TONY STEPANOSKI v ZHIMIN CHEN

Judgment 1The plaintiffs own the house at 144 XXXXXXXXXXXXXX XXXXXXX on Lot XXXX DP XXXXXXXX and apply by summons of 24 February 2011 under section 88K of the Conveyancing Act 1919 for an easement to convey storm water over the land of their neighbour, the defendant who owns 146 XXXXXXXXXXXXXXX, Lot XXXXXXXX DP XXXX. On the plaintiffs' land is a house which appears from photographs to be four or more decades old. They bought the property at auction on 23 October 2010 for $1,048,000 and settled the purchase in January 2011. The circumstances which led them to buy it included reference in advertising to a Development Consent which was granted by Willoughby City Council on 23 August 2010. That consent was to lapse on 23 August 2011 but has been extended for twelve months. There are many conditions in the Development Consent. 2The Development Consent was given on a Development Application by Mr Orsatti, who sold the property to the plaintiffs. It is a deferred commencement consent pursuant to section 80(3) of the Environmental Planning and Assessment Act 1979 . Conditions in Schedule 1 relate to deferred commencement. Condition 1 is entitled "Documentary evidence of drainage easement": "1. The applicant shall submit documentary evidence to Council by way of title documents and relevant instruments demonstrating that the subject property (Lot XXX of DP XXXXXX) benefits from a drainage easement of 1 metre minimum over the downstream property (XXXXXXXXXXX XXXXXX)" 3The second deferred commencement condition requires an inter-allotment drainage design; full hydraulic design for the drainage system to the point of discharge to the public drainage system. A great deal of information and many plans were prepared in support of Mr Orsatti's development application. In the course of design work, a storm water concept plan was prepared by Mr Lowry of Neil Lowry & Associates Pty Ltd, hydraulic engineer. The second condition has been complied with as the Council has accepted Mr Lowry's drainage design. 4I incorporate two plans in this judgment. The first is the plan annexed to the summons and the second is DP XXXXXX which shows a wider area but does not show the resubdivision which produced the defendant's Lot XXX DP XXXXX. These show the layout of the properties referred to. The plaintiffs' land has a frontage on its northeastern side to XXXX Road. The defendant's land is immediately to the west and has an irregular frontage on its northern side to XXXXXXXXX. A public street, XXXXXX, which is only 6.095 metres wide, runs from the rear of the defendant's land generally westward to XXXXXXStreet. 5To the south of both properties lies the house property No. 57AXXXXX XXXXX Avenue, connected by a battleaxe drive to XXXXXXXAvenue. No. 57A has a common boundary with the plaintiffs' property, and also a common boundary with the defendant's property. South of No. 57A is house property No. 57 XXXXXXAvenue, which has a narrow frontage to XXXXXxxAvenue. No. 57A has the benefit of an easement for services and an easement to drain water, both over a strip of land 1 metre wide running the length of No. 57 and reaching the street frontage of XXXXXX Avenue. Drainage from No. 57A discharges into the gutter in XXXXXXAvenue through a pipe in this easement. 6The easement which the plaintiffs seek is shown on the plan annexed to the summons by Mr Surveyor Palmer of 24 August 2010 entitled "Proposed drainage line within new drainage easement." There is an accompanying sketch. The proposed easement relates to a strip of land one metre wide, running for 21.105 metres the full length of the rear line of the defendant's land, connecting the plaintiffs' land at its western corner with XXXX Lane. It is proposed in the plan that within that strip of land there should be a 200mm diameter drainage pipe centred within the easement and buried 0.45 metres below the surface. However the plaintiffs' experts now intend to use a 150mm diameter pipe. The experts agreed (Exhibit G) that a pipe of diameter 150mm would be appropriate, that the strip is not subject to vehicular traffic, that 100mm of cover over the pipe was permitted and that a minimum depth to the invert of the pipe was 250mm. The proposed pipe would continue past the defendant's boundary under XXXX Lane until it discharges into an existing lined open channel which is part of the Council's drainage works. The proposed pipe would generally follow the inclination of the natural surface, which slopes downwards slightly to the west, so that water would drain by gravity to XXXXX Lane. 7The trench would be excavated with a bobcat. An aggregate base would be laid in the trench and the PVC pipe would be laid on top of that and back filled with aggregate. The aggregate keeps the pipe in place and also is itself means of drainage. No inspection pit would be required within the defendant's land. After back fill the presence of the pipe and of the easement would not be visually observable. Further excavation would be required in XXXX Lane. Of course there would be construction noise from the use of the bobcat. It is quite likely that rock requiring excavation would be encountered. Expressions in evidence about the likelihood of finding rock are not based on site investigation. There would also be construction noise from the use of a jackhammer in the likely event that rock would be encountered. I find that two weeks is a reasonable estimate of the maximum work period. Mr Lowry indicated circumstances in which the pipe would be available for potential storm water drainage from the defendant's property. He estimated the costs to the plaintiffs as about $15,000 and possibly $20,000. 