Twelve Walker Street Pty Ltd v Lee
[2017] NSWSC 1807
•20 December 2017
|
New South Wales |
Case Name: | Twelve Walker Street Pty Ltd v Lee |
Medium Neutral Citation: | [2017] NSWSC 1807 |
Hearing Date(s): | 9 November 2017 and 11 December 2017 |
Date of Orders: | 20 December 2017 |
Decision Date: | 20 December 2017 |
Jurisdiction: | Equity |
Before: | Darke J |
Decision: | Orders made for imposition of an easement for temporary rock anchors. |
Catchwords: | LAND LAW – easements – creation of easements – creation by order of court – temporary easement for underground rock anchors – where plaintiffs propose deep excavation of dominant tenement – where easement will temporarily restrict development of servient tenement – whether easement reasonably necessary for effective use or development of plaintiffs’ land – easement imposed |
Legislation Cited: | Conveyancing Act 1919 (NSW), s 88K |
Cases Cited: | 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 |
Category: | Principal judgment |
Parties: | Twelve Walker Street Pty Ltd (First Plaintiff) |
Representation: | Counsel: |
File Number(s): | 2017/186035 |
Publication Restriction: | None |
JUDGMENT
Introduction
The plaintiffs, by a Further Amended Summons filed on 9 November 2017, seek the imposition of an easement pursuant to s 88K of the Conveyancing Act 1919 (NSW) over the defendants’ land at 16 Walker Street, Rhodes (being Lot 3 in Deposited Plan 15734). There is at present a single storey dwelling on the land. The first plaintiff is the owner of an adjoining property in Walker Street to the south (being Lot 2 in Deposited Plan 15734). The second plaintiff is the owner of the common property in Strata Plan 37320, which adjoins the rear (western) boundary of the defendants’ land.
The easement sought by the plaintiffs would permit subterranean access to the defendants’ land for the purpose of installing, and within a two year period de-stressing, a series of rock anchors (about 255 in total throughout 9 rows).
The plaintiffs wish to deploy the rock anchors as part of a large mixed use development of their land and other adjacent properties. The development site is opposite the Rhodes railway station. The development entails a deep excavation of about 28 metres. The proposed rock anchors would provide support to the piling system designed to retain the defendants’ land in the wake of the excavation.
The development is the subject of a consent (DA 2016/0005) issued by the City of Canada Bay Council on 1 December 2016 following a determination made by the Sydney Central Planning Panel. The proposed rock anchors are not the subject of the consent, which does not extend to any construction on the defendants’ land (see Condition 4). The terms of the consent contemplate that, prior to the issue of a construction certificate, a construction management plan will be submitted to the accredited certifier that sets out, amongst other things, the proposed method of support to any excavation adjacent to adjoining properties, as designed by a chartered civil engineer (see Condition 23(e)). The defendants adduced evidence from a building surveyor (Mr Harriman) and a town planning consultant (Mr Threlfo) to the effect that the plaintiffs would require a further development consent and a modification of the existing consent in order to be able to lawfully install the proposed rock anchors on the defendants’ land.
The proposed rock anchors will also need to be the subject of a construction certificate before the plaintiffs can proceed with their installation.
The development is envisaged to be carried out in five construction stages, the first two of which are concerned with:
(1)excavation and bulk earthworks, piling/retaining walls, and associated civil works; and
(2)the construction of footings and the building structure up to the podium level.
In the absence of consent from the defendants to the installation of rock anchors on their land, an application was made in about September 2017 for a construction certificate that did not include the rock anchor work. On 21 September 2017 a construction certificate was obtained for bulk earthworks and retaining walls, limited to a depth of 500mm below the top row of the proposed anchors, and piling. The certificate specifically excludes the installation of ground anchors.
The defendants have raised various objections to the imposition of the easement sought by the plaintiffs. These include:
(a)that the subject matter of the application is not an easement within the terms of s 88K of the Conveyancing Act because it would create a right of exclusive and unrestricted use of the defendants’ land or at least parts of it;
(b)that the easement is not in any event reasonably necessary for the effective use or development of the plaintiffs’ land within the meaning of s 88K(1), as there are other appropriate and cost effective methods available to retain the defendants’ land;
(c)that the use of the plaintiffs’ land with the easement is contrary to the public interest because it would delay the development of the defendants’ land by at least 17 months, with very little timing benefit to the plaintiffs;
(d)that uncertainties in the length of the delay mean that it is not possible to adequately compensate the defendants for the loss and disadvantage that would be caused by the imposition of the easement;
(e)that the plaintiffs have not made all reasonable attempts to obtain the easement; and
(f)that the imposition of the easement should in any case be declined in the exercise of the Court’s discretion.
The proposed rock anchors
As already noted, the proposed development of the plaintiffs’ land forms part of a large development that includes other adjacent properties. The development is being undertaken by companies associated with Billbergia Pty Ltd, including Walker Street Development Pty Ltd as the development manager. Demolition and fencing works have already been carried out. The bulk earthworks and shoring are the next works to undertake.
In April 2016 the developers obtained a geotechnical investigation report from Consulting Earth Scientists Pty Ltd (“CES”). The report was based in part on the results obtained from 14 boreholes drilled to depths of between about 10m and 36m below ground level. Section 5.3 of the report, concerning excavation support, contains the following:
The observations from the site at 40 Walker Street indicate that the risk of potential failures caused by adversely orientated defects in Units 3C and 3D Shale will require assessment. Consideration should be given to carrying out the excavation in stages of not more than 2m depth intervals and leaving a 3m wide x 2m high bench next to the excavation boundary at each stage to enable geological mapping to be carried out and remedial measures taken (if required) before the next stage of excavation.
If such a benching and staged excavation/geological mapping approach is unacceptable to the excavation programme, systematic rock bolting should be designed to support rock wedges between major beds in the shale. Geological mapping at 2m vertical intervals will still be required, together with more substantial remedial works if potential larger scale instability is assessed. Due to the predominant strike of NNE joints in Sydney Sandstone and Shale, the western and eastern boundaries are more likely to require support.
Section 5.4 of the report, concerning lateral earth pressures, contains the following:
Due to the anticipated depths of excavation, it is likely that multiple rows of anchors or internal struts will be required to provide support to retaining walls and to limit lateral movement. The magnitude of movement depends upon the type of wall, the ground profile and the sequencing of construction. Detailed soil structure interaction analyses will be required during the detailed design stage to determine magnitudes of movement specific to the construction methodology and construction sequencing to be adopted.
Section 5.5, concerning anchors and strut systems, includes the following:
Consideration should be given to the type of anchor/strut system that may be required to support basement excavations. External anchoring systems would avoid the internal obstructions that would occur with bracing systems. However anchor lengths may need to be relatively long to develop the required load capacity in soils (therefore extending beneath adjacent properties and roads) or have to be inclined steeply to anchor into rock. Anchors with their bond zone in the shale bedrock will achieve significantly higher capacities and stiffness compared to soil anchors.
An internal strut system may not be suitable given the size of the excavation and the span required between walls. In addition, internal bracing would restrict excavation methodologies. Bracing from the walls to internal piles or footings could be considered. A top-down construction system could be adopted that utilises the basement floors as a bracing system.
Bonacci Group (NSW) Pty Ltd (“Bonacci”) were retained as the project’s structural engineers in about September 2015. Bonacci proceeded to design a piling system which would be supported by rock anchors on all sides of the development site.
In July 2017 the developers obtained a geotechnical investigation report from Douglas Partners. The investigation was intended to supplement the earlier investigation carried out by CES. It was noted in the report that:
A geotechnical investigation was undertaken for the project by Consulting Earth Scientists Pty Ltd in 2016 (Ref. CES150910-BIL-AG). This included the drilling of 14 boreholes over both the Stage 1 and Stage 2 development sites. Of these 14 boreholes only five (BH01, BH03, BH05, BH06 and BH08) were drilled to below the proposed excavation level on the Stage 1 site. These boreholes were used to develop the geotechnical model for the site and are included in Appendix E of this report.
The fieldwork carried out by Douglas Partners included the drilling of two further boreholes.
Section 9.2 of the report, concerning excavation support, included the following:
Shoring support will be required for the basement excavation to at least the level of the high strength sandstone, and possibly to below bulk excavation level if the shoring piles are proposed to support significant vertical loads (either structural loads or loads from temporary ground anchors). Soldier piles with reinforced shotcrete infill panels are commonly used to support excavations in shale and would be suitable for this site.
The soldier piles would generally be spaced at about 2m to 3m centres. Shotcreting will be needed over the materials above the high strength sandstone and should be undertaken in approximately 2.5m drops as excavation proceeds in order to reduce the risk of local slippages. Temporary ground anchors will be required to prevent excessive lateral deformation and movement of rock wedges.
…
The shoring wall design will need to consider the possibility that adverse joints will be exposed in the excavation faces. The eastern sides of the excavation are oriented at approximately 10o east of north, and the northern and southern faces approximately 10o south of east. These orientations coincide with the strikes of the major joint sets in Sydney and continuous, steeply dipping joints should be expected. The imaging in the current boreholes confirms this risk. The return corners along the northern and southern elevations also result in an increased probability of rock wedge movement occurring.
