Gittany v McDowell

[2009] NSWSC 591

CITATION:	Gittany v McDowell [2009] NSWSC 591 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	06/05/09, 07/05/09, 19/06/09
JUDGMENT DATE :	30 June 2009
JUDGMENT OF:	Forster J at 1
DECISION:	See paragraph 89.
CATCHWORDS:	Easements to drain water - Agreement to grant - Whether agreement breached - Whether agreement at an end by mutual abandonment. Easements to drain water - Conveyancing Act (NSW) section 88K - Whether requirements of subsections (1) and (2)(c) have been met.
LEGISLATION CITED:	Conveyancing Act (1919) Real Property Act (1900)
CATEGORY:	Principal judgment
CASES CITED:	D.T.R Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 Durack v De Winton (1998) 9 BPR 16,403 Grattan v Simpson (1998) 9 BPR 16,649 Hanny v Lewis (1999) NSWConvR 55,879 Katakouzinos v Roufir (1998) 9 BPR 17,303 Khattar v Wiese (2005) 12 BPR 23,235 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 Summers v The Commonwealth (1918) 25 CLR 144
PARTIES:	Plaintiff: Robert Paul Gittany First Defendant: Siobhan Mary McDowell Second Defendant: Gregory John Burke
FILE NUMBER(S):	SC 4584/06
COUNSEL:	Plaintiff: W. La Hood (Solicitor) First Defendant: P.Lane Second Defendant: G.M.McGrath
SOLICITORS:	Plaintiff: W. La Hood First Defendant: R.Hood Second Defendant: F.J.Smith

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

FORSTER J

TUESDAY, 30 JUNE 2009

4584/06 ROBERT PAUL GITTANY v SIOBHAN MARY McDOWELL & ANOR

JUDGMENT

1 HIS HONOUR: By his further Amended Statement of Claim filed on 10 October 2007, the plaintiff (“Mr Gittany”) seeks declarations and orders for the specific performance of an agreement made on 12 July 2004 (“the 2004 Agreement”) for the provision by the first defendant (“Ms McDowell”) and the second defendant (“Mr Burke”) of easements to drain water over their respective properties and for consequential orders. In the alternative, Mr Gittany seeks an order pursuant to section 88K of the Conveyancing Act, imposing an easement over the respective properties of Ms McDowell and Mr Burke. Mr Gittany also seeks orders for damages, interest and costs.

2 Ms McDowell and Mr Burke oppose Mr Gittany’s application.

The factual background

3 The basal background facts are substantially uncontested. I find them to be as set out hereunder.

4 As appears from Exhibit 1-D1 (a copy of which is reproduced in this judgment for ease of reference), Piper and Peel Streets Bathurst intersect at right angles to each other. Although the Exhibit shows that Piper Street runs north-west to south-east, for convenience I shall refer to Piper Street as running north-south and to Peel Street as running east-west, and to the various lots shown thereon correspondingly.

5 By reference to that Exhibit, Mr Gittany owns Lot 1 in DP 1015500 (“the Gittany Lot”). The street address of Gittany Lot is 290A Piper Street. I should note for the sake of completeness that Mr Gittany also owns the lot immediately to the north of the Gittany Lot, whose address is 292 Piper Street.

6 The Gittany Lot extends west from Piper Street to a boundary that I shall refer to as the “Gittany Boundary”.

7 Proceeding south from the Gittany Lot, facing Piper Street, are numbers 290 and 288 Piper Street. These properties are not relevant to the present dispute.

8 Continuing southward along Piper Street, the next property, being 286 Piper Street, is Lot 11 in DP 593432. I shall refer to that property as the “Schembri Lot”, as it was previously owned by people by the name of Schembri. The Schembris subsequently sold the Schembri Lot to people by the name of Hockings, but the change of ownership has no relevant effect on the current dispute.

9 Proceeding further south, the next property fronting Piper Street is 284A Piper Street, which is Lot 2 in DP 561534. It is owned by Mr Burke and is referred to as the “Burke Lot”. Like the Schembri Lot, the Burke Lot extends to a line which is virtually (although not precisely) a continuation of the Gittany Boundary.

10 Ms McDowell owns Lot 1 in DP 125801, whose postal address is 221 Peel Street. I shall refer to it as the “McDowell Lot”. It will be noted that its western boundary is a continuation of the line that constitutes the western boundary of the Schembri Lot and the Burke Lot. I shall refer to the Gittany Boundary and the western boundaries of the Schembri Lot, the Burke Lot and the McDowell Lot collectively as “the Back Boundary”.

11 The only other property to which I shall make reference is Lot 1 in DP 737965, which adjoins the McDowell Lot to the west, and which similarly extends to Peel Street. That property has been at all relevant times owned by Dr and Mrs Hohnen, and to which property I shall refer as the “Hohnen Lot”.

12 The land and thus the flow of water is from Hope Street in the north towards Peel Street in the south.

13 On 11 March 2002, Mr Gittany obtained a development consent from the Bathurst Regional Council to demolish the existing buildings on the Gittany Lot and to erect thereon six three-bedroom units. The condition that had to be fulfilled as a condition of the operation of the consent was that Mr Gittany had to provide the Council with evidence that storm water from the proposed development would be directed to a legal point of discharge. The condition continued:

“If this means that stormwater will be conveyed across private land, an easement will need to be created over the affected properties. Evidence of the creation of any easement will need to be provided to Council before a Construction Certificate will be issued.”

The development consent was valid for 5 years.

14 Mr Gittany decided to satisfy the said condition by draining the Gittany Lot through the four properties that lay down the slope from the Gittany Lot to Peel Street, that is to say through the Schembri Lot, the Burke Lot, the McDowell Lot and then through the Hohnen Lot by what has generally been referred to as the dog-leg over the Hohnen Lot. The reason for the dog-leg was that there was an existing pit towards the southern extremity of the Hohnen Lot (referred to as “Pit 4), and it was significantly cheaper and easier to link into that pit from the McDowell Lot rather than to create a new opening directly from the McDowell Lot into Peel Street.

