The Owners - Strata Plan No 61233 v Arcidiacono; The Owners - Strata Plan No 17719 v Arcidiacono

[2019] NSWSC 1307

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

The Owners – Strata Plan No 61233 v Arcidiacono; The Owners – Strata Plan No 17719 v Arcidiacono [2019] NSWSC 1307

Hearing dates:

18, 19, 20, 21, 22, 28, 29 March and 18 April 2019; last written submissions received 3 May 2019.

Decision date:

30 September 2019

Jurisdiction:

Equity

Before:

Henry J

Decision:

See [43]-[44], [621]-[625]

Catchwords:

LAND LAW – easements – creation of easements – creation by prescription – long use of land from late 1880’s and from 1981 – whether doctrine of lost modern grant applies where identity of owners of land unknown from 1880s to 2008 – held that easement by prescription could still arise – use sufficiently open that a diligent owner would have been aware of it

 

LAND LAW – easements – creation of easements – creation under statute – applications under s 88K Conveyancing Act 1919 (NSW) – easements for overhang and encroaching structures to remain and for repair and services considered reasonably necessary – where elements of first plaintiff’s heritage building intrude on to defendants’ land – compensation awarded under s 88K Conveyancing Act 1919 (NSW) – easements for drainage of sewerage and water and for light and air refused –– first plaintiff failed to establish easements for light and air were reasonably necessary

 

LAND LAW – easements – creation of easements – creation by express grant or implication in old system deeds of conveyance – held that general words in 1871 deed created rights of way to benefit of landlocked plots over private lane where only access to public road via that lane – where rights of way no longer accommodate the second plaintiff’s land – held that second plaintiff does not have the benefit of any existing rights of way

  LAND LAW – easements — where owner of dominant tenement purported to transfer benefit of rights of way to other land – held that purported transfer invalid – held that easements are not ‘extended’ upon consolidation of landholdings

Legislation Cited:

Access to Neighbouring Land Act 2000 (NSW), s 7
Civil Procedure Act 2005 (NSW), ss 56, 58, 64
Conveyancing Act 1919 (NSW), s 88K, Schedule 8
Encroachment of Buildings Act 1922 (NSW), s 3
Environmental Planning and Assessment Regulation 2000 (NSW), cl 94
Real Property Act 1900 (NSW), ss 28J, 28T, 42

Cases Cited:

117 York Street Pty Ltd v Proprietors of Strata Plan 16123 (1998) 43 NSWLR 504
Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27
Archer v Timpar Nominees Pty Ltd [1999] WASC 20
Barkshire v Grubb (1881) 18 Ch D 616
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334
Bayley v Great Western Railway Co (1884) 26 Ch D 434
Dabbs v Seaman (1925) 36 CLR 538
Diment v NH Foot Ltd [1974] 1 WLR 1427
Evans v Cornish Nominees Pty Ltd (2009) 14 BPR 27,257; [2009] NSWSC 1295
Fernance v Simpson [2003] NSWSC 121
Gallagher v Rainbow (1994) 179 CLR 624; [1994] HCA 24
Gangemi v Watson (1994) 11 WAR 505
Hamilton v Joyce [1984] 3 NSWLR 279
Hanny v Lewis (1998) 9 BPR 16,205
ING Bank (Australia) Ltd v O’Shea [2010] NSWCA 71
Kent Street Pty Ltd v Council of City of Sydney [2001] NSWSC 268
Khattar v Wiese [2005] NSWSC 1014
King v Carr-Gregg [2002] NSWSC 379
Kitching v Phillips (2011) 278 ALR 55; [2011] WASCA 19
Laming v Jennings [2018] VSCA 335
Liverpool Corporation v H Coghill & Son Ltd [1918] 1 Ch 307
Lock v Abercester Ltd [1939] 1 Ch 861
Lonergan v Lewis [2011] NSWSC 1133
Maher v Bayview Golf Club [2004] NSWSC 275
Mills v Silver [1991] 2 Ch 271
Milne v James (1910) 13 CLR 168
Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445
Owners Strata Plan 13635 v Ryan [2006] NSWSC 221
Pasade Holdings Pty Ltd v Sydney City Council [2006] NSWSC 299
Pasade Holdings v Sydney City Council [2003] NSWSC 515
Pasade Holdings v Sydney City Council [2003] NSWSC 1220
Plumpton Park Developments Pty Ltd v SAS Trustee Corp [2018] NSWSC 461
Pugh v Savage [1970] 2 QB 373
R (Beresford) v Sunderland City Council [2004] 1 AC 889
Rainbowforce Pty Limited v Skyton Holdings Limited (2010) 171 LGERA 288; [2010] NSWLEC 2
Re Eddowes [1991] 2 Qd 381
Re Ellenborough Park [1956] 1 Ch 131
Re Maiorana and the Conveyancing Act [1970] 1 NSWR 627
Re Permanent Trustee Australia Ltd (1997) 8 BPR 15,551
Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 129
Roberts v Karr (1809) 1 Taunt 495; 127 ER 926
Spencer v the Commonwealth (1907) 5 CLR 418
Sunset Properties Pty Ltd v Johnston (1975) 3 BPR 97,173
Sunshine Retail Investments Pty Ltd v Wulff [1999] VSC 415
Swann v Spiropoulos [2006] NSWSC 860
Tehidy v Minerals v Norman [1971] 2 QB 528
The Owners – Strata Plan No 61233 v Arcidiacono [2018] NSWSC 1260
Timpar Nominees Pty Ltd v Archer [2001] WASCA 430
Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557
Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5
Walker v Bridgewood [2006] NSWSC 149
Wengarin Pty Ltd v Byron Shire Council [1991] NSWSC 485
Westfield Management Limited v Perpetual Trustee Company Limited (2007) 233 CLR 528
Williams v State Transit Authority of NSW (2004) 60 NSWLR 286; [2004] NSWCA 179
Woodland v Manly Municipal Council [2003] NSWSC 392

Texts Cited:

A Bradbrook, S MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, 2011, LexisNexis Butterworths)
B Edgeworth, Butt’s Land Law (7th ed, 2017, Lawbook Co)
English Law Reform Commission, Fourteenth Report on Acquisition of Easements and Profits by Prescription, (1966)
J Gaunt, Gale on Easements (20th ed, 2012, Sweet & Maxwell)
P Butt, “Use “As of Right” “(2004) 78 ALJ 162

Category:

Principal judgment

Parties:

2016/187360: 
The Owners – Strata Plan No 61233 (Plaintiff)
John Anthony Arcidiacono (First Defendant)
Anna Marie Arcidiacono (Second Defendant)

  2016/187385
The Owners – Strata Plan No 17719 (Plaintiff)
John Anthony Arcidiacono (First Defendant)
Anna Marie Arcidiacono (Second Defendant)

Representation:

Counsel:
2016/187360: 
Mr A Rogers (Plaintiff)
Mr T S Hale SC with Mr R Higgins (Defendants)

 

2016/187385:
Ms C A Webster SC (Plaintiff)
Mr T S Hale SC with Mr R Higgins (Defendants)

 

Solicitors:
2016/187360: 
Peter Prior & Co Solicitors (Plaintiff)
Russells Law (Defendants)

  2016/187385:
Jane Crittenden Lawyer (Plaintiff)
Russells Law (Defendants)

File Number(s):

2016/187360; 2016/187385

Judgment

Introduction

Background

The parties and the land

Procedural history

Clarence House amendment application

Issues for determination and summary of conclusions

71 York Street proceedings

Clarence House proceedings

The gate

History of the passage, the dock, and the relevant land – 1839 to today

Evidence

Initial crown grants

The Passage: right of way created under Book 8

The Dock: a remnant part of a Private Lane

The Gardiner landholdings

Sale of Clarence House land in 1927

Conversion of 71 York Street and Clarence House land to Torrens Title

71 York Street: 1928 – 1980’s

Strata plans of Clarence House and 71 York Street

Defendants purchase 100 Clarence Street

Rights of way to the benefit of 65 York Street and 5 – 7 Barrack Street

Transfer of the Passage and Dock to the defendants and notifications on titles

Other evidence

The view

Lay evidence: use of the Passage, Dock and rear area since 1981

Anthony Cook

Jill Yates

Graham Brooks

Anton Peetz

Expert evidence

Surveyor: Rolf Cambridge

Traffic engineer: Ken Hollyoak

Fire safety: Stephen Grubits and Allan Harriman

Valuations

Paul Dale

Dimity Marshall

Existing rights of way over passage and dock: by historical grant

Clarence House: existing rights of way over the Passage and Dock

Clarence House’s submissions

Defendants’ submissions

Consideration

Did Book 124 create a right of way over the Private Lane?

Do the rights of way created by Book 124 continue to accommodate the Clarence House land?

Do any rights of way over the Passage and Dock exist for the benefit of the Clarence House land today?

Were rights of way over the Passage and Dock recorded on the title of SP17719?

Conclusion on Clarence House claim

71 York Street: right of carriageway over the Passage

Existing rights of way: easements by prescription

Legal principles

Prescriptive easements over the Passage and the Dock

71 York Street proceedings: submissions

Clarence House proceedings: submissions

Consideration

Easement by prescription where unknown owner of servient tenement

71 York Street: prescriptive easement over the Dock

Clarence House: prescriptive easements over the Passage and Dock

Conclusion on easements by prescription over the Passage and Dock

Other prescriptive easements claimed by 71 York Street

Easements for drainage of water and sewerage

Encroachments and overhang

Alternative claims: rights of carriageway over the Passage and Dock under s 88K Conveyancing Act

Relevant legislation

Are rights of carriageway over the Passage and the Dock reasonably necessary?

Legal principles

71 York Street: is a right of carriageway over the Dock reasonable necessary?

Clarence House: are rights of carriageway over the Passage and Dock reasonably necessary?

Submissions

Consideration

Are rights of carriageway inconsistent with the public interest?

Can the defendants be adequately compensated?

71 York Street

Clarence House

Should the Court exercise its discretion to grant easements over the Passage and the Dock?

Level of compensation

Legal principles

71 York Street

Submissions

Consideration

Clarence House

Submissions

Consideration

Terms of s 88K easements over the Passage and the Dock

71 York Street: other s 88K easements

Introduction

71 York Street’s submissions

Defendants’ submissions

Consideration

Reasonable necessity

Overhang and encroachments

Drainage for sewerage and water

Repairs and services

Light and air

Public interest, compensation, and other factors

Conclusion on 71 York Street’s other s 88K easements

Conclusion and Orders

ANNEXURE 1

ANNEXURE 2

ANNEXURE 3

ANNEXURE 4

ANNEXURE 5

Judgment

Introduction

1. These two proceedings concern two small parcels of land in the Sydney CBD.

2. The first parcel of land is a passage or lane that runs between the buildings located at 65 and 71 York Street, Sydney. It is approximately 26.16 metres long (12 feet) and 3.6 metres wide, and is contained in Lot 1 in Deposited Plan 619464 (the Passage).

3. The second is a small landlocked parcel of land that measures only 2.89 metres by 1.99 metres (5.75m²). It is located at the western end of the Passage and is contained in Lot 2 in Deposited Plan 1052948. Consistent with the way it has been described in the proceedings, I refer to this land as the Dock, although it is more aptly described as a remnant part of a lane or passage.

4. The plaintiffs seek declarations and orders that they have the benefit of various easements over the Passage and the Dock. The defendants, who own the Passage and the Dock, contest their entitlements to the easements.

Background

The parties and the land

5. The plaintiff in proceedings 2016/187360 is a body corporate entitled to bring proceedings on behalf of the owners of lots in Strata Plan 61233, which comprises a six storey heritage building at 71 York Street, called “Company Director House”. In these reasons, I refer to proceedings 2016/187360 as the 71 York Street proceedings, the plaintiff as 71 York Street, the land at SP 61233 as the 71 York Street land and Company Director House as the 71 York Street building.

6. The 71 York Street building is used primarily for office space. Until recently, some of its ground floor space was used for a retail tenant.

7. The plaintiff in proceedings number 2016/187385 is a body corporate entitled to bring proceedings on behalf of the owners of lots in Strata Plan 17719, which comprises a five storey heritage building at 104-118 Clarence Street, called “Clarence House”. In these reasons, I refer to proceedings 2016/187385 as the Clarence House proceedings, the plaintiff as Clarence House and the land at SP 17719 as the Clarence House land.

