Peulen v Agius[2015] QSC 137

SUPREME COURT OF QUEENSLAND

[1] THE CHIEF JUSTICE: The applicants filed an application with the Queensland Supreme Court for an order under s 180 of the Property Law Act 1974 (Qld) granting a statutory right of user in respect of certain land owned by the respondents.  The applicants seek a right of access over a small corridor of land over which a driveway connecting the applicants’ dwelling and Maraju-Yakapari Road extends.  The applicants are willing to pay compensation to the respondents for the encumbrance on the servient land.

[2] The respondents resist the application claiming, inter alia, that alternative access to the applicants’ property exists through Erinagh Road. In the alternative, the respondents seek compensation for any grant of a statutory right of user over the servient tenement.  The respondents propose that the compensation should be measured, at least in part, by reference to the augmented value of the dominant tenement as a result of the imposition of the statutory right of access. 

Background

[3] The parties are adjoining landowners at Balnagowan, a rural community situated approximately 20 kilometres west of Mackay.

[4] The respondents purchased their landholdings in 1990.  In 1993 the respondents subdivided their land to create six rural residential lots. The respondents retained ownership of Lot 6, and sold Lot 5 to Mr and Mrs Van Lint (“Van Lints”). 

[5] Lot 5 is a predominately landlocked parcel of land, with the exception of a small northern boundary contiguous with Erinagh Road, an unformed rural carriageway. Erinagh Road adjoins the State controlled Maraju-Yakapari Road to the east.

[6] The dwelling on Lot 5 is located on a raised segment in the south-western corner, where it enjoys elevation, views and a degree of privacy from other landowners. 

[7] The dwelling is approximately 250 metres from the northern boundary adjoining Erinagh Road.  The topography of the terrain connecting the dwelling with the northern boundary may fairly be described as “arduous”. 

[8] Maraju-Yakapari Road, to the east of Lot 5, is more proximate to the dwelling.  As a State controlled road, Maraju-Yakapari Road is formed and suitable for the regular and frequent carriage of motor vehicles. 

[9] Lot 5, however, does not share an adjoining boundary with Maraju-Yakapari Road.  There is a small corridor of land, connecting two broader tracts of land to the north east and south east of Lot 5, which is owned by Lot 6.  This corridor is approximately 50 metres wide. 

[10] At an unspecified time between 1993 and 2001, the Van Lints constructed a formed driveway connecting Lot 5 with Maraju-Yakapari Road.  The driveway traverses approximately 50 metres of the corridor on Lot 6.  In the interests of aesthetics, the Van Lints lined the driveway with palm trees.  The respondents appear to have been were aware of the construction of the driveway. 

[11] Prior to the applicant’s acquisition of Lot 5, the Van Lints used the driveway as their primary means of access to the property. This occurred for several years, apparently without significant complaint or objection by the respondents.  This informal arrangement was described as a “gentlemen’s agreement”.  Despite the frequent and regular residential use of the driveway, the Van Lints failed to obtain an enforceable right of user over the section of the driveway traversing Lot 6. 

[12] In 2001 development approval was obtained by the respondents to reconfigure Lot 6.  The approval provides that all points of access to Lot 6 would be from Erinagh Road, and that no additional vehicular entries for Lot 6 from Maraju-Yakapari Road would be permitted.  No evidence has been adduced indicating whether this was an essential and indispensable condition of the development approval.  Accordingly, the existing vehicular access through the driveway is inconsistent with the approval. 

[13] In 2012, the Van Lints alienated Lot 5 to the applicants.  The applicants were not aware at the time of settlement that they possessed no enforceable right to use the section of the driveway extending over the narrow corridor on Lot 6.  It appears that the realtor innocently misrepresented that the existing driveway would be used as their primary means of vehicular access.  Inadequate title searches by the applicants’ legal representatives in the conveyance reinforced this misapprehension. 