15 With that in mind, Mr Gittany approached the owners of each of those four lots, including Mr Burke and Ms McDowell. The negotiations between Mr Gittany and Ms McDowell proved to be difficult and the relationship between them deteriorated. Nevertheless, eventually an agreement in principle was reached, resulting in the execution by Mr Gittany, Ms McDowell and Mr Burke of an agreement, being the 2004 Agreement referred to earlier.

16 The 2004 Agreement is contained in a document dated 29 June 2004. A four page document, purporting to be an instrument setting out the terms of the easement intended to be created pursuant to section 88B of the Conveyancing Act was also signed by the same parties as well as by the owners of the Schembri Lot and the Hohnen Lot.

17 The 2004 Agreement contained the following provisions:

“-…Ms Siobhan McDowell will agree to the following:
1. Execute all necessary documents in order to enable the registration of the easement in question shown on the final plan,
2. Will provide access to tradesmen to carry out the necessary work,
3. If and only if required to do so, assist in answering or complying with any reasonable requisitions or requests that are raised,

4. Accept the amount of $25,000.00, $12,500.00 to come from Mr Robert Gittany and $12,500.00 to come from Mr Greg Bourke as full and final payment for granting the easement.

In return for the above, Mr Robert Gittany and Mr Greg Bourke will agree to the following;

1. Have the plan of easement registered as soon as possible,

2. Ensure that all works are completed in a proper and
workmanlike manner,

3. Agree to pay the above specified amounts namely $12,500.00 each once the plan of easement is registered,

4. Agree to maintain and carry out any repairs to the pipes, and repair any damage caused to Ms McDowell’s or any other property by the easement or pipes once installed,

5. To consult with and seek approval from Ms McDowell the route of the easement,

6. To retain or reinstate any plants, lawn, trees or any other garden that is destroyed, during the installation of the pipes,

7. To pay for all costs associated with the registration of the easement and installation of the pipes, including registration fees, mortgagees consents, production fees and survey costs.

8. Mr Gittany and Mr Bourke agree with themselves that the costs mentioned at point (7) will be apportioned to each of them in relation to the benefit that each derives from the easement and installation of pipes. In the event that costs cannot be apportioned, total costs completed will be paid for on a 50/50 basis.

9. The parties to this document Ms McDowell, Mr Gittany and Mr Bourke, can amend any term of this agreement, provided it is agreed to by all parties to the contract.
10. If a problem, disagreement or concern develops during the registration or installation period, the parties agree to have the matter resolved in the first instance by mediation, prior to seeking other avenues.
11. That Ms McDowell’s rights to raise requisitions and make further claims for compensation in the event of damage to her property be retained”

18 The misspelling of Mr Burke’s name appears in the original

19 The identity of “the final plan” is in dispute between the parties, and is referred to below.

20 For reasons that are in dispute, and to which I shall refer below, the plan of easement envisaged by the 2004 Agreement had not been registered as at the commencement of April 2005. On 14 April 2005 Ms McDowell wrote to Mr Gittany’s solicitors in the following terms:

“I refer to my previous correspondence in relation to the above matter.

It is now three years since negotiations started in respect of the above easement and now eight months since I signed the agreement with Mr Gittany.

As Mr Gittany has made no effort to fulfil his part of the agreement and no money has been received, the agreement will be cancelled if payment in full is not received on or before Friday 29 April 2005”

21 There was no response to that letter by Friday, 29 April 2005.

22 By that time, Mr Burke had also decided to develop the Burke Lot and had requested Mr Gittany to vary the proposed easement from a width of three metres that had previously been contemplated, to a width of two metres. Mr Gittany agreed.

23 Since no later than early 2005, Mr Burke had also been in negotiations with Ms McDowell, in relation to Mr Burke’s desire to proceed with his own development and his own need to drain water. Those negotiations culminated in an agreement made on 10 October 2005 between Mr Burke and Ms McDowell (“the 2005 Agreement”). By that agreement, in consideration for the payment by Mr Burke to her of a sum of $23,000, Ms McDowell agreed to grant to Mr Burke a two metre wide easement to drain water from the Burke Lot over the McDowell Lot, through an easement two metres wide proceeding from the Burke Lot over the western extremity of the McDowell Lot, and without the dog-leg into the Hohnen Lot, leading directly into a collection point in Peel Street. The plan for that easement is referred to as the “straight-line plan”.

24 So far as is presently relevant, the 2005 Agreement provided as follows:

“WHEREAS

A. Burke is the proprietor of all that land contained in Lot 2 DP 561534 more commonly known as 290A Piper Street, Bathurst (herein referred to as “Lot 2”).

B. McDowell is the proprietor of all that land contained in Lot 1 DP 125801 and more commonly known as 221 Peel Street, Bathurst (herein referred to as “Lot 1”).

C. Burke wishes to obtain an Easement to Drain Water in accordance with the Plan annexed hereto and marked ‘A’ over Lot 1.

D. McDowell has agreed to grant such an Easement subject to the payment of a total amount of $23,000.00 in accordance with the payment schedule set out herein and on conditions.

NOW THIS AGREEMENT WITNESSES AS FOLLOWS:

1. McDowell agrees to grant an Easement to Drain Water over Lot 1 in favour of Lot 2 over the sight (sic) outlined in the Plan of Easement to Drain Water effecting Lot 1 in DP 125801 which is annexure ‘A’ hereto.