8. The ground floor of Clarence House is used as retail space, with the higher floors used by residential occupants.

9. The defendants, John Arcidiacono and Anna Marie Arcidiacono, became the registered proprietors of the Passage and the Dock in February 2008 having purchased them when they were put up for sale by Sydney City Council for unpaid rates. They also own the land contained in Lot 1 in Deposited Plan 17418, on which sits a seven storey building at 100 Clarence Street (100 Clarence Street), and another small parcel of land contained in Lot 1 in Deposited Plan 1052948 that runs north from the western end of the Passage (the 8 ft lane).

10. The plan at annexure 1 (Plan 1) identifies the Passage (in yellow), the Dock (in green) and the 8 ft lane (in blue). As set out on Plan 1, the Passage commences at York Street and runs westwards to the Dock. The Passage and Dock do not run through to any other public road.

11. Plan 1 also identifies the boundaries of the 71 York Street land, the Clarence House land, 100 Clarence Street, and the land at Deposited Plan 71977 (5-7 Barrack Street). It also shows where the land at Strata Plan 73850, which comprises a twelve storey building at 65 York Street (65 York Street), abuts the Passage along its southern boundary.

12. Not shown on Plan 1 are the boundaries of the 71 York Street and Clarence House buildings and the open area of land at the rear of those buildings. Part of that rear open area is on the 71 York Street land, the other part is on the Clarence House land. In these reasons I refer to this open area of land at the rear of the 71 York Street and Clarence House buildings as the rear area or the loading yard. The Dock is immediately adjacent to the rear area of the 71 York Street land.

13. The rear areas of the 71 York Street and Clarence House land can be accessed by the Passage and over the Dock. The need (as the plaintiffs say) or the desire (as the defendants contend) for access to the rear areas of their land via the Passage and the Dock has led to these proceedings.

Procedural history

14. In October 2011, the defendants installed a gate at the York Street end of the Passage which was affixed to the walls of the buildings at 71 York Street and 65 York Street.

15. On or about 8 June 2016, the defendants locked the gate and placed a skip bin on the western end of the Passage and on the Dock. 71 York Street and Clarence House claimed that the locked gate and skip bin impeded rubbish removal and vehicle access to the rear area of their buildings.

16. On 20 June 2016, 71 York Street and Clarence House commenced these proceedings on an urgent basis seeking orders to restrain the defendants from obstructing access to the Passage and the Dock. Consent orders have been made which restrain the defendants from locking the gate and from placing skip bins or other items in the Passage or on the Dock which obstruct vehicular access until these proceedings are determined at first instance.

17. The York Street and Clarence House proceedings have since progressed by way of pleadings.

18. 71 York Street filed its statement of claim on 20 July 2016. It seeks declarations that it has rights of carriageway over the Passage and Dock. It also seeks declarations that it has the benefit of various easements arising by way of prescription over the Passage and the Dock which it claims were omitted from the Register when the Passage and Dock were brought under the provisions of the Real Property Act1900 (NSW) and should now be registered. In the alternative, it seeks orders for various easements over the Passage and Dock pursuant to s 88K of the Conveyancing Act 1919 (NSW). It also seeks restraints in respect of the gate.

19. Clarence House filed an amended statement of claim on 12 March 2019 in which it seeks declarations that it has rights of way over the Passage and Dock, which are alleged to have arisen by reason of historical grants. In the alternative, it seeks orders pursuant to s 88K of the Conveyancing Act imposing easements over the Passage and Dock in the terms set out in Part 1 of Schedule 8 of the Conveyancing Act.

20. The defendants filed defences in the York Street and Clarence House proceedings on 12 August 2016.

21. On 20 June 2016, orders were made that the York Street and Clarence House proceedings be heard concurrently, and that the evidence in one proceeding be evidence in the other.

22. The hearing of both proceedings commenced on 18 March 2019. At the hearing, Clarence House was granted leave to amend and file a second amended statement of claim (2ASOC) to include claims for easements by prescription over the Passage and the Dock. Before dealing with other matters, I have provided further reasons for this decision, as I foreshadowed at the time I would do.

Clarence House amendment application

23. The amendment application was made in the following context.

24. On the first day of the hearing, Senior Counsel for Clarence House opened her case referring to a claim for easements by prescription (T23:37). The defendants’ Senior Counsel asserted that such a claim was not part of Clarence House’s case. After reviewing the pleadings, Senior Counsel for Clarence House accepted that a claim for easements arising by prescription had not been “formally pleaded” and foreshadowed a possible amendment application (T54:4).

25. A draft second amended statement of claim was served on the defendants and a formal application to amend was made by Clarence House at the start of the second day of the hearing. The amended pleading included three new prayers for relief ([4A], [4B] and [4C]) and three new paragraphs ([20B], [20C] and [20D]). Relying on the facts already pleaded, the new paragraphs asserted that the Clarence House land had the benefit of easements by prescription for rights of carriageway, those easements were omitted by the Registrar when the Passage and Dock were brought under the provisions of the Real Property Act, and the Register should now be corrected.

26. Senior Counsel for Clarence House submitted that it should be granted leave to rely on the amendments. She contended that no prejudice should be caused as the prescriptive easement claim was simply an alternative legal characterisation of factual matters already pleaded about the use to which the Passage and Dock has historically been put.

27. Senior Counsel for Clarence House indicated that no further evidence would be adduced from Clarence House as a consequence of the amendments and submitted that none should be required from the defendants. She submitted that an adjournment of the proceedings was unnecessary, although conceded that her client would not wish the hearing to be vacated if adjournment was the price for the amended pleading (T81:31-34).

28. Senior Counsel for the defendants submitted that leave to amend should not be granted and placed reliance on Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27 with respect to the delay and likely prejudice.

29. He submitted that the new claim for easements by prescription was different in kind to the existing claims under s 88K of the Conveyancing Act as they rely on evidence of long-term use of land rather than evidence going to the reasonable necessity of the proposed easement over the land. This difference, he said, led to forensic decisions having been made as to the evidence the defendants adduced.

30. Senior Counsel for the defendants submitted that, if the amendments were to be allowed, his clients would require access to further documents to test the evidence of long-term use relied on by Clarence House, possibly going back to 1887 but, in particular, from 1927 as there was little evidence of use between then and 1981.

31. Subject to s 58 of the Civil Procedure Act 2005 (NSW), s 64(2) provides that all necessary amendments are to be made for the purpose of determining the real questions raised by the proceedings. Given the nature of the claims and pleaded facts already raised by Clarence House, the proposed amendments raised questions that were appropriate for determination in the proceedings. There was no submission made to the contrary. Nor was any submission made that the proposed amendments were futile.

23. It was self-evident that there had been significant delay by Clarence House in applying for the amendments. While not satisfactory and not clearly stated, it seemed the delay in doing so was due to a pleading oversight.

24. The key issue in relation to Clarence House’s application was whether granting leave to amend would be likely to cause significant prejudice to the defendants which could not be overcome other than by way of an adjournment.

25. I declined to grant Clarence House leave to amend to claim easements by prescription based on use of the Passage and the Dock for the period prior to 1981. I accepted the defendants’ submission that they may need access to documents relating to pre-1981 use. Obtaining access in a timely way was likely to be difficult and necessitate an adjournment. The statement of claim also appeared to plead use of an existing right of carriageway in general terms ([11]), but did not clearly plead use by the predecessors of title to the Clarence House land of the Dock prior to 1981 ([8]).

26. The position was different in respect of the proposed amendments which relied on use of the Passage and Dock for the period from 1981. I concluded that the likelihood of prejudice was low, should be able to be addressed without an adjournment, and that it was consistent with the just, quick and cheap resolution of the real issues in proceedings to grant leave to Clarence House to amend and file the second amended statement of claim to plead prescriptive easement claims limited to that period: s 56 and s 64 of the Civil Procedure Act 2005 (NSW).

27. The proposed prescriptive easement claims based on use from 1981 did not raise any new factual matters. The use to which the Passage and the Dock had been put by Clarence House from 1981 has been pleaded since the Clarence House proceedings began in 2016 and been disputed by the defendants since they filed their defence shortly thereafter ([16], statement of claim and [16], defence).

28. Clarence House’s evidence of use had also been served since 2016 (affidavits of Anthony Bruce Cook dated 20 June 2016 and Jill Elizabeth Yates dated 29 June 2016). The defendants had had ample opportunity to adduce evidence in response. They chose not to do so although evidence of past use was relevant to the existing claim for easements under s 88K of the Conveyancing Act: Owners Strata Plan 13635 v Ryan [2006] NSWSC 221 at [67].

29. It was also relevant that the 71 York Street proceedings included claims based on easements by prescription. The legal issues raised by Clarence House’s proposed amendments were, therefore, issues which the defendants had come to the hearing prepared to meet.

30. The defendants did not assert any need to lead further lay or expert evidence in response to the amendments. They sought the production of documents relating to the use of the rear area of Clarence House since 1981. They also wanted time to prepare for additional cross-examination, particularly of Mr Cook who had given evidence of the use of a roller door and the rear area for his business.

31. The defendants were given an opportunity to seek production of documents from Clarence House and Sydney City Council and time during the first week of the hearing, including during Court hours, to review the documents produced and prepare for additional cross-examination.

32. Documents were produced and reviewed by the defendants’ legal team over a period of two days. The additional cross-examination of Mr Cook was relatively short and completed on the fifth day of the hearing.

33. The defendants also dealt with the issues raised by Clarence House’s prescriptive easement claims in their written and oral closing submissions in a comprehensive manner.

Issues for determination and summary of conclusions

71 York Street proceedings

43. The issues for determination raised in the 71 York Street proceedings and a summary of my conclusions are:

1. Is 71 York Street entitled to a declaration that it has a right of carriageway over the Passage?

As 71 York Street has an existing right of way over the Passage which is recorded on its title, the Court declines to grant declaratory relief that 71 York Street has a right of carriageway over the Passage.

2. Does 71 York Street have the benefit of an easement by prescription for a right of carriageway over the Dock?

Yes, an easement by prescription for a right of carriageway over the Dock has arisen based on long open use in the years prior to 1927. The prescriptive easement should be recorded on 71 York Street’s title in terms that provide for the right to pass and repass over the Dock by motor vehicles and reflects the use of the 71 York Street land for commercial activities, being office and retail space.

3. Have easements by prescription arisen over the Passage and the Dock to the benefit of 71 York Street in relation to the drainage of sewerage and water and for overhang and encroaching structures?

No. The use of the Passage and the Dock by 71 York Street for drainage for sewerage and water and overhanging and encroaching structures was not sufficiently open or of a character to ascribe constructive knowledge of that use to the unknown owners in this case. The evidence relating to use for drainage for sewerage and water is also not sufficient to support an easement by prescription.

4. Should the Court make orders under s 88K of the Conveyancing Act imposing an easement for a right of carriageway over the Dock to the benefit of 71 York Street?

It is not necessary to make an order under s 88K of the Conveyancing Act as the Court has concluded that an easement by prescription has arisen over the Dock. Had it been necessary, 71 York Street would be entitled to an order under s 88K of the Conveyancing Act for an easement over the Dock for a right of carriageway as defined in Part 1 of Schedule 8 of the Conveyancing Act, and the appropriate amount of compensation would be $6,000 (excluding reasonable legal costs).

5. Should the Court make orders under s 88K of the Conveyancing Act imposing easements over the Passage and the Dock to the benefit of 71 York Street for the drainage of sewerage and water, for overhang and encroaching structures to remain, for services and repairs and for light and air?

Orders should be made under s 88K of the Conveyancing Act imposing easements over the Passage and the Dock for overhang and encroaching structures to remain and for services and repairs. The appropriate amount of compensation is $2,000 for each easement (excluding reasonable legal costs).

71 York Street has not established that easements over the Passage and the Dock in relation to the drainage of sewerage and water or for light and air are reasonably necessary. The Court declines to make orders under s 88K for those easements.

Clarence House proceedings

44. The issues raised for determination in the Clarence House proceedings and a summary of my conclusions are:

1. Were rights of way over the Passage and Dock created by historical dealings? Do those rights continue to benefit the Clarence House land today, and were those rights of way recorded on the title to Clarence House when it was registered in 1981?

Clarence House does not have existing rights of way over the Passage or the Dock based on grants in the historical dealings.

The rights of way created in the historical dealings over the Passage and the land of which the Dock was part were created to the benefit of land which, for the most part, is not now part of the Clarence House land. Those rights of way could not be conveyed to or acquired by Clarence House’s predecessors in title, and do not benefit the Clarence House land today.

To the extent the Clarence House land today includes small slivers of land which formed part of lots that had the benefit of rights of way created under Book 124, those rights of way are no longer of benefit to and do not accommodate the Clarence House land today.

Rights of way over the Passage and the Dock were not recorded on the title to Clarence House when it was registered in 1981.

2. Does Clarence House have the benefit of easements by prescription for rights of carriageway over the Passage and the Dock based on user since 1981?

Yes, easements by prescription for rights of carriageway over the Passage and the Dock have arisen to the benefit of the Clarence House land based on open user since 1981. The prescriptive easements should be recorded on Clarence House’s title in the terms of Part 1 of Schedule 8 of the Conveyancing Act amended to reflect the use of the Clarence House land for commercial retail and residential purposes.

3. Should the Court make orders under s 88K of the Conveyancing Act imposing easements for rights of carriageway over the Passage and the Dock to the benefit of Clarence House?

As the Court has concluded that easements by prescription have arisen over the Passage and the Dock, it is not necessary to make orders under s 88K of the Conveyancing Act. Had it been necessary, Clarence House would be entitled to orders under s 88K of the Conveyancing Act for easements over the Passage and the Dock for rights of carriageway as defined in Part 1 of Schedule 8 of the Conveyancing Act, and the appropriate amount of compensation would be $6,000 for each easement (excluding reasonable legal costs).

The gate

45. 71 York Street’s statement of claim also includes claims for final injunctive relief in the form of restraints concerning the gate (at [xv] and [xvi]). During final closing submissions, Counsel for 71 York Street indicated that 71 York Street no longer pressed its claims for restraints as it accepted that “the gate as proposed wouldn't represent an improper impediment to the operation of the laneway, or at least the Passage” (T372:34-37).

46. Clarence House seeks no final relief in respect of the gate in the 2ASOC.

47. Accordingly, I have approached these reasons on the basis that there are no issues for final determination in respect of the gate. These reasons may also impact the existence and operation of any gate and the parties should have an opportunity to consider them.

History of the passage, the dock, and the relevant land – 1839 to today

48. The following sets out the history of the creation and ownership of the Passage, the Dock, the surrounding lands, the existence of the various rights of way and easements in respect of those lands, and the buildings on the surrounding lands.

49. As many of the historical deeds of conveyance and related documents are relied on by Clarence House in support of its claim for existing rights of way over the Passage and the Dock, it is necessary to set out the history and the terms of the documents in some detail.

50. Most of the matters referred to below are not in dispute. Where there are disputes, the following should be taken to be my findings in respect of those matters based on the evidence.

Evidence

51. The evidence includes extensive copies of old system deeds of conveyance and title manuscripts (some with transcriptions), plans of survey, title searches in relation to the Passage, Dock and other relevant land, council records and other documents. Most of these documents are annexed to affidavits and reports relied on at the hearing, including a number of affidavits from the plaintiffs’ legal representatives. Some of the council records are contained in the exhibits.

52. An affidavit made by Gregory Michael Collyer on 7 June 2018, a registered land surveyor employed by the Office of the Registrar-General, annexes historical title searches relating to the Passage, the Dock, the 8ft lane and surrounding properties, and charting maps relating to the original crown grants of some lands. Mr Collyer’s affidavit describes, amongst other things, the documentary titles in respect of land the subject of the proceedings from the date of the original crown grants, and as affected by the various subsequent deeds of conveyance. Mr Collyer’s evidence was not challenged.

53. The history of the Passage, the Dock and surrounding land and buildings was also the subject of an expert report admitted into evidence prepared by Graeme Brooks and Dr Cameron Hartnell, from GBA Heritage Pty Ltd, Heritage Consultants Sydney dated October 2016 (Heritage Report). There were some objections made and upheld to the Heritage Report.

54. Rolf Kenneth Cambridge, a registered surveyor at the firm ATS Land and Engineering Surveyors Pty Ltd at West Ryde, Sydney who has practised for about 40 years, prepared a report dated 4 October 2016 which commented on some of the historical matters in issue and annexed some of the historical deeds of conveyance and plans. Mr Cambridge prepared a plan which depicts the current boundaries of the Passage, the Dock, 71 York Street and Clarence House overlain on boundaries of lots in the same location as those described in an historical deed of conveyance, being Deed of Partition and plan of subdivision, Book 124 No 952 (Book 124), using the metes-and-bounds description contained in Book 124 and taking into account the circumstances represented by an historical survey report (CB603) (Overlay Plan). Objections were made and upheld to some of the conclusions and recommendations made in Mr Cambridge’s report. No objection was taken to the Overlay Plan and Mr Cambridge was not cross-examined.

55. In some cases, there are multiple copies of the same document in evidence. Where I refer to a document in these reasons, I refer to only one version of it by reference to its page number in the Court Book. Where I have included matters based on the evidence of Mr Collyer, Mr Cambridge or the Heritage Report, I also refer to the relevant pages in the Court Book.

Initial crown grants

56. The land which is now the Passage, the 8ft lane and some of 71 York Street, 65 York Street and 100 Clarence Street were all located within the metes-and-bounds description of land the subject to a Crown grant made in favour of Hugh McDonald on about 20 May 1819 (Allotment 2 land) (CB1269).

57. The land which is now the Dock and some of Clarence House were within the metes-and-bounds description of the land the subject to a Crown grant made in favour of John Terry Hughes on 10 May 1829 (Allotment 3 land) (CB1269).

58. The Allotment 2 land formed an “L” shape that ran through the entire block between York and Clarence Streets and is marked in yellow in the diagram at annexure 2 (CB672) (Plan 2). The Allotment 3 land faced Clarence Street and is marked in blue in Plan 2.

59. The description of the boundaries of the Allotment 2 and 3 lands in the 1819 and 1829 Crown Grants did not correspond, with a strip of land 4.88 metres long on the east boundary of the Allotment 3 land appearing to have been included in the metes and bounds of the Allotment 2 land (CB674). This strip of land was not developed, possibly because of the boundary issue (CB1512).

60. During the period from at least 1855 to the late 1880’s, the strip of land was used as a lane between buildings located on the Allotment 2 and 3 lands (CB673 and CB1512).

The Passage: right of way created under Book 8

61. By an instrument made on 30 September 1839 and registered in Book 8 No 383 (CB152–CB168) (Book 8), Stephen McDonald (Hugh McDonald’s oldest surviving son and sole trustee) and others related to Hugh McDonald (McDonald family) sold some of the Allotment 2 land, including that on which 71 York Street is now located, to Henry Macdermott.

62. Book 8 refers to the land conveyed as being bounded on the North by a “private road or passage twelve feet or thereabouts in width”. This is a reference to the Passage. It is not clear when the Passage was first created. Book 8 is the first reference to it in a document in evidence.

63. Book 8 created a right of way over the Passage to the benefit of the land purchased by Mr Macdermott in the following terms:

“Each of them doth grant ….a free and uninterrupted right of way and passage and liberty and privilege for him…his heirs and assigns and their Servants…. and others with our (sic read as ‘or’) without horse, sheep, surine (sic read as ‘swine’) or other animals and carriages carts wagons or other vehicles to pass and repass into along across upon and over the reserved Road or passage [Passage] hereinbefore mentioned and described or referred to…”

64. It is not in dispute that the 71 York Street land today has the benefit of the right of way over the Passage created by Book 8 (T25:15-21).

The Dock: a remnant part of a Private Lane

65. The Allotment 3 land was conveyed by John Terry Hughes to David William Jamieson and George Cooper Turner on 16 and 17 June 1841 pursuant to Book W No 189 (CB173). On 12 and 13 August 1842, George Cooper Turner obtained the entirety of the interest in the Allotment 3 land pursuant to Book Y No 203 (CB173).

66. Mr Turner conveyed the whole of the Allotment 3 land to Patrick Erwin on 1 May 1847 pursuant to Book 18 No 13 (Book 18) (CB970-CB971).

67. Book 18 provided that the Allotment 3 land was conveyed to Mr Erwin “together with ….all ways, waters, water courses rights…and appurtenances to the said land and hereditaments hereby granted and released or intended so to be belonging or appertaining…” (CB974).

68. In addition to the Allotment 3 land, Mr Erwin acquired other land on Clarence Street to the north and south of the Allotment 3 land, including part of the north-western portion of Hugh McDonald’s Allotment 2 land (CB705).

69. Mr Erwin developed his landholding into at least eighteen lots linked by three private lanes which connected with the Passage (CB674). One of those private lanes ran along the eastern boundary of Mr Erwin’s Allotment 3 land as it adjoined the land then owned by Mr Macdermott, and was “five feet four inches” at its widest, but narrowed to “four feet wide” at its southern end (Private Lane) (CB674, CB607-CB633). Pausing here, it seems that the Private Lane is the strip of land the subject of the boundary issue referred to at [59] above (CB665).

70. In 1871, after Mr Erwin died, his land was the subject of a Deed of Partition and plan of subdivision, Book 124 No 952 (Book 124) (CB607-CB633).

71. Under Book 124, Mr Erwin’s trustee and executor, Joseph Rose, conveyed most of Mr Erwin’s land to his beneficiaries. The eight schedules referred to in Book 124 (numbered two to nine) described the particular lots conveyed to each beneficiary, some of whom were conveyed more than one lot.

72. Relevantly, Book 124 states:

“Now this Indenture Witnesseth that in pursuance of the said direction and agreement He the said Joseph Rose does grant bargain sell alien release and convey unto the said William Maguire and his heirs all and singular the lands hereditaments and premises described and contained in the second third fourth fifth sixth seventh eighth and ninth Schedules hereunder written together with all messuages buildings and improvements erected and made on the said lands respectively and all roads rights of way watercourses fixtures rights easements advantages and appurtenances whatsoever to the to the said parcels of land hereditaments and premises pertaining or with the same held or enjoyed or reputed as part thereof or appurtenant thereto…

…

The Second Schedule to which the above written indenture refers

All that piece or parcel of land with the dwelling houses erected and built thereon and appurtenances appertaining to situate and lying in being situated….and shown on the annexed Plan as lot numbered 4 lettered D commencing on the eastern side of Clarence Street…and bounded on the west by Clarence Street….. and use of all that piece and parcel of land with the dwelling house erected thereon, shown upon the said plan as Lot 4 lettered d commencing at the south east corner of Lot 6 lettered f on the said plan and bounded on the sought by a line bearing easterly twelve feet seven inches to the passage four feet wide on the east by that passage bearing northerly twelve feet [illegible] …with a right of way.

…

The Fifth Schedule to which the above written indenture refers

All that piece or parcel of land with the dwelling houses erected and built thereon and appurtenances appertaining to situate and lying in being situated …and shown on upon the annexed piece of the subdivision of the late Patrick Erwin’s property as Lot No 5 lettered E commencing on the eastern side of Clarence Street…And bounded on the west by Clarence Street…And also all that piece or parcel of land within the dwelling houses erected thereon shown upon the said plan as Lot No 5 and 5 lettered e and c commencing at…and bounded by…to a reserved passage…on the east by a reserved lane five feet four inches wide bearing southerly…

The Eighth Schedule to which the above written indenture refers

All that piece or parcel of land with the dwelling houses erected and built thereon and appurtenances appertaining to situate and lying in being situated…shown upon the annexed plan of subdivision of the late Patrick Erwin’s property as Lot No 6 lettered F commencing…and bounded on the west by Clarence Street…and also all that piece or parcel of land with the dwelling houses erected thereon shown upon the said plan as Lots No 6 and 6 lettered ff commencing at…and bounded on…to the lane five feet four inches wide on the east by that lane…”.

