Rouse Hill Custodian Corporation Pty Ltd v Prisma Rouse Hill Development Pty Ltd

[2023] NSWLEC 48

Land and Environment Court

New South Wales

Medium Neutral Citation:

Rouse Hill Custodian Corporation Pty Ltd v Prisma Rouse Hill Development Pty Ltd [2023] NSWLEC 48

Hearing dates:

6, 7, 8 July 2022, 12, 19, 20 December 2022, further written submissions 11 January 2023, 10, 21, 28 February 2023

Decision date:

02 May 2023

Jurisdiction:

Class 3

Before:

Pain J

Decision:

See below in [394]-[403]

Catchwords:

EASEMENT – grant of development consent by court for medium density residential development with stormwater to drain under public road to neighbouring private land – variation from approved development in volume of stormwater to be discharged – s 40(1)(a) applies despite need to vary development consent – exercise of discretion to find joinder of relevant parties not necessary – easement in pipe under public road does benefit applicant’s land - easement reasonably necessary for use of applicant’s land for medium density residential development – use of land not inconsistent with the public interest – appropriate compensation can be paid to servient tenement – exercise of discretion to make an easement with some variation of terms

Legislation Cited:

Blacktown City Council Growth Centre Precincts Development Control Plan 2010 (NSW), Sch 4

Conveyancing Act 1919 (NSW), ss 70, 70A, 88, 88A, 88K

Encroachment of Buildings Act 1922 (NSW)

Environmental Planning and Assessment Act 1979 (NSW)

Land and Environment Court Act 1979 (NSW), s 40

Local Government Act 1993 (NSW), s 59A

Real Property Act 1900 (NSW)

Roads Act 1993 (NSW), ss 71, 85, 94, 97, 138, 139, 139A, 142, 145, 146, 149

State Environmental Planning Policy (Precincts – Central River City) 2021 (NSW), cl 1.4, Appendix 8

State Environmental Planning Policy (Sydney Region Growth Centres) 2006 (NSW), Appendix 6

State Environmental Planning Policy (Transport and Infrastructure) 2021 (NSW), cl 5.8

Uniform Civil Procedure Rules 2005 (NSW), rr 6.23, 6.24

Cases Cited:

117 York Street Pty Ltd v Proprietors of Strata Plan 16123 (1998) 43 NSWLR 504; (1998) 98 LGERA 171

Alramon Pty Ltd v City of Ryde Council [2022] NSWLEC 108

Arrow v Electricity Commission of NSW (1994) 87 LGERA 363

A.T.B. Morton Pty Ltd v Community Association DP270447 (No 2) [2018] NSWLEC 87

Becton Corporation Pty Ltd v Minister for Infrastructure, Planning and Natural Resources [2005] NSWLEC 197

Besmaw Pty Ltd v Sydney Water Corporation (2001) 113 LGERA 246; [2001] NSWLEC 15

Billgate Pty Ltd v Woollahra Municipal Council (2004) 136 LGERA 356 [2004] NSWLEC 436;

Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209

Bonnici v Ku-ring-gai Municipal Council (2001) 121 LGERA 1; [2001] NSWSC 1124

Bonvale Enterprises Pty Ltd v Halfpenny Investments Pty Ltd (2005) 62 NSWLR 698; [2005] NSWSC 219

Bropho v Western Australia (1990) 171 CLR 1; [1990] HCA 24

Casuarina Rec Club Pty Limited v The Owners - Strata Plan 77971 (2011) 80 NSWLR 711; [2011] NSWCA 159

Celesteem Rouse Hill Development v Blacktown City Council [2020] NSWLEC 1137

City of Canterbury v Saad (2013) 195 LGERA 329; [2013] NSWCA 251

Community Association DP270447 v ATB Morton Pty Ltd (2019) 240 LGERA 32; [2019] NSWCA 87

Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297

Dewhirst v Edwards [1983] 1 NSWLR 34

Diro Group Pty Ltd v Leuzinger [2021] NSWLEC 107

Electricity Commission of NSW v Arrow (1994) 85 LGERA 418

Hamilton v Joyce [1984] 3 NSWLR 279

Huntington & Macgillivray v Hurstville City Council (No 2) (2005) 139 LGERA 84

Katakouzinos v Roufir Pty Ltd (1999) 9 BPR 17,303; [1999] NSWSC 1045

Khattar v Wiese (2005) 12 BPR 23235; [2005] NSWSC 1014

Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd (2012) BPR 31257; [2012] NSWCA 445

Nicole-Anne Hickey v The Owners Strata Plan 78825 [2022] NSWLEC 135

North Shore Gas Co Ltd v Commissioner of Stamp Duties (1940) 63 CLR 52; [1940] HCA 7

Olefines Pty Ltd v Valuer-General (NSW) [2018] NSWCA 265

Potter v Minahan [1908] HCA 63; 7 CLR 277

Pugh v Savage [1970] 2 QB 373

Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd (2010) 171 LGERA 286 ; [2010] NSWLEC 2

Re Maiorana and the Conveyancing Act (1970) 92 WN (NSW) 365

Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321; [2015] NSWCA 74

Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 1293

Roden v Bandora Holdings Pty Limited [2015] NSWLEC 191

Ross v Lane Cove Council (2014) 86 NSWLR 34; [2014] NSWCA 50

Rudd v Hornsby Shire Council (1975) 31 LGRA 120

Shi v ABI-K Pty Ltd (2014) 87 NSWLR 568; [2014] NSWCA 293

Spencer v Commonwealth (1907) 5 CLR 418

Sydney City Council v Claude Neon Limited (1989) 15 NSWLR 724

Sydney City Council v Ipoh Pty Limited (2006) 68 NSWLR 411; [2006] NSWCA 300

Sydney Seaplanes Pty Ltd v Page (2021) 393 ALR 485; [2021] NSWCA 204

Stow v Mineral Holdings (Australia) Pty Ltd (1979) 180 CLR 295; [1979] HCA 30

Terry Rd Development Pty Ltd v Blacktown City Council [2018] NSWLEC 1226

The Queen v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327; [1982] HCA 69

Todrick v Western National Omnibus Co Ltd [1934] CH 561

Tomasic v Port Stephens Council [2021] NSWLEC 56

Tregoyd Gardens Pty Limited v Jervis (1997) 8 BPR 15845

Trevlind v BMP Manufacturing [2008] NSWSC 603

Willoughby City Council v Roads and Maritime Services (2014) 201 LGERA 177; [2014] NSWLEC 6

Woodland v Manly Municipal Council (2003) 127 LGERA 120; [2003] NSWSC 392

Texts Cited:

Dennis Pearce, Statutory Interpretation in Australia (9th ed, 2019, LexisNexis Butterworths)

New South Wales Legislative Assembly, Parliamentary Debates (Hansard) 10 October 1995 at 1494

Category:

Principal judgment

Parties:

Rouse Hill Custodian Corporation Pty Ltd (Applicant)
Prisma Rouse Hill Development Pty Ltd (Respondent)

Representation:

Counsel:
P Tomasetti SC with T Poisel (Applicant)
I Hemmings SC with C Koikas (Respondent)

Solicitors:
Harrington Lawyers (Applicant)
MillsOakley (Respondent)

File Number(s):

2021/243080

Judgment

Application for easement for drainage of stormwater

Legislation

Conveyancing Act 1919 (NSW)

Land and Environment Court Act 1979 (NSW)

Local Government Act 1993 (NSW)

Roads Act 1993 (NSW)

Planning for Area 20

RHCC development consent

Prisma development consent/evidence of Mr Ng

Poly development consent

Stormwater catchments

Conditions of RHCC’s development consent

Easement sought by RHCC

Change in evidence/scope of easement

Concept drainage scheme

Temporary?

Pipe under Terry Road

Development consent required for work on Prisma’s land

Threshold issue - should the Court dismiss proceedings for failure to comply with s 40(1)(a) LEC Act

RHCC’s submissions

Prisma’s submissions

Consideration

Threshold issue - should the Court dismiss proceedings for failure to comply with s 40(3) LEC Act?

Evidence on s 40(3) issue

Prisma’s submissions

RHCC’s submissions

Consideration of joinder issue

Preliminary issues resolved

Issues for determination under s 88K Conveyancing Act

Easement does benefit RHCC’s land (s 88K(1))

Evidence on issue of Council requirement for easement in gross

RHCC’s submissions

Prisma’s submissions

Consideration - Easement benefits RHCC’s land

Balance of s 88K issues

RHCC’s evidence

Prisma’s evidence

Joint expert reports

Exhibits

Reasonable attempts made (s 88K(2)(c))

Reasonable necessity established (s 88K(1))

Evidence on reasonable necessity

RHCC’s submissions on reasonable necessity

Prisma’s submissions on reasonable necessity

Consideration of reasonable necessity

Use of RHCC’s land not inconsistent with public interest (s 88K(2)(a))

Evidence on public interest

RHCC’s submissions

Prisma’s submissions

Consideration of public interest

Adequately compensated

Evidence on adequate compensation

Evidence on quantum of compensation

A. Can Prisma be adequately compensated?

RHCC’s submissions

Prisma’s submissions

B. Amount of compensation

RHCC’s submissions

Prisma’s submissions

Consideration of appropriateness and quantum of compensation

Discretion

RHCC’s submissions

Prisma’s submissions

Consideration of discretion

Costs

In conclusion

Judgment

Application for easement for drainage of stormwater

1. The Applicant Rouse Hill Custodian Corporation Pty Ltd (RHCC) asks the Court to impose an easement under s 88K of the Conveyancing Act 1919 (NSW) (Conveyancing Act) for the drainage of stormwater from RHCC’s land over land owned by the Respondent Prisma Rouse Hill Development Pty Ltd (Prisma). Prisma opposes the imposition of the easement. RHCC’s land is located at 49 Terry Road, Rouse Hill. Prisma’s land is located across the road at 54 Terry Road, Rouse Hill.

2. The Court may exercise the jurisdiction of the Supreme Court under s 88K of the Conveyancing Act if the Court has determined to grant or modify a development consent pursuant to proceedings on appeal under the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) or if proceedings on appeal under the EPA Act for the granting or modification of development consent are pending before the Court: s 40(1) of the Land and Environment Court Act 1979 (NSW) (LEC Act). An applicant may make an application for an order imposing an easement over land: s 40(2). The Court went on a site view of RHCC’s land and its surroundings on 6 July 2022 in the course of the Class 3 hearing.

3. The Court determined in 2018 to grant development consent pursuant to an appeal under the EPA Act in respect of RHCC’s land, as explained below in [18].

4. The Class 3 Application filed 25 August 2021 seeks the following orders:

1. An order imposing an easement for drainage over the respondent’s land being Lot 132 in DP 208203 as shown in the plan of easement prepared by Anna Ilona Paterak dated 21 July 2021 being Annexure 1 hereto on the terms in Annexure 2 hereto pursuant to section 40 of the Land and Environment Court Act 1979.

2. An order that no compensation because of the special circumstances of the case.

3. Alternatively to 2., above an order that the applicant pay the respondent compensation in the sum of $30,000.

4. An order providing for the costs of these proceedings.

5. The terms of the easement have been amended since the Class 3 Application was filed as detailed in [37] below.

Legislation

Conveyancing Act 1919 (NSW)

6. Sections 88, 88A and 88K of the Conveyancing Act provide:

Part 6 Covenants and powers

…

Division 4 Easements and restrictive and positive covenants

…

88   Requirements for easements and restrictions on use of land

(1) Except to the extent that this Division otherwise provides, an easement expressed to be created by an instrument coming into operation after the commencement of the Conveyancing (Amendment) Act 1930, and a restriction arising under covenant or otherwise as to the user of any land the benefit of which is intended to be annexed to other land, contained in an instrument coming into operation after such commencement, shall not be enforceable against a person interested in the land claimed to be subject to the easement or restriction, and not being a party to its creation unless the instrument clearly indicates—

(a)  the land to which the benefit of the easement or restriction is appurtenant,

(b)  the land which is subject to the burden of the easement or restriction—

Provided that it shall not be necessary to indicate the sites of easements intended to be created in respect of existing tunnels, pipes, conduits, wires, or other similar objects which are underground or which are within or beneath an existing building otherwise than by indicating on a plan of the land traversed by the easement the approximate position of such easement,

(c)  the persons (if any) having the right to release, vary, or modify the restriction, other than the persons having, in the absence of agreement to the contrary, the right by law to release, vary, or modify the restriction, and

(d)  the persons (if any) whose consent to a release, variation, or modification of the easement or restriction is stipulated for.