2. Burke agrees to pay to McDowell the sum of $23,000.00 paid as to the sum of $5,000.00 immediately upon registration of the Easement to Drain Water on Title and as to the remaining $18,000.00 within a period of 6 months after completion of the units to be constructed on Lot 2 or within 6 months of the registration of a Strata Plan on those units, which ever occurs first.
…
4. Burke will attend to registration of the Easement as soon as possible and will ensure that all work is completed in relation to the registration of the easement and in relation to the physical creation of the easement in a proper and workman like manner and that Lot 1 is reinstated as soon as the work is completed.
…
7. Should any third party seek to join into or use the Easement to Drain Water installed by Burke they must first approach Burke and McDowell to obtain their permission upon such conditions as both parties are able to negotiate with the third party.

8. It is hereby acknowledged that the compensation sum set out above relates only to the provision to the benefit of the Easement to Lot 2 and that if the benefit is to be extended to any third party then payment of additional compensation is to be negotiated by McDowell and Burke separately to this Agreement”.

25 By transfer dated 1 March 2006 the easement was registered.

26 There was then an attempt by Mr Gittany to persuade Ms McDowell to permit him to avail himself of the easement that Ms McDowell had granted to Mr Burke. He wanted to drain water from the Gittany Lot onto the Burke Lot and then for Ms McDowell to permit that water to run through the easement she had granted to Mr Burke. Ms McDowell refused. There were then discussions between Mr Gittany and Mr Burke which resulted in yet a further agreement being reached, namely an agreement between Mr Burke and Mr Gittany in the form of a deed of grant of easement for services, which was entered into on or about 26 September 2006. Under that deed, Mr Burke granted to Mr Gittany an easement to drain water from the Gittany Lot onto the Burke Lot (“the 2006 Agreement”).

27 So far as is relevant, the 2006 Agreement in which Mr Burke was named as the “Grantor” and Mr Gittany as the “Grantee”, provided as follows:

“RECITALS:
A: The Grantor owns in fee simple the property known as 188 Piper Street, Bathurst being Folio Identifier 2/561534.

B: The Grantee owns in fee simple property known as 192A Piper Street, Bathurst being Folio Identifier 1/1015500.

C: The Grantee intends to carry out a development on his property and wishes to create an easement for services (“the easement”) appurtenant to his property, and affecting the Grantor’s property.

D: The Grantor and the Grantee have agreed that the cost of the Easement will be shared in accordance with this Deed.

E: For the purpose of carrying out their agreement into effect, the parties have agreed to enter into the covenants contained in this deed.

F: The Grantee has prepared drawings showing annexed hereto and marked “A”(“the plan”) showing the intended easement and has submitted them to the Grantor, who has approved them.

THE DEED WITNESSES:

The Easement
1. The easement and subject of this Deed is an
easement to drain water over Lots 11/593432, 2/561534, and other lots shown in the Plan.
The easement has already been established over Lots 1/737965 and 1/125801 and the Grantee has made arrangements with the owners of such lots to receive an appurtenant right from the existing easement.

Expense
2. The parties agree to pay their own legal
costs, surveyors fees and charges, engineers fees and charges, registration fees and all other expenses incurred in relation to the creation of the Easement.
…
Covenants by Grantee
4. The Grantee covenants with the Grantor that the
Grantee and his successors in title:


(a) will create the intended easement with all due expedition, in conformity with the provisions of this deed and in conformity with the Plan and specifications;

(b) will not do any unnecessary damage to the land of the adjoining owner in creating the easement, or in laying the necessary footings or foundations, or in making the excavations, or in carrying out the necessary excavations; and

(c) when the easement is completed, will fill up all excavations and remove all materials, waste and rubbish from the land of the Grantor, and as far as possible restore the surface of the land to its previous condition.

(d) as consideration for this Deed, the Grantee hereby agrees with the Grantor to pay the Grantor an amount being one half of the cost (including labour) of the installation of the stormwater pipes through Lots 2/561534, 1/737965 and 1/125801 such amount being $6,200.00 including the cost of relaying 6 stormwater pipes as required by the Grantor.

(e) as further consideration and in addition to the amount contained in paragraph 4(d) above the Grantee hereby agrees with the Grantor to reimburse the Grantor one half of the amount paid to Siobhan McDowell as compensation for her granting the Easement over her property, such amount being $24,000.00 and half of such amount being $12,000.00.”

28 Meanwhile, on 29 August 2006, Mr Gittany commenced these proceedings against Ms McDowell. Subsequently, Mr Gittany also added Mr Burke as the second defendant.

29 Mr Gittany’s development consent has now expired and there is no evidence as to whether or not any application for its renewal has been made.

Claim under the 2004 Agreement

30 Under this heading, Mr Gittany seeks to enforce the 2004 Agreement primarily by an order for specific performance, or alternatively he seeks an order for damages presumably for its breach.

31 It seems to me that the resolution of this claim is dependent upon the resolution of the following issues:

(a) the identification of the “final plan” referred to in the 2004 Agreement;
(b) the determination of whether Ms McDowell and Mr Burke breached the 2004 Agreement;
(c) the determination as to whether the 2004 Agreement remains in effect;
(d) the consideration of whether an order for specific performance ought to be granted; and
(e) further or in the alternative, the determination of whether Mr Gittany is entitled to an order for damages.

32 I shall deal with these issues seriatim.

(a) Identification of the “final plan”

33 It will be recalled that under the terms of the 2004 Agreement, Ms McDowell agreed to execute all necessary documents in order to enable the registration of the easement shown on “the final plan”. In turn, Mr Gittany and Mr Burke agreed to consult with and seek approval from Ms McDowell in relation to the route of the easement.

34 Shortly after 29 June 2004, which is the date that the 2004 Agreement bears, namely on 12 or 13 July 2004, a form of plan was agreed on and signed by all parties. A copy of that plan forms Exhibit 1-D1 in these proceedings and is reproduced herewith. It is referred to as “the dog-leg plan”.

35 There is no evidence of the existence of any subsequent plan which bears the signatures of all of the parties to these proceedings.