[14] The respondents only advised the applicants of the absence of the right of user after the settlement of Lot 5.  Since January 2014 the parties have been negotiating the granting and registration of a formal easement over Lot 6.  Negotiations proved unsuccessful as a result of disagreement regarding the quantum of compensation payable to the respondents for the conveyance.  

[15] The respondents obtained a valuation by Optimum (Central and Southern) Pty Ltd estimating that the quantum of compensation payable is $33,000.  The applicants are not prepared to offer more than $5,000, and adduced their own valuation estimating the compensation payable at around $2,000. 

Submissions of the Parties

[16] The respondents oppose the grant of the statutory right of user on four main grounds:

1. The proposed right of user would impair the respondents’ quiet use and enjoyment of Lot 6;

2. The applicants possess alternative access through Erinagh Road;

3. The grant of the right of access would preclude any further subdivision of their lot; and

4. The statutory right of user is inconsistent with the 2001 development approval.

[17] The applicants, however, contend that the section of Lot 6 occupied by the driveway is vacant and not meaningfully utilised.  The applicants further argue that due to the positioning of the dwelling of the respondents, and the fact that the respondents do not use the driveway for access purposes, continued use of the driveway for vehicular access will not substantially impair the respondents’ quiet enjoyment of Lot 6.   In this respect, the applicants note that the respondents allowed the Van Lintens to utilise the driveway for several years without significant objection, even after the acquisition of the development approval in 2001.

[18]           The applicants posit that the proposed alternative access via Erinagh Road is unreasonable.  This is because the cost associated with removing the existing driveway and palm trees, in conjunction with providing equivalent access to Erinagh Road, is approximately $100,000.  The applicants submit that this is disproportionate to the historical $300,000 purchase price paid in 2012 for Lot 5.   The applicants further contend that the destruction of the existing driveway and palm trees would not only be wasteful, but depreciate the market value of Lot 5. 

[19] In relation to the subdivision, the applicants have adduced expert evidence indicating that council approval for further subdivision of Lot 6 is unlikely to be forthcoming. This evidence is apparently accepted by the experts of the respondents.  The applicants argue that the proposed intention to subdivide the property is unrealistic and therefore should not impede the grant of the right of access.

[20] Expert evidence for the applicants and respondents diverge regarding whether the local council is likely to grant approval for the right of access to Maraju-Yakapari Road using the existing driveway.  The applicants contend, however, that it is unnecessary to determine whether the council will grant approval for registration of the right of access, and therefore this should not impede the grant of the statutory right of user. 

Regulatory Framework

[21] Section 180(1) of the Property Law Act 1974 (Qld) prescribes that:

Where it is reasonably necessary in the interests of effective use in any reasonable manner of any land (the dominant land) that such land, or the owner for the time being of such land, should in respect of any other land (the servient land) have a statutory right of user in respect of that other land, the court may, on the application of the owner of the dominant land but subject to this section, impose upon the servient land, or upon the owner for the time being of such land, an obligation of user or an obligation to permit such user in accordance with that order.

[22] Therefore, the discretion of the court is activated where the proposed statutory right of user is reasonably necessary in the interests of effective use of the land in any reasonable manner.[1]

[23] The statutory right of user may be in the form of an easement, licence, or otherwise,[2]  which includes an easement for right of way.

[24] The court must refuse any such application for a statutory right of user unless:

1. It is consistent with the public interest that the dominant land be used in the manner proposed;[3]
2. The owner of the servient land can be adequately recompensed in money for any loss or disadvantage which the owner may suffer from the imposition of the obligation;[4] and
3. The owner of the servient land has unreasonably refused to accept the imposition of such an obligation.[5]

[25] The applicants possess the onus to establish the abovementioned elements to the civil standard expressed in Briginshaw, namely on the balance of probabilities. 

