019 standards (T197:18; T198:27-30; T:199:33-40; T200:15). Mr Harriman did not disagree.
5. Clarence House is a heritage listed building. Construction of a fire isolated passage, assuming Council consent was forthcoming, would involve delay and disruption to the occupants of Clarence House, particularly to those who occupy the ground floor and those who rely on the stairs at the northern area of the building where Mr Harriman indicated a potential passage would most likely be located (T202:3-6).
6. I am also unpersuaded by the defendants' submission that using the Dock and the Passage to enable access to the rear area of Clarence House, which includes the goods area and loading dock behind Clarence Street Cyclery, by vehicle or on foot is merely a convenience and not reasonably necessary for the effective use of the Clarence House land.
7. Rights of carriageway are, in my view, reasonably necessary to enable all the occupants of Clarence House, their tradespeople, couriers and the like to continue to enjoy a more ready means of access to the rear area to the building for the uses to which that area has been put in the past and to which it is currently put. This is particularly the case for Clarence Street Cyclery which, the evidence indicates, uses the rear area on a daily basis for its business and needs access to do so via a path over the Dock and the Passage.
8. I do not accept the suggestion in the defendants' submissions that the use of the loading zone on Clarence Street at the front of the building is an adequate alternative or substantially preferable to easements which provide for vehicle or pedestrian access over the Dock and the Passage in favour of Clarence House. The loading zone is for four hours per day only, from 6am to 10am. There is no stopping at all between 10am and 8pm on Monday to Friday and from 10am and 6pm on weekends and public holidays (exhibit A5).
9. The use of an existing path of travel which is untroubled by traffic and restrictive parking limits and which is already used as a means of access by other adjoining properties (in respect of the Passage) is substantially preferable to reliance on loading and unloading at times which are not consistent with usual business hours on a very busy street in the central business district of Sydney.
10. I also do not accept the defendants' submission that Sydney City Council's approval in 1980 supports the conclusion that rights of carriageway are now not reasonably necessary. The waiver of the car parking requirement related to permanent overnight car parking for residents of Clarence House, not to the use of the rear area for loading and unloading, garbage collection, removalists, deliveries and the like. While not referring to a loading yard, the plan of the development by Council refers to a "goods" area with doors opening onto the rear of Clarence House, consistent with the rear area of Clarence House being used for loading and unloading goods for the business located on the ground floor (exhibit A6, ground floor plan).
11. Easements over the Dock and the Passage are reasonably necessary to enable the continued use of the rear area of the Clarence House land in its current form by occupants of the building. Not granting rights of carriageway would prevent access to the rear area from York Street and significantly limit the uses to which that land can be put. Whilst past use is not automatically indicative of reasonable necessity, the option of not granting rights over the Passage and the Dock to enable continued access is not, in my view, substantially preferable to granting easements which reflect the status quo in terms of the use to which that land is currently, and has historically been, put.
12. The defendants' submission that vehicles which access the rear area of Clarence House might trespass on 71 York Street and 100 Clarence land does not lead me to conclude that the easements sought are not reasonably necessary. Granting rights of carriageway over the Dock and the Passage will not impede adjoining landowners taking steps to prevent any trespass on their land by vehicles, assuming any steps are in fact necessary or warranted. As Clarence House noted in its submissions, the defendants appear to have taken some steps already by chaining off the rear area to 100 Clarence Street.
13. As to the consequences of the easements on the Passage and the Dock, the impact of granting easements to the benefit of Clarence House is very much lessened and, in my view, negligible due to the pre-existing easements over the Passage. Having regard to the history and current use of the Passage and the Dock, granting those easements is unlikely to involve any intensification of use.
14. The imposition of easements to the benefit of Clarence House is also unlikely to interfere with the defendants' use of the Dock and the Passage in the future or have the consequence of precluding a reasonably available development, thereby requiring a strong case of reasonable necessity: Moorebank Recyclers, at [156]. For reasons which I discuss below, I do not accept that development of the Passage and the Dock by the defendants is a reasonably available option.
15. In any event, granting easements to Clarence House would have the consequence of increasing the number of parties the defendants would need to deal with before undertaking any development from three to four, given 71 York Street, 65 York Street and 5-7 Barrack Street all have existing rights of way over the Passage. To my mind, such an impost is not significant.

Are rights of carriageway inconsistent with the public interest?

1. The defendants' submission on this question in both the 71 York Street and Clarence House proceedings focuses on vehicle access over the Dock and Passage.
2. The defendants submit that general rights of carriageway would not be in the public interest due to safety concerns from vehicles reversing from the rear of 71 York Street and Clarence House onto York Street. They rely on Mr Hollyoak's report which, they contend, indicates that there is not enough room for vehicles to turn around in the rear area of 71 York Street and Clarence House (CB1845; [94] closing submissions).
3. I am not persuaded by the defendants' submission and their reliance on Mr Hollyoak's evidence that granting easements that enable vehicle access over the Passage and the Dock to the rear of each of 71 York Street and Clarence House would result in safety issues so as to impact adversely the activities of the public generally and be inconsistent with the public interest: Marshall v The Council of The City Of Wollongong [2000] NSWSC 137 at [15].
4. While Mr Hollyoak's report indicates that some vehicles entering the rear area of 71 York Street and Clarence House in a forward motion could not turn around and face out towards the Passage, those indications are based on simulated exercises using the computer program AutoTurn (T210:25-26) and what could be described as vehicles attempting a turnaround manoeuvre by a 'one point turn' (CB1849-1854). Further, at least some of the vehicles used in Mr Hollyoak's simulated exercises were larger than the type of small van used by Clarence Street Cyclery (CB1840).
5. Mr Hollyoak also accepted in cross-examination that he had not driven a vehicle up the Passage, over the Dock and onto the land at the rear of 71 York Street or Clarence House, nor had he attempted a three-point, five-point or ten-point turn in the rear area behind those buildings (T210:23-26). Based on the photographs in Mr Hollyoak's report, it also appears that small vehicles that access the rear area behind 71 York Street and Clarence House are able to exit into York Street in a forward motion (CB1840).
6. The evidence is that vehicles have been accessing the rear area of Clarence House via the Passage and the Dock since at least 1981. There is also evidence that vehicles have been accessing the rear area of the 71 York Street land. There is no evidence that any safety issues or accidents have occurred as a result.
7. Granting easements in the nature of general rights of carriageway over the Dock and the Passage will simply continue the status quo of many years. Those easements will continue to facilitate the use of landlocked areas behind buildings in the central business district where there are limited available alternatives for loading and unloading on the street. It is also relevant, in my view, that rights of way already exist over the Passage that allow for vehicle access by other properties, including 71 York Street based on the terms of the Book 8 grant.
8. Easements over the Dock and Passage for fire egress from the rear of 71 York Street and Clarence House are also clearly in the public interest. There was no submission made that easements enabling pedestrian access over the Dock and the Passage for use of the land at the rear of 71 York Street and Clarence House would impair or be inconsistent with the public interest.
9. I am, therefore, satisfied that granting general rights of carriageway over the Passage and the Dock to enable the use of the Clarence House land at the rear of the buildings is not inconsistent with the public interest. I am similarly satisfied in relation to a right of carriageway over the Dock in respect of 71 York Street.

Can the defendants be adequately compensated?

1. The question of whether the owner of servient land can be adequately compensated under s 88K(2)(b) of the Conveyancing Act requires the Court to focus on whether the owner will suffer a loss or other disadvantage from the imposition of the easement. If they will, and they cannot be compensated, then no easement can be granted: Moorebank Recyclers, at [233]; Lonergan v Lewis [2011] NSWSC 1133 at [50].

71 York Street

1. The defendants accept they can be adequately compensated if an easement over the Dock is granted to the benefit of the 71 York Street land ([123] closing submissions). Their submissions focus on the level of compensation that should be paid, which I deal with below.

Clarence House

1. The defendants do not accept they can be adequately compensated for the loss and disadvantage that say will arise if easements over the Dock and the Passage were granted to the benefit of Clarence House.
2. The defendants submit that the loss and disadvantage is the additional burden on the defendants of having to deal with Clarence House in the event of any redevelopment by the defendants of the Dock and the Passage. They rely on the cross-examination of Ms Marshall where she accepted that granting an easement over the Passage would be a "very valuable commercial advantage to Clarence House" (T159:20).
3. The defendants submit that Mr Marshall's valuation should not be accepted as she failed to take account of the "valuable commercial advantage to Clarence House". They submit the Court should conclude that the defendants cannot be reasonably compensated for any easements which place Clarence House in the position accepted by Ms Marshall ([154] and [155] closing submissions).
4. I do not accept the defendants' submissions on this issue and have concluded that the defendants could be adequately compensated for any loss or other disadvantage that will arise from granting rights of carriageway over the Dock and the Passage to the benefit of the Clarence House land. This is for the following reasons.
5. I am not satisfied the defendants have shown there would be any relevant loss or other disadvantage to them arising from the grant of the easements based on Ms Marshall's evidence, or at all. Ms Marshall's evidence that Clarence House would obtain a commercial advantage if easements were granted was limited to the situation where the defendants undertook a redevelopment of the Passage and the Dock in conjunction with a redevelopment of 71 York Street and 65 York Street and had obtained the consent of those adjoining properties to do so (T159:16-22).
6. There is no evidence to suggest that a redevelopment of all of those lands together is likely, let alone something that is being contemplated by the defendants and will give rise to loss or another disadvantage if the easements were granted. A commercial advantage which is based on a speculative development dependent on the consent of various lots owners in neighbouring heritage buildings who already have existing rights of way over the Passage does not, in my view, equate to a loss or other disadvantage to the defendants that will arise, as required by s 88K(2)(b).
7. I also do not accept the submission that the evidence shows that the defendants have an intention to develop the Passage and the Dock, either by themselves or as part of a possible development of 100 Clarence Street with neighbouring 71 and 65 York Streets ([156] closing submissions).
8. Mrs Arcidiacono's evidence (at [16], CB1786) was as to her belief as to the ease of development of the Passage, the Dock and the 8ft lane, and was based on the incorrect understanding that there was only one party with existing rights of way over the Passage. There is no evidentiary foundation for that belief and there are three parties with existing rights of way over the Passage.
9. Mrs Arcidiacono's evidence during cross-examination about a proposed development (T250:28) appears to have been about development of 100 Clarence Street alone, as opposed to a development of the Dock and the Passage in conjunction with the development of the 71 and 65 York Street buildings.
10. The defendants' submission is also inconsistent with Mrs Arcidiacono's evidence in cross-examination that the defendants had received advice that it is highly unlikely they will develop the Passage as an area to build on: (T256:41-46).
11. The defendants' submission is also inconsistent with the valuation evidence that there are significant developments constraints on the Dock and Passage and a very low probability of developing the Dock or the Passage in isolation (CB749; CB757 Dale at [31], [43], CB1161 Marshall at 3.02.03).
12. It is also difficult to see what real and tangible financial loss or other disadvantage will arise for the defendants if they are required to negotiate with Clarence House in circumstances where they need to negotiate with adjoining property owners (71 and 65 York Street) as well as another non-adjoining property owner with rights of way over the Passage, being 5-7 Barrack Street, before any development could proceed. Ms Marshall's evidence that Clarence House would be in a very advantageous position to negotiate a favourable deal (T159:22) did not take account of 5-7 Barrack Street.
13. There is also evidence from both Ms Marshall and Mr Dale which indicates that it is possible to quantify an amount of compensation for loss that will arise from the grant of any easements over the Dock and the Passage. I deal with the level of that compensation below.

Should the Court exercise its discretion to grant easements over the Passage and the Dock?

1. Where a plaintiff has established reasonable necessity and the other factors in s 88K(2) of the Conveyancing Act, the Court retains a discretion as to whether to grant the easement sought: King v Carr-Gregg [2002] NSWSC 379 at [59]; Owners Strata Plan 13635 v Ryan [2006] NSWSC 221 at [84].
2. There is nothing in the evidence or the submissions that leads me to the conclusion that I should exercise my discretion and not make orders under s 88K of the Conveyancing Act for easements over the Dock and Passage in either the 71 York Street or Clarence House proceedings, if it were necessary to make those orders.

Legal principles

1. The assessment of the level of compensation to be paid is to be determined by reference to the loss or other disadvantage incurred by the servient owner as a result of the easement, rather than the benefit obtained to the dominant owner: 117 York Street, at 515-517.
2. The amount of compensation will ordinarily be made up of the diminished market value of the servient land (including what is sometimes called the hope value, being the potential use to which the affected land could have been put), the associated costs caused to the owner of the servient land, and an amount for insecurity and loss of amenities, less any compensating advantages, if any: Wengarin Pty Ltd v Byron Shire Council [1991] NSWSC 485, at [26]; cited with approval in Moorebank Recyclers at [234] and [238], as followed in Lonergan v Lewis [2011] NSWSC 1133 at [52] and Khattar v Wise [2005] NSWSC 1014 at [66].
3. The diminished market value of the servient land is usually assessed by forming a view of what a willing but not anxious purchaser would pay to a not unwilling vendor before and after the grant of the easement, assuming that both the purchaser and vendor are perfectly acquainted with the land and have access to all currently available information that affects its value: Moorebank Recyclers at [239]; Spencer v the Commonwealth (1907) 5 CLR 418; Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 at [51].

Submissions

1. 71 York Street relies on the evidence of Mr Dale and submits that the amount he identifies, of $6,000, is an appropriate level of compensation to the defendants for a grant of an easement over the Dock.
2. The defendants dispute the figure of $6,000. They submit that compensation should be calculated based on Ms Marshall's evidence, which valued the Dock at $30,000 per square metre before any discount.
3. Initially, the defendants proposed compensation in the amount of $172,500, representing its full non-discounted value on the basis of Ms Marshall's evidence that the Dock could be developed together with the three adjoining sites and that she could not say whether her discount of 75% would be appropriate in those circumstances ([126] written submissions). In final oral submissions, the defendants moved away from a full value compensation amount, suggesting that some discount should be given but did not indicate what discount they considered appropriate (T361:33-T362:6).
4. The defendants' also submit that the Court should prefer the evidence of Ms Marshall over that of Mr Dale. Their submission also assumes that the Court should proceed to assess compensation on the basis that the Dock has development potential and that an easement to the benefit of 71 York Street would result in financial loss to the defendants from the sterilisation of that development potential.

Consideration

1. In general terms, I prefer the evidence of Mr Dale to that of Ms Marshall. His methodology considers market value of the Dock based on capital rates for an improved site area, as well as for potential gross floor area (GFA), whereas Ms Marshall's only considered site area rates.
2. Mr Dale is a certified practising valuer with over 34 years' experience. His opinion is expressed based on the particulars of the easements sought as well as details of the Dock (and Passage) and relevant surrounding properties. His opinion that the grant of the easements would not detrimentally affect the value of the Dock takes account of relevant factors and the approach from the recent authorities, and he adopts a highest and best use approach (CB756-CB758).
3. I accept Mr Dale's evidence that his adoption of higher adjustment rates of between 60-80% on a sale by sale basis does not make his valuation less accurate than Ms Marshall's, who used an overall rate of 75% for the Dock (T133:39 - T134:6). His approach of adopting total adjustments to the raw capital rates indicated by each sale reflects an assessment of market value based on how purchasers typically undertake adjustments, as opposed to sequentially adding on an adjustment for each factor (CB750).
4. I also accept his evidence that the special value to an owner of property, being the additional amount that a prudent person would pay for land rather than lose it, is not applicable to assessing market value of property (T129:28-30). To my mind, such special value is not in the nature of a tangible financial loss or other real non-financial disadvantage that will arise from the imposition of an easement that is compensable under s 88K of the Conveyancing Act.
5. I do not accept, as the defendants suggest ([151] and [155] closing submissions; T312:14-16), that Ms Marshall's and Mr Dale's evidence was that the best and highest use of the Dock (or the Passage) was as part of the development of 100 Clarence Street and some other adjoining properties. Ms Marshall was of the opinion that development as part of an amalgamated site of 100 Clarence Street, 65 and 71 York Street which involves cantilevering over the Dock and Passage was a possibility but a limited one, not that it was the best and highest use of the Dock (CB1661).
6. Mr Dale's opinion, which I accept, is that the best and highest use of the Dock and the Passage both before and after any easement is granted is utilising the available floor space ratio for the development potential with an adjoining property (such as 100 Clarence Street), and that it is appropriate to value the on that basis. That opinion is not inconsistent with the evidence of Mrs Arcidiacono, which I have referred to earlier (at [508] - [511]). Mr Dale and Ms Marshall also both concluded that development of the Dock and the Passage on their own is not likely (CB757 and CB1661), which is consistent with the evidence of Mrs Arcidiacono referred to above.
7. I accept Mr Dale's opinion that the likely market value of the Dock with an easement granted to 71 York Street would be no different to the market value today, and that an appropriate assessment for compensation for loss of market value and/or proprietary rights and loss or disadvantage to the defendants is $0. This conclusion is consistent with that reached by Ms Marshall, notwithstanding the different methodology applied by her. While not determinative, it is also consistent with the valuation evidence of Mr Eccleston, which was relied on by the defendants when they sought their own easements over the Passage and the Dock in Pasade Holdings v Sydney City Council.
8. Mr Dale provides an amount of $6,000 as his assessment of disturbance compensation for all easements over the Dock and Passage, whereas Ms Marshall provides a figure of $5,000 for blot on title.
9. In the absence of any evidence from a valuer on behalf of the defendants and as 71 York Street has made an open offer in the amount of $6,000, I am satisfied that Mr Dale's figure of $6,000 would be an appropriate sum for compensation (excluding reasonable legal costs incurred by the defendants) for an easement over the Dock for a right of carriageway under s 88K.

Submissions

1. As set out above, I have concluded that the defendants can be adequately compensated for easements over the Dock and the Passage to the benefit of Clarence House. The remaining issue is the level of that compensation. Clarence House submits that no compensation should be payable to the defendants (T23:45).
2. The defendants' submission on compensation in respect of the Clarence House easements focusses on the development potential of the Passage and the Dock as part of a development with adjoining properties and the need to take into account that possibility in valuing compensation. They submit that Ms Marshall failed to take that possibility into account, and the commercial advantage that accrued to Clarence House as a result.
3. They also submit that, where the highest and best use of the land is development, the Court cannot ignore the possibility of development in valuing the land ([157] closing submissions).

Consideration

1. Clarence House's submission that no compensation should be payable is not sustainable given the expert opinions (of Ms Marshall and Mr Dale) accept that some amount, albeit minimal, is payable to recompense the defendants.
2. As to the defendants' submissions, I do not accept the evidence indicates a likelihood of development of the Passage and the Dock, or that it supports the conclusion that their highest and best use is part of a development with the adjoining properties of 65 and 71 York Street and 100 Clarence Street. I have already commented on the evidence regarding the likelihood of development of the Dock and the Passage and my acceptance of Mr Dale's evidence on the best and highest use of the land, at [508] - [513] and [529] - [530] of these reasons.
3. Consistent with my reasoning in respect of 71 York Street, I also do not accept that Ms Marshall (or Mr Dale) ignored the possibility of development of the Passage and the Dock, including as part of a development with adjoining land, when they undertook their valuations.
4. To the contrary, both considered the development possibilities. Mr Dale based his opinion of the value of compensation on an assessment of the highest and best use of the Passage and the Dock, which he concluded was to use their floor space to contribute to the floor space of the development of an adjoining property (CB758 and T135:8-16). Ms Marshall considered the possibility of the Dock and Passage being developed as part of an amalgamation with adjoining properties, by way of a cantilevered development as a stratum lot, but concluded there would be no loss in value (CB1661-CB1662).
5. I have commented on Ms Marshall's evidence about the commercial advantage to Clarence House, at [506] and [513] of these reasons. I also accept Clarence House's submission that granting easements under s 88K would not cause any additional loss to the defendants, given the existing and continuing commercial advantages enjoyed by 65 York Street, 71 York Street and 5-7 Barrack Street.
6. The defendants did not articulate the precise quantum by which any compensation payable by Clarence House should be increased based on Ms Marshall's evidence that an easement would give Clarence House a commercial advantage of being able to negotiate a more favourable deal. Rather, the defendants contend that the Court should reject Ms Marshall's view that the compensation for the easements should be nil ([154] closing submissions) and submit that the Court could put itself in the position of a juror and assess as best as it can what the compensation payable should be, following the approach in Swann v Spiropoulos [2006] NSWSC 860 and Evans v Cornish Nominees Pty Ltd (2009) 14 BPR 27,257; [2009] NSWSC 1295.
7. In both Swann v Spiropoulos [2006] NSWSC 860 and Evans v Cornish Nominees Pty Ltd (2009) 14 BPR 27,257; [2009] NSWSC 1295, the Court concluded that the expert valuation evidence was not persuasive. This is not such a case.
8. The Court has before it very persuasive evidence from Mr Dale. While I generally prefer his evidence, I do not consider that Ms Marshall's evidence should be rejected or is unpersuasive for reasons advanced by the defendants.
9. Ms Marshall determined the value of compensation by reference to the diminution in value of the land by considering what would be paid by a willing but not eager or determined buyer to a willing but not anxious or forced seller before and after the grant of the easement where both are reasonably informed about the characteristics of the land (CB1663 and CB1659). She took account of the existing easements on the Passage, the features and scope of the Dock and the uses to which the Dock and Passage are put (CB1659), together with the uncertainty of any development opportunity over that land and the possibility of development on value (CB1661-CB1662).
10. Consistent with the opinion of Mr Dale, Ms Marshall concluded that the grant of easements over the Passage and the Dock would not have a detrimental effect on their value and that compensation should be payable in a small amount reflecting the associated blot on title to the defendants.
11. Accordingly, if I were required to make orders for easements under s 88K, I would consider it appropriate to order compensation be payable by Clarence House to the defendants in an amount of $12,000 (excluding any reasonable legal costs incurred by the defendants). This figure reflects my conclusion that $6,000 should be paid by 71 York Street as compensation for an easement for a right of carriageway over the Dock, and Clarence House would be granted an easement over the Passage as well as the Dock.