36 Nevertheless, Mr Gittany submits that notwithstanding the foregoing, the dog-leg plan is not “the final plan” and that upon the true construction of the 2004 Agreement, and in the events which have happened, the “final plan” for the purposes of the 2004 Agreement is the plan attached (or at least intended to be attached) to his Further Amended Statement of Claim, which is the straight line plan.

37 Mr Gittany supports his submission by pointing to the aggregate effect of the 2005 Agreement between Ms McDowell and Mr Burke and the 2006 Agreement between Mr Gittany and Mr Burke. It is his submission that when taken in conjunction with each other, all three parties have agreed to an easement proceeding over the McDowell Lot at a width of two metres and leading directly into Peel Street without any detour into the Hohnen Lot. He submits that the parties should be deemed to have agreed, pursuant to the 2004 Agreement, to vary what was initially the plan envisaged (namely the dog-leg plan) to the straight line plan and that the straight line plan now forms part of the 2004 Agreement.

38 The flaw in that submission, however, is that the evidence makes it clear that Ms McDowell has never agreed to permit Mr Gittany to drain water over the McDowell Lot utilising the straight line plan. Under the terms of the 2005 Agreement, Ms McDowell has permitted Mr Burke to pass water from the Burke Lot over the McDowell Lot, but the terms of the 2005 Agreement make it clear that the extent of the easement granted by Ms McDowell to Mr Burke was intended by Ms McDowell to be limited to the right to drain water from the Burke Lot, and that she did not intend to include in the easement the right to drain water which in turn has been drained onto the Burke Lot from another property.

39 Then, when one considers the terms of the 2006 Agreement between Mr Gittany and Mr Burke, it is clear that Mr Burke did not consider himself to be in a position, nor did he purport, to grant to Mr Gittany the right to drain water from the Gittany Lot onto the McDowell Lot. All that Mr Burke purported to do under the 2006 Agreement was to permit Mr Gittany to drain water onto the Burke Lot.

40 Accordingly, in my opinion, the “final plan” under the 2004 Agreement was initially the dog-leg plan, and there has been no amendment or alteration of it. Accordingly, if the 2004 Agreement were found to be in effect, and continuing on foot, the dog-leg plan and not the straight line plan, would form part of it.

41 Save for how they impacted upon the 2004 Agreement, other possible consequences of the 2005 Agreement and of the 2006 Agreement were not raised by the pleadings and were not argued before me.

(b) Have the defendants breached the 2004 Agreement?

42 The principal way in which Mr La Hood, who appeared for Mr Gittany, put his submissions was to allege that the defendants breached their obligations under clause 10 of the 2004 Agreement and their implied obligation to act reasonably and in good faith by failing to inform Mr Gittany that the problem caused by the unavailability of the certificates of title relating to the Hohnen Lot could be overcome by varying the easement contained in the 2004 Agreement from the dog-leg plan to the straight-line plan. He submitted that the defendants were under an obligation to include the plaintiff in their negotiations for the straight-line plan and that there was a collusion against him by the defendants, similarly in breach of their obligations under the 2004 Agreement.

43 He also submitted that the reason why Mr Burke took the course of negotiating directly with Ms McDowell to the exclusion of Mr Gittany were first, that he feared that if Mr Gittany were involved, Ms McDowell would refuse to grant him the easement he needed because of the poor relationship between Ms McDowell and Mr Gittany; second, that Mr Burke wanted to have his development completed before that of Mr Gittany’s Lot so as to improve his competitive market position; and third, so as to force Mr Gittany to have to negotiate with him at some later point of time, thereby giving himself a superior negotiating position.

44 There are numerous difficulties with the foregoing submissions. To start with, most of them are not pleaded and some were only raised in final submissions. In any event, they are all premised on the basis that Mr Gittany did not realise that there was a possibility of substituting what became the straight-line plan for the dog-leg plan.

45 That basis is simply not made out. It seems to me to have been patently obvious to all and sundry that an obvious alternative to the dog-leg plan was the straight-line plan. I do not accept the submission that Mr Gittany was unaware of this possibility. Whether or not Mr Burke specifically raised this matter with Mr Gittany may be unclear on the oral evidence, but the letter dated 23 February 2005 from the solicitors then acting for Mr Gittany to the solicitors then acting for Mr Burke makes it clear that the issues had been discussed between Mr Burke and Mr Gittany’s solicitors the previous day. Yet there is no indication the Mr Gittany took any steps to involve himself in those negotiations.

46 Further, Mr Gittany gave the following evidence in chief:

“Q. Mr Gittany, you are looking at paragraph 20 of your affidavit sworn 3 August 2007?
A. Yes.

Q. And in this paragraph you state that you ‘initially understood she’, being the first defendant Miss McDowell, ‘had no difficulties with the three metre easement over her land being registered’?
A. Yeah.

Q. And that it also says here ‘I later came to understand through discussions with the second defendant Mr Bourke’?
A. Yes.

Q. ‘I later came to understand through discussions with the second defendant that the second defendant was proposing to run the two metre easement on to her land all the way down to her front fence line" and it further states "During this time the second defendant and I discussed the easement and general progress from time to time’?
A. Yes.

Q. And it further states ‘I recall the second defendant advising me he would use his own engineer and surveyor to create a two metre easement’?
A. Yes.

LANE: Is there a question?

LA HOOD: Yes, I just wanted to refer him to that paragraph and then I'll ask a question.

Q. Your understanding there Mr Gittany, do you remember around what time, what date, did you have that understanding?
A. Would have been early 2005.