Reasonably Necessary in the Interests of Effective Use of the Land in Any Reasonable Manner

[26] The starting point for any determination of the grant of a statutory right of user is Lange Parade Pty Ltd v Peluso, where Douglas J conveniently summarised the relevant principles as follows:

1. One should not interfere readily with the proprietary rights of an owner of land.
2. The requirement of “reasonably necessary” does not mean absolute necessity.
3. What is “reasonably necessary” is determined objectively.
4. Necessary means something more than mere desirability or preferability over alternative means; it is a question of degree.
5. The greater the burden of the imposition that is sought the stronger the case needed to justify a finding of reasonable necessity.
6. For a right of user to be reasonably necessary for a development, the development with the right of user must be (at least) substantially preferable to development without the right of user.
7. Regard must be had to the implications or consequences on the other land of imposing a right of user.[6]

[27] The concept of “reasonably necessary” implies an objective test.[7] The use of “reasonably” as an adjectival qualifier of “necessary” indicates that it is a continuum concept, and therefore a question of degree.  However, as “necessary” is the subject noun, it is clear that the semantic meaning of “reasonably necessary” is more proximate to necessity than mere convenience, prudence or desirability.  This will generally depend on the relevant factual matrix of the case. 

[28] The applicants are not required to demonstrate that the grant is “absolutely necessary” or that there would be no effective use of the land if the statutory right of user was refused.[8] In this respect, the position under the Property law Act 1974 (Qld) s 180 deviates from the traditional position at common law, where an easement would only be imposed because it was “absolutely necessary”.[9]

[29] However, the use of the word “necessary” requires something more than:

1. “Mere desirability or preferability over alternative means”;[10] or

2. That which is “convenient or nice to have”.[11]

[30] As held by Young J in D & D Corak Investments Pty Ltd, “one must look for a requirement that is far closer to necessity than it is to convenience.”[12] The proposed use must also be something more than “substantially preferable” to the existing use of the land.[13] In considering “reasonable necessity”, the court must have regard to the implications or consequences for the servient tenement as a result of the imposition of the proposed statutory right of user.[14] 

[31] The applicants must show that the grant of the statutory right of user is necessary in the interests of the effective use of the land in the manner proposed, not every potential or theoretical use.  As held by McMurdo J:

an applicant does not have to demonstrate that each and every use (in any reasonable manner) of its land is one for which the obligation of user is reasonably necessary. Instead, an applicant can point to a particular use and seek to make its case in relation to it.[15]

[32] This reasoning emanates from the seminal decision of Hanger CJ in Re Seaforth, where his Honour held that:

The applicant must show that in the interests of effective use of the land in this particular manner, the grant of statutory right of user in some form is reasonably necessary.[16]

[33] The concept of “reasonable manner” is rarely construed separately from “reasonable necessity”.  However, it is important to recognise that it incorporates a distinct criterion into the applicable statutory test.  The Court is required to enquire into whether the use of the dominant tenement, not the servient tenement, is a use in a “reasonable manner”.  In this respect, the Court considers not only the broad purpose of the relevant parcel of land (for example, residential usage), but also the specific purpose of the use of the relevant segment of land giving rise to the necessity for the statutory right of user. 

Interference with Privacy and Utility of the Respondents’ Land

[34] The respondents’ claim that the imposition of the statutory right of user will interfere with their privacy and quiet enjoyment of Lot 6.  Although loss of privacy or utility is a relevant factor in considering the burdens of the owner of the servient tenement, the court must assess the extent of any asserted adverse consequences.[17]

[35] In accordance with the surveyor’s plans, the dwelling of the respondents is remote relative to the existing driveway.  The respondents do not utilise the driveway for access purposes.  The applicants only propose to use the driveway for residential purposes, indicating that usage would by relatively limited. 

[36] Nevertheless, the respondents claim that the relevant portion of the vacant corridor currently occupied by the driveway presents an obstacle to their farming operations.  Apparently, that portion of land is traversed by agricultural vehicles and machinery to access two agricultural sections on Lot 6.  The applicants failed to explain how the continued presence of the existing driveway structure would cause any further inconvenience to their farming operations in comparison to its historical use by the Van Lintens, to which the respondents did not materially object. 