8Within the defendant's land there is already an existing 200mm diameter PVC drainage pipe which drains water from the defendant's land generally westward into XXXXX Lane and reaches a junction with drainage from another property from which water is piped to the lined open channel in XXXX Lane. The existing pipe is situated a little further than 1 metre from the rear line of the defendant's property. 9The plaintiffs' land contains 1,015 square metres and has a frontage of 30.005 metres to XXXXX Road. Its dimensions are irregular but its rear line is approximately 37 metres from XXXXX Road. The natural gradient of 144 XXXXXX Road is a diagonal gradient across the block from the north east corner to the south west corner. The natural gradient takes surface water onto 146 XXXXXXRoad and 57A XXXXxAvenue. There is about a 6 metre fall from XXXXX Road to the rear line of the plaintiffs' property. 10The defendant's land contains 592 square metres. Its rear line is approximately 45 metres from its frontage to XXXXXRoad. The gradient of 146 XXXXX Road is basically front to back, from north north east to south south west from the XXXX Road frontage to the rear boundary. The natural flow of surface water is onto 57A XXXXXXX Avenue. The defendant's land was formerly part of Lot XXX DP XXXXX, and after a re-subdivision in 1995 two similar dwellings were constructed on what had previously been a single lot. A positive covenant in favour of the Council created by DP XXXXX relates to retention and management of storm water on the defendant's land. The existing pipe carrying drainage to XXX Lane could well be part of arrangements made in compliance with the covenant. The defendant's land is approximately 15 metres wide but is connected by a tongue of land 6.72 metres long to XXX Lane, producing a rear line 21.15 metres in total. 11The defendant's property is not a dual occupancy, although it appeared so to Mr Lowry. The land title history taken with aerial photographs shows that there are two quite similar properties, but they are separate constructions on what was a parcel of land suitable for a single dwelling, until 1995, when there was a re-subdivision. At that stage there was a restrictive covenant requiring a single dwelling. 12Section 88K(1) and (2) are: (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. 13An order must specify matter required by subsection (3). Subsection (4) contains provisions which must be observed on the making of the Court's order and subsection (5) makes special provisions for costs. 14The terms and subject matter of section 88K show that its primary purpose relates to the public interest in effective land use. The purpose of section 88K is illustrated by the nature of an easement as a right annexed to land irrespective of who may from time to time own it, a right which touches and concerns that land, and to which another piece of land is servient, again irrespective of who from time to time may own it. The advantages for the proposed dominant land, and the disadvantages for the proposed servient land are the most prominent considerations. As shown in the words of section 88K, that the proposed easement is reasonably necessary for the effective of use or development of the dominant land is not enough to produce a positive exercise of the discretion in section 88K(1); There is discretion, and the effect on the servient land is also relevant and important. 15The power in subsection (1) is discretionary, and in my opinion the discretionary considerations include consideration of matters personal to the owners of pieces of land, which may extend more widely than considerations affecting land use. Such considerations are likely to be less cogent than considerations which bear on effective use or development of land, and on the subjects expressly mentioned in subsections (1) and (2). As subsection (2) shows, satisfaction of each of the matters in subparagraphs (a), (b) and (c) is a necessary precondition for the making of an order imposing an easement. It is an important consideration that an order imposing an easement is an invasion of property rights made without the consent (and in this case against the wish) of the owner of property; those rights require respect and protection; and an order should not be made unless grounds clearly exist within statutory authorisation. 16There are many first instance decisions on applications under section 88K, each strongly influenced by the facts of the instant case. What can be gathered from the case law was meticulously restated in Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd [2010] NSWLEC 2 (Preston CJ at [67] to [83]). 