Q. Was it in January 2005 or February 2005?
A. Around January, late January.”

47 Nor do I accept the submissions that purport to explain why Mr Burke acted in the way alleged. There is no support for the proposition that Mr Burke (or for that matter Ms McDowell) intentionally kept Mr Gittany out of the negotiations in early 2005. After all, they were both content to enter into the 2004 Agreement with Mr Gittany. It was Mr Gittany who appears to have lost heart on being confronted with the problem of procuring the production of the certificates of title to the Hohnen Lot. As to the other suggested reasons why Mr Burke is said to have taken the course that he did, I see no basis for any such finding and note that those alleged reasons were not put to Mr Burke in cross examination.

48 Accordingly, I do not find that either Ms McDowell or Mr Burke breached their respective obligations under the 2004 Agreement, and in particular I do not find that they breached it in the manner submitted on behalf of Mr Gittany.

49 I might further add that no submissions of substance were made on behalf of Mr Gittany as to the consequences were I to find that the defendants had breached the 2004 Agreement as alleged. No damages were submitted to have flowed from such breach; the only submission that was put was that as a consequence of those breaches, Ms McDowell was now under an obligation to permit the drainage of water from the Gittany Lot over the McDowell Lot, through the existing straight-line easement that she has granted to Mr Burke.

50 I do not see how that consequence flows from the breaches alleged, even if I had found those breaches to have been proved. In any event, the submission is based on the assumption that the 2004 Agreement remains in force and continues to be valid and effective and binding on Ms McDowell.

(c) Is the 2004 Agreement still on foot?

51 It is clearly a matter of some significance whether or not the 2004 Agreement remains on foot. Ms McDowell in particular has placed significant reliance on the provision of the 2004 Agreement under which Mr Gittany (and for that matter Mr Burke) agreed to have the plan of easement (that is to say the “final plan”) registered “as soon as possible”. That had not happened as at April 2005 and indeed it has still not happened.

52 Mr Gittany’s justification for the failure to register the dog-leg plan is that he was unable to do so because of the unavailability of the certificates of title to the Hohnen Lot, which were required to be produced to enable registration to take place. By way of reply Ms McDowell submitted that this was because Mr Gittany had failed to make adequate efforts to obtain the certificates of title, which were in fact in the possession of Dr and Mrs Hohnen’s solicitors.

53 She also referred to section 38(2) of the Real Property Act, which, with s 38(1), provides as follows:

“38 Recording dealings on certificate of title etc

(1) If the Registrar-General, having delivered a certificate of title for land:

(a) requests its production for the purpose of registration of a dealing that relates to the land, and

(b) the request or a requirement under subsection (2) is not complied with, the Registrar-General may refuse to register the dealing or to accept it for registration.

(2) Where a certificate of title is not produced in response to a request made by the Registrar-General under subsection (1), the Registrar-General may require that the dealing in respect of which the request was made be accompanied by an application in the approved form to dispense with the production of the certificate of title together with such evidence as the Registrar-General requires”.

54 I do not consider that it is necessary for the Court to determine whether, as at 14 April 2005 (the date on which Ms McDowell wrote to Mr Gittany’s solicitors in the terms already referred to), Mr Gittany was in fact in breach of his obligations under the 2004 Agreement. Similarly, it is not necessary for the court to determine whether the period of 14 (or arguably 15) days provided for in Ms McDowell’s letter was sufficient in all the circumstances to make time of the essence. In order to determine whether such was the case, it would be necessary to give detailed consideration to the events leading up to the letter of 14 April 2005, including the precise steps that Ms McDowell had taken prior to that date to bring to the attention of Mr Gittany her growing concern over the delay that was occurring and her insistence on timely performance on the part of Mr Gittany. I should add, however, that I accept her evidence that she had, on more than one occasion before sending the said letter, made contact with the solicitors then acting for Mr Gittany and had complained to them about the lack of progress in registering the easement.

55 My reason for being of the view that it is unnecessary to determine this last-mentioned issue of whether the period provided in the letter was sufficient to make time of the essence is that although the letter of 14 April 2005 warns that if payment in full is not received on or before 29 April 2005, “the agreement will be cancelled”, no steps were in fact taken by Ms McDowell to “cancel” the 2004 Agreement. There is no evidence of the letter of 14 April 2005 being followed up by any document purporting to bring the 2004 Agreement to an end. The issue might have arisen if Ms McDowell had purported to terminate the 2004 Agreement in reliance upon Mr Gittany’s failure to comply with the terms of the letter of 14 April 2005, but there was no such purported termination.

56 In my opinion the correct characterisation of what occurred thereafter was that the parties conducted themselves in a manner that constituted an abandonment of the 2004 Agreement by mutual consent.

57 In Summers v The Commonwealth (1918) 25 CLR 144 the court was concerned with a contract to supply a specified number of blocks of marble. The seller was unable to provide marble in the sizes agreed upon and the purchaser refused to accept smaller blocks. Isaacs J said at pages 151-152:

“Whatever the terms of a contract may be, it is possible for the parties so to conduct themselves as mutually to abandon or abrogate it. A position not altogether dissimilar arose in the case of De Soysa v De Pless Pol…There, neither party had repudiated or refused to perform the contract, nothing in the nature of rescission had occurred, but, said Lord Atkinson for the Privy Council:
‘One party to a contract is not bound to give to the other unlimited time after a day named to do that which the other has contracted to do. There must be some point of time at which delay or neglect amounts to refusal…In truth, the projects seem to have been to a great extent, if not altogether, abandoned by all the parties concerned’.
In my opinion, that is the legal position here. Informally, but effectively, the parties have so acted in relation to each other as to abandon or abrogate the contract”.