Douglas Partners has analysed each of the eight shoring wall elevations for 45o joints in the shale as well as continuous 70o joints in both the sandstone and shale. Surcharge pressures on top of these potential wedges resulting from filling/soil overburden and adjacent structures/roads were also considered. The horizontal lateral forces (per m run) of each of the shoring wall elevations are summarised in Table 4. Temporary ground anchors will be needed to support these loads.
…
Temporary ground anchors will be required for the lateral restraint of the perimeter piled walls. Such ground anchors should be declined below the horizontal to allow anchorage into the stronger bedrock materials at depth. The design of temporary ground anchors for the support of piled wall systems may be carried out using the allowable average bond stresses at the grout-rock interface given in Table 5.
…
In normal circumstances the building will restrain the basement excavation over the long term and therefore ground anchors are expected to be temporary only. It may also be necessary to install ‘durable temporary anchors’ in some areas of the site where the anchors may be required to support the excavation for a period of greater than 12 months. In such case, the anchors should be designed as ‘permanent’ anchors and incorporate sheathing, greasing and grouting procedures that will extend the life of the anchors.
Evidence was given by Mr Ryan Campbell, a structural engineer employed by Bonacci, and Mr John Braybrooke, a geotechnical engineer employed by Douglas Partners, concerning the proposed system of rock anchors.
Evidence was also given by Mr Ralph Erni, a geotechnical engineer employed by Martens & Associates and retained by the defendants. Amongst other things, Mr Erni gave evidence about possible alternatives to the proposed use of rock anchors beneath the defendants’ land. One alternative option identified by Mr Erni was a staged construction sequence that would utilise temporary bracing as the excavation proceeded near the boundaries with the defendants’ land. Another alternative identified was a braced construction approach which would involve a number of tubular steel braces across the development site. A third alternative identified by Mr Erni involved setting the construction 3m back from the boundaries with the defendants’ land, below the 7m depth. Each of those options envisaged the use of rock anchors on all boundaries of the development site other than the two boundaries with the defendants’ land.
Messrs Braybrooke, Campbell and Erni participated in conclaves of experts. The experts produced two joint reports, dated 9 November 2017 and 28 November 2017. (Affidavits and reports by Mr Campbell and Mr Erni were also read at the hearing.)
The following should be noted from the 9 November 2017 joint report:
(1)the proposed anchoring system is based on a model that assumes rock fractures within the rock (a discontinuum) affecting ground stability, requiring support of rock wedges;
(2)Mr Braybrooke noted that 30-45o joints were identified in the boreholes undertaken by Douglas Partners as well as in those undertaken by CES, and that joints with steeper dips were also intersected. Mr Braybrooke indicated that such joints are typically encountered in shale in the Sydney area and are the predominant cause of rock excavation failure. Mr Braybrooke stated that his discontinuum model is based on his extensive experience with jointed shale rock, and takes a low risk approach to supporting high rock faces below adjacent sites and roads;
(3)Mr Braybrooke noted that his model loading is based on a 45o joint extending upwards from the excavation site along the length of the excavation face (worst case scenario);
(4)Mr Erni referred to one of the borehole logs undertaken by Douglas Partners and stated that the open and partially open fractures dipping towards the south or the west (worst case scenario) are located in the upper 12m of the soil/rock profile. He noted that one of the borehole logs undertaken by CES showed a 40o joint at a depth of 22.6m (although the orientation of the joint was not given);
(5)Mr Erni referred to evidence in relation to other possible fault zones, and stated that 30-45o joints below a 12m depth would be expected to dip away from the excavation face. He further stated that there was no evidence (from certain borehole logs) that a 45o joint ascends away from the base of the excavation; and
(6)the experts noted that the difference in approach between a continuum model without joints versus a discontinuum model with joints (including a 45o joint along the excavation base) was the main difference in approach in relation to the degree of ground support required.
It is apparent from the 28 November 2017 joint report that Mr Braybrooke and Mr Erni continued to disagree on retaining wall support requirements. This was as a result of the different retention design models adopted by them and the assumptions made for those models, including as to inherent rock structure. The report contains further exposition of the reasons of each expert for the positions held. There was, however, agreement that the presence of steeply dipping joints is more likely to lead to wedge failure events than a 45o joint.
The joint reports of 9 November 2017 and 28 November 2017 also dealt with aspects of the three alternative options put forward by Mr Erni (including as to the number of braces required for the bracing option), and the extent to which the presence of rock anchors would make any excavation on the defendants’ land more difficult. These issues will be returned to later in these reasons.
The parties also adduced evidence from expert quantity surveyors, namely Mr David Collins of Altus Group, who was retained by the plaintiffs, and Mr Stephen Bolt of WT Partnership, who was retained by the defendants. They, too, participated in conclaves and produced joint reports dated 8 November 2017, 4 December 2017 and 8 December 2017. (An affidavit and a report by Mr Bolt was also read at the hearing.)
The quantity surveyors estimated the cost of the proposed rock anchor system and the costs of the staged construction and braced construction alternatives. There was agreement that:
(1)the cost of the proposed rock anchor system (including a contingency allowance) was about $2,732,000;
(2)the cost of the staged construction alternative (including a contingency allowance) was about $8,783,000; and
(3)the cost of the braced construction alternative (including a contingency allowance for 5 additional props) was about $4,210,000.
There was also agreement that the braced construction alternative would cost about $28,836,000 if it required 45 props (as maintained by Mr Braybrooke and Mr Campbell).
It is clear that even the least costly alternative (namely, the braced construction method advanced by Mr Erni) is approximately $1,478,000 more expensive than the rock anchor system proposed by the plaintiffs. I note that in the joint report of 28 November 2017 Mr Erni seemed to accept that for costing purposes an allowance could be made for an additional row of 5 props.
The quantity surveyors also provided estimates, for various assumed developments of the defendants’ land, of the additional excavation costs likely to be incurred due to the presence of rock anchors beneath its surface. In this regard, the quantity surveyors agreed that:
(1)for the development the subject of the development consent issued in March 2017, involving excavation of an 8.5m deep three level basement not extending to the boundaries of the land, the cost would be about $130,000;
(2)for a revised development now favoured by the defendants and which is the subject of a recently lodged development application, involving excavation of a 16.5m deep six level basement not extending to the boundaries of the land, the cost would be about $304,000 (or about $345,000 if the excavation was to a depth of 18m); and
(3)for an assumed development not yet the subject of any development consent or development application, involving excavation to the full width of the site, the cost would be about $1,691,000 for a 30m deep excavation, about $952,000 for a 16.5m deep excavation, and about $353,000 for an 8.5m deep excavation.
Mr Collins also gave an estimate of the net saving the defendants would make if the development the subject of the existing consent was revised to involve excavation of a three level basement to the full extent of the site. Mr Collins estimated this benefit at about $189,000. Mr Bolt did not make an estimate of that nature. He was of the view that there was insufficient detail as to the scope of works involved to enable a reliable estimate to be made.
Evidence was also adduced from valuers, Mr Keen (who was retained by the plaintiffs) and Mr Carrapetta (who was retained by the defendants), on the issue of compensation to the defendants for the imposition of the easement sought by the plaintiffs. The valuers participated in a conclave and produced joint reports dated 9 November 2017 and 8 December 2017. (Affidavits and reports from Mr Keen and Mr Carrapetta were also read at the hearing.)
There was agreement between the valuers that an amount of $10,000 should be allowed for blot on title, and $52,000 for a “rock anchor installation fee”. Mr Keen accepted that $130,000 would be appropriate to allow for additional excavation costs, based on the approved development for the defendants’ land. Mr Carrapetta considered that $304,000 should be allowed on the basis of the proposed six basement level development of the defendants’ land.
Mr Carrapetta also considered that an allowance should be made for holding costs due to delays likely to be caused to the defendants’ development. He ultimately assessed holding costs at $320,000, based on an assumed delay of 17 months. Mr Keen did not think that any allowance should be made for holding costs because it would be possible for the defendants’ development to proceed without delay if the rock anchors were progressively de-stressed as excavation on the defendants’ land progressed.
The proposed development of the defendants’ land
Each of the defendants gave evidence. They are a married couple. The first defendant, Mr Lee, is a medical practitioner. The second defendant, Ms Lai, is responsible for the day to day management of the couple’s property interests.
Mr Lee deposed in his affidavit of 1 November 2017 that they would like to shortly commence the demolition and excavation for the project the subject of the development consent obtained in March 2017. This consent is for a seven storey mixed use development with basement parking for 14 vehicles over three basement levels. Mr Lee deposed that Ms Lai was presently involved in obtaining a construction certificate for the demolition and excavation for that approved project.
Mr Lee deposed that Ms Lai was also working on a new development application which would involve changing the approved building into a boarding house development, with up to six or seven levels of basement parking. An application of that character was in fact lodged with the Council on 11 December 2017.
Mr Lee further deposed that Ms Lai was also co-ordinating the preparation of an application for a much larger scale (up to 19 storeys) boarding house. That application would require an increase in the currently allowable floor-space ratio. Mr Lee deposed that if either of these new proposals is approved, the defendants will amend their construction plans to reflect those proposals. In cross-examination, Mr Lee agreed that if a development of the defendants’ land was to proceed it would be necessary to obtain construction finance. There was no evidence that any finance of that character had yet been obtained, or even applied for.
Ms Lai deposed in her affidavit of 2 November 2017 that she was working on two development schemes. The first of those is a proposal to convert the existing approved building into a boarding house, with six levels of basement parking. As already noted, a development application for such a development was lodged on 11 December 2017. The second scheme is what Ms Lai describes as a “super boarding house”. This proposal would require a change to existing planning controls. Ms Lai said she understood that the planning proposal for the super boarding house would have to go to the Department of Planning and the process would take much longer than a normal development application.
Ms Lai deposed that she intended to commence development of the property in accordance with the existing development consent, and that her architect, Mr Peter Chan, was preparing an application for a construction certificate for demolition and excavation. She deposed that such work will start, and once the boarding house is approved, the defendants will swap over to that scheme and build the (six level) basement whilst waiting to see if the super boarding house is approved.
However, Ms Lai deposed in a further affidavit (9 November 2017) that she and her husband want to pursue the boarding house rather than the development the subject of the existing consent “as the boarding house will provide much better income and we want to hold onto the building as a long term investment”. In cross-examination, Ms Lai seemed to say that the intention was to proceed with the existing seven level boarding house first.
There was no evidence that any construction certificate has been applied for in respect of the approved development. However, it appears from documents produced by the defendants in answer to a Notice to Produce, that in early November 2017 the defendants engaged a structural engineer to prepare a structural design for an “early work” construction certificate. There was no evidence as to what, if any, work of that character has since been undertaken.
The terms of the proposed easement
The easement sought by the plaintiffs is in the following terms (as set out in the Further Amended Summons):
1. Definitions
Unless the contrary intention appears in this easement, the following terms have the following meanings in this easement:
Authorised Users means every person authorised by the Developer for the purposes of this easement, and includes any successors, transferees, contractors, licensees, representatives, employees and agents of the Developer.
Burdened Land means the land burdened by this easement.
Developer means the registered proprietor of the Development Site (as applicable).
Development Site means the land comprised in the certificate of title folio identifiers Lot 2 in DP15734 and the common property in SP37320.
Plan means the plan for easement attached and marked "B".
Rock Anchors means rock anchors, rock pinning, rook nails and other structures for the purpose of supporting or protecting works on the Development Site and supporting improvements erected on the Burdened Land.
Temporary means for a period of twenty four (24) months.
2. Terms of the Easement for Rock Anchors
(a) The Developer and all of its Authorised Users have full and free right (including with tools, implements and machinery) that is necessary for the purpose to enter that part of the Burdened Land beneath the surface of the land, underground from the Development Site for the purpose of constructing, placing, leaving, inspecting, repairing, maintaining and de-stressing Temporary Rock Anchors or any parts thereof within that part of the Burdened Land and set out in the Plan provided always that the Developer will use all reasonable endeavours to cause as little disturbance to the Burdened Land as possible and if it causes damage to the Burdened Land in exercising its rights under this easement it will make good that damage at its cost.
(b) Prior to the release of this easement the Developer must ensure that Temporary Rock Anchors or any parts thereof within the Burdened Land placed pursuant to this easement will be de-stressed.
(c) After de-stressing such redundant Rock Anchors referred to in paragraph 2(b) above or any parts thereof, will remain in situ and form part of the Burdened Land, until such time as they may be removed by any registered proprietor of the Burdened Land.
(d) The proprietor of the Burdened Land must forthwith on written request by the Developer or any of its Authorised Users give consent in writing to the making of any application in the terms of this easement, under the Environmental Planning and Assessment Act 1979 (NSW) for the construction and use of the Rock Anchors within the Burdened Land.
At the conclusion of the hearing, Senior Counsel for the plaintiffs stated that the plaintiffs would be content for the terms of the easement to be amended by reducing the duration of the easement to 17 months from the date that appropriate consents are obtained for the installation of rock anchors in the defendants’ land. It was also stated that the plaintiffs agreed that if an order imposing the easement was made, liberty should be reserved for a further order for an easement, should an unexpected event occur or it turns out that the easement is required for a longer period, and if and when such an order is made further compensation can be given. It was also agreed that any order should be stayed until the plaintiffs obtained appropriate consents for the installation of rock anchors in the defendants’ land.
The Court was informed after the hearing that the parties had agreed that if the easement was imposed a condition should be included to the effect that the plaintiffs would indemnify the defendants against damage from misuse of the easement or accident.
It is clear from the terms of the proposed easement that whilst the easement itself is temporary, the de-stressed rock anchors will remain under the surface of the defendants’ land indefinitely. The evidence established that excavation of the defendants’ land would be possible once the rock anchors had been de-stressed. The presence of the rock anchors would, however, make the excavation more expensive and difficult.
There was apparent agreement between the engineering experts that it would be possible to excavate the defendants’ land even whilst the rock anchors remained in tension (that is, before they were de-stressed) as the anchors could be progressively de-stressed as the site is excavated and the load on the shoring is relieved. That seems to be correct if the defendants’ land is assumed to be excavated right up to the boundary. However, there was some debate concerning the extent to which such excavation would be practicable if the excavation was not to the boundary (as is contemplated by the development the subject of the consent issued in March 2017 in respect of the defendants’ land).
Mr Erni gave evidence that it was not practicable because shoring piles need to be installed before excavation could commence and there was thus a likelihood that those piles would strike the rock anchors. It was thus necessary, in Mr Erni’s view, that the rock anchors be de-stressed before the installation of the piles. Mr Erni noted that such a process would require the plaintiffs’ agreement.
Mr Braybrooke did not agree that it was not practicable to install shoring piles whilst the rock anchors remained in tension. He said that techniques can be employed so that the piles miss the rock anchors. Mr Braybrooke accepted, however, that it would be difficult to achieve this. He also stated that there would need to be a lot of co-operation between the respective owners so they could identify where the rock anchors are actually located. Mr Campbell stated (and Mr Braybrooke agreed) that if such excavation was 18m in depth there would also need to be some additional bracing installed.
Mr Braybrooke also agreed that there would need to be co-operation in relation to any process of progressive de-stressing of rock anchors to facilitate excavation on the defendants’ land.
Given that the terms of the proposed easement would not oblige the plaintiffs to provide any co-operation in order to facilitate excavation of the defendants’ land (such as the provision of information concerning the location of rock anchors, or agreeing to the progressive de-stressing of rock anchors), I consider that the easement would, if imposed, effectively preclude any significant excavation of the defendants’ land during the period the rock anchors remain in tension.
Section 88K of the Conveyancing Act
Section 88K(1)-(2) provides:
(1) The Court may make an order imposing an easement over land if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement.
(2) Such an order may be made only if the Court is satisfied that:
(a) use of the land having the benefit of the easement will not be inconsistent with the public interest, and
(b) the owner of the land to be burdened by the easement and each other person having an estate or interest in that land that is evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act 1900 can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement, and
(c) all reasonable attempts have been made by the applicant for the order to obtain the easement or an easement having the same effect but have been unsuccessful.
The first question to consider is whether the easement the plaintiffs wish the Court to impose is in truth an easement for the purposes of s 88K. The defendants contend that the easement sought is not truly an easement because it would confer upon the plaintiffs a right of exclusive or unrestricted use of the defendants’ land for the period the rock anchors are stressed. It was submitted that the proposed easement thereby amounts to an effective grant of exclusive possession over the defendants’ land, and is thus not an easement for the purposes of s 88K of the Conveyancing Act. The plaintiffs on the other hand contend that the proposed easement does not deny the defendants the use of their land at all. The plaintiffs refer to the subterranean nature of the proposed easement and the fact that the rock anchors are capable of being de-stressed as development of the defendants’ land occurs.
An easement for the purposes of s 88K of the Conveyancing Act may be taken to be an easement as conventionally understood in land law, even though easements under the section derive, not from a grant, but from an order of the Court. One of the requirements of the grant of a valid easement is that the rights conferred be capable of forming the subject matter of a grant. This is the so-called fourth condition for a valid easement identified by the English Court of Appeal in In re Ellenborough Park [1956] 1 Ch 131 at 163. In that case, Evershed MR went on to explain that one aspect of this fourth condition was that the rights granted must not amount to rights of joint occupation or be such as to substantially deprive the servient tenement owners of proprietorship or legal possession (see In re Ellenborough Park (supra) at 164).