(1A)  Land (including the site of an easement) is clearly indicated for the purposes of this section if it is shown—

(a) in the manner prescribed by regulations made under this Act or the Real Property Act 1900, or

(a1) in the manner required by the lodgment rules under the Real Property Act 1900, or

(b)  in any other manner satisfactory to the Registrar-General in the particular case or class of cases concerned.

This subsection does not limit other ways in which land may be clearly indicated.

(2)  This section shall not prevent the enforcement by a person entitled to a reversion remainder or other future estate or interest in any land of any contract against a person entitled to the estate or interest on which the reversion remainder or other future estate or interest is expectant.

(3) This section applies to land under the provisions of the Real Property Act 1900, and in respect thereof—

(a)  the Registrar-General shall have, and shall be deemed always to have had, power to record a restriction referred to in subsection (1), in such manner as the Registrar-General considers appropriate, in the folio of the Register kept under that Act that relates to the land subject to the burden of the restriction, to record in like manner any dealing purporting to affect the operation of a restriction so recorded and to record in like manner any release, variation or modification of the restriction,

(b)  a recording in the Register kept under that Act of any such restriction shall not give the restriction any greater operation than it has under the dealing creating it, and

(c) a restriction so recorded is an interest within the meaning of section 42 of that Act.

(4) Subsection (1) does not apply to an easement without a dominant tenement acquired by or for a prescribed authority referred to in section 88A, nor to any restriction on the use of land in relation to any such easement.

…

88A   Easements in gross

(1)  In this section—

prescribed authority means—

(a)  the Crown, or

(b)  a public or local authority constituted by an Act, or

(c)  a corporation prescribed by the regulations for the purposes of this section.

(1A)  An easement without a dominant tenement may be created in favour of a prescribed authority, and any such easement may be assured to a prescribed authority.

(1B)  However, an easement without a dominant tenement may only be created in favour of, or assured to, a corporation prescribed by the regulations for the purposes of this section if the easement is for the purpose of, or incidental to, the supply of a utility service to the public, including (but not limited to)—

(a)  the supply of gas, water or electricity, or

(b)  the supply of drainage or sewage services.

…

88K   Power of Court to create easements

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

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

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

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

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

(3) The Court is to specify in the order the nature and terms of the easement and such of the particulars referred to in section 88(1)(a)–(d) as are appropriate and is to identify its site by reference to a plan that is, or is capable of being, registered or recorded under Division 3 of Part 23. The terms may limit the times at which the easement applies.

(4)  The Court is to provide in the order for payment by the applicant to specified persons of such compensation as the Court considers appropriate, unless the Court determines that compensation is not payable because of the special circumstances of the case.

(5)  The costs of the proceedings are payable by the applicant, subject to any order of the Court to the contrary.

…

(8) An easement imposed under this section has effect (for the purposes of this Act and the Real Property Act 1900) as if it was contained in a deed.

…

7. As can be seen from the above provisions s 88 specifies the requirements for the instrument creating an easement. RHCC is relying on s 88K. Section 88A concerning easements in gross is also identified as that is relevant to Blacktown City Council (the Council) requirements relied on by Prisma below in [118]. The Court does not have power to make an easement in gross in this proceeding.

Land and Environment Court Act 1979 (NSW)

8. Section 40 of the LEC Act provides:

Part 4 Exercise of jurisdiction

…

Division 4 Special provisions respecting Class 1, 2 or 3 proceedings

…

40   Additional powers of Court—provision of easements

(1)  This section applies if—

(a) the Court has determined to grant or modify a development consent pursuant to proceedings on an appeal under the Environmental Planning and Assessment Act 1979, or

(b) proceedings on an appeal under the Environmental Planning and Assessment Act 1979 with respect to the granting or modification of a development consent are pending before the Court (whether constituted by a Judge or by one or more Commissioners).

(2)  The appellant may make an application to the Court for an order imposing an easement over land.

(3) The parties to an application under this section include the owner of the land to be burdened by the easement, and each other person having an estate or interest in the land, as evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act 1900.

(4) In dealing with an application under this section, the Court may exercise the jurisdiction of the Supreme Court under section 88K of the Conveyancing Act 1919 and, in that event, section 88K of the Conveyancing Act 1919 applies to the Court’s exercise of that jurisdiction in the same way as it applies to the exercise of that jurisdiction by the Supreme Court.

9. In this proceeding, the following two threshold issues arise under s 40 of the LEC Act:

1. Should the Court dismiss proceedings for failure to comply with s 40(1)(a)?

2. Should the Court dismiss proceedings for failure to comply with s 40(3)?

10. If the Court answers no to the threshold questions, numerous issues arise for consideration under section 88K of the Conveyancing Act as set out below in [87].

Local Government Act 1993 (NSW)

11. Section 59A of the Local Government Act 1993 (NSW) (LG Act) provides:

Part 3 Restraints and qualifications that apply to service functions

…

Division 2 Water supply, sewerage and stormwater drainage works and facilities

…

59A Ownership of water supply, sewerage and stormwater drainage works

(1) Subject to this Division, a council is the owner of all works of water supply, sewerage and stormwater drainage installed in or on land by the council (whether or not the land is owned by the council).

(2) A council may operate, repair, replace, maintain, remove, extend, expand, connect, disconnect, improve or do any other things that are necessary or appropriate to any of its works to ensure that, in the opinion of the council, the works are used in an efficient manner for the purposes for which the works were installed.

(3) The provisions of this section have effect despite anything contained in section 42 of the Real Property Act 1900.

Roads Act 1993 (NSW)

12. The relevant provisions of the Roads Act 1993 (NSW) (Roads Act) provide:

Part 6 Road work

Division 1 General

71 Powers of roads authority with respect to road work

A roads authority may carry out road work on any public road for which it is the roads authority and on any other land under its control.

…

Division 3 Miscellaneous

85 Location of conduits for utility services

A roads authority that proposes to provide conduits across a public road for the carriage of utility services must consult, as to the location and construction of the conduits, with all persons—

(a) who are providing utility services along or in the vicinity of the road, or

(b) who are, in the opinion of the roads authority, likely to provide utility services along or in the vicinity of the road.

…

Part 7 Protection of public roads and traffic

Division 1 Protection of public roads

…

97 Utility services to be located in conduits

(1) The roads authority for a public road in which there are conduits for the carriage of utility services across the road may direct any person who is entitled to place utility services in, on or over the road—

(a) to locate any new or replacement services in any such conduit, and

(b) to pay to the roads authority such proportion as may be prescribed by the regulations of the costs incurred by the roads authority in connection with the construction of the conduit.

(2) The direction may specify the manner in which or the standard to which the direction must be complied with.

(3) A provision of an Act that authorises the provision of services in, on or over a public road does not authorise the provision of the services in contravention of this section.

…

Part 9 Regulation of works, structures and activities

…

Division 3 Other works and structures

…

138   Works and structures

(1)  A person must not—

(a)  erect a structure or carry out a work in, on or over a public road, or

(b)  dig up or disturb the surface of a public road, or

(c)  remove or interfere with a structure, work or tree on a public road, or

(d)  pump water into a public road from any land adjoining the road, or

(e)  connect a road (whether public or private) to a classified road,

otherwise than with the consent of the appropriate roads authority.

Maximum penalty—10 penalty units.

(2)  A consent may not be given with respect to a classified road except with the concurrence of TfNSW.

(3)  If the applicant is a public authority, the roads authority and, in the case of a classified road, TfNSW must consult with the applicant before deciding whether or not to grant consent or concurrence.

(4)  This section applies to a roads authority and to any employee of a roads authority in the same way as it applies to any other person.

(5) This section applies despite the provisions of any other Act or law to the contrary, but does not apply to anything done under the provisions of the Pipelines Act 1967 or under any other provision of an Act that expressly excludes the operation of this section.

139   Nature of consent

(1)  A consent under this Division—

(a)  may be granted on the roads authority’s initiative or on the application of any person, and

(b)  may be granted generally or for a particular case, and

(c)  may relate to a specific structure, work or tree or to structures, works or trees of a specified class, and

(c1) in relation to integrated development within the meaning of section 91 of the Environmental Planning and Assessment Act 1979, is subject to Division 5 of Part 4 of that Act, and

(d)  may be granted on such conditions as the appropriate roads authority thinks fit.

(2)  In particular, a consent under this Division with respect to the construction of a utility service in, on or over a public road may require the service to be located—

(a)  in such position as may be indicated in that regard in a plan of subdivision or other plan registered in the office of the Registrar-General with respect to the road, or

(b)  in such other position as the roads authority may direct.

(3)  In particular, a consent under this Division with respect to the erection of a structure may be granted subject to a condition that permits or prohibits the use of the structure for a specified purpose or purposes.

…

142 Maintenance of works and structures

(1) A person who has a right to the control, use or benefit of a structure or work in, on or over a public road—

(a) must maintain the structure or work in a satisfactory state of repair, and

(b) in the case of a structure (such as a grating or inspection cover) located on the surface of the road, must ensure that the structure is kept flush with the surrounding road surface and that the structure and surrounding road surface are so maintained as to facilitate the smooth passage of traffic along the road,

and the person is, by this section, empowered to do so accordingly.

Maximum penalty—30 penalty units.

(2) Subsection (1) applies to all structures and works in, on or over a public road, including structures and works for which there is no consent in force under this Division.

(3) Subsection (1) does not apply to a person whose right to the control, use or benefit of a structure or work consists merely of a right of passage that the person has as a member of the public or a right of access that the person has as the owner of adjoining land.

(4) If—

(a) a roads authority has granted a consent under this Division to the doing of anything, and

(b) that thing has been or is being done otherwise than in accordance with the consent,

the roads authority may direct the holder of the consent to take specified action to remedy any damage arising from the doing of that thing otherwise than in accordance with the consent.

…

Part 10 Other road management functions

Division 1 Functions with respect to land generally

145 Roads authorities own public roads

(1) All freeways are vested in fee simple in TfNSW.

(2) All Crown roads are vested in fee simple in the Crown as Crown land.

(3) All public roads within a local government area (other than freeways and Crown roads) are vested in fee simple in the appropriate roads authority.

(4) All public roads outside a local government area (other than freeways and Crown roads) are vested in fee simple in the Crown as Crown land.

146 Nature of ownership of public roads

(1) Except as otherwise provided by this Act, the dedication of land as a public road—

(a) does not impose any liability on the owner of the road that the owner would not have if the owner were merely a person having the care, control and management of the road, and

(b) does not affect the rights or liabilities of any person under any easement or under any Act or law, and

(c) does not affect any rights of any person with respect to minerals below the surface of the road, and

(d) does not constitute the owner of the road as an occupier of the land, and

(e) does not authorise the owner of the road to dispose of any interest (other than an easement or covenant) in the land, and

(f) does not prevent any lands that were previously considered to be adjoining lands for the purposes of the Land Acquisition (Just Terms Compensation) Act 1991 from continuing to be so considered.

(2) This section does not restrict the power of a roads authority to regulate the digging up of public roads pursuant to the provisions of any other Act.

…

149 Leasing of land above or below public road

(1) A roads authority may lease the air space above, or land below the surface of, any public road (other than a Crown road) that is owned by the authority.

(2) Such a lease may not be granted by a roads authority other than TfNSW except with the approval of the Secretary of the Department of Planning and Environment.

(3) The Secretary of the Department of Planning and Environment must not approve a lease in respect of a public road if the granting of the lease would be inconsistent with the rights of passage and access that exist with respect to the road.

(4) The term of a lease, together with any option to renew, must not exceed 99 years.

Planning for Area 20

13. RHCC’s land is in the suburb of Rouse Hill in the local government area of Blacktown City Council (the Council), and was previously zoned rural. The land was rezoned as part of the North West Growth Centre urbanisation plan. RHCC is the registered proprietor of Lot 135 DP208203, known as 49 Terry Road, Rouse Hill, with an area of 2.234ha (or 22,340m²). Prisma’s land lies to the east, separated by a public road known as Terry Road. RHCC’s land is zoned R3 Medium Density Residential under State Environmental Planning Policy (Precincts – Central River City) 2021 (NSW) (PCRC SEPP).

14. Prisma is the registered proprietor of Lot 132 DP208203, known as 54 Terry Road. Prisma’s land has an area of 2.116ha (or 21,160m²). Part of Prisma’s land (approximately 13,300m²) is zoned R3 Medium Density Residential. Approximately 2,440m² is zoned RE1 Public Recreation and approximately 5,420m² is zoned SP2 Infrastructure (Local Drainage) under the PCRC SEPP.

15. Terry 048 Service Pty Ltd is the registered proprietor of Lot 134 DP208203, known as 51 Terry Road. The parties referred to the owner of Lot 134 as Poly. Poly’s land immediately abuts RHCC’s land, and is across Terry Road from Prisma’s land.

16. The PCRC SEPP commenced on 1 March 2022. Certain provisions of the State Environmental Planning Policy (Sydney Region Growth Centres) 2006 (NSW) (SGC SEPP) were transferred into the PCRC SEPP. Appendix 6 (Area 20 Precinct Plan) of the SGC SEPP was transferred to Appendix 8 (Area 20 Precinct Plan) of the PCRC SEPP. RHCC’s land and Prisma’s land is located within the Area 20 Precinct – Cudgegong Road Station pursuant to the Blacktown City Council Growth Centre Precincts Development Control Plan 2010 (NSW) (GCDCP). Schedule 4 of the GCDCP contains the Indicative Layout Plan, which shows the development envisaged for the Area 20 Precinct, reproduced below with markups showing the location of RHCC’s and Prisma’s lands:

17. The following aerial satellite image, taken from the report of Mr Bewsher dated 30 March 2022, helpfully depicts the location of the various lots to be discussed in this judgment owned by RHCC, Prisma and Poly. Second Ponds Creek to which stormwater is to drain is also shown.

RHCC development consent

18. In Terry Rd Development Pty Ltd v Blacktown City Council [2018] NSWLEC 1226, the Court granted development consent to DA SPP-17-00003 on 11 May 2018, for the demolition of existing structures and the construction of three four storey residential flat buildings on RHCC’s land. The approved development comprises 311 apartments, a café, basement car parking with 386 car parking spaces, new public roads, stormwater drainage and landscaping works.

19. The approved civil engineering plan C2-00 revision D prepared by Calibre Consulting as part of RHCC’s development consent depicts drainage arrangements for RHCC’s land including the piping of stormwater within RHCC’s land, a discharge point on the southern boundary for that system, a pipe across Terry Road leading to Prisma’s land and a piped system on Prisma’s land commencing on the Terry Road boundary. While the development consent cannot apply to Prisma’s land or indeed the road reserve in Terry Road the stormwater drainage system depicted at the time development consent was granted envisaged disposal of RHCC stormwater, and Poly stormwater, across Prisma’s land.

Prisma development consent/evidence of Mr Ng

20. On 24 March 2020 the Court granted a development consent in Celesteem Rouse Hill Development v Blacktown City Council [2020] NSWLEC 1137 in respect of Prisma’s land for the demolition of existing structures, subdivision and construction of 43 attached dwellings with associated works to be completed over multiple stages. The Prisma consent is a deferred commencement consent. The deferred commencement consent conditions must be complied with before 24 March 2024. Condition 0.2.i. states:

0.2 Amended drainage and civil plans from Samana Blue, File Ref. 2019026 Rev H (apart from drawing C22 which is Revision I) must address the following to the satisfaction of the Manager Asset Design;

i. Revise the trunk drainage line within Road 2. Ensure the starting downstream 10% AEP HGL at pit 2-2 allows for the backwater from the Rocla CDS diversion weir. Set the HGL for the 10% AEP flow and allow for a weir height of 500mm and a weir length of 1.8m. Where the existing 1200 x 600 box cannot carry the required flow a supplementary drainage system may be required. Review HGL on pipe long-sections.

21. The following diagram in the engineering plans produced by Samana Blue Engineering dated 5 February 2020 required by Prisma’s development consent usefully illustrates the outline of the approved development:   

22. Along the northern boundary of Prisma’s land runs a half-built road known as Boolavogue Street. The Samana Blue plan above indicates that the development consent includes the construction of half of Road 2 (Boolavogue Street) and consists of three blocks of development separated by internal roads. A temporary bio-retention basin is located at the north-western end of the development.

23. The Prisma development consent is subject to general conditions including:

6.5       Roads

…

6.5.5    Proposed new roads shall be designed and constructed as follows:

Name	Width (m)	Length (m)	Formation (mm)	Traffic loading N(E.S.A)
Road 1	18	75	3.5-11.0-3.5	5x5⁵
Road 2 [Boolavogue Street]	17 (half)	200	5.5-3.5	5x10⁵
Road 3	18	75	3.5-11.0-3.5	5x10⁵
Road 4	18	75	3.5-11.0-3.5	5x10⁵

…

17.2     Site Access

17.2.1  All lots shall have access from a dedicated public road.  In this regard, all proposed roads shall be dedicated as public road free of cost to Council.

24. The northern half of Boolavogue Street has already been built and is fronted by several fully developed houses that have been constructed and occupied, formerly 44 Terry Road, as seen on the view. Cars can park on the northern side of Boolavogue Street. The southern half of Boolavogue Street is identified in the GCDCP Sch 4 as land to be transferred to the Council and used for widening and completion of Boolavogue Street, including completion of stormwater drainage works within the road. The completion of public roads by this means has occurred in neighbouring developments, as was seen on the view along Barbola Street which runs parallel to Boolavogue Street. Conditions 6.5.5 and 17.2.1 of Prisma’s development consent require the design and construction of the other half of Boolavogue Street and its dedication as a public road free of cost to the Council.

25. Mr Ng sole director and secretary of Prisma in his affidavit dated 11 March 2022 stated he has no present intention of acting on Prisma’s development consent. The deferred commencement conditions have not yet been satisfied. Mr Ng also deposed that there is a possibility he may never act on the consent for the following reasons:

(a) There are significant costs in acting upon the Prisma consent. These include:

(i) an estimate of $12,000 in order to satisfy the deferred commencement conditions in relation to amended civil design drawings to be prepared and assessed;

(ii) a monetary contribution of $66,688 under the VPA to be paid prior to the issue of a construction certificate for building work (other than investigatory or demolition work) or a subdivision certificate; and

(iii) a total development cost estimated to be $18,215,944.

…

(b) I have not engaged the necessary consultants and/or contracts to carry out and oversee the anticipated works.

(c) Over the last few years I have also overseen the preparation of a development application for another site. As part of this I have also had general discussions with contractors in relation to that site whose name I do not remember. In reviewing the documentation that has been prepared and my general conversations, I have become aware that the cost of construction and materials is increasing.

Poly development consent

26. On 24 September 2020, Poly obtained a development consent from the Council for construction of new public roads, multi-dwelling housing and subdivision into 145 residential lots inter alia. Poly’s land, like RHCC’s land, naturally drains downstream in the direction of Prisma’s land towards Second Ponds Creek. The drainage of stormwater on Poly’s land through RHCC’s land is provided for in RHCC’s development consent.

Stormwater catchments

27. Figure 2 of Mr Bewsher’s report dated 30 March 2022 is a topographic map showing the flow directions of stormwater on RHCC’s, Prisma’s and Poly’s lands, and the size of the stormwater catchments, as follows:

28. RHCC’s development consent was approved with two stormwater outlets, one in the northwest and one in the southwest of RHCC’s land. The northern catchment of RHCC’s land drains to the northwest. According to the approved plans northwest flows are intended to use the public stormwater drainage system on Barbola Street.

29. In the approved plans stormwater flows from the southern catchment of the RHCC land and stormwater collected on Poly’s land is to be drained to a point on the southwest boundary of RHCC’s land then through Terry Road (collecting stormwater in Terry Road) to the northern boundary of Prisma’s land and through that part of Prisma’s land which would become part of Boolavogue Street under Prisma’s development consent to Second Ponds Creek. The water collected in the southern catchment of the RHCC land and the catchment on the Poly land naturally drains approximately west towards Second Ponds Creek over Prisma’s land. The required capacity to drain the RHCC and Poly water and Terry Road stormwater is identified in the engineering evidence as 2,113 litres per second (l/s).

Conditions of RHCC’s development consent

30. RHCC’s development consent is subject to a number of conditions, relevantly as follows:

5.1 DA Plan Consistency

5.1.2    No construction certificate for building works is to be released until all civil works related to roads and drainage within the road reserve have been completed and sign-off received from the PCA. However, staging of road construction (and any associated drainage works) will be permitted where suitable traffic circulation or temporary turning areas in dead end roads are evident in accordance with Council’s Engineering Guide for Development, to the satisfaction of the PCA.

…

7.3 Site Works and Drainage

…

7.3.2 Stormwater drainage from the site shall be designed to satisfactorily drain rainfall intensities of 159mm per hour over an average recurrence interval of 20 years. The design shall:

…

(c) ensure that the development, either during construction or upon completion, does not impede or divert natural surface water runoff so as to cause a nuisance to adjoining properties.

…

8.3 Roads Act Requirements

8.3.1 Under Section 138 of the Roads Act 1993 an approval for engineering work is required.

These works include but are not limited to the following:

● Any works within Council’s road reserve

● Half width road construction

● Kerb inlet pit connections or construction

● Vehicular crossings

● Path Paving

The above requirements are further outlined in this section of the consent.

…

8.4 Other Engineering Requirements

…

8.4.3 Submit written permission from the affected owner for any works proposed on adjoining land.

…

8.6 Drainage

8.6.1   Drainage discharge from the development shall be designed in accordance with the discharge points as shown in the approved civil engineering plan C2-00 revision D prepared by Calibre Consulting.

8.6.2   Any overland or stormwater flows must be intercepted at the property boundary, conveyed through the site in a piped or channelled drainage system and discharged in a satisfactory manner.

…

8.9 Stormwater Quality Control

8.9.1    Provide a stormwater quality treatment system in accordance with Council’s Engineering Guide for Development and Development Control Plan Part J – Water Sensitive Urban Design and Integrated Water Cycle Management.

…

13.2 Road Damage

13.2.1 The cost of repairing any damage caused to Council's assets in the vicinity of the subject site as a result of the development works be met in full by the applicant/developer.

Note: Should the cost of damage repair work not exceed the road maintenance bond, Council will automatically call up the bond to recover its costs. Should the repair costs exceed the bond amount a separate invoice will be issued.