58 A similar position was taken by the High Court in D.T.R Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, particularly at 434 per Stephen, Mason and Jacobs JJ, where their Honours said:

“Thus the contract in the present case was still on foot on and after 25 July 1974. Neither party had effectively rescinded. But there can be no doubt that by 5 December 1974, when these proceedings were commenced, neither party, whatever may have been their reasons, regarded the contract as being still on foot. Neither party intended that the contract should be further performed. In these circumstances the parties must be regarded as having so conducted themselves as to abandon or abrogate the contract. The position is similar to that with which Isaacs J dealt in Summers v Commonwealth (1918) 25 CLR 144. The plaintiff did not succeed in his action for damages for breach of contract, but on the other hand the defendant had not rescinded. Time passed during which neither party took any steps to perform the contract. It was held that the parties had so conducted themselves as mutually to abandon or abrogate the contract”

59 As occurred in the above cases, after the date provided for in Ms McDowell’s letter of 14 April 2005 had come and gone, neither party rescinded the 2004 Agreement, but nor did any of the parties take any steps to perform it or to procure the other parties to perform it. The parties all went off in their own respective directions and entered into agreements which were inconsistent with the 2004 Agreement and were clearly intended to supersede it. Thus under the terms of the 2005 Agreement between Ms McDowell and Mr Burke, Ms McDowell granted Mr Burke an easement limited to the drainage of the Burke Lot over an area that had not previously been the subject of any proposed easement. Likewise, under the terms of the 2006 Agreement, Mr Burke granted to Mr Gittany an easement to drain water onto the Burke Lot, but through a narrower width of easement than that provided for under the 2004 Agreement. Thus, all of the parties appear to have proceeded on the basis that, for whatever reason, the 2004 Agreement was no longer in place.

60 It was only later that Mr Gittany, in an attempt to take advantage of the agreement between Mr Burke and Ms McDowell, asserted that the 2004 Agreement remained on foot, and had been consensually varied so as to reduce the width, and change the route, of the easement and required Ms McDowell to comply with her alleged obligations thereunder. However, Ms McDowell maintained that the 2004 Agreement had by then come to an end.

61 In my opinion, the position taken by Ms McDowell was correct. Certainly by the time these proceedings were commenced, the 2004 Agreement had come to an end through the parties’ mutual abandonment of the same.

62 The alternative way in which Ms Lane, Counsel for Ms McDowell, put her client’s case was to submit that upon the true construction of the events, Mr Gittany’s failure to take further steps to register the dog-leg easement constituted a repudiation by him of his obligations under the 2004 Agreement. Ms Lane referred me to what was said by Mason CJ in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 634 to the following effect:

“There is a difference between evincing an intention to carry out a contract only if and when it suits the party to do so and evincing an intention to carry out a contract as and when it suits the party to do so. In the first case the party intends not to carry out the contract at all in the event that it does not suit him. In the second case the party intends to carry out the contract, but only to carry it out as and when it suits him. It is much easier to say of the first than of the second case that the party has evinced an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. But the outcome in the second case will depend upon its particular circumstances, including the terms of the contract. In some situations the intention to carry out the contract as and when it suits the party may be taken to such lengths that it amounts to an intention to fulfil the contract only in a manner substantially inconsistent with the party's obligations and not in any other way”. [Emphasis in the original]

63 It was submitted on behalf of Ms McDowell that by the time Ms McDowell entered into the 2005 Agreement, she was entitled to do so on the basis that by his conduct, Mr Gittany had indicated (to use the words of Mason CJ), that he intended to fulfil his obligations under the 2004 Agreement only in the manner and at a time that suited him, and that that amounted to repudiatory conduct. It was submitted that by entering into the 2005 Agreement, Ms McDowell accepted such conduct on the part of Mr Gittany as a repudiation of his obligations under the 2004 Agreement, and thereby brought that Agreement to an end. That, it seems to me, is an alternative way of arriving at the same conclusion, namely that certainly by the time these proceedings were commenced by Mr Gittany, the 2004 Agreement had come to an end.

(c) The claim for specific performance

64 The foregoing conclusions are sufficient to dispose of Mr Gittany’s claim for an order for specific performance of the 2004 Agreement. As I have already concluded, that Agreement is at an end. In those circumstances, Mr Gittany is not entitled to enforce it, and even if he were, I have concluded that the 2004 Agreement would provide for an easement follows the dog-leg plan.

65 That would be yet another reason why an order for specific performance would not be granted. Even if the 2004 Agreement were still on foot, Mr Gittany is not in a position to perform his obligations under it given that there is no evidence that even now he could procure the easement to pass through the Hohnen Lot. What evidence there is before me would, if anything, suggest the contrary. In any event, it was a matter for Mr Gittany to show that he was able to perform, and that he was offering to perform, his obligations under the agreement of which he seeks an order for specific performance against Ms McDowell and Mr Burke. He has not done so and for that reason also, an order for specific performance is refused.

66 I should also add, for the sake of completeness, that the order that Mr Gittany seeks against Mr Burke by way of specific performance seems otiose as Mr Gittany appears to concede in paragraph 25 of the Further Amended Statement of Claim that Mr Burke has in fact signed the documents that Mr Gittany wants to have him ordered to sign.

(e) Damages

67 Mr Gittany is similarly not entitled to an order for damages. In cases such as the present, damages are only payable where one party has breached his obligations to another under an agreement, as a result of which the innocent party has suffered loss or damage. As I have already found, the 2004 Agreement was abandoned by what I have found to have been the mutual consent of all parties.

68 I have already decided that neither Ms McDowell nor Mr Burke breached their obligations under the 2004 Agreement in the manner alleged. Nor do I consider that in all the circumstances, the entry by Ms McDowell and Mr Burke into the 2005 Agreement constituted a breach of their obligations thereunder. So long as the 2004 Agreement remained on foot, had Mr Gittany become able to perform his obligations thereunder, the defendants could, if called upon to do so, still have performed their obligations thereunder notwithstanding their entry into the 2005 Agreement.

69 However, Mr Gittany never reached that point. Instead, he entered into his own agreement with Mr Burke thereby only confirming that the 2004 Agreement was at an end and that he was making no claim under it.

70 In those circumstances, I do not consider that Mr Gittany is entitled to an order for damages. Even if I had come to the opposite conclusion, in the absence of any evidence as to the damages suffered by him, I would not have been able to find what damages, if any, Mr Gittany had suffered. In those circumstances, I would not have awarded him anything other than nominal damages.

Claims under section 88K of the Conveyancing Act

71 In the alternative, Mr Gittany seeks an order pursuant to section 88K of the Conveyancing Act, imposing an easement over the Burke Lot and over McDowell Lot in accordance with the plan and the section 88B instrument annexed to his Amended Statement of Claim. That plan is identical to the plan that forms part of the 2006 Agreement between Mr Burke and Ms McDowell, that is to say, the straight line plan.

72 So far as is relevant, section 88K provides as follows:

“88K Power of Court to create easements

(1) The Court may make an order imposing an easement over land
if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement.

(2) Such an order may be made only if the Court is satisfied that:

(a) use of the land having the benefit of the easement will not be inconsistent with the public interest, and

(b) the owner of the land to be burdened by the easement and each other person having an estate or interest in that land that is evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act 1900 can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement, and

(c) all reasonable attempts have been made by the applicant for the order to obtain the easement or an easement having the same effect but have been unsuccessful.

(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…”

73 In his pre-trial outline of submissions, Mr Gittany submitted that all of the requirements of section 88K are met and that in the circumstances, an order under section 88K should be made.

74 The first requirement of section 88K that Mr Gittany has to satisfy before the court may make an order under that section is that imposed by sub-section (1), namely that the easement sought to be imposed must be “reasonably necessary for the effective use or development” of the Gittany Lot.

75 There is no evidence before me to suggest that the easement sought to be imposed is reasonably necessary of the effective “use” of the Gittany Lot. The terms of the development consent reveal that as at the time that the said consent was given, there were existing buildings situated on the Gittany Lot, whose demolition was permitted under the terms of the development consent. I infer that the Gittany Lot was capable of being put to effective “use” notwithstanding the absence of any such easement. The evidence does not reveal the current condition of the Gittany Lot and I am in no position to find, and do not find, that it is reasonably necessary for the effective use of the Gittany Lot to have the benefit of such an easement.

76 However, presumably Mr Gittany puts his case on the basis that the imposition of such an easement is reasonably necessary for the effective “development” of the Gittany Lot. It is clear from the terms of the development consent itself that it required that stormwater from the proposed development would be directed to a legal point of discharge.

77 Thus there is no doubt in my mind that for the effective “development” of the Gittany Lot, some provision was required for the disposal of stormwater in a proper and satisfactory manner. That however still leaves open the question of whether the easement sought by Mr Gittany pursuant to section 88K can be said to be “reasonably necessary” for the development.

78 The meaning of the term “reasonably necessary” has been the subject of a number of decisions of this court, including that of Einstein J in Durack v De Winton (1998) 9 BPR 16,403 at pages 16,448-9. So far as is relevant to the case before me, his Honour set out the following as the correct approach:

“ 1.The words “reasonably necessary” in s 88K(1) do not mean “absolutely necessary”. The requirement may possibly be satisfied even when the plaintiffs’ land could be effectively used or developed without the easement: 117 York Street Pty Ltd v Proprietors of Strata Plan 16123 (1998) 8 BPR 15,917 at 15,920; Tregoyd Gardens Pty Ltd v Jervis (1987) 8 BPR 15,845; Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15,795; Re Seaforth Land Sales Pty Ltd’s Land (No 2) [1977] Qd R317 at 320–1; In the Matter of an Application by Kindervater [1996] ANZ Conv Rep 331.

2.The proposed easement must be reasonably necessary either for all reasonable uses on developments of the land, or else for some one or more proposed uses or developments which are at least reasonable as compared with the possible alternative uses and developments: 117 York Street at 8 BPR 15,920 per Hodgson J.

3.In order that an easement be reasonably necessary for a use or development, that use or development with the easement must be at least substantially preferable to the use or development without the easement: 117 York Street at 8 BPR 15,920.

4.The continued use of the word ‘necessary’ means something more than mere desirability or preferability over the alternative means available. It is always a matter of degree: Kindervater, above, 333.

5.Reasonable necessity is to be determined objectively. The question of reasonable necessity has to be decided in the light of the present circumstances, taking into account the factual position at the time of the making of the order, as opposed to the court being confined to taking into account only the facts at the time the court proceedings were commenced. Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14,638 at 14,643–4 per Simos J; Goodwin at 8 BPR 15,800 per Windeyer J; 117 York Street at 8 BPR 15,922 per Hodgson J.

6.The application should be approached with caution, having regard to the fact that a compulsory change of registered property rights is sought and that this is not lightly to be undertaken: per Thomas J in Nelson v Kalahara Properties — cited by Carter J in Re Worthston Pty Ltd [1987] 1 Qd R 400 ; cf Hamilton J in Tregod Properties at 8 BPR 15,853; Andrews J in Ex parte Edwards Street Properties Pty Ltd [1977] Qd R 86 at 91.

7.“Land” in s 88K(2)(a) refers to the dominant land or tenement: 117 York Street at 8 BPR 15,923–4; per Contra Windeyer J —Goodwin at 8 BPR 15,800”.

79 I refer also to the decision of Young J (as his Honour then was) in Grattan v Simpson (1998) 9 BPR 16,649 particularly at page 16,651 and to the decision of Hodgson CJ in Eq (as his Honour then was) in Katakouzinos v Roufir (1998) 9 BPR 17,303 particularly at pages 17,307-8.

80 Applying those principles to the case before me, I am not satisfied that the easement sought to be imposed is “reasonably necessary” in the sense used in those authorities. I have in mind in particular the evidence of Mr Armitage, a civil engineer called by the plaintiff as an expert, who gave evidence of an alternative avenue of draining stormwater from the Gittany Lot by means of an existing stormwater drain situated on the western side of the Gittany Boundary, running all the way from Hope Street in the north to Peel Street in the south (“the western drain”). In his affidavit, Mr Armitage gave evidence that in about early 2003, he was asked by Mr Gittany to design drainage from the Gittany Lot. He was provided with a survey which disclosed the existence of the western drain. Mr Armitage stated in his affidavit that the Gittany Lot was capable of being drained by running a short connecting line into the property directly to the west of the Gittany Lot being the property at 212 Hope Street, and connecting on to the western drain. However he stated that later he was subsequently asked, presumably by Mr Gittany, to redesign the drainage line, which led him to design a drainage plan parallel to the western drain, which he did, and which plan is now the dog-leg plan.

81 In the course of his cross examination, Mr Armitage was asked some questions in relation to two documents, one being referred to as Annexure A (which contained a plan of the western drain) and the other referred to as Annexure B, which contained the dog-leg line. The following exchange then took place:

“Q. I am asking you as to the extent of the works necessary to execute drainage on Annexure A and on Annexure B, what is the difference in extent? Does B require more extensive works to be done than A, than connecting the drainage through Hope Street?

A. I don't quite understand the question but I think you're asking is, is it less, is there less work required to create what is shown on annexure B.

Q. Yes.

A. Annexure B is more work in the initial (sic), as I say the original brief was the drain and engineering is cost effective design, that's our first priority. Cost effective design would be to utilise the existing drainage system as shown on existing Annexure A, but then for whatever reason we were asked to keep it away from the existing system and take it down through lots 11, 2 and 1 as a new line and that is more work than it would have been to upgrade the existing system”.

82 In his affidavit of 3 August 2007, Mr Gittany gave the following evidence:

“42. …I recall when the ‘dog leg’ portion of the 2004 plan was being organised in 2004 with the Hohnans, Mr Hohnan said to me at one point ‘I’ll only let you join in the far bottom corner. I don’t want an easement created in the top Section of my property’.

43. Accordingly, I only pursued the easement on my side of the dividing fence line as I knew the Hohnans would not permit the easement in their side, apart from the small dog-leg in the lower corner which they consented to.”

83 However, as the authorities make clear, the question of “reasonable necessity” has to be decided in the light of present circumstances. I am simply in no position to determine whether, given the expiry of the development consent, Mr Gittany is in any position to develop the Gittany Lot in a way that requires such an easement to be imposed. Once again, the evidence is simply insufficient to determine what Mr Gittany’s current proposal is for the Gittany Lot, and what, if any, requirements are to be met as a condition of any development consent that has been or might at some stage hereafter be sought. Nor does the evidence reveal whether there are any other avenues reasonably open to Mr Gittany to drain the Gittany Lot. In particular, there is no evidence as to whether the western drain option is now available, and whether any further steps have been taken by Mr Gittany since 2004 to persuade Dr Hohnen to permit him to utilise the western drain.

84 For those reasons alone, I consider that Mr Gittany has not satisfied the requirements of sub-section (1) of section 88K. That would be enough to dispose of his application for an order under that section.

85 However, in my opinion there is a further reason why no such order should be made. Sub-section (2) of section 88K specifically restricts the court’s power to make such an order unless it is satisfied in respect of the three matters referred to in that sub-section. I do not consider that any difficulty is raised by the requirements of paragraphs (a) and (b). I do not consider that provided that a valid development consent is on foot, the use of the Gittany Lot would be inconsistent with the public interest, nor am I aware of any reason why Ms McDowell and Mr Burke could not be adequately compensated by the payment of an appropriate amount of compensation for any loss or other disadvantage that may be found to arise from the imposition of the easement.

86 However, I am not satisfied that, as is required by paragraph (c), all reasonable attempts have been made by Mr Gittany to obtain the easement or an easement having the same effect, but which attempts have been unsuccessful. First, I am not satisfied on the evidence before me that Mr Gittany has been made all reasonable attempts to obtain the benefit of the western drain. As I have already noted, there is no evidence of any attempt by Mr Gittany to revisit the possibility of utilising the western drain. The evidence satisfies me that an easement over the western drain, if it were obtained, would have “the same effect” as the easement which Mr Gittany now seeks to have imposed. Second, I am not satisfied that Mr Gittany has made all reasonable attempts to obtain from Ms McDowell the easement which he seeks to have the court impose. It is quite clear from the evidence that Ms McDowell has taken the stance that the 2004 Agreement is at an end and that any fresh easement would have to be the subject of negotiation between herself and Mr Gittany. That is, at the very least, a reasonably arguable stance to have taken. Nevertheless, she has never refused to enter into such negotiations with Mr Gittany, but Mr Gittany has never sought to do so. He has at all times simply insisted that he is entitled to the straight line drainage easement based upon the 2004 Agreement and has not made any attempt, let alone making all reasonable attempts, to negotiate for a further easement. The correspondence of June-July 2006 supports that conclusion in the sense that although at one point, Mr Gittany did make an “offer” to pay $12,500 (admittedly within 7 days), that “offer” was made pursuant to the 2004 Agreement, which, if accepted, would have had the effect of reducing Mr Burke’s liability to Ms McDowell by a corresponding amount.

87 Finally, I should add that it is always to be kept in mind that as Young J (as his Honour then was) pointed out in Hanny v Lewis (1999) NSWConv R 55-879, the court should not lightly interfere with the property rights of land owners having regard to the expropriatory nature of section 88K (see also Khattar v Wiese (2005) 12 BPR at page 23,235). In the exercise of my discretion I would in all the circumstances of this case, have declined to make an order under that section.

88 For those reasons, I likewise decline to make an order under section 88K.

Final Disposition

89 Accordingly, I order that the Further Amended Statement of Claim be dismissed with costs.

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07/07/2009 - Typgraphical error. - Paragraph(s) 47. The word "not" put in before the words "put to Mr Bourke in cross-examination".