Louisiana Properties Pty Ltd v Hakea Holdings Pty Ltd; Hakea Holdings Pty Ltd v Louisiana Properties Pty Ltd

[2017] NSWLEC 37

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Louisiana Properties Pty Ltd v Hakea Holdings Pty Ltd; Hakea Holdings Pty Ltd v Louisiana Properties Pty Ltd [2017] NSWLEC 37
Hearing dates:	12, 13, 14, 15, 16 and 20 December 2016
Decision date:	29 March 2017
Jurisdiction:	Class 4
Before:	Moore J
Decision:	See directions at [204] and [205]
Catchwords:	EASEMENT – application pursuant to s 88K of the Conveyancing Act 1919 for imposition of an easement – easement sought for the purpose of creating an asset protection zone for bushfire protection – tests in s 88K(1) and (2) considered – tests satisfied – easement ordered EASEMENT – calculation of area for easement – whether whole easement required in perpetuity – valuation of easement – basis of and amount for easement determined CROSS-CLAIM – road constructed by owner of land on land adjoining not owned by it for the purported satisfaction of condition of development consent – whether construction authorised or was construction a trespass – construction not authorised and therefore a trespass – ordinary damages to await outcome of related Land and Environment Court proceedings – modest exemplary damages warranted and awarded – issues of injunctive relief also to await outcome of related Land and Environment Court proceedings – cross-claim adjourned DEVELOPMENT CONSENTS – 2006 development commenced – status of 2006 development consent in light of different 2013 consent that is partially incompatible and which has been implemented – 2006 consent remains on foot – 2006 consent provides for mandated route to adjacent hospital – 2013 consent mandates such access by different route – 2013 consent holder causes road to be conducted along route in 2006 consent – no legal basis to do so – construction also not authorised by Right of Access in favour of 2013 consent holder – discretionary relief matters stood over to further hearing
Legislation Cited:	Conveyancing Act 1919, s 88K Environmental Planning and Assessment Act 1979, ss 79BA, 79C and 124 Wyong Local Environmental Plan 2013, Land Use Table
Cases Cited:	ABI-K Pty Limited v Frank Shi [2014] NSWSC 551 City of Canterbury v Saad [2013] NSWCA 251 Khattar v Weise [2005] NSWSC 1014 Project Blue Sky v Australian Broadcasting Authority 194 CLR 355; 72 ALJR 841; 153 ALR 490; [1998] HCA 28 Rainbowforce Pty Limited v Skyton Holdings Pty Limited and Ors (2010) 171 LGERA 286; [2010] NSWLEC 2 Tregoyd Gardens Pty Limited v Jervis (1997) 8 BPR 15,845 Whitfeld v De Lauret and Company (1920) 29 CLR 71; [1920] HCA 75
Category:	Principal judgment
Parties:	Louisiana Properties Pty Ltd (Applicant in Matter No 322081 of 2016 and Respondent and Cross-claimant in Matter No 261922 of 2016 ) Hakea Holdings Pty Ltd (First Respondent in Matter No 322081 of 2016 and Applicant and Cross-defendant in Matter No 261922 of 2016) Caverstock Group Pty Limited (Second Respondent in Matter No 322081 of 2016) Central Coast Council (Third Respondent in Matter No 322081 of 2016 – submitting appearance)
Representation:	Counsel: Mr C Ireland, barrister (Louisiana Properties Pty Ltd) Mr T Hale SC and Mr J Tobin, barrister (Hakea Holdings Pty Ltd) Mr A Carney, solicitor (Caverstock Group Pty Limited)   Solicitors: O’Brien Legal Pty Limited (Louisiana Properties Pty Ltd) Watson Mangioni (Hakea Holdings Pty Ltd) Carneys Lawyers (Caverstock Group Pty Limited)
File Number(s):	261922 and 322081 of 2016
Publication restriction:	No

TABLE OF CONTENTS

Introduction

The two proceedings

Louisiana’s development consent

The ownership history

The Hakea development consent

The Hakea development consent APZ condition

The link road

The subdivision consent easements

The power to require the APZ easement

The requirement to link the Hakea land

The constructed road

The Supreme Court proceedings

The nature of the Supreme Court proceedings

The issues requiring determination in the Supreme Court proceedings

The tests in s 88K of the Conveyancing Act

The terms of the easement

The boundary and area of the easement

Valuation of the necessary compensation for the easement

Giving effect to the APZ

Louisiana’s cross-claim in the Supreme Court proceedings

The nature of Louisiana’s cross-claim

The issues requiring determination in Louisiana’s cross-claim

Was there a trespass?

Ordinary damages

Exemplary damages

Injunctive relief arising out of the cross-claim

The Land and Environment Court proceedings

The nature of the Land and Environment Court proceedings

The status of Louisiana's development consent

Louisiana’s approved access to the Wyong Health Campus

Hakea’s approved access route

Summary of outcomes

Directions

Judgment

Introduction

1. Some 145 metres to the west of the western perimeter road of the Wyong Health Campus are located two parcels of land. These were created by subdividing an original single parcel owned by Louisiana Properties Pty Limited (Louisiana). Approval for subdivision was given on 16 August 2005 by Wyong Shire Council (the Council) – now part of Central Coast Council following the amalgamation of the Wyong and Gosford local government areas in May 2016.

2. The original parcel was rectangular in shape and had an area of about 4 ha. The original parcel had a frontage of about 160 metres to Louisiana Road.

3. The layout of the subdivision created an irregular interface between the two allotments, with the western allotment becoming Lot 101 in Deposited Plan 109897, whilst the eastern one became Lot 102 in the same Deposited Plan. Lot 101 retained the bulk of the frontage to Louisiana Road, whilst access to Lot 102 from Louisiana Road is by an axe-handle along the northern boundary of Lot 101.

4. Registration of the subdivision took place in late 2005.

The two proceedings

5. There are two sets of proceedings that have been dealt with in these hearings. The first, Land and Environment Court proceedings – Matter No 322081 of 2016 (the LEC proceedings), were brought by Louisiana against Hakea Holdings Pty Ltd (Hakea) and Caverstock Group Pty Limited (Caverstock).

6. The second, Supreme Court proceedings – Matter No 261922 of 2016 (the Supreme Court proceedings) were commenced by Hakea against Louisiana and were transferred from the Supreme Court to this Court by order of Darke J on 10 October 2016.

Louisiana’s development consent

7. Also on 16 August 2005, Louisiana obtained a second development consent from the Council. This development consent was for a combined development of an aged care facility on the south-western portion of the land and a medical centre on the north-western portion.

8. When the subdivision was registered, the boundary between the resultant allotments had the effect of severing the two elements of Louisiana's proposed development. The approved medical centre and its access handle from Louisiana Road would have been located upon what became Lot 102, whilst the aged care facility would have been located on what became Lot 101.

9. This development consent had commenced as a consequence of Louisiana undertaking a range of preliminary activities on Lot 102, including demolishing an existing dwelling on that allotment. Although the Council accepts that Louisiana has commenced the development and, thus, has a development consent which continues to be valid, Louisiana has not undertaken any further substantive construction on Lot 102.

The ownership history

10. The original, unsubdivided allotment was owned by Louisiana Holdings. After the subdivision in 2005, Louisiana sold the allotment now known as Lot 101 to Thompson Health Care, an entity which, in turn, onsold Lot 101 to Hakea Holdings Pty Limited (Hakea). Hakea remains the owner of this allotment.

The Hakea development consent

11. In August 2013, Hakea obtained a development consent from the Council for the erection of an aged persons care facility on Lot 1. That aged care facility has been constructed on Lot 101. Hakea contracted Caverstock Pty Limited (Caverstock) to undertake that construction.

12. The aged care facility which Hakea has now constructed on Lot 101, although of a building footprint generally consistent with that for which Louisiana had had approval, nonetheless differs from that footprint in a number of respects. In addition, the scale of the development constructed by Hakea differs from that approved for Louisiana because the Hakea development is one of three storeys, whilst that approved for Louisiana was only of two.

13. Although construction has been completed, Hakea’s aged care facility is only partially operational as it only has an Interim Occupation Certificate, a certificate which permits only the use of portion of the facility for its intended purpose. The circumstances giving rise to this state of affairs, and the terms of Hakea’s development consent underpinning this, provide the foundation for one of the two sets of proceedings the subject of this decision.

14. It is necessary, as a consequence, later to consider the current status of Louisiana’s development consent in light of Hakea’s development consent and the resulting construction of the aged care facility on Lot 101.

The Hakea development consent APZ condition

15. Condition 78 of the Hakea development consent deals with the necessity for bushfire risk preventative measures required to protect the Hakea development. The condition, as originally imposed, that the granting of the original development consent has been modified, in two aspects, since its original terms were applied. The original condition, as now modified, is reproduced below, with the two changes identified in bold (the first change being the addition of the underlined word, whilst the second change was the deletion of the struck-through word. The condition is in the following terms:

78   Prior to the issue of the Final Occupation Certificate, compliance with the Bush Fire Safety Authority issued by the NSW Rural Fire Service as outlined in its correspondence dated 5 August 2013 as follows:

Asset Protection Zones

The intent of measures is to minimise the risk of bush fire attack and provide protection for emergency services personnel, residents and others assisting fire fighting activities. To achieve this, the following conditions shall apply:

A:   At the commencement of building works and in perpetuity the property around the proposed building to a distance of 50 metres to the east and south and to the property boundary to the north and west, shall be maintained as an inner protection area (IPA) as outlined within section 4.1.3 and Appendix 5 of ‘Planning for Bush Fire Protection 2006’ and the NSW Rural Fire Service’s document ‘Standards for asset protection zones’.

B   The balance of the asset protection zone (APZ) not achievable on Lot 101 is to be provided on adjoining Lot 102 DP 1091897 for the full distance of the required APZ. In accordance with section 88B of the ‘Conveyancing Act 1919’ an easement is to be registered benefiting Lot 101 and burdening Lot 102 requiring the provision of this APZ which shall be maintained as outlined within section 4.1.3 and Appendix 5 of ‘Planning for Bush Fire Protection 2006’ and the NSW Rural Fire Service’s document ‘Standards for asset protection zones’. This easement can be extinguished upon commencement of any future residential development on adjacent lots, but only if the hazard is removed as part of the proposal.

16. Apart from the chapeau to the condition, the remainder of the substance of the condition reflects the terms notified to the Council by the Rural Fire Service (the RFS) as being necessary to be imposed as both Lots 101 and 102 have been mapped as bushfire-prone land.

17. The extent of the necessary APZ to comply with the condition is in contest.

The link road

18. At the time of Louisiana's original development application, the eastern boundary of the then unsubdivided allotment abutted the land forming part of the Wyong Health Campus landholding. However, the actual development on that campus, relevantly an internal road within the campus, was at a distance of some 145 metres from that boundary. That remains the present position.

19. When considering the Louisiana development application, the Council needed to have regard to the fact that, at that time, Louisiana Road was potentially flood-affected. As a consequence, the Council considered that it was appropriate to impose a condition of development consent that required Louisiana to reach agreement with the body controlling the Wyong Health Campus for the construction of an all-weather emergency access link between the eastern boundary of the then un-subdivided allotment and the internal road within the Wyong Health Campus. This link road was to be boomgate-controlled so that it was not able to be used as a general thoroughfare.

20. It was also the Council's intention that, at that time, the link road would only be temporary and would, by implication, be decommissioned when proposed council works to upgrade Louisiana Road and render it flood-free had been completed in the future. Several conditions concerning use of this road were set by the Council.