17I address the considerations in subsection (2). The plaintiffs' land is used for a residence and is proposed to be used for a development for dual occupancy, which already has been considered by Council and received development consent, under the Environmental Planning and Assessment Act 1979 . The Council was required to consider the public interest .The proposed development by increasing the density of structures on the land will increase the accumulation and runoff of storm water and other surface water, which hitherto has not been subject to any particular regulatory control, but has been left to run off in accordance with natural ground surface; hence the deferred conditions. It can be expected that Council will not permit re-subdivision for a further five years after construction of dual occupancy dwellings. Mr Israel, architect, estimated the costs of the plaintiffs' proposed works at $950,000. The proposed development is in accordance with the highly regulated controls over town planning, and will take place in an area already developed for residential purposes which town planning requires primarily to be used for residential purposes. It will provide more modern housing, for more people. The proposed use of the plaintiffs' land will not in any way be inconsistent with any recognisable public interest. I am satisfied as to condition 2(a). 18In March 2011 the plaintiffs proposed payment of $11,000 inclusive of GST as compensation and supported this proposal with a written valuation. While the proceedings were pending arrangements were made for a conclave among experts, including valuing experts, on issues involving expertise. The outcome included an agreement as to valuation, recorded in a letter in Exhibit 2, which assessed the value of the proposed easement if granted at $15,000 inclusive of GST. This agreement relates to land value, which is not the only element relevant to compensation. Works to put the pipe in place in the easement will involve excavation; until the work is undertaken it cannot be known how long the work will take or what subsoil conditions will be encountered, but it is likely that rock excavation will be required, there could well be some days of jackhammer work, the whole of the work will take up to a week and could well take longer, and this will involve disturbance, noise and other annoyance to the occupants of the defendant's house including the defendant herself. This will happen in circumstances where the work, and the presence of workmen are contrary to the defendant's wishes and feelings. However when the work is completed the pipe will be buried in soil, on a bed of aggregate, and is unlikely to require attention, probably none at all for some decades. It will be no more of an inconvenience or source of loss to the plaintiff than the presence of her own drainage pipes buried in her back yard. There is a prospect of further disturbance at some unknown time in the future should maintenance or replacement work be required on the pipe. An assessment of adequate compensation for loss or other disadvantage requires consideration of inconvenience and disturbance which may occur in the future. 19In my assessment, $10,000 is adequate compensation for loss and disadvantage arising from imposition of the easement, in addition to $15,000 as agreed loss of value of the land: a total of $25,000. Condition 2(b) is satisfied. 20Mr Orsatti called at the defendant's house late in August 2010 and spoke to the defendant's brother Mr Zhiyong Chen; Mr Orsatti told him that he needed some documents signed so that he could put a drainage pipe through the backyard. Mr Chen told him that he would speak to his sister. The following day Mr Orsatti brought some documents including a Transfer Granting Easement and left them with Mr Chen, who sent a copy by email to his sister who told him that she declined. Mr Chen informed Mr Orsatti by letter, and returned the documents. Mr Orsatti spoke to him again a few days later and asked for the reasons. Mr Chen said "It will have a bad effect on our property. It is our land and it is an infringement of our property and it will drop the value of house". There were some further communications and Mr Chen again told Mr Orsatti that the proposal was refused. 21The defendant's evidence shows that she knew something of Mr Orsatti's development proposal because she asked her brother to tell Mr Orsatti in writing that she did not want any easement going through her property because it affected her use of land, created inconvenience and would affect value . These communications serve to show that when Mr Stepanoski did speak to the plaintiff, the proposal was not new to her. Mr Orsatti's attempts to obtain an easement are not otherwise in fulfilment of condition 2(c). 22When Mr Stepanoski saw that the property was for sale and was to be auctioned he regarded it as very suitable for himself and his family in their circumstances; it would be a residence for his wife and children and an adjacent home for his parents. The advertising stated that the property was DA approved for dual occupancy. He regarded it as the ideal situation to realise a family dream. He took a very favourable view of the design which had been prepared by an architect Mr Israel, submitted to Council and approved. He made enquiries of Council's planners, was given some information by them and had access to their file. He noted information on the Council file to the effect that notification of the proposed development had been sent to the defendant and other neighbours on 31 May 2010 and that no objection or comments had been received. He understood that to get an easement it would be necessary for him to offer reasonable compensation. The plaintiffs sold their family home to raise the purchase price. He made arrangements to borrow construction costs. 