73. The plan referred to in Book 124 (CB620) is annexure 3 to these reasons (subdivision plan) and shows the subdivided deed boundaries of the land conveyed in Book 124. The subdivision plan describes the Passage as “LANE”, the 8ft lane as a “RESERVED ROAD” (CB1276) and the Private Lane as the “Lane or Passage”. Within the schedules to Book 124, the Private Lane is referred to as a “passage four feet wide” and as the “lane five feet four inches”. The subdivision plan shows lots 5e, 6f and 4d [1] as abutting the Private Lane and lots 4D, 5E and 6F as facing Clarence Street.

    1. There are two lots numbered 5e and two lots numbered 6f, making a total of five lots numbered 4d, 5e, and 6f.

74. The Dock is largely made up of land at the northern end of the Private Lane, as well as a small remnant sliver of lot 5e (Overlay Plan and CB600). The Private Lane was not conveyed to any of Mr Erwin’s beneficiaries under Book 124 (CB600). Nor was the Dock, which remained in Book 18 No 13 (CB1276).

75. Clarence House contends that Book 124 should be interpreted as granting a right of way over the Dock to which it has the benefit today. I deal with that issue later in these reasons.

The Gardiner landholdings

76. From 1877 to 1886, William Gardiner acquired various parcels of land on York and Clarence Streets to create a landholding with access to both streets, including the lands which are now 71 York Street and Clarence House (CB676).

77. In 1878, Mr Gardiner acquired the south east portion of the Allotment 3 land (of which 71 York Street land is now part) under Book 181 No 693 (Book 181), together with “all fences ways paths….waters watercourses liberties privileges easements and appurtenances to the said land and hereditaments or any part thereof belonging or in anywise appertaining or therewith usually held used occupied or enjoyed” (CB172). Prior to its transfer to Mr Gardiner, the Post Office Hotel was located on what is now the 71 York Street land (CB673).

78. Mr Gardiner also acquired land from the beneficiaries of Mr Erwin’s estate, including lots numbered 4d, 5e and 6f and lots numbered 4D, 5E and 6F. The instruments under which those lots were conveyed to Mr Gardiner relevantly provided as follows:

1. No 456 Book 220 dated 3 June 1881 (Book 220) by which Lots 5e and 5E were conveyed from Michael Erwin:

“together with all houses buildings lights fences ways rights of way paths passages waters watercourses liberties privileges easement and appurtenances to the said land and hereditaments or any part thereof belonging or in anywise appertaining on therewith usually held used occupied or enjoyed and the reversions remainders rents issues and profits thereof and all the estate right title interest property possession claim and demand whatsoever both at law and in equity of him the said vendor in to and out of the same premises and every part thereof …”(CB211).

2. No 623 Book 172 dated 5 September 1877 (Book 172), by which Lots 4d, 6f and 4D were conveyed from Elizabeth Erwin and James Irwin

“together with full and free liberty for the said William Gardiner his appointees heirs and assigns and all others authorised by him with or without horses and other animals carts and other carriages at all times to drive ride operate and labor up down to fro and upon all lanes, streets or ways adjoining or leading to the said lands and as the same are shown on the plan annexed to the said deed of partition together with the dwelling houses and buildings erected on the said land and all other the rights easements advantages and appurtenances to the premises belonging or appertaining or usually held or enjoyed ….”(CB209); and

3. No 55 Book 171 dated 19 July 1877 (Book 171), by which Lot 6F was conveyed from P Dessaix and Susannah Dessaix (nee Erwin) together with:

“rights of way easements advantages and appurtenances to the said lands and premises being…in anywise appertaining or therewith usually held occupied or enjoyed” (CB207).

79. In 1887, Mr Gardiner demolished the buildings on the land he acquired and constructed three large adjoining multi-story warehouse buildings, each with basements and a shared loading yard (CB677). Two warehouse buildings faced Clarence Street and is now Clarence House. The other building is now 71 York Street. The business that operated out of the warehouse buildings was styled “Importers and Warehousemen” and handled a variety of dry goods (CB677).

80. The Gardiner warehouse buildings were serviced from a common area at the centre of the landholding, which is the rear area or loading yard previously referred to in these reasons. The common loading yard was accessed from York Street via the Passage and the Dock. It could also be accessed from Clarence Street via a stone archway running to the north of the warehouse building facing Clarence Street (CB678). Each warehouse building had a goods lift adjacent to the loading yard (CB677). Fire escapes from the warehouses at 71 York Street and Clarence House opened onto the loading yard (CB677-CB678).

81. The layout of the warehouses, the area of the loading yard and surrounding laneways have not relevantly changed since 1919, as indicated in the plan at annexure 4 to these reasons (Plan 4). Plan 4 identifies a “LANE”, which is now the Passage and the Dock, and a “YARD”, which is the rear area behind the 71 York Street and Clarence House buildings (CB707).

82. On 14 March 1900, Mr Gardiner conveyed his lands to W Gardiner & Co Ltd (Gardiner & Co) pursuant to instrument No 496 Book 663 (Book 663) (CB1002-CB1014). Book 663 relevantly provided that the land was conveyed:

‘…together with the house outhouses ways rights of way rights easements and appurtenances to the said hereditaments or any of these belonging or …appertaining…”

83. During Gardiner & Co’s ownership, the Passage was upgraded from dirt to iron tracks and cobblestone pavements to allow for the movement of heavily loaded carts that were brought into the Passage for the purposes of delivery of goods to the loading yard (CB678). The use of cobblestones stones and metal tracks is consistent with the Passage having been constructed and used as an integral part of the Gardiner & Co warehouse complex (CB682).

84. On 18 October 1922, Gardiner & Co entered into an agreement with adjoining landowners in respect of a gate located at the York Street end of the Passage (1922 agreement) (CB1383-CB1388). By 1940, the gate was gone (CB710).

Sale of Clarence House land in 1927

85. In 1927, by Deed registered in conveyance Book 1481 No 117 (Book 1481), Gardiner & Co (now called Sargood Gardiner Ltd) sold the land and warehouse which is now Clarence House to British Electric Company Ltd (British Electric) (CB1371-CB1374 and CB1376-CB1382). Book 1841 relevantly conveyed the land:

“…hereinafter described Together with and subject to such rights of way as are hereinafter described…

Together with a right-of-way in common with the Vendor and its assigns and all persons authorised by it or them over that piece or parcel of land edged blue on the said plan being part of allotment Three of Section Fifty two of the City of Sydney starting at a point on the South Eastern side of a wall fourteen inches wide said point being bearing and distant from the South Western corner of the land comprised…

Together with the right to use in common with others having a similar right and the Vendor and its assigns and all persons authorised by it or them the private lane or passage leading from the lastly described parcel of land to York Street coloured yellow on the said plan … subject however to the terms of a certain agreement dated…18…October 1922…(together also with a right of use in common with the Vendor…of the wooden stage giving access to the lift well opening of the premises intended to be hereby conveyed as coloured buff on the said plan) Subject to and reserving out of the land first hereinbefore described and intended to be hereby conveyed AND the Purchaser hereby grants to the vendor and its assigns an easement of right-of-way appurtenant to all other adjacent land of the vendor having frontage to York Street known as Seventy One York Street…with or without horses carts carriages motor cars motor lorries or other vehicles laden and or unladen and to walk ride drive and operate to fro over upon All that piece or parcel of land “edged green” [hand insert – eligible (sic) but appears to be “edged green’) starting at…”

86. Under Book 1481, the common loading yard at the rear of the warehouses was divided, with part being conveyed to British Electric, and the other part remaining with Gardiner & Co. Rights of way were granted by each of British Electric and Gardiner & Co to the other in relation of their respective parts of the loading yard. A right to use the wooden stage at the southern end of the loading yard (which remained in the land owned by Gardiner & Co), was also granted to British Electric under Book 1841.

87. The plan which formed part of Book 1481 (CB1373) is at annexure 5 (Plan 5). It shows the subdivided loading yard, with the part owned by Gardiner & Co (now 71 York Street) and over which British Electric was granted a right of way, edged in blue. It shows the part conveyed to British Electric (now Clarence House), and over which Gardiner & Co had a right of way, edged in green. It shows the wooden stage in orange. That loading yard reflects the boundaries of the rear area of the 71 York Street and Clarence House lands today.

88. Plan 5 also shows the Passage in yellow. The Dock is not separately identified in Plan 5 but appears to have been situated within the land which is the Passage (CB1273).

89. Book 1481 also purported to assign a right to use the Passage (and the Dock) in favour of the lands conveyed to British Electric “in common with others having a similar right”. This is relied on by Clarence House in support of its claim for existing rights of way over the Passage and Dock. I return to that issue later in these reasons.

90. Following the sale of the land to British Electric, the warehouses no longer operated together (CB668).

Conversion of 71 York Street and Clarence House land to Torrens Title

91. In 1929, Sargood Gardiner Ltd lodged Primary Application 30148 to bring the land now known as 71 York Street under the Torrens Title system (CB680). The application was supported by a survey plan by H E Foxell, a licensed surveyor (CB1462), and four statutory declarations (CB221–CB231)

92. Mr Foxell’s survey plan shows the Passage by reference to Book 8 as abutting the northern boundary of 71 York Street. It also shows the Dock by reference to Book 124 as abutting part of the northern and eastern boundaries of the 71 York Street land.

93. The statutory declarations included one dated 21 March 1927 from William Audsley, a clerk to William Gardiner, in which he describes the land acquired by Mr Gardiner and the construction of the warehouse buildings. He refers to a right of way leading from the loading yard (which Mr Audsley refers to as a cart-dock) to York Street being in existence when William Gardiner purchased the land. The right of way comprises the Passage and the Dock.

94. Mr Audsley’s statutory declaration refers to the right of way having been used by William Gardiner since the building was erected, as well as by occupants of the adjoining building in Clarence Street. He states that the right of way and loading yard have been in “continuous and undisturbed occupation possession and enjoyment of William Gardiner, W Gardiner & Co and W Gardiner and Co Limited for over forty years”. 71 York Street relies on this statutory declaration as evidence of use of the Dock as a right of carriageway until 1927.

95. Certificate of title volume 4493 folio 64 was issued in respect of 71 York Street on 20 July 1931 (CB1275). As a result of Primary Application 30148, the Private Lane (with the exception of the remnant Dock) was brought within the title to 71 York Street.

96. The land now known as Clarence House was brought under the Torrens Title system in two stages. First, by means of Primary Application 28983, from which certificate of title volume 4304 folio 41 was issued on 23 July 1929 (CB1276). Second, by means of primary application No 304409.

97. The survey plan which formed part of primary application No 28983 indicates that the Clarence House land does not abut the Passage or the Dock (CB1277).

71 York Street: 1928 – 1980’s

98. Works were undertaken to the 71 York Street building sometime around 1928 or 1929 to convert it from operating primarily as a warehouse building to lettable space, and to incorporate fire escapes which exited onto the loading yard. From that time until the 1980s, 71 York Street was used as a building for a mixture of minor warehouse, office and manufacturing businesses (CB680).

99. As at 1931, the wooden stage and goods lift continued to form part of the loading facilities in the loading yard for 71 York Street. An access driveway from York Street to the basement of the 71 York Street building was constructed in the 1930’s to create additional loading and parking access, although the rear loading facilities remained in place until the 1980’s (CB680).

100. By 1940, fire stairs were located at the rear of the 71 York Street building, constructed in steel, and ran from 12 feet above the loading yard to the fifth floor of 71 York Street brackets (CB681).

101. In 1948, ownership of 71 York Street transferred to 71 York Street Pty Ltd.

102. Major works were undertaken to the 71 York Street building in the early 1980s to fully upgrade it for use primarily for office space, with some retail space available on the ground floor. Those works were likely the result of a 1976 fire upgrading order, and included reconfiguring the rear fire stairs with a new internal fire escape staircase from the first floor of the building into the rear loading yard (CB681).

103. From 1927 until the 1980’s, when works were undertaken to upgrade the 71 York Street building, the Passage continued to be used and served as an access path to the rear area of 71 York Street. Over time, the use of the rear area for loading and unloading reduced, reflecting the evolution of 71 York Street’s use from warehousing to light manufacturing and then to commercial office use (CB695).