21. An application was made by Louisiana to the Council to permit the link road to be a permanent (but remaining a controlled access) link between the Wyong Health Campus facilities and the Louisiana development so that health professionals based in the Wyong Health Campus facilities would be able to have access to the Louisiana development precinct in order to provide services to patients resident in the proposed aged care facility. The Council agreed to this proposed modification and deleted the second and third of the relevant conditions, leaving only the requirement for the establishment of the link road as a now non-temporary element of the consent.

The subdivision consent easements

22. The conditions of the development consent granted by the Council to Louisiana approving the proposed subdivision required the creation of a number of easements. Three were created.

23. The third easement is in the following terms:

RIGHT OF ACCESS

24. It is clear from the plan that this easement, shown as (C) on the plan, benefits and burdens each of Lots 101 and 102. This made clear by a boxed note on the plan, a note which reads:

THE RIGHT OF ACCESS DENOTED (C) AFFECTS THE WHOLE OF LOTS 101 & 102

25. This easement plays no role in the Supreme Court proceedings but is at the heart of the LEC proceedings. It is dealt with later.

The power to require the APZ easement

26. The Conveyancing Act 1919 (the Conveyancing Act) provides, through the mechanism of s 88K, a process whereby there can be a Court determination mandating the granting of an easement over a proposed servient tenement in favour of a proposed dominant tenement. The provision is designed to provide an appropriate balance between the competing interests that require to be considered and, if, as a result of that balancing, there was a determination that an easement was appropriate to be required, to mandate the payment of compensation for burdening the servient tenement with that easement.

27. It will be necessary to return to an analysis of how this provision is to be considered for the purposes of the Supreme Court proceedings. It is, at the present point, sufficient to note that Hakea has invoked this process as the basis for seeking to have its APZ easement imposed as a burden on Lot 102.

The requirement to link the Hakea land

28. As part of Hakea’s development consent, the Council required that there be a link between the Hakea land and the eastern boundary of the land that remained within Louisiana's ownership (Lot 102) and thence over the adjoining Wyong Health Campus land in order to ensure that the access that would function as a flood-free emergency access/egress route for residents of the aged care facility for which Hakea was being granted development consent.

The constructed road

29. Caverstock has constructed a road, under instructions from Hakea, in what Hakea considers to be satisfaction of the condition in Hakea’s development consent that it constructs access to the Wyong Health Campus.

30. It is to be noted that the Wyong Health Campus land commences at the eastern boundary of Lot 102. Caverstock has constructed the road across Lot 102.

31. Hakea says that that road has been constructed to follow the alignment of the internal road approved in the plans for Louisiana's development subject to the 2005 Louisiana development consent.

32. Hakea also says that it is entitled to construct this access road as an exercise of its access rights pursuant to easement (C), an easement created at the time of Louisiana's subdivision to create Lots 101 and 102 (as earlier set out). Whether this is a proper invocation of this easement or not and the consequences of the answer to that question are at the heart of the LEC proceedings.

The Supreme Court proceedings

The nature of the Supreme Court proceedings

33. In these proceedings, Hakea seeks an order requiring Louisiana to grant an easement over portion of Lot 102, with that easement being for the purpose of establishing the APZ required for bushfire protection purposes of the aged care facility that Hakea has constructed on Lot 101. Establishment of the APZ is a necessary precondition to the granting of a Final Occupation Certificate for Hakea’s aged care facility.

34. Louisiana opposes the granting of the easement for the APZ and has filed a cross-claim in the Supreme Court proceedings.

35. It is to be observed that, although Caverstock is a respondent to the LEC proceedings, it is not a party to the Supreme Court proceedings.

The issues requiring determination in the Supreme Court proceedings

36. There are, as I understand it, five issues arising out of Hakea’s proceedings commenced in the Supreme Court. These are:

1. Are all the tests posed by s 88K of the Conveyancing Act satisfied so that it would be appropriate for me to order that Louisiana provide Hakea with an easement for the purposes of establishing the required APZ on Louisiana's land?

2. If so, what should be its terms?

3. If so, what is the area required to be covered by (and the appropriate boundary delineation for) the easement for the establishment of that APZ required by condition 78 of Hakea’s development consent?

4. What would be the value of the necessary compensation for such an APZ area if such an easement were to be imposed? and

5. Would Hakea be required to obtain a further development approval from the Council prior to carrying out works on Lot 102 necessary to render the APZ effective as a basis for permitting the issuing of a final occupation certificate to Hakea for the aged care facility it has been erected?

The tests in s 88K of the Conveyancing Act

The legislative provision

37. It is, first, appropriate to set out portions of s 88K of the Conveyancing Act to provide an appropriate framework within which to consider the objections raised by Mr Ireland, on behalf of Louisiana, in suggesting that there is no proper statutory basis as to why such an easement should be ordered. I therefore set out the relevant terms of this legislative provision:

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)  …..

(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.

(5)  …..

(6)  …..

(7)  …..

(8)  …..

(9)  …..

38. It is clear that whether or not the imposing of an easement is to be ordered involves the exercise of discretion by the Court and that, in considering whether or not to grant such an easement, the tests in s 88K (1) and (2) must be addressed and the Court satisfied that they have been met.

The 3 May 2013 letter to the Council

39. Hakea and Louisiana sent a joint letter dated 3 May to the Council – a letter which said, inter alia:

4.   In addition, and for the avoidance of doubt, Louisiana Properties consents to a Section 88B Instrument creating a positive covenant with respect to the APZ, upon the basis that the APZ excludes the existing building footprint the subject of the current development approval of Lot 102, or any approved variation of that footprint. This is upon the basis that the s.88B Instrument is to be created with respect to Lot 102 as a condition prior to the issue of any occupation certificate for the development undertaken on Lot102.

40. Whether or not the “agreement” noted to the Council in the joint letter from Hakea and Louisiana dated 3 May was absolute or contingent does not seem to me to be relevant given the conclusion I have otherwise drawn and I thus do not need to consider the terms of this letter further.

Hakea’s submissions in support of an easement

41. Mr Hale, in Hakea’s written summary of argument concerning matters raised by s 88 requiring to be satisfied, set out, in some detail, the basis upon which Hakea says it is reasonably necessary for the effective use or development of Hakea’s land, for it to have the benefit of the proposed easement for an APZ, it is unnecessary to set out the propositions put in support of proposing that I should reach that conclusion. In essence, Hakea submitted:

1. Lot 101 and Lot 102 are zoned for the purpose of healthcare facilities (SP2 - Infrastructure “Healthcare Facility”);

2. The Council has approved development of an aged care facility on Lot 101 and that facility has been constructed;

3. A final occupation certificate for Hakea’s aged care facility cannot be granted until condition 78 of Hakea’s development consent is satisfied. This condition can only be satisfied by the creation of the necessary APZ on, relevantly, Louisiana's land;

4. It is necessary to have the easement for an APZ on Louisiana's land for this purpose, and to carry out the necessary vegetation clearing to permit the establishment of that APZ and remove condition 78 as an impediment to the granting of a final occupation certificate for Hakea’s development; and

5. The fact that the interim occupation certificate granted for Hakea’s development significantly limits the extent to which the aged care facility can be used, in itself, demonstrates that this limited use of the aged care facility is not an effective use of Hakea’s land.

42. Although Mr Hale cites an extensive array of authorities to support the broad propositions outlined above that I have derived from his submissions, it is not necessary to set them out, given that, as is discussed in my responses to each of the specific matters raised by Mr Ireland, I am satisfied that there is no reason why s 88K(1) poses any impediment to the requiring of the easement sought by Hakea.

43. I now turn to the issue of public interest raised by s 88K(2)(a). There is a deal of coincidence between the matters outlined above and those matters requiring consideration against the public interest test. However, tellingly, Mr Hale's submission said:

Louisiana's own experts who provided reports in favour of the development of the nursing home pursuant to Louisiana's earlier consent in 2005 also noted the public interest in the development of a facility.

44. The only difference between the facility proposed by Louisiana for the purposes of gaining its 2006 development consent (incorporating a nursing home/aged care facility on a nearly identical footprint to that constructed by Hakea) is a question of scale. That is, Hakea’s development is of larger scale than that which had been proposed, earlier, by Louisiana. The Council has consented to each of these aged care facilities and, in doing so, was mandated to have regard to matters contained in s 79C of the EP&A Act. Consideration of whether or not a proposed development is in the public interest is called up by s 79C(1)(e), and there is no suggestion that the Council failed to have regard to this matter in their assessment of Hakea’s development application. Indeed, Mr Hale, has submitted:

The fact that the Council has approved Hakea’s use of Lot 101 is compelling evidence that such use will not be inconsistent with the public interest.

45. Mr Hale cited the decision of Kunc J in ABI-K Pty Limited v Frank Shi [2014] NSWSC 551at [25] in support of the proposition.

46. The question of adequate compensation, although raised by Mr Ireland, as later discussed, as a barrier to the granting of an easement does not, in my view, constitute such a barrier, as there is adequate experienced expert valuation evidence in these proceedings to provide a proper basis for my assessment of what would be “adequate compensation for any loss or other of disadvantage that will arise from the imposition of the easement”.

47. Finally, with respect to s 88K(2)(c), Mr Hale submitted that Hakea had made two offers to Louisiana ($20,000 and $50,000, respectively) and that those offers had not been accepted. He said:

Hakea has repeatedly sought that Louisiana identify the compensation it requires for the imposition of the easement and the easement terms Louisiana would be prepared to accept. Louisiana has refused to engage on the issue of compensation and whilst identifying that the RFS terms are onerous, it has not identified what terms would satisfy it.

48. It is appropriate, on this last point, to indicate that this is pressed, in the matters raised below, by Mr Ireland as standing as barriers to the granting of the easement and will be considered at that point.

Louisiana's objections to an easement

49. Mr Ireland says that there are seven separate matters for consideration in determining whether or not Hakea has a proper basis for seeking a court-mandated easement of the nature here being considered. It was Mr Ireland's submission that Hakea failed all seven of the tests which he posed as being mandatory to be satisfied.

50. I have summarised, in short form, the matters pressed by Mr Ireland. They were:

1. Inconsistency with the public interest as Hakea does not propose to obtain development consent for the physically clearing for the APZ on Lot 102;

2. The impact of that clearing required for the APZ on Lot 102 and its adverse environmental impacts;

3. Hakea has not made all reasonable attempts to obtain the easement by negotiation;

4. The proposed easement sought differs in its terms and area from that required by condition 78;

5. The Interim Occupation Certificate permits an effective use of the land;

6. Adequate compensation is not able to be provided; and

7. As a matter of discretion it was not appropriate to grant Hakea the easement

51. As I have concluded that none of these seven matters provides a basis upon which an easement should be rejected, it is necessary to deal with each of the matters raised by Mr Ireland.

52. The appropriate basis upon which to do so is to set out, from Mr Ireland's final written closing submissions, what was described as each of the seven barriers then set out, in a little more detail from those submissions, what was advanced concerning them and, finally, considering such further matters from the oral submissions as are necessary to explain the conclusion which I have reached concerning each of these matters.

Louisiana’s first s 88K objection

53. Mr Ireland's summary of this basis for objection was:

The use of Hakea’s land as proposed in the Development Consent will be inconsistent with the public interest within the meaning of s88K(2)(a) as it is proposed to occur without the lawful carrying out of the physical clearing required on Lot 102 to establish the APZ and in breach of Condition 78 of the Hakea Consent, as Hakea proposes to allow the aged care facility to be fully occupied under a Final Occupation Certificate without obtaining development consent for the physically clearing for the APZ on Lot 102

54. His more detailed written submissions on this point were:

This ground depends on the proper construction of the amended Condition 78 of the Development Consent.

Louisiana contends, in a contention common to the related Land and Environment Court proceedings being heard with these proceedings, that the Development Consent relates to Hakea’s land (Lot 101 DP 1091897) alone, and that although Condition 78 requires work to be carried out on Lot 102 as a precondition for the issue of a Final Occupation Certificate, it does not authorise that work as it only relates to Lot 101.

By contrast, Hakea persistently misinterprets the Development Consent as only requiring an easement over Lot 102, and ignores the requirement for actual work on Lot 102 (see par 3, Plaintiff’s Submissions). Hakea has expressly submitted that once it gets this s88K easement, it believes it is entitled to the final occupation certificate for the aged care facility which can at that point become fully operational: par 24, Plaintiff’s Submissions.

If Louisiana’s construction of the Development Consent is correct, then Hakea’s proposal to proceed to final occupation of Lot 101 and the aged care facility without securing further consent over Lot 102 and without physically carrying out the works required to establish the APZ will be contrary to the public interest as either the actual clearing required to render the aged care facility and its occupants safe will not be carried out before that occupation, or at best will be carried out unlawfully and without development consent under the EP & A Act, where that is required. The condition, after all, is more about a physical thing (the APZ) rather than proprietorial rights, save that the rights must precede the physical thing.

Louisiana relies on its submissions as regards the proper construction of Condition 78 made in the Class 4 proceedings, and repeats those submissions in the present case.

The easement cannot be granted unless the Court is satisfied that the use of Lot 101 will not be inconsistent with the public interest (s88K(2)(a)). This is a positive statutory requirement being a precondition to the existence of power to grant the easement, and is accordingly an issue on which Hakea bears the onus. Yet Hakea has not provided any evidence that is proposed use of Lot 101 for its aged care business is in the public interest. The Court cannot infer this from the mere fact of the Development Consent and mention of an unspecified Commonwealth regulatory approval. Hakea is pursuing a course that will not allow it to physically establish the APZ (as Hakea disavows the need for development consent applying to Lot 102), which can only lead to an unsafe and dangerous situation of aged residents being housed without the physical establishment of the APZ even if the s88K easement is granted. This would be contrary to ss54.1 and 54.2 of the Aged Care Act 1997 (Cth) and the Quality of Care Principles 2014 that are referred to there, and therefore not in the public interest.

The meaning of “public interest” in s88K(2)(a) is critical. Use which is contrary to statutory prohibitions, in this case the requirement for development consent to use Lot 102 in the manner sought, cannot be in the public interest. The issue is not that further development consent is required, it is that Hakea proposes to ignore this requirement due to the erroneous understanding of Condition 78 and the scope of the Development Consent that it has adopted.

The use of the servient tenement is a relevant matter under s88K(2)(a): City of Canterbury v Saad [2013] NSWCA 251 at [53].

The use of Lot 102 will be contrary to the public interest in these respects:

Ongoing breach of Condition 78A as building was built before APZ established;

If the Exhibit K easement is imposed, further breach of Condition 78 as the easement required by Condition 78 will not have been sought;

Reliance on APZ external to Lot 101, contrary to planning principle and the PBP policy, except in exceptional circumstances (Monavasios v Mid-Coast Council [2016] NSWLEC 1283 at [46] and [48] (Pearson C)), which do not apply here as none of the exceptional circumstances at page 13 and 14 at CB 1071-1071 of PBP apply; and

Development on Lot 101 will not have the protection of the full 60m easement required by the July 2016 s109B instrument from the RFS.

The PBP is given statutory recognition by s79BA. Non-compliance with the PBP, in this case, is capable of giving rise to a non-compliance with the public interest.

55. I have noted Mr Hale’s submission on this point at [43] to [45]. Despite Mr Ireland’s valiant attempts to persuade me to the contrary on the issue of the public interest, Kunc J observed, in [25] of ABI-K Pty Ltd, concerning a council approved development:

While it may not always be so, it is difficult to imagine an example where an approved development might, for some other reason, be inconsistent with the public interest.

56. This observation is equally apt in these proceedings. There is nothing in the material that suggests that the Council’s approval of Hakea’s development was contrary to the public interest. This objection has no foundation and Hakea’s proposed APZ in satisfaction of condition 78 (and the Rural Fire Service’s requirements) over the area as subsequently discussed is clearly in the public interest.

Louisiana’s second s 88K objection

57. Mr Ireland's summary of this basis for objection was:

The impact of that physical clearing required for the APZ on Lot 102 and its adverse environmental impacts, considered in the context of the absence of any evidence of a pressing need for Hakea’s aged care facility mean that the easement is not reasonably necessary.

58. His more detailed written submissions on this point were:

The concept of reasonable necessity in s88K(1) requires a consideration of impact on the servient tenement: Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445: at [113]-[117], [156] (Bathurst CJ, Beazley and Meagher JJA).

The terms of Clause 1 of the s88B instrument annexed to the Summons show the APZ area as a large curvilinear swathe occupying a large part of Lot 102. The easement will give the plaintiff the right to at all times carry out bushfire hazard reduction work on Lot 102 (within the APZ) and to do anything reasonably necessary on Lot 102 (within the APZ) for that purpose including but not limited to the establishment or maintenance of fire breaks, the controlled application of fire, entering any time with surveyors, workmen, vehicles and machinery. The terms of Clause 1 requires the plaintiff to maintain the APZ to achieve a 50m Inner Protection Area from the buildings on Lot 101 in accordance with section 4.1.3 and Appendix 5 of “Planning for Bushfire Protection 2006”. That obligation placed on the plaintiff requires the clearing of vegetation as required.

Louisiana repeats and relies on its submissions in the Class 4 Land and Environment Court proceedings as to the impact of the clearing required for the APZ on Lot 102, as explained in the affidavits of Dr Robertson and Mr Travers. Hakea’s valuer, Mr Pugsley, accepts that an area of impact of over 5,000 sqm will be associated with this easement, and Travers puts this at over 9,000 sqm. On any view, it is clear that significant clearing and disturbance will be required on Lot 102 on an ongoing basis.

Hakea bears the onus of establishing that the easement is reasonably necessary (Moorebank at [118]), yet is calling no evidence on this matter. The fact that an Interim Occupation Certificate has been granted without any APZ, allowing partial occupation of the aged care facility counts against the proposition that the APZ is reasonably necessary for the development of Lot 101, particularly having regard to the significant environmental impacts that it will on the evidence have on Lot 102.

The development approved under the 2005 development consent for both Lot 101 and 102, and now superseded by the Development Consent, did not require the APZ now sought by Hakea. It approved a different building envelope, and those buildings have not been constructed, and now cannot be having regard to the implementation of the Development Consent on Lot 101 by Hakea, acting unilaterally and in reliance on the Development Consent. The Plaintiff’s Submissions at par 25, for example, referring to the 2005 development consent, must be understood with these facts in mind.

Note separate development consent required for occupancy of Medical Centre, Condition 57 in 2005 Consent: CB 216. So no requirement for an APZ would arise until that point even if the 2005 Consent could be acted upon. Condition 1 only authorised development in accordance with the Condition 1 plans. What was proposed was a 2 storey facility. What is proposed now is a 3 storey facility. Council in assessing DA 2012 acknowledged that the second consent had implications for DA 2005: CB 476.

59. The impact on vegetation is considered in my response to the next objection. There is, however, nothing in this proposed APZ that would impede, in any way, Louisiana’s ability to give effect to its own existing development consent nor would it in any way impede any other orderly development of Lot 102. For reasons later set out, I consider Louisiana’s 2006 medical centre remains on foot (although “in hibernation”).

60. Any ongoing vegetation clearing required for the APZ could not conflict with any future use Louisiana might propose that was consistent with Lot 102’s SP2 Infrastructure – Health Care zoning under the Wyong Local Environmental Plan 2013 (the LEP). A conflicting activity (suggested facetiously) such as forestry would be prohibited by the LEP. Any landscaping for a Louisiana proposed development would also need to comply with bushfire controls.

61. This objection has no validity.

Louisiana’s third s 88K objection

62. Mr Ireland's summary of this basis for objection was:

Hakea by its conduct has not made all reasonable attempts in order to obtain the easement, in that it at the same time as seeking the easement for the APZ, in circumstances where negotiations were ongoing but had not given Hakea what it wanted, it engaged in an unlawful act of trespass on Lot 102, and did so in contravention of the EP & A Act, and subsequently has not acknowledged, and has not agreed to rectify or compensate Louisiana for that unlawful act or even respond to its correspondence regarding the same.

63. His more detailed written submissions on this point were:

Hakea bears the onus of satisfying the Court that all reasonable attempts have been made to obtain the easement, but is not calling any evidence seeking to explain its conduct in constructing the internal access road, conduct that plainly requires explanation.

The Court would conclude that this is a case where an applicant has used the very opposite of all reasonable attempts to secure the easement, and has crossed the line from acceptable and lawful commercial negotiation and engaged in what is tantamount to commercial or corporate “thuggery” being the illegal construction of the internal access road in lieu of reaching a negotiated arrangement in relation to that matter and the related matter of the APZ easement (which physically intersects with the internal access road).

The letter of 3 May 2013 at Tab 25 does not demonstrate that all reasonable attempts were taken to obtain the easement, as it leaves the terms of the easement subject to negotiation of its terms. Those terms have never been effectively negotiated by Hakea, particularly as until August 2016 a form of easement was being sought that only allowed lifting of the easement if residential development, which was then prohibited on the land, was approved on Lot 102 (an impossibility). The absence of a Fuel Management Plan accompanying or referenced in the APZ, as identified by Mr Travers, also leaves an unresolved uncertainty as to what work is required to be done under its terms. It is accepted that the issue of all reasonable steps can take into account steps up to the date of the Court’s order: See Butt, Land Law, 6th Ed, at [16.88]. Even in this litigation, Hakea has denied its act of trespass and in Exhibit K is proposing, still, an easement that does not accord with Condition 78 of the 2012 Consent. There is still no Fuel Management Plan despite that having been clearly identified in Mt Travers’ evidence. Hakea has not even bothered to call its own bushfire expert, Mr Barry Eadie, or any expert to address the management of the ecological impacts of the APZ.

The fact that Hakea and Louisiana and a third party at one stage had entered into a commercial arrangement whereby Lot 102 was purchased subject to a s88B easement for the APZ being imposed unilaterally by Louisiana before transfer for $3.5 million but only if Hakea sold its facility for $41 million to the third party, is perhaps historically interesting, but does not demonstrate that Hakea took all reasonable steps to acquire the easement. Obtaining the easement was really an incidental part of that much larger commercial transaction for Hakea, and would have cause Louisiana no harm as it would be alienating Lot 102.

64. I do not accept that it is appropriate to conflate Hakea’s road construction with the reasonableness of Hakea’s attempts to obtain Louisiana’s consent to the APZ easement. As to monetary matters, the second offer by Hakea to Louisiana (of $50,000) is sufficiently close to the amount I have determined is the appropriate compensation amount to speak of the sufficient reasonableness of the commercial settlement offer process.

65. Whatever might be the impact of the APZ on the vegetation on Lot 102, the standard of clearing required by condition 78 is that prescribed by B of condition 78 being compliance with:

… section 4.1.3 and Appendix 5 of ‘Planning for Bush Fire Protection 2006’ and the NSW Rural Fire Service’s document ‘Standards for asset protection zones’ …

66. Relevantly, s 79BA(1)(a) of the EP&A Act requires that Hakea’s development conforms to the specifications and requirements of Planning for Bush Fire Protection 2006. The condition gives effect to this requirement.

67. The range of historical air photos in Exhibit C show that, up to 5 July 2013 (Tab 84, folio 1013) the area to be subject to vegetation clearing for the APZ within the easement area I have determined is appropriate has also been subject to regular vegetation clearing between 1985 and 2013. Although Dr Robertson and Mr Travers gave evidence about wider natural values of the overall site, I am satisfied that the obvious extent of past clearing means that there is no valid reason to conclude that there would be inappropriate impacts within the APZ easement area of clearing to comply with the mandated elements of Planning for Bush Fire Protection 2006.

Louisiana’s fourth s 88K objection

68. Mr Ireland's summary of this basis for objection was:

In addition, it cannot be reasonably necessary as it is required by DA2012 and is in breach of it as it seeks a lesser area and is proposed to be differently worded: Khattar v Weise at [45]

69. His more detailed written submissions on this point were:

The panhandle and to Lot 102 boundary is required by the need for access. The constructed road to Wyong Hospital leads nowhere. The only emergency access is along panhandle. A purposive and practical construction must be taken of s100B instruments and Condition 78. See standards for APZs CB 1135, specifying emergency access requirements. The perimeter road is to form part of the APZ CB 1078, 1081, 1083, 1126 (Fig A4.1), 1130. Section 78BA gives statutory recognition to the PBP as well as the s100B letter: CB 1098.

70. Given that I am satisfied that Exhibit L contains an appropriate form of words for the necessary instrument to create the APZ easement and I have determined the appropriate area for it on Lot 102, this objection has no foundation. To the extent that the Conacher Bushfire Assessment Report (Exhibit A, tab 22) postulates the existence of an emergency egress route across the Wyong Health Campus lands to the east, that is dealt with elsewhere in this decision and does not impact on the appropriateness of the proposed APZ simpliciter.

Louisiana’s fifth s 88K objection

71. Mr Ireland's summary of this basis for objection was:

No reasonable necessity as the Interim Occupation Certificate allows substantial occupation at a level that represents an effective use of the land for the planning purpose selected by Hakea. Hakea has not adduced any evidence to show that the use under the Interim Occupation Certificate, which is not the subject of any time limit, is a manner of use that is not able to continue into the future as an economic use of Lot 101, and Hakea bears the onus of persuading the Court on the balance of probabilities that it is only using the aged care facility to its maximum capacity that represents an economically rational use of the land (use under the Interim Occupation Certificate has allowed Hakea to secure the grant of its application to provide care from the Commonwealth: Tab 74). The aged care purpose can be carried out pursuant to the 2012 Consent under the Interim Occupation Certificate. The Interim Occupation Certificate, supported by a decision of Council to modify the 2012 development consent to its final form in reliance on an alternative performance solution (CB Tab 72) is the best evidence possible that the APZ is not reasonably necessary for the effective development of Lot 101;

72. His more detailed written submissions added nothing on this point.

73. The relevant element of s 88K(1) for this objection is whether the easement will advance “the effective use … of other land that will have the benefit of the easement”. Object 5(a)(ii) of the EP&A Act is:

the promotion and co-ordination of the orderly and economic use and development of land.

74. It must be assumed that, in the exercise of its powers as a consent authority under the EP&A Act, the Council has regard to and does not act contrary to the objects of that Act. It is therefore appropriate to conclude that the Council’s approval of the whole of Hakea’s proposed development on Lot 101 embodied the Council’s view that this development would be “orderly and economic use” of Lot 101.

75. Although the Interim Occupation Certificate allows substantial occupation of the development on Lot 101 (at a level less than the level of occupancy that will be permitted when a Final Occupation Certificate is issued), I do not consider that this constitutes “the effective use” of Lot 101 for the purposes of the development consent. Only full functionality of the approved development could satisfy the term – anything less, once the scope of permissible development on Lot 101 had been defined by the Council’s determination to grant development consent to Hakea’s application could only be regarded as “partial effective use”. On the other hand, “the effective use” will only come about, in the context of this development, when a Final Occupation Certificate is issued to Hakea.

76. This basis for objection is rejected.

Louisiana’s sixth s 88K objection

77. Mr Ireland submitted:

Adequate compensation is not able to be provided pursuant to s88K(2)(b);

78. As I have concluded that an APZ easement is to be required as none of the other objections pressed by Mr Ireland have any validity, questions of valuation approaches and outcome for payment of compensation pursuant to s 88K(4) are better left until a later point in this decision.

Louisiana’s seventh s 88K objection

79. Mr Ireland's summary of this basis for objection was:

In the overarching discretion of the Court conferred by s88K(1), the unclean hands and conduct of Hakea would as a discretionary matter persuade the Court not to grant the easement.

80. His more detailed written submissions on this point were:

Further, the power conferred on the Court by s88K(1) leaves the Court with a residual discretion (the word “may” in s88K(1) indicates this). That is, even if the four specific questions arising under s88K(1) and (2)(a)-(c) are answered in the applicant’s favour the Court must be satisfied that the Court should exercise its discretion: Khattar v Wise [2005] NSWSC 1014; Rainbowforce Pty Limited v Skyton [2010] NSWLEC 2 at [19] and [133] – [136] (Preston CJ).

Hakea’s conduct in the present case would persuade the Court not to grant the easement sought, as to do so would reward Hakea’s unlawful conduct.

Further, an easement in the terms of the easement in the form annexed to the Summons would not be made by the Court for two further reasons. Firstly, the extinguishment provision (allowing the easement to be extinguished only upon commencement with any residential development on Lot 102) is more onerous than that in the amended Condition 78, which now refers to any development. Second, s88(1)(c) of the Conveyancing Act 1919 requires a reference to the persons who have the right to release, vary or modify the easement.

81. In Rainbowforce Pty Limited v Skyton Holdings Pty Limited and Ors (2010) 171 LGERA 286; [2010] NSWLEC 2, Preston CJ made two relevant observations. The first of these was at [133]:

133 The power under s 88K(1) of the Conveyancing Act to make an order imposing an easement is discretionary. Notwithstanding satisfaction of all of the requirements in s 88K(1) and (2), it still remains in the discretion of the Court to grant or withhold relief [citations omitted].

82. The second, in [136], summarised his Honour’s overall s 88K findings. His Honour said:

136   In the circumstances of this case, an order imposing an easement over the Skyton land is consistent with the purpose of the section. It facilitates the reasonable development and use of the Rainbowforce land, consistently with the strategic and site specific planning for the site and the public interest in the orderly and economic use and development of land, on the condition that Skyton is adequately compensated for any loss or disadvantage that will arise from imposition of the easement. There are no discretionary factors that justify refusing relief.

83. It is the implicit invitation in these two passages that Mr Ireland invites me to accept with this submission. First, I observe that there is no “superior alternative” (postulated by Brereton J in Khattar v Weise [2005] NSWSC 1014 in [60] as a broader possible basis to decline to exercise discretion than that provide for by the test in ss 88K(1) and (2)) in the present circumstances.

84. Brereton J also observed in Khattar, at the commencement of [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 [Hansard citation omitted].

85. As Brereton J also observed in Khattar in [60] (citing Tregoyd Gardens Pty Limited v Jervis (1997) 8 BPR 15,845):

… the mere reluctance of the servient owner to accept an easement is not relevant.

86. In this instance, the “unclean hands” aspect can be dealt with through the cross-claim and the Land and Environment Court proceedings. There is nothing else – such as a potential conflict with public enjoyment of community parklands (City of Canterbury v Saad [2013] NSWCA 251) – that arises. This is simply a dispute where the owner of the proposed servient tenement does not wish to grant the easement. This basis of objection carries no weight and is to be set aside.

87. To the extent that the latter portion of this submission, these matters are now cured by the drafting of the proposed instrument that became Exhibit L.

Conclusion on s 88K matters

88. I am satisfied that the matters advanced by Mr Hale on behalf of Hakea as satisfying ss 88K(1) and (2) provided a proper foundation for concluding that it is appropriate to order the easement to burden Lot 102 as sought for the purposes of providing an APZ for Hakea’s aged care facility. There is nothing in Mr Ireland’s objections on behalf of Louisiana that can provide any impediment to this conclusion.

The terms of the easement

89. Hakea’s summons proposed the terms of the APZ easement it sought be ordered. The easement proposed by Hakea’s summons included a provision, cl 4, dealing with potential future release of Louisiana's land of the burden of the easement.

90. During the proceedings, the terms sought were amended to delete the word “residential”, reflecting the relevant modification to condition 78 of Hakea’s development consent.

91. At the end of the second day of the hearing, I pointed out to Mr Hale my view that there were defects in the drafting of cl 4 of the proposed easement.

92. An essential element of Hakea’s case is that Louisiana's 2005 development consent (as modified) remains on foot with respect to the medical centre elements proposed on Lot 102, this provision could have no application to that development for two reasons.

93. First, cl 4 would only be triggered by the commencement of an un-commenced development. The position, with respect to Louisiana's 2005 development consent, is that the Council accepts that, as a matter of law, activities undertaken by Louisiana have effected the commencement of that development consent and, as a consequence, it has become an enduring consent (at least on the basis advanced by Hakea concerning it.

94. Second, similarly, if Louisiana's development consent remains operative, as advocated by Hakea, it does not constitute proposed future development as it is existing development.

95. Several further attempts were made at drafting an appropriate easement. The latest version became Exhibit L. This version addresses the issues noted above together with the fact that there may be need for variation rather than extinguishment (as a consequence of the fact that there is an area in the north-western corner of Lot 102 – disregarding the access handle in this description) that would remain needed as an APZ for Hakea’s development even if the Louisiana development on Lot 102 were to be constructed.

96. Exhibit L embodies the appropriate terms for drafting of the required easement.

The boundary and area of the easement

97. I have earlier set out the provisions of the currently applicable terms of cl 78 of Hakea’s development consent, the condition dealing with the necessity for bushfire prevention measures an APZ said over portion of Lot 102. For the purposes of the valuation evidence, it was clear that there were starkly contrasting interpretations as to what portion of Lot 102 was required to be within the scope of the easement. From the totality of the evidence, across all disciplines (not merely the valuation evidence), there appeared to be three different versions of the area of Lot 101 required by condition 78 to be within the boundaries of the required easement. These different interpretations comprise, from smallest potential scope to largest:

• the plan prepared by Conacher (Exhibit E) shows a proposed easement extending, along Hakea’s eastern boundary with Lot 102, only to a point approximately halfway along the eastern façade of the aged care facility building constructed by Hakea on Lot 101. This limited easement dimension is not pressed as appropriate by either Hakea or Louisiana in these proceedings;

• the second potential easement dimension, adopted by Mr Pugsley, Hakea’s valuer, for valuation purposes, extends further to the north than the area in the first version. However, this proposed easement area, being the one advocated by Hakea as appropriate, extends only to the eastern façade of Hakea’s development and, commencing on Hakea’s development at the north-eastern corner of that most eastern façade. The resultant area of this version of the proposed easement (as valued by Mr Pugsley) has a total area of 5,660 square metres; and

• finally, the proposed easement version is that shown in Annexure A to the 6 December affidavit of Mr John Travers, Louisiana’s bushfire expert (also considered by Mr Wotton – Louisiana’s valuer – in his valuation evidence). This APZ encompasses the totality of the area adopted by Mr Pugsley but continues the north-running eastern boundary of the area considered by Mr Pugsley, in a northerly direction to the northern boundary of Lot 102. This version of the easement not only encompasses a substantive portion of Lot 102 in the return of the Hakea development in its north-eastern corner, but also includes the full east-west extent of the axe-handle along the northern boundary of Lot 102 that leads from Louisiana Road to the substantive portions of Lot 102, located to the east of Lot 101. The area encompassed by an easement, if it were to be imposed on this basis, would be 9,544 square metres. An easement of this configuration is that which is the subject of Mr Wotton's valuation approach.

98. Understanding the competing positions can best be illustrated by reproducing a copy of Mr Travers’ diagram and adding a red line showing what Hakea contends should be the northward limit of the needed APZ:

99. The consideration which follows is also informed by the fact that the whole of Lots 101 and 102 are mapped as bushfire prone land by the LEP.

100. It is, therefore, necessary to determine what is the correct interpretation to be applied to the relevant wording contained in condition 78. It is, therefore, appropriate to repeat the relevant element of the condition. It is in the following terms:

At the commencement of building works and in perpetuity the property around the proposed building to a distance of 50 metres to the east and south and to the property boundary to the north and west, shall be maintained as an inner protection area ….

101. It is to be observed, initially, that this is a legally binding condition which, unless modified or removed, runs with the land in perpetuity. The proper approach is to look at the terms of the language used, having regard to its context and purpose (Project Blue Sky v Australian Broadcasting Authority 194 CLR 355; 72 ALJR 841; 153 ALR 490; [1998] HCA 28).

102. Unsurprisingly, given the significant difference between the areas involved with the second and third versions of the proposed easement described above, there is a significant difference between the parties on what material is relevant to having a proper understanding of that which is required by condition 78 as the necessary extent of any easement for an APZ that might be imposed on Lot 102.

103. In this context (although the result may seem perverse given the bushfire prone land mapping), the critical word is “property” in the above extracted element of the condition. This can only refer to Hakea’s property – Lot 101. As the following element of the condition makes clear, portion of the APZ may need to be on Lot 102 – but this only arises after the APZ has been defined in the terms set out above. Thus the area of the APZ to be the subject of the easement is 5,660 square metres – being that used by Mr Pugsley as the basis for his valuation process.

Valuation of the necessary compensation for the easement

Mr Ireland’s position on value

104. I have earlier listed the various matters Mr Ireland pressed as warranting rejection of mandating an easement for an APZ in favour of Hakea. Amongst those objections was the proposition that Louisiana could not be compensated, adequately, for having such an easement imposed on Lot 102 owned by it. I earlier noted that I proposed to deal with this aspect of Mr Ireland’s objections at the time I dealt with the general valuation propositions inherent in the granting of an easement, given my conclusion that the APZ easement should be required to be given in favour of Hakea.

105. It is now appropriate to set out the material from Mr Ireland’s submissions that he advanced in favour of the “valuation impossible” proposition. As earlier noted, the founding submission on value by Mr Ireland was:

Adequate compensation is not able to be provided pursuant to s88K(2)(b);

106. His more detailed written submissions on this point were:

If adequate compensation cannot be provided the grant of easement must be refused: s88K(2)(b). There are cases where adequate compensation cannot be provided: see Khattar at [50]. This is a case where the valuation evidence does not reflect the value of the EEC vegetation that will be lost, in terms of amenity and inherent ecological value to the landowner. A very large number, close to 2,000 trees on Mr Travers evidence, will be lost due to the APZ.

In the alternative, if the Court (contrary to these submissions) decides to exercise its discretion, if a discretion is found (contrary to these submissions) to arise upon satisfaction of the s88K(1) and (2) factors, then the compensation awarded should be in the amount of the loss of value amount identified by Mr Wotton, Louisiana’s valuer. This is not a case of Hakea being “held to ransom” (see par 43, Plaintiff’s Submissions). Given that Mr Wotton’s valuation is some $305,000 and par 42 documents past offers of $20,000 and $50,000 this is quite apparent. To the contrary, this is a case where Hakea has sought to force Louisiana’s hand into granting the easement it seeks, for its private financial gain, by a course of unacceptable and, indeed, unlawful conduct. This is precisely the case where, if the Court grants the easement at all, the determination of “appropriate” compensation may have proper regard to this unfortunate history of grossly unreasonable conduct by Hakea.

Adequate compensation is not simply the difference between the value of the servient land with and without the easement. Loss of amenity, construction impact, maintenance impact are all compensable: Butt, Land Law, 6th Ed at [16.89]. The discount in value of easement should also be around 20-50% on the case law, which is higher than that even in Mr Wotton’s evidence: Property Pacific Pty Ltd v Owners Strata Plan No 54882 [2006] NSWLEC 709 (land value discounted only 20%) and other cases at [16.89]. As the judicial valuer, the Court can arrive at a higher compensation figure than Mr Wotton.

The Court would prefer Mr Wotton over Mr Pugsley. Mr Pugsley had not visited 2 of 5 of his comparable sales and had relied on digested descriptions of those sales in his firm’s database by persons unknown. His report has on the face of it borrowed heavily from a report earlier prepared by a senior valuer in May 2016 that Mr Pugsley signed off on as a director, without visiting the subject site before doing so, and without endorsing the UCPR Code of Conduct (the first report being that of the senior valuer), and did not cite in his later report (which Mr Pugsley agreed would have been preferable). Mr Pugsley did not answer clear questions and agreed that this was the case on at least one occasion. He admitted that he had adopted a 5% value reduction figure, which figure was the same as appeared in the first report. He was prepared to characterise the impact on price as entirely trivial in the mind of a prospective purchaser, and agreed that even if the easement covered the whole of Lot 102 he would have no idea what percentage reduction to apply. He admitted that he did not consider the reduction of the value of the land in Lot 102 outside the actual area of the easement.

The evidence from Mr Haxell as to the offered purchase price by Encore for Lot 102 (an offer very recently made and only falling away in June 2016) of $3.5 million also shows that Mr Pugley’s $2.35 million figure for Lot 102 is very much too low, and is an additional reason to prefer Mr Wotton’s valuation evidence.

Further, it is only Mr Wotton’s before and after approach that would be considered adequate by the Court as it is only that methodology (not the piecemeal approach) that captures the injurious affectation of that part of Lot 102 outside the area of the APZ, due to the presence of the APZ. This is an accepted element of compensation in such a case, as explained by Preston CJ in Rainbowforce at [175]. That injurious affection amount is in addition to the amount of compensation for the loss of proprietary rights within the area of the easement itself ([165] and [178] Rainbowforce), but both are captured in Mr Wotton’s whole of block before and after methodology (cf. Rainbowforce at [173]).

Mr Pugsley’s approach also does not capture disturbance impacts as does Mr Wotton’s before and after approach: [166] Rainbowforce.

In addition to the figure of compensation arrived at by Mr Wotton on the whole of block before and after methodology, the Court as judicial valuer would add an amount referable to the loss and impact on the EEC on Lot 102. The substantial impact on the Swamp Oak Floodplain Forest (which can be described as “significant”, with the caveat that that term is not used in a technical sense in the sense used in s5A and s112B of the EP & A Act, for example). As observed earlier, it may be impossible to adequately compensate for this impact that goes beyond compensation for the appropriation of proprietary rights, injurious affectation or disturbance (which would mean no easement could be granted under s88K(2)(b)), but if contrary to this submission an amount is allocated, it would not be unreasonable to provide compensation on a per tree basis plus an amount for ongoing impact on the integrity of the EEC, so at a nominal figure of, say $10 a tree on Mr Travers’ figures this would provide an amount of $13,000 -$19,000, to which would be added a nominal amount of $5,000 to reflect the ongoing impact to the EEC. It is submitted that an additional sum of around $20,000 is on the evidence required to be added to Mr Wotton’s figure to adequately compensate Louisiana for this ecological impact (if, contrary to these submissions, the Court finds that this impact can be adequately compensated for at all). It is accepted that on occasion s88K easements will be granted over vegetated land, so no doubt the legislative purpose requires an effort to assess a compensation figure for this ecological impact.

107. Whilst I understand, given the nature of the commercial dispute between Louisiana and Hakea, there is a deal of vigour in this aspect of these submissions this is, in my view, significantly misplaced.

108. The question of valuation of the easement for the APZ is one capable of being resolved using conventional valuation methodology. In these proceedings, Hakea and Louisiana have each engaged a qualified expert valuer. Each of those valuers has provided an individual expert report and they have, together, provided the relevant mandated Joint Expert Report. I will return to my consideration of the conventional valuation material later.

A “per tree” valuation?

109. However, before doing so, it is appropriate to address the proposed “per tree” valuation approach derived from the affidavit evidence of Mr John Travers, Louisiana's bushfire expert. First, it is to be observed that this proposed valuation methodology is one of considerable novelty, in my experience. Although advanced on the basis of Mr Travers’ original October 2016 affidavit, his vegetation density calculations required revision and were corrected in his December 2016 affidavit.

110. Given that there is conventional land valuation evidence, from both sides, on how the APZ valuation tasks should be approached, I do not think that it is appropriate to embark on pursuit of what might be regarded as an experimental valuation methodology in circumstances where the conventional, tested process (accepting that there are different conventional valuation methodologies available, as is later discussed) has been utilised by two appropriately qualified valuers.

111. I reject the proposition that valuation of the APZ easement should be undertaken on any basis other than that of a conventional land valuation methodology being utilised to determine what might be the impact on the land value of Lot 102 by the imposition of the easement sought.

Mr Pugsley's oral evidence

112. Mr Pugsley was questioned, amongst other things, about the nature of the material he had used in the preparation of his individual expert report. It emerged that a deal of the content had been sourced by Mr Pugsley from earlier work done by a professional colleague. In particular, this included several elements of the analysis of comparable sales relied upon by Mr Pugsley for his report. There was no acknowledgement and attribution of this work having been undertaken by a colleague. Mr Pugsley, himself, had not visited a number of the sites upon the analysis of which (prepared by his colleague) he relied for his valuation conclusions.

113. This failure, itself, is sufficient to cause me to regard Mr Pugsley's evidence with a deal of caution.

Valuation methodology

114. Mr Pugsley and Mr Wotton approached their valuation methodology in significantly differing fashions. Mr Pugsley proposed valuing the site on a piecemeal basis, whilst Mr Wotton proposed that it be valued on a before and after basis. The relevant aspects of their Joint Report (Exhibit G), record their different approaches and their overall derived valuation outcomes.

115. Their conclusions on the value of Lot 102 varied significantly as a consequence of these differing approaches as the valuers’ joint report discloses:

•           We are unable to agree on the level of value which 88 Louisiana Road Hamlyn Terrace would attract.

Mr Pugsley has based his assessment on an overall average value of $135 per m2 of land area together with a consideration of splitting the value between the non flood affected and flood affected land and applying values to the non flood affected land at $240 per m2 of land area and $30 per m2 of land area for the flood affected land. A total value for 88 Louisiana Road Hamlyn Terrace, prior to any affect through the imposition of the easement, is calculated at $2,395,000 (see paragraph 68 of Mr Pugsley’s report)

Mr Wotton has based his assessment on a value range in the overall from $175 to $190 per m2 of land area. A total value for 88 Louisiana Road Hamlyn Terrace, prior to any affect through the imposition of the easement, is calculated from $3,104,500 to $3,370,600 (see paragraph 62 of Mr Wotton’s report).

116. It is unnecessary to undertake an extensive analysis of the individual evidence of these two experts, given the quite stark distinction between their approaches. Although they were both questioned, during the course of their concurrent oral evidence, there is nothing of any significance arising from that questioning that assists me with the merit of the valuation methodology which each has employed (setting aside my earlier noted reservation about Mr Pugsley's evidence’s reliability).

117. There are three reasons, in my view, that cause me to accept that Mr Wotton's valuation methodology and derived valuation figures are to be preferred to that which would come from Mr Pugsley's evidence.

118. First, there is the question of the initial offer that had been made by The Encore Capital Group to both Hakea and Louisiana to purchase the totality of the site. Whilst I appreciate that, in conventional valuation terms, it is appropriate to exercise considerable caution when using offers that did not translate into completed purchases for purposes such as these, there is some utility in doing so in this context. The reason for that is that the initial offer for Lot 102, as part of the proposed (but eventually unsuccessful) purchase of both allotments was $3.5 million.

119. Whilst no sale resulted (for reasons upon which it is not appropriate to speculate), this offer provides a deal of comfort in accepting Mr Wotton's valuation range as being appropriate, on the basis that it is somewhat lower than the offer price, but nonetheless not so low as to be made to appear unrealistic in comparison to that offer price. On the other hand, Mr Pugsley's valuation is significantly lower (only a little above 60% of the offer price) and I can see no rational basis why such a significant differential would emerge.

120. Second, I have earlier set out the reasons why I consider that Mr Pugsley's evidence should be approached with a deal of caution. Although he was present and able to be tested on those matters contained in his evidence where the opinions were derived from his own observations and analysis, the same cannot be said with respect to the material prepared by his professional colleague. Whilst it is not unusual for experts appearing in this Court to have assistance from professional colleagues or subordinates, it is usual that such assistance be acknowledged. In this instance, Mr Pugsley simply adopted the work of his colleague as if it were his own.

121. However, under the circumstances, he could not validly be tested on that material, nor upon the precise basis upon which he had adopted it (other than the fact that he, self-evidently, regarded his colleagues work as being of sufficient accuracy that he should claim it as if it were his own).

122. Finally, I am not satisfied that there is any appropriate basis to adopt the piecemeal valuation approach adopted by Mr Pugsley. There is no evidence of any transactional nature that demonstrates that, in the market within which Lot 102 might be put out to hypothetical sale, such a valuation approach would be adopted by any prospective purchaser.

123. As consequence, I am satisfied that the valuation methodology and broad outcomes proposed by Mr Wotton should be adopted.

Time period for the APZ easement

124. One of the disagreements between Mr Pugsley and Mr Wotton was the time period within which it would be necessary for the APZ easement to be operative. Mr Pugsley was of the view that it would be reasonable to expect Lot 102 to be developed in a fashion that would permit the extinguishment of the easement for an APZ to benefit Hakea’s development. It was his evidence that he expected Lot 102 would be developed within 10 years.

125. Mr Wotton, on the other hand, was of the view that the APZ should be expected to be in place in perpetuity.

126. I consider it is reasonable to accept Mr Pugsley's 10-year hypothesised timeframe for this valuation purpose (I accept this on the basis that there is, now, an existing aged care facility on Lot 101 and an approved medical centre development permitted on Lot 102 with a link from that medical centre development to the Wyong Health Campus. There is a significant development synergy and attraction in such a development grouping and it is not unreasonable to assume that this attraction would lead to a development of Lot 102 in a fashion taking advantage of the two developments that book-end it).

The area to be in perpetuity

127. An aspect of the dimensions of the APZ that emerged during the course of the hearing was that there was an area, in the elbow of Lot 102 in its north-western corner, where that portion of the APZ would not have any overlap with any necessary APZ that would be required if Louisiana's development of its approved medical centre were to go ahead. Mr Pugsley produced a Supplementary Report (Exhibit F) that identified that area. It is depicted as a light blue, almost square-shaped area on the image below extracted from Exhibit F.

128. As a consequence, whatever might be the long-term position with respect to the remainder of the APZ needed by Hakea and the impact of development by Louisiana (or a successor in title) on Lot 102, this area will need to remain an easement-protected APZ for Hakea’s development in perpetuity.

129. The possibility of partial extinguishment only has, therefore, been provided for in the final terms of the draft easement (Exhibit L) proposed by Hakea and, as earlier noted, accepted by me as being appropriate.

130. The area of this portion of the APZ will need to remain in an easement benefiting Hakea in perpetuity is 1,275 square metres. It seems to me that it is necessary to provide some modest differentiation in value between this area and the area of the proposed easement that will be able to be extinguished upon the developing of Lot 102. The remaining area of the proposed easement, 4,385 square metres, is appropriate to be valued on the basis that Lot 102 will be developed in the future.

Conclusion on compensation

131. Accepting that a 10-year time horizon for development on Lot 102 would be appropriate for valuation purposes (with the limited area excepted as earlier described), I am not satisfied that this should result in any significant variation to the APZ easement compensation that Hakea will need to pay to Louisiana. Although the 10-year time horizon is appropriately cautious and to be adopted, it is necessary to approach the valuation of such an interest almost as if it were a rental for that period, rather than as a permanent encumbrance.

132. Pursuing this analogy would result in the striking of a capitalisation rate based on the anticipated length of time for which the easement interest would need to be maintained. In this regard, I do not think that there would be any difference of significance between a 10-year operative period value and a permanent encumbrance one.

133. Doing as best I can with the valuation evidence that I have, I am satisfied that the extent of the affectation of the easement on the value of Lot 102 would be a maximum of 5% of the value of the portion of Lot 102 within the area of the APZ. The appropriate starting for the calculation is within of Mr Wotton’s valuation range for Lot 102 – this being $185 per square metre.

134. However, it is appropriate, for the reasons I have earlier set out concerning the portion of the APZ shown in Exhibit F as needing to be maintained for that purpose, in perpetuity, to allow a minor adjustment to the above rate for that area comprising 1,275 square metres. This adjustment should be an upward one of 5% only.

135. Therefore the compensation rate per square metre for the 4,385 square metres that can be expected to be developed within 10 years is $9.25 – leading to a total compensation for this area of $40,570 (rounded up to the nearest ten dollars). The compensation rate per square metre for the 1,275 square metres that can be expected to be APZ in perpetuity is $9.7125 (that is $9.25 by 105%) – leading to a total compensation for this area of $12,390 (rounded up to the nearest dollar).

136. These calculations result in a total compensation to Louisiana for the imposition of the easement of $53,000 (rounded up to the nearest thousand dollars).

Giving effect to the APZ

137. The final matter requiring consideration concerning the easement for the APZ is whether or not Hakea requires further development consent from the Council (and, to obtain such development consent, Hakea requires Louisiana to give its owner’s consent for that purpose).

138. This matter can be dealt with in comparatively short compass. I have earlier set out, in full, the terms of condition 78 of Hakea’s development consent. That condition mandates the creation of the APZ, and it does so by not only defining the area to be incorporated in the APZ (with the accompanying need to obtain an easement over portion of Lot 102 for this purpose) but also mandates the standard of vegetation management required to give effect to the APZ. It does this by the explicit reference to the requirements of Planning for Bushfire Protection that must be observed in the establishment and ongoing maintenance of this APZ. There is no lack of specificity in those requirements and Planning for Bushfire Protection has the appropriate status for such nominated incorporation as a foundation for such a condition.

139. Although the Council may have a Tree Preservation Order established under the LEP, there is no suggestion in these proceedings that the required processes under the EP&A Act for the granting of Hakea’s development consent have not been followed appropriately.

140. It therefore follows that, when the easement benefiting Lot 101 and burdening Lot 102 provided for by this decision has been created, Hakea will have the right to enter onto Lot 102 and cause to be carried out the necessary vegetation works to give effect to the APZ in order to satisfy condition 78 of its development consent.

141. It is to be observed that the exercising of this to-be-created right for the purposes of condition 78 is what might be regarded as a freestanding one and has no bearing on whether or not Hakea has satisfied any other condition of its development consent, particularly that relating to the provision of access to the Wyong Health Campus lands, a matter also dealt with by this decision.

Louisiana’s cross-claim in the Supreme Court proceedings

The nature of Louisiana’s cross-claim

142. With respect to the cross-claim in the Supreme Court proceedings, there are two elements requiring to be considered. The first is whether, and to what extent, should damages for the alleged trespass onto Lot 102 by Caverstock on behalf of Hakea be compensated (with this requiring determination of the precursor issue as to whether or not easement (C) created as a consequence of the 2005 subdivision consent burdening Lot 102 in favour of Lot 101 gave the proprietors of Lot 101, the right to construct a road on Lot 102. In exercising the right of access over Lot 102 be provided for by that easement) and, as a second, separate question, if there was such a trespass, should exemplary damages be awarded to Louisiana in addition to any compensatory damages which Hakea might be required to pay to Louisiana.

143. I therefore turn to the question of whether easement (C) of the subdivision easements authorised Hakea to construct the road, of which Louisiana complains in the exercise by Hakea of its right of access, pursuant to that easement. I am satisfied that, on proper consideration of the terms of the easement and of the law as it would be applied to those terms that Hakea did not have the right to instruct Caverstock to construct the road on Lot 102 and that, as a consequence, both Hakea and Caverstock trespassed on Lot 102 when they undertook that construction.

The issues requiring determination in Louisiana’s cross-claim

144. With respect to Louisiana’s cross-claim in the Supreme Court proceedings, there are four elements requiring to be determined:

1. Was there a trespass?

2. If so, If so, was an award of ordinary damages warranted?

3. If so, was an award of exemplary damages warranted? and

4. If so, would injunctive relief, if any, be warranted?

Was there a trespass?

145. I turn first to whether there was a trespass by Hakea and/or Caverstock in constructing a road on Lot 102 and, if so, to what extent, should ordinary damages for the alleged trespass onto Lot 102 by Caverstock on behalf of Hakea be compensated. The second, separate question, if there was such a trespass, is whether exemplary damages be awarded to Louisiana in addition to any compensatory damages which Hakea might be required to pay to Louisiana.

146. In this context, I needed to determine the question of whether easement (C) of the easements created at the time of the subdivision to create Lots 101 and 102 authorised Hakea to construct the road on Lot 102 (of which Louisiana complains) in the exercise by Hakea of its Right of Access pursuant to that easement.

The Right of Access

147. Louisiana’s subdivision consent contained four conditions under the heading Subdivision Works. Those conditions related to easements to be created. The conditions were in the following terms:

4.   The registration of the necessary restrictions as to user.

5.   All necessary right(s) of carriageway and easement(s) for services are to be approved by Council prior to the issue of the subdivision certificate, and registered with the plan of subdivision.

6.   The certification by a registered surveyor, prior to issue of the subdivision certificate that all services and domestic drainage lines are wholly contained within the respective lots and easements.

7.   The registration of a right of access overall internal roads within the development benefiting both lots.

148. Although the Council's conditions referred to the creation of a mutual rights of access over internal roadways, that which was actually registered was not created in those terms. What was created was simply recorded as a Right of Access.

149. At the time Louisiana subdivided its original holding into Lots 101 and 102, three easements were created at that time. The third of them, easement (C) was a Right of Access, burdening each of the two created allotments in favour of each of the other created allotments. To understand what the rights and obligations that arise from an easement in those terms, it is necessary to return to the Conveyancing Act as those rights and responsibilities are defined in that statute. Those rights and responsibilities are set out in Part 14 of Schedule 8 Construction of certain expressions of the Conveyancing Act. The provision is in the following terms:

Part 14 Right of access

1   

The owner of the lot benefited may:

(a)  by any reasonable means pass across each lot burdened, but only within the site of this easement, to get to or from the lot benefited, and

(b)  do anything reasonably necessary for that purpose, including:

•  entering the lot burdened, and

•  taking anything on to the lot burdened, and

•  carrying out work within the site of this easement, such as constructing, placing, repairing or maintaining trafficable surfaces, driveways or structures.

2   

In exercising those powers, the owner of the lot benefited must:

(a)  ensure all work is done properly, and

(b)  cause as little inconvenience as is practicable to the owner and any occupier of the lot burdened, and

(c)  cause as little damage as is practicable to the lot burdened and any improvement on it, and

(d)  restore the lot burdened as nearly as is practicable to its former condition, and

(e)  make good any collateral damage.

150. As can be seen from the above provision, it sets out what may be done to a servient tenement for the purposes of exercising rights under the easement; for what purposes those rights might be exercised; and the responsibilities/restrictions that apply when doing so.

151. In these circumstances, Hakea relies on the provisions of this easement as the basis for proposing that its instructing of Caverstock to construct the road from the eastern edge of Lot 101 to the Wyong Health Campus lands at the eastern boundary of Lot 102 fell within the scope of that which was permitted to Hakea by its Right of Access over Lot 102. In considering whether that is correct, two steps are required. The first is to consider what Hakea has caused to be done and, second, why it says it has done so.

152. As can be seen from the statutory extract reproduced above, that which may be done physically on the servient tenement prima facie permits construction of a road such as that placed by Caverstock on Lot 102. This arises as a result of the element of the statutory description of such an easement including “carrying out work within the site of this easement, such as constructing … trafficable surfaces.”

153. There is no evidence that would suggest that that which has been constructed by Caverstock at Hakea’s instruction has not been properly and adequately built. In addition, there is nothing that would point to any element of Caverstock's activities that could be regarded as breaching any of the other responsibilities imposed by (2) as set out in Part 14 of Schedule 8 reproduced above. In that regard, I am satisfied that that which has been constructed by Caverstock clearly falls within that which is permitted to be done, provided it is done for a purpose permitted by the statutory terms of a Right of Access.

154. It is, therefore, necessary to turn to consider, within the framework of a Right of Access as defined, whether what Hakea sought to achieve by the construction of the road was something that was permitted by the easement.

155. In this context, it is appropriate to note that Hakea’s purpose was to provide a method by which one could go to or from Lot 101 over Lot 102 from a point on the western boundary of the Wyong Health Campus lands. In this more general sense, on the issue of whether Caverstock's construction activities were permitted by the terms of the easement, the fact that the road was not constructed at a location permitted by Hakea’s development consent is a matter of irrelevance.

156. However, it seems to me that a proper understanding of the words mean that the exercising of the right to go to or from a place to the allotment benefited must be from a location where those seeking to exercise the right have a lawful entitlement to be located for the purposes of commencing traversing Lot 102 pursuant to the easement. In this instance, for Hakea to take advantage of the easement and construct a road, that road would need to be constructed to somewhere where those exercising the right under the easement were entitled to go otherwise they would not be going to or from Hakea’s land utilising the easement, they would merely be able to go to the boundary of Lot 102 without having any right to go further.

157. This restriction would, of course, not apply if there were some right vested in Hakea to traverse the Wyong Health Campus land to the east of Lot 102. Whilst it is clear that such a right was contemplated to be created as an element of the satisfaction of condition 78 of Hakea’s development consent and that it is reasonable, at its highest for Hakea, to assume that those with the authority over Wyong Health Campus could be expected to grant such a right independent to that accruing to Louisiana if Louisiana constructed its approved medical centre development, there is no evidence before me that, at the time Caverstock undertook its construction activities, Hakea had such an independent right.

158. Absent such a right, it would not be possible for any person or vehicle traversing the road constructed by Caverstock to be doing so for the purposes of going to or from Lot 101. In any event, there is no physical way such access could be achieved across the Wyong Health Campus land until that which has been agreed to by the Health Administration Corporation and Louisiana has been constructed. Hakea has no independent right to construct such an access without participation by Louisiana (nothing in the Deed of Accession between Louisiana and Hakea later discussed provides such and independent right – a joint enterprise only is envisaged).

159. It therefore follows that, although constructed in a fashion consistent with the Right of Access, the construction was not for a purpose authorised by that Right of Access. This, therefore, necessitates the conclusion that Caverstock’s construction of the road on behalf of Hakea was a trespass on Lot 102.

160. I am satisfied that, on proper consideration of the terms of the easement and of the law (as it would be applied to those terms) that Hakea did not have the right to cause Caverstock to construct the road on Lot 102 and that, as a consequence, both Hakea and Caverstock trespassed on Lot 102 when they undertook that construction.

Ordinary damages

161. However, the question of whether any ordinary damages for that trespass should be awarded and, if so, against whom and (if necessary) in what proportion, is a question that must necessarily await consideration of issues of discretion arising from the LEC proceedings.

Exemplary damages

162. I now turn to the question of whether any exemplary damages should be awarded to Louisiana, payable by Hakea, as a consequence of the trespass that I have found has occurred.

163. It is clear from the authorities that the purposes of such an award would be to both punish Hakea and to deter Hakea from undertaking a similar activity in the future.

164. Mr Hale submitted, on the question of exemplary damages:

There is no reason to conclude that Hakea constructed the road without any belief that it had a legal right to do so. In Whitfeld v De Lauret and Company (1920) 29 CLR 71 (at 77), Knox CJ (with whom Rich J agreed) made the long regarded authoritative statement as to what constitutes the basis for an award of exemplary damages:

‘Exemplary damages are given only in cases of conscious wrongdoing in contumelious disregard of another’s rights’.

165. It is also the be noted that Issacs J also observed, with approval and citing a range of authorities, in Whitfeld v De Lauret and Company (1920) 29 CLR 71; [1920] HCA 75 (at 81):

From a very early period exemplary damages have been considered by very eminent Judges to be punitive for reprehensible conduct and as a deterrent.

166. Mr Hale’s submission on this point is not to be accepted.

167. I am satisfied that Hakea’s activity in constructing the road in circumstances where there is an inference available from the email chain between Hakea and Caverstock that Hakea knew that a further easement would be required to provide a basis for the construction of the road absent construction of Louisiana’s development does warrant some award of exemplary damages for punitive purposes.

168. For the purposes of this analysis, it is next appropriate to address the issue of deterrence.

169. Given the specific nature of the trespass which has been committed and all the circumstances arising out of Hakeas development consent that gave rise to it, when coupled with the fact that Louisiana Road has now been upgraded to flood free status, I am satisfied that there is no need for specific deterrence to restrain Hakea from such conduct in the future.

170. I consider that, with respect to this aspect, such damages would be more than nominal but would not be expected to be substantial. Doing the best I can, the appropriate amount would be $30,000.

Injunctive relief arising out of the cross-claim

171. Finally with respect to the cross-claim, given that which I set out below in my consideration of the LEC proceedings, I do not consider that it would be appropriate to consider granting any injunctive relief on the cross-claim in the Supreme Court proceedings until after matters of discretion in the LEC proceedings have been determined..

The Land and Environment Court proceedings

The nature of the Land and Environment Court proceedings

172. The LEC proceedings are Class 4 civil enforcement ones concerning the road constructed by Caverstock on instructions from Hakea. These proceedings (the LEC proceedings) seek that Hakea pay Louisiana the sum of ~ $500,000, this being the cost estimated by Louisiana to be the cost of removal and revegetation of the portion of Louisiana's land occupied by this road.

173. Caverstock is the Second Respondent to the LEC proceedings.

174. The Council has been joined as the Third Respondent to the LEC proceedings and has filed a submitting appearance.

The status of Louisiana's development consent

175. I have earlier noted that, in August 2006, Louisiana was granted two development consents from the Council. The first was a development consent for the construction of an aged care facility and a medical centre. That development consent was granted whilst the original allotment was un-subdivided.

176. On the same day, Louisiana was granted development consent to subdivide the land into what has now become Lot 101 and Lot 102. That subdivision was registered later that year. As earlier noted, the effect of the subdivision was to split the elements approved by the Council, in the first development consent, so that the approved aged care facility, if constructed pursuant to that consent, would have been on Lot 101, whilst the medical centre, if it were to be constructed, would be on Lot 102.

177. There is no dispute that the Council accepts that, as a result of Louisiana's demolition of the dwelling that had been located on the site (within the area that became Lot 102), Louisiana's development consent for its aged care facility proposal and its medical centre proposal had legally commenced. This remained, without dispute, the position until Hakea obtained a new and separate development consent for the aged care facility proposed by it (and now constructed) on Lot 101.

178. It is also not disputed that the aged care facility constructed by Hakea on Lot 101 has been constructed in a fashion that differs in a number of significant respects from that for which consent had been granted to Louisiana for its proposed aged care facility. Although it is trite to say it, construction of Hakea’s aged care facility, self-evidently, renders it impossible for the aged care facility element of Louisiana's development consent to be constructed.

179. Having described this factual position, it is then necessary to consider what might be the current status of Louisiana's development consent, at least to the extent that it is necessary to do so for the purposes of these proceedings. Whether or not that which follows would actually result is not a matter for consideration by me, as it is necessary to contemplate the possibility of some further application being made by Louisiana to the Council.

180. Put simply, I am of the view that Louisiana's consent, having legally commenced, prima facie, remains an operative consent.

181. Should Louisiana wish to construct the medical centre on Lot 102, this being the portion of the approved development that remains within Louisiana's control, physically, this could still be undertaken. Whilst it might be necessary to seek the Council's approval to modify Louisiana's development consent to delete such aspects of the development that were located on what is now Lot 101 and, potentially, to redesign the internal road system for the medical centre development on Lot 102 to reflect the current reality, that would be a matter for consideration by the Council (on the assumption that it remained the consent authority for such an application). It is not a matter concerning which it is appropriate for me to express any tentative, let alone concluded, view in these proceedings.

182. It is sufficient, for the purposes of the matters with which I am engaged, to conclude that Louisiana's development consent remains alive (although, perhaps, to be regarded as in hibernation) for the purposes of these proceedings.

Louisiana’s approved access to the Wyong Health Campus

183. Louisiana's development consent and Hakea’s development consent each required the provision of an arrangement with the administration of the Wyong Health Campus to permit access, across the element of its site, to the east of the eastern boundary of Lot 102 in order to provide flood-free access and egress as a consequence of Louisiana Road, at the time of the granting of the development consents, not being constructed to a flood-free standard.

184. Louisiana had entered a deed with Thompson Health Care in January 2006. As part of Hakea acquiring lot 101, Louisiana and Hakea executed a Deed of Accession in which, relevantly, Hakea adopted the terms of the Thompson deed. One of the matters in the Hakea deed recorded the agreement that Louisiana and Hakea would share the costs, equally, of future access to Wyong Hospital from the adjoining land as described in the s 96 EP&A Act approval as shown on Annexure D to the development deed. A copy of Annexure D is reproduced below, making it clear that this connection was intended to be one which linked to the location shown on the Louisiana development consent plans (a relevant plan is reproduced later).

185. Louisiana has a development consent granted in April 2009 to construct the access road along the alignment consistent with its development consent plans. A deed between Louisiana and the Health Administration Corporation (being the owner of the Wyong Health Campus lands) is in evidence. This deed confirms consent to the construction by Louisiana of the approved road along the Louisiana alignment and that the Health Administration Corporation had agreed to grant Louisiana a right of carriageway over this access road. It is clear from the terms of the proposed right of carriageway that, had Louisiana constructed the road, the agreement between Louisiana and Hakea would have permitted use of Louisiana's access road for the purposes of Hakea’s development.

186. Although the deed between Louisiana and Hakea envisaged sharing of the cost of the construction of the road, this access to the Wyong Health Campus has not been constructed. The consent that permits the construction of that access road, along the Louisiana alignment, is Louisiana's development consent not Hakea’s – Hakea’s consent approved a different alignment for the reasons later discussed.

187. As is a matter in contest in these proceedings in a number of aspects and as earlier noted, Hakea commissioned Caverstock to construct a road from the eastern edge of Lot 101 across Lot 102, along a route that can be described as generally coinciding with Louisiana’s approved route for connection to the western boundary of the Wyong Health Campus land. Several air photos confirm that this is the position. I reproduce below an extract from the Louisiana development consent plans, plans which show the location of the road approved by the Council when it granted development consent to Louisiana for the overall development then proposed.

188. An air photo, in evidence for bushfire purposes, shows where Caverstock has constructed the road at Hakea’s instigation. As can be seen, this road generally coincides with the route approved on the Louisiana plans.

Hakea’s approved access route

189. However, the road that was noted for this purpose, on the plans submitted by Hakea for its development application, shows a different route to Louisiana’s proposed road. Rather than being a road with the two bends in it proposed by Louisiana in a fashion that skirted the medical centre building footprint, the road depicted on the Hakea plans is one that runs, without bends, from a similar starting point at the boundary of Lots 101 and 102, but runs in a directly eastward direction to a different point on the boundary of the Wyong Health Campus lands. A copy of the relevant portion of the plans for the Hakea development (plans in evidence bearing the stamp of the Council recording the Council's approval of them) is in evidence and is reproduced below.

190. As can be seen, clearly, by comparing the two road alignments, that which Hakea has, in fact, constructed on Lot 102 (the Louisiana land) is not what was approved by the Council for the Hakea consent, except to the extent that the first portion of that which is constructed, where constructed along the direct eastward route shown on Hakea’s approved plans, coincides with the on-ground constructed road.

191. However, it seems to me that that portion of the road constructed by Caverstock, as soon as it departed from the approved route shown on the approved plans, cannot be said to be constructed in satisfaction of the requirements of Hakea’s development consent. Whether Hakea’s development consent can be modified to rectify this position is a matter that does not fall within the scope of these proceedings, as I am dealing with the position of this road at the present time and examining it in the precise context of the development consent purported to be satisfied by its construction.

192. It is to be observed that condition (1) of Hakea’s 2013 development consent is a conventional one that incorporates various plans and documents as operative elements of the consent by specific reference. Amongst those, in this instance, is included the plan from which the above extract showing the location of the approved route of the road from the Hakea development to the western boundary of the Wyong Health Campus.

193. The condition also says, as is customary, that, to the extent that any of the written conditions of consent modify the terms of any of the plans or documents, the conditions prevail to the extent of any inconsistency. In this instance, the relevant condition that requires consideration is that mandating the construction of a road from Hakea’s development across Lot 102 to the western boundary of the Wyong Health Campus. There is nothing in the terms of this condition that would act to modify or alter the route along which that connection is to be constructed, as depicted above.

194. It is also to be noted that one of the documents in evidence is the bushfire assessment prepared by Conacher. A plan from it showing, amongst other things, the road to the boundary of the Wyong Health Campus became Exhibit E. This bushfire assessment plan not only depicts what is considered by the author to be the necessary Asset Protection Zone (this matter being discussed separately elsewhere in this judgment), but also depicts the route of the link between the Hakea development and the western boundary of the Wyong Health Campus. This plan is reproduced below.

195. This plan is entirely consistent with the earlier noted, stamped plan showing the Council’s approval of the defined route.

196. The consequence of all this is that, whatever right Hakea thought it might have pursuant to easement (C) created at the time of subdivision of Lots 101 and 102 (and it had none, as earlier discussed), that which Hakea has had Caverstock construct only partially satisfies the requirement for the construction of a link between the eastern edge of Hakea’s development and the western boundary of the Wyong Health Campus along the route approved by the Council.

197. It therefore follows that, for the purposes of satisfying the condition of the Hakea development consent, that which has been constructed by Caverstock, upon instructions from Hakea, does do so. It is, however, a condition required to be satisfied prior to the issuing of a final occupation certificate for Hakea’s development.

198. Whether or not the Council could, or would, approve a modification application by Hakea to alter condition 78 so that the defined route for the linkage between its development and the western boundary of the Wyong Health Campus is not a matter upon which it is appropriate to speculate. Indeed, given my earlier discussion concerning easement (C), the right of access enjoyed by Hakea over Lot 102, if I am correct, would render the utility of such an application of no consequence unless Hakea were to obtain a right to construct a continuation of such a route across the Wyong Health Campus lands through to the perimeter road on those lands.

199. The conclusions which follow provide a basis for further consideration as to what might be appropriate to be ordered in the LEC proceedings in the exercise of the discretion given by s 124(1) of the EP&A Act.

1. As earlier articulated in my cross-claim analysis in the Supreme Court proceedings, I am satisfied that Hakea required Louisiana's consent to construct the road on Lot 102 and, self-evidently, did not have the consent;

2. Second, the third easement created at the time of subdivision of Lots 101 and 102, being an easement creating a Right of Access, did not authorise Hakea to construct the road on Louisiana's land;

3. Hakea’s development consent did not provide a basis to construct the road on Louisiana's land had Louisiana granted owner’s consent for that purpose as the road as constructed did not follow the path approved in Hakea’s development consent;

4. A separate, development application was required to the Council for the purposes of constructing the road actually constructed by Caverstock at Hakea’s instigation and such an application would require Louisiana’s owner’s consent; and

5. Whether or not regularisation of the construction of the road by an application to modify Hakea’s development consent (if Louisiana's owner’s consent were given to such an application) would be a matter for consideration by the Council.

200. It will be necessary for there to be a further hearing on these matters of discretion unless this decision assists the parties resolve their dispute on a commercial basis. The directions at the end of this judgment accommodate the potential need to set the LEC proceedings down for a further hearing for this purpose.

Summary of outcomes

201. In the Supreme Court proceedings, I have determined:

1. It is appropriate to require that an easement for an APZ be created burdening Lot 102 in favour of Lot 101;

2. The area of the APZ is to be 5,660 square metres of which 1,275 square metres will be in perpetuity and 4,385 square metres can reasonably be expected to be developed within the next 10 years;

3. The compensation for the larger area is to be at the rate of $9.25 per square metre, whilst that for the smaller area is to be $9.7125 per square metre (being a loading of 5% on the rate for the larger area to reflect that the smaller area is expected to be an APZ in perpetuity);

4. The resulting compensation to be paid to Louisiana for the imposition of the APZ easement is $53,000 (rounded up to the nearest thousand dollars);

5. Pursuant to s 88K(5) of the Conveyancing Act, Hakea is to pay Louisiana's costs of the Supreme Court proceedings, excluding the costs of Louisiana's cross‑claim in those proceedings unless Hakea proposes to advocate for some alternative costs order; and

6. Hakea will not require any further development consent from the Council to enter onto Lot 102 for the purposes of carrying out the necessary vegetation clearing works for the purposes of establishing the APZ.

202. In Louisiana's cross-claim in the Supreme Court proceedings, I have concluded:

1. Caverstock committed trespass when it entered onto Lot 102 at Hakea’s instigation to construct the road;

2. What relief, if any, that might be appropriate as a consequence of this finding must await consideration of matters of discretion arising under s 124(1) of the EP&A Act in the Land and Environment Court proceedings;

3. Therefore, no injunctive relief is appropriate to be granted to Louisiana in the Supreme Court proceedings cross-claim;

4. Consideration of whether any damages should be awarded to Louisiana on an ordinary basis should also be deferred until after consideration of matters of discretion in the Land and Environment Court proceedings;

5. It is appropriate to award Louisiana exemplary damages for the trespass committed by the construction of the road but these are not to be substantial and I have assessed them at $30,000; and

6. The question of costs on the cross-claim must await finalisation of the cross-claim in light of the final outcome of the Land and Environment Court proceedings.

203. In the Land and Environment Court proceedings, I have concluded:

1. There was no lawful basis upon which Caverstock was permitted to construct the road on Lot 102;

2. Specifically, Hakea’s development consent did not include approval from the Council to construct a road along the alignment upon which the road had been constructed, even if Louisiana had given owner’s consent for construction of the road along that alignment (however, Louisiana could have given owner’s consent for the construction of that road along that alignment pursuant to Louisiana's development consent);

3. The right of access in favour of Lot 101 burdening Lot 102 did not provide a basis for the construction of the road by Caverstock on Hakea’s behalf as, absent any right vested in Hakea (as opposed to Louisiana) to cross the Wyong Health Campus lands, the road as constructed could not be used to go to or come from Lot 101 with that being the entitlement arising under the right of access in favour of Lot 101 burdening Lot 102;

4. What should be the result in the Land and Environment Court proceedings, as a matter of discretion under s 124(1) of the EP&A Act must await a further hearing on that point, unless the parties reach a commercial settlement beforehand; and

5. Consideration of questions of costs in the Land and Environment Court proceedings must also await the determination of matters of discretion in those proceedings.

Directions

204. In the Supreme Court proceedings:

1. The parties are to settle orders to the extent necessary to give effect to my conclusions that an easement should be created burdening Lot 102 in favour of Lot 101 for the purposes of an Asset Protection Zone in the terms of Exhibit L and providing for compensation on the basis earlier set out, and with Hakea to pay Louisiana's costs, as agreed or assessed, in the Supreme Court proceedings (other than costs of Louisiana's cross-claim in those proceedings); and

2. These orders are also to provide that Louisiana's cross-claim in the Supreme Court proceedings is to be adjourned until the date to be set for the further hearing in the Land and Environment Court proceedings on the issue of discretion arising pursuant to s 124 of the EP&A Act.

205. In the Land and Environment Court proceedings:

1. The parties are to approach the Registrar (as my Associate will be on leave until 18 April 2017) to have these proceedings set down for a further hearing of a duration to be agreed between the parties (expected by me to be a maximum of one day) to deal with matters of discretion arising under s 124(1) of the EP&A Act;

2. The parties are to agree on a timetable for the filing and exchange of written submissions on the question of discretion prior to the further hearing;

3. Should either party propose to rely on any additional evidence on the question of discretion, the filing and serving of such evidence is to be provided for in the timetable;

4. If the parties are unable to agree on a date for a further hearing, or a timetable to lead up to it, the matter is listed for mention before me at 4.15 pm on Wednesday 19 April 2017 unless the parties notify my Associate by midday on Tuesday 18 April 2017 that the mention is not required. If this occurs, the mention will be vacated and the matter stood over to the further hearing to deal with matters of discretion under s 124(1) of the EP&A Act.

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Amendments

26 April 2017 - The word "not" had been omitted. The clause now reads "does not do so" at [197].

06 September 2017 - The year "2005" was omitted prior to 'subdivision consent" at line 6 of [142].

Decision last updated: 06 September 2017