Terms of s 88K easements over the Passage and the Dock

1. Clarence House seeks rights of carriageway over the Dock and the Passage. I am satisfied that if orders under s 88K of the Conveyancing Act were required to be made, easements in terms provided by Part 1 of Schedule 8 of the Conveyancing Act would be the appropriate given the use to which Clarence House has put the Passage and the Dock to date.
2. I am also satisfied that, if an easement under s 88K was required for 71 York Street, it would be appropriate to make an order for a right of carriageway in the terms of Schedule 8, Part 1 of the Conveyancing Act in respect of the Dock given the use to which the Dock is put and the nature of 71 York Street's existing right of way over the Passage.

Introduction

1. 71 York Street seeks orders under s 88K of the Conveyancing Act for other easements over the Passage and the Dock in respect of the drainage of water and sewerage, repairs and services, encroaching and overhanging structures, and light and air.
2. There are discrepancies between the other easements claimed in 71 York Street's pleadings ([vi] - [xiv] and [17] - [28] of the statement of claim) and those referred to in the documents relied on at the hearing: see draft instrument (CB646-CB659, easements at items 1-7 and 9-15 (which includes plans prepared by Mr Cambridge at CB658-CB659 (RC Plan)) (easement instrument), and 71 York Street's offer of compensation (at MFI-2).
3. By way of example, the easements instrument refers to fourteen easement items (on one reading amounting to twenty three easements), whereas the pleading seeks orders for nine (or possibly eighteen). The offer of compensation refers to ten other easements. The statement of claim also refers to encroaching structures which are not referred to in the RC Plan and appears to limit the easements claimed for overhang to fire sprinklers (at [25]). The easements referred to on the RC Plan are also, in some respects, different to the descriptions in the easement plans contained in Mr Cambridge's report (CB583-CB584).
4. Given the way the hearing ran and the contents of the closing submissions, I have considered 71 York Street's claims under s 88K for the other easements by reference to their general descriptions and the evidence, rather than seeking to resolve the discrepancies and give reasons on the terms of each of the easements sought in the orders for relief or in the easements instrument.
5. In so doing, I have adopted the categories referred to by the parties (being easements for overhang and encroaching structures to remain, for the drainage of water and sewerage, for repairs and services and for light and air), and have considered 71 York Street's claim for those categories of easements by reference to the questions earlier identified in these reasons (at [441]).

71 York Street's submissions

1. In general terms, 71 York Street submits that most of the other easements are reasonably necessary for the effective use of the 71 York Street land as the structures and services to which they relate exist on or as part of the building and have done so for over 100 years.
2. It submits there should be no consequential burden on the defendants as similar easements have been granted over the Passage to the benefit of other properties in the past, and which are recorded on the title to the Passage (CB444), and because the evidence indicates the defendants are unlikely to develop the Passage and the Dock.
3. 71 York Street also submits that an easement for repairs and services is reasonably necessary given the difficulties it had negotiating consent from the defendants to enable it to undertake repair works for the fire drencher system.
4. The easement for light and air is, 71 York Street submits, necessary to ensure that light from the Passage is available to the offices that run along the northern wall of the building.
5. In summary, 71 York Street contends there are no reasons why easements under s 88K of the Conveyancing Act should not now be granted to the benefit of the 71 York Street land and there can be no rational objection by the defendants to easements being ordered ([11.8], [12.4], [13.4] and [14.5] closing submissions).

Defendants' submissions

1. The defendants' submit that 71 York Street has failed to demonstrate that the other easements are reasonably necessary. Simply put, they query how the easements claimed can be reasonably necessary now when the land has operated well enough for over a century without them and licences in respect of some of them have been offered for a nominal sum (T347:45).
2. The defendants submit that the easements for the drainage of water and sewerage are not reasonably necessary in circumstances where they are sought over the whole of the Dock and the Passage and, they say, there is no evidence to suggest that water cannot be drained over 71 York's Street's own land.
3. They submit that the easements for overhang, encroachments and services are not reasonably necessary as a licence can be given under the Encroachments of Buildings Act, and the defendants have offered a five year license for the nominal sum of $1. They also submit that the only encroachment identified is the vent pipe and there is no evidence for why it is required and cannot be moved.
4. They also contend that an easement for repairs is not reasonably necessary as 71 York Street can have recourse to the Access to Neighbouring Land Act 2000 (NSW) to affect such repairs, assuming the parties cannot reach an agreement about repair access issues as they arise.
5. As to the easement for light and air, the defendants submit that 71 York Street has not shown why it is reasonably necessary, as distinct from merely desirable. This is in circumstances where, they submit, there are no windows fronting the Dock, there are other windows at the front of the building which provide natural light to some offices, there are other offices which have no side windows, the offices are air-conditioned and, unlike the case of Pasade Holdings v Sydney City Council [2003] NSWSC 515, there is no evidence that an easement for light and air is required for development consent.
6. The defendants reject the contention that the imposition of the other easements on their land would not impose a significant burden. They say there would be a burden as the easements would prevent the defendants from being able to develop the Passage and the Dock, including by a cantilevered development.
7. They also contend that the easements previously imposed over the Passage are of no relevance to the Court's consideration of the issues as they relate to different parties, were granted in circumstances where the owners of the Passage were unknown, the evidence of necessity was different to that relied on by 71 York Street, and those easements create different burdens because of the different land to which they benefit and the different terms on which they were granted.

Reasonable necessity

1. A party who seeks an order under s 88K of the Conveyancing Act is required to establish why the easements are reasonably necessary: Owners Strata Plan 13635 v Ryan at [24]; Hanny v Lewis (1998) 9 BPR 16,205.
2. In that context, it is appropriate to acknowledge that 71 York Street's submissions on the issue of reasonable necessity for the other easements claimed are not detailed and there is little specific evidence going to need. There is, therefore, some force to the defendants' submission that 71 York Street may not have established the requirement for reasonable necessity, as required by s 88K of the Conveyancing Act.
3. That said, based on the evidence before the Court and the arguments advanced by the parties, I am satisfied that easements for overhang and encroachment structures to remain and for repairs and services are reasonably necessary for the effective use of the 71 York Street land.
4. In reaching that conclusion, I accept 71 York Street's submission that granting such easements would not have any real impost on the defendants.
5. No evidence was led by the defendants to suggest that easements for overhang and encroaching structures to remain and for repairs or services would interfere with the defendants' use of the Passage and Dock or that they would be prevent any development of the defendants' land. In any event, the prospect of development of the Passage and the Dock by themselves or as part of an amalgamated cantilevered development is remote, given Mrs Arcidiacono's evidence, the opinions of the valuers, and the existence of other easements over the Passage to the benefit of three other parties.
6. I do not accept the defendants' submission that the existing easements over the Passage for overhang and the keeping in place of certain structures (similar to some which 71 York Street seek to maintain) to the benefit of 65 York Street are not relevant to the Court's consideration of 71 York Street's claims.
7. The existence of the easements which benefit 65 York Street demonstrates the nature of the easements that can be readily accommodated by the Passage and the Dock and also confirms that granting similar easements to the benefit of 71 York Street should not result in any additional burden or loss to the defendants. The location of 65 York Street on the opposite side of the Passage is also not indicative of some fundamental difference in respect of the burden imposed by easements created to the benefit of 71 York Street, as the defendants suggest ([14], supplementary submissions).
8. The evidence does not support the conclusion that the imposition of easements for overhang and encroachment structures to remain and for repairs and services would effectively preclude a reasonably available development or use of the Passage and the Dock. Accordingly, a strong case for a finding of reasonable necessity in respect of those easements is not required.

Overhang and encroachments

1. The expert report of Mr Cambridge identifies the overhang and encroaching structures as the windowsill mouldings, parapet, corbel, conductor boxes/rain water head, downpipes, electrical conduits, fire system pipes and sprinkler heads, and the vent pipe. His report makes clear that each of these structures form part of or is affixed to the northern wall or roof line of the 71 York Street building and trespasses over or into the Passage and the Dock.
2. I accept the submission of 71 York Street that these structures have been present on the 71 York Street building for some years. The fire drencher system has been in place since at least 1919 (CB678) and it is reasonable to infer that the windowsill mouldings, parapet and corbel may have been part of the 71 York Street building since it was constructed in the early part of the 20th century.
3. I have no doubt that the effective use of the 71 York Street building requires the continued existence of the overhang and encroachment structures.
4. Given the heritage status of the 71 York Street building, it may be taken that the windowsill mouldings, parapet and corbel elements need to be maintained in their current positions.
5. The need to maintain downpipes and conductor boxes/rain water heads for drainage of water, electrical conduit for electrical services and fire system pipes and sprinkler heads for fire safety purposes is self-evident.
6. It may be that some of the other structures identified, such as the downpipes and vent pipe, could possibly be moved, but they have also been in place for some time and moving them would also likely interfere with the heritage fabric of the building and its operations, and involve cost and delay.
7. The offer of a five-year licence for $1 or the prospect of seeking one under s 3 of the Encroachment of Buildings Act 1922 (NSW) does not mean that the easements for overhang and encroaching structures to remain are not reasonably necessary. The existence of an alternative remedy under the Encroachment of Buildings Act does not preclude the grant of an easement under s 88K. The court can choose to grant one in preference to the other: North v Marina (2003) 11 BPR 21,359; [2003] NSWSC 64.
8. Contractual licenses limited in time would also create uncertainty going forward: Ward v Hull [2019] QSC 032. The parties will have to renegotiate the terms of their license in five years, in circumstances where they have experienced difficulty in reaching consensus positions on many issues, as evidenced by this litigation. They may create uncertainty for successors in title who may not be bound by a contractual license, as they would by a registered easement.