23The plaintiffs attempted to communicate with the defendant about the proposed easement but these attempts were unsuccessful because Mr Stepanoski did not encounter the defendant in occupation of the house. Mr Stepanoski called at the defendant's house a number of times but did not ever encounter her. On one occasion he told another person who was there that he had been trying to introduce himself to the people who lived there. Then in March he noticed that there was someone at home, and the plaintiffs called at the house and met the defendant. They made arrangements to speak to her again. They saw her again at her home; she gives the date as 14 March while Mr Stepanoski says it was on or about 21 March. The plaintiffs explained that they purchased the house from Mr Orsatti with the projected plan, that they needed to build an easement under the defendant's backyard, that they had been told that she did not agree with this easement and that they were willing to pay her for the easement. She told them to the effect that compensation was not her concern and she was concerned about the burden on her land. 24The plaintiffs gave her a letter written by their solicitors; the letter actually bears date 27 January 2011 but she received it in March. The letter pointed out (as she had known) that the previous owner wished to acquire an easement, that the plaintiffs wished to resolve the matter without litigation, that they proposed to pay her $11,000 for an easement and that if the offer was not accepted they would commence litigation. By the time the letter was actually delivered these proceedings had been commenced. The defendant did not agree and has never agreed to grant an easement on any terms. Further approaches would not have achieved any change: her position is very firm. 25Attempts to obtain the easement at all times up to the presentation of the application in Court before me should be regarded; there is no reason why attention is limited to attempts made before the proceedings were commenced. In the circumstances I am satisfied and I find that all reasonable attempts were made by the applicant to obtain the easement and the attempts have been unsuccessful. Condition 2(c) is satisfied. 26The issue of reasonable necessity arises under subsection (1). The plaintiffs' proposed use of their land for re-development in dual occupancy accords with town planning controls and has development consent from the Willoughby City Council, with conditions I have mentioned. Development for dual occupancy is a normal event, although it has not frequently happened in the Chatswood West area. It appears that subdivision of a previous lot suitable for a dwelling into two happened in 1995 and produced the defendant's dwelling. I see nothing to commend a decision which in effect compelled the plaintiffs to continue with the existing dwelling on their land and to turn away from the dual occupancy development. I find that the redevelopment is a reasonable proposal. 27The plaintiffs' proposal has the advantage, in the circumstances a large advantage, that it has been considered by the town planning authority, which is prepared to accept it. There are two alternative methods of managing drainage from the plaintiffs' land which were put forward as issues and dealt with in evidence. These do not have the same advantage; they have not been considered by the Council and its planners, because Mr Orsatti and the experts who dealt with his development application did not take them before Council for consideration. There are substantial reasons in what can be known of the Council's policy when dealing with development applications why Mr Orsatti's application took the form it did. 28Redevelopment which increases the intensity of occupation leads to greater and more immediate runoff of storm water and other surface water, and town planning requires that this be dealt with by providing for collection and retention so that release does not overwhelm drainage facilities, and takes place in volumes which drainage facilities can deal with, so as to minimise risks of flooding or other water damage. Willoughby City Council adopted Water Management Developing Control Plan DCP 35 on 26 September 2005, for objectives which include applying water sensitive urban design (WSUD) principles which minimise impact on the natural water cycle. Its terms show that it applies to all development on private and public land in the City Council area where development requires consent from Council. It is not entirely mandatory; as is stated in its clause 1.6 page 103: "As the consent authority, Council will assess each application on its merits. Consents, approvals and releases may be withheld if the application does not comply with the controls set out in this Development Control Plan. If an application does not comply with a control under this Development Control Plan and any appropriate Technical Standards, the applicant must clearly demonstrate: