Tenacity Investments v Ku-Ring-Gai Council and Ors - [2008] NSWLEC 27

Land and Environment Court

of New South Wales

CITATION: Tenacity Investments v Ku-Ring-Gai Council and Ors [2008] NSWLEC 27

PARTIES:
APPLICANT:
Tenacity Investments
FIRST RESPONDENT:
Ku-ring-gai Council
SECOND RESPONDENTS:
Russell and Angela Cooke
THIRD RESPONDENTS:
Vicki and Daniel Ming
FOURTH RESPONDENT:
Peter Dobrijevic
FIFTH RESPONDENT:
Yvonne Forsyth
SIXTH RESPONDENTS:
Ivan and Janet Lum
SEVENTH RESPONDENTS:
John and Virginia Hill
EIGHTH RESPONDENTS:
Christopher and Aini Wong
NINTH RESPONDENTS:
Patrick Lee and Liza Lam
TENTH RESPONDENT:
Marina Brun-Smits
ELEVENTH RESPONDENTS:
Gavin and Lynn Hucker
TWELFTH RESPONDENTS:
Steven and Gum You; Kwok and Sylvia Ng

FILE NUMBER(S): 30688 of 2006

CORAM: Pain J

KEY ISSUES: Easements :- imposition of drainage easement by Court under s 40 Land and Environment Court Act 1979 - whether easement reasonably necessary for development to have effect in accordance with development consent which Court has determined to grant - whether owner of burdened land can be adequately compensated for any loss or other disadvantage that would arise from imposition of the easement - whether all reasonable attempts made by applicant to obtain the easement or an easement having same effect without success - whether Court should exercise its discretion to impose easement - appropriate compensation.

LEGISLATION CITED: Conveyancing Act 1919 s 7, s 88AC, s 88B, s 88K, s 89
Environmental Planning and Assessment Act 1979 s 96, s 97, s 118
Land and Environment Court Act 1979 s 16, s 22, s 40
Local Government Act 1993 s 59A
Real Property Act 1900

CASES CITED: 117 York Street Pty Ltd v Proprietors of Strata Plan 16123 (1998) 43 NSWLR 504;
Antipas v Kutcher and Anor (2006) 144 LGERA 289;
Blulock Pty Ltd v Majic [2001] NSWSC 1063;
Castagnet Investments Pty Ltd v Woollahra Municipal Council [2005] NSWLEC 647;
Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14, 638;
Cracknell and Lonergan Pty Limited v Council of the City of Sydney [2007] NSWLEC 392;
Delohery v Permanent Trustee Co of New South Wales (1904) 1 CLR 283;
Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15, 795;
Gordon v Gioia and Anor [2007] NSWLEC 509;
Gosper v Hornsby Shire Council (1993) 80 LGERA 138;
Khatter v Wiese [2005] NSWSC 1014;
King v Carr-Gregg & Anor [2002] NSWSC 379;
Mitchell v Boutagy (2001) 118 LGERA 249;
Mulliner v Midland Railway Co (1879) 11 Ch D 611;
Municipal District of Concord v Coles (1906) 3 CLR 96;
Owners Strata Plan 13635 v Ryan [2006] NSWSSC 221;
Property Partnerships Pacific Pty Ltd v The Owners of Strata Plan 58482 [2006] NSWLEC 709;
Reilly v Booth (1890) 44 Ch D 12;
Swann & Anor v Spiropoulos & Ors [2006] NSWSC 860;
Tenacity Investments v Ku-Ring-Gai Council [2006] NSWLEC 148;
Tenacity Investments v Ku-Ring-Gai Council [2006] NSWLEC 539
Tenacity Investments v Ku-Ring-Gai Council [2007] NSWLEC 246
Treweeke v 36 Wolseley Road Pty Limited (1973) 128 CLR 274;
Treygoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15, 845;
Wengarin Pty Ltd v Byron Shire Council (1999) 9 BPR 16, 985

DATES OF HEARING: 30 October 2007
31 October 2007
19 November 2007 (written submissions)
3 December 2007 (written submissions)

DATE OF JUDGMENT:
31 January 2008

LEGAL REPRESENTATIVES: APPLICANT
Mr J Webster SC
SOLICITOR
Sattler & Associates

FOURTH RESPONDENT
In person
TENTH RESPONDENT
Mr L Smits (Agent)

JUDGMENT:

ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

31 January 2008

30688 of 2006 Tenacity Investments v Ku-Ring-Gai Council and Ors
JUDGMENT

1 Her Honour: The Applicant has development consent granted by this Court pursuant to s 97 of the Environmental Planning and Assessment Act 1979 (the EP&A Act) to develop land at 2-4 Everton Street, Pymble (the land) for townhouses and a residential flat building. This is an appeal under s 40 of the Land and Environment Court Act 1979 (the Court Act) seeking an order that the Court grant the Applicant an easement to drain water from the land into Ku-Ring-Gai Council’s (the Council) existing drain located in an existing drainage easement across a number of properties.

2 The Second to Twelfth Respondents are the owners of land both upstream and downstream of the land over which the existing drainage easement lies which permits the Council to collect and drain water, generally stormwater, from Pymble Avenue and Everton Avenue across the Respondents’ and the Applicant’s lands within the area of that existing easement (the existing easement).

3 The terms of the easement sought by the Applicant have been agreed by the Council, the First Respondent. Agreement with the Council on the final wording of the proposed easement was reached on or about 18 October 2007. Essentially the easement allows the stormwater from the Applicant’s land to flow into the existing pipes and open drain running across the Respondents’ properties. The easement is over the Respondents’ land in the same location as the existing easement. No physical work is required on any of the Respondents’ properties for the proposed easement as it will allow water to flow into the existing drain on the Respondents’ respective properties. No additional work to the Council’s drain is required to enable this to occur.

4 The proposed easement states:

THE BODY EMPOWERED TO RELEASE, VARY OR MODIFY THE SAID EASEMENT TO DRAIN WATER

The owners of the benefited lots and Ku-ring-gai Council. In respect of variation or modification the consent of the owners of the burdened land is required.

5 An affidavit sworn on 25 October 2007 by Mr Clerke, surveyor, identifies plans needed to give effect to the proposed easement and confirms these are able to be registered as an instrument under s 88B of the Conveyancing Act 1919.

6 Section 40 of the Court Act states:

(1) If the Court has determined to grant development consent on an appeal under section 97 of the

, the appellant may apply to the Court for an order imposing an easement over land.

(2) The Court, on application under subsection (1), may make an order imposing an easement over land if it is satisfied that:

(a) the easement is reasonably necessary for the development to have effect in accordance with the consent, and

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

(c) the owner of the land to be burdened by the easement can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement, and

(d) 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.

(4) Before making an order under this section, the Court must notify the owner of the land affected by the proposed easement (other than an owner who is a party to the proceedings before the Court), and the owner of any land on which it may be necessary for works to be carried out in connection with the easement (other than such a party), of the proposed easement or works, or both.

(5) An owner of land affected by the proposed easement and an owner of land on which it may be necessary for works to be carried out in connection with the easement:

(a) may object to the proposed easement or works, and

(b) is entitled to appear before the Court in support of the objection.

The Court must consider each objection.

(6) The Court:

(a) 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) of the Conveyancing Act 1919 as are appropriate, and

(b) 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 of the Conveyancing Act 1919 .

The terms may limit the times at which the easement applies.

(7) The Court is to provide in the order for payment by the applicant for the order to such persons as the Court specifies 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.

(8) The costs of the proceedings, in so far as they relate to an order sought or made under this section, are payable by the applicant for the order, subject to any order of the Court to the contrary.

(9) An easement imposed under this section:

(a) may be released by the owner of the land having the benefit of it, or

(b) may be modified by a deed made between the owner of the land having the benefit of it and the persons for the time being having the burden of it (or in the case of land under the provisions of the Real Property Act 1900 ) by a dealing in the form approved under that Act giving effect to the modification.

7 I note that that the Applicant wishes the matter of whether costs ought be payable under s 40(8) to be considered separately. That section will not therefore be considered in this judgment.

8 Section 40(4) requires that the owners of affected properties must be notified by the Court of its intention to grant a proposed easement if not already a party to the proceedings. The need to notify further parties beyond the twelve respondents has not been suggested to me.

9 By the date of hearing the Applicant had reached agreement in principle with all but the Fourth and Tenth Respondents. Both these Respondents oppose the order sought and appear as objectors as they are entitled to do under s 40(5). The Court is required to consider their objections under s 40(5). The Fourth Respondent represented himself. The Tenth Respondent was represented by her agent, Mr Smits.

Background

10 In 2005 the Applicant lodged development application DA 657/2005 (the DA) with the First Respondent seeking development consent for the demolition of existing buildings and erection of four townhouses and a 23 lot residential flat building on the development site. Following a deemed refusal the Applicant appealed to the Court pursuant to s 97 of the EP&A Act.

11 The appeal was heard by Senior Commissioner Roseth in April and May 2006. In Tenacity Investments v Ku-Ring-Gai Council [2006] NSWLEC 148 delivered on 2 May 2006 the Senior Commissioner upheld the appeal and approved DA 657/2005 subject to conditions.

12 Consent condition 56 requires that stormwater run-off is to be piped and connected to the Council drainage system within the development site. Consent condition 58 requires that an on-site stormwater detention system must be provided for the Applicant’s development to control the rate of run-off leaving the site. The discharge of stormwater into the Council’s pipe (within the land) is determined by compliance with Council’s Development Control Plan No 47 Stormwater (DCP 47 – Stormwater).

13 The development consent was modified twice pursuant to s 96 of the EP&A Act by orders of the Court. The first application was heard by the Senior Commissioner on 17 October 2006. The modification approved by the Senior Commissioner on 17 October 2006 is not relevant to these proceedings. The second modification, approved by Talbot J on 13 June 2007 in Tenacity Investments v Ku-Ring-Gai Council [2006] NSWLEC 539 modified consent condition 89A(d) to provide:

The applicant is to either:
(1)Submit the written approval of the downstream owners as far as the public drainage system, to modify the terms of the drainage easement which is currently for drainage of road water from Everton Street.

or

(2) Create (whether by agreement or by compulsory process) a new easement or easements along the alignment of the existing drainage easement,

to permit the collection, carriage and discharge of surface and stormwater run-off from the development site.

14 The Fourth Respondent sought to be joined, and was joined, as a party in the two s 96 modification hearings and opposed the making of the modifications to the development consent condition.

Section 40(1) satisfied

15 Section 40(1) of the Act has therefore been satisfied as the Court has determined to grant development consent on an appeal under s 97. The Applicant argued that the proposed easement will satisfy consent condition 89A(d)(2) as it will be a new easement which may be imposed pursuant to the compulsory process available under s 40 of the Court Act. Further the requirements of s 40(2) are met.

16 These proceedings pursuant to s 40 were commenced on 7 August 2006. Mediation was held in March 2007. In Tenacity Investments Pty Ltd v Ku-ring-gai Council [2007] NSWLEC 246 Biscoe J considered a preliminary issue raised:

whether the existing public drainage system referred to in condition of consent 89A(d) … has the capacity to accept the anticipated run off from the proposed development.

All twelve Respondents have been joined to these proceedings from the outset however only the Fourth and Tenth Respondents appeared before Biscoe J. Biscoe J held that there was physical capacity in the Council’s stormwater drain to accept water from the proposed development on the land.

