Khattar v Wiese

[2005] NSWSC 1014

CITATION:	Khattar & anor v Wiese [2005] NSWSC 1014
HEARING DATE(S):	18 August 2005
JUDGMENT DATE :	7 October 2005
JUDGMENT OF:	Brereton J

CATCHWORDS:	REAL PROPERTY - EASEMENTS - imposition of easement by court - drainage easement - reasonable necessity - whether easement reasonably necessary for effective use and development of plaintiffs land - whether proposed use or development of dominant land reasonable - where grant of some easement reasonably necessary for proposed development - where three courses for creation of easement involving different servient properties - where council requirement for development consent included acquisition of drainage easement which would not interfere with trees - where particular proposed easement would interfere with trees - REASONABLE ATTEMPTS - whether plaintiff required to make all reasonable attempts to obtain easements over alternative course - whether plaintiff had demonstrated that all reasonable attempts had been made to obtain easement over alternative course - COMPENSATION - whether defendant could be adequately compensated for imposition of easement - adequacy of monetary compensation for intangible losses - where servient owner intends to sell - factors relevant to assessment of compensation - COSTS - whether s 88K(5) requires indemnity costs order as of course in favour of defendant.
LEGISLATION CITED:	Conveyancing Act 1919 (NSW), s.88K Supreme Court Act, s.63 Civil Procedure Act, ss.58, 60
CASES CITED:	Tregoyd Gardens Pty Limited v Jervis (1997) 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 R 317 117 York Street Pty Limited v Proprietors of Strata Plan 16123 (1998) 43 NSWLR 504 Katakouzinos v Roufir Pty Limited (2000) 9 BPR 17,303; [1999] NSWSC 1045 Blulock Pty Limited v Majic (2001) 10 BPR 19,143 (2002) NSWConvR 56-012; [2001] NSWSC 1063 Re Seaforth Land Sales Pty Limited v Land [1976] QdR 190 Nelson v Calahorra Properties Pty Limited (QSC, Thomas J, 5 December 1984; affirmed [1985] QConvR 54-202) Ex parte Edward Street Properties Pty Limited [1977] QdR 86 Re Worthston Pty Limited [1987] 1 QdR 400 Durack v D E Winton (1998) 9 BPR 16,403 Hanny v Lewis (1999) 9 BPR 16,205; (1999) NSWConvR 55-879 Woodland v Manly Municipal Council (2003) 127 LGERA 120, [2003] NSWSC 392 Re Parimax SA Pty Ltd [1956] SR (NSW) 130 Heaton v Loblay (1960) 60 SR (NSW) 332 Re Cook [1964] VR 808 Re Robinson [1972] VR 278 Mogensen v Portuland Developments Pty Ltd (1983) NSWConvR 55-116 Shelfer v City of London Electrical Lighting Co [1895] 1 Ch 287 Kelsen v Imperial Tobacco Co Ltd [1957] 2 QB 334 Owen v O'Connor [1964] NSWR 1312 Wollerton & Wilson Ltd v Richard Costain Ltd [1970] 1 All ER 483 Post Investments Pty Ltd v Wilson (1990) 26 NSWLR 598 Wakeham v Wood (1982) 43 P&CR 40 PD Consultants Pty Ltd v Leonard Childs [2004] NSWSC 1076 Bland v Levi (2000) NSWConvR 55-935 Annwrack Pty Ltd v Williams (NSWSC, Waddell CJ in Eq, 8 February 1989, BC8902584) Patrial Holdings Pty Ltd v Short (Cohen J, 14 July 1994, unreported) Mitchell v Boutagy (2001) 118 LGERA 249; (2001) 10 BPR 19,187; (2002) NSWConvR 56-024; [2001] NSWSC 1045 March v E M H Stramare Pty Limited (1991) 171 CLR 506 Wengarin Pty Limited v Byron Shire Council (1999) 9 BPR 16,985
PARTIES:	Tony Khattar & Damia Dib Valerie Claire Wiese
FILE NUMBER(S):	SC 1479 of 2005
COUNSEL:	C Robinson (plaintiff) J A C Potts (defendant)
SOLICITORS:	CPC Lawyers (plaintiff)

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

7 October 2005

1479 of 2005 Tony Khattar & Anor -v- Valerie Claire Wiese

JUDGMENT

1 HIS HONOUR: The plaintiffs Tony Khattar and his wife Damia Dib are the owners of three properties at 112, 114 and 116 Jersey Road, South Wentworthville, for which they have been granted a deferred commencement development approval by Holroyd Council, conditional on obtaining a drainage easement over adjoining land to permit the disposal of stormwater to the Council’s drainage system. They have applied to the Court for an order imposing such an easement over neighbouring land at 61 Irrigation Road, South Wentworthville, owned by the defendant Valerie Claire Wiese. Mrs Wiese, who wishes to sell her land for redevelopment, opposes the imposition of the easement.

2 The Court may impose an easement if the requirements of Conveyancing Act, s.88K are satisfied. On an application under that section, the issues which arise are:-

1 Is the proposed easement reasonably necessary for the effective use or development of the applicant’s land [s.88K(1)]?

2 Will the use of the applicant’s land be not inconsistent with the public interest [s.88K(2)(a)]?

3 Can the owner of the land to be burdened be adequately compensated for any loss or other disadvantage that would arise [s.88K(2)(b)]?

4 Have all reasonable attempts been made by the applicant to obtain the easement or an easement having the same effect, but been unsuccessful [s.88K(2)(c)]?

5 If yes to each of the foregoing, should the Court exercise its discretion to impose an easement [s.88K(1)]?

6 Unless there are special circumstances, what compensation should be imposed [s.88K(4)]?

7 Is there any reason why the costs should not be paid by the applicant [s.88K(5)]?

Background

3 The circumstances which provide the background against which these issues fall to be considered are as follows.

4 Mr Khattar is the registered proprietor of Lots 1 and 2 in DP 27411, being 112 and 114 Jersey Road. His wife Ms Dib is the registered proprietor of Lot 3 in DP 27411, being 116 Jersey Road. There presently stand on the plaintiffs’ three properties three separate houses, one on each lot. The plaintiffs wish to demolish those houses, consolidate and re-subdivide their properties into four lots, and erect four duplex dwellings, one on each of the four proposed lots.

5 On or about 16 August 2004, Holroyd City Council granted the plaintiffs a deferred commencement development approval for the demolition of the existing structures, and their re-subdivision into four lots. The approval is not to operate until the Council is satisfied that certain conditions referred to in Schedule “A” to the approval have been satisfied. Those conditions include one requiring the acquisition of a drainage easement over adjoining downstream property to permit the disposal of stormwater from the site to the Council drainage system (emphasis added):

Easement Creation
1. The applicant shall negotiate and obtain drainage easement rights over the adjoining downstream property/properties to permit the disposal of stormwater from the site to the Council drainage system. The location of the proposed easement shall permit the installation of stormwater pipe within the easement, ensuring that any structures or root zones of existing trees within the property/properties are not disturbed . Documents relative to the creation of the easement to be lodged with Land & Property Information NSW with registration being effected prior to Schedule “B” becoming operational. All costs associated with the registration of the easement shall be borne by the applicant.

6 Also on or about 16 August 2004, the Council issued four further deferred commencement development approvals, one in respect of each of the four proposed lots in the proposed re-subdivision of the plaintiffs’ properties, for the erection on each lot of an attached two-storey dual occupancy, and associated Torrens subdivision of each lot into two. Those approvals also are not to operate until Council is satisfied that all Schedule “A” conditions have been satisfied, including one requiring the acquisition of a drainage easement over adjoining downstream property to permit the disposal of stormwater from the site to the nearest Council drainage system (emphasis added):-

Easement Creation
1. A drainage easement 1.25m wide (minimum) being created in favour of the property to be developed over downstream properties, to permit the disposal of stormwater to the nearest Council piped system . Documents relative to the creation of the easement to be lodged with Land & Property Information NSW with registration being effected prior to Schedule “B” conditions becoming operational. All costs associated with piping, relocation and creation of easements shall be borne by the applicant.