This aspect of the fourth condition was considered by the Court of Appeal in Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605; [2002] NSWCA 389, especially at [35]-[36], and then at [45] where Santow JA (with whom Mason P and Beazley JA agreed) said:
In relation to the fourth condition, it is necessary to assess the degree to which the rights conferred interfere with the servient owners' exclusive possession of the site. In Australia, Harada v Registrar of Titles [1981] VR 743 expressly followed Copeland v Greenhalf [1952] Ch 488 (and not the earlier inconsistent Wright v Macadam [1949] 2 KB 744 (CA)), in rejecting the easement claimed by the SEC in favour of an overhead power line transmitting electricity over the plaintiff's land. No pylon was located on the plaintiff's land and the Commission owned no land in the vicinity. Though these are distinguishing features, what is relevant here is the statement of principle by King J (at 753), applicable here, which emphasised that the rights sought to be acquired went much further than what were needed for SEC to enjoy its rights of power transmission:
"the restriction on the owner not to build on the easement area and not to erect any structure thereon goes much further than a prohibition of interference with the enjoyment by the SEC of its rights. I think that if the rights the subject of the [alleged easement] were acquired the plaintiff would be left with very few rights over her property and could do little more with it than move over it and park cars on it. I think that the rights sought to be acquired by the SEC do not fall within the category of a common law easement. They would really amount to rights to joint user by the SEC of the plaintiff's land."
Applying those principles, Santow JA went on to uphold the decision of the primary judge (Bryson J) that an “easement for vineyard” was invalid. Santow JA stated at [46] that the purported easement:
applies to a very significant portion of the lot. It leaves the owner with merely his rights of residual recreational activities that are totally subordinated to the over-arching rights of Clos Farming. When [the easement] is placed in its context of those further restrictions that apply to the lot in total, the servient owner’s rights are so attenuated as no longer to meet the description of exclusive possession.
Clos Farming Estates Pty Ltd v Easton (supra) was itself considered by the Court of Appeal in Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321; [2015] NSWCA 74. At [39]-[45] and [61]-[62] Bathurst CJ and Beazley P considered Clos Farming Estates Pty Ltd v Easton (supra) as part of a review of the relevant authorities (including the House of Lords decision in Moncrieff v Jamieson (2007) 1 WLR 2620; [2007] UKHL 42).
At [63]-[64] Bathurst CJ and Beazley P stated:
Santow JA’s conclusion, at [46], is clearly an abbreviated or summary form of what his Honour had stated at [36]. Having said that, it is apparent from his Honour’s reference, at [45], to Copeland v Greenhalf and its application in Australia in Harada v Registrar of Titles [1981] VR 743 that the extent of a restriction on use of the servient tenement may mean that no easement is created. Harada v Registrar of Titles concerned a claim for easement by an electricity company in favour of an overhead power line transmitting electricity over the plaintiff’s land. King J, at 753, had emphasised that the restriction on the owner of the servient tenement not to build on the easement went further than a prohibition of interference with the enjoyment of the claimed rights of the electricity company. King J stated that, if the rights the subject of an alleged easement meant the owner of the servient tenement would be left with very few rights over that property, the rights claimed would not constitute a common law easement but rather were really rights of joint user.
Notwithstanding the reference to Copeland v Greenhalf in Santow JA’s judgment, we do not consider that Clos Farming Estates stands only for the proposition that the owner of the servient tenement must have reasonable use of the servient tenement in its entirety. That is a relevant consideration and, in a given case may be decisive, but it is also relevant to consider the extent of the interference with the rights of ownership on that part of the servient tenement actually affected by the easement. That is apparent from the bolded portion of the summary from Bryson J’s judgment to which reference is made above. It is also consistent, in our view, with the approach taken in Harada v Registrar of Titles. It may be that if the interference with possession amounts to an effective interference with ownership rights, that may be sufficient to deny the validity of an easement. However, that is not this case. In our opinion, Windeyer AJ was correct in his conclusion, at [39] and [40], that Jea Holdings “enjoys a very substantial use of the land”. It not only has the right to use the servient tenement for parking for itself, its servants, agents and invitees, it could be added for matters such as advertising on fencing and the like, and it has the valuable right to use both the airspace above and the subterranean land below. It also follows that, as his Honour also indicated and for the reasons he gave, the Covenant would be a valid easement if the correct approach was that taken in Moncrieff.
(The reference to the bolded portion of the summary of Bryson J’s judgment is to “the rights sought to be conferred on the farm managers were inconsistent with the proprietorship and possession by the servient owners”.)
These statements indicate that in considering this ground of suggested invalidity of the proposed easement it is necessary to consider the extent of interference with the servient owners’ rights of ownership, not only on the servient tenement as a whole, but also on that part of the servient tenement actually affected by the proposed easement. As part of that analysis consideration must be given to whether the servient owner would retain reasonable use of the servient tenement in its entirety, and an assessment must be made of the degree to which the rights conferred by the proposed easement would interfere with the servient owner’s exclusive possession of the land. Questions of degree and evaluation are involved (see Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (supra) at [150] per Basten JA). As noted by McColl JA in White v Betalli (2007) 71 NSWLR 381; [2007] NSWCA 243 at [189] the question whether a grant of rights over another’s land fails the fourth condition required for an easement is one of fact.
I was referred to Pennant Hills Golf Club Ltd v Roads and Traffic Authority of New South Wales (1999) 11 BPR 17,011; [1999] NSWCA 110 in relation to the question whether the right to place rock anchors beneath the surface of the land of another could constitute a valid easement. That case concerned a compulsory acquisition of land the terms of which gave the respondent the right to place rock anchors beneath a portion of a golf course owned by the appellant. The terms also contained a provision to the effect that the soil within the affected area was to remain undisturbed. A question arose as to whether the land compulsorily acquired was an easement within the meaning of s 62(1) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW). The Court of Appeal upheld the decision of the primary judge (Lloyd J) in Pennant Hills Golf Club Ltd v Roads and Traffic Authority of New South Wales (1997) 96 LGERA 164.
It had been argued before Lloyd J that the rights granted to the acquiring authority, in particular the right to have the soil remain undisturbed, amounted to a grant of exclusive rights that was inconsistent with the notion of an easement. Lloyd J rejected that argument. After holding that the right to have the soil remain undisturbed was merely a right incidental to the right to install the rock anchors, Lloyd J continued (at 171):
The right not to have the soil disturbed by the applicant must be construed according to its incidental nature and the purpose for which it has been created. As Bryson J held in Prospect County Council, the rights of the dominant owner are limited in that they are “not to interfere with the use and enjoyment of the servient land to a greater extent than is reasonably necessary” (at 608). This view is consistent with the wording of the Memorandum itself.
The respondent’s right cannot be used to prevent the applicant from entering the surface of the land or using the land in some way which does not undermine the integrity of the rock anchors. I do not accept the applicant’s submission that “any use or utilisation of the land (on the part of the applicant) would necessarily involve a disturbance of the soil” within the easement and thus be prohibited by the terms of the Memorandum. The respondent has not acquired “the whole beneficial user” of the land (Copeland v Greenhalf [1952] Ch 488 at 498). Accordingly, the facts in this case can be distinguished from those in Bursill Enterprises or Grigsby v Melville.
In the Court of Appeal, Stein JA (with whom Handley and Giles JJA agreed) stated (at [20] and [23]):
It is not obvious to me that the grant wholly deprives the appellant of its property rights in the land. As mentioned by leading counsel for the respondent, the appellant is entitled to the right to support of the surface and that right is unaffected by the grant. It is in fact often an ordinary consequence of many utility easements that there be a constraint upon disturbance of the soil within the easement, either expressly or by implication. A ready example is a drainage easement where the owner of the servient tenement is denied the capacity to interfere with the soil within the easement which may support the walls and bed of the channel or disturb the soil around a pipe in the easement. This is not very different from the instant case. Although the subject grant undoubtedly affects the right of the appellant to use the land in the easement, it does not altogether extinguish it. It must be kept steadily in mind that the respondent enjoys no positive right to use the land within the easement other than for the purpose of constructing or maintaining works. The right acquired by the respondent by reason of the grant does not deprive the appellant of its legal ownership or its de facto possession of the land. Neither is purported to be transferred, nor does the respondent assert or purport to exercise ownership or possession. The respondent’s right is limited to installing the rock anchors and maintaining them and no more.
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The instant grant does not purport to vest unlimited or unconstrained rights in the RTA, nor does it give any right of possession to it beyond that which is necessary to house the rock anchors. Again, in my opinion, Lloyd J was correct in his conclusion.
The case is authority for the proposition that s 62(1) of the Land Acquisition (Just Terms Compensation) Act applies to an easement for rock anchors that is compulsorily acquired by an authority (see Bligh Consulting Pty Ltd v Ausgrid [2017] NSWCA 95 at [122] per Sackville AJA, with whom McColl and Basten JJA agreed). However, it should be noted that Stein JA went on to conclude that even if the rights in question were not an easement within the meaning of s 62(1) of the Land Acquisition (Just Terms Compensation) Act, they were a “right to use land” within the meaning of the sub-section.