Strata plans of Clarence House and 71 York Street

104. In April 1980, approval was sought from Sydney City Council for the strata subdivision of Clarence House.

105. Conditional approval was granted subject to evidence being provided to establish a right of unobstructed access through the “adjoining right-of-way and laneway discharging onto York Street” for fire egress (Condition B(3), exhibit 4A). Council accepted the condition had been satisfied based on a surveyor’s letter dated 29 May 1980 which concluded that “it would appear that a Right of Way by prescription has been obtained over this passage” (part of exhibit 4A). The reference to the passage and the laneway is a reference to the Passage and the Dock.

106. An amended application for strata subdivision was made on 15 September 1981 and approved by Council on 23 October 1981. The amended application was the subject of a minute paper prepared by a city engineer to the town clerk dated 9 October 1981 which recommended approval of the application and noted that the main entry to the building is from Clarence Street and that “rear entry, accessible to all floors, is from York Street via a private laneway” (exhibit A4). The reference to the private laneway is a reference to the Passage and the Dock.

107. The plans that formed part of the amended application identified a “goods area” and an opening onto the rear area of Clarence House (exhibit A6). A photograph on the Council file identifies the existence of a roller shutter door at the rear of Clarence House, which I accept is the opening reflected on the plans (exhibit A4).

108. In 1981, SP 17719 was registered in respect of Clarence House (CB795-CB804). The title search of SP17719 relevantly records the following notifications:

1. BK 1482 no 117 right of way affecting the part shown so burdened in the title diagram – notification 2;

2. BK 1482 no 117 right of way appurtenant to the part of the land so shown benefited in the title diagram affecting the parts shown so burdened in the title diagram – notification 3;

3. BK 1482 no 117 right of user of the wooden stage appurtenant to the part of the land shown so benefited in the title diagram affecting the parts shown so burdened in the title diagram – notification 4.

109. The title diagram identifies two rights of way at “(X)” and “(Z)” (“VIDE Deed BK 1481”) which relate to the rights of way over the loading yard, and a right of way of the wooden stage at “Y” (also VIDE DEED BK 1481”). The title diagram identifies the Passage and includes a reference within it to “PASSAGE (BK 1481)”.

110. In 1999, SP 61233 was registered in respect of 71 York Street (CB136). The title search relevantly records the following notifications:

1. BK 1481 no 117 right of way affecting the part of the land above described shown so burned in the title diagram – notification 3;

2. BK 1481 no 117 right of user of the wooden stage affecting the part shown so burdened in the title diagram – notification 4;

3. BK 8 no 383 right of way appurtenant to the land above described affecting Lot 1 in DP 619464 – notification 5;

4. BK 1481 no 117 right of way appurtenant to the land above described affecting the land shown in plan with Book 1481 no 117 see request S630513 – notification 6.

111. The title diagram to SP 61233 identifies two rights of way at “[X]” and “[Z]” both of which refer to “Deed Book 1481…” and which relate to the rights of way over the loading yard. It also refers to a right of user of the wooden stage at “[Y]” and BK 1481. The title diagram also identifies the Dock with an arrow as “lane or passage in conv. BK. 124 no 952” and the Passage with the words “right of way”.

Defendants purchase 100 Clarence Street

112. In September 2002, the defendants purchased 100 Clarence Street (CB92).

113. The land which is now 100 Clarence Street had obtained the benefit of a right of way over the 8ft lane when that land was conveyed by the McDonald family to Patrick Erwin pursuant to Conveyance Book 1 No 111 on 5 and 6 October 1841 (CB1368–CB1370).

114. Rights of way burdening the Passage and the 8ft lane were also created to the benefit of 100 Clarence Street for the purposes of fire egress and sub-division as a result of orders made under s 88K of the Conveyancing Act, in proceedings involving the defendants: Pasade Holdings Pty Ltd v Sydney City Council [2006] NSWSC 299.

Rights of way to the benefit of 65 York Street and 5 – 7 Barrack Street

115. Rights of way over the Passage and the 8ft lane have also been created to the benefit of the land:

1. which is now 65 York Street as part of the transfer of that land from the McDonald family to Hugh Nolan pursuant to Book 13 No 293 dated 29 November 1839 (Book 13) (transcribed extracts of which are at CB373-CB378); and

2. now known as 5-7 Barrack Street when it was transferred from the McDonald family to Moses Joseph pursuant to instrument Lease and Release, Book T No 153 dated 13 January 1940 (Book 153) (CB1366–CB1368).

116. Other easements burdening the Passage and 8ft lane were created to the benefit of the 65 York Street land as a result of orders made under s 88K of the Conveyancing Act in proceedings: Pasade Holdings v Sydney City Council [2003] NSWSC 515 and Pasade Holdings v Sydney City Council [2003] NSWSC 1220. These easements are:

1. for light and air burdening the Passage and the 8ft lane;

2. for keeping in place sprinkler heads burdening the Passage;

3. for overhang burdening the Passage; and

4. for keeping in place a ventilation pipe burdening the Passage.

Transfer of the Passage and Dock to the defendants and notifications on titles

117. In 2007, the City of Sydney Council auctioned the Passage, the 8ft lane and the Dock for unpaid rates. They were purchased by the defendants for $170,000.

118. On 8 February 2008, ownership of the Passage, the Dock and 8 ft lane was transferred to the defendants pursuant to Deed of Conveyance Book 4543 Number 876 (CB830-CB833).

119. At the time of transfer, the Passage and the 8ft lane were both under old system title in the name of Hugh McDonald (CB413; CB1467).

120. At the time of transfer, the Dock was still held under old system title in the name of Patrick Erwin (CB1488-CB1597).

121. On 5 June 2008, the defendants took steps to bring the Passage, the Dock and the 8ft lane under the provisions of the Real Property Act by means of Conversion Action No 130431 (CB1395-CB1396).

122. On conversion, the Registrar General failed to register the right of way to the benefit of 71 York Street created by Book 8 or the rights of way purported to be created by Book 1481 on the title to the Passage or the Dock.

123. Following correspondence with the Registrar General, the Book 8 right of way in favour of 71 York Street was noted on the second schedule to the title of the Passage, as were rights of way created in favour of 65 York Street and 5 - 7 Barrack Street (CB1282).

124. The Registrar General concluded that Book 1481 did not create any rights of way in respect of the Passage or the Dock and refused to register them (CB1505-CB1506).

125. The title search of the Passage relevantly records the following notifications (CB1287):

1. Qualified Title, caution pursuant to s 28J of the Real Property Act, Book 4543 – notification 2;

2. Limited Title, being a limitation pursuant to s 28T(4) of the Real Property Act that the boundaries of the land had not been investigated by the Registrar General – notification 3;

3. a right of way pursuant to Book T No 153 – notification 4;

4. a right of way pursuant to Book 8 – notification 5;

5. a right of way pursuant to Book 13 – notification 6; and

6. rights of footway and carriageway and an easement for services in accordance with the s 88K orders obtained as referred to above.

126. The title search of the Dock relevantly records the following notifications (CB1294):

1. Qualified Title, caution pursuant to s 28 of the Real Property Act, Book 4543 – notification 2; and

2. Limited Title, being a limitation pursuant to s 28T(4) of the Real Property Act that the boundaries of the land had not been investigated by the Registrar General – notification 3.

Other evidence

The view

127. On the first day of the hearing, the Court conducted a view of the Passage, the Dock, 71 York Street and Clarence House.

128. The view commenced at the York Street end of the Passage. I observed the Passage was made of stone cobblestones and had metal tracks running down each side located about 1 metre from the buildings at 71 York Street and 65 York Street.

129. Along the northern wall of the 71 York Street building, I observed three downpipes. Some projecting cornices were pointed out to me, as were some sprinkler heads and fire drenchers which overlooked the Passage. I saw windows located at various levels of the northern wall of the 71 York Street building overlooking the Passage.

130. After walking up the Passage, I was shown the location of the Dock. From there I could observe the rear area of 71 York Street and Clarence House.

131. When standing at the end of the Passage, it was apparent that it was not physically possible to access the rear area of the 71 York Street and Clarence House land from that spot without crossing over the Dock.

132. On the 71 York Street side of the rear area, I observed some metal gates on the southern boundary of the building. This area was the location of the old wooden stage (referred to at [86] and [87] above). I also observed two sets of metal fire stairs external to the building which exited onto the rear area.

133. On the Clarence House side, I observed a roller shutter door on the north western wall of the building, which opens onto the rear area.

134. I observed a number of rubbish bins along the walls of the rear area of the 71 York Street and Clarence House buildings.

135. The view continued to the internal space on the first floor of the 71 York Street building. I observed two fire stairs, one which exits into the foyer of 71 York Street and the other onto the rear area.

136. I also observed the underground car park that services the 71 York Street building which can only be accessed via York Street.

137. After leaving the 71 York Street building, I entered Clarence House from Clarence Street. On the ground floor of Clarence House is a retail store, called Clarence Street Cyclery. At the rear of the store is a goods area which opens onto the rear area of Clarence House via a roller shutter door. Fire stairs are located at the rear of the store, which go down to a basement area and then exit onto the rear area of the Clarence House land.

138. The entrance for residents of the strata units located in Clarence House is from the southern side of Clarence Street. I observed a fire exit opposite a lift which services the residential units. That fire exit leads out onto the rear area.

Lay evidence: use of the Passage, Dock and rear area since 1981

139. Anthony Cook, Jill Yates and Graham Brooks are owners of strata lots or tenants of Clarence House and 71 York Street. Anton Peetz was the managing agent of 71 York Street. Together, they gave evidence of the use to which the Passage, Dock and rear area of the 71 York Street and Clarence House land have been put since 1981. A summary of their relevant evidence is set out below.

Anthony Cook

140. Anthony Cook is a registered proprietor of the lots that comprise the ground and lower ground floors of Clarence House. He and his wife, Christine Cook, have operated the Clarence Street Cyclery from within those lots from 1981 to 30 July 2018 (T274:17-24). He is a member of the Executive Committee of the Owners Corporation of Clarence House.

141. Since 1981, Mr Cook and his employees have used the Passage and the Dock to access the rear area of Clarence House by foot and by vehicles for the purposes of receiving and sending out deliveries on an almost daily basis, seven days a week ([10], [11] affidavit 20 June 2016 and [3] affidavit 30 June 2016).

142. He gave evidence that the Clarence Street Cyclery has owned a small van that regularly drove up and down the Passage and over the Dock to the rear area to access goods for delivery to customers from a loading dock area behind the roller shutter door at the rear of the store ([10] affidavit of 20 June 2016). Two to three times a week, the rear area was also used as the van was loaded with cardboard waste from the roller shutter or the fire exit ([14] affidavit 30 June 2016).

143. Mr Cook’s evidence is that Clarence Street is a busy street, there is rarely any parking available within the vicinity of the front of his business and there is no off street parking at Clarence House. The only way for him and his business to access York Street by vehicle or foot to or from the rear area and his loading dock is via the Dock and Passage ([8] affidavit 20 June 2016, [12] and [13] affidavit 30 June 2016).

144. Mr Cook also gave evidence that his business uses the rear area of Clarence House to store garbage bins, which are collected by a private contractor on a weekly basis via the Passage and the Dock. Garbage bins that service the residential lots in Clarence House are also kept at the rear area and are collected by Council via the Passage ([12] and [13] affidavit of 20 June 2016).

145. Mr Cook’s evidence is that the Passage is also used to gain access to rear area of Clarence House by tradespeople and the owners and occupiers of residential lots, for maintenance of services at Clarence House and for moving large items in and out of the building ([16] and [17] affidavit of 20 June 2016).

146. Mr Cook also observed things occurring when 71 York Street used the rear area and the Passage. Since he moved into the building in 1981, he has regularly observed vehicles and pedestrians using the Passage to access the loading and rear areas at the back of 71 York Street (T275:5-13, [14], affidavit 20 June 2016).

147. Mr Cook was cross-examined at the hearing. He confirmed that the photographs (exhibit 4) were of his van parked at the rear area of Clarence House and that it was only his business that used the roller shutter door (T275:30-35, 44-47).

Jill Yates

148. Jill Yates is the registered proprietor of Lot 9 in Clarence House. She has been on the executive committee of the Owners Corporation of Clarence House since the mid-1990s when she purchased her lot.

149. Her evidence is that she has used the Passage and the Dock to access the rear of Clarence House since the time she purchased her lot ([4] affidavit 29 June 2016).

150. She has also observed other owners and occupiers of Clarence House, as well as owners and occupiers of neighbouring properties, including 71 York Street, use the Passage and Dock for pedestrian and vehicular access to the rear of their properties ([4] affidavit 29 June 2016).

151. Ms Yates’ evidence is that the Passage has been used for the purposes of garbage collection by Clarence House residents and, after negotiation with Sydney City Council, has also been used in the past for disposal of household items ([9] affidavit 29 June 2016).

152. Ms Yates was not required for cross-examination.

Graham Brooks

153. Graham Brooks, a co-author of the Heritage Report, has been a tenant of 71 York Street since 1995.

154. He gave evidence that he has observed occupants of 71 York Street using the “side laneway” (namely the Passage and then Dock) for egress since 1995 (T113:34; [12] affidavit 18 March 2019).

155. Mr Brooks also gave evidence that he had, since 1995, observed Quality Hi-Fi and the Papillion restaurant (both former ground floor retail tenants of 71 York Street) use the Passage for access to dispatch and deliver goods to the rear area of 71 York Street. He has also observed maintenance and repair tradesmen using the Passage to conduct external maintenance work on 71 York Street, and it being used for material deliveries using the rear fire stairs (CB666; [19] and [20] affidavit 18 March 2019).

156. Mr Brooks also gave evidence as to the existence and use of the external fire stairs that exit onto the rear area of 71 York Street and the use of the Passage and the Dock for access through to York Street (CB675-CB676; [28], affidavit 18 March 2019).

157. Mr Brooks was not cross-examined.

Anton Peetz

158. Anton Peetz was the strata managing agent for 71 York Street during the period from February 2004 to March 2019.

159. Mr Peetz gave evidence that 71 York Street used the rear area to store garbage bins along the back wall of the 71 York Street building (usually stored between the two fire exits), and that garbage had been collected on Monday, Wednesday and Friday nights at 9pm (T151:1-2, 17-18; [10] and annexure E, affidavit 28 June 2016).

160. He also gave evidence that 71 York Street’s emergency ground floor procedures provide for the emergency exit to be onto the rear area and the Passage ([8] and annexure D, affidavit 28 June 2016).

161. Mr Peetz also gave evidence that Quality Hi-Fi had occupied a ground level retail store with a loading dock that was accessed at the rear area behind the 71 York Street building and was served by the Passage and the Dock. During cross-examination Mr Peetz gave evidence that Quality HiFi had been a tenant of 71 York Street until the previous week and he was not aware of any restaurant having been a tenant for many years (T150:9, T150:20-23, T151:2-24, [9] affidavit 28 June 2019).

Expert evidence

Surveyor: Rolf Cambridge

162. As noted earlier, Mr Cambridge prepared a report and some plans relating to Book 124.

163. Mr Cambridge prepared another report dated 26 September 2016, which is relied on by 71 York Street and was not challenged. He was instructed to prepare a survey report to ascertain the position of the services and building elements constructed on the northern face of the 71 York Street building and whether they encroach upon the Passage and Dock. He was also asked to prepare an easement plan to encompass the encroachments.

164. Mr Cambridge attended 71 York Street and the adjoining sites on 25 August and 6 September 2016. He found there were a number of items that encroached upon the Passage and Dock and took steps to establish the extent of the various encroachments (CB562). He carried out survey works in respect of the services visible from outside 71 York Street and visible from inside the basement, but did not include the position of services within walls or underground or adjoining buildings (CB564).

165. Mr Cambridge’s opinion of the nature and magnitude of the elements and services on the northern face of the 71 York Street building which encroach upon the Passage and the Dock is as follows:

1. four conductor boxes (rainwater heads) encroach from 0.3m to 0.335m upon the Passage and the Dock. Three encroach the Passage and one encroach the Dock (CB565);

2. three downpipes on the northern facing wall of 71 York Street encroach up to 0.18m upon the Passage and the Dock. Two on the Passage and one on the Dock (CB566);

3. five sets of windowsill mouldings encroach up to 0.8m upon the Passage and the Dock, four on the Passage and one partially over the Dock (CB567);

4. one vent pipe encroaches up to 0.135m upon the Passage (CB568);

5. the parapet at the top of 71 York Street encroaches up to 0.06m upon the Passage and the Dock (CB569);

6. electrical conduits encroach up 0.06m upon the Dock (CB570);

7. corbels (being decorative mouldings) encroach up to 0.18m upon the Passage (CB571); and

8. sprinkler heads and pipe work forming a fire system encroach up 0.06m to 0.175m upon the Passage and the Dock (CB572).

166. Mr Cambridge also identified three fire door exits, two of which are located on the western boundary of 71 York Street and one on the southern wall which require exits through the Dock and the Passage to York Street (CB574-CB575).

Traffic engineer: Ken Hollyoak

167. Ken Hollyoak prepared a report dated 13 January 2017 on which the defendants rely. He is a chartered professional engineer and has 35 years of experience in the road design, transportation and traffic planning field.

168. In his letter of instruction dated 20 December 2016, he was asked to provide his opinion as to whether the Dock and the Passage are large enough for vehicles to travel in and out, and turn around in the rear area behind 71 York Street and Clarence House, without passing over the land comprising 100 Clarence Street.

169. Mr Hollyoak attended the site and observed that 71 York Street had two doors leading onto the rear area and an additional gated access. He also observed two cars parked adjacent to the doors, garbage bins and other general garbage adjacent to the building. He also observed that Clarence House had a loading dock with a roller door and a simple door access with garbage bins located against the boundary wall.

170. Using a software program known as AutoTurn, Mr Hollyoak created and included in his report some diagrams which indicated it would not be possible for a truck, a B99 car or a B85 car to turn around within the available area behind Clarence’s House and 71 York Street (CB1842). A B99 car is a design motorcar whose physical dimensions represent the 99.8% of all cars and light vans, whereas a B85 vehicle has the physical dimensions which represent the 85th percentile class (CB1842).

171. In his report, Mr Hollyoak expresses the opinion that:

1. there would not be sufficient room in the Passage and the Dock for vehicles to turn around without passing over the land known as 100 Clarence Street (CB1844); and

2. it would be possible for vehicles to drive on to the rear area behind 71 York Street and Clarence House in a forward gear but they would need to reverse back along the laneway and out onto York Street, which that would be dangerous notwithstanding compliance with AS 2890.1 was not required for the existing buildings (CB1845).

172. Mr Hollyoak was cross-examined. He accepted that he did not attempt to undertake an on-site three-point or five-point or any point turn in a car but used a bespoke software program, being AutoTurn (T210:23-25).

173. He also accepted that a B85 vehicle is equivalent to a Ford Falcon Sedan, a B99 is equivalent to a Ford Transit, being a medium wheelbase Ford transit van, and a SRV is a 6.4m long vehicle like a small vehicle truck that Coles would use to do home deliveries (T211:4-10).

Fire safety: Stephen Grubits and Allan Harriman

174. Clarence House and the defendants adduced evidence from fire safety experts. Clarence House called Stephen Grubits, a fire safety engineer who swore an affidavit dated 15 November 2016 attaching his report. The defendants called Allan Harriman, a fire safety engineer and building surveyor who provided a report dated 23 December 2016.

175. Mr Grubits and Mr Harriman produced a joint report dated 11 March 2019 relating to Clarence House. Given their joint report, I have not detailed the evidence they produced in their initial reports. Both were cross-examined as part of evidence which was given concurrently.

176. In the joint report, Mr Grubits and Mr Harriman agreed that:

1. Clarence House has two fire isolated exits discharging to the rear onto the loading yard behind Clarence House. One stair serves the upper residential level of the buildings whereas the other serves the lower ground floor and basement retailer;

2. from the point of discharge at the rear area of Clarence House, there needs to be a path to a public road. If that path is over an adjoining property, such as the Dock or Passage, there must exist a legal right of way or equivalent over the path;

3. the path of travel needs to be available and unobstructed at all times. A gate may be placed in the path with any locking or latching mechanism being able to be operated by single-handed action in accordance with clause D2.21 of the Building Code of Australia (BCA);

4. a right of way over the Passage and Dock would address any concerns with the definition of “open space”, according to the BCA, for the purposes of the discharge to the public road; and

5. Clarence House may be altered to permit the discharge of the exit to be to Clarence Street but it would require the construction of a fire isolated Passage with consequent loss of rentable space and building frontage. Development and building construction consent would also be required from council.

177. The fire experts disagreed as to the consequences of undertaking alterations to Clarence House to construct a fire isolated passage. Mr Grubits considered that doing so would require a development consent which may trigger the upgrade provisions of clause 94 of the Environmental Planning and Assessment Regulation 2000 (NSW) and a fire safety upgrade to the existing building. Mr Harriman agreed that development consent would be necessary but was not briefed to assess the compliance of the building against the provisions of the existing or future BCA and so could not express a view on that issue.

178. Mr Harriman’s report also dealt with 71 York Street (CB1807). The substance of his evidence is similar to that given in respect of Clarence House, although it only became clear on the fourth day of the hearing that his evidence regarding the construction of a fire isolated passage also related to 71 York Street (T206:4).

179. In cross-examination, Mr Harriman accepted that, while the current fire egress from the rear area of 71 York Street is non‑compliant because of the definition of open space which requires the path to travel to beyond the allotment, an easement over adjoining land is a common and quite frequent alternative solution (T270:28-36). He also accepted it would not be difficult to obtain approval for fire egress from the rear area of 71 York Street by way of a path over its own land and then over the Dock and Passage to York Street (T271:16-24).

524. I also accept his evidence that the special value to an owner of property, being the additional amount that a prudent person would pay for land rather than lose it, is not applicable to assessing market value of property (T129:28-30). To my mind, such special value is not in the nature of a tangible financial loss or other real non-financial disadvantage that will arise from the imposition of an easement that is compensable under s 88K of the Conveyancing Act.

525. I do not accept, as the defendants suggest ([151] and [155] closing submissions; T312:14-16), that Ms Marshall’s and Mr Dale’s evidence was that the best and highest use of the Dock (or the Passage) was as part of the development of 100 Clarence Street and some other adjoining properties. Ms Marshall was of the opinion that development as part of an amalgamated site of 100 Clarence Street, 65 and 71 York Street which involves cantilevering over the Dock and Passage was a possibility but a limited one, not that it was the best and highest use of the Dock (CB1661).

526. Mr Dale’s opinion, which I accept, is that the best and highest use of the Dock and the Passage both before and after any easement is granted is utilising the available floor space ratio for the development potential with an adjoining property (such as 100 Clarence Street), and that it is appropriate to value the on that basis. That opinion is not inconsistent with the evidence of Mrs Arcidiacono, which I have referred to earlier (at [508] - [511]). Mr Dale and Ms Marshall also both concluded that development of the Dock and the Passage on their own is not likely (CB757 and CB1661), which is consistent with the evidence of Mrs Arcidiacono referred to above.

527. I accept Mr Dale’s opinion that the likely market value of the Dock with an easement granted to 71 York Street would be no different to the market value today, and that an appropriate assessment for compensation for loss of market value and/or proprietary rights and loss or disadvantage to the defendants is $0. This conclusion is consistent with that reached by Ms Marshall, notwithstanding the different methodology applied by her. While not determinative, it is also consistent with the valuation evidence of Mr Eccleston, which was relied on by the defendants when they sought their own easements over the Passage and the Dock in Pasade Holdings v Sydney City Council.

528. Mr Dale provides an amount of $6,000 as his assessment of disturbance compensation for all easements over the Dock and Passage, whereas Ms Marshall provides a figure of $5,000 for blot on title.

529. In the absence of any evidence from a valuer on behalf of the defendants and as 71 York Street has made an open offer in the amount of $6,000, I am satisfied that Mr Dale's figure of $6,000 would be an appropriate sum for compensation (excluding reasonable legal costs incurred by the defendants) for an easement over the Dock for a right of carriageway under s 88K.

Clarence House

Submissions

533. As set out above, I have concluded that the defendants can be adequately compensated for easements over the Dock and the Passage to the benefit of Clarence House. The remaining issue is the level of that compensation. Clarence House submits that no compensation should be payable to the defendants (T23:45).

534. The defendants’ submission on compensation in respect of the Clarence House easements focusses on the development potential of the Passage and the Dock as part of a development with adjoining properties and the need to take into account that possibility in valuing compensation. They submit that Ms Marshall failed to take that possibility into account, and the commercial advantage that accrued to Clarence House as a result.

535. They also submit that, where the highest and best use of the land is development, the Court cannot ignore the possibility of development in valuing the land ([157] closing submissions).

Consideration

536. Clarence House’s submission that no compensation should be payable is not sustainable given the expert opinions (of Ms Marshall and Mr Dale) accept that some amount, albeit minimal, is payable to recompense the defendants.

537. As to the defendants’ submissions, I do not accept the evidence indicates a likelihood of development of the Passage and the Dock, or that it supports the conclusion that their highest and best use is part of a development with the adjoining properties of 65 and 71 York Street and 100 Clarence Street. I have already commented on the evidence regarding the likelihood of development of the Dock and the Passage and my acceptance of Mr Dale’s evidence on the best and highest use of the land, at [508] - [513] and [529] - [530] of these reasons.

538. Consistent with my reasoning in respect of 71 York Street, I also do not accept that Ms Marshall (or Mr Dale) ignored the possibility of development of the Passage and the Dock, including as part of a development with adjoining land, when they undertook their valuations.

539. To the contrary, both considered the development possibilities. Mr Dale based his opinion of the value of compensation on an assessment of the highest and best use of the Passage and the Dock, which he concluded was to use their floor space to contribute to the floor space of the development of an adjoining property (CB758 and T135:8-16). Ms Marshall considered the possibility of the Dock and Passage being developed as part of an amalgamation with adjoining properties, by way of a cantilevered development as a stratum lot, but concluded there would be no loss in value (CB1661-CB1662).

540. I have commented on Ms Marshall’s evidence about the commercial advantage to Clarence House, at [506] and [513] of these reasons. I also accept Clarence House’s submission that granting easements under s 88K would not cause any additional loss to the defendants, given the existing and continuing commercial advantages enjoyed by 65 York Street, 71 York Street and 5-7 Barrack Street.

541. The defendants did not articulate the precise quantum by which any compensation payable by Clarence House should be increased based on Ms Marshall’s evidence that an easement would give Clarence House a commercial advantage of being able to negotiate a more favourable deal. Rather, the defendants contend that the Court should reject Ms Marshall’s view that the compensation for the easements should be nil ([154] closing submissions) and submit that the Court could put itself in the position of a juror and assess as best as it can what the compensation payable should be, following the approach in Swann v Spiropoulos [2006] NSWSC 860 and Evans v Cornish Nominees Pty Ltd (2009) 14 BPR 27,257; [2009] NSWSC 1295.

542. In both Swann v Spiropoulos [2006] NSWSC 860 and Evans v Cornish Nominees Pty Ltd (2009) 14 BPR 27,257; [2009] NSWSC 1295, the Court concluded that the expert valuation evidence was not persuasive. This is not such a case.

543. The Court has before it very persuasive evidence from Mr Dale. While I generally prefer his evidence, I do not consider that Ms Marshall’s evidence should be rejected or is unpersuasive for reasons advanced by the defendants.

544. Ms Marshall determined the value of compensation by reference to the diminution in value of the land by considering what would be paid by a willing but not eager or determined buyer to a willing but not anxious or forced seller before and after the grant of the easement where both are reasonably informed about the characteristics of the land (CB1663 and CB1659). She took account of the existing easements on the Passage, the features and scope of the Dock and the uses to which the Dock and Passage are put (CB1659), together with the uncertainty of any development opportunity over that land and the possibility of development on value (CB1661-CB1662).

545. Consistent with the opinion of Mr Dale, Ms Marshall concluded that the grant of easements over the Passage and the Dock would not have a detrimental effect on their value and that compensation should be payable in a small amount reflecting the associated blot on title to the defendants.

546. Accordingly, if I were required to make orders for easements under s 88K, I would consider it appropriate to order compensation be payable by Clarence House to the defendants in an amount of $12,000 (excluding any reasonable legal costs incurred by the defendants). This figure reflects my conclusion that $6,000 should be paid by 71 York Street as compensation for an easement for a right of carriageway over the Dock, and Clarence House would be granted an easement over the Passage as well as the Dock.

Terms of s 88K easements over the Passage and the Dock

547. Clarence House seeks rights of carriageway over the Dock and the Passage. I am satisfied that if orders under s 88K of the Conveyancing Act were required to be made, easements in terms provided by Part 1 of Schedule 8 of the Conveyancing Act would be the appropriate given the use to which Clarence House has put the Passage and the Dock to date.

548. I am also satisfied that, if an easement under s 88K was required for 71 York Street, it would be appropriate to make an order for a right of carriageway in the terms of Schedule 8, Part 1 of the Conveyancing Act in respect of the Dock given the use to which the Dock is put and the nature of 71 York Street’s existing right of way over the Passage.

71 York Street: other s 88K easements

Introduction

549. 71 York Street seeks orders under s 88K of the Conveyancing Act for other easements over the Passage and the Dock in respect of the drainage of water and sewerage, repairs and services, encroaching and overhanging structures, and light and air.

550. There are discrepancies between the other easements claimed in 71 York Street’s pleadings ([vi] - [xiv] and [17] – [28] of the statement of claim) and those referred to in the documents relied on at the hearing: see draft instrument (CB646-CB659, easements at items 1-7 and 9-15 (which includes plans prepared by Mr Cambridge at CB658-CB659 (RC Plan)) (easement instrument), and 71 York Street’s offer of compensation (at MFI-2).

551. By way of example, the easements instrument refers to fourteen easement items (on one reading amounting to twenty three easements), whereas the pleading seeks orders for nine (or possibly eighteen). The offer of compensation refers to ten other easements. The statement of claim also refers to encroaching structures which are not referred to in the RC Plan and appears to limit the easements claimed for overhang to fire sprinklers (at [25]). The easements referred to on the RC Plan are also, in some respects, different to the descriptions in the easement plans contained in Mr Cambridge’s report (CB583-CB584).

552. Given the way the hearing ran and the contents of the closing submissions, I have considered 71 York Street’s claims under s 88K for the other easements by reference to their general descriptions and the evidence, rather than seeking to resolve the discrepancies and give reasons on the terms of each of the easements sought in the orders for relief or in the easements instrument.

553. In so doing, I have adopted the categories referred to by the parties (being easements for overhang and encroaching structures to remain, for the drainage of water and sewerage, for repairs and services and for light and air), and have considered 71 York Street’s claim for those categories of easements by reference to the questions earlier identified in these reasons (at [441]).

71 York Street’s submissions

554. In general terms, 71 York Street submits that most of the other easements are reasonably necessary for the effective use of the 71 York Street land as the structures and services to which they relate exist on or as part of the building and have done so for over 100 years.

555. It submits there should be no consequential burden on the defendants as similar easements have been granted over the Passage to the benefit of other properties in the past, and which are recorded on the title to the Passage (CB444), and because the evidence indicates the defendants are unlikely to develop the Passage and the Dock.

556. 71 York Street also submits that an easement for repairs and services is reasonably necessary given the difficulties it had negotiating consent from the defendants to enable it to undertake repair works for the fire drencher system.

557. The easement for light and air is, 71 York Street submits, necessary to ensure that light from the Passage is available to the offices that run along the northern wall of the building.

558. In summary, 71 York Street contends there are no reasons why easements under s 88K of the Conveyancing Act should not now be granted to the benefit of the 71 York Street land and there can be no rational objection by the defendants to easements being ordered ([11.8], [12.4], [13.4] and [14.5] closing submissions).

Defendants’ submissions

559. The defendants’ submit that 71 York Street has failed to demonstrate that the other easements are reasonably necessary. Simply put, they query how the easements claimed can be reasonably necessary now when the land has operated well enough for over a century without them and licences in respect of some of them have been offered for a nominal sum (T347:45).

560. The defendants submit that the easements for the drainage of water and sewerage are not reasonably necessary in circumstances where they are sought over the whole of the Dock and the Passage and, they say, there is no evidence to suggest that water cannot be drained over 71 York’s Street’s own land.

561. They submit that the easements for overhang, encroachments and services are not reasonably necessary as a licence can be given under the Encroachments of Buildings Act, and the defendants have offered a five year license for the nominal sum of $1. They also submit that the only encroachment identified is the vent pipe and there is no evidence for why it is required and cannot be moved.

562. They also contend that an easement for repairs is not reasonably necessary as 71 York Street can have recourse to the Access to Neighbouring Land Act 2000 (NSW) to affect such repairs, assuming the parties cannot reach an agreement about repair access issues as they arise.

563. As to the easement for light and air, the defendants submit that 71 York Street has not shown why it is reasonably necessary, as distinct from merely desirable. This is in circumstances where, they submit, there are no windows fronting the Dock, there are other windows at the front of the building which provide natural light to some offices, there are other offices which have no side windows, the offices are air-conditioned and, unlike the case of Pasade Holdings v Sydney City Council [2003] NSWSC 515, there is no evidence that an easement for light and air is required for development consent.

564. The defendants reject the contention that the imposition of the other easements on their land would not impose a significant burden. They say there would be a burden as the easements would prevent the defendants from being able to develop the Passage and the Dock, including by a cantilevered development.

565. They also contend that the easements previously imposed over the Passage are of no relevance to the Court’s consideration of the issues as they relate to different parties, were granted in circumstances where the owners of the Passage were unknown, the evidence of necessity was different to that relied on by 71 York Street, and those easements create different burdens because of the different land to which they benefit and the different terms on which they were granted.

Consideration

Reasonable necessity

566. A party who seeks an order under s 88K of the Conveyancing Act is required to establish why the easements are reasonably necessary: Owners Strata Plan 13635 v Ryan at [24]; Hanny v Lewis (1998) 9 BPR 16,205.

567. In that context, it is appropriate to acknowledge that 71 York Street’s submissions on the issue of reasonable necessity for the other easements claimed are not detailed and there is little specific evidence going to need. There is, therefore, some force to the defendants’ submission that 71 York Street may not have established the requirement for reasonable necessity, as required by s 88K of the Conveyancing Act.

568. That said, based on the evidence before the Court and the arguments advanced by the parties, I am satisfied that easements for overhang and encroachment structures to remain and for repairs and services are reasonably necessary for the effective use of the 71 York Street land.

569. In reaching that conclusion, I accept 71 York Street’s submission that granting such easements would not have any real impost on the defendants.

570. No evidence was led by the defendants to suggest that easements for overhang and encroaching structures to remain and for repairs or services would interfere with the defendants’ use of the Passage and Dock or that they would be prevent any development of the defendants’ land. In any event, the prospect of development of the Passage and the Dock by themselves or as part of an amalgamated cantilevered development is remote, given Mrs Arcidiacono’s evidence, the opinions of the valuers, and the existence of other easements over the Passage to the benefit of three other parties.

571. I do not accept the defendants’ submission that the existing easements over the Passage for overhang and the keeping in place of certain structures (similar to some which 71 York Street seek to maintain) to the benefit of 65 York Street are not relevant to the Court’s consideration of 71 York Street’s claims.

572. The existence of the easements which benefit 65 York Street demonstrates the nature of the easements that can be readily accommodated by the Passage and the Dock and also confirms that granting similar easements to the benefit of 71 York Street should not result in any additional burden or loss to the defendants. The location of 65 York Street on the opposite side of the Passage is also not indicative of some fundamental difference in respect of the burden imposed by easements created to the benefit of 71 York Street, as the defendants suggest ([14], supplementary submissions).

573. The evidence does not support the conclusion that the imposition of easements for overhang and encroachment structures to remain and for repairs and services would effectively preclude a reasonably available development or use of the Passage and the Dock. Accordingly, a strong case for a finding of reasonable necessity in respect of those easements is not required.

Overhang and encroachments

574. The expert report of Mr Cambridge identifies the overhang and encroaching structures as the windowsill mouldings, parapet, corbel, conductor boxes/rain water head, downpipes, electrical conduits, fire system pipes and sprinkler heads, and the vent pipe. His report makes clear that each of these structures form part of or is affixed to the northern wall or roof line of the 71 York Street building and trespasses over or into the Passage and the Dock.

575. I accept the submission of 71 York Street that these structures have been present on the 71 York Street building for some years. The fire drencher system has been in place since at least 1919 (CB678) and it is reasonable to infer that the windowsill mouldings, parapet and corbel may have been part of the 71 York Street building since it was constructed in the early part of the 20th century.

576. I have no doubt that the effective use of the 71 York Street building requires the continued existence of the overhang and encroachment structures.

577. Given the heritage status of the 71 York Street building, it may be taken that the windowsill mouldings, parapet and corbel elements need to be maintained in their current positions.

578. The need to maintain downpipes and conductor boxes/rain water heads for drainage of water, electrical conduit for electrical services and fire system pipes and sprinkler heads for fire safety purposes is self-evident.

579. It may be that some of the other structures identified, such as the downpipes and vent pipe, could possibly be moved, but they have also been in place for some time and moving them would also likely interfere with the heritage fabric of the building and its operations, and involve cost and delay.

574. The offer of a five-year licence for $1 or the prospect of seeking one under s 3 of the Encroachment of Buildings Act 1922 (NSW) does not mean that the easements for overhang and encroaching structures to remain are not reasonably necessary. The existence of an alternative remedy under the Encroachment of Buildings Act does not preclude the grant of an easement under s 88K. The court can choose to grant one in preference to the other: North v Marina (2003) 11 BPR 21,359; [2003] NSWSC 64.

575. Contractual licenses limited in time would also create uncertainty going forward: Ward v Hull [2019] QSC 032. The parties will have to renegotiate the terms of their license in five years, in circumstances where they have experienced difficulty in reaching consensus positions on many issues, as evidenced by this litigation. They may create uncertainty for successors in title who may not be bound by a contractual license, as they would by a registered easement.

Drainage for sewerage and water

582. As a matter of principle, I accept that easements for drainage of water and sewerage over the Passage and the Dock may be reasonably necessary for the effective use of the 71 York Street land.

583. I have already commented on the Sewerage diagram and why I do not accept it as sufficient evidence of use (at [418] - [425]).

584. As to drainage for water, there is no water drainage or other plan in evidence that identifies the location of pipes which run under the Passage and the Dock for the purposes of draining water from 71 York Street.

585. Mr Cambridge’s report identifies downpipes and other water related structures on the northern wall of the 71 York Street building that encroach on the Passage and the Dock but does not address whether those pipes and structures lead or drain into pipes that run anywhere along or under the defendants’ land. It is also not possible to infer they do from the photographs in evidence (for example CB850-CB851, CB855) or from what I observed on the view.

586. Easements for drainage of water appear to be sought in respect of the four downpipes located on the northern wall of the 71 York Street building as encroaching structures (CB658, items A, A1, B, B1 in the RC Plan). Mr Cambridge’s report identifies their location and that they encroach on the defendants’ land.

587. As noted earlier, it is a matter for 71 York Street to establish the easements are reasonably necessary. While detailed evidence may not be required to satisfy s 88K(1) of the Conveyancing Act, it is to be expected that some views would be expressed by a witness, such as a surveyor, as to the location of sewerage and other drainage pipes under the Passage and the Dock, the use to which they are put, and the continuing need to use them for drainage in support of the easements claimed. Mr Cambridge’s report expresses an opinion on the need to maintain the encroaching structures only, rather than a view on the use of sewerage and other drainage pipes under the Passage and the Dock.

588. Accordingly, I am not persuaded by 71 York Street’s submissions, the Sewerage Diagram or the other material in evidence that it has established the need for easements for drainage of water and sewerage over the Passage and the Dock in the terms of and as referred to as items X and Y on the RC Plan.

Repairs and services

589. An easement for repairs and services appears to be sought in respect of the fire sprinkler system and northern wall of the 71 York Street building ([23], statement of claim), and in respect of electrical services associated with the encroaching electrical conduits (item F at CB584 and CB659).

590. I am satisfied that, in this case, use of the 71 York Street land with an easement for repairs and services is substantially preferable to its use without such an easement. Without such an easement, 71 York Street has no ongoing legal right to enter the Passage or the Dock to carry out repairs to the northern wall of its building or take steps to maintain essential services, such as electricity.

591. It might be expected that arrangements to enter another person’s land to undertake repairs of a building and maintenance of services to ensure their continued operation would be agreed in a short timeframe and that an easement is unnecessary. But the evidence in this case indicates otherwise.

592. 71 York Street requested consent from the defendants to undertake urgent repairs to its fire drencher system on 25 May 2016 (CB506). That consent was not forthcoming despite the provision of detailed information from the defendants as to how the works were to be carried out and why it was needed (CB510). It was not until 15 January 2019, nearly eight months after the first request, that agreement was reached.

593. In those circumstances, I do not accept the defendants’ submission that negotiation between the parties for access for repairs and services is a reasonable or viable option for the future.

594. Nor do I accept the submission that the option of seeking access by recourse to the Access to Neighbouring Land Act means that the easement sought is not reasonably necessary.

595. As noted above, the existence of an alternative statutory regime does not does not preclude the grant of an easement under s 88K. Granting an easement to enable repairs to be undertaken and services maintained in a timely and cost-effective manner is, in my view, clearly superior to the alternative option of recourse to a regime which involves further Court action.

Light and air

596. The difficulty with 71 York Street’s claim for an easement for light and air is that there does not appear to be any need (reasonable or otherwise) to make an order for an easement for light and air for the ongoing and effective use of the 71 York Street land.

597. The 71 York Street building was constructed in 1877 with a number of windows facing the Passage. It has been and continues to be used on the basis that the offices along the northern wall have natural light from the Passage. Mr Brooks, whose office is located on that side, gave evidence that he considers that amenity to be significant (T111:1-18).

598. I do not accept, as the defendants suggest, that use of natural light is merely desirable, rather than a reasonable necessity for the purposes of s 88K. Natural light has been recognised as an aspect of the use of land that is substantially preferable to use without it: Kent Street v Sydney City Council [2001] NSWSC 268, at [14].

599. But the relevant question is not whether light and air are reasonably necessary for the effective use of the 71 York Street land. Rather, it is whether an easement for light and air is reasonably necessary for that use: s 88K(1).

600. Unlike the other proceedings in this Court involving claims for easements over the Passage, there is no development consent in respect of 71 York Street which requires an easement for light and air.

601. Nor is there any evidence of any threatened action by the defendants that would interfere with or impede 71 York Street’s existing enjoyment of natural light or air coming from the Passage or the Dock. As noted above, the evidence does not indicate any likelihood of development of the Passage or the Dock in isolation or any cantilevered development.

602. The circumstances that subsisted at the time of the hearing also include the existence of other easements over the Passage which prevent it being obstructed and require natural light to be made available to the neighbouring 65 York Street land.

603. The amenities of natural light and air from the Passage and Dock that 71 York Street enjoys do not depend on any trespass over or encroaching structure on the Passage or Dock, and do not require the consent of the defendants, as in the case of repairs. The 71 York Street land enjoys the amenities due to the physical location of the windows and the Passage.

604. While a strong case for reasonable necessity may not be required in this case, a claimant must point to some matter which supports the conclusion that an easement is reasonably necessary. I do not consider that 71 York Street has done so. The existence of a similar easement to the benefit of 65 York Street is not sufficient in circumstances where that easement was required as part of a development consent. Nor do I accept the submission that the Court should make an order because “there can be no rational objection by the defendants” ([14.5] closing submissions).

605. Simply put, and as the defendants submit, the 71 York Street land may continue to be used effectively by accessing natural light and air from the Passage and Dock without the proposed easement.

606. Accordingly, I am not satisfied that 71 York Street has established that an easement for light and air over the Passage and the Dock is reasonably necessary.

Public interest, compensation, and other factors

607. There is nothing to suggest that easements for overhang and encroaching structures to remain or for repairs and services would be inconsistent with the public interest. The defendants did not advance any submission to the contrary.

608. The easements for overhang and encroaching structures to remain would continue the status quo of many years, whereas easements for repairs and services may improve the efficiency of the operations of the building. In either case, they would not impact adversely on the public. I am satisfied that granting them would not be inconsistent with the public interest.

609. The defendants accept that all reasonable attempts had been made to obtain the easements under s 88K of the Conveyancing Act (T347:23-26) and also accept they can be adequately compensated for the easements sought ([123] closing submissions).

610. I do not find any discretionary reasons for declining to make orders for the grant of easements for overhang and encroaching structures to remain, or for repairs and services.

611. The remaining issue to be decided is, therefore, what level of compensation should be ordered.

612. 71 York Street contends that the amount of compensation it has offered the defendants for each of the other easements claimed, being $2,000 (MFI-2), is appropriate.

613. The defendants submit that compensation will vary depending on the extent to which the Passage is affected by the easements, but do not advance any particular figure ([127] closing submissions).

614. I have already concluded that a figure of $6,000 is an appropriate amount for compensation for a right of carriageway over the Passage and for the Dock. That figure reflects the conclusion of Mr Dale that an amount for disturbance was appropriate for all proposed easements over the Passage and the Dock, including a right of carriageway and the other easements claimed by 71 York Street.

615. It seems to me that the level of disturbance to the defendants’ enjoyment of the Passage and the Dock from the imposition of easements for repairs and services and for overhang and for encroaching structures to remain may be less than the disturbance from the grant of a right of carriageway, given the regularity of use of the Passage and Dock as a right of way. Any blot on title is also unlikely to be as significant given the existence of other easements of a similar nature to the benefit of 65 York Street.

616. On that basis, and in the absence of any submission by the defendants on the level of compensation, I consider the amount offered by 71 York Street of $2,000 to be the appropriate amount of compensation to be payable to the defendants for each easement to be ordered under s 88K of the Conveyancing Act, excluding the defendants’ reasonable legal costs.

Conclusion on 71 York Street’s other s 88K easements

617. The Court will make orders granting easements to the benefit of the 71 York Street land for overhang and for encroaching structures to remain and for repairs and services, with compensation to be payable for each easement to be ordered in the amount of $2,000 (excluding reasonable legal costs).

618. The easement instrument includes proposed terms, by reference to the matters set out in s 88K(1)(a)-(d) of the Conveyancing Act. It identifies the site of the easements, restrictions and positive covenants as per the RC Plan.

619. The defendants did not address the terms proposed in the easement instrument and, as noted above, there are some discrepancies between the easement instrument and the other documents before the Court.

620. Accordingly, I defer making any orders under s 88K of the Conveyancing Act for the other easements at this stage and will provide the parties with an opportunity to reflect on these reasons and confer with a view to reaching agreement as to the terms of the easements to be granted.

Conclusion and Orders

621. I have deferred making any orders at this stage to enable the parties to consider these reasons and agree on the precise terms of the easements and other orders to be made. I invite the parties to bring in proposed short minutes of order to give effect to these reasons within 14 days.

622. The proposed short minutes should also deal with costs. Each of 71 York Street and Clarence House experienced some success, although not on all of their claims. That said, they succeeded on a large part of their claims which suggests they should receive the benefit of some costs order.

623. In relation to the 71 York Street proceedings, the costs order will need to take account of s 88K(5) of the Conveyancing Act, which provides for an applicant to pay the costs of the proceedings for s 88K easements, unless the Court makes an order to the contrary.

624. If the parties are unable to agree on the appropriate orders, including as to costs, the parties are to confer and, within 21 days, propose directions for the exchange of short written submissions. This is with a view to re-listing the matter for a short hearing, unless the parties agree to any remaining issues being dealt with on the papers.

625. The interlocutory consent orders made by Darke J on 1 July 2016, which restrain the defendants from locking the gate and placing skip bins on the Passage and the Dock, are in place until both proceedings are determined at first instance. For the avoidance of doubt, those orders are extended until final orders are made in accordance with these reasons in each of the proceedings.

ANNEXURE 1

ANNEXURE 2

ANNEXURE 3

ANNEXURE 4

ANNEXURE 5

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Endnote

Amendments

30 September 2019 - Typographical error.

30 September 2019 - Typographical error.

30 September 2019 - Typographical error.

03 October 2019 - Typographical error in paragraph [3].

Decision last updated: 03 October 2019