Supreme Court grants developer easement for support under neighbouring land

In this article, Elizabeth McDonald, Principal of the Property and Planning team reviews the case of Twelve Walker Street Pty Ltd v Lee [2017] NSWSC 1807.

The case involved a large mixed use development in Rhodes. To facilitate the development, the plaintiff (the Developer) sought to install a series of rock anchors under its property and adjacent properties. The rock anchors would provide support to the piling system designed to retain the surrounding land in the wake of excavation. The Developer sought an easement which would permit subterranean access to the neighbouring land for the purpose of installing and, within a two year period, de-stressing the rock anchors.

The owners of a neighbouring property, Mr Lee and Mrs Lai (the Neighbours) objected. The Neighbours argued that the easement would preclude any significant excavation of their land during the period the rock anchors remained in tension. Excavation would be possible once the rock anchors had been de-stressed, but it would be more expensive and difficult. This was significant for the Neighbours as they had their own development plans.

When the Developer was unable to negotiate an easement with the Neighbours, it commenced court proceedings seeking an easement pursuant to section 88K of the Conveyancing Act 1919 (NSW).

Our recent e-alert on section 88K easements outlined the five matters the Court will consider when deciding whether to impose an easement. In addition to these matters, the Court in this case had to decide whether the use proposed by the Developer really could be imposed by an easement or whether the Developer was seeking a right more akin to joint occupation. Some of the Court’s key findings are outlined below.

1. Was the Developer seeking an easement or a right more akin to joint occupation?

One of the requirements of the grant of a valid easement is that the rights must not amount to rights of joint occupation or substantially deprive the servient tenement owners of proprietorship or legal possession. If the grant of an easement leaves the owner of the servient tenement with very few rights over that property, the rights claimed will not constitute an easement, but rather rights of joint user.

The Neighbours argued that the easement would give the Developer a right of exclusive or unrestricted use of their land. The Developer disagreed on the basis that the easement would be underground and the rock anchors would be capable of being de-stressed over time.

The Court held that the easement would confer extensive rights on the Developer in respect of the subterranean parts of the land, and that the rights would largely eliminate the capacity of the Neighbours to use and enjoy possession of those parts of the land, including by carrying out any significant excavation. Further, the rights would impose a significant practical restriction upon development of the land in that period.

However, whilst the effect upon the rights of the servient owners would be extensive, the owners would retain reasonable use of their land as a whole. Further, the rights conferred on the Developer would be restricted to works required for the carrying out of installation, maintenance and de-stressing of rock anchors, and would not deprive the Neighbours of any rights of ownership, including rights of possession. Consequently, the Court held that the proposed easement was a valid easement.

2. Was the easement reasonably necessary for the effective use or development of the developer's land?

Although there were alternative means of retaining the land during excavation, such as a bracing system, the Court held that the proposed rock anchors were a reasonable means of retaining the faces of the deep excavation. This was because the rock anchors were a safer method than the alternative suggestions, and at least $1.4 million cheaper than a bracing system.

3. Would the easement be contrary to the public interest?

The Neighbours submitted that development of the Developer’s land using rock anchors would be contrary to the public interest as it would delay their own development and would not significantly improve the progress of the development on the plaintiff’s land. The Court held that the easement was not inconsistent with the public interest, as the easement would facilitate the carrying out of an approved development in a safe and efficient manner.

The Court was also satisfied that the Neighbours could be adequately compensated for any loss or disadvantage that may arise from the proposed easement.

4. Had the Developer made reasonable attempts to obtain the easement by negotiation?

The Developer and the Neighbours had engaged in negotiations for more than 6 months concerning the obtaining of access to the Neighbours’ land, including for the purpose of installing temporary rock anchors. Further, on the final day of hearing, the Developer offered to pay the Neighbours up to $192,000 in compensation for the easement, but this was rejected. The Court held this demonstrated reasonable attempts at negotiations.

5. Could the Neighbours be adequately compensated?

Although the easement would have a ‘substantial’ impact on the Neighbours, the Court held the Neighbours could be adequately compensated for the loss or disadvantage imposed by the easement. The Court ordered the Developer to pay compensation in the sum of $267,000 plus costs.

6. Should the easement be declined in the exercise of the Court's discretion?

Taking all the circumstances concerning the easement into account, including the matters agreed between the parties concerning the terms of the easement, the Court held that it should proceed to exercise its discretion in favour of the grant of relief. The easement was granted to the Developer.

This article is not legal advice. It is intended to provide commentary and general information only. Access to this article does not entitle you to rely on it as legal advice.  You should obtain formal legal advice specific to your own situation. Please contact us if you require advice on matters covered by this article.