The Issues

17 Before considering whether s 40(2) is satisfied there are some arguments raised by the Fourth and Tenth Respondents that if accepted mean the Court cannot further consider this application. I should therefore consider these first.

18 All parties relied on decisions of the Supreme Court under s 88K of the Conveyancing Act which is in similar terms to s 40. Several cases in this Court have recognised that it is appropriate to consider such decisions for assistance in considering the operation of s 40, see for example Antipas v Kutcher and Anor (2006) 144 LGERA 289 at [14], Property Partnerships Pacific Pty Ltd v The Owners of Strata Plan 58482 [2006] NSWLEC 709 at [16].

Issue 1 - the Court lacks jurisdiction to superimpose an easement under s 40 of the Court Act over an existing registered easement (Court lacks jurisdiction to consider the application)
Respondents’ submissions

19 The Respondents have recognisable rights under the registered easement on their respective titles. Only the Council and the Respondents have the standing to apply to a court to seek a modification or extinguishment of the existing easement under s 89 of the Conveyancing Act. It follows inescapably that the new easement would have the same location.

20 Accordingly, in order to create such a new easement, it would be essential for this Court to have an implied power to modify and partially extinguish the registered easements. Section 40 of the Court Act does not confer power to extinguish, directly or indirectly, registered easements that are not created under s 40.

21 Section 40(1) should be construed as preserving common law rights and other statutory rights unless those rights are abrogated, extinguishable or alterable by express words or necessary intendment. In Cracknell and Lonergan Pty Limited v Council of the City of Sydney [2007] NSWLEC 392 before Preston J the same approach was taken or adopted by this Court.

22 The Fourth and Tenth Respondents submitted it would have been a simple matter for the legislature to have enacted a corresponding section to s 89 of the Court Act. This is particularly so in light of the amendments made to s 40 consequential upon the decision in Gosper v Hornsby Shire Council (1993) 80 LGERA 138. As s 40 relevantly mirrors s 88K it cannot possibly have been intended to enlarge the jurisdiction of this Court by implication merely by adopting, in substance and effect, in s 40 most of the same terminology for the empowering provisions as contained in s 88K. Clearly s 88K does not confer the powers given by s 89, s 88K does not override, subordinate or neutralise s 89. Like s 40 it operates independently of s 89.

Applicant’s submissions

23 Under s 40 the Court has power to make an order imposing an easement over land. The term “land” is not defined in the Court Act. Section 40(11) of the Court Act provides:

An easement imposed under this section has effect (for the purposes of the

and the

) as if it were contained in a deed.

24 Section 7(1) of the Conveyancing Act defines “land” as:

"Land" includes tenements and hereditaments, corporeal and incorporeal, and every estate and interest therein whether vested or contingent, freehold or leasehold, and whether at law or in equity.

25 Section 21(1) of the Interpretation Act 1987 provides that in any Act or Instrument:

"land" includes messuages, tenements and hereditaments, corporeal and incorporeal, of any tenure or description, and whatever may be the estate or interest therein.

26 An easement is an incorporeal hereditament; Delohery v Permanent Trustee Co of New South Wales (1904) 1 CLR 283 at 308. It is a right enjoyed by a person with regard to the land of another person, the exercise of which interferes with the normal rights of the owner or occupier of that land; Municipal District of Concord v Coles (1906) 3 CLR 96.

27 If the right over the burdened land is unrestricted or exclusive then it is not an easement; Reilly v Booth (1890) 44 Ch D 12 at 26. The existing easement which provides for the right granted under that easement over the burdened land is not exclusive or unrestricted. The proposed easement is not exclusive or unrestricted.

28 The position is not dissimilar to the circumstances in Antipas. In that case the applicant for the easement was the owner of two blocks of land, lots 31 and 32. There was an existing right of way benefiting lot 32 but not lot 31. The application was to extend the benefit of the existing right of way to lot 31 so that the whole of the applicant’s development would have the benefit of the right of way rather than only lot 32. The Court made the order imposing the easement. The effect of the order was that the owner of lot 31 was granted the right to use the right of way over the site of the existing right of way in favour of lot 32.

29 In answer to the Respondents’ submissions that the Court cannot superimpose the proposed easement over the existing easement, the Applicant submitted that the land including the existing easement (incorporeal hereditament) is land for the purposes of s 40 over which the Court can by order impose an easement.

Finding on issue 1

30 The Court has been provided with a specific power to impose the proposed easement under s 40. The imposition of the proposed easement is separate from the existing easement and can exist together with it. The Applicant seeks an easement, as identified in par 26 and 27 of the Applicant’s submissions, namely the proposed easement will provide a not exclusive or unrestricted right over the Respondents’ properties but only to the extent contained in the proposed easement.

31 As identified in the Applicant’s submissions there is no definition of land in the Court Act. The operation of s 40 interacts with the provisions of the Conveyancing Act. Section 40(11) provides that an easement created under the Court Act has effect for the purposes of the Conveyancing Act and the Real Property Act 1900 as if it were contained in a deed. As defined in the Conveyancing Act s 7, “deed” in relation to land under the provisions of the Real Property Act includes a dealing having the effect of a deed under that Act. It is relevant therefore to consider that the broad definition of land under the Conveyancing Act and the Interpretation Act which can include the interest in land the subject of the proposed easement.

32 Further, the dominant tenement may be an incorporeal interest such as another easement, as is provided for by s 88AC(1) of the Conveyancing Act, referred to in Peter Butt, Land Law, (5th ed, 2006) at page 423 [1611].

33 The grant of the proposed easement will create a “blot on title” of the Respondents’ lands as the easement will be recorded on their respective titles. There is statutory power provided under s 40 to order that an easement be created. To the extent that power means that other statutory rights or common law obligations are altered, that is the intention of s 40 (see Antipas at [25]). Precisely what common law rights and statutory rights are being altered or extinguished is unclear from the Respondents’ submissions but I surmise that the usual right (or expectation) that land owners will not have dealings affecting their land imposed on them is, not surprisingly, of concern to them. Section 40 is a statutory provision which allows that to occur in defined circumstances. While the general principle identified in Cracknell that common law rights are to be preserved unless there is clear statutory authority to the contrary is well understood the circumstances in Cracknell are different to those before me. That general principle is subject to s 40.

34 Section 40 is similar to s 88K of the Conveyancing Act and confers power on this Court to impose an easement if the section is satisfied. The proposed easement can exist concurrently with the existing easement and the Respondents’ argument that it cannot be “superimposed” on the existing easement is not accepted.

Issue 2 – proposed easement under s 40 is an implied modification of existing easement (Court lacks jurisdiction to consider the application)

Respondents’ submissions

35 Similar submissions to those raised in issue 1 were also made in relation to the implied modification argument in issue 2 by the Respondents. Additional issues were also raised. Under s 89 of the Conveyancing Act the Council and the Respondents can apply to the Supreme Court to seek a modification (or extinguishment) of the existing easement. Applying Windeyer J in Blulock Pty Ltd v Majic [2001] NSWSC 1063 at [13], conferral of the power on Council to release or modify the proposed easement as provided for in its terms would conflict with s 40(9)(a) of the Court Act. The Court could specify in accordance with s 40(6)(a) and s 88(1)(d) that the consent of the Council is required for release or modification. That would entail changes (and partial extinguishment) to the existing easement. There is no power in s 40 to modify (or extinguish) directly or indirectly registered easements.

36 The jurisdiction to modify (or extinguish) easements is conferred on the Supreme Court by s 89 of the Conveyancing Act. Its requirements have not been satisfied. Section 40 should be construed as preserving common law and other statutory rights unless those are abrogated, extinguishable or altered by express words or necessary intendment. The Applicant is attempting to alter, if not extinguish, rights and obligations of the Respondents which it cannot do under s 89, by using s 40. Reliance was placed on Cracknell per Preston J at [24] (I have already considered this argument in the previous section at par 33). In substance or effect the creation of the proposed easement under s 40 will modify (or partially extinguish) the existing easement without compensation for all heads of injury such as could be obtained under s 89.

37 The proposed easement will restrict or limit, complicate or put at risk the ability of the Respondents to restrain breaches of the existing easement. If imposed there will be two conflicting easements, one preventing the Applicant draining into the public drain and the new easement allowing it. The modification (or extinguishment) of an existing easement is an alteration of proprietary rights and must be specifically empowered. The application of a purposive construction is insufficient. There is no corresponding section to s 89 of the Conveyancing Act in the Court Act.

38 Section 40 of the Court Act is in similar terms to s 88K of the Conveyancing Act and the latter section does not override, subordinate or neutralise s 89. Accordingly s 40 should not be interpreted as doing so and that is the effect of the proposed easement. It would be an inappropriate use of the Court’s powers to modify or extinguish the registered easement in order to extinguish or modify proprietary common law rights by denying them the statutory rights under s 89 of the Conveyancing Act, and with a wider compass than the express powers under s 89. The decisions of this Court in which a facultative approach to s 40 has been adopted should be distinguished as there was little consideration of s 89 or s 88K in these.

39 The Respondents stated that no legal or equitable claim is made to ground ancillary remedies which might otherwise be available under s 16 and 22 of the Court Act. Section 22 has no application (nor is it relied upon by the Applicant in any event so that I do not consider this is a relevant matter).

40 The proposed easement clearly modifies the existing easement by allowing a mixture of excess surface or stormwater from the Applicant’s land to drain into the water discharged from Everton Street. The conclusion of the expert hydrologist that less water would flow into the drain if the proposed easement is granted is irrelevant. Essentially public water would be mixed with private water as two different water flow systems would be allowed to use the drainage system for a public purpose. Future development such as roadworks on the Pacific Highway may require greater utilisation of the public drainage system. There is no evidence about this.

Applicant’s submissions

41 The Applicant submitted that the existing easement is not an unrestricted or exclusive right over the burdened land. The proposed easement would not modify the existing easement but rather it would result in the creation of a concurrent restricted and non-exclusive right to drain water over the burdened land in favour of the development site.

42 Biscoe J has already determined in the earlier hydrology hearing in these proceedings that the existing easement has the capacity to accommodate the two drainage rights. In the circumstances the rights granted under the existing easement and the proposed easement are entirely consistent and there is no modification of the rights of the First Respondent under the existing easement. To the extent that there is a loss of proprietary rights to the owner of the burdened land by the imposition of the proposed easement, the owner can and will be compensated.

43 The owners of the burdened land would maintain unchanged their common law and statutory rights in respect of the existing easement and would acquire common law and statutory rights in respect of the proposed easement. The imposition of the proposed easement would not affect the Respondents’ rights to restrain the Council if it acts outside its rights under the existing easement.

44 In relation to building over the existing easement, that easement currently states that the Respondents cannot build over the existing easement without the consent of the Council. There is no such restriction in the terms of the proposed easement.

45 In relation to s 89 of the Conveyancing Act, if the proposed easement is imposed the Respondents will still be entitled to apply to modify or extinguish the existing easement if and when circumstances identified under s 89 arise. Similarly, if the proposed easement is imposed then the Respondents will be entitled to apply to modify or extinguish the proposed easement if the circumstances in s89 arise. Section 40(12) provides that the section does not prevent an easement being extinguished or modified under s 89 of the Conveyancing Act.

46 The Court has concluded that there is sufficient capacity for the existing Council drain to accept water from the Applicant’s land. What may be required in the future in relation to the drain is irrelevant.