7 Mr Khattar says that it had been clear to him, from the time when the development applications were first lodged, that an easement would be required, and he began to examine neighbouring properties to ascertain which would offer the best option for acquisition of an easement. Ultimately, he identified a strip of land at the rear of Lot 1 DP 26175 - being 61 Irrigation Road, of which Mrs Wiese is the registered proprietor – leading to an existing drainage easement, which runs east/west through 61 Irrigation Road, just north of the alignment of the southern boundary of 118A Jersey Road (which is two properties to the south of the southernmost of the plaintiffs’ properties, 118 Jersey Road being between 116 and 118A).

8 The properties, and the site of the easement which the plaintiffs wish to obtain, are depicted in a sketch plan prepared by Mrs Wiese’s son, which (although not to scale) was accepted by all parties as accurately depicting the relationship between the properties, and which is reproduced at the foot of this judgment. The site of the proposed easement is a strip, 30.5 metres in length, marked “Proposed Easement” on the plan, running along the western boundary of 61 Irrigation Road, from the north-western corner of that property (where it is diagonally opposite the south-eastern corner of the plaintiffs’ properties and aligned with the southern boundary of the plaintiffs’ properties), to the existing drainage easement.

9 In order to enter the site of the easement, a drain from the plaintiffs’ properties would also have to pass either through numbers 4 and 2 Susan Street, or through number 118 Jersey Road. Although the plaintiffs’ original proposal was to bring the drain through numbers 4 and 2 Susan Street, the proposal presented at the hearing was one involving the rear of 118 Jersey Road, and the plaintiffs have obtained the consent of the proprietors of 118 Jersey Road to the acquisition of an easement at the rear of that property sufficient for that purpose.

10 In or near the site of the proposed easement are four trees greater than 12 feet in height, including in particular a Silky Oak which is located close to the point where a drain laid in the proposed easement would join the existing drain in the existing easement.

11 Mrs Wiese is an 80 year old widow. According to her son Mr Lance Wiese, who appears to have assumed responsibility for the conduct of the proceedings on her behalf, her understanding of the issues is limited. She does not occupy 61 Irrigation Road: it appears that her son Mr Clive Wiese does so; upon what terms the evidence does not disclose. She has a small amount of money in the bank, on which she is dependent for her living expenses. She does not qualify for a pension, due to the value of the property (which she inherited from her mother). She wishes to sell the property - which, not being her primary place of residence, attracts liability for land tax. Prior to the institution of these proceedings she was, through her son Mr Lance Wiese, endeavouring to arrange for the property to be placed on the market for sale. In those circumstances, the development potential of her property is a matter of considerable significance for Mrs Wiese, and the imposition of an easement as sought by the plaintiffs might constrain that potential, by restricting optimum layouts to maximise unit yield.

12 The plaintiffs say that they have also considered and explored several alternative proposals. One (“the Susan Street option”), which would involve acquiring an easement over 2 Susan Street, would require a drain some 70 metres in length (rather than the 30 metres involved over Mrs Wiese’s property), would run close to existing structures on 2 Susan Street, and would be twice as expensive to construct ($19,600 as against $9,900). Another (“the 118/118A option”), which would involve an easement traversing the rear of 118 and 118A Jersey Road, immediately adjacent to the site of the proposed easement but on those properties rather than on Mrs Wiese’s property, would, the plaintiffs say, be complicated by affecting two other proprietors rather than one, and by a building at the rear of number 118A which would likely be affected by any construction to tap into the existing drainage easement. A third (“the Jersey Road option”), of draining to a stormwater pit in Jersey Road, appears impossible having regard to the relative levels of the plaintiffs’ land and the invert level of the pit in Jersey Road, Council restrictions on the building-up of land, and Council requirements for an on-site detention tank - the combined effect of which is that, Council not permitting use of a pump, water would somehow have to flow uphill to enter the Jersey Road stormwater pit.

13 There was no evidence of any approach to or negotiation with the owners of either of the Susan Street properties.

14 As to approaches to owners of 118 and 118A Jersey Road, other than that, as already mentioned, the plaintiffs have obtained the consent of the proprietors of 118 Jersey Road to the acquisition of an easement at the rear of that property of whatever dimensions might be necessary for the purpose of introducing a drain from the plaintiffs’ properties to the site of the proposed easement over 61 Irrigation Road, the only evidence was given by Mr Khattar, in re-examination, as follows:-

Q. My friend asked you about the alternative courses, including the possibility of running an easement or running a drainage line through properties 118 and 118A Jersey Road, remember those first questions?
A. Yes I do.

Q. And he asked you what reasons there were for choosing to run it over his client's property rather than 118 and 118A, do you recall that?
A. Yes I do.

Q. Did you in fact speak to anybody at 118A about the possibility?
A. Yes, I did.

Q. What were the consequences of those?
A. Not interested.

Q. When you say not interested, did you indicate some compensation might be payable?
A. Yes, I was approached to offer, discuss compensating in a way we were both happy. He still wasn't interested.

Q. In essence you were left with the same dilemma you have here?
A. Yes.

15 After some preliminary informal approaches to Mrs Wiese had been unproductive, the plaintiffs’ then solicitors, McDonnell Schroder, wrote to Mrs Wiese on 15 May 2003, in the following terms:-

We refer to the above and confirm we act on their behalf in relation to their proposed development at South Wentworthville.
We have been instructed by our client that preliminary discussions with yourself have been fruitless in obtaining your consent for connection to the stormwater easement on your property from their proposed development.
We have been instructed to commence formal negotiations with yourself to come to a suitable agreement in relation to access to your property for connection to the storm water easement.
Our client instruct [sic] that they are prepared to enter into an agreement which will facilitate the following:
1. Our client to be responsible for the costs of the preparation of all legal documentation in relation to the easement
2. Our client will to be [sic] responsible for all work to be carried out to effect the connection from their property to the stormwater easement on your property
3. Our client will indemnify you against any loss claim or actions in relation to all work carried out to obtain access to the stormwater easement on your property
4. All future repairs maintenance and costs associated with the use of the stormwater easement on the property to be the responsibility of our client and their successors in title
5. Our client will undertake to minimise the loss of use or enjoyment of your property as well as minimise the loss of peace and quiet
6. Our client will agree to pay all costs to reinstate your property to its pre work condition including replacing all fencing, trees, turf, buildings etc which may have to be removed to carry out the work required to obtain access to the drainage easement.
We are instructed that the work on the proposed easement from our client’s property over your property will be carried out on the rear left hand side of your property. We are instructed that there are no buildings or services belonging to yourself which will be affected whilst the work is being carried out and after the work is complete.
Please note that under Section 88K of the Conveyancing Act 1900 [sic] our client can approach the Supreme Court for an order for access to your property to carry out the required work. Please note that this is not a course of action which our client necessarily wants to take. However if there is no assistance from you to facilitate this matter then this will be our client’s only option as access to your property to connect to the drainage easement is reasonably necessary for the development of their land.
We invite you to contact our office with a view to commencing negotiations in this matter.
Should you require any further information, please contact the writer.

16 There was no response from Mrs Wiese, and the plaintiffs did not pursue the matter at that stage, while they attended to other aspects of the development applications. But after the approvals were granted by the Council, the plaintiffs, on or about 30 August 2004, instructed CPC Lawyers to re-open negotiations on their behalf, and those solicitors wrote to Mrs Wiese on 30 August 2004, in the following terms:-

We refer to the above and confirm we act for Mr & Mrs Khattar.
We enclose herein a copy of correspondence forwarded to you by our clients previous Solicitors dated 15 May 2003.
Please note that Council has now granted approval to our client in relation to their development subject to them obtaining an easement 1.25m wide to drain water.
Please note that our client has instructed us to commence negotiations with you for the purposes of obtaining the easement along your property.
We now enclose herein a copy of the Council’s Deferred Commencement together with Schedule “A”, point number 1 of which notes the requirement for an easement.
Please note that our client requires you to contact our office for the purposes of commencing negotiations in this matter.
Alternatively you can seek legal advice in relation to this matter for the purposes of having a Solicitor represent you to commence negotiations.
We confirm that we will allow you 14 days to make contact with our office in relation to this matter.
Please note that in the event that we do not hear from you or that you do not allow our client to obtain the easement, then we will be left with no alternative but to commence proceedings in the Supreme Court for the Court to order the access to your property and for the work required for the easement.
Please note that our client would like to finalise this matter without the need to attend Court and to the satisfaction of both parties.
Should you require further information please contact the writer.

17 On 1 September 2004, CPC Lawyers received an e-mail, from the e-mail address “Clive Wiese” (who is apparently a son of Mrs Wiese, and who occupies her property) but over the signature block “V. Wiese”, in the following terms:-

I have spoken to Mr Khattar previously and made it clear to him that I have no interest in his proposal whatsoever, however I do hope this harassment will stop.

18 On 24 November 2004, CPC Lawyers sent to Mrs Wiese a letter in the following terms:-

We refer to the above and to previous correspondence in this matter.

We now enclose herein by way of service a valuation prepared on behalf of our client in relation to the dimunition [sic] of the value to your property as a result of the proposed easement to be situated within your boundaries.
We note that our client is prepared to pay you the amount in the valuation of $8000 being the consideration for the construction of the easement as well as the blight on your title.
Please note that this offer is open for a period of seven (7) days after which our instructions are to persue [sic] an application to the Supreme Court pursuant to section 88k of the Conveyencing [sic] Act.
We kindly request that you obtain some legal advice in relation to this matter.
Further to this our client will also pay your reasonable costs incurred in relation to having the required documents explained to you by a legal representative of your choice.
Should you require any further information please contact the writer.

19 This letter was accompanied by a valuation, by Access Valuations, which assessed a compensation value of $8,000 for the acquisition of the proposed easement. That valuation was admitted in these proceedings, pursuant to Evidence Act, s.136, for the limited purpose of proving the basis of the offer and its communication to Mrs Wiese, and not as evidence of value.

20 On 8 December 2004, Mrs Wiese sent a letter, apparently signed by her (other) son Lance Wiese, to CPC Lawyers, in the following terms:-

Thank you for your letter of 24 Nov 2004, and the attached valuation document which I read with interest. This document has raised some questions which you might kindly like to answer in order that we may progress this matter.

· What are the specific reasons for your client selecting my property in pursuing the creation of the easement. In particular with reference to the fact that my property only joins with your clients [sic] at the corner and so does not actually share a boundary fence with the proposed Khattar development?

· What other alternatives [sic] been investigated by your client and to what extent were these alternatives investigated before involving me.

21 By letter dated 22 December 2004, CPC Lawyers wrote to Mrs Wiese, in the following terms:-

We refer to the above and to your letter of 8 December 2004 received in our office on 15 December 2004. We further refer to our telephone attendance with your son.
We note it comes as an extreme surprise to us to receive a letter from yourself when it was indicated by your Son that you were seeking legal advice and that your Solicitor would correspond with us in this matter.
We note it is quite clear form the way in which your Son has endeavoured to mislead the writer that you are attempting to delay this matter, which is causing our clients considerable stress and financial loss.
In any even [sic] to comply with our obligations we are instructed to respond to the points in your letter as follows:-
1. We note that your property provides the most direct route for the creation of the easement. Further to this a drainage easement runs across your property in which it is envisaged our client’s easement will be tapped into. This is the most direct and in expensive [sic] manner of the creation of the easement. In relation to the fact that the properties do not share a boundary fence, we note that our client will make other arrangements with the neighbour as far as this easement is concerned.
2. We note our client considered other options including obtaining the easement down the rear of the property that immediately boarders [sic] the rear of his property. We note however this easement would require travel along the side of the next door neighbour’s property as well as down to the front to exit out onto the street. We note that it would involve construction of the easement within very close proximity to a residence and would cost more than two times the most direct route through your property for both construction as well as compensation to the owner.
We note we are now finalising our application to the Supreme Court and note you will be served with the same shortly.
If you however wish to commence “proper and fruitful” negotiations in this matter, please do not hesitate to contact the writer.

22 On 7 January 2005, Mrs Wiese’s son Lance Wiese sent by registered mail to CPC Lawyers, a letter in the following terms, which was received by CPC Lawyers on 10 January 2005:-

I am writing to seek a reply to my letter of 8 December 2004. In doing so, I notice that my original letter was wrongly addressed and may not have reached you.
I apologise if this has caused any inconvenience. Nevertheless, I would like a response to the questions I have raised.

23 It was in those circumstances that, on 11 February 2005, the plaintiffs filed their summons, claiming the following relief:-

1. An order imposing a drainage easement 1.25m wide on such terms and conditions as the Court thinks appropriate in the circumstances, over land of the Defendant at 61 Irrigation Road, South Wentworthville in the State of New South Wales and contained in Folio Identifier 1/26175 for the benefit of the First and Second Plaintiff as proprietors of the land at 112-116 Jersey Road, South Wentworthville in the State of New South Wales and contained in Folio Identifiers 1/27411, 2/27411 and 3/27411.
2. An order that the Defendant execute and deliver to the First and Second Plaintiffs a dealing in the form approved under the Real Property Act 1900 setting out particulars of the easement imposed by the Court in favour of the Plaintiffs over the land of the Defendant.
3. Costs.

Is the proposed easement reasonably necessary?

24 Conveyancing Act, s.88K(1) requires that the proposed easement be “reasonably necessary for the effective use or development” of the land to be benefited. It does not require that the easement be absolutely necessary for that use or development, nor that the proposed use or development be the only reasonable use of the land to be benefited; thus the requirement may possibly be satisfied even when the applicant's land could be effectively used or developed without the easement [Tregoyd Gardens Pty Limited v Jervis (1997) 8 BPR 15,845 (Hamilton J); Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15,795 (Windeyer J); Re Seaforth Land Sales Pty Ltd's Land (No 2) [1977] Qd R 317; 117 York Street Pty Limited v Proprietors of Strata Plan 16123 (1998) 43 NSWLR 504, 508G-509D; Katakouzinos v Roufir Pty Limited (2000) 9 BPR 17,303; [1999] NSWSC 1045, [38]].

25 The proposed easement must be reasonably necessary, either for all reasonable uses or developments of the land, or else for some one or more proposed uses or developments which are (at least) reasonable as compared with the possible alternative uses and developments; and 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, 508G-509D; Katakouzinos v Roufir, [38]; Blulock Pty Limited v Majic (2001) 10 BPR 19,143; (2002) NSWConvR ¶56-012; [2001] NSWSC 1063, [14] (Windeyer J)].

26 Accordingly, where, as in a case such as the present, a particular proposed use or development is in contemplation, the first question is whether that proposed use or development is a reasonable one (in comparison with the possible alternatives); and the second is whether that use or development with the proposed easement is substantially preferable to that use or development without the proposed easement.

27 The authorities repeatedly point to the confiscatory nature of s.88K as requiring firm proof of the reasonable necessity for the easement, and that the court bear in mind that property rights are valuable rights not lightly to be taken away [Re Seaforth Land Sales Pty Limited v Land [1976] QdR 190, 193 (Douglas J); Nelson v Calahorra Properties Pty Limited (QSC, Thomas J, 5 December 1984; affirmed [1985] QConvR ¶54-202); Ex parte Edward Street Properties Pty Limited [1977] QdR 86, 91 (Andrews J); Re Worthston Pty Limited [1987] 1 QdR 400, 402-3 (Carter J); Tregoyd Gardens, 15,853-4; Durack v D E Winton (1998) 9 BPR 16,403, 16,449 (Einstein J); Hanny v Lewis (1999) 9 BPR 16,205; (1999) NSWConvR ¶55-879, 56,875; Woodland v Manly Municipal Council (2003) 127 LGERA 120, [2003] NSWSC 392, [15] – [18] (Hamilton J)]. The extent of the burden of the proposed easement on the servient property is a relevant consideration, to the effect that the greater the burden, the stronger is the case needed to justify a finding of reasonable necessity [Katakouzinos v Roufir, [42]; Woodland v Manly Municipal Council, [12]].

28 As to whether the proposed use or development is a reasonable one (in comparison with the possible alternatives), in this case, the proposed development involves demolition of the existing three separate houses on the plaintiffs’ properties, their re-subdivision into four lots, and the erection on them of four duplex dwellings. (The main alternative is retaining the properties in their current condition). In effect, the proposed development will result in the substitution of eight dwellings for the existing three. In the planning context, such redevelopment accords with the permitted uses for the zoning of the plaintiffs’ properties under the applicable environmental planning instrument. Economically, it is self-evidently a higher and better use of the properties than their present use as three separate dwellings. Aesthetically and environmentally, there is already existing villa development in the area, and in particular on the property immediately to the east of Mrs Wiese’s property in Irrigation Road. Indeed, Mrs Wiese wishes to sell her property for the purposes of medium density or villa redevelopment. The immediate area, though residential in character and retaining a predominance of free-standing residences of varying age and condition, has in recent years seen a number of the larger allotments developed with townhouse and villa complexes [Report of Leigh Bridges dated 13 May 2005, DX02, p6].

29 For Mrs Wiese, Mr Potts submits that there is no cogent evidence why the proposed use and development of the plaintiffs’ properties is substantially preferable to their current use. There are at least two answers to this. The first is that it is not necessary that the plaintiffs show that the proposed development is substantially preferable to the current use, but only that it is reasonable; the question of “substantially preferable” arises when evaluating the posited use with, as against without, the easement. The second is that there is evidence which warrants the conclusion that the proposed development is, in the language of valuers, a “higher and better” use than single residential dwellings: the emergence in the area over recent years of medium density and villa developments is a strong indication that such development is a superior use; the plaintiffs’ desire to proceed in accordance with their proposals, and Mrs Wiese’s wish to sell her property for redevelopment, supports an inference that the higher unit yields which can be derived under a medium density or villa development are economically more advantageous uses of the properties than their existing uses as separate residential dwellings; indeed, it might be said to be self-evident that eight dwellings on the same land is likely to be a more valuable use than three dwellings. Accordingly, the plaintiffs’ proposed development is a reasonable use or development of the plaintiffs’ properties.

30 As to whether the plaintiffs’ proposed development with the proposed easement is substantially preferable to that development without the proposed easement, the conditions imposed by the Council on the deferred commencement development approvals make clear that there can be no such development at all without a drainage easement. The evidence of the plaintiffs’ architect Mr Cozzupoli demonstrated that any supposed alternative which involved draining the properties to Jersey Road was impracticable due to the relative levels of the properties and the invert level of the drain in Jersey Road. Only by acquiring an easement – whether over the rear of 118 and 118A Jersey Road, or the proposed site, to the existing main, or over 2 or 4 Susan Street, to the sub-main in Susan Street – could the proposed development of the plaintiffs’ properties, or (as Mr Potts accepted) any similar development, proceed. In this case, the proposed development is impossible without the easement or an easement to like effect. It follows that an easement is reasonably necessary for the use or development of the plaintiffs’ land. But this is not conclusive of whether the proposed easement is reasonably necessary: two subsidiary issues require to be addressed.

31 First, where, as here, there is more than one possible course for an easement to satisfy the necessity, a further question arises as to whether the particular proposed easement is reasonably necessary. A similar problem confronted Hamilton J in Tregoyd Gardens. In that case, the plaintiff’s need for an easement could have been satisfied by an easement over either of two properties (“the Jervis land” and “the Barbalace land”). In rejecting the Jervis’ contention that reasonable necessity had not been made out (in respect of an easement over their land), and that other possible alternatives (in particular, an easement over the Barbalace land) had not been negatived, Hamilton J said that it could not be the intention of the Act that, if an easement would be equally efficacious over two pieces of land, it could not be granted over either, just because it could not be said that it was necessary for it to be granted over one as opposed to the other (emphasis added):-

However, only three alternatives are mentioned in the evidence. The first is the scheme for pumping uphill which the Council will not countenance. The only other schemes are for a drainage line to carry the water away downhill which, as set out above, to be possible, must pass through either the defendants’ land or the Barbalaces’ land. It is reasonably necessary that it must pass through one or the other; although the difference between the two is not great, it is in my view easier and more convenient on the evidence that it pass through the defendants’ land than through the Barbalaces’ property. It cannot be the intention of the Act that if an easement would be equally efficacious over two pieces of land it cannot be granted over either because it cannot be said that it is necessary for it to be granted over that piece of land as opposed to the other . In these circumstances I am of the view that the plaintiff has established reasonable necessity as claimed by it and I so find.

32 I respectfully agree with Hamilton J that the purpose of s.88K would be defeated if, it being equally efficacious to obtain an easement over either of two lots, it could then be said that it was not necessary for it to be obtained over one or the other of them. In such a situation, the applicant may, within reason, select that lot over which it desires to acquire an easement. This may require the court to undertake some evaluation of the alternatives, in order to be satisfied that the applicant’s proposal is reasonable as between them, but this need not involve 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. In this, the court may be guided by the inference that an applicant will ordinarily pursue that course which offers the greatest practical and economic advantages for the development, and incur the least liability to pay compensation: a developer’s economic interests will powerfully influence it to select the most reasonable course.

33 The plaintiffs consider that the Susan Street alternative is inferior, because it will involve a longer drain and easement (in the order of 70 metres and opposed to 30 metres) and a substantially greater cost (in the order of $19,000 as opposed to $10,000). In addition, the plaintiffs are concerned that such an easement would impinge much more closely on structures on the servient property or properties. The plaintiffs say that their cost estimates include provision for the protection and preservation of the trees in the site of the proposed easement. In those circumstances, I consider that the plaintiffs’ preference for the proposed easement through Mrs Wiese’s land over the Susan Street option is reasonable.

34 As to the 118/118A Jersey Road option, the plaintiffs say that such an easement would have to traverse two as opposed to one servient property, would impinge on the structure at the rear of number 118, and would require excavation and replacement of a concrete slab at the rear of number 118A. This course, they say, would involve greater expense in construction of a drain than the proposed easement, but the plaintiffs have not adduced any evidence as to the actual costs which it would involve. In cross-examination of the plaintiffs’ witness Mr Cozzupoli, Mr Potts established that the slab at the rear of 118A could be carved out with a concrete saw, and that the building at the rear of 118 was temporary and about a metre clear of the boundary:-

Q. In paragraph 9 you talk about some difficulties that would be encountered if you were to try to put an easement over 118A Jersey Road, is that right?
A. That's correct.

Q. And why is it the fact there is presently no drainage easement over 118 Jersey Road, a factor that makes the defendant's land more suitable as a site for the easement?
A. There is physical barriers at 118A which are some large sheds and garages at the rear of the site. Bringing it through 118, you have to cross 118 to go through 118A to get into the easement, whereas cutting into the back, whether the corner of 118 or through the corners of 2 and 4, we are only running over 61 Irrigation Road, so it is just a straight run.

Q. I show you some photos … . Do you agree that depicts the rear of 118 Jersey Road, the rear boundary abutting 61 Irrigation Road?
A. That's correct.

Q. And do you agree that it shows a temporary structure in the form of a Colorbond or zinc alum shed?

…

WITNESS: It is a temporary structure, a Colorbond, pre-fabricated Colorbond garden shed-type structure.

POTTS: Q. It appears to be on a concrete slab?
A. That's correct.

Q. It is a distance from the fence?
A. That's correct.

HIS HONOUR: Are you able to say how far? I think we have been told it is an 8 foot fence in Imperial measures. That probably doesn't help much.

POTTS: Q. Are you able to estimate how far the shed is?
A. From the diagram, if it was built in accordance with Council's requirements, it would be 900 to a metre from the fence, 900 being a minimum for out-buildings, 900 to a metre.

Q. Is there sufficient room to run a drain between the fence and the shed?
A. Yes, there would be.

HIS HONOUR: Q. But not a 1.25 metre easement presumably, is that right?
A. That's right.

POTTS: Q. What would prevent you from moving the shed sufficiently back towards Jersey Road to enable a 1.25 metre easement to be run down there?
A. Anything is possible.

…

Q. And you agree, don't you, that the only structure at the rear of 118A Jersey Road is the structure to the left of that photo?
A. That's correct.

Q. And the only thing abutting the fence appears to be a number of concrete slabs?
A. That's correct.

Q. Are you able to tell from the photo whether that is laid as one slab or are there a number of slabs abutting one another?
A. You can see some construction joints in it so it looks to be a concrete slab with some expansion joints being poured in. I couldn't tell whether there are slabs placed there or in situ from those photos, but it looks like construction joints.

Q. Using a concrete saw or some other appropriate means of machinery, you could cut up that concrete and put a drain in, couldn't you?
A. Certainly.

Q. And there is no reason, is there, in terms of impediments, apart from the temporary shed, why you couldn't run an easement along the rear boundary of 118 and 118A Jersey Road into the existing drain main?
A. No, there is no reason why.

35 But for the trees on Mrs Wiese’s property, the plaintiffs’ view that the proposed easement is objectively a more convenient and reasonable course than one over numbers 118/118A would be unimpeachable. Apart from whether the proposed easement can fulfil the conditions of the deferred commencement approval, to which I next turn, and even though the presence of trees within the site of the proposed easement would reduce its advantages over the 118/118A option, it would nonetheless still be no less reasonable a solution. I would not decline to find that the proposed easement was reasonably necessary on the ground that, relative to the 118/118A option, it was inferior. And given that the plaintiffs’ properties would not be developable without an easement, and that (as I have concluded) the proposed easement would be not significantly if at all less efficacious and convenient than one over 118/118A Jersey Road, and that an easement over the Jersey Road properties would potentially be prejudicial to their development (at least if they were consolidated), I would not accept that the burden which the proposed easement would impose on Mrs Wiese’s property is such as to make the proposed easement other than reasonably necessary.

36 The second subsidiary issue arises from the submission of Mr Potts, that this particular proposed easement cannot be reasonably necessary for the effective use or development of the plaintiffs’ land, because it is incapable of satisfying the conditions in the development approval, which conditions provide the sole basis for the contention that an easement is reasonably necessary. While observing that the proposed easement is only 1.20 metres in width, whereas the condition requires one of 1.25 metres width minimum, Mr Potts particularly emphasises that the proposed easement cannot satisfy the requirement that it permit the installation of stormwater pipe within the easement ensuring that any structures or root zones of existing trees within the property/properties are not disturbed.

37 The proposed easement would be constructed with two 225mm pipes side-by-side. Any excavation to permit this would have to be at least 500mm wide. There are four trees in the vicinity of the site of the proposed easement, and so far as can be ascertained from the photos and plans, they seem to be about half a metre inside the boundary – approximately in the mid-line of the proposed easement. From that it can be concluded that any excavation of the proposed easement is likely to affect their root systems, if not their structures.

38 McDonnell Schroder’s letter to Mrs Wiese of 15 May 2003 included the following:-

Our client will agree to pay all costs to reinstate your property to its pre work condition including replacing all fencing, trees, turf, buildings etc which may have to be removed to carry out the work required to obtain access to the drainage easement

39 Mr Khattar’s was asked about this in cross-examination:-

Q. Can I now take you to Exhibit G. It is a letter from McDonnell Schroder dated 15 May 2003, do you have that?
A. I do.

Q. I ask you to go to page 2 and read the numbered paragraph 6 to yourself, that is a letter of 15 May 2003? Go to page 2 and read paragraph 6 (witness complied)?
A. You want me to read it?

Q. Yes please, to yourself (witness complied)?
A. Yes.

Q. See there in that paragraph a reference to "including replacing all fencing, trees", you see those words?
A. Yes I do.

Q. And did you see this letter before it was sent?
A. I can't say if I have or not.

Q. You have given evidence you instructed your solicitors to send it?
A. Send it, that's right.

Q. Did you see it or not before it was sent?
A. Yes.

Q. May we take it from paragraph 6 that you thought at the time you instructed the letter to be sent that there would be a need to remove trees on my client's property if you put your drainage in?
A. Correct, the trees are there.

40 The northernmost tree is located in the northwestern corner of Mrs Wiese’s property. The plan of the proposed easement currently relied upon by the plaintiffs [Affidavit of T Khattar, 15 August 2005, annexure C] indicates the drainage line in a position which would interfere with the root system, if not the structure, of that tree. However, in his oral evidence Mr Khattar suggested that he would obtain from the proprietors of 118 Jersey Road a sufficient easement over 118 Jersey Road to enable that tree to be by-passed. I must say that I thought this evidence was a rather spontaneous and convenient response to the problem: it is not consistent with the plan of the easement contained in Mr Khattar’s affidavit sworn as recently as 15 August 2005, which suggests that the easement would be not more than about 1.2m by 1.2m in the north-eastern corner of number 118; and the letter from the proprietors of 118 Jersey Road consenting to an easement is entirely non-specific as to its dimensions. However, as this issue could be addressed by the imposition of appropriate conditions on the grant of relief, I am prepared to proceed on the basis that the plaintiffs will obtain a sufficient easement over the rear of 118 Jersey Road to by-pass the first tree.

41 The second and third trees are located in about the centre of the site of the proposed easement. Although Mr Khattar in his oral evidence suggested that they did not exceed eight feet in height - since (so he asserted) they did not rise above the eight foot boundary fence - he was mistaken: the photographic evidence shows them well above the height of the boundary fence and, accepting the boundary fence to be eight feet in height, are clearly more than twelve feet. Mr Khattar’s evidence was that these trees would be removed and replaced, perhaps by potting them during the construction process, and then replanting them afterwards:-

Q. Does that allow for the cost of cutting down trees?
A. No, trees would be cut down, the two shrubs would be removed and replaced. Yes, the two shrubs that we were talking about would be replaced.
…
ROBINSON: Q. My friend asked you whether it was easier to replace trees or concrete and I think you have indicated it is easier to replace trees. Can you tell his Honour why that is the case?
A. The trees, you can save them, put them in the pots, maintain them. By the time you finished the work, replant them. Concrete, you have to hire a machine, rip it out, get rid of the concrete, pay to get rid, then relay and supply concrete.

42 I am unable to see how this complies with a requirement that the easement permit installation of stormwater pipe ensuring that any … root zones of existing trees … are not disturbed. To the contrary, it is implicit in this evidence that the root zones would be disturbed.

43 The fourth tree, which has attracted most attention, is located at the southern extremity of the site of the proposed easement. Mr Khattar says that he has stood on the alignment of the existing easement in Jersey Road and by looking along the alignment of the easement has ascertained that this tree is south of the existing drainage line. That corresponds with the way in which it is marked on Mr Wiese’s plan. The photographic evidence, though not entirely clear, supports that view. But on any view, this tree – a Silky Oak – is a substantial tree. Given the location and dimensions of the tree and of its foliage, as revealed by the photographic evidence – in particular by the aerial photograph - and given that the onus lies on the plaintiff of proving reasonable necessity, I am quite unable to be satisfied that the construction of a stormwater drain within the proposed easement would not disturb the root zone of that tree.

44 In this respect, the evidence falls well short of firmly proving that the proposed easement will satisfy Council’s condition. For the plaintiffs, Mr Robinson submits that it would be premature to decide that the easement could not be constructed in compliance with the condition of the deferred approval, and that account should be taken of the possibility that the Council could be persuaded to accept arrangements for the protection of the trees. But this overlooks that it is for the plaintiffs to establish reasonable necessity, and to do so by firm proofs. Although there is some faint evidence that Council might entertain applications for variation of the conditions in some respects – such as to reduce the minimum width of the easement from 1250mm to 1200mm - there is nothing to suggest that it would entertain an application for variation of the condition relating to the root zones and structures of trees. Accordingly, Mr Potts has made good the submission that the proposed easement is incapable of meeting Condition 1 in Schedule A of each of the development approvals. In other words, the easement sought by the plaintiffs is not the easement which Council requires; it will not satisfy Council’s conditions; and its creation will not permit the proposed development to proceed.

45 I accept that s.88K, given its remedial nature, should not be interpreted in such an inflexible way as to require that all other obstacles to the proposed use must have been overcome before an easement is granted, and that some necessary consents may not be available unless and until the Court has granted an easement – especially as projects may require dealings with several adjoining properties and government authorities [117 York Street, 512C-E]. But where the very necessity for the easement is said to arise from the imposition of a condition, it is not possible for an easement which does not satisfy that condition to meet the necessity. It follows that reasonable necessity has not been established by the plaintiffs: as the proposed easement would not satisfy the conditions of approval which are said to make it necessary, it cannot be said to be reasonably necessary for the reasonable use and development of the plaintiffs’ land.

46 While this conclusion is dispositive, it is appropriate, that I express my conclusions on the other issues: first, lest I be wrong; and secondly, because it is conceivable that the plaintiffs may be able to formulate some further proposal which will satisfy Council’s conditions, in which case the determination of the other issues in the case may facilitate resolution of the matter between the parties without further litigation.

Will the use of the plaintiffs’ land not be inconsistent with the public interest?

47 The use and development of the plaintiffs’ land in accordance with the development approval is a permitted use under the applicable environmental planning instrument. It is consistent with recent development in the area, including immediately adjacent to Mrs Wiese’s land. It is consistent with what Mrs Wiese envisages will happen to her own land. There is nothing in the proposed use and development of the plaintiff’s land which would be inconsistent with the public interest, and I did not understand Mr Potts to submit otherwise. The requirement of s.88K(2)(a) is satisfied.

Can Mrs Wiese be adequately compensated?

48 Section 88K(2)(b) requires consideration of the adequacy of monetary compensation for the injury which imposition of the easement will visit on the servient owner.

49 In the law of restrictive covenants, which is closely analogous to that of easements, the significance of injuries of an intangible kind, and the inadequacy of monetary compensation for them, is well-recognised. Thus, a person may be “substantially injured” by modification or extinction of a covenant notwithstanding that the value of his or her land would be unaffected or even increased [Re Parimax SA Pty Ltd [1956] SR (NSW) 130, 133; Heaton v Loblay (1960) 60 SR (NSW) 332, 335-336; Re Cook [1964] VR 808, 810; Re Robinson [1972] VR 278, 283-24; Mogensen v Portuland Developments Pty Ltd (1983) NSW ConvR ¶55-116, 56,856], and, particularly in the case of injuries of an intangible kind, subjective tastes, preferences or beliefs of particular individuals may give rise to relevant injury [Mogensen v Portuland Developments, 56,856]. Ordinarily, damages are not a sufficient remedy for a substantial interference with intangible benefits, because the loss is not one which is readily capable of being estimated in money, nor one which can be adequately compensated by a small money payment: that is why generally injunctive relief is granted to restrain breaches of restrictive covenants, rather than damages being considered sufficient, at least in most suits [cf Shelfer v City of London Electrical Lighting Co [1895] 1 Ch 287, 322 (A L Smith LJ, CA); Kelsen v Imperial Tobacco Co Ltd [1957] 2 QB 334; Owen v O’Connor [1964] NSWR 1312; Wollerton & Wilson Ltd v Richard Costain Ltd [1970] 1 All ER 483]. Views are the paradigm case of intangible benefits, and in Post Investments Pty Ltdv Wilson (1990) 26 NSWLR 598 Powell J (as he then was) referred to and applied Wakeham v Wood (1982) 43 P&CR 40, in which Waller LJ said “I find it difficult to say that where one has a view protected by covenant, the denial of that view is capable of being estimated in money terms and therefore it seems to me it cannot be adequately compensated by a small money payment”.

50 Thus in many cases, injury to intangible benefits and the imposition of intangible detriments, such as reduced amenity and enjoyment of property, and exposure to increased disruption and interference, may weigh heavily against a conclusion that the servient owner can be adequately compensated for the purposes of s.88K(2)(b). One such case, in which it was found that the servient owner could not be adequately compensated, was Blulock (although that case turned on the constraints which the easement would impose on future use of the servient land, rather than on intangibles). On the other hand, in Tregoyd Gardens, Hamilton J, at least implicitly, rejected a submission that, given the intangible benefits which the defendants in that case obtained from the presence of a palm tree, the viability of which might be jeopardised by the proposed easement, a sum of money in exchange for the tree could not be regarded as adequate, in circumstances where the injury was regarded as unlikely to eventuate, and would be relatively minor in the overall context if it did.

51 In the present case, it is decisive that it is Mrs Wiese’s intention to sell her property. If, as in Blulock, the impact of a proposed easement on the future utility or amenity of servient land might sometimes be incapable of adequate compensation, that cannot be said in this case. In circumstances where Mrs Wiese proposes to sell her property, more so when she is not herself in occupation of it, and is not receiving rent for it so far as the evidence goes, Mrs Wiese’s loss and other disadvantage can readily be identified and valued as the diminution in the value of her property upon sale. In principle, in those circumstances, her loss is the difference between the price which she would have obtained on sale without the easement, and the price she will attain with the easement imposed, plus an allowance for any disruption or other disadvantage which she might suffer in the meantime.

52 It follows that I am satisfied that Mrs Wiese could be adequately compensated for any loss or other disadvantage that would arise from imposition of the proposed easement.

Have all reasonable attempts been made to obtain an easement?

53 The requirement of s.88K(2)(c) is that 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.

54 In Tregoyd Gardens, Hamilton J rejected a submission that the second easement referred to in s.88K(2)(c) must be an easement over the same land as the first and not another easement, whether or not over the same land as the first, producing in effect the same result. His Honour held that if an easement over the alternative (Barbalace) land would have the same effect as the proposed easement (over the Jervis land), then the applicant was obliged to seek and make all reasonable attempts to obtain the alternative grant. This construction is consistent with the policy that compulsory imposition of an easement and expropriation of proprietary rights should be a last resort, and an applicant should first be required to take all reasonable steps to obtain an alternative solution.

55 I do not doubt that Mr Khattar has made all reasonable attempts to obtain the proposed easement over Mrs Wiese’s land. But he is required also to make reasonable attempts to obtain any other easement to the same effect. As Hamilton J said in Tregoyd Gardens, in this context reasonableness is a matter of degree, and the relative advantages, convenience and costs of the various options are relevant. Thus in Tregoyd Gardens, the applicant was held entitled to accept the rebuff of its initial approach of Mr Barbalace, given the advice it had as to the relative superiority of the course over the Jervis land, the firmness of the rebuff, and the refusal of Mr Barbalace even to discuss the matter further.

56 Although there was no evidence of any attempt to acquire an easement over 2 and/or 4 Susan Street, its manifest disadvantages when compared to the proposed easement – including much longer easement which would be required, the additional cost, and the condition of the deferred commencement approval which requires connection to the closest drainage system - which Susan Street is not – I would not conclude that reasonable attempts to acquire an easement having the same effect as the proposed easement required that the Susan Street option be pursued.

57 As to the 118/118A Jersey Road option, Mr Khattar did not refer to it at all in his affidavit evidence (though his draftsman, Mr Cozzupoli, did). While, in cross-examination, Mr Khattar said that he had considered it, he was unable to explain why it was not mentioned in his affidavit. He has obtained agreement from the proprietors of number 118 to an easement, he says at least to the extent necessary to by-pass the first tree on Mrs Wiese’s property. Only in re-examination did he say that he had spoken to the proprietor of number 118A, whose response was said to be that he was “not interested” - adding, only in response to a leading question, that he had mentioned the possibility of compensation, still to no avail. But there is no evidence of any particular offer of compensation, nor of any written offer, nor of any formal approach such as was made to Mrs Wiese.

58 Contrary to Mr Robinson’s submission, an easement over 118/118A Jersey Road would be an easement having the same effect as the proposed easement, just as in Tregoyd Gardens an easement over the Barbalace property was one having the same effect as one over the Jervis property: it connects the plaintiffs’ properties to the existing drainage system. The evidence discloses at best perfunctory attempts to obtain an easement over the rear of 118/118A Jersey Road. While that course may not be entirely as advantageous as the proposed easement over Mrs Wiese’s land, its disadvantages relative to the proposed easement are not so great as to entitle the plaintiff to substantially disregard it. I am not satisfied that the plaintiff has made all reasonable attempts to obtain an easement having the same effect as the proposed easement [cf PD Consultants Pty Ltd v Leonard Childs [2004] NSWSC 1076 (Brownie AJ)], because he has made at best only perfunctory attempts to obtain an easement over 118/118A Jersey Road, when efforts of considerably greater substance in that behalf were warranted.

Discretionary Considerations

59 The granting of relief under s.88K is discretionary: s.88(1) is expressed in terms which confer a discretion to make an order imposing an easement when the relevant considerations are satisfied. Thus, notwithstanding satisfaction of all the requirements of s.88K(1) and (2), it still remains in the discretion of the court to grant or withhold relief [cf Tregoyd Gardens; 117 York Street, 517-518; Blulock , [20]].

60 That discretion is to be exercised having regard to the purpose of the section, which might be summarised as facilitating the reasonable development of land whilst ensuring that just compensation be paid for any erosion of private property rights [Second Reading Speech, Legislative Council, 4 December 1995]. Consideration of exercise of the discretion will only arise once the court is satisfied that the servient owner can be adequately compensated, but will often be informed, if not determined, by a finding that there can be adequate compensation [Blulock, [20]]. While the confiscatory nature of the section may be relevant, and likewise the extent of the burden which would be imposed on the servient land, the mere reluctance of the servient owner to accept an easement is not relevant [Tregoyd Gardens]. The existence of a superior alternative might well remain at least a relevant discretionary consideration, if it is not determinative of “reasonable necessity”.

61 Mr Potts submits that even if the requirements of s.88K(1) and (2) had been satisfied, the court should decline to exercise its discretion to grant an easement for substantially the same reasons as he advances in support of the proposition that “reasonable necessity” has not been established. Although in some cases the extent to which a basal statutory requirement is satisfied might be relevant to the exercise of a discretion which arises upon satisfaction of that requirement, that is not so in the present case, essentially because considerations of reasonableness which might otherwise be germane to the exercise of the discretion would be subsumed in findings that reasonable necessity was established, that the servient owner could be adequately compensated, and that reasonable attempts to acquire an easement or an alternative having the same effect had been made. In my opinion, those concepts leave no further room for discretionary consideration of the same factors.

62 One issue raised by Mr Potts, though not initially on discretion, is that there is in force a tree preservation order which applies to Mrs Wiese’s land, having the effect that written consent of the Council is required for any works including pruning and removal which affect a tree, such as the Silky Oak; that to carry out of works on a tree on a neighbouring property, the owner’s consent is required; that the circumstances envisaged are not such as would be likely to attract such a consent; and that breaches of the tree preservation order can attract serious penalties.

63 It would be implicit in an easement, if granted, that the dominant owner could do whatever might reasonably be necessary to construct it, and that the servient owner would cooperate, including by giving consent to any requisite development application (including any application under the tree preservation order) to facilitate its construction [cf Bland v Levi (2000) NSWConvR ¶55-935; Annwrack Pty Ltd v Williams (NSWSC, Waddell CJ in Eq, 8 February 1989, BC8902584); Patrial Holdings Pty Ltd v Short (Cohen J, 14 July 1994, unreported); 117 York Street, 521-523]. Were I otherwise of the view that the easement complied with the conditions of the approval, then having regard to the purpose of the section, and having regard to the implied obligation to which I have referred, I would have exercised my discretion in favour of imposing the easement.

Quantum of compensation

64 It has not been suggested that there are any such special circumstances of the case as would warrant the court determining that compensation is not payable. Accordingly, were it otherwise appropriate to impose the proposed easement, it would be necessary to provide for payment of such compensation as the court considers appropriate.

65 The onus of proof in a case for compensation under s.88K is borne by the applicant [117 York Street, 516; Mitchell v Boutagy (2001) 118 LGERA 249; (2001) 10 BPR 19,187; (2002) NSWConvR ¶56–024; [2001] NSWSC 1045 (Austin J), [34]]. This compensation is the same compensation “for any loss or disadvantage that will arise from imposition of the easement” as is referred to in s.88K(2)(b) [Goodwin v Yee Holdings; Mitchell v Boutagy]. The court’s task, therefore, is to assess appropriate compensation for the imposition of the easement, measured as adequate compensation “for any loss or other disadvantage that will arise from the imposition of the easement” [Mitchell v Boutagy, [25]]. That test involves a causal relationship between the imposition of the easement and the loss or other disadvantage, in which respect the common law of causation – that it is a question of fact to be determined by applying common sense to the facts of each particular case – is applicable [March v E M H Stramare Pty Limited (1991) 171 CLR 506, 515 (Mason CJ); Mitchell v Boutagy, [26]-[27]].

66 In Wengarin Pty Limited v Byron Shire Council (1999) 9 BPR 16,985, 16,989, Young J (as the Chief Judge then was) said that ordinarily compensation would include the diminished market value of the affected land (including the potential use to which it could have been put), associated costs caused to the owners of the affected land, and provision for insecurity, and loss of amenities such as peace and quiet. In Tregoyd Gardens, Hamilton J identified, in the case of grant of a permanent easement such as one to drain stormwater, that compensation will normally include compensation for loss of the proprietary rights taken by the easement, and compensation for the disturbance effected by carrying out the initial work and subsequent repair and maintenance. In Mitchell v Boutagy, Austin J held that provision was to be made both for initial disturbance (upon installation of the pipes) and future disturbance (least in the future there was a need to service and maintain the pipes). Ultimately, His Honour allowed $2,600 (being the rental value for four weeks during which the initial works would take place), and a further $2,000 (about three weeks) for future disturbance.

67 The plaintiffs made a number of offers of compensation, one supported by a valuation. However, the only evidence of value before me is that tendered by Mrs Wiese.

68 Anthony Bruce Duggan, a real estate agent with eleven years experience in the Holroyd and Parramatta districts, opines that if Mrs Wiese’s property were sold, it would attract interest from developers for redevelopment; that the proposed easement would have a detrimental effect on the property, as provision would have to be made for a reduction in possible yields and floor space ratios, and that the reduction in value to an incoming developer would be in the vicinity of $19,000. He adds that, as there is already a substantial drainage easement affecting the property, a further easement would deter some buyers initially from making further enquiries. Mr Duggan valued Mrs Wiese’s land en globo to an incoming developer, on the basis of seven sites each utilising 225sqm per site at $120,000 per site, as a total of $840,000, or $508 per sqm. He derived the lost value of the proposed easement by applying that square metre rate to the 38.12 sqm of the proposed easement site, producing $19,364.

69 Mr Leigh Bridges, valuer, concludes that affectation of Mrs Wiese’s property by the proposed easement would reduce its value by about $15,000, and that additional provision should be made for initial disturbance for works relating to carrying out the easement ($4,000), and future disturbance associated with maintenance of the pipes (a further $4,000). Mr Bridges’ approach was primarily derived from sales of easements within the western Sydney area. He looked at the price which had been extracted for the grant of easements to benefit developments. These ranged between $10,000 and $20,000. As a secondary approach, he adopted a basis said to be authorised by Mitchell v Boutagy, which he said had held that the assessment of compensation payable for the creation of an easement was calculated at a percentage of 2% to 2.5% of land value. Valuing Mrs Wiese’s land as a whole at $650,000 (based on $130,000 per development site with Council approval in place), and discounted for 12 months to obtain relevant approvals, he concluded that 2.5% of $600,000 was $15,000. However, while this was an approach adopted by one of the valuers in Mitchell v Boutagy, it cannot be said that it was embraced by Austin J [Mitchell v Boutagy, [42]].

70 Mrs Wiese’s chief loss would be the diminution in value which would be occasioned by the proposed easement to Mrs Wiese’s land. This is manifested as the reduced price she would receive upon sale of her land if it were affected by the easement. In the context of this case, I consider that Mr Duggan’s approach is more likely than that of Mr Bridges to reflect that loss: he has valued the reduction in value to the hypothetical purchaser of Mrs Wiese’s land, which is a more relevant measure than the going rate for the negotiated purchase of similar easements, or the arbitrary application of a percentage of the land value.

71 In the present case, the evidence is that the easement can be constructed in one day. The rental value of Mrs Wiese’s property is $200 to $220 per week. The disruption element is minimal. That is accentuated by the circumstance that the plaintiff is not in occupation. As Mrs Wiese is not in occupation, I reject Mr Potts submission that there should be a solatium in the order of $1,000 for the damage or destruction of the trees, but having regard to initial and future disruption I would round up Mr Duggan’s figure to $20,000.

72 I would, therefore, have fixed compensation at $20,000.

Conditions

73 Mr Potts submits that if the court were minded to order that the proposed easement be imposed, such orders should be subject to conditions that:-

· The plaintiffs prepare an instrument in registrable form for the creation of the easement and furnish it to Mrs Wiese;

· The plaintiffs agree to meet Mrs Wiese’s reasonable costs of obtaining advice in relation to the form of the instrument on an indemnity basis;

· The plaintiffs provide not less than seven clear days written notice of their intention to undertake drainage work through the easement;

· The plaintiffs only undertake drainage work through the easement between 8.00 am and 4.30 pm on weekdays;

· The plaintiffs engage a qualified arborist to supervise any works done near any of the four existing trees and abide by any direction or advice of that arborist;

· The plaintiffs reinstate Mrs Wiese’s property including the vegetation to its pre-existing state;

· The plaintiffs agree to indemnify Mrs Wiese for any loss or damage including any liability to any third party occasioned by undertaking works necessary to install the drain along the easement;

· The plaintiffs agree to obtain insurance for property damage and third party liability arising out of any drainage works undertaken through the easement.

74 I would in any event require production of an easement in registrable form before making an order imposing it, in compliance with s.88K(3). The costs of advice in respect of it would form part of the costs of the proceedings. This addresses the first two proposed conditions.

75 As to the others, these are in the nature of what are ordinarily seen to be conditions of development approval, rather than terms of an easement for drainage. To my mind, they are issues properly addressed when any approval for construction of the drainage works is sought, rather than attached the grant of the easement. I would therefore not impose those conditions as terms of any easement.

Costs

76 Section 88K(5) provides that the costs of the proceedings are payable by the applicant, subject to any order of the court to the contrary.

77 Section 88K(5) reflects a policy that while the court is empowered to require a defendant to suffer an easement against his or her will, that should generally be on the basis that the cost of obtaining it is borne by the applicant, and only in circumstances of unreasonableness on the defendant’s part would the court exercise its discretion to make an order to the contrary [117 York Street, 523-524; Mitchell v Boutagy, [60]]. In several cases, the applicant has been required to pay the defendant’s costs on an indemnity basis [see, for example, Tregoyd Gardens], but this is not invariably so [117 York Street, 523-524; Mitchell v Boutagy, [68]], even when the application has failed [Blulock, [23]].

78 Although, in circumstances that the plaintiffs have failed, the costs order in favour of the defendant should not be on any less generous a basis than would have been the case had the plaintiffs succeeded, it does not follow that it should be on an indemnity basis. Mrs Wiese has not succeeded on every issue she raised. There has been no unreasonableness in the conduct of the application on the part of the plaintiffs. The plaintiffs should pay Mrs Wiese’s costs on the party/party basis.

Conclusion and Orders

79 The proposed use and development of the plaintiffs’ properties is reasonable, and would not be inconsistent with the public interest. It requires that some easement for drainage be obtained. Mrs Wiese could be adequately compensated for any loss or other disadvantage that would arise from the imposition of the proposed easement. Had the proposed easement met the conditions imposed by the Council, then subject to being satisfied that reasonable steps had been taken without success to procure an alternative easement having the same effect over the rear of 118/118A Jersey Road, I would have granted the proposed easement subject to payment of compensation of $20,000.

80 However, I am not satisfied that the location of the easement would permit the construction of a stormwater drain without disturbing the root zones of at least three trees over twelve feet in height. In those circumstances, I cannot be satisfied that it will fulfil Council’s condition, that the location of the proposed easement permit the installation of stormwater pipe within the easement, ensuring that any structures or root zones of existing trees within the property/properties are not disturbed. It follows that the particular proposed easement cannot be said to be reasonably necessary, since it will not satisfy the condition of the deferred development approval from which the necessity is said to arise. Further, I am not satisfied that the plaintiffs have taken all reasonable steps to procure an easement over 118/118A Jersey Road having the same effect as the proposed easement. Accordingly, the requirements of s.88K(1) and (2)(c) are not satisfied, and I cannot make the order which the plaintiffs seek.

81 The plaintiffs have nonetheless established that an easement – though not the proposed easement, at least on the evidence so far adduced – is reasonably necessary, and have satisfied many of the pre-requisites for an order imposing an easement. Having regard to Supreme Court Act, s.63, and Civil Procedure Act, ss.58 and 60, I have concluded that rather than simply dismissing the summons, and leaving the plaintiffs, if so advised, to make a fresh application in new proceedings, I should instead reserve leave to them to make a further application in these proceedings if they are able to overcome the difficulties which presently stand in their road, particularly so far as compliance with Council’s condition about trees is concerned. In 117 York Street, Hodgson CJ in Eq reserved leave to make a further application, albeit in the context that His Honour granted an easement, and stayed the grant until relevant consents were obtained, reserving leave to apply for a different easement if they were not. In PD Consultants, Brownie AJ declined to grant relief because His Honour was not satisfied that all reasonable attempts had been made to obtain an easement, but, invoking Supreme Court Act, s.63, rather than dismissing the summons, and having regard to the “common sense practicalities” of the case – including that sooner or later someone would make another similar application – stood the proceedings over for further directions, envisaging that the parties might negotiate in the meantime.

82 I do not overlook that the case went to hearing on a final basis, after it had previously been adjourned at the request of the plaintiffs, and that the plaintiffs have not proved some matters essential to entitle them to the orders which they seek. While the pendency of the proceedings will be a continued impediment to Mrs Wiese achieving a sale, fresh proceedings, and even lingering doubt as to whether there might be further proceedings, would pose a similar impediment. While, depending on which properties are affected by any new or revised proposal, additional or different parties may be necessary, it is conceivable that the plaintiffs might formulate a proposal not greatly dissimilar to the proposed easement, but which accommodates the problem with the trees. And it is even possible that, with the resolution of the issues which have been addressed in this judgment, the parties may be able to negotiate a compromise.

83 Accordingly, I decline to grant the relief claimed by the plaintiffs, and I make the following orders:-

(1) ORDER that the plaintiffs pay the defendant’s costs of the proceedings to date;

(2) GRANT leave to the defendant to proceed to assessment forthwith;

(3) ADJOURN the summons to 2 December 2005 at 0930 before me for mention;

(4) DIRECT that if the plaintiffs wish to make a further application in these proceedings, they file and serve by 25 November 2005:-


(a) a minute complying with s.88K(3) specifying precisely the nature and terms of the easement which they seek and such of the particulars referred to in section 88(1)(a)–(d) as are appropriate and identifying its site by reference to a plan that is, or is capable of being, registered or recorded under Division 3 of Part 23 of the Conveyancing Act ;

(b) such further affidavit and documentary evidence as they propose to rely on.

84 On 2 December, I will consider whether it is appropriate to permit the plaintiffs to make a further application in these proceedings; if so, whether additional parties should be joined and what directions should be made if there is to be a further hearing; if not, I will dismiss the summons. The parties may relist the matter in the meantime if they want any further order, by arrangement with my associate.

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