13.3 Easements/Restrictions

13.3.1 In the event that subdivision precedes construction of buildings on any of the lots, Council will require the lodgement of a Section 88B Instrument to ensure that development proceeds in accordance with this consent. The restriction should contain a provision that it may not be extinguished or altered except with the consent of the Council of the City of Blacktown.

…

13.9 Engineering Matters

…

13.9.2 Easements/Restrictions/Positive Covenants

13.9.2.1 Any easement(s) or restriction(s) required by this consent must nominate Blacktown City Council as the authority to release vary or modify the easement(s) or restriction(s). The form of easement or restriction created as a result of this consent must be in accordance with the following:

(a) Blacktown City Council's standard recitals for Terms of Easements and Restrictions (Current Version).

(b) The standard format for easements and restrictions as accepted by the Lands Title Office.

13.9.2.2 The Restrictions and positive covenants, to be submitted for each relevant stage of the development, must be endorsed by Council and lodged with NSW Government - Land and Property Information over the Stormwater Quality Control devices/system and outlet works. Documentary evidence of this LPI lodgement shall be submitted to Council.

13.9.2.3 All Section 88B restrictions and covenants created, as part of this consent shall contain a provision that they cannot be extinguished or altered except with the consent of Blacktown City Council.

…

14.17 Drainage Matters

[Not extracted due to length and lack of relevance.]

31. Conditions 5.1.2, 8.6.1, 8.6.2 and 8.9.1 provide context for why the proceedings have been commenced. The Council has identified in correspondence with RHCC s 4.6 of the Council’s Engineering Guide for Development dated 2005 (Council’s Engineering Guide), mentioned in condition 8.9.1 of the Consent, which provides:

4.6   Adjoining Owners Consent/Creation of Drainage Easements

Where drainage involves the provision of drains across land owned by others, evidence that the necessary easements have been created over the downstream properties must be lodged with Council. This evidence and downstream owner's consent to carry out the proposed works must be lodged with the initial set of engineering plans. Details of the easement and proposed works must be shown on the engineering plans and downstream owners consent to carry out the proposed works. Easements must be registered prior to release of the engineering plans, Construction Certificate and/or Subdivision Works Certificate.

32. The Council also indicated by email to RHCC that an easement to drain water from RHCC’s land must be registered prior to the issue of any construction certificate related to RHCC’s development consent. Consequently RHCC has been unable to commence its development consent. It argues that under current circumstances it cannot do so unless the easement it seeks is obtained from the Court.

Easement sought by RHCC

Change in evidence/scope of easement

33. In the course of the hearing the volume of water intended to be discharged through the easement was clarified by RHCC as being 421 l/s, less than the amount the subject of RHCC’s development consent, which provides for drainage of the southern catchment of RHCC’s land, Poly’s land and stormwater in the public drainage system in Terry Road (2,113 l/s). According to RHCC, only water from the southern catchment of RHCC’s land will be discharged through the easement.

34. Before commencement of cross-examination of the stormwater engineering experts in July 2022, Mr Bewsher, RHCC’s stormwater engineering expert, informed the Court that he had prepared his expert report and participated in the production of the first engineers’ joint report on the basis that the easement sought by RHCC was in accordance with the RHCC development consent. The engineers’ evidence had assumed that the amount of water required to be accommodated by the easement was 2,113 l/s, draining RHCC’s southern catchment, the Poly land and the public stormwater drainage system in Terry Road. Mr Bewsher stated orally that he now understood that the amount of water needing to be accommodated was far less, around 500 l/s plus or minus 20%. Mr Bewsher was given leave to prepare a further report, which was prepared and dated 10 July 2022, on the basis of draining 421 l/s from RHCC’s southern catchment. On 22 July 2022, the stormwater engineers were ordered to prepare new expert reports and consequently the proceedings were adjourned part-heard. Orders were also made for the possible preparation of new expert reports from the traffic engineers, quantity surveyors and valuers in light of this change. The proceedings resumed in December 2022 on the basis that the easement sought is to accommodate 421 l/s from the southern catchment of the RHCC land only.

35. Regardless of the reduction in the amount of water intended to flow along the easement, the dimensions of the easement sought did not change. The proposed easement is approximately 210m long and 3m wide. It is set back approximately 3m along the northern boundary of Prisma’s land, running approximately parallel to Boolavogue Street, 3.5 to 4m to the south of the centre line of the proposed Boolavogue Street. Based on the valuation experts’ agreed description of the easement, the area of land directly impacted by the easement is approximately 755m² of which 600m² is zoned R3 for Medium Density Residential development. RHCC seeks to impose the easement shown in the plan in Annexure 1 to the Class 3 Application, as follows:

36. The proposed easement is described as “Easement to Drain Water 3 wide and variable (A)”. The burdened lot is specified as Lot 132 in DP208203 (Prisma’s land) and the benefitted lot is Lot 135 in DP208203 (RHCC’s land). The easement adopts the terms of Pt 3 of Sch 8 to the Conveyancing Act (Easement to drain water), as follows:

Full and free right for every person who is at any time entitled to an estate or interest in possession in the land herein indicated as the dominant tenement or any part thereof with which the right shall be capable of enjoyment, and every person authorised by that person, from time to time and at all times to drain water (whether rain, storm, spring, soakage, or seepage water) in any quantities across and through the land herein indicated as the servient tenement, together with the right to use, for the purposes of the easement, any line of pipes already laid within the servient tenement for the purpose of draining water or any pipe or pipes in replacement or in substitution therefor and where no such line of pipes exists, to lay, place and maintain a line of pipes of sufficient internal diameter beneath or upon the surface of the servient tenement, and together with the right for the grantee and every person authorised by the grantee, with any tools, implements, or machinery, necessary for the purpose, to enter upon the servient tenement and to remain there for any reasonable time for the purpose of laying, inspecting, cleansing, repairing, maintaining, or renewing such pipe line or any part thereof and for any of the aforesaid purposes to open the soil of the servient tenement to such extent as may be necessary provided that the grantee and the persons authorised by the grantee will take all reasonable precautions to ensure as little disturbance as possible to the surface of the servient tenement and will restore that surface as nearly as practicable to its original condition.

37. The terms of the easement were amended in the course of the hearing to stipulate that the persons having the benefit of the easement:

shall be responsible for maintaining in good order or repair the Easement, access or other things required for the enjoyment of the Easement and shall be liable for the cost of maintaining in good order or repair that Easement.

38. The proposed easement also sets out the following term:

Name of the persons whose consent is required to release, vary or modify the Easement referred to in the abovementioned plan: Blacktown City Council.

Concept drainage scheme

39. Plans of possible drainage structures on Prisma’s land showing a concept tailout drainage scheme within the easement was identified in Appendix A to the second joint report of the stormwater engineers. Part of Appendix A is reproduced below as it helps to visualise the scale and nature of the easement sought in the context of the development Prisma has consent for.

40. The easement ends at chainage 210 on the Prisma land. Water is intended to exit the easement area and disperse onto the Prisma land in the direction of the black arrows to the left of the page, that is, in the general direction of Second Ponds Creek. The evidence of Mr Bewsher (below in [176]) is that Second Ponds Creek is roughly 50m from the western edge of the easement. Appendix A also provides further detail as to the potential drainage works for which consent may be sought. Parts of the drainage channel would be below ground level and parts would be above ground level. At its deepest the channel would be approximately 1.5m deep.

Temporary?

41. RHCC’s submissions described the easement sought as “temporary” because it considers that it is inevitable that, as has occurred in neighbouring developments, the southern half of Boolavogue Street and associated drainage works on the Prisma land must be completed and dedicated as a public road. When that occurs, the easement will become redundant as it will be replaced with a piped system lying on public land under Boolavogue Street as part of the Council’s public drainage infrastructure. If the southern half of Boolavogue Street is not built as a condition of consent, RHCC submitted that the land will necessarily be required to be compulsorily acquired by the Council to enable completion of Boolavogue Street and the trunk drainage network. As Prisma submitted the terms of the easement do not include the word temporary. The easement is unlimited as to time and on its face is therefore permanent.

Pipe under Terry Road

42. RHCC submitted in the December hearing that in light of the change in scope of the easement, which no longer precisely reflects the 2018 development consent, it will build a pipe under publicly owned Terry Road to connect its land with the easement proposed on Prisma’s land. This will require approval pursuant to s 138 of the Roads Act for the work required in Terry Road. That approval has been applied for but not yet granted according to RHCC’s submissions because it is pending the outcome of this proceeding. This circumstance generated a lot of argument in the context of whether RHCC’s land will benefit from the easement, considered below in [126]-[139].

Development consent required for work on Prisma’s land

43. If the Court imposes the easement sought under s 88K of the Conveyancing Act, RHCC will require development consent to carry out the drainage works on Prisma’s land within the easement. Prisma would be required to provide owner’s consent to the making of a development application to enable the determination of that development application. The Court could provide for a term of the easement requiring such owners’ consent, as occurred in 117 York Street Pty Ltd v Proprietors of Strata Plan 16123 (1998) 43 NSWLR 504; (1998) 98 LGERA 171 (117 York Street) at 522-523.

Threshold issue - should the Court dismiss proceedings for failure to comply with s 40(1)(a) LEC Act

44. The application of s 40(1)(a) of the LEC Act, on which RHCC relies, arises as an issue given the change in scope of the easement sought. The Court must determine whether the proceedings are to be dismissed for failure to comply with s 40(1)(a) of the LEC Act. RHCC identified that it now intends to drain only part of the stormwater the subject of the development consent as identified above in [33]. In other words the terms of the development consent do not underpin precisely the stormwater drainage scheme for which the easement is sought in that only RHCC land is to be drained. RHCC further identified in the course of the substantive hearing that as the easement sought is not intended to accommodate water discharged in accordance with the development consent granted that development consent will need to be modified or a new consent sought: Tcpt 12 December 2022, pp34(45-50)-35(1-29) extracted below.

TOMASETTI: Your Honour, I object to this. This is not going to any issue in dispute, this cross examination. Mr Bewsher last time indicated that the assumption that he had was that the easement would service the poly land and the RHCC land, and also Terry Road. That's the very reason we fell into the adjournment, because he said once he had the assumption correct, then all we'd be doing is draining the RHCC land. The volumes dropped down to 421 litres per second.  There's no issue between my learned friend and his client and our client that in order ‑ if we were to get the easement ‑ to drain the RHCC land, we would need a further development consent.  And we would need that development consent to either update the earlier consent or whatever.

But what is now proposed is not in fulfilment of the existing conditions of consent.  There's no issue about that, and it's really a matter for legal submission.  As I say, I'm in strident agreement with my learned friend.  What I understood the engineering experts would be involved in is the examination of alternative options 1, 2 and 3.  Not about something with which we are ad idem about.  But we can't drain through this proposed easement, water from other areas.  It's not an issue.  My friend knows that.

HEMMINGS: Well, I didn't know that.  That's why I'm cross‑examining on it.

TOMASETTI: Well, it's in his report‑‑

HEMMINGS: There's never been a concession made until now that they cannot act upon the consent.  If my friend's making that concession that they cannot act upon that consent, then I don't need to ask any further questions on it.

TOMASETTI: Concession was made last time, but anyway.  That concession's made now if that's what you want.

HEMMINGS: Okay.  I'll now get rid of a couple of questions.  Do you have access to Mr Hayek's most recent affidavit, the one from only a couple of days' ago, which is part of exhibit G.

45. Following a further question about the application of s 40(1) from me after the hearing further written submissions were provided by the parties dated 10, 21 and 28 February 2023.

RHCC’s submissions

46. RHCC submitted that it does not matter if the RHCC consent requires modification as the consent has been granted by the Court and its implementation requires that any drainage over Prisma’s land be within a legally created easement.