Finding on issue 2

47 The Applicant’s characterisation of the proposed easement as resulting in the creation of a concurrent restricted and non-exclusive right to drain water over the burdened land in favour of the development site is correct. The existing easement continues unchanged and any rights in relation to that, such as those conferred by s 89 of the Conveyancing Act, will continue unchanged. The Applicant’s submissions correctly identify (par 45) that the application of s 89 of the Conveyancing Act to the existing easement is unaltered. Section 89 of the Conveyancing Act provides:

(1) Where land is subject to an easement or a profit à prendre or to a restriction or an obligation arising under covenant or otherwise as to the user thereof, the Court may from time to time, on the application of any person interested in the land, by order modify or wholly or partially extinguish the easement, profit à prendre, restriction or obligation upon being satisfied:

having the benefit of the easement, profit à prendre, restriction or obligation, or in the character of the neighbourhood or other circumstances of the case which the Court may deem material, the easement, profit à prendre, restriction or obligation ought to be deemed obsolete, or that the continued existence thereof would impede the reasonable user of the land subject to the easement, profit à prendre, restriction or obligation without securing practical benefit to the persons entitled to the easement or profit à prendre or to the benefit of the restriction or obligation, or would, unless modified, so impede such user, or …

48 If the proposed easement is created s 89 of the Conveyancing Act also applies to the proposed easement, as provided for in s 40. Section 40(12) states that:

Nothing in this section prevents such an easement from being extinguished or modified under section 89 of the

1919 .

49 I do not agree with the Respondents’ submission at par 37 that there will be two conflicting easements imposed. Nor will there be modification of the existing easement. I agree with the Applicant’s submission in par 41-43.

50 I do not understand the Respondents’ argument at par 35 made in reliance on Blulock at [13] in relation to the power to release or modify an easement being in conflict with s 40(9)(a). Blulock concerned an application for an easement for air and light under s 88K of the Conveyancing Act where Windeyer J held that the requirement that the easement was reasonably necessary was not made out. At [13] his Honour sets out the argument of the plaintiff in the case.

51 As submitted by the Applicant, to the extent there is any loss of proprietary rights to the owner of the burdened land s 40 requires that compensation is payable. The proposed easement does not contain the restriction which exists in the current easement whereby the Respondents cannot build over the existing easement without the consent of the Council.

52 In relation to the Respondents’ argument in par 40, evidence of possible future development is unnecessary as that is irrelevant to this application. Whether the drainage system will be utilised for other purposes such as roadworks for the Pacific Highway in the future is simply unknown. The fact that water from private land will be able to flow into a public drain is not material to the grant of this application for an easement. In conclusion, I do not accept the Respondents’ submission that the proposed easement under s 40 is an implied modification of the existing easement.

Issue 3

–

proposed easement under s 40 will extinguish the existing easement (Court lacks jurisdiction)

Respondents’ submissions

53 The submissions made in relation to the modification of the existing easement were also made in relation to arguing that partial extinguishment of the existing easement would occur if the proposed easement was made. In addition the Respondents argued that should waters enter the Council’s drainage pipes from the Applicant’s land that would reduce or alter the volumetric capacity of the pipes to receive waters from the roadworks or Everton Street. That would change partially and extinguish the rights of parties with an interest or estate in the pipes which is derived solely from the existing public utility easements.

Applicant’s submissions

54 The Applicant submitted that the terms of the existing easement are clear. The existing easement gives the First Respondent the right to drain water from its roads across the burdened lots. If the proposed easement is granted, the rights under the existing easement would continue to subsist concurrently with the new drainage rights granted by the proposed easement. Those rights would not be put to a total end, be done away with or blotted out of existence.

55 In any event the law recognises that extinguishment of an easement can only take place in certain circumstances being (1) express release, (2) abandonment, (3) unity of possession or (4) court order. Express release requires written authorisation or execution of an instrument or plan by the owner of the dominant tenement specifying the release of the easement. Abandonment requires evidence of intent to relinquish the right granted by the easement; Treweeke v 36 Wolseley Road Pty Limited (1973) 128 CLR 274. Unity of possession occurs when the dominant and servient tenements come into the same ownership and an order of the Court is available under s 89 of the Conveyancing Act in the circumstances prescribed by that section.

56 None of the recognised events of extinguishment have occurred. What in fact and law will occur is that the existing easement will continue to operate in accordance with its terms and the proposed easement will operate concurrently in accordance with its terms. There will be no extinguishment in whole or part of the existing easement.

Finding

57 I accept the Applicant’s submissions at par 54-56 and consider the proposed easement if made will not extinguish the existing easement.

58 For reasons already stated at par 52, whether the water from the Applicant’s land entering the existing drain would impact on the ability of the Council’s drain to be used for potential roadworks in the future is irrelevant to this application.

Issue 4 – all reasonable attempts to obtain the easement must be made before the commencement of proceedings (Court lacks jurisdiction in their absence)

59 The Court must be satisfied of certain matters under s 40(2) when considering whether to grant an easement under s 40. Section 40(2)(d) states:

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.

Respondents’ submissions

60 A purposive reading of s 40 suggests that it was intended that a reasonable attempt would be made to resolve the issue prior to seeking a resolution from the Court. A search of authorities showed successful s 40 applications are almost universal in having an extensive history of negotiations before an application is made. Making reasonable attempts to obtain an easement prior to filing a s 40 application is a requirement in the absence of which the Court has no jurisdiction to consider the application.

61 The Respondents submitted that their construction was accepted as true by the Applicant at the time of the application. The s 40 application of 7 August 2006 states that attached to the document is “copy of documentary material evidencing that all reasonable attempts to obtain the easement have been made but have been unsuccessful.” They also submitted that all litigation involves some level of negotiation, but to comply with the intention of the legislation the requirements need to be satisfied at the time of the application rather than at the hearing date. Reliance was placed on Simos J in Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14, 638 (s 88K application), Windeyer J in Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15, 795 (s 88K application) and Lloyd J in Antipas at [17] (s 40 Court Act application). All those decisions were said to determine that the test of whether reasonable attempts had been made was applicable at the date of filing of the application in a court, not only the hearing date. Both dates were considered in those cases. The cases are different to this case as here the Applicant did not satisfy the test when the s 40 application was filed as reasonable attempts to settle the matter had not been made at that date.

62 The proper construction of s 40(2)(d) requires the Applicant to have made “all” reasonable attempts to obtain the easement before filing its application. Antipas at [17] was relied on as supporting this approach. To construe it otherwise would result in mischief. Conduct of an applicant after filing of court proceedings goes to discretion not to the grounding of the application. The decision of Windeyer in Goodwin was incorrect where he accepted Simos J in Coles Myer to the effect that the court can have regard to the factual position at the time of making an order, not only the position when the court action was commenced. An application to the court should be the last resort so that only if it is clear, objectively, that further negotiations will not produce an agreement should proceedings be commenced. Reliance was also placed on Treygoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15, 845. If this approach is not taken then an applicant can behave aggressively by commencing proceedings issuing threats of adverse costs orders in order to force compulsory acquisition of private proprietary rights.

63 Prior to 7 August 2006 when the s 40 application was filed the Applicant made no or negligible attempts to obtain the easement from the Respondents. It relied in its application on letters dated 16 May 2006 and 29 May 2006 to all the Respondents. The Tenth Respondent states that she did not receive these letters. She states that no contact was made with her until November 2006. The Fourth Respondent argued the efforts made by the Applicant in terms of the correspondence relied on were not sufficient before the filing of the application to satisfy the requirement that all reasonable attempts were made.

Applicant’s submissions

64 The Applicant submitted there is nothing in the wording of s 40 which requires “all reasonable attempts” to have been made prior to the commencement of the proceedings in which the order imposing the easement is sought. Section 40(1) permits an applicant who obtains consent in a s 97 appeal to this Court to apply to this Court for an order imposing an easement over land. Section 40(2) provides that the Court may make an order imposing an easement over land if it is satisfied in respect of the matters in s 40(2) including s 40(2)(d).

65 Authorities such as Coles Myer, Goodwin and Antipas confirm that “all reasonable attempts have been made” includes consideration by the Court of all attempts made up to the final hearing date of an application under s 40.

Finding on issue 4

66 In Antipas Lloyd J summarised at [14] five principles derived from s 88K cases in the Supreme Court on the issue of whether “all reasonable attempts” have been made as follows:

As submitted by both the applicant’s and the respondents’ respective counsel, cases on s 88K of the Conveyancing Act 1919 can assist in informing the question of whether “all reasonable attempts” have been made. The tests adopted in the Supreme Court said to be of particular relevance to this case are:

(a) The applicant need not negotiate exhaustively to a consensus which involves concessions he may deem not to be in his best interests ( Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14638 at 14644.2)

(b) The applicant is not required to demonstrate a willingness to meet any demand, even an unreasonable demand, to satisfy the court that all reasonable attempts to obtain the easement have been made ( Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14638 at 14643.8).

(c) The court should make a determination on the basis of the whole circumstances of the case (( Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14638 at 14643.2).

(d) The test requires an objective assessment ( Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14638 at 14643.8).

(e) The requirement is satisfied when objectively it is extremely unlikely that further negotiations will produce a consensus within the reasonably foreseeable future (

(1997) 8 BPR 15845)

67 The Respondents relied on [17] in Antipas where his Honour identified the same argument put by the respondent in that case that the relevant time to apply s 40(2)(d) is prior to the commencement of proceedings. He did not need to determine that issue in the circumstances before him. His Honour held that there had been sufficient attempts made before the commencement of proceedings to obtain the easement. It did not matter if attempts after the commencement of proceedings were taken into account on the facts before him. It is not therefore an authority which supports the Respondents’ argument.

68 Section 88K(2)(c) of the Conveyancing Act has a similar provision to s 40(2)(d), stating that:

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

69 In Coles Myer Simos J held that he saw no reason why the Court should not have regard to the factual position at the time of making the order not just at the time when court proceedings were commenced. These comments were obiter. In that case an easement was sought over a laneway owned by the defendant. The plaintiff required an easement for the purpose of erecting scaffolding related to demolition and redevelopment of the plaintiff’s land. The first contact between the parties was when a surveyor for the plaintiff went on to the defendant’s land. Meetings and correspondence between the parties occurred over the next six weeks. At the time proceedings were instituted, Simos J held that it was extremely unlikely that consensus could be reached due to differences between the parties relating to an easement for light and the amount of compensation that should be paid by the plaintiffs. The plaintiffs were not required to continue to negotiate with the defendant by making more and more concessions until consensus was reached. It was not necessary for the plaintiff to provide the defendant with every detail of what was proposed. This section did not require the plaintiff to demonstrate a willingness to negotiate exhaustively. His Honour was satisfied that sufficient reasonable attempts had been made to satisfy s 88K(2)(c) of the Conveyancing Act.

70 In Goodwin Windeyer J also considered s 88K(2)(c) of the Conveyancing Act in circumstances where a builder made a very late request to obtain an easement from the neighbouring property owner and gave only one or two days to respond to that owner. That was the only request before the filing of a cross-claim which made an offer of compensation for an easement sought for scaffolding to occupy air space for a limited period. The cross-claim contained details of the scaffolding arrangements sought. The combination of the original letter and the cross-claim was held to be sufficient for his Honour to conclude at the hearing that reasonable attempts had been made, although his Honour noted the matter had caused him difficulty. He also considered that correspondence between solicitors after the cross-claim was filed was more likely to cause problems than to facilitate reaching agreement. He also considered in that case the owners of the servient property would not have agreed to the easement regardless of the terms.

71 In Treygoyd the plaintiff required easements over land from the development site to a particular street, including a small easement over one of two properties. One of the property owners refused to discuss the possibility of granting an easement. Protracted negotiations were entered into with the defendant, the other property owner, with no result. The plaintiff paid $5,000 to the defendant's solicitors for costs and offered a further $15,000 to cover costs and compensation. The defendant did not accept this offer, partly because it opposed the development due to a perceived loss of amenity. The property rights in the easement were worth at most $3,500. The defendant stated it was not concerned primarily about money but opposed the easement for other reasons including that the plaintiff had not established the easement was reasonably necessary or that reasonable attempts to negotiate an easement had been made. Further the plaintiff had failed to pursue negotiations with the alternative land owner, and a particular palm tree on the defendant’s property could be injured. Hamilton J held the steps taken by the plaintiff were reasonable and they fulfilled its obligations to satisfy the court that all reasonable attempts had been made to obtain the easement.

72 While the Respondents submitted that it would be wrong to adopt an approach whereby conduct after the commencement of court proceedings was solely considered sufficient to satisfy s 40(2)(d), as this would encourage applicants to file court proceedings without making any attempt to obtain an easement, that is a hypothetical scenario and does not arise in this case. That is not the situation as identified in the evidence which is set out below in some detail at par 167-181. The evidence identifies attempts by the Applicant before and after the filing of the application to obtain an easement from all twelve Respondents. I consider that all of those attempts should be considered in the circumstances of this case. There is no requirement in the legislation explicitly or implicitly, as argued by the Respondents, that all reasonable attempts must be made before the filing of the application. In this case attempts were made before and after the filing of the s 40 application and will be considered in more detail below. This approach is supported by the approach in Coles Myer, Treygoyd and Goodwin and the principles usefully summarised in Antipas at [14] set out above at par 66.

73 As I have found against the Respondents on all four preliminary issues there is no jurisdictional impediment to the Court considering the matters under s 40(2). Before doing so there are additional matters to consider.

Additional issues raised by the Respondents

74 In their wide ranging and lengthy submissions further issues were raised by the Respondents which it is appropriate to consider at the outset. To the extent I am able to understand these they are as follows.

(i) validity of the existing easement

75 The Respondents argued that the existing easement for drainage in favour of the Council was invalid because no dominant tenement is identified in the existing easement. Section 88(1) does not apply to an easement without a dominant tenement acquired by or for a prescribed authority referred to in s 88A: s 88(4). The Applicant’s assertion that the existing easement is enforceable as an easement in gross pursuant to s 88(4) and s 88A was not proved in the proceedings and should not be assumed by the Court. If the existing easement does not comply with s 88(1) then it was only enforceable as between the grantor and grantee (if any), that is inter partes, and does not bind either of the Respondents as the successors in title, notwithstanding notification of the easements on the title. This was said to be a hurdle for the Applicant which it sought to overcome by asserting that the existing easement was a valid easement in gross as contemplated by s 88A of the Conveyancing Act.

76 As the Applicant stated, the validity of the existing easement was never raised substantively in the proceedings until the joint written submissions of the Respondents were filed after the hearing. The onus is on the Respondents to seek a declaration concerning invalidity of the existing consent and this has not been done. I will determine this matter on the basis that the existing easement is valid.

(ii) private use of public drain not permissible

77 The Respondents submitted that conversion of an easement for the benefit of a public utility into use for a private purpose, here the draining of water from a private property, must change the existing rights or obligations of the Respondents. The existing easement can only exist because it is in favour of the Council for the supply of a utility service, namely drainage of a public road, as provided for by s 88A(1B). It is only permissible because it is an exclusive public use. The proposed easement is invalid as it is beyond the powers of the Council to convert or allow easements for private use under the terms of the existing easement, see Mulliner v Midland Railway Co (1879) 11 Ch D 611.

78 The Applicant argued, and I accept, that the existing easement continues in effect separate from the proposed easement. The rights of the Council are not exclusive as that would mean there had been a transfer of land. The rights under the two separate easements are separate and distinguishable. Mulliner concerned a statutory authority granting an easement outside its powers. In this case the Court can make the determination that the public drain can be used in the Applicant’s private interest. Assuming there is such a limit on the Council’s powers, about which I make no finding, there is no such limit on the Court’s power. The Respondents’ argument fails.

79 I do not understand the submissions that the Applicant is estopped from asserting certain matters as stated at [57] of the Respondents joint submission filed on 19 November 2007. There is nothing before me to suggest that estoppel can arise.

(iii) proposed easement uncertain

80 The Respondents submitted that the Court would not have power to change the proposed easement if made. The Respondents would only be able to apply to the Supreme Court under s 89 but because the easement was created by this Court would be prejudiced in doing so. The proposed easement would be void for uncertainty or outside the proper limits of the jurisdiction of the Court under s 40 as the class of persons entitled to the benefit of the easement is too wide and uncertain. The class of person to be benefited is wide and offends the rule against perpetuities. The proposed easement would be radically different in its statutory provenance, nature and incidence and as to its operation and enforceability inter partes. It would limit the ability of the Respondents to apply for a future easement, relying on Blulock at [18].

81 The Applicant submitted the proposed easement is certain and able to be validly created. The Court is not limited under s 40 as to the terms of the easement it can impose. The agreed terms of the easement control discharge in accordance with the development consent. If the Respondents wish to discharge stormwater into the Council’s drain they will have to create a new easement, just as they must do now. The owners of the burdened and benefited lands are easily identifiable.

82 I consider that future applications for easements are irrelevant to consider in this matter. Blulock at [18] is irrelevant to the Respondents’ submissions but [19] should be considered. I otherwise agree with the Applicant’s submissions at par 81. As stated in Blulock at [19] in relation to s 88K of the Conveyancing Act:

The purpose of s88K is to enable reasonable development land. In many cases this can be achieved by the imposition of easements for a restricted period of time so that access over adjoining land can be obtained to enable a development to proceed in a reasonable manner without undue expense and without the developer being held to ransom by an adjoining owner. Many applications are for permanent easements for drainage and the like required as a result of sub-division of land into a number of blocks, creating additional problems of rain water run off as a result of more land being built over which water might have just sunk into the ground had there been no improvements erected. In such cases it is often reasonable to impose a drainage easement over lower lands to allow water to be taken to municipal drains. Generally speaking these can be imposed underground and adjacent to boundaries so that they would have little or no effect on possible re-development of the burdened land and little effect on its continued use or enjoyment so that there is little question of adequate compensation for loss of disadvantage not being available. …

83 The approach identified in these findings applies equally in this case and is an approach taken in other s 40 applications in this Court. For example, a facultative approach to s 40 was taken by Lloyd J in Antipas, see [11].

84 As I have not found there is any jurisdictional issue referred to above precluding the Court considering this application I will now consider s 40(2)(a) to (d). The onus of proof in an application under s 88K of the Conveyancing Act is broadly on the Applicant, 117 York Street Pty Ltdv Proprietorsof Strata Plan 16123 (1998) 43 NSWLR 504. This has been held to also apply in s 40 cases; Antipas at [29], in the context of assessing the appropriate amount of compensation.

Section 40(2)(a) whether easement reasonably necessary

85 A conditional development consent was granted by the Court in May 2006. The modified development consent condition 89A(d)(2) made in June 2007 requires drainage along the Council’s stormwater drain either by agreement of the downstream owners to the discharge or the creation of a new easement along the existing Council drainage easement, whether by agreement or compulsory process.

Applicant’s submissions

86 The new easement is clearly necessary for the approved development. This is not a case where it is necessary to examine whether there are alternative routes for the drainage easement as was required in Khatter v Wiese [2005] NSWSC 1014 (s 88K Conveyancing Act) or Gordon v Gioia and Anor [2007] NSWLEC 509 (s 40 Court Act). The Applicant submitted that this case is more akin to Antipas.

87 In Khatter and Gordon the relevant consent required an easement over downstream properties without specifying which downstream properties or the alignment of the easement. In such cases it is appropriate to examine alternative routes. In Antipas, although dealing with a right of way, the consent specified both the location and the alignment of the easement. The present case is the same. The Court, after considering the merits of the development, has nominated the alignment of the easement which has in turn identified the land over which the easement is to be imposed.

88 Unless the Applicant obtains the right to drain along the alignment of the existing easement by agreement with the Respondents or by compulsory process then the development cannot have effect in accordance with the consent. Further, the evidence of the hydrological engineer, Mr Lawson, suggests there has only ever been one alternative for the drainage easement. His report refers to the topography of the site whereby the land naturally drains to the low point which is where the Council’s drain is located. The Council’s DCP 47-Stormwater states that such water should flow downhill and not be rediverted to another street or catchment.

Respondents’ submissions

89 The Applicant is applying for a private drainage easement in a public drain which has existed for sixty years or more to drain water from a public road, Everton Street. The property also faces Pymble Avenue. Relying on Rein J in Owners Strata Plan 13635 v Ryan [2006] NSWSSC 221 at [67], the historical context is important to consider in determining if an easement is reasonably necessary. The circumstances of this case suggest that because private rights are being created when none previously existed then such a use is not reasonable.

90 Blulock at [14] and [15] per Windeyer J is authority that the Court is required to take into account whether a particular development is reasonable or not in deciding whether an easement was reasonably necessary. No evidence was led by the Applicant as to whether the proposed building could or should have been designed and oriented to drain into Pymble Avenue rather than Everton Street. As in Treygoyd no attempt has been made to establish that there is no feasible alternative drainage route. If an easement to the same or similar effect was available for the Council’s drainage system in Pymble Avenue then the Applicant was bound to make all reasonable attempts to obtain that.

91 Further, relying on Castagnet Investments Pty Ltd v Woollahra Municipal Council [2005] NSWLEC 647, the Applicant has to show why a new building could not be designed to drain into Pymble Avenue.

92 The affidavit evidence of the Fourth Respondent makes clear that the Applicant was told prior to submitting its development application in March 2005 there was a drainage issue. It was obvious that drainage from the site was an issue when the land was acquired. It is not an issue that should be left at large until after the acquisition of the site, or the filing of a s 40 application, as has occurred in this case.

Finding on s 40(2)(a)

93 Blulock considered applications for the creation of an easement under s 88K of the Conveyancing Act. As part of that consideration the reasonableness of the development requiring the easement sought was considered to some extent in Blulock as part of determining if the easement was reasonably necessary. At [15] Windeyer J stated:

While I do not think it is necessary for the purpose of satisfying the requirements of s88K(1) that detailed evidence be given to the court of alternative plans there is little doubt that as the court retains a discretion as to whether or not an easement ought to be imposed, one would at least expect there to be some view expressed by the developer or an architect or a planner that the proposed development is a sensible and reasonable development as compared with some other development which would involve a set back on the western side or some development where council would not require the easement the subject of the present condition. Where an existing building is to be completely gutted and transformed the court should not be too ready to assume the easement sought is reasonably necessary for effective development. I am not satisfied on the evidence that the requirements of s88K(1) are made out.

94 In Treygoyd, Hamilton J held at page 15, 854:

… I think the development referred to must be a particular development which is proposed, but I also think that the insertion of the word “development” in New South Wales emphasises that the Act may be enlivened if the easement is reasonably necessary for any development that is within the law. This Court is not to judge upon the reasonableness of the particular development, at least in the circumstances of this case.

95 The different approaches to whether the development for which an easement was sought under s 88K of the Conveyancing Act was reasonably necessary reflects the different factual circumstances of these two cases. On either approach, the level of inquiry as to whether a development is reasonably necessary is not required to be exhaustive. Further, when s 40 is considered, it differs from s 88K in important respects. Section 40(1) makes a precondition to the granting of an easement under the section the existence of a development consent granted by this Court. That requirement means that the Court has assessed the merits of a particular proposal and found it sufficiently satisfactory to grant development consent. The assessment of the reasonableness of the development has therefore occurred and there is no basis for the Court to again consider the merits of the development the subject of s 40(1). It is not open legally to find in these proceedings that the development consent ought not to have been granted because the development is unreasonable. For that reason the approach in Blulock in particular has no application in this context. I am not determining the reasonableness of this application for an easement under s 40 by determining whether the development which triggers the necessity for it is reasonable.

96 Castagnet concerned an application to this Court under s 40 of the Court Act in the absence of development consent being granted under s 97 of the EP&A Act and is not authority for the matter for which it is relied on by the Respondents.

97 As identified by the Applicant, the circumstances in Khattar and Goodwin differ as there was more than one possible route for a drainage easement able to be identified and therefore consideration of these was necessary. Here the amended development consent condition 89A(2) requires that the drainage be effected through the Council’s stormwater drain. This condition reinforces a finding that the easement sought is reasonably necessary. As submitted by the Applicant the s 97 appeal process and the availability of s 40 are legitimate applications to facilitate the orderly and economic development of land.

98 The evidence of Mr Lawrence referred to by the Applicant (par 88) suggests that as a practical matter the proposed drainage of stormwater from the Applicant’s land was the only sensible option given the site topography. That is clearly a relevant matter to also consider as supporting a finding that the easement is reasonably necessary. The Applicant has satisfied s 40(2)(a).

99 Another matter that arises from this finding concerns what is a compensable matter under s 40. The Fourth Respondent claims compensation on the basis of injurious affectation to his property resulting from the development on the Applicant’s land. Given that development consent has been granted for that development and of itself gives rise to no claim for compensation to any affected property, a claim for compensation on this basis cannot arise in these proceedings where there is no separate assessment of the merits of that development open.

Section 40(2)(c) - owner of burdened land can be adequately compensated for any loss or disadvantage

100 In Khattar at [50] Brereton J held that:

… injury to intangible benefits and the imposition of intangible detriments, such as reduced amenity and enjoyment of property, and exposure to increased disruption and interference, may weigh heavily against a conclusion that the servient owner can be adequately compensated for the purposes of s 88K (2)(b).

101 The proposed easement sought by the Applicant is a drainage easement over the alignment of an existing drainage easement in favour of the Council which has existed and operated for many years. There is no need to enter or disturb the Respondents’ land as the existing easement and the necessary infrastructure already exists. The connection to the drainage pipe would be made within the Applicant’s development site. The Council is responsible for ongoing maintenance and the Council's right to enter the Respondents’ land for maintenance purposes already attaches to the existing easement. The Court has already determined that not only is there sufficient capacity within the existing easement to take the stormwater from the proposed development but in fact the amount of stormwater flowing through the existing easement will be reduced after the development is completed due to the stormwater collection required on-site. There will be no additional disturbance or interference with the Respondents’ land if the proposed easement is imposed. In Antipas [39] Lloyd J stated that:

A drainage easement is not, in my opinion, comparable to a right of way. Once drainage pipes have been laid and covered over, there is no ongoing interference with the surface of the land within the easement. A right of way, on the other hand, involves an ongoing disturbance in the form of vehicles coming and going which is both visible and generates noise and fumes and it limits the use to which the surface of the land may be put.

102 The impacts of the right-of-way referred to by Lloyd J in Antipas at [39] are the same type of impacts alluded to by Brereton J at [50] in Khattar (see par 100 above). In the present case there will be no such impacts as, consistent with Lloyd J’s observations in Antipas, the proposed easement sought is a drainage easement where drainage pipes have already been laid and covered over so that there will be no disturbance or ongoing interference with the surface of the land within the proposed easement. Indeed, the Respondents can expect a reduction in impact as the evidence before Biscoe J demonstrated there will be a reduction in the flow of stormwater through the existing easement.

103 The terms of the proposed easement clearly identify and protect the rights and obligations of the Applicant and Respondents. As a consequence the owner's loss or other disadvantages, if any, can be readily identified and valued with the result that the Court can be satisfied that the Respondents can be adequately compensated for any loss or other disadvantage that would arise from the imposition of the easement. There are no intangible benefits such as those identified in Khattar, which suggest that adequate compensation cannot be provided.

Respondents’ submissions

104 The Respondents considered that the proposed easement will require the consent of other lot owners so that any application for a new easement in respect of any downstream development will require the consent of lot owners and countless other persons where hitherto no such consents were required. Just building over the proposed easement without the need to tap into the drainage easement would require the consent of all the current Respondents. Under the current easement, only Council’s consent would be required for development. This is a major change to the status quo.

105 Compensation for injury under s 89 of the Conveyancing Act is not the same as compensation under s 40 of the Court Act. The decision in this case will prejudice the Respondents because it will create a res judicata apropos any s 89 application. The practical result will be that the grant of the proposed easement will deny the latter relief in relation to the modification and partial extinguishment effected by the proposed easement. Any future application of any lot owner under s 89 of the Conveyancing Act will be complicated by the potential interaction of all existing easements over the same drainage system.

106 Reductions in capacity of the drain to accept run-off from future developments on downstream sites has not been considered. Biscoe J’s decision was confined to the question of whether the drainage system has the capacity to accept the anticipated run-off from the proposed development on the Applicant’s site. The issue that downstream owners would miss out or be disadvantaged by the conferral of previous easement rights to drain excess water into the system from other properties has not been dealt with. Further the likely reduction in stormwater from the Applicant’s land after the development is not relevant as any stormwater entering the drain from the Applicant’s land is illegal in any event.

107 Further the precedential effect of this approval has not been considered as part of the blot on title. In Ryan at [67] Rein AJ emphasised that the historical context of use of the land is of relevance to the application. It would undoubtedly be directly relevant to this application. Any potential purchaser, if faced with a series or a potential series of easements, would be advised by a responsible solicitor that he/she would avoid those uncertainties, expenses, delays and risks due to the possibility of complex negotiations with the Council and other lot owners which will be expensive and time consuming to investigate and give rise to uncertainty. Any developer acting on an informed basis would reduce substantially his or her offer for a property which is affected by not only an easement in gross for a public utility, but also by an easement for drainage held by a private developer or body corporate representing 29 owners, particularly if it raises the probability of similar easements being granted to title holders on the drainage pathway.

108 Development over the easement is likely in the future. That development would become more complex in the future due to relocation and reconstruction by reason of the proposed easement. The grant of the proposed easement would substantially impede those kinds of developments. Any site development of the old lot No 17 (part of the Tenth Respondent’s property) would involve putting the existing easement channel underground or relocating it. To be dependent upon consents from the owners of the lot benefited by the proposed easement would undermine the current market value of No 17 and inhibit its development.

109 No 17, part of the property of the Tenth Respondent, was listed for sale on 1 December 2007 and this was impeded by this litigation for several reasons. These reasons include the giving up of proprietary rights, the blot on title, that prospective purchasers would have to assess the potential for future applications of a similar nature in the event they develop their properties, that the number of parties would increase with increases in easements, that it would create an unfavourable precedent for all other Respondents, it would prejudice the Tenth Respondent’s application for rezoning to the Director-General and the market value of the property would be reduced.

110 The Respondents also submitted the Court should take into account issues concerning the restoration of the riparian zone by the Council, public announcements by the Minister for Planning about the proposed appointment of a planning panel under s 118 of the EP&A Act to undertake certain planning functions of the Council and discussions about rezoning of properties to allow medium density development which have focussed on the status of the Council’s proposed riparian restoration. The latter may result in the relocation of the easement underground or in a different location.

Finding on s 40(2)(c)

111 The principles for the determination of compensation in an application under s 40 were identified by Biscoe J in Property Partnerships at [62] – [64] as follows:

62 The equivalent provisions to s 40(2)(c) and (7) in the Conveyancing Act 1919 are s 88K(2)(b) and (4). In this context in

(above), Brereton J said:

[65] The onus of proof in a case for compensation under s.88K is borne by the applicant [ 117 York Street , 516; Mitchell v Boutagy (2001) 118 LGERA 249; (2001) 10 BPR 19,187; (2002) NSWConvR 56–024; [2001] NSWSC 1045 (Austin J), [34]]. This compensation is the same compensation “for any loss or disadvantage that will arise from imposition of the easement” as is referred to in s.88K(2)(b) [ Goodwin v Yee Holdings; Mitchell v Boutagy ]. The court’s task, therefore, is to assess appropriate compensation for the imposition of the easement, measured as adequate compensation “for any loss or other disadvantage that will arise from the imposition of the easement” [ Mitchell v Boutagy , [25]]…

[66] … In

, 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

, 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.

63 In

[2006] NSWSC 221 at [85] Rein AJ summarised the compensation principles under s 88K as follows:

(1) The compensation referred to in s 88K(4) is compensation for any loss or other disadvantage (as referred to in s 88K(2)(b)) caused by the easement: see

(1997) 8 BPR 15,795 at 15,801 per Windeyer J.

(2) Section 88K(2)(b) requires a causal relationship between the loss or disadvantage for which claim is made and the imposition of the easement:

(2001) 118 LGERA 249 at [26].

(3) Causation is to be ‘determined by applying common sense to the facts of each particular case’: as set out in

(1991) 171 CLR 506 at 515; Mitchell at [27].

(4) Ordinarily compensation will have three elements:

(a) the diminished market value of the affected land, including the potential use to which the land could be put;

(b) associated costs that would be caused to the owner of the affected land;

(c) an assessment of compensation for insecurity, loss of amenities such as loss of peace and quiet;

and will allow as an offset any compensating advantages: per Young J in

(1999) 9 BPR 16,985; [1999] NSWSC 485 at [26].

(5) There may be an exceptional case where it is extremely difficult to assess compensation and it is clear that the applicant is to derive a considerable benefit from the application, and where it may be appropriate to assess the compensation on a percentage of the profits that would have been made: Wengarin per Young J.

(6) The Court ‘should not err on the side of generosity or miserliness’, and leaving aside (5) above, the fact that the plaintiff ‘may generate profit, substantial or moderate, from the development in connection with which the easement is sought, does not justify any departure from what would otherwise be the principles upon which adequate compensation is assessed’: Mitchell per Austin J at [31].

(7) Compensation under s 88K includes, in the case of a grant of a permanent easement, compensation for loss of proprietary rights taken by the grant of the easement and compensation for the disturbance effected by carrying out the initial work and the costs of subsequent repair and maintenance. The first aspect is often referred to as the ‘blot on title’ and the second as ‘disturbance’: Mitchell at [32].

(8) Loss or disadvantage does not include the loss of the bargaining position that the owner of the servient tenement would have if s 88K had not been enacted: Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15,795 at 15,801; 117 York Street at 515, 516; Wengarin at 16,988. Loss of rent can be compensated: Goodwin .

(9) The plaintiff has to establish what the relevant losses and disadvantages are as part of satisfying the Court that the persons affected can be adequately compensated:

at 516, but onus should not be overemphasised: see

(2000) 10 BPR 18,377; [2000] NSWSC 1208, and unfavourable inferences can be drawn where evidence of facts is peculiarly within the knowledge of the defendant:

at [34].

64 In the context of s 40, in

(2006) 144 LGERA 289 at 295 [28] – [30] Lloyd J said:

[28] There is no material difference between s 40 of the Court Act and s 88K of the Conveyancing Act relating to compensation. The principles of determining compensation under s 88K may thus be applied to the determination of compensation under s 40.

[29] The onus of proof for the question of the appropriate amount of compensation is upon the applicant:

(1998) 43 NSWLR 504 at 576, 98 LGERA 171 at 182-183,

at [34].

[30] In

(1999) 9 BPR 16,985, Young J, drawing upon cases decided in the Supreme Court of Queensland, set out, at [26], a number of general principles which apply in considering the question of compensation:

(i) The compensation referred to in subs (4) [cf subs (7) of s 40] is the same compensation as is referred to in subs 2(b) [cf subs 2(c) of s 40], that is, adequate compensation for loss or other disadvantage.

(ii) The compensation is not a substitute for the price that could have been exacted if the section did not exist.

(iii) The compensation is not just the diminished value of the affected land.

(iv) Ordinarily the compensation will be:

(a) the diminished market value of the affected land;

(b) associated costs that would be caused to the owner of the affected land;

(c) an assessment of the compensation for insecurity and loss of amenities such as loss of peace and quiet;

(d) the compensation is to be less where there are advantages to be taken into account.

(v) There may be some exceptional cases which fall outside the net of the section where it is extremely difficult to assess the compensation, but it is clear that the applicant is to derive a considerable benefit from the application. In such circumstances it may be appropriate to assess the compensation on a percentage of the profits that would be made.

112 The matters identified in the summary of principles above as being relevant to the consideration of compensation include, inter alia, any diminution in market value, any associated costs caused to the land owner, and disturbance, such as insecurity or loss of amenity. I note that, as summarised by Lloyd J in Antipas, in WengarinPty Ltd v Byron Shire Council (1999) 9 BPR 16, 985 Young J held that in some exceptional circumstances where it is extremely difficult to assess the compensation it may be appropriate to award a percentage of the profits that would be made. I have not been provided with any case where that approach identified in Wengarin has been applied.

113 The issue that must be considered under s 40(2)(c) is whether in addition to identified matters for which compensation can be determined there are losses or disadvantages arising from the imposition of the easement which cannot be adequately compensated. In Khattar Brereton J referred at [50] (see par 100) to the need to consider injury to intangible benefits when considering whether adequate compensation can be awarded under s 88K(2)(b) of the Conveyancing Act. He also referred to whether there would be the imposition of intangible detriments which he identified as matters such as reduced amenity and enjoyment of property. In [49] his Honour noted that in the analogous context of the law of restrictive covenants, damages are not ordinarily a sufficient remedy for substantial interference with intangible benefits because the loss is not capable of being estimated as a monetary value.

114 Lloyd J considered the application of these findings in Antipas in relation to the loss and disadvantage claimed in that case which concerned an easement being established over an existing right of way to benefit an additional block of land. The respondents argued that money was inadequate compensation for losses which included additional noise and traffic on a permanent basis, potential loss of tenants and associated difficulty in finding new tenants, loss of quiet enjoyment of the property and loss of bargaining position and the legitimate economic advantage in maintaining the status quo (at [21]). Lloyd J held these losses were largely physical impacts rather than intangible ones and could be adequately compensated. In relation to maintaining the status quo he observed at [25] that s 40 reflects a legislative policy that the Court is empowered to require the respondents to grant an easement against their will, relying on Mitchell v Boutagy (2001) 118 LGERA 249 at [60].

115 The Respondents’ perceived losses and disadvantages relate to their belief that there will be a major change in the legal status quo in relation to their properties if the proposed easement is made and their properties burdened. They do not otherwise raise any physical impacts or loss of amenity resulting from the proposed easement. It is necessary to determine if these losses are likely to occur and if so whether they can be adequately compensated for.

116 Considering each of the Respondents’ submissions in turn, in relation to par 104, the Respondents’ submission that the proposed easement would mean that the consent of other lot owners for any application for a new easement for any downstream development appears misconceived. Similarly their submission that building over the proposed easement without requiring the consent of all current Respondents, with the exception of the Council, would be altered if the proposed easement is made is also misconceived. The Council’s consent is required under the existing easement if building is to occur over the existing easement. There is no requirement to obtain consent from all the Respondents in such circumstances under the proposed easement.

117 In relation to par 105, I do not consider there is any prejudice to rights under s 89 for the existing easement nor, given the provisions of s 40(12) of the Court Act, for the proposed easement. Section 40(12) states that s 40 does not prevent an easement from being extinguished or modified under s 89 of the Conveyancing Act.

180 Mr Sattler was cross-examined by the Fourth Respondent on various matters including in relation to a possible meeting between them at the Court on 31 May 2006, whether a paragraph in a letter dated 29 May 2006 was incorrect/untruthful in relation to the Fourth Respondent, whether the letter was sent to the Fourth Respondent at all as he denied receiving it, why there was continued reliance on the letter of 29 May 2006 by the Applicant in its case in light of this, Mr Sattler’s evidence about contacts with Mr Dobrow, valuer, and incorrect information in correspondence about this, whether the terms of an offer by Mr Sattler on behalf of the Applicant on 14 October 2007 were reasonable given that it was made to a litigant representing himself, and his estimate of the costs of the easement if the offer of 16 May 2007 had been accepted by all the Respondents.

181 The parties filed voluminous documents as annexures or exhibits to the affidavits identified above concerning the numerous interactions between them. The following table identifies most of the written communications concerning settlement negotiations and their timing in relation to these proceedings (or the related Class 1 appeal in which the two s 96 applications were lodged). While the Respondents argued the conduct of these proceedings by the Applicant and its solicitor have been unreasonable and it was therefore submitted the steps in these proceedings were also to be considered I do not agree. The table does not therefore attempt to include communications particular to the litigation.

Date	Description
16/05/2006	Letter from Sattler, Applicant’s solicitor, to all affected land owners requesting reciprocal easement and offering $1000.00 to obtain legal advice
20/05/2006	Email from the Fourth Respondent to Sattler requesting $10,000 to seek legal advice
29/05/2006	Letter from Sattler to all affected land owners requesting reciprocal easement and offering $1000.00 to obtain legal advice and $1000.00 compensation, noting court proceedings will result if they do not agree, causing costs. Correspondence received back from Second, Third, Fourth, Fifth, Seventh, Eighth and Ninth Respondents.
07/08/2006	Section 40 Application filed
10/08/2006	Letter from Sattler to all Respondents serving s 40 Application and requesting reciprocal easement
26/09/2007	Statement of Issues filed by Fourth Respondent
12/10/2006	First Section 96 Application in s 97 appeal proceedings No. 11234 of 2005 before Senior Commissioner Roseth decided
29/10/2006	Letter from Applicant to all Respondents (except Fourth Respondent) providing information about development and easement, outlining actions of Fourth Respondent and requesting resolution
31/10/2006	Email from Fourth Respondent to Sattler responding to Director of Applicant’s letter of 29 October 2006
01/11/2006	Email from Director of Applicant to Respondents other than Fourth Respondent responding to Fourth Respondent‘s email and requesting resolution
01/11/2006	Email from Fourth Respondent to other Respondents
17/11/2006	Email from Director of Applicant to Respondents other than Fourth Respondent referring to cost consequences if matter proceeds to hearing, advising Respondents to consult lawyers and accept the offer if lawyers advise no issue that can legitimately be raised
12/12/2006	Email from Director of Applicant to Respondents confirming offer of $2000, stating the offer only available until 5 pm 14 December 2007.
13/12/2006	Email from Fourth Respondent to Director of Applicant rejecting latest offer and denying receipt of previous offers other than 16 May 2006
22/12/2006	Email from Sattler requesting availability for hearing if mediation unsuccessful
23/12/2006	Email from Fourth Respondent to Sattler stating negotiations ceased when court papers were served and advising he does not wish to deal with negotiation, mediation and hearing all at once, requesting correspondence to come from Applicant's solicitor only.
10/01/2007	Email from Fourth Respondent advising that he does not want to negotiate whilst mediation has been booked and hearing date sought and does not want to deal with Director of Applicant direct
15/01/2007	Email from Sattler to all Respondents advising of listing for directions for mediation and requesting common sense resolution by negotiation, mediation or Court determination
17/01/2007	Letter from Sattler to all Respondents offering reciprocal easement at applicant’s costs
18/01/2007	Letter from Applicant to Respondents offering $2000 based on valuation advice plus costs if settled by 24 January 2007
19/01/2007	Email from Director of Applicant to Tenth Respondent’s agent making offer of settlement
19/01/2007	Email from Director of Applicant to Fourth Respondent making new offer and confirming alternate offer, offer not attached
20/01/2007	Email from Fourth Respondent to Sattler confirming that neither offer is acceptable
27/01/2007	Email from Director of Applicant to agent for Tenth Respondent, asking for response to offers or alternate resolution
28/01/2007	Email from Tenth Respondent’s agent to Director of Applicant requesting answer to question in previous email and what happens to flows if other developments occur
29/01/2007	Email from Director of Applicant to Tenth Respondent’s agent requesting him to accept one of the Applicant’s offers or advise of anything they missed or alternate proposal
03/02/2007	Email from Director of Applicant to Tenth Respondent’s agent requesting him to advise detrimental impact and appropriate amount of compensation
04/02/2007	Email from Tenth Respondent’s agent to Director of Applicant stating offer is too low, costs are adding up and likely to be borne by Applicant
05/02/2007	Email from Director of Applicant to Tenth Respondent’s agent asserting extortion and requesting answer on impacts and appropriate compensation amount
06/02/2007	Email from Tenth Respondent’s agent to Director of Applicant denying extortion
06/02/2007	Email from Director of Applicant to Tenth Respondent’s agent requesting identification of legal issues and answer to question on identifying impacts and appropriate compensation
07/02/2007	Email from Tenth Respondent’s agent to Director of Applicant regarding legal issues, role of Council
01/03/2007	Mediation – no agreement reached
06/03/2007	Email from Tenth Respondent’s agent to Director of Applicant setting out heads of compensation and terms of proposed easement
06/03/2007	Email from Director of Applicant to Tenth Respondent’s agent asking for compensation amounts of heads of compensation identified
06/03/3007	Email from Director of Applicant to Tenth Respondent’s agent advising on view of the Council's role
06/03/2007	Letter from Applicant to Respondents offering three alternative settlements
07/03/2007	Email from Fourth Respondent to Sattler refusing offer
07/03/2007	Email from Tenth Respondent’s agent to Director of Applicant responding to his email and advising on legal costs
07/03/2007	Email from Director of Applicant to Tenth Respondent’s agent advising on cases where costs not awarded
07/03/2007	Email from Tenth Respondent’s agent to Sattler identifying outstanding issues (compensation, costs, extinguishment of old easement) and suggesting they could be resolved if Director of Applicant increases offer
07/03/2007	Email from Sattler to all Respondents attaching a copy of draft 88B instrument providing reciprocal easements asking for response by close of business
07/03/2007	Email from Fourth Respondent to Sattler complaining of time limit on response to draft 88B and asking if compensation would be increased
07/03/2007	Email from Sattler to Fourth Respondent responding to questions, advising compensation would not be increased and asking Fourth Respondent to make offer
12/03/2007	Email from Director of Applicant to Tenth Respondent’s agent requesting response on compensation amounts
13/06/2007	Second s 96 application in Class 1 proceedings – decision of Talbot J to modify condition 89A(d)
09/07/2007	Email from Sattler to all Respondents attaching draft 88B creating new easement with reciprocal rights and suggesting release of old easement
11/07/2007	Email from Tenth Respondent’s agent to Sattler asking compensation amount and whether indemnity costs will be paid
29/07/2007	Email from Fourth Respondent to Sattler refusing offer of 26 July 2007 ($750 on advice of valuer)
03/08/2007	Email from Sattler to Fourth Respondent and other Respondents offering meeting on site including valuer to negotiate resolution on 11 August 2007
03/08/2007	Letter from Sattler serving offers of compromise on all Respondents – offer open for 30 days
07/08/2007	Email from Fourth Respondent to Sattler refusing offer of $3000.00
28/09/2007 Emailed 29/09/2007	Letter from Sattler to all Respondents confirming relief sought in s.40 proceedings, providing a copy of survey plan showing site of easement and confirming reciprocal easement not agreed with Council
29/09/2007	Letter from Sattler to all Respondents recapping previous offers, noting that no previous offers have been accepted and asking how much the Respondent is prepared to accept
04/10/2007	Email from Tenth Respondent’s agent concerning a settlement offer
10/10/2007	Without Prejudice meeting between Director of Applicant and Fourth Respondent
13/10/2007	Letter from Sattler to remaining Respondents offering compensation determined by Mr Wood plus reasonable costs as agreed or assessed. Terms of proposed easement not included.
23/10/2007	Email from Sattler to Tenth Respondent’s agent requesting signature of consent orders
24/10/2007	Email from Tenth Respondent’s agent to Sattler re costs
24/10/2007	Email from Director of Applicant to Tenth Respondent’s agent confirming posting of compensation payment
25/10/2007	Email from Tenth Respondent’s agent to Director of Applicant requesting resolution of costs
25/10/2007	Email Tenth Respondent’s agent to Sattler regarding costs
26/10/2007	Email from Sattler to Tenth Respondent’s agent re amended consent orders to include costs
30-31/10/07	Hearing on s 40 application

Applicant’s submissions - law

182 In determining whether all reasonable attempts have been made, all efforts made up to and after the date of hearing should be considered. In Antipas at [14] Lloyd J set out the principles in relation to "all reasonable attempts" in respect of cases under s 88K of the Conveyancing Act which were found to be applicable to applications under s 40 of the Court Act (these are set out above at par 66).

Applicant’s submissions - facts

183 The proposed easement in favour of the Council traverses eleven properties over the alignment of the existing Council easement. The Applicant therefore had to deal with all those twelve parties in negotiating to obtain the easement. Prior to proceedings being commenced in August 2006 two letters were sent by the Applicant’s solicitor dated 16 May 2006 and 29 May 2006. The letters clearly and accurately identified that there was an existing drain in place, the existing easement did not permit landowners to drain into the drainage easement and that the Applicant wished to obtain that right. The letter also noted that it would be beneficial if at the same time all owners obtained reciprocal rights. It was therefore reasonable that no compensation was offered in relation to the proposed easement at that stage. The Applicant did offer to pay for the cost of legal advice to confirm that what the Applicant was saying was correct. This offer was not accepted by any Respondent. The letter of 29 May 2006 repeated the offer in the 16 May 2006 letter and also offered compensation of $1,000. This offer was also reasonable. Mr Sattler’s evidence establishes that the letters were sent. Mr Sattler’s affidavit of 15 October 2007 (exhibit F) annexes various communications received. No Respondent accepted the offer and most were silent. The Tenth Respondent’s evidence is that none of these letters were received by her. In his affidavit sworn 12 October 2007 Mr Sattler identifies that he sent the letters to her and then engaged a process server to find her for the purposes of serving the s 40 application in October 2006.

184 The Director of the Applicant, Mr Poole, had advice from several valuers that any compensation offered should be nominal. In the circumstances therefore the offers were reasonable.

185 Following mediation which was unsuccessful, settlement was reached with the Tenth Respondent but then repudiated. Ultimately the Tenth Respondent through her agent contested the matter at hearing.

186 While the Respondents argue that the offers made by the Applicant over more than 15 months were unreasonable and well below what Mr Wood ordered, the Applicant‘s written submissions stated that:

Section 40

attempts to obtain the easement or an easement of similar effect. The applicant pursued a reciprocal easement which would provide equal rights to all respondents. Such an easement would be of similar effect to the Proposed Easement and it was reasonable that compensation be limited where all respondents would achieve equal rights. The later offers made by the applicant were based on expert advice that the easement had a nominal value. Kent Wood is also of the view that compensation should be nominal but suggested a greater amount. As soon as the applicant became aware of Mr Wood’s findings it made offers to R4 and R10 to pay those amounts plus costs. R10 actually accepted the applicant’s offer and then repudiated. R4 did not accept the offer and is plainly labouring under the incorrect impression that R4 is entitled to be compensated for perceived impacts on his amenity caused by the development as opposed to amenity impacts caused by the easement. Tenacity, while holding the view that zero compensation should be awarded because of the circumstances of this matter;

[2002] NSWSC 969 para 21 – is nonetheless happy for the compensation as recommended by Kent Wood to be Ordered in final settlement of this matter.

187 The evidence filed by the Applicant supports a finding that reasonable attempts were made to obtain an easement before and after proceedings were commenced. The evidence demonstrates that the Applicant has been reasonable and it is unlikely that any further negotiation would result in a consensus being reached between the Applicant and the remaining Respondents. References to cost consequences in correspondence to the Respondents were not unreasonable in the circumstances. The Applicant faced considerable opposition from the Respondents as is clear from the behaviour of the Fourth Respondent in particular. The Fourth Respondent also seeks compensation based on injurious affectation resulting, he claims, from the development itself. That clearly falls outside the scope of compensation which is able to be claimed for an easement granted pursuant to s 40. The Applicant requested the Council to exercise its powers under s 59A of the Local Government Act but it declined to do so leaving the Applicant to pursue an application under s 40 of the Court Act.

Respondents’ submissions

188 In relation to events before the filing of the application, the Applicant has failed to demonstrate that a new building could not have been designed to drain into Pymble Avenue and therefore not require the proposed easement. The Applicant could have convinced or compelled the Council to exercise its powers under the registered easement deeds or under s 59A of the Local Government Act or under s 89 of the Conveyancing Act. The Applicant did not take all reasonable steps including the submission of workable reciprocal easements, except belatedly in the proceedings, to obtain the easement rights from the Council.

189 The Applicant did not submit an appropriate form of easement to the Respondents including the Council, until 18 October 2007. The two letters referred to in the s 40 application dated 16 and 29 May 2006 did not provide for an easement in terms acceptable to the Council. The Fourth Respondent responded by letter offering to negotiate. The Fourth Respondent did not receive the 29 May 2006 letter having responded to the 16 May 2007 letter and it should not be relied on in relation to the Fourth Respondent. The Applicant should be estopped from asserting that it satisfied s 40(2)(d).

190 Since 1 March 2007 there has been substantial correspondence from the Applicant as that is when the Respondents made it clear that the Applicant had not made reasonable attempts to obtain the requisite easements by negotiation. The issue is whether the Applicant made all reasonable attempts, and the purpose, calibre and content of the correspondence shows that pressure tactics were adopted by the Applicant.

191 The Applicant failed to submit appropriate terms of easement to the Respondents until after 18 October 2007 when final terms were agreed by the Council. This is two and a half years after the issue arose following the Applicant’s pre-development application meeting with the Council in March 2005. Further, given that the terms of the easement were not agreed with the Council until just before the hearing, no offer made to any Respondent was certain to be enforceable.

192 The Applicant has created a paper trail to support its application once it discovered that its s 40 application of 7 April 2006 did not comply with s 40(2)(d). The Applicant did not negotiate in a reasonable manner. The substance of conversations and evidence given by Mr Sattler is disputed in several respects. Further, the tone of correspondence from the Applicant was abusive and threatening, notwithstanding that the Applicant had not agreed upon any easement terms with the Council. Particular reference was made to the letter from the Applicant’s Director Mr Poole dated 29 October 2006 to all Respondents other than the Fourth Respondent suggesting that a costs order could be sought of 17 November 2006 to the Respondents stating that if the Court made a costs order it would be enforced, following further abusive correspondence and no other offers, and a letter from the Applicant dated 12 December 2006 making an offer of $2,000 open only until 14 December 2006. The Applicant’s solicitor’s letter dated 18 January 2007 to the Fourth Respondent stated that all the valuers were of the view that the amount of compensation should be zero, and referred to reserving the right to seek costs for unnecessary and obstructive conduct throughout these proceedings and offered $2,000 compensation.

193 The Court should infer that the Applicant did not take every reasonable step available to it to resolve the issue, but used the Court process to pressure all Respondents including improper use of Calderbank letters, and threats of prohibitive costs orders.

Finding on s 40(2)(d) whether reasonable attempts made by the Applicant

194 At the outset I should note that the Respondents’ argument at par 188 that s 59A of the Local Government Act should have been pursued lacks merit. Section 59A provides that a council may operate its own stormwater drainage works to ensure these are used efficiently. It provides no right to the Applicant to discharge into the Council’s drain in the absence of Council’s consent to do so. Nor could the Applicant negotiate workable reciprocal easements in the absence of the Council’s agreement to that approach. Finally, I have held that the easement is reasonably necessary for the Applicant’s development (par 97) and also practically, given the evidence of the hydrologist, Mr Lawson (par 98).

195 I should consider the whole course of conduct of all the respective parties in determining whether reasonable attempts were made to obtain an easement. I have already determined at par 72 that it is not necessary that every attempt be made before proceedings are commenced. It is highly desirable that a genuine attempt to obtain an easement is made before proceedings are commenced and a failure to take such steps before commencing proceedings would weigh heavily against an applicant, in my view. That is not the circumstance before me here.

196 The lengthy correspondence and communications between the parties identified in the affidavit summary and the table of communications above demonstrates that the Applicant’s offer was first made two and a half months before proceedings were commenced did alter over time, because the agreement of the Council to the initial proposal was not forthcoming. Initially, reciprocal easements were suggested in the Applicant’s letters of 16 and 29 May 2006 to the Respondents with nil or nominal compensation offered. These were the letters sent before the s 40 application was filed. The achievement of this clearly depended on the Council agreeing to such a course and it did not. The Applicant commenced these proceedings in August 2006 after these first attempts to negotiate with all the Respondents were made and had not met with great success at that stage.

197 The Applicant cannot be argued to have acted precipitously in commencing proceedings in my view given the terms of conditions 56 and 58 imposed in the development consent granted by the Court in May 2006. These required that the stormwater for the site be discharged to the Council’s drain and be managed on the Applicant’s land.

198 There has been substantial correspondence since the proceedings commenced between the parties, and with other Respondents who have settled before the hearing.

199 While the terms of the final easement agreed to by the Council have only been known since 18 October 2007, the general terms of the easement sought by the Applicant should have been clear to all Respondents since the Class 1 appeal was determined in favour of the Applicant with conditions 56 and 58 imposed and the modified condition 89A(2) made by Talbot J in June 2007. The efforts of the Applicant and his solicitor have been directed to obtaining an easement to implement the terms of the consent conditions. Those efforts included the attempt to obtain reciprocal easements to the benefit, according to the Applicant, of all Respondents, albeit unsuccessfully because the Council would not consent to such an easement. The course of negotiation did therefore change as the Applicant then sought to obtain an easement generally similar to what has been agreed by the Council. When the current proposed easement was agreed with the Council the Applicant offered nominal compensation based on valuation advice to the Applicant that this was appropriate. When the Court appointed valuer, Mr Wood, handed down his report the Applicant offered the amounts he nominated to the Respondents. The submissions of the Applicant’s solicitor set out at par 186 are a reasonable summary of the Applicant’s approach. I consider that the attempts were genuine, contrary to the Respondents’ submissions.

200 Some of the correspondence sent at various times by various parties in evidence has an unfortunate tone and content. I do not need to explore in detail all the interactions, positive and negative, between the parties as what I am assessing overall is whether reasonable attempts were made by the Applicant to obtain an easement or an easement of similar effect. It is therefore unnecessary to resolve a number of the criticisms made by the Fourth Respondent about Mr Sattler’s evidence in particular. Largely the documents relied on by the parties speak for themselves. A blow by blow analysis of who said what to whom and whose version is correct is not helpful for the task I have before me given that the correspondence generally makes clear the course of the Applicant’s attempts to negotiate.

201 While the Respondents complain about the conduct of the negotiations by the Applicant and his solicitor with some justification given the tone of some of that correspondence, and the unnecessarily short time frames specified by Mr Sattler for response to some of the offers made, it cannot be said that the Respondents, particularly the Fourth Respondent, have acted dispassionately at all times when the correspondence between the parties is read.

202 The likelihood of achieving settlement is a matter which is referred to in several of the s 88K cases referred to in argument, for example, Goodwin at 9. Whether settlement was likely to be achieved is relevant to consider in the case of the Fourth Respondent as a very large component of the compensation sought by him, up to $500,000, was for injurious affectation from the development on the Applicant’s land, not from the proposed easement. I have held in this judgment this is not a compensable matter. No offer from the Applicant was going to include a sum close to that amount, suggesting that no amount of negotiation would have resulted in a settlement with him.

203 In relation to the Tenth Respondent, while her evidence, through her agent, is that she did not receive any correspondence from the Applicant before proceedings were commenced, this appeared to be due to her living on the NSW north coast and in Queensland. The Applicant’s evidence confirms that letters were sent to the Tenth Respondent before proceedings were commenced. The fact the letters were not received by her before the proceedings were commenced does not negate the fact that the Applicant was making attempts to negotiate a settlement with her.

204 The evidence relied on by the Applicant is that settlement was achieved with the Tenth Respondent but was then repudiated. It is not necessary that I understand all the circumstances concerning this, as I do not at this stage, but these circumstances once again suggest that the Applicant was engaging in substantive attempts to achieve settlement with that Respondent.

205 In considering the circumstances of this application, including the number of Respondents involved, the decision of the Court to grant conditional development consent including the specified drainage arrangements and the efforts that were made by the Applicant and its solicitor before and after the commencement of these proceedings, I consider reasonable attempts to obtain the proposed easement have been made by the Applicant. That these attempts have lead at times to acrimonious exchanges between the parties does not negate them.

206 If events before and after the filing of the s 40 application are considered the Applicant has discharged its obligation in this regard in relation to the Respondents. I therefore consider that the Applicant has engaged in reasonable attempts to obtain an easement as required by s 40(2)(d) and this sub-section is satisfied.

Section 40(2)(b) easement not inconsistent with public interest

207 Having determined that the Applicant has satisfied s 40(2)(a)(c) and (d) I now turn to s 40(2)(b) which requires consideration of whether the use of the land the subject of the easement is not inconsistent with the public interest. The Applicant argued that the development is permissible on the development site. The Applicant has applied for and, after the Court took into account the planning controls and the public interest, been granted the development consent authorising the development subject to obtaining the right to drain stormwater via the alignment of the existing easement. Accordingly, the consent is lawful; a matter also taken into account in Property Partnerships at [46]. The development is permissible under the zoning. In Swann and Anor v Spiropoulos and Ors an application was made under s 88K of the Conveyancing Act for an easement. At [66] Campbell J considered that it was consistent with the public interest that a development consistent with zoning be able to occur.

208 Biscoe J has found in the earlier hydrology hearing in this matter that the existing easement has the capacity to receive the stormwater from the development and the evidence demonstrates that if the development proceeds there will be a reduction in impact because after the installation of detention systems on the development site there will be less stormwater flowing though the easement. The Court can be comfortably satisfied that the use of the land for the development is not inconsistent with the public interest.

209 The Respondents did not make specific submissions in their extensive written submissions that the development was not in the public interest but I infer that their arguments in relation to other issues such as the modification/partial extinguishment of the existing easement and that the proposed easement allows the private use of a public drainage system, suggest the proposed easement is not in the public interest.

210 For the reasons given by the Applicant at par 207 and in light of the facultative approach which should be taken to s 40, (see Antipas at [11], Property Partnership at [59] and Blulock at [19] in relation to s 88K of the Conveyancing Act, I consider s 40(2)(b) is satisfied.

Exercise of discretion under s 40

211 Under the terms of s 40(2) of the Court Act the Court has a discretion to decide whether having been satisfied about all the matters in s 40(2) it should grant the proposed easement sought. This approach was taken in Property Partnerships at [58] and Antipas at [49] – [50]. On this aspect in Antipas Lloyd J held at [50]:

I have found, however, that the respondents can be adequately compensated. In particular, their land is already burdened by the existing right of way in favour of lot 32. That lot can be developed in isolation. The extension of the benefit of the right of way to lot 31 cannot be viewed in the same light as the creation of a new easement where none previously existed. It is, as I have found, necessary for the applicant’s development to have effect. This is the object or purpose of provisions such as s 88K of the

and s 40 of the

, provided the conditions in sub-s (2) are satisfied. In all the circumstances the Court’s discretion will be exercised in favour of the grant.

212 A similar approach in this case is appropriate. The Respondents raised a number of issues to the effect that the Applicant’s and its solicitor’s conduct of this litigation was unsatisfactory in a number of respects, see par 176-196 of their joint written submissions. I do not consider the issues raised are relevant to the s 40 issues raised in this judgment.

213 In light of the matters referred to in this judgment, I consider that I should exercise my discretion to make an easement in the terms sought by the Applicant and agreed with the Council on the basis that compensation is payable in the amounts identified by Mr Wood, valuer, at par 129 in relation to the Fourth and Tenth Respondents. As noted at par 7, the issue of whether costs ought be payable under s 40(8) is a matter to be dealt with separately at the Applicant’s request and the matter will be finalised when costs have been determined. An appropriate timetable to enable the determination of costs and for the preparation of draft orders giving effect to this judgment is required.

CITATION:	Tenacity Investments v Ku-Ring-Gai Council and Ors [2008] NSWLEC 27
PARTIES:	APPLICANT: Tenacity Investments FIRST RESPONDENT: Ku-ring-gai Council SECOND RESPONDENTS: Russell and Angela Cooke THIRD RESPONDENTS: Vicki and Daniel Ming FOURTH RESPONDENT: Peter Dobrijevic FIFTH RESPONDENT: Yvonne Forsyth SIXTH RESPONDENTS: Ivan and Janet Lum SEVENTH RESPONDENTS: John and Virginia Hill EIGHTH RESPONDENTS: Christopher and Aini Wong NINTH RESPONDENTS: Patrick Lee and Liza Lam TENTH RESPONDENT: Marina Brun-Smits ELEVENTH RESPONDENTS: Gavin and Lynn Hucker TWELFTH RESPONDENTS: Steven and Gum You; Kwok and Sylvia Ng
FILE NUMBER(S):	30688 of 2006
CORAM:	Pain J
KEY ISSUES:	Easements :- imposition of drainage easement by Court under s 40 Land and Environment Court Act 1979 - whether easement reasonably necessary for development to have effect in accordance with development consent which Court has determined to grant - whether owner of burdened land can be adequately compensated for any loss or other disadvantage that would arise from imposition of the easement - whether all reasonable attempts made by applicant to obtain the easement or an easement having same effect without success - whether Court should exercise its discretion to impose easement - appropriate compensation.
LEGISLATION CITED:	Conveyancing Act 1919 s 7, s 88AC, s 88B, s 88K, s 89 Environmental Planning and Assessment Act 1979 s 96, s 97, s 118 Land and Environment Court Act 1979 s 16, s 22, s 40 Local Government Act 1993 s 59A Real Property Act 1900
CASES CITED:	117 York Street Pty Ltd v Proprietors of Strata Plan 16123 (1998) 43 NSWLR 504; Antipas v Kutcher and Anor (2006) 144 LGERA 289; Blulock Pty Ltd v Majic [2001] NSWSC 1063; Castagnet Investments Pty Ltd v Woollahra Municipal Council [2005] NSWLEC 647; Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14, 638; Cracknell and Lonergan Pty Limited v Council of the City of Sydney [2007] NSWLEC 392; Delohery v Permanent Trustee Co of New South Wales (1904) 1 CLR 283; Goodwin v Yee Holdings Pty Ltd (1997) 8 BPR 15, 795; Gordon v Gioia and Anor [2007] NSWLEC 509; Gosper v Hornsby Shire Council (1993) 80 LGERA 138; Khatter v Wiese [2005] NSWSC 1014; King v Carr-Gregg & Anor [2002] NSWSC 379; Mitchell v Boutagy (2001) 118 LGERA 249; Mulliner v Midland Railway Co (1879) 11 Ch D 611; Municipal District of Concord v Coles (1906) 3 CLR 96; Owners Strata Plan 13635 v Ryan [2006] NSWSSC 221; Property Partnerships Pacific Pty Ltd v The Owners of Strata Plan 58482 [2006] NSWLEC 709; Reilly v Booth (1890) 44 Ch D 12; Swann & Anor v Spiropoulos & Ors [2006] NSWSC 860; Tenacity Investments v Ku-Ring-Gai Council [2006] NSWLEC 148; Tenacity Investments v Ku-Ring-Gai Council [2006] NSWLEC 539 Tenacity Investments v Ku-Ring-Gai Council [2007] NSWLEC 246 Treweeke v 36 Wolseley Road Pty Limited (1973) 128 CLR 274; Treygoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15, 845; Wengarin Pty Ltd v Byron Shire Council (1999) 9 BPR 16, 985
DATES OF HEARING:	30 October 2007 31 October 2007 19 November 2007 (written submissions) 3 December 2007 (written submissions)
DATE OF JUDGMENT:	31 January 2008
LEGAL REPRESENTATIVES:	APPLICANT Mr J Webster SC SOLICITOR Sattler & Associates FOURTH RESPONDENT In person TENTH RESPONDENT Mr L Smits (Agent)