In the present case, the terms of the proposed easement would permit the installation of rock anchors throughout that part of the defendants’ land as set out in an attached plan. That plan would allow rock anchors underneath the entire (approximately 12m) width of the block at all depths up to a plane that runs across the site between RL12 and RL5. The rock anchors so installed may remain in tension for the now proposed 17 month duration of the easement, but must be de-stressed within that time. As I have found, the terms of the easement would effectively preclude any significant excavation of the defendants’ land during the period the rock anchors remain in tension.
The defendants submitted that whilst the rock anchors remain in tension all they could effectively do with their land would be to “move over it, and park cars on it”. The defendants submitted that the easement would amount to “exclusive and unrestricted use” of the land during that period, and that the easement effectively amounts to exclusive possession of the land.
As already noted, it is necessary to consider the extent of interference with the servient owners’ rights in respect of that part of the servient tenement actually affected by the easement, as well as in respect of the servient tenement as a whole.
Clearly, the easement would confer extensive rights in respect of the subterranean parts of the land, which rights would largely eliminate, for a period, the capacity of the servient owners to use and enjoy possession of those parts, including by carrying out any significant excavation. Given the need for excavation to occur in order to undertake certain developments of the land, these rights would impose a significant practical restriction upon development of the land in that period. However, the existing use of the land (upon which a dwelling and a garage are situated) would not be affected by the imposition of the easement.
In my opinion, whilst the effect upon the rights of the servient owners is extensive, the servient owners retain reasonable use of their land as a whole. Further, I do not think that the rights that would be conferred by the proposed easement amount to joint occupation, or would substantially deprive the servient owners of proprietorship or legal possession. The rights conferred are only to carry out the works for the purposes of the installation, maintenance and the eventual de-stressing of rock anchors. The servient owners are not otherwise deprived of any rights of ownership, including rights of possession.
It is not a case like Clos Farming Estates v Easton (supra) where “the servient owner’s rights were so attenuated as no longer to meet the description of exclusive possession”. In my view, neither is it a case like Harada v Registrar of Titles [1981] VR 743 where wide (and permanent) restrictions were imposed upon the servient owner that went further than mere prohibitions against interference with the rights of the dominant owner, and it was held that the servient owner was left with “very few rights” and indeed could do little more with it than “move over it and park cars on it”. Here, the effect upon the rights of the servient owners is not nearly as extensive, and it is not permanent.
It seems to me that the proposed easement satisfies the fourth condition identified in Re Ellenborough Park (supra). The proposed easement, if imposed, would constitute a valid easement. I therefore do not accept the defendants’ contention that it is not an easement for the purposes of s 88K of the Conveyancing Act.
The next question to consider is whether the easement is reasonably necessary for the effective use or development of the plaintiffs’ land for the purposes of s 88K(1). The relevant principles were stated by the Court of Appeal in Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd (2012) 16 BPR 31,257; [2012] NSWCA 445 at [154]-[159]. Relevantly, the Court of Appeal there stated:
154 The requirement that the easement be reasonably necessary for the effective use and development of the land means something more than mere desirability or preferability over the alternative means available: Rainbowforce supra at [76]. However, reasonable necessity does not mean absolute necessity. The correct approach to the question, in our opinion, was stated by Hodgson J (as his Honour then was) in 117 York Street supra as follows:
It is clear that “reasonably necessary” in s 88K(1) does not mean “absolutely necessary”, and thus that the requirement may possibly be satisfied even when the plaintiff’s land could be effectively used or developed without the easement.
In my opinion: (1) the proposed easement must be reasonably necessary either for all reasonable uses or developments of the land, or else for some one or more proposed uses or developments which are (at least) reasonable as compared with the possible alternative uses and developments; and (2) in order that an easement be reasonably necessary for a use or development, that use or development with the easement must be (at least) substantially preferable to the use or development without the easement.
The first of those requirements may seem contrary to a statement by Hamilton J in Tregoyd Gardens (at 14) that the Court “is not to judge upon the reasonableness of the particular development”. However, that statement is qualified by the words “at least in this case”. If there are some possible reasonable uses or developments of the land for which a proposed easement is not reasonably necessary, then it seems to me that the easement cannot be “reasonably necessary for the effective use or development” of the land, at least unless there is some proposed use or development, for which the proposed easement is reasonably necessary, which is itself a reasonable use or development. It may be that the particular use or development would need also to be preferable to the alternatives; but whether or not that is so, it would in my opinion certainly need to be at least reasonable. (At 508–509; citations omitted.)
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156 As we have indicated the authorities have established that the concept of reasonable necessity requires consideration of the effect of the grant of the easement on the servient tenement: O’Shea supra. Further, it is correct in our opinion, that the greater the burden on the servient tenement, the stronger the case needed to justify a finding of reasonable necessity: Rainbowforce supra at [77]; Khattar v Wiese supra at [27]; Woodland v Manly Municipal Council, supra at [12] Lonergan v Lewis supra at [22].
157 As we indicated earlier (para [131]) in Bloom v Lepre supra, Young J stated that where the effect of the easement was to sterilise the servient tenement insofar as the person’s own development or use is concerned, the court is not necessarily quite so favourable to the application. We would put the proposition more strongly. If the effect of the imposition of an easement was to effectively preclude a reasonably available development or use of the servient tenement appropriate to that land, then it would require a strong case of reasonable necessity before the easement would be imposed.
158 The determination of whether an easement is reasonably necessary for the use or development of the land also involves consideration of the alternative methods by which such use or development could be achieved. That is implicit in the concept of reasonable necessity. In the present case it involves the consideration of whether there is alternative access to give effect to the development.
159 None of the factors to which we have referred above can be considered in isolation from the others. Ultimately the question of whether an easement is reasonably necessary for the use or development of the land will be determined by an evaluation of those factors in conjunction with each other.
The plaintiffs submitted, by reference to those principles, that the easement is reasonably necessary for the development the subject of the consent issued by the Council on 1 December 2016, which development is a reasonable one. The plaintiffs further submitted that undertaking the development with the easement is at least substantially preferable to undertaking the development without the easement.
The plaintiffs place principal emphasis on the evidence of Mr Campbell to establish reasonable necessity. Mr Campbell, for example, refers to the Douglas Partners report of July 2017 (in particular the section on excavation support) and concludes in section 5.0 of his report of 14 September 2017:
The geotechnical report by Douglas Partners Pty Ltd for 6-14 Walker St (refer Appendix 4) identifies that for the very large depth of excavation and the specific rock and soil conditions present that a shoring wall must be constructed. The report further specifies that temporary ground anchors are “required to prevent excessive lateral deformation and movement of rock wedges”.
The rock anchors are required to provide the temporary support to the shoring wall system as the excavation continues and are installed progressively once excavation reaches each level of required anchors. The anchors act to resist the loads applied by the adjoining soil which otherwise would be free to move into the excavated area. The anchors are long enough so that they extend past the potential rock wedge line as nominated by Douglas Partners and they are then bonded past this point in order to achieve their strength.
The use of temporary rock anchors to provide support to the shoring system is a common method of constructing deep excavations.
Mr Campbell further states in section 8.0 of his report:
Given the depth of the excavation, along with the very large scale of the site, in my opinion the simplest, cheapest, quickest and safest option is to provide temporary support to the shoring wall by using temporary ground anchors.
There are alternatives that do not require the use of temporary ground anchors such as the use of an internal propping system which uses the same shoring wall system but removes the need for anchoring.
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While feasible is not appropriate for a basement excavation of this depth and width due to:
• Cost issues with very large steel members required to support this shoring wall over its 8 level depth. I have undertaken temporary propping solutions for projects with up to a maximum 4 levels of basement previously, which I would consider the maximum feasible depth to use a propping system.
• Increased risk of shoring wall movements that may occur if the bracing was damaged during excavation works. This system is also more flexible then an anchored system and hence would result in larger shoring wall movements.
• Time issues with delays to site construction works as a result of working around the steel bracing members both during the excavation works and also during the construction of the basement slabs. On previous projects with a max 4 level excavation, working around these steel beams and props has slowed the basement slab construction between 10 - 20%. In my opinion, for this very large 8 storey basement, the time delays would be significantly longer that this, if this system was to be adopted.
Another alternative that does not require anchors is the top down excavation system.
…
This system is generally feasible although typically used when excavating in weaker materials such as sands as the material falls away as excavation continues beneath the slab. For this project which is predominately in rock, this would mean that the excavation would need to continue to one level below the slab level and the slab would then need to be formed up, poured and later the formwork removed. In which case the use of a steel framed floor system would be more appropriate although this will add floor thickness so would require additional height between floors and hence a deeper excavation. Additionally the time taken to undertake the excavation would be significantly longer and excavating in confined spaces with a top down construction methodology will add cost.
The slabs themselves in the typical basement levels would be able to be used as part of the permanent slab system however as there will need to be large voids left to enable both excavation materials to be lifted out plus future cores to be constructed then the slab thickness would be greater than otherwise required.
The upper 3 levels contain vehicle ramps to be constructed adjacent to 16 Walker St for the loading dock entry ramps and hence the slabs in these regions would need to be demolished in a carefully considered manner which would mean that that these slabs are temporary and hence replaced by a permanent slab.
As a result, for this project while the use of this system is feasible, in my opinion it would add significant cost and time constraints to this project when compared against an anchored shoring wall system.
The defendants, relying upon the evidence of Mr Erni, challenged the underlying notion, reflected in the Douglas Partners report and Mr Braybrooke’s evidence, that the site conditions were such that the likely or potential lateral forces called for a system of piles supported by rock anchors. The defendants placed most emphasis, however, on the significant effect the easement would have on the defendants’ land, and in particular upon the development of that land. The defendants also pointed to the existence of alternative means of retaining the defendants’ land during excavation, notably the bracing system suggested by Mr Erni. It was submitted that in the context of the very large development in this case, the additional cost of this method was not of great significance.
It may be accepted that the approach taken by the plaintiffs’ engineers is conservative. Mr Braybrooke himself described his assumed 45o joint as a conservative assumption. Mr Braybrooke went on to explain that his approach was not only based on the borehole evidence but also his extensive experience of these types of excavations throughout the Sydney area. I note that Mr Erni accepted that the borehole evidence may have missed some jointing in the rock, and he further accepted that the assumptions made by Mr Braybrooke about jointing were typical for the Sydney area. In my opinion, having regard to the nature of the task, being the retention of a deep excavation of about 28m in depth, and the potentially serious consequences if the shoring ultimately proved to be inadequate, Mr Braybrooke’s approach seems entirely reasonable.
I note further that there was evidence that the piling system using rock anchors created a safer construction environment as compared with a bracing system such as that put forward by Mr Erni. Mr Erni accepted that in such a system there was a risk that braces could be damaged by equipment operating on the site, and that such risk was not present with a system of rock anchors. Mr Erni nonetheless did not accept that a rock anchor system was necessarily “much safer”.
It should also be noted that Mr Erni conceded that he had never seen a bracing system of the size contemplated in this instance.
It seems to me, based on the evidence referred to above, that the proposed piling system using rock anchors is not only a reasonable means of retaining the faces of the deep excavation, it is a safer option than the proposed alternative bracing system. Of course, the evidence is that it is at least $1.4 million cheaper than the bracing system.
It is necessary to consider the effect that the grant of the easement would have upon the defendants’ land, being the proposed servient tenement.
As noted earlier, the grant of the easement would effectively preclude any significant excavation of the defendants’ land during the period the rock anchors remain in tension. Unless the plaintiff was prepared to offer appropriate co-operation, any development of the defendants’ land involving significant excavation would not be practicable in that period. That would include the development the subject of the consent issued in March 2017, which entails three levels of basement. It would also include the development the subject of the recently lodged development application, which entails six levels of basement.
In my view, that is a significant burden upon the defendants’ land, and in particular its capacity for development. It is true that the proposed easement would entail only a 17 month period within which rock anchors may be in tension, but there is a risk, recognised by both parties, that unexpected events could occur which mean that the easement would be required for a longer period (in which case the defendants would be entitled to seek further compensation). Whilst the present case is not one of an easement that would permanently sterilise the servient tenement against development, or certain types of development, the easement proposed here imposes a constraint upon certain types of development for a period of about 17 months.
In the context of considering this type of burden, it is relevant to consider the practical likelihood of delay to development. I accept that the defendants have an intention to develop the land, but there is little evidence of the taking of any firm steps towards proceeding with any particular development. There was some lack of clarity in the evidence given by Ms Lai on the subject. It seems, however, that the current preference is to proceed with the boarding house development the subject of the recently lodged development application. Mr Threlfo, a town planning consultant, gave some evidence to the effect that a boarding house proposal, involving a building of similar bulk and scale to that the subject of the March 2017 consent, but with a six level basement instead, had a high likelihood of being approved “because it is not difficult to design a building that can comply with the planning controls and fit in with the character of the area”. Mr Threlfo’s evidence was not based on the content of the actual development application lodged on 11 December 2017. Indeed, that application, including its supporting documents, was not sought to be tendered by the defendants even though that had been foreshadowed at the hearing. Mr Threlfo did not express any opinion as to how long it might take for the development application to be determined.
The plaintiffs submitted that the Court should not be satisfied that the defendants will proceed with that development. They pointed to the lack of any feasibility study for the development, whether of a financial kind or otherwise (including as to the feasibility of the car-stacker that is depicted on the development application drawings). The plaintiffs submitted that the proposed development should be regarded as conceptual only. The plaintiffs also pointed to the evidence given by Mr Lee concerning the need for finance, coupled with the lack of evidence that any application for finance had yet been made. I note further that there was also no evidence that approaches had been made to any builders or other contractors about being retained in respect of the development.
There is much to be said for the contention that the proposed development should be regarded as merely conceptual. I accept, based on Mr Threlfo’s evidence, that a development of that type appears to be at least capable of approval, and may even be considered likely to be approved in due course. However, in the absence of firm evidence concerning the feasibility of the development, whether from a design and construction standpoint or from the point of view of financial viability, it is difficult to regard it as anything more than a reasonable possibility.
Even if it is assumed in the defendants’ favour that the proposed development is practically and economically feasible, and will likely be approved by the Council, the defendants would still need to obtain a construction certificate and retain a contractor before any excavation works could commence.
The evidence adduced by the defendants about the proposed development does not enable a rigorous assessment of how long that might take. It would have been possible for the defendants to adduce evidence of that character. In these circumstances, yet recognising that the defendants are in a position of land owners facing the prospect of the burden of an easement being imposed upon them by Court order, I would proceed on the basis that it is likely to be at least 9 months from now before the defendants may be in a position to commence excavation for the development. On that basis, and allowing about 2-3 months (as suggested by Mr Threlfo) for the necessary planning consents for the installation of the rock anchors, were the proposed development to proceed the imposition of the easement sought by the plaintiffs would likely delay it by no more than about 10 months. That assessment assumes, in the defendants’ favour, that the proposed development is practically and economically feasible.
In summary, the easement should be regarded as one involving a constraint for a period of about 17 months upon certain types of development of the defendants’ land, including the proposed development favoured by the defendants, but which in practical terms is not likely to result in a delay of any more than 10 months or so. In my view, this effect that the easement would have upon the servient tenement should nonetheless be regarded as substantial. It is no trifling matter that a land owner should be restricted in their ability to pursue the lawful development of their land.
Moreover, even though excavation of the defendants’ land can occur once the rock anchors are de-stressed, this can only occur with greater difficulty and hence expense than would be the case in the absence of rock anchors.
As stated in Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd (supra) at [157], if the effect of the imposition of an easement would be to effectively preclude a reasonably available and suitable development of the servient tenement, a strong case of reasonable necessity is required before the easement would be imposed. Here, of course, there is no absolute preclusion of any development; any preclusion is temporary.
I have considered the totality of the evidence, and in particular the evidence bearing upon the matters referred to above, and have concluded that the plaintiffs have established that the proposed easement is reasonably necessary for the effective development of their land, such that the requirement in s 88K(1) of the Conveyancing Act is satisfied. I consider that the proposed easement is reasonably necessary for the development of the land in accordance with development consent DA 2016/0005, issued on 1 December 2016, even if it is not absolutely necessary, and even if the use of rock anchors is not itself required by the development consent.
There is no reason to doubt that the development itself is a reasonable development of the plaintiffs’ land, appropriate for the locality. It was not suggested that the approved development overall, or any particular aspects of the approved development, were unreasonable or inappropriate.
There is also no doubt that measures must be taken to support adjacent properties (including the defendants’ land) due to the excavation involved in the development. I am satisfied on the evidence concerning the alternatives available to fulfil that purpose that carrying out the development using a system of piling supported by rock anchors, as proposed by the plaintiffs, is at least substantially preferable to carrying out the development using the options put forward by Mr Erni, including the bracing system.
The rock anchor proposal would cost considerably less than either the bracing option or the staged construction option. I do not accept that the cost differential of more than $1.4M million in relation to the bracing system is not “material” in light of the very much greater costs that would be incurred in the development as a whole. Neither do I accept that because the section speaks of “effective” use or development of land, not “efficient” use or development of land, the cost differential is irrelevant. It seems to me that it is clearly relevant as part of the assessment of the alternative methods by which the proposed development can be carried out (see Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd (supra) at [158]). To my mind, the notion of “effective use or development” is concerned with how land may be used. It is a broad concept that encompasses economic factors (as well as physical and legal or regulatory factors) that bear upon the manner in which land may be used or developed.
Quite apart from the very considerable cost savings involved with the rock anchor proposal, the proposal is clearly preferable to the bracing option in terms of its capacity to cater for loads that might in fact be encountered once excavation takes place. If additional loads not catered for in the bracing option were encountered, it would be necessary to add further props to the system, at considerable extra cost. The rock anchor proposal is also preferable to the bracing option by reason of the fact that the latter gives rise to risks in the carrying out of construction, including the risk of damage to the bracing itself and a consequential risk to the effectiveness of the bracing.
In short, the rock anchor proposal appears to be more reliable and safer than the bracing option. Those relative deficiencies may not be found in the staged construction option, but that option would cost about $6M more than the proposed rock anchor system. I did not understand the defendants to ultimately contend that the rock anchor proposal was not substantially preferable to the staged construction option.
In reaching my conclusion about reasonable necessity I have borne in mind the statement made by Brereton J in Khattar v Wiese (2005) 12 BPR 23,235; [2005] NSWSC 1014 at [27] in which his Honour noted that “the authorities repeatedly point to the confiscatory nature of s 88K as requiring firm proof of the reasonable necessity for the easement, and that the court bear in mind that property rights are valuable rights not to be lightly taken away”.
I turn now to consider whether the conditions set forth in s 88K(2) have been satisfied.
The defendants submitted that development of the plaintiffs’ land using rock anchors would be contrary to the public interest as it would delay the development of the defendants’ land without significantly improving the progress of the development on the plaintiffs’ land. It is true that the evidence, so far as it goes, suggests that the rock anchor proposal is likely to save only about one month in construction time for the development the subject of the plaintiffs’ land, and gives rise to significant albeit temporary restrictions upon the capacity to develop the defendants’ land, as discussed above. However, I do not see that use of the plaintiffs’ land having the benefit of the proposed easement can thus be regarded as inconsistent with the public interest within the meaning of s 88K(2)(a). The easement would facilitate the carrying out of an approved development in a safe and efficient manner, and may only be imposed if the Court is satisfied that the owners of the servient tenement can be adequately compensated for any loss or other disadvantage that will arise from its imposition (see s 88K(2)(b)).
On that score, the evidence establishes that the easement will give rise to particular losses or disadvantages, notably some diminution in the value of the defendants’ land, and the losses or disadvantages that arise from the presence of the rock anchors beneath the surface of the defendants’ land, initially in tension and later in a de-stressed state. The defendants claimed that those losses or disadvantages included financial losses such as additional excavation costs likely to be incurred, and the loss of the opportunity to commence development whilst the rock anchors remained in tension. There is no reason why the defendants cannot be adequately compensated for losses or disadvantages of that character. That is so even if there are uncertainties as to the length of the delay likely to be experienced by the defendants in undertaking a development of their land. In my view, that is a matter that principally bears upon the assessment of appropriate compensation, rather than the distinct question of whether adequate compensation can be given (see Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd (supra) at [236]). In relation to uncertainty concerning the duration of the easement, I note that the parties agreed that if for some reason the plaintiffs required a period of more than 17 months, and an additional period was ordered, the defendants would be entitled to seek further compensation (see 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 at 516). That would be compensation separate from any compensation ordered in respect of the easement the subject of this application.
As for s 88K(2)(c), I am satisfied that the plaintiffs have made all reasonable attempts to obtain the easement sought but have been unsuccessful. The evidence establishes that the developers of the plaintiffs’ land, and the defendants, have engaged in negotiations from time to time since about November 2016 concerning the obtaining of access to the defendants’ land, including for the purpose of installing “temporary rock anchors”. A draft Deed of Licence was submitted to the defendants on 18 November 2016. There does not appear to have been any response from the defendants until about March 2017. The defendants expressed an interest in selling their property, and some negotiations about a possible sale followed. Negotiations about the terms of a Deed of Licence continued from about April 2017 until after the commencement of these proceedings. As pointed out by the defendants, these negotiations were not concerned with an easement as such. However, any question about whether the plaintiffs have made all reasonable attempts largely fell away on the final day of the hearing when an open offer was made by the plaintiffs for the grant of the proposed easement upon payment to the defendants of compensation of $192,000 (the amount assessed by the valuer retained by the plaintiffs), and the payment of the defendants’ reasonable costs. In my opinion, the plaintiffs, having made that offer (which has not been accepted), have made all reasonable attempts to obtain the proposed easement but have not been successful.
Each of the matters set forth in s 88K(2) has in my view been satisfied.
As submitted by the defendants, it remains in the discretion of the Court to grant or withhold relief even if the requirements of s 88K(1) and (2) have been met. In this context the defendants again referred to the significant delay to and hampering of their own development, and submitted (at least in their opening submissions) that those losses and disadvantages outweighed the benefit of the easement to the plaintiffs. It was further submitted that whilst that loss and disadvantage can be compensated, there may be a need to re-visit the question if the development of the plaintiffs’ land is itself delayed. It was submitted that the need for the Court’s supervision of the easement and the adequacy of the compensation is a significant factor weighing against the grant of relief.
However, the weight of the evidence is against the proposition that the defendants will suffer losses and disadvantages of a magnitude greater than the benefits that the plaintiffs would obtain if the easement is imposed. The compensation ultimately claimed by the defendants was in the amount of $720,000, an amount less than half of the cost saving to the plaintiffs if the rock anchor proposal proceeds rather than the bracing option. Further, the Court will not have an ongoing supervisory role if the easement is imposed. If the plaintiffs later find that more time is required for the rock anchors to remain in tension the plaintiffs may (absent agreement with the defendants) need to make a further application to the Court. Any such application would then be dealt with on the basis of the evidence then presented, and it is accepted by the plaintiffs that it would be open to the defendants to seek further compensation. In the meantime, the respective rights of the parties will be defined by the terms of the easement, and the defendants will have obtained compensation for the imposition of the easement as specified in the order of the Court (see s 88K(3)).
The Court has concluded that the easement sought is reasonably necessary for the effective use or development of the plaintiffs’ land, and is satisfied of the matters referred to in s 88K(2), including that the defendants can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement. The amount of that compensation is dealt with in the paragraphs which follow. Taking all of the circumstances into account, including the matters agreed between the parties concerning the terms of the easement, I think that the Court should proceed to exercise its discretion in favour of the grant of relief.
The next matter to consider is the assessment of appropriate compensation to the defendants for the imposition of the proposed easement. By s 88K(4), where the Court makes an order imposing an easement, it must, unless special circumstances exist, provide for payment of compensation as the Court considers appropriate. The compensation contemplated by s 88K(4) is compensation “for any loss or other disadvantage that will arise from imposition of the easement” as referred to in s 88K(2)(b) (see Wengarin Pty Ltd v Byron Shire Council (1999) 9 BPR 16,985; [1999] NSWSC 485 at [26]; Mitchell v Boutagy (2001) 118 LGERA 249; [2001] NSWSC 1045 at [25]).
It seems to be common ground between the parties (and their respective valuers) that the compensation should include $10,000 for blot on title and $52,000 for a “rock anchor installation fee” (which reflects, it seems, the fact that the rock anchors remain in place even after they are de-stressed), and at least $130,000 for additional excavation costs that may be incurred after the anchors are de-stressed. The valuer retained by the defendants (Mr Carrapetta) would allow $304,000 for those costs, based on the cost of excavation of a 16.5m deep six level basement.
The valuers do not appear to have treated this item as a diminution in value of the defendants’ land. Rather, it is treated as a cost likely to be incurred by the owners of the servient tenement as a consequence of the imposition of the easement.
The plaintiffs submitted that $304,000 should not be allowed because the boarding house proposal involving a six level basement has not been approved and there was no evidence as to its feasibility. I have earlier dealt with this matter in a different context. I concluded that in the absence of firm evidence concerning the feasibility of that development it was difficult to regard it as anything more than a reasonable possibility. However, I do not think it would be appropriate to discount the broader possibility that extra costs may ultimately be incurred in excavating a six level basement to the extent that no account is given for it. There is no doubt that a disadvantage that will arise from imposition of the easement is the effect of the on-going presence of de-stressed rock anchors in the soil beneath the defendants’ land. That is a condition that renders excavation of the land more expensive than would otherwise be the case. The question is what amount of money would be appropriate to compensate the defendants for that disadvantage.
I consider that this calls for a broad assessment of the likely financial effect of the disadvantage, including an assessment of the degree of likelihood that additional costs of various magnitudes may be incurred.
It seems fairly safe to assume that the defendants’ land, located across the street from the Rhodes railway station, will be re-developed in the relatively near future, and that such re-development will involve excavation. Having regard to the development consent issued in March 2017 involving a three level basement, the evidence to the effect that a boarding house development involving a six level basement would likely be approved, and the defendants’ evidence about their development intentions, I would be prepared to conclude (notwithstanding the lack of evidence concerning the feasibility of any particular development) that a development involving a basement of between four and six levels is a substantial possibility, even if not shown to be more likely than not.
Taking that broad approach, I think that it would be appropriate to include in the compensation for this disadvantage an amount that reflects that substantial possibility. The additional costs in respect of a six level basement as compared with a three level basement are in the order of $175,000. In all the circumstances I would allow an additional $75,000, over and above the $130,000, to make a total amount of $205,000 for the prospect of having to incur additional excavation costs.
I have not overlooked the plaintiffs’ submission that any claim for excavation costs over and above the figure of $130,000 (which figure is based upon the defendants’ approved development) should have set-off against it the benefit by way of cost saving that the defendants would achieve if they excavated to the boundaries of the plaintiffs’ land. It was said that this benefit (quantified by Mr Collins at $189,000) would arise if the defendants excavated to the boundary so as to take advantage of the plaintiffs’ construction up to the boundary, and thus avoid the need to undertake shoring as would otherwise be required. It seems to me that this potential saving is not an advantage that would arise from the imposition of the easement. Rather, it would arise from the carrying out of the development on the plaintiffs’ land, whether that development was undertaken using the rock anchor proposal or some other method such as Mr Erni’s bracing option. I therefore decline to reduce the amount of compensation for additional excavation costs.
The defendants also seek an amount for holding costs to compensate for the delay that would be caused to their development due to the effective preclusion of excavation during the period the rock anchors remain in tension. I have already concluded (on the basis of an assumption, favourable to the defendants, that their preferred development is practically and economically feasible) that the development is likely to be delayed by no more than 10 months or so.
However, the defendants claim holding costs of $320,000 in respect of a period of 17 months. That amount comprises components of interest ($234,000), Council rates ($4,552), water rates ($1,059) and land tax for two years ($40,000). The total amount claimed is equivalent to approximately $18,825 per month.
There are a number of difficulties with this aspect of the compensation claim. First, it is clear that the interest component is significantly overstated. It is based on borrowings totalling $3.19 million but Mr Lee stated in cross-examination that not all of those loans were for the purchase of the property (the purchase price of which was only $1.7 million). Secondly, there is no evidence that land tax will actually be levied in respect of the property in the years claimed. Thirdly, and more fundamentally, no evidence was adduced to establish that any delay in development would result in the defendants being deprived of any money (whether of a capital or revenue nature) that could be applied so as to reduce or eliminate any of the holding costs that would otherwise be incurred.
It is here that the lack of any evidence concerning the financial viability of any proposed development has most impact. In my view, it makes it impossible to properly assess the loss that might be sustained if any development was in fact delayed due to the presence of the rock anchors in tension. It is neither possible to assess any development as a commercial opportunity of some value, nor assess the likely financial consequences of any delay to such development. These are matters which could have been the subject of evidence adduced by the defendants. In my view the defendants had an evidentiary onus in this regard, as the subject matter is peculiarly within their knowledge.
In these circumstances, I do not think that an amount for holding costs should be included in the compensation to be ordered in favour of the defendants.
In summary, it seems to me that compensation of $267,000 should be paid to the defendants. That amount is made up of $10,000 for blot on title, $52,000 for a “rock anchor installation fee”, and $205,000 in respect of additional excavation costs. In my opinion, compensation in that amount is appropriate to adequately compensate the defendants for the losses or other disadvantages that will arise from imposition of the easement sought by the plaintiffs.
Conclusion
For the reasons set out above, the Court will make an order pursuant to s 88K(1) of the Conveyancing Act imposing an easement for rock anchors over the defendants’ land. Subject to one qualification, the order will be in substantially the terms sought by the plaintiffs in their Further Amended Summons and as subsequently modified by agreement with the defendants.
The qualification concerns the agreement that any order for the imposition of the easement should be stayed until the plaintiffs obtain the necessary approvals for the installation of the rock anchors.
I do not think that it would be appropriate to grant a stay in those terms, notwithstanding the agreement of the parties. The stated intention of the parties was that the now agreed period of 17 months would commence once the approvals are obtained. The evidence suggests that the approvals should be able to be obtained within a period of about two to three months. However, if there was a delay in that respect, the effect of the stay would be to delay the commencement of the 17 month period. I do not think that would be appropriate. In my opinion, having regard to the evidence concerning the effect that rock anchors in tension will have upon the defendants’ land, and the manner in which the Court has assessed the questions of reasonable necessity and appropriate compensation, the defendants ought not bear the burden of the risk that delays may occur in the obtaining of approvals.
Another reason why the order should not be stayed is that it is only the easement itself that would place the defendants under an obligation to provide their consents to the applications to be made by the plaintiffs for the necessary approvals.
In these circumstances, I consider that there should be no stay, and the terms of the easement should be amended to make it clear that the period during which the plaintiffs will install, maintain and then de-stress the rock anchors will terminate 17 months after the earlier to occur of: (a) the obtaining of all necessary consents and approvals are obtained, or (b) 3 months from today.
A further amendment will be made to the easement to make it clearer that the rock anchors are required to be de-stressed prior to the end of the 17 month period. The agreed condition concerning indemnity will be included and, as also agreed, liberty will be reserved to the plaintiffs to seek a further order for an easement should a period longer than 17 months be required, in which case the defendants will be entitled to seek further compensation. The Court will also direct that the easement be registered within 21 days, and that the parties co-operate in doing all that is necessary to enable that to occur.
Section 88K(5) provides that the costs of proceedings under the section are payable by the applicant, subject to any order of the Court to the contrary. There does not seem to be any reason why the Court should make any order to the contrary.
I have considered the defendants’ submission that the plaintiffs be ordered to pay their costs on an indemnity basis. It was submitted that the hearing of the matter was expedited on the ground that the plaintiffs were ready to proceed to install rock anchors, but in fact they cannot do so until certain approvals are obtained. It was suggested that the preparation of the case on an expedited basis has caused the defendants to incur undue expense which would not be compensated for by a costs order on the ordinary basis.
No formal order for expedition was made, although a relatively early hearing date was appointed in view of the nature of the proceedings and the fact that they concern a large development in progress. No details were provided as to what expense incurred by the defendants was “undue”. In all the circumstances, I do not think that it would be appropriate to order the plaintiffs to pay the defendants’ costs on an indemnity basis.
Accordingly, the Court:
(1)Orders pursuant to s 88K(1) of the Conveyancing Act 1919 (NSW) that an easement for temporary rock anchors be imposed over the defendants’ land comprised in Lot 3 in DP 15734 in favour of Lot 2 in DP 15734 and the common property in SP 37320, in the terms contained in the document annexed and marked “A”;
(2)Orders pursuant to s 88K(4) of the Conveyancing Act that the plaintiffs pay compensation to the defendants for the imposition of the easement, such compensation to be in the sum of $267,000 and paid no later than 20 March 2018;
(3)Orders that the said easement be registered within 21 days, and directs that the parties co-operate in doing all that is necessary to enable that to occur;
(4)Reserves liberty to the plaintiffs to seek a further order for an easement should a period longer than 17 months be required in respect of the rock anchors, and notes that in those circumstances the defendants will be entitled to seek further compensation; and
(5)Orders that the plaintiffs pay the defendants’ costs of the proceedings.
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Annexure “A”
1. Definitions
Unless the contrary intention appears in this easement, the following terms have the following meanings in this easement:
Authorised Users means every person authorised by the Developer for the purposes of this easement, and includes any successors, transferees, contractors, licensees, representatives, employees and agents of the Developer.
Burdened Land means the land burdened by this easement.
Developer means the registered proprietor of the Development Site (as applicable).
Development Site means the land comprised in the certificate of title folio identifiers Lot 2 in DP15734 and the common property in SP37320.
Plan means the plan for easement attached and marked "B".
Rock Anchors means rock anchors, rock pinning, rook nails and other structures for the purpose of supporting or protecting works on the Development Site and supporting improvements erected on the Burdened Land.
Termination Date means the date seventeen (17) months after (a) the date on which the Developer obtains all necessary consents and approvals in relation the construction and use of the Rock Anchors, or (b) 20 March 2018, whichever occurs earlier.
Temporary Rock Anchors means Rock Anchors which are to be de-stressed by the Termination Date.
2. Terms of the Easement for Rock Anchors
(a) Until the Termination Date, and subject to obtaining all necessary consents and approvals, the Developer and all of its Authorised Users have full and free right (including with tools, implements and machinery) that is necessary for the purpose to enter that part of the Burdened Land beneath the surface of the land, underground from the Development Site for the purpose of constructing, placing, leaving, inspecting, repairing, maintaining and de-stressing Temporary Rock Anchors or any parts thereof within that part of the Burdened Land and set out in the Plan provided always that the Developer will use all reasonable endeavours to cause as little disturbance to the Burdened Land as possible and if it causes damage to the Burdened Land in exercising its rights under this easement it will make good that damage at its cost.
(b) The Developer must ensure that any Temporary Rock Anchors or any parts thereof placed within the Burdened Land pursuant to this easement will be de-stressed prior to the Termination Date.
(c) After de-stressing such redundant Rock Anchors referred to in paragraph 2(b) above or any parts thereof, will remain in situ and form part of the Burdened Land, until such time as they may be removed by any registered proprietor of the Burdened Land.
(d) The proprietor of the Burdened Land must forthwith on written request by the Developer or any of its Authorised Users give consent in writing to the making of any application in the terms of this easement, under the Environmental Planning and Assessment Act 1979 (NSW) for the construction and use of the Rock Anchors within the Burdened Land.
(e) The Developer agrees to indemnify the proprietor of the Burdened Land against any damage from misuse of the easement or accident, and will prior to entry upon the Burdened Land under the easement provide a dilapidation survey of the Burdened Land, and also provide evidence of appropriate insurance in respect of any such possible damage.
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