[37] The function of the power to grant a statutory right of user is to permit the Court to adjust the relevant rights and obligations of the respective parties to achieve an economically efficient outcome.  As real property is a scarce and valuable resource, there is a public interest in ensuring that land is utilised in a productive and economical manner.  This balances the importance of protecting personal property rights with the public interest in promoting allocative efficiency in land usage. 

[38] The imposition of an easement, as a shared use of land, will invariably result in a degree of inconvenience to the servient tenement owner.  However, the inconvenience occasioned to the respondents as a result of the imposition of the right of way is comparatively minor.  This is evidenced by their failure to significantly object to the Van Linten’s historical use of the same carriageway.  Accordingly, any disruption of quiet enjoyment, privacy or utility may be adequately rectified by an award of monetary compensation. 

Alternative Access through Erinagh Road

[39] The respondents allege that a grant of a statutory right of user in the form of a right of access is not reasonably necessary because an alternative access point exists within the northern quadrant of Lot 5 through the contiguous Erinagh Road.

[40] The Queensland Supreme Court has consistently held that a statutory right of user granting a compulsory easement for right of way may be reasonably necessary in the interests of effective use of the land in any reasonable manner notwithstanding the existence of an alternative access point.[18]  This case is broadly analogous with Hodgskin and Kindervarter, within which this Court granted a statutory right of user in the form of a right of way.[19] 

[41] In determining “reasonable necessity”, the Court must have regard to the cost associated with establishing access to Erinagh Road equivalent to that currently obtained through the driveway connecting the dwelling to Maraju-Yakapari Road.[20] 

[42] The applicants claim that the cost of establishing the road connecting the residential dwelling with Erinagh Road and removing the existing sealed driveway to Maraju Yakapari Road is approximately $100,000. 

[43] It is doubtful whether the removal of the existing sealed driveway should be considered in the assessment of the cost associated with establishing equivalent access to Erinagh Road.  This is because equivalent access does not require the destruction of existing means of access.  According to Mackay Earthworx Pty Ltd, the cost of establishing a new driveway into the property from Erinagh Road is $70,090 + GST (approximately $77,100).[21]

[44] The cost associated with establishing the new driveway represents approximately 25.7% of the total value of the property.  Expert evidence from the respondents indicates that the burden on the servient tenement as a result of the imposition of the easement is “nominal”, although it may interfere with their farming operations.

[45] On balance, the cost of establishing the alternative access to the equivalent standard of that obtainable through the existing driveway is disproportionate to: (a) the value of Lot 5; and (b) the burden of the easement on Lot 6. 

Depreciation in Market Value of Servient Tenement

[46] Any depreciation to the market value of property is a relevant factor in ascertaining the burden imposed on the servient tenement.[22] The applicants and respondents disagree regarding the purported effect of the easement on the market value of the servient tenement. 

[47] The applicants claim that the effect on the market value will be “nominal” and the value of the 75m2 on an outright purchase basis would be $16.14/m2, which works out to be $1,210.50.

[48] The respondent, however, values the access easement by reference to the purported appreciation of the market value of the dominant tenement.  The respondents claim that a reasonable assessment of the value of the easement was $30,000.

[49] At this stage, in determining “reasonable necessity”, it is clear that the focus should be on the burdens to the servient tenement.  This is because the appreciation of the dominant tenement is of limited relevance to the need for the easement.[23]

[50] Therefore, the respondents’ assessment by reference to the value of the easement, even if accurate, does not provide an effective measure of the burden to the servient tenement.  Similarly, however, the applicants’ assessment of the value of an abstract 75m2 tract of land on an outright purchase basis may not always be an appropriate measure.  For example, a cumbersome easement imposed over a critical and frequently used segment of land (e.g., a right of access through the centre of an ordinary residential lot) may cause depreciation greater than the average outright purchase value of an equivalent area of land in the abstract.  Therefore, any valuation should be specific to the relevant portion of the servient tenement subject to the proposed statutory right of user.