47. RHCC relied on cases such as Billgate Pty Ltd v Woollahra Municipal Council (2004) 136 LGERA 356; [2004] NSWLEC 436 (Billgate) Bignold J at [15]-[17], Becton Corporation Pty Ltd v Minister for Infrastructure, Planning and Natural Resources [2005] NSWLEC 197 (Becton) at [16]-[17] and Huntington & Macgillivray v Hurstville City Council (No 2) (2005) 139 LGERA 84 (Huntington) at [10]-[12] to support the beneficial and facultative nature of s 40(1)(a). Regardless that a modification of the RHCC consent may be required s 40(1)(a) is nevertheless enlivened.

48. An easement can be reasonably necessary although some future action is required in addition to obtaining the easement, Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd (2010) 171 LGERA 286; [2010] NSWLEC 2 (Rainbowforce) at [83]. The same circumstance arose in A.T.B. Morton Pty Ltd v Community Association DP270447 (No 2) [2018] NSWLEC 87 (ATB Morton LEC) where development consent was granted in relation to land by the Court subject to a condition that an easement for access be obtained over the respondent’s land.

49. A development consent has been granted in respect of RHCC’s land to enable a large residential development. It is reasonably necessary to be able to drain RHCC’s land. And it is reasonably necessary to drain the stormwater generated by the easement sought to be imposed over Prisma’s land. There is no reasonable alternative option.

50. Prisma submits that s 40(1)(a) operates only “for an easement that has a nexus to the court granted or modified development consent”.

51. For the court to have jurisdiction to impose the easement s 40(1)(a) of the LEC Act only requires a development consent to have been granted by the court. The language of the provision makes no reference to any other requirement. Of course, there has to be some nexus between the development that is being carried out and the reasonable necessity in the circumstances for the easement sought to be imposed. Without the nexus it could never be reasonably necessary that the easement be imposed. However, nothing in s 40 mandates that the court lacks jurisdiction to impose the easement where the development consent granted by it in respect of the development requires some modification. Section 40 simply enables the imposition of an easement where it is reasonably necessary to carry out development.

52. Prisma draws on no authority for the proposition that the Court lacks jurisdiction to impose the easement if any modification of the development consent is required. Such a construction of s 40 is neither beneficial nor facultative.

53. For completeness I note that in its further submissions dated 10 February 2023 RHCC attempted to change its position as follows:

It is the Applicant’s position that no such modification of its Consent is necessary. Any suggestion otherwise is misconceived. The conditions of consent as drafted contemplate there may be amended designs, in particular future engineer design as part of the Construction Certificate (CC) process. Accordingly, while some further engineering modification may be required to the approved engineering plans the conditions of consent to be satisfied prior to CC, allow that to achieve CC either in updated engineering drainage plans for the CC and/or in obtaining a s138/139 Roads Act approval, which is also required by a condition of the Applicant’s Consent.

Prisma’s submissions

54. Prisma identified the change in RHCC’s position set out above in [46] and submitted this should not be allowed given the concession made during the hearing as extracted above in [44], which change meant that a line of cross-examination of Mr Bewsher was not pursued, submissions on public interest under s 88K(2)(a) of the Conveyancing Act would have changed and is now intended to cure the jurisdictional hurdle posed by s 40(1)(a).

55. The Court’s power to determine to grant an easement under s 40(1)(a) can only be for an easement that has a nexus to the Court granted or modified development consent. In light of the need to obtain a new or modified development consent there is no nexus between the easement sought and the consent obtained. While s 40 is beneficial and facultative and should be given the widest interpretation which its language permits, the section does not confer jurisdiction on the Court to hear applications for easements that have no nexus with a court granted development consent or modified consent.

56. Billgate addressed a different issue of whether the jurisdiction of the Court was enlivened in a situation where the Court had decided to grant development consent but withheld making final orders. Here the Court has already issued development consent to RHCC. There is no nexus between the easement sought and the RHCC consent because if the easement is granted the Applicant will need to either modify the RHCC consent or obtain a new easement that satisfies the conditions of the RHCC consent.

57. Huntington is authority for the circumstance that the Court can grant an easement even if a future development application will be required on the servient tenement’s land to give effect to the intent of the easement, in this case Prisma’s land. Huntington has no application on the issue of whether s 40(1)(a) of the LEC Act is enlivened in circumstance where the easement sought is unresponsive to RHCC’s development consent.

Consideration

58. In light of the transcript reference set out above in [44] and my understanding of oral submissions made by RHCC during the hearing to the effect that the RHCC development consent would need to be modified or a new consent obtained in light of the reduced drainage of stormwater, RHCC’s position in further written submissions identified above in [46] is a significant change of position. I was not taken to the conditions of consent referred to in RHCC’s further written submissions relied on to underpin that change in the course of the hearing. I will approach the matter of whether the Court has jurisdiction under s 40(1)(a) on the basis that RHCC does need to modify its existing development consent or seek a new one as that was the position put by RHCC throughout the second substantial hearing.

58. Prisma expressed the basis for this determination of the application of s 40(1) as “if the Court grants the amended easement, the Applicant (RHCC) would not be able to act on the RHCC consent (at least until that consent was modified.” RHCC’s submissions concerning the easement being reasonably necessary although a future action is required, referring to Rainbowforce, is addressing a requirement of s 88K(1) of the Conveyancing Act. That does not precisely address whether the Court has jurisdiction under s 40(1)(a). Subsection (1)(a) states that section applies if the Court has granted development consent.

59. Nor are these circumstances precisely like ATB Morton LEC. While condition 8.9.1 in the RHCC consent indirectly requires an easement to be obtained due to the reference to the Council’s Engineering Guide, the RHCC consent does not entirely permit that which is sought. The approved stormwater drainage plans of Calibre Consulting referred to in condition 8.6 require modification to reflect what is now sought. No ‘intervening step’ of needing to modify the consent arose in ATB Morton LEC.

60. None of the three cases referred to Billgate, Becton or Huntington consider the facts that arise in this case and in that sense do not provide immediate assistance to the resolution of the circumstances before the Court. As identified above in [56], Billgate addressed a circumstance that development consent would be granted but final orders were delayed.

61. Returning to first principles concerning the beneficial and facultative nature of s 40(1)(a), which the cases relied on by RHCC emphasise, I accept that the easement sought does enable the implementation in large part of the RHCC consent in the manner contemplated by that consent concerning the drainage of stormwater through Prisma’s land from RHCC’s land (Billgate at [16]). That provides sufficient nexus for s 40(1)(a) to apply. The natural flow of stormwater from RHCC’s land is towards Second Ponds Creek across Prisma’s land and the drainage scheme contemplated in RHCC’s development consent does provide for drainage of RHCC’s land to Second Ponds Creek.

62. I will proceed on the basis that s 40(1)(a) of the LEC Act can be relied on by RHCC.

63. While RHCC’s submissions also dealt with whether there is any requirement to obtain development consent over Prisma’s land before the easement sought could be granted, I do not need to consider these. I understand the parties agree that if the easement is granted over Prisma’s land a development consent in relation to Prisma’s land will be needed. Huntington addressed that circumstance.

Threshold issue - should the Court dismiss proceedings for failure to comply with s 40(3) LEC Act?

65. Should the Court, in its discretion, dismiss the proceedings because, on Prisma’s case, persons referred to in s 40(3) of the LEC Act should have been joined to the proceeding by RHCC (or at least given notice of the proceeding) and were not?

Evidence on s 40(3) issue

66. Covenant J182006 (in Ex 1) was registered on 4 August 1962 on the title of Lot 132 in DP208203, Prisma’s land. The terms of the covenant are as follows:

… the Transferees so as to bind themselves their executors administrators and assigns hereby covenant with the Transferors and their assigns as follows:-

(a)   Any main building to be erected on the Lot hereby transferred shall only be used for the purpose of a dwelling house.

(b)   No earth, clay, stone, gravel, soil or sand shall be excavated carried away or removed or permitted to be excavated carried away or removed from the said Lot except for the purpose of excavating for the foundations of any building to be erected thereon nor shall the transferees use or permit or allow the said Lot to be used for the manufacture or winning of bricks, tiles or pottery ware.

(c)   For the benefit of the adjoining land owned by the Transferors being the land comprised in Deposited Plan No. 208203 but only during the ownership thereof by the Transferors or their assigns other than purchasers on sale, no fence shall be erected upon the land hereby transferred to divide it from such adjoining land without the consent of the transferors or their assigns but such consent shall not be withheld if such fence is erected without expense to the Transferors and their assigns and in favour of any person dealing with the Transferees or their assigns such consent shall be deemed to have been given in respect of every such fence for the time being erected.

AND IT IS HEREBY EXPRESSLY AGREED AND DECLARED:

(i) That the land subject to the to the burden of the foregoing covenants is the land hereby transferred.

(ii) The lands to which the benefit of the foregoing covenants is intended to be appurtenant are the lands comprised in the said Deposited Plan.

(iii) The foregoing covenants or any of them may be released varied or modified by or with the consent of the Transferors or their assigns.

67. The parties agreed that the covenant fitted the description of an instrument registered under the Real Property Act 1900 (NSW) (Real Property Act) as referred to in s 40(3).

68. RHCC relied on affidavits from Mr Williamson land title searcher dated 11 November 2022, Mr Jiriaev solicitor dated 17 November 2022, and Mr Hayek solicitor dated 22 November 2022 (Hayek #3). Mr Williamson was engaged by RHCC to conduct searches in order to determine the number of current individual lots originating from the 102 lots in DP208203 in 1962 including lots that are still in DP208203, lots that have since changed deposit plan numbers, and lots that have been subdivided into other lots. There are currently 1,150 lots within various deposited plans and public roads that were created from DP208203 from 1962. Those lots, excluding the Prisma land, are benefitted by Covenant J182006.

69. Mr Jiriaev deposed that he sent a letter to the Historic Houses Trust (the Trust) on 15 September 2022 and had a telephone call with the head of corporate governance for the Trust on 28 October 2022. The Trust has a registered interest in DP208203, and the present day DP815213, and has an interest in Covenant J182006. In this correspondence Mr Jiriaev sought and obtained from the Trust an indication that the Trust did not wish to be joined as a party to this proceeding.

70. Hayek #3 was partly read, confirming Mr Jiriaev’s actions with respect to the Trust and the Trust’s response. The affidavit also annexed correspondence between Mr Jiriaev and legal representatives for the Council in September 2022. That correspondence asked the Council to confirm that it wishes to take no part in the proceedings, and that if no response was received, RHCC will proceed on the basis that the Council is fully informed of and has no objections against the proceeding. No response was received. A similar letter was sent ten days later. There is no evidence of any response to the second letter.

Prisma’s submissions

71. Prisma submitted that the Court should dismiss the proceeding for failure to comply with s 40(3) of the LEC Act. Section 40(3) specifies a jurisdictional prerequisite to the grant of an easement by the Court under s 88K of the Conveyancing Act. It requires the parties to an application under s 40 of the LEC Act include each other person having an estate or interest in the land, as evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act. While the covenant has not been registered on the title of all 1,150 lots which were once part of DP208203, that is not demonstrative of whether or not they benefit from the dealing. The failure to record an instrument in a certificate of title does not affect the validity of that instrument: Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321; [2015] NSWCA 74 at [110]-[112], [115] (Bathurst CJ and Beazley P) and [161]-[163] (Basten JA). RHCC has not joined every person required to be joined. Although that would be an onerous task in the circumstances, it is a requirement of s 40(3).