Drainage for sewerage and water

1. As a matter of principle, I accept that easements for drainage of water and sewerage over the Passage and the Dock may be reasonably necessary for the effective use of the 71 York Street land.
2. I have already commented on the Sewerage diagram and why I do not accept it as sufficient evidence of use (at [418] - [425]).
3. As to drainage for water, there is no water drainage or other plan in evidence that identifies the location of pipes which run under the Passage and the Dock for the purposes of draining water from 71 York Street.
4. Mr Cambridge's report identifies downpipes and other water related structures on the northern wall of the 71 York Street building that encroach on the Passage and the Dock but does not address whether those pipes and structures lead or drain into pipes that run anywhere along or under the defendants' land. It is also not possible to infer they do from the photographs in evidence (for example CB850-CB851, CB855) or from what I observed on the view.
5. Easements for drainage of water appear to be sought in respect of the four downpipes located on the northern wall of the 71 York Street building as encroaching structures (CB658, items A, A1, B, B1 in the RC Plan). Mr Cambridge's report identifies their location and that they encroach on the defendants' land.
6. As noted earlier, it is a matter for 71 York Street to establish the easements are reasonably necessary. While detailed evidence may not be required to satisfy s 88K(1) of the Conveyancing Act, it is to be expected that some views would be expressed by a witness, such as a surveyor, as to the location of sewerage and other drainage pipes under the Passage and the Dock, the use to which they are put, and the continuing need to use them for drainage in support of the easements claimed. Mr Cambridge's report expresses an opinion on the need to maintain the encroaching structures only, rather than a view on the use of sewerage and other drainage pipes under the Passage and the Dock.
7. Accordingly, I am not persuaded by 71 York Street's submissions, the Sewerage Diagram or the other material in evidence that it has established the need for easements for drainage of water and sewerage over the Passage and the Dock in the terms of and as referred to as items X and Y on the RC Plan.

Repairs and services

1. An easement for repairs and services appears to be sought in respect of the fire sprinkler system and northern wall of the 71 York Street building ([23], statement of claim), and in respect of electrical services associated with the encroaching electrical conduits (item F at CB584 and CB659).
2. I am satisfied that, in this case, use of the 71 York Street land with an easement for repairs and services is substantially preferable to its use without such an easement. Without such an easement, 71 York Street has no ongoing legal right to enter the Passage or the Dock to carry out repairs to the northern wall of its building or take steps to maintain essential services, such as electricity.
3. It might be expected that arrangements to enter another person's land to undertake repairs of a building and maintenance of services to ensure their continued operation would be agreed in a short timeframe and that an easement is unnecessary. But the evidence in this case indicates otherwise.
4. 71 York Street requested consent from the defendants to undertake urgent repairs to its fire drencher system on 25 May 2016 (CB506). That consent was not forthcoming despite the provision of detailed information from the defendants as to how the works were to be carried out and why it was needed (CB510). It was not until 15 January 2019, nearly eight months after the first request, that agreement was reached.
5. In those circumstances, I do not accept the defendants' submission that negotiation between the parties for access for repairs and services is a reasonable or viable option for the future.
6. Nor do I accept the submission that the option of seeking access by recourse to the Access to Neighbouring Land Act means that the easement sought is not reasonably necessary.
7. As noted above, the existence of an alternative statutory regime does not does not preclude the grant of an easement under s 88K. Granting an easement to enable repairs to be undertaken and services maintained in a timely and cost-effective manner is, in my view, clearly superior to the alternative option of recourse to a regime which involves further Court action.

Light and air

1. The difficulty with 71 York Street's claim for an easement for light and air is that there does not appear to be any need (reasonable or otherwise) to make an order for an easement for light and air for the ongoing and effective use of the 71 York Street land.
2. The 71 York Street building was constructed in 1877 with a number of windows facing the Passage. It has been and continues to be used on the basis that the offices along the northern wall have natural light from the Passage. Mr Brooks, whose office is located on that side, gave evidence that he considers that amenity to be significant (T111:1-18).
3. I do not accept, as the defendants suggest, that use of natural light is merely desirable, rather than a reasonable necessity for the purposes of s 88K. Natural light has been recognised as an aspect of the use of land that is substantially preferable to use without it: Kent Street v Sydney City Council [2001] NSWSC 268, at [14].
4. But the relevant question is not whether light and air are reasonably necessary for the effective use of the 71 York Street land. Rather, it is whether an easement for light and air is reasonably necessary for that use: s 88K(1).
5. Unlike the other proceedings in this Court involving claims for easements over the Passage, there is no development consent in respect of 71 York Street which requires an easement for light and air.
6. Nor is there any evidence of any threatened action by the defendants that would interfere with or impede 71 York Street's existing enjoyment of natural light or air coming from the Passage or the Dock. As noted above, the evidence does not indicate any likelihood of development of the Passage or the Dock in isolation or any cantilevered development.
7. The circumstances that subsisted at the time of the hearing also include the existence of other easements over the Passage which prevent it being obstructed and require natural light to be made available to the neighbouring 65 York Street land.
8. The amenities of natural light and air from the Passage and Dock that 71 York Street enjoys do not depend on any trespass over or encroaching structure on the Passage or Dock, and do not require the consent of the defendants, as in the case of repairs. The 71 York Street land enjoys the amenities due to the physical location of the windows and the Passage.
9. While a strong case for reasonable necessity may not be required in this case, a claimant must point to some matter which supports the conclusion that an easement is reasonably necessary. I do not consider that 71 York Street has done so. The existence of a similar easement to the benefit of 65 York Street is not sufficient in circumstances where that easement was required as part of a development consent. Nor do I accept the submission that the Court should make an order because "there can be no rational objection by the defendants" ([14.5] closing submissions).
10. Simply put, and as the defendants submit, the 71 York Street land may continue to be used effectively by accessing natural light and air from the Passage and Dock without the proposed easement.
11. Accordingly, I am not satisfied that 71 York Street has established that an easement for light and air over the Passage and the Dock is reasonably necessary.

Public interest, compensation, and other factors

1. There is nothing to suggest that easements for overhang and encroaching structures to remain or for repairs and services would be inconsistent with the public interest. The defendants did not advance any submission to the contrary.
2. The easements for overhang and encroaching structures to remain would continue the status quo of many years, whereas easements for repairs and services may improve the efficiency of the operations of the building. In either case, they would not impact adversely on the public. I am satisfied that granting them would not be inconsistent with the public interest.
3. The defendants accept that all reasonable attempts had been made to obtain the easements under s 88K of the Conveyancing Act (T347:23-26) and also accept they can be adequately compensated for the easements sought ([123] closing submissions).
4. I do not find any discretionary reasons for declining to make orders for the grant of easements for overhang and encroaching structures to remain, or for repairs and services.
5. The remaining issue to be decided is, therefore, what level of compensation should be ordered.
6. 71 York Street contends that the amount of compensation it has offered the defendants for each of the other easements claimed, being $2,000 (MFI-2), is appropriate.
7. The defendants submit that compensation will vary depending on the extent to which the Passage is affected by the easements, but do not advance any particular figure ([127] closing submissions).
8. I have already concluded that a figure of $6,000 is an appropriate amount for compensation for a right of carriageway over the Passage and for the Dock. That figure reflects the conclusion of Mr Dale that an amount for disturbance was appropriate for all proposed easements over the Passage and the Dock, including a right of carriageway and the other easements claimed by 71 York Street.
9. It seems to me that the level of disturbance to the defendants' enjoyment of the Passage and the Dock from the imposition of easements for repairs and services and for overhang and for encroaching structures to remain may be less than the disturbance from the grant of a right of carriageway, given the regularity of use of the Passage and Dock as a right of way. Any blot on title is also unlikely to be as significant given the existence of other easements of a similar nature to the benefit of 65 York Street.
10. On that basis, and in the absence of any submission by the defendants on the level of compensation, I consider the amount offered by 71 York Street of $2,000 to be the appropriate amount of compensation to be payable to the defendants for each easement to be ordered under s 88K of the Conveyancing Act, excluding the defendants' reasonable legal costs.

Conclusion on 71 York Street's other s 88K easements

1. The Court will make orders granting easements to the benefit of the 71 York Street land for overhang and for encroaching structures to remain and for repairs and services, with compensation to be payable for each easement to be ordered in the amount of $2,000 (excluding reasonable legal costs).
2. The easement instrument includes proposed terms, by reference to the matters set out in s 88K(1)(a)-(d) of the Conveyancing Act. It identifies the site of the easements, restrictions and positive covenants as per the RC Plan.
3. The defendants did not address the terms proposed in the easement instrument and, as noted above, there are some discrepancies between the easement instrument and the other documents before the Court.
4. Accordingly, I defer making any orders under s 88K of the Conveyancing Act for the other easements at this stage and will provide the parties with an opportunity to reflect on these reasons and confer with a view to reaching agreement as to the terms of the easements to be granted.

Conclusion and Orders

1. I have deferred making any orders at this stage to enable the parties to consider these reasons and agree on the precise terms of the easements and other orders to be made. I invite the parties to bring in proposed short minutes of order to give effect to these reasons within 14 days.
2. The proposed short minutes should also deal with costs. Each of 71 York Street and Clarence House experienced some success, although not on all of their claims. That said, they succeeded on a large part of their claims which suggests they should receive the benefit of some costs order.
3. In relation to the 71 York Street proceedings, the costs order will need to take account of s 88K(5) of the Conveyancing Act, which provides for an applicant to pay the costs of the proceedings for s 88K easements, unless the Court makes an order to the contrary.
4. If the parties are unable to agree on the appropriate orders, including as to costs, the parties are to confer and, within 21 days, propose directions for the exchange of short written submissions. This is with a view to re-listing the matter for a short hearing, unless the parties agree to any remaining issues being dealt with on the papers.
5. The interlocutory consent orders made by Darke J on 1 July 2016, which restrain the defendants from locking the gate and placing skip bins on the Passage and the Dock, are in place until both proceedings are determined at first instance. For the avoidance of doubt, those orders are extended until final orders are made in accordance with these reasons in each of the proceedings.

Endnote

1. There are two lots numbered 5e and two lots numbered 6f, making a total of five lots numbered 4d, 5e, and 6f.

Amendments 30 September 2019 - Typographical error. 30 September 2019 - Typographical error. 30 September 2019 - Typographical error. 03 October 2019 - Typographical error in paragraph [3]. 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: 03 October 2019