[51] Despite the considerable limitations of the valuation evidence, this Court is satisfied that any depreciation in market value caused by the statutory grant of user will be relatively nominal and may be adequately rectified by monetary compensation. 

Loss of Opportunity for Subdivision

[52] The respondents claim that the imposition of the proposed statutory right of user would preclude further subdivision of the property.  Although a loss of opportunity for subdivision may be relevant in determining the reasonableness of the grant of the right of user, the expert evidence of both parties indicates that there is a very low likelihood of approval for the intended subdivision.

[53] Unrealistic or speculative expectations and intentions should not operate to restrict the imposition of a statutory right of user.  To hold otherwise would invite opportunistic or confected inventions to obstruct existing, legitimate and economical usages of land, or extort improperly inflated compensation. Where hopes or intentions for subdivision are more than mere conjecture or fantasy, the Court may generally remedy any potential loss or harm through an award of monetary compensation. 

[54] In this case, where the hopes and intentions of the respondents are likely speculative or unrealistic, only limited compensation is required to reflect any impediment to a potential future subdivision.

Prospect of Failure to Obtain Approval for Easement

[55] The respondents claim that it is likely the applicants will fail to obtain local council approval for the easement even if a statutory right of user is imposed.  Expert evidence advanced by the parties is divergent regarding whether the right of access to Maraju-Yakapari Road will be permitted by the local council.

[56] The Court should not grant a statutory right of user where the subject use is absolutely unlawful or there is no real chance of obtaining approval necessary to render the relevant use lawful.[24]  However, where there is a real chance of obtaining the required approval, the Court is not precluded from granting the statutory right of user merely because of the possibility – or in some cases, the probability – that the required approval may not be obtained.[25] 

[57] Although the Court need not be satisfied that all obstacles to the imposition of the statutory right of user have been removed, it retains a residual discretion to refuse a statutory right of user despite the existence of a “real chance” of success in obtaining regulatory approval.[26]  The Court may, in appropriate circumstances, enquire into the probability of success of any application for approval in determining whether the proposed use of the land is use in a “reasonable manner”. 

[58] However, this enquiry should not be treated as a substitute for the overarching test, which is whether it is “reasonably necessary” in the interests of “effective use” of the land in a “reasonable manner” that the statutory right of user is granted as proposed by the applicant.[27]

[59] Despite the divergent expert evidence, I am satisfied that there is a “real chance” of that an application for approval of the easement will be successful.  This is based on:

1. the historical use of the driveway for access purposes;
2. the fact that the proposed right of access will not have any substantial adverse effect on the use of Lot 6 or the amenity of the community;
3. the fact that the driveway is adequately safe and visible for egressing vehicles and other road uses; and
4. that imposition of the statutory right of user substantially enhances the economic utility of Lot 5.

[60] Accordingly, the possibility of the local council refusing approval for the relevant easement will not preclude the imposition of the statutory right of user.

Findings on the Application of the Statutory Test

[61] The applicants propose to use Lot 5 for residential accommodation, and the relevant driveway for vehicular access. Residential accommodation and vehicular access clearly use the dominant tenement in a “reasonable manner”.  The Court is required only to consider the existing uses of land, not any counterfactual uses of land which may involve the relocation of the existing driveway or dwelling. 

[62] The imposition of the statutory right of user would cause only minor disruption of the respondents’ quiet enjoyment, privacy and utility of Lot 6.  The proposed subdivisional plans are conjectural or fanciful, and depreciation in the market value of Lot 6 as a result of the imposition of the statutory right of user is nominal.  Any losses or harms sustained by the respondents are adequately remediable by a monetary award of compensation. 

[63] In contrast, the costs associated with establishing equivalent alternative access through Erinagh Road are disproportionate to the value of the property and the burden on the servient tenement.  Although the construction of the alternative access route does not require the removal of the existing driveway, it would result in uneconomic and inefficient waste of infrastructure and resources.