72. Prisma accepted that the Court has discretion whether to dismiss proceedings by virtue of a failure to comply with s 40(3) of the LEC Act under the principles discussed in Community Association DP270447 v ATB Morton Pty Ltd (2019) 240 LGERA 32; [2019] NSWCA 83 (ATB Morton CA) at [94]-[120] (Leeming JA, Bell P and Payne JA agreeing). The default position is joinder. Prisma accepted that the Council and the Trust have both now been notified of proceedings and have decided not to seek joinder as a party. The failure to join those entities would not be fatal to proceedings in light of ATB Morton CA. Prisma nevertheless submitted that RHCC should have at least taken steps to bring this proceeding to the attention of the 13 landowners who occupy the houses on the northern side of Boolavogue Street proximate to the proposed open drainage infrastructure, who may have wished to be heard against the grant of the easement. The views of those residents may have been relevant to reasonable necessity and public interest in this proceeding because, for example, Mr Bewsher (RHCC’s stormwater engineering expert) put at issue the views of those residents (see below in [158]) in relation to options for stormwater disposal.

73. That the terms of the covenant may not be relevant to the easement or the proposed activities within it is irrelevant, as s 40(3) does not define the right to be a party to this proceeding by reference to the nature of the interest. It is also irrelevant that the covenant may be suspended by operation of a State Environmental Planning Policy or Local Environmental Plan.

RHCC’s submissions

74. Firstly, s 40(3) of the LEC Act does not require that all persons having an estate or interest in the land be joined as a party to the proceedings: ATB Morton CA at [118]-[119]. Ultimately the necessity for the joinder of parties is discretionary. Section 40(3) exists because parties to Class 1 proceedings in this Court are the applicant for consent and the consent authority. In those circumstances there is an obvious need to join persons who own the land burdened by a proposed easement. It was not practical or feasible for all the proprietors of the 1,150 lots originally within DP208203 to have been joined to this proceeding by RHCC. Common sense does not suggest they would have the slightest interest in the proceedings. RHCC has notified the Council and the Trust of the proceeding and both chose not to participate. Prisma did not plead that some interests were affected more than others in its statement of facts and contentions (SOFAC) in reply. It did not specify that all interests in DP208203 needed to be notified and joined in the proceedings. Prisma specifically referenced public authorities as opposed to other interests in its SOFAC in reply. Either all of the lot owners needed to be joined or none did. In these circumstances, the non-joinder of those parties is not fatal to proceedings: ATB Morton CA at [94]-[120].

75. Secondly, the easement does not authorise the carrying out of the proposed drainage works within the easement on Prisma’s land. Whether the easement is granted does not impact anyone other than RHCC at this stage. If a development application is made for works within the easement, persons in the locality can make submissions on the merits of that development. There would be provision for notification and objections or the seeking of injunctions from the Court.

76. Thirdly, the activities prohibited by the covenant are not relevant to the grant of the proposed easement and would only become relevant when the works the subject of the later DA are performed. Furthermore, if development consent is granted the covenant will be of no force and effect by operation of cl 5.8 of the State Environmental Planning Policy (Transport and Infrastructure) 2021 (NSW). In these circumstances joinder is not necessary.

77. The expression “estate or interest” in s 40(3) has a proprietary connotation: Stow v Mineral Holdings (Australia) Pty Ltd (1979) 180 CLR 295; [1979] HCA 30 at 311 (Aickin J); The Queen v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327; [1982] HCA 69 at 342 (Mason J). Each covenantee does not have any “estate or interest” in all of the other parcels of land on which the covenant is registered. A covenantee of one parcel of land does not have an “estate or interest” in the other 1,149 lots and various public roads.

78. The owners of the 1,150 lots are not prejudiced by the proposed easement. On the site view the Court would have observed that many of the neighbouring residential dwellings had involved works that may not be consistent with the covenant.

Consideration of joinder issue

79. In ATB Morton LEC an application for an easement pursuant to s 88K of the Conveyancing Act made in reliance on s 40 of the LEC Act. The applicant had written to both prospective parties asking whether they wished to be parties to the application and each had declined. Robson J held that two prospective parties who enjoyed registered easements over part of the land over which the easement was sought did not need to be joined as parties under r 6.24 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). In ATB Morton CA, Leeming JA (Bell P and Payne JA agreeing) considered the application of rule 6.23 of the UCPR and held that s 40(3) should not be read so as to displace the body of authority on rule 6.23. Rule 6.23 of the UCPR states:

Part 6 Commencing proceedings and appearance

Division 5 Joinder of causes of action and joinder of parties

…

6.23 Effect of misjoinder or non-joinder of parties

Proceedings are not defeated merely because of the misjoinder or non-joinder of any person as a party to the proceedings.

80. ATB Morton CA discussed the body of authority, practice and 19^th century legislation of which r 6.23 of the UCPR is a modern reflection at [112]-[119]:

112. It will be seen that ground 1 of the appeal explicitly accepted that UCPR r 6.24 applied. It was common ground that r 6.23 likewise applied to the proceedings in Class 3 of the jurisdiction of the Land and Environment Court. That rule provides as follows:

“6.23   Effect of misjoinder or non-joinder of parties

Proceedings are not defeated merely because of the misjoinder or non-joinder of any person as a party to the proceedings.”

113.   That rule has a long history. As was pointed out during the hearing, when Lord Macnaghten said in William Brandt’s Sons & Co v Dunlop Rubber Company Ltd [1905] AC 454 at 462 that “no action is now dismissed for want of parties”, his Lordship was referring to the well-known reforms effected by the Judicature legislation of 1873. Rule 6.23 is simply the modern incarnation of the basal nineteenth century reform. There is no reason to construe s 40(3) as a return to the days of the unreformed court of chancery whereby misjoinder automatically led to a suit’s being dismissed: see Boyd v Thorn (2017) 96 NSWLR 390; [2017] NSWCA 210 at [94]-[102].

…

118.   True it is that persons directly affected by an order should ordinarily be joined to litigation. Joinder is the default position, and the obligation to join necessary parties is ordinarily a matter of obligation, not discretion, as Mr Tomasetti emphasised, by reference to what was said in Ross v Lane Cove Council at [54] and [57]. However, the passage in Ross was not unqualified, and continued at [61]-[62] as follows:

“All of that said, because the underlying concern is (as McHugh J said in Victoria v Sutton) natural justice, joinder is not always necessary. That reflects a very old approach. Although the common law knew nothing of the joinder of a party merely for the purpose of having that party bound by the judgment, equity was not so strict. Where no prejudice would be suffered by a party not being joined, his or her presence could be dispensed with: see for example Smith v Brooksbank (1834) 7 Sim 18; 58 ER 743, where the non-joinder of the executors who were alleged to have assented to the bequest was held not to be fatal. The direct ancestor of the rules in the UCPR governing joinder of parties is the rule of procedure contained in O XVI r 13 in the First Schedule to the Supreme Court of Judicature Act 1875 (UK). That in turn reflected chancery practice. In particular, and relevantly for present purposes, UCPR r 6.23 ‘Proceedings are not defeated merely because of the misjoinder or non-joinder of any person as a party to the proceedings’ is merely a modern formulation of the chancery practice.

The positive assent to an order by the executors who were not joined in Smith v Brooksbank has its modern counterpart in the course adopted by Preston CJ in Woollahra Municipal Council v Sahade. His Honour, recognising that the owners corporation was directly affected by the proposed demolition of a staircase which extended onto the common property, proceeded on the basis that the practical impact was low and its attitude to the orders was abundantly clear (the owners corporation was notified of the proposed order, and informed the Court through the applicant local council that it wished neither to be joined nor heard, but had passed a resolution supporting the orders proposed).”

119. There is no reason why s 40(3) should be read so as to displace this body of authority. No such submission was made, and indeed the Community Association’s appeal explicitly proceeded on the basis that rr 6.23 and 6.24 applied. This is inconsistent with s 40(3) having the per se effect of requiring the proceedings to be dismissed. Rather, there is a discretion. There was an overwhelming case for the primary judge proceeding as he did, where Ausgrid and Reliance Hexham were informed of the proceedings and their entitlement to be joined and chose in an informed way not to participate.

81. Consequently, s 40(3) does not have the effect of requiring that proceedings be dismissed where not all parties referred to in that subsection have been joined, there is a discretion held by the court as to how the section ought be applied. Robson J appropriately proceeded as he did in circumstances where the two prospective parties indicated they did not wish to participate.

82. The circumstances here mirror those in ATB Morton LEC in relation to the Council and the Trust and there is no dispute that the Court has discretion not to require their joinder as parties to satisfy s 40(3). At issue is the 1,150 beneficiaries of Covenant J182006 which meets the description of registered instrument referred to in s 40(3) of the LEC Act who have not been notified of this proceeding and have not therefore been provided with an opportunity to join as a party, which is arguably an important departure from the circumstances in ATB Morton LEC where the Court could be confident that potential parties were aware of their ability to join if they wished. In s 40(3) ‘estate or interest’ is undefined, and these terms are wide.

83. In light of ATB Morton CA holding that r 6.23 operates in these circumstances, the range of factors to consider in relation to the discretion directed to the application of s 40(3) is wide. RHCC has referred to the terms of the covenant, which does not have any connection to the subject matter of the easement. The covenant set out in [66] above is directed to use of any main building as a dwelling on a burdened lot, limiting excavation and restrictions on fencing. The number of lots is very large at 1,150 according to Mr Williamson’s evidence. Although Prisma submitted that at least the owners of the 13 houses along Boolavogue street opposite the Prisma land should be informed, no obvious basis exists to consider their interest under the covenant separately to the balance of the 1,150 lots. As RHCC submitted the surrounding house owners will be notified of the RHCC development application in relation to the Prisma land if the easement is to be implemented and will have the opportunity to object to the proposal as part of the usual planning process.

356. His approach is inconsistent with Khattar where Brereton J stated at [66]:

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

358. Even accepting his methodology is correct, Mr Adlington also does not provide for the cost of the works costed by Mr Bolt in Option 2 of QS JER #2 (see above in [300]).

359. Mr Konidaris has valued the loss of the proprietary right occasioned by the imposition of the easement by assessment of a percentage reduction in value of residual land. An available approach, as Mr Adlington accepted (see above in [324]), when valuing a partial interest is to work out the value of the freehold land and apply a diminution percentage. Mr Konidaris applied a rate of 75% for the easement land and 10% for the balance of R3 zoned land (aside from the strip between the easement and northern boundary). Mr Adlington does not engage with this approach. This was the first element of compensation. The second element of compensation is for the reduction in value of the sterilised land between the easement and the northern boundary. Mr Konidaris applies the same rate to the severed land. The third element of compensation is for the reduction in the balance of the land. Mr Konidaris used a rate of 10% diminution for the residue. Mr Adlington did not agree that the market would pay less for a block of land having an easement of this size on it compared to one that would not (see above in [324]). That evidence was unpersuasive. The Court would be satisfied that the market would pay less for a block burdened by the easement than one without such a burden. Reasons supporting this conclusion include:

1. Flexibility in design of any future redevelopment is affected because of the presence both of the above ground infrastructure and the existence of the easement.

2. Access from Boolavogue Street along the 200m long boundary is denied (or at the very least very significantly impeded).

3. The hypothetical purchaser knows that it will need to negotiate with the future owner of the dominant tenement in order to have the easement released.

4. Alternatively, the hypothetical purchaser might reasonably anticipate that it will need to bring proceedings in the Supreme Court to have the easement extinguished.

5. The hypothetical purchaser appreciates the public liability implications associated with the increased risk that someone may suffer harm as a result of the infrastructure.

6. The hypothetical purchaser knows it must provide access to the dominant tenement to maintain and repair the stormwater infrastructure as required.

7. The hypothetical purchaser appreciates the risk that the dominant tenement will not repair or maintain the easement, which will require the hypothetical purchaser to take over this burden (at its own expense) or bring proceedings in the Supreme Court to compel the dominant tenement to maintain and repair the infrastructure in accordance with the terms of the easement.

360. In light of his approach, RHCC’s cross-examination of Mr Konidaris on whether or not he considered the highest and best use is beside the point. In circumstances where RHCC’s expert agreed to the $860/m² figure and gave evidence that he had analysed the highest and best use of the land when valuing Prisma’s land, the Court can infer that $860/m² reflects the highest and best use.

361. The fourth element of compensation is loss or other disadvantage in terms of costs to Prisma. There are two categories of costs. One category are those works that a reasonable hypothetical purchaser would expect to incur because of the existence of the easement and drainage infrastructure, such as constructing the fences, guardrails, bridges, and grading works. The Court must assess compensation on the basis that the dominant tenement will take full advantage of their rights: Besmaw. The Court cannot be satisfied that these costs will be incurred by RHCC as a result of any eventual development for the drainage works on Prisma’s land. If the reasonable hypothetical purchaser would consider they may need to pay for these works, and they would so consider, Prisma is entitled to compensation for them. The second category are those incurred in removing the temporary drainage infrastructure and the reasonably anticipated additional works. Unlike Mr Bolt, Dr O’Donnell’s costings do not reflect what will actually be constructed, and he provides for no reinstatement costs. Only Mr Bolt has costed works outside the easement, which will be necessary for Prisma to undertake. Only Mr Bolt has assessed reinstatement costs. The Court would plainly prefer Mr Bolt’s evidence in terms of costs falling within loss or other disadvantage.

Consideration of appropriateness and quantum of compensation

362. In Rainbowforce at [106]-[111], [113]-[114], [116], Preston CJ summarised the principles to be applied when the Court assesses the statutory precondition in s 88K(2)(b), the key principles relevant to this matter being (references to caselaw omitted):

106. First, the adequate compensation referred to in s 88K(2)(b) is the same as the compensation that the Court may order under s 88K(4)…

107. Secondly, compensation is for “any loss or disadvantage” that will arise from the imposition of the easement. The addition of the words “or other disadvantage” provides for compensation for disturbance beyond the actual value of the proprietary right taken…

108. Thirdly, the compensation is not a substitute for the price that could have been exacted if the section did not exist… Hence, there can be no compensation for the loss of bargaining position of the owner of the land to be burdened...The owner is “to receive a just sum and for value for what he or she has to give over, rather than being able to demand the earth”...

109. Fourthly, the compensation is for any loss or disadvantage “that will arise from the imposition of the easement”. That language imposes a requirement for a causal relationship between the loss or disadvantage for which compensation is claimed and the imposition of the easement… The common law of causation should be applied, namely that causation is a question of fact to be determined by applying common sense to the facts of each particular case…

110. Fifthly, the Court’s task under s 88K is to be satisfied that the persons affected by imposition of the easement are “adequately compensated” and to provide for an order for payment of such adequate compensation. In assessing adequate compensation the Court “is not to err on the side of generosity or miserliness”… The Court should not depart from the task of assessing adequate compensation because the applicant for the order stands to gain from the development or use which leads to their applying for the order…

111. Sixthly, ordinarily, compensation will have three elements: (a) the diminished market value of the affected land; (b) associated costs that would be caused to the owner of the affected land, and (c) an assessment of compensation for insecurity and loss of amenities, such as loss of peace and quiet. Against these losses and disadvantages should be allowed, as an offset, any compensating advantages…

…

113. In the case of a grant of a permanent easement, such as a right of carriageway or easement for drainage or services, compensation includes the loss of proprietary rights by the imposition of the easement and compensation for the disturbance effected by the carrying out of the initial work, such as construction of a road or laying of pipes in the easement, and subsequent repair and maintenance from time to time…

114 Seventhly, if the imposition of the easement causes material injury to intangible benefits or the imposition of material intangible detriments, such as reduced amenity, enjoyment of property, and exposure to increased disruption and interference, which are not readily capable of being estimated in monetary terms, the Court may not be able to be satisfied that the servient owner can be adequately compensated… However, compensation is often able to be assessed for injury to intangible benefits or the imposition of intangible detriments…

…

116. Ninthly, the applicant for the order has to establish what the relevant losses and disadvantages are as part of satisfying the Court that the persons affected by imposition of the easement can be adequately compensated… In the course of the hearing, evidentiary onuses may shift to the person affected... Where facts are peculiarly within the knowledge of the person affected and that person does not adduce relevant evidence, it may be open to the Court to draw unfavourable inferences…

363. No specific valuation approach must be applied when valuing an easement. By way of example, Rainbowforce at [145] preferred a piecemeal approach to the valuation of compensation. The authorities relied on by RHCC of Arrow CA, Arrow LEC and Willoughby Council all consider the application of the Spencer v Commonwealth (1907) 5 CLR 418 test cited in Arrow CA at 421 of asking what a willing purchaser would pay for the property without the easement, and what a purchaser would pay for the property burdened by the easement, a before and after approach. Prisma relied on Khattar, as extracted above in [357] citing Tregoyd Gardens, as supporting the piecemeal approach applied by Mr Konidairis.

A. Appropriate compensation

364. I am satisfied that Prisma is able to be adequately compensated for the imposition of the easement. While there is some uncertainty in the precise form of infrastructure to be built, applying Besmaw the Court should assume RHCC will exercise the full extent of their rights in the easement. Accordingly an open swale drain of up to approximately 1.5m in depth in some places will be assumed, the evidence has been prepared on that assumption by the quantity surveyors and costs of removal are generally agreed by them. I have concluded below in [397] in relation to my overall exercise of discretion that the easement needs to be modified to limit the amount of water to be discharged to the amount on 421 l/s the subject of this application. The easement is more certain with the limitation of flow rate imposed. RHCC accepted that all work related to the easement must be built by it within the 3m easement sought and that must include any fencing and bridges for vehicle access if needed. Further, RHCC is responsible for maintenance. The separate issue of who can vary the easement is referred to below in [399].

B. Amount of compensation

365. Prisma is seeking compensation in relation to four matters. Firstly, injurious affectation of the 3m strip of land to be occupied by the easement. Secondly, the 3m strip of land between the easement and Boolavogue Street. Thirdly, the loss of value of the remainder of the R3 zoned land. Fourthly, the cost of construction of some of the assumed easement infrastructure and the cost of removal of the infrastructure in the easement is also sought. RHCC’s valuer Mr Adlington identified that only the cost of removal is warranted as compensation. As identified in the extract of Rainbowforce above I am considering any loss or disadvantage to by Prisma as a result of the imposition of the easement, and that can include diminished market value of affected land, associated costs and compensation for other impacts such as loss of amenity. Prisma’s claims are essentially for loss of market value and associated costs in relation to the easement infrastructure.

366. The different approaches of the two valuers arise in large part from their respective assumptions about whether valuation of the loss and disadvantage to Prisma’s land should assume that Prisma’s development consent will be implemented. Mr Adlington’s valuation is based on the assumption that it will be implemented. As a result he considers compensation should be awarded solely on the basis of the costs of removing any easement infrastructure, which the QS evidence in QR JER #2 has quantified as $102,000 (minus fencing).

367. I have stated above in [278] that I have accepted Mr Ng’s evidence that he has no intention to implement the development consent for the foreseeable future. I therefore consider that compensation should be awarded on the basis that the easement may well be permanent on Prisma’s land. I do not assume that it will be temporary. It follows that the amount of compensation I am likely to award will be greater than the figure applied by Mr Adlington as permanent infrastructure on Prisma’s land may well impact the use of that land.

368. A further issue in relation to Mr Adlington’s approach is whether he undertook a before and after exercise meaning an assessment of the value of the land before the easement was imposed and the value after the easement was imposed. Prisma disputed that Mr Adlington undertook a before and after exercise, which submission I agree with. Mr Adlington did not place any value on the interest in the land within the easement, as was clear from cross-examination, and as submitted by Prisma at [356]. Mr Adlington’s approach in his before and after analysis did not attribute any value to Prisma’s land regardless of whether it had an easement on it, a matter highlighted in cross-examination. I agree with Prisma’s criticism of Mr Adlington’s view that the market would pay the same amount for the land regardless of whether it had an easement on it or not. Consequently he did not undertake the usual analysis a before and after approach requires. I infer that Mr Adlington’s approach arose from his assumption that the Prisma consent will be implemented with conditions requiring disposal of stormwater in what would be land transferred to the Council to become Boolavogue Street. As already identified above that is not an appropriate assumption.

369. I turn to consider Mr Konidaris’ piecemeal approach in the Konidaris #2 which valued three areas of the Prisma land separately, namely the easement land, the strip between that land and Boolavogue Street and the balance of the land. The valuers agreed that the value of englobo R3 land in this location was $860/m². The easement land and the adjacent strip of land were both valued with a reduction of 75% as Mr Konidaris considered that was the extent of injurious affectation to these areas. The value of the balance of the R3 zoned land was reduced by 10%. Issues arise in relation to the areas of land that should be assumed to be affected and whether the extent of the percentage deduction applied by Mr Konidaris is warranted.

370. Mr Konidaris valued compensation in the amount of $260,000 in his first report and was criticised by RHCC for the major change in his evidence in his later report where he considered compensation amounted to about $1.8m. The reasons for the substantial change in his evidence are extracted above at [306]-[307] including that he assumed the land subject to the easement could be utilised to some extent by the servient tenement but later evidence suggests not given the assumption of an open swale of varying depth. I consider the evidence he relies on accurately reflects the limitations which will potentially be imposed on Prisma’s land by the proposed easement including the possibility of fencing being required and land in the easement not being available for open space. In the absence of a precise proposal indicating what depths the easement will require over its length the worst case scenario whereby RHCC exercise the full extent of their rights in the easement must be assumed, per Besmaw. That Mr Konidaris changed his mind from his first report resulting in a substantial increase in the amount of compensation he determined has a rational basis in the evidence of the stormwater and traffic engineers. That he changed his evidence alone is not a reason to ignore his revised opinion.

371. Much of Mr Adlington’s criticism of Mr Konidaris was based on the assumption that Prisma’s development consent can be assumed to proceed (see above in [313(2)] [313(4)], [313(5)], [313(6)]). I have already stated that is not a valid assumption.

372. Another issue underpinning RHCC’s criticism of Mr Konidaris is who should be considered a prudent hypothetical purchaser. RHCC submitted that a developer should be the assumed hypothetical purchaser. They would be aware of the Indicative Layout Plan for Area 20 and that most developers in this area had transferred land to the Council for free as part of carrying out their development. While RHCC submitted that the hypothetical purchaser was not Prisma, RHCC submitted that the highest and best use of the land was represented by Prisma’s development consent and any hypothetical purchaser very likely a developer will assume that is the likely scenario for any development. I agree with this submission in that the overall planning and consequential rezoning of large areas including the Prisma land and surrounds to medium density residential suggests the hypothetical purchaser is likely to be a developer. The hypothetical purchaser who is a developer should not be completely equated with Prisma however.

373. Concerning the highest and best use for Prisma’s land, neither valuer undertook a separate financial feasibility study to determine what land use was most financially advantageous. Mr Adlington assumed Prisma’s development consent represented the highest and best use of Prisma’s land. RHCC submitted that Mr Dickson’s three alternative development scenarios were not, given their low FSR yield compared to the planning controls and when compared to Prisma’s approved development, a submission I agree with. Prisma did not rely on these alternatives in closing so that I presume that no weight is now placed upon them in relation to the loss of flexibility of design because of the easement. Mr Konidaris stated that he did not come to any view about what the highest and best use of the land was. Given that the valuers agreed that the value of englobo R3 land in this location was $860/m² based on an assessment of market sales I do not consider I need to form any particular conclusion on this matter. That is the rate applied by Mr Konidaris in his valuation of the three different areas of Prisma’s land zoned R3 medium density residential which he considered. No other rate per square metre has been identified as the basis on which Prisma’s land can be valued. I note for completeness that no claim for compensation was made in respect to any other part of Prisma’s land zoned SP2 or public recreation.

374. Prisma submitted above in [359] various reasons why the market would pay less for land burdened by an easement than for land without an easement. While I accept that the hypothetical purchaser is likely to be a developer the identified matters will be material to such a purchaser meaning that there is scope for compensation for some amount of injurious affectation arising from the implementation of the easement.

375. Mr Konidaris valued the easement strip of 3m as if effectively sterilised for development purposes. The same approach was taken by him to the 3m strip between the easement and Boolavogue Street on the basis that was also effectively sterilised. Mr Adlington challenged this approach as he considered required setbacks for medium density development in this location along Boolavogue Street would require a 4m setback. Of the two strips which are collectively 6m wide, only 2m would be adversely affected resulting in compensation of $260,000 if Mr Konidaris’ 75% is applied to that reduced area.

365. Mr Reed's evidence set out above in [205] identified that Mr Dickson’s alternative proposals could be accommodated with the widening of Boolavogue Street. I did consider in relation to reasonable necessity at [284] above that the Council was likely to require the widening of Boolavogue Street for any development of Prisma’s land.

366. Taking into account these various matters I consider that Mr Adlington’s approach whereby a 4m setback is likely to be required as a minimum for further development of Prisma’s land along Boolavogue Street should be accepted. Compensation will therefore be allowed in the amount of $260,000 for the easement land only.

367. Considering the balance of R3 zoned land of 12,100m² (excluding the easement land and the severed land north of the easement), Mr Konidaris reduced this by 10%, resulting in compensation of about $1m. This area is accessible from Terry Road as has been the case historically. All of Mr Dickson’s alternative developments showed access from Terry Road. Ten percent appears a large adjustment given the existing adequate access. I consider some amount should be allowed for the inability to develop all of the R3 zoned land as a whole and the inability to easily access it from Boolavogue Street depending on the form of the easement. I will allow a 5% reduction, amounting to $520,000.

368. Part of the fourth category of compensation claimed namely removal of easement infrastructure is not, as I understand RHCC’s position, disputed to be payable. The quantity surveyors have agreed an amount of $102,000 based on certain assumptions. Prisma is also claiming construction costs as costed by Mr Bolt in Option 2. RHCC submits that these works will not be required by Council or it will be responsible for such amounts as all such work is to be conducted within the easement. I do not consider construction costs should be awarded to Prisma in light of RHCC’s position.

369. In Kattar referring to Tregoyd Gardens the need to compensate for initial disturbance in implementing the purpose of an easement is also identified as a valid claim. The quantity surveyors included an amount for this in their agreed estimate of $102,000 above in [299].

370. That the R3 zoned land is valued at about $11m was identified by RHCC, as I understand, as an indication that the amount of compensation identified by Mr Konidaris was excessive particularly for the balance of R3 zoned land. Given the location, nature and permanence of the easement to be imposed compensation of more than $260,000 should be awarded. I have not accepted all of Prisma’s evidence as explained above so that a lesser sum than sought will be awarded, in the amount of $260,000 (loss of value of easement land), $520,000 (loss of value of R3 zoned land outside the easement and setback areas), and $102,000 (removal of easement infrastructure costs) which totals $882,000.

Discretion

382. The Court has a discretion whether to make an order to impose the easement even if the other matters in s 88K(1) and (2) are established by an applicant. As I stated in Alramon at [183] citing Khattar extracted above in [87], this is to be exercised in accordance with the purpose of s 88K, being the facilitation of the reasonable development of land whilst ensuring that just compensation be paid for any erosion of private property rights.

RHCC’s submissions

383. RHCC submitted that the Second Reading Speech for the Property Legislation Amendment (Easements) Bill 1995 (New South Wales Legislative Assembly, Parliamentary Debates (Hansard) 10 October 1995 at 1494), which introduced s 88K into the Conveyancing Act, was relevant to the circumstances of this case. The purpose of s 88K was to give courts the power for the first time to interfere with private property rights to enable easements to be granted where necessary to facilitate development, rather than hinder it.

384. RHCC faintly pressed an oral submission that the lots to be constructed by RHCC when the development consent is operationalised have been sold off the plan to third parties.

385. RHCC also sought to counter the submissions made by Prisma that imposing the easement would lead to RHCC straying outside the easement area or to a nuisance where the stormwater leaves the easement area. RHCC does not propose to undertake works outside the easement area and the proposed easement does not by its terms, authorise this. RHCC contends that the stormwater will spread over SP2 zoned area and therefore will not cause any unreasonable interference with Prisma’s enjoyment or use of that portion of the land. The water will not affect development yield. That land, as is the case with all other current neighbouring developments which Bella Parade traverses, is not reserved for development. During the view, it was evident that the roads surrounding the undeveloped Prisma land were not kerbed and guttered and therefore in its current state any stormwater naturally overflows onto the Prisma land in order to reach Second Ponds Creek. This is the state of the natural environment. Prisma has not claimed nuisance. What occurs at the conclusion of the easement sought in this proceeding is no different to how water naturally traverses various private properties to reach Seconds Ponds Creek and Prisma has not identified any prejudice or harm or loss of enjoyment that would result by the easement not extending to Second Ponds Creek.

386. A matter going to discretion is that the Council has reviewed the alternative drainage options proposed by Dr Martens and has rejected all those options (see above in [178]). RHCC submitted that while the correspondence from the Council suggests that an easement in gross is required, that does not detract from the fact that the easement is to benefit a private landowner. Drainage is only possible via an easement through the location proposed in this proceeding. RHCC’s development consent requires an easement and cannot specify an easement in gross. Irrespective of the type of easement, there can be no dispute that when one considers the locality and surrounding developments, all developers must provide half-road construction including drainage.

387. In circumstances where Prisma can be and is adequately compensated for the imposition of the proposed easement, there is no reason why the Court would not exercise its discretion to impose the proposed easement.

388. In reply to Prisma’s submissions below in [393] concerning the terms of the easement that are sought to be imposed, as it is not possible to predict exactly when Prisma’s land will be developed, the easement cannot be framed in temporary terms or language. There is no need to limit the easement to certain flow rates or areas beyond the terms of the proposed easement which adopts the general terms of an easement for drainage as set out in the Conveyancing Act.

Prisma’s submissions

389. Prisma made submissions in respect of the terms of the proposed easement in the context of public interest (s 88K(2)(a)), but I view these as more properly relevant to the exercise of discretion.

390. Prisma submitted that if an easement were to be granted, the terms of the proposed easement are unsatisfactory. Firstly, although the easement will be for "temporary infrastructure" it is a permanent easement. No mechanism is identified as to how the permanent easement may be extinguished. This depends upon the goodwill of the then owner of the dominant tenement and/or the obtaining of an order from the Supreme Court pursuant to s 89 of the Conveyancing Act.

391. Secondly, although the stormwater design is now said to be for 421 l/s only, there is no such limit on the easement. Nor is there any limit to suggest that the only waters drained through the easement will be those from the southern catchment of the RHCC land. That limitation is fundamental to the amendment of the evidence following Mr Bewsher's oral evidence in July 2022. The amendment, requiring a new development consent, does not include the water from Poly’s land, nor water from Terry Road and only includes the southern catchment. In the absence of any limitation upon the easement, and where it was previously anticipated by Mr Bewsher that he could design a system to dispose of the totality of the catchment water (2,113 l/s) within the easement, and applying the Besmaw approach, RHCC merely could rely upon its rights pursuant to an unconstrained easement to seek consent for drainage infrastructure that dispose of the whole of the catchment stormwater requirements.

392. Thirdly, no power should be given to the Council pursuant to s 88(1)(d) of the Conveyancing Act to vary the easement. There is no necessity for the Council to have that power under s 88(1)(d). Rather it is an option only, as demonstrated by the presence of the words "if any" in s 88(1)(d). The Council is not a party. It is inappropriate to rest such a power in the Council in the circumstances of this matter.

393. If the Court is satisfied that an easement should be imposed, it would not be in the terms proposed by the Applicant. It should include some mechanism to reflect its temporary nature. It should contain some limitation on flow rates and areas to be drained in order to reflect the expert evidence. It should not include the Council as a party able to vary the terms of the easement.

Consideration of discretion

394. I considered in relation to reasonable necessity a number of the matters relied on by RHCC in relation to discretion and I have resolved that an easement is reasonably necessary for the benefit of RHCC under s 88K(1). I accept that the orderly development of RHCC’s land is facilitated by the grant of this easement subject to further considerations below in relation to the burden on Prisma’s land and that an easement should be imposed.

395. As highlighted in the consideration of whether reasonable necessity was established by RHCC a few issues relating to the burden imposed on Prisma’s land suggest the terms of the easement must be considered in the exercise of my discretion. While I do not consider the burden imposed on Prisma’s land warrants refusal of the easement, amendment of the terms of the easement are warranted.

396. RHCC accepts that all works must be included within the easement. This work may include a bridge to enable vehicles to cross the easement if ultimately required. No amendment in this regard is warranted.

397. I agree with Prisma that the easement should be varied to restrict the volume of water able to be discharged through it as that reflects the application which RHCC makes. It should also specify where the stormwater can come from, namely RHCC’s land. That will provide greater certainty to Prisma about what will happen in a permanent easement.

398. Amendment to the easement to appropriately deal with all of the dispersal of stormwater on Prisma’s land may need to be addressed, namely the 50m at the end of the easement where stormwater is proposed to be dispersed across Prisma’s land to Second Ponds Creek. While Prisma identified that this dispersal of stormwater was unsatisfactory and was across land which Prisma would have to maintain, not RHCC, I am not sure if Prisma would seek an extension of any easement sought, particularly given the limitation of flow I intend to impose discussed in the paragraph immediately above. Further advice from Prisma will need to be provided in this regard.

399. A further issue to consider is what entity if any should be able to vary or extinguish the easement as provided in s 88(1)(d). RHCC has proposed the Council. The Council is not a party to the proceeding, having been asked if it wished to join as a party and declining. No reason for the Council to be the entity named as able to vary or extinguish the easement is provided beyond an assertion by RHCC that it should be. The wider objectives of the Council in obtaining an easement in gross are able to be achieved by it through the exercise of statutory powers of acquisition if such an easement cannot be obtained by negotiation. That is a separate process to what I am presently dealing with namely an easement to benefit a private landowner. The easement will not be granted with the Council identified as being able to vary the easement. I am unclear if the parties would seek to propose an alternative and they will need to further inform the Court on this matter. The terms of this part of the easement are set out above in [38].

400. Accordingly the terms of the easement the Court will impose under s 88K(3) require further discussion.

401. One last matter to raise is that in 117 York Street at 522, Hodgson CJ in Eq determined that it was ancillary to the granting of an easement over the respondent’s land to order that the respondent consent to the lodging of a DA by the applicant for use of a crane in the easement. The order made was that the owner’s consent be a condition of the easement imposed, as this was considered to be the only way such a result could be accomplished legally. Section 88K allowed such an order. The parties’ views on whether such an order ought be made are also sought.

Costs

402. The effect of section 88K(5) is that Prisma’s costs of this proceeding would in the normal course be paid by RHCC. Prisma has flagged that a special costs order may be warranted depending on the outcome of this proceeding given its history. A process for the resolution of costs will also need to be discussed with the parties.

In conclusion

403. A timetable for further discussion addressing the issues highlighted in [397]-[402] above leading to the making of a final order:

1. imposing an easement in modified terms as provided for by s 88K(3) of the Conveyancing Act;

2. any appropriate additional order(s);

3. providing for the payment of compensation in the amount determined of $882,000 as provided by s 88K(4) of the Conveyancing Act; and

4. payment of costs,

will be determined with the parties.

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Decision last updated: 03 May 2023