[64] Accordingly, the imposition of the statutory right of user is essential to the effective and productive use of Lot 5.  In this respect, the imposition of the statutory right of user is not merely convenient, prudent or desirable, but reasonably necessary in the interests of the effective use of Lot 5 in a reasonable manner.  The alternative proposition urged by the respondents is inefficient, uneconomic and wasteful. 

Consistent with the Public Interest

[65] A statutory right of user must not be imposed unless the proposed use of the dominant tenement is consistent with the public interest.[28] 

[66] The public interest test is directed towards the use of the dominant tenement, not the grant of the statutory right of user.[29] The Court is only required to be satisfied that the proposed use of the dominant tenement is not inconsistent with, or contrary to, the public interest.[30] 

[67] Any fault on the part of the applicants or respondents in respect of the absence of adequate access may be relevant to the determination of whether the use of the dominant tenement is in the “public interest”.[31] Similarly, any inefficient, uneconomic or wasteful use of property is relevant in determining whether the land use is consistent with the “public interest”.[32]

[68] The use of a dominant tenement for rural residential property is consistent with the public interest.[33] Furthermore, the use of a section of the dominant tenement for vehicular access is not adverse to the public interest. Indeed, it promotes the public interest by allowing the applicants’ vehicle to be parked off the street.[34]  Any fault of the applicants in failing to secure an enforceable right of access prior to purchasing Lot 5 is innocent and unintentional.  The construction of the alternative carriageway and removal of the existing driveway is uneconomic and inefficient. 

[69] On balance, I am satisfied that the applicants’ proposed use of Lot 5 is consistent with the public interest. 

Loss or Disadvantage of the Owner of the Servient Tenement Adequately Remediable by Monetary Compensation

[70] The question of whether the loss or harm caused to the owner of the servient tenement is “adequately” compensable by money is essentially a qualitative matter.  The court enquires into whether, in all the circumstances, any such loss is capable of being compensated by money.[35] 

[71] The Court is justified in concluding that any loss or harm incurred to the owner of the servient tenement as a result of the imposition of the easement is adequately compensable by money because:

1. Any depreciation in the value of the dominant tenement is capable of being quantified and repaired by monetary compensation. 
2. There is very limited loss of privacy, amenity, quiet enjoyment, or security of the servient tenement.  The quantum of any such loss would be capable of being rectified by monetary compensation. 
3. The likely frequency and intensity of use of the encumbered portioned of the servient tenement will be low.  Any such harm, loss or damage ensuing from the encumbrance will be readily quantifiable and compensable financially.

Unreasonable Refusal by Owner of Servient Tenement

[72] The applicants must demonstrate, where the owner of the servient tenement can be identified, that the owner of the servient tenement has refused to agree to the imposition of the right of user, and that in all the circumstances such refusal is unreasonable.[36]

[73] Where the owner of the servient tenement had not been asked to consider a specific monetary offer for the imposition of the easement, or any such monetary offer supplied by the owner of the dominant tenement is subject to unreasonable conditions, the court is justified in holding that there has been no unreasonable refusal to agree to the imposition of the right of user.[37] However, where the owner of the servient tenement has made an unreasonable or unconscionable offer in exchange for the grant of the required right of user, and the owner of the dominant tenement has rejected such offer, the court may still find that there has been an unreasonable refusal to agree to the imposition of the right of user.[38]

[74] In considering whether the refusal of the owner of the servient tenement was, in all the circumstances, “unreasonable”, factors which the court may consider relevant to this case include:

1. The absence of any significant detriment, loss or harm to the respondent;[39]
2. The significant cost associated with establishing any alternative access;[40]
3. The historic usage of the existing passageway over the servient tenement to access the dominant tenement;[41]
4. Whether the refusal was motivated by ill-will, malice, or acrimony;[42]
5. Refusal of reasonable offers subject to appropriate conditions.[43]

[75] On 19 May 2014 the applicants offered the respondents $5,000 in exchange for the grant of an easement over the servient tenement. The respondent’s solicitors replied, stating that: “we are instructed that our client is not prepared to grant an easement to your client.”  The refusal of the offer of $5,000 was unreasonable because:

1. The offered $5,000 significantly exceeded the purchase value of the proposed tract of land to which the easement would attach;
2. Subjecting the proposed tract of land to the easement would not cause any significant detriment, loss or harm to the respondent;
3. The carriageway the subject of the intended easement had been used for several years without significant objection by the respondents or interference with their quiet enjoyment of Lot 6; and
4. The cost of establishing the alternative access route is entirely disproportionate to the value of the dominant tenement and the harm or loss caused to the servient tenement by the imposition of the easement.

Quantification of Compensation

[76] Section 180(4)(a) of the Property Law Act 1974 (Qld) provides that, in making an order for a statutory right of user, the court

shall, except in special circumstances, include provision for payment by the applicant to such person or persons as may be specified in the order of such amount by way of compensation or consideration as in the circumstances appears to the court to be just.

[77] New South Wales jurisprudence indicates that “compensation” is not a substitute for the price that could have been exacted if s 88K did not exist.[44] However, unlike s 88K of the Conveyancing Act 1919 (NSW), s 180(4)(a) of the Property Law Act 1974 (Qld) provides for “compensation or consideration”.  In the decision of Peluso, Douglas J held that the appending of “consideration” disjunctively with “compensation” does not result in an interpretation materially different in this respect from the New South Wales jurisprudence:

I do not believe that the use of the word “consideration” in the Queensland legislation in s. 180(4)(a) should allow a significantly different approach from that adopted in New South Wales. In other words the adequate recompense meant for the adjoining owner should not be used as a means of a developer being held to ransom.[45]

[78] In Wengarin Pty Ltd v Byron Shire Council Young J held in respect of the equivalent s 88K(1) of the Conveyancing Act 1919 (NSW) that compensation will ordinarily be awarded for:

1. Any diminution in market value of the affected land (including its potential usage);
2. Any associated costs caused by the imposition of the easement;
3. Any loss of privacy, security, amenity, or quiet enjoyment of the land, or any increased nuisance caused by the use of the easement; and
4. Any disturbance effected by carrying out the initial work and subsequent repair or maintenance. 

[79] Other cases have held that, in respect of permanent easements, the loss of proprietary rights should also be compensated.[46] Importantly, when assessing the diminution in market value, it must be differentiated from any loss of privacy, security, amenity, or quiet enjoyment of the land to avoid double compensation.[47]  It must also be separated from any loss of proprietary rights.[48]

[80] In relation to the relevance of the benefit of the statutory right of user to the dominant tenement when calculating the quantum of compensation or consideration, Justice Windeyer in Goodwin held that:

To put it simply, what this does is to compensate the servient owner for his loss of opportunity to extract money which would have been available had s 88K not been enacted. That is not the compensation to which ss 88K(2) and 88K(4) refers. Clearly what is to be compensated is the loss arising from the compulsory acquisition or imposition of the easement; that is the loss of property arising from the taking out of the freehold estate the incorporeal proprietary interest of the easement. It is not compensation to be equated with or apportioned out of the gain to the dominant owner as a result of the imposition.[49]

[81] Despite Goodwin and the absence of the term “consideration” in the New South Wales Conveyancing Act, the courts have suggested that in exceptional cases “it may be appropriate to assess the compensation on a percentage of the profits that would be made”.[50]  However, this statement was disapproved by the unanimous New South Wales Court of Appeal, comprising of Bathurst CJ, Beazely and Meagher JJA, in Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd.[51] Notwithstanding this, the New South Wales Supreme Court has previously utilised the benefit or value of the easement to the dominant tenement in calculating the compensation payable.[52]

[82] It would appear that in New South Wales the Supreme Court has not yet completely resolved the question of the relevance of any benefit or appreciation to the dominant tenement as a result of the statutory right of user in quantifying compensation.

[83] In Queensland, the decision of Towerpoint is authority for the proposition that any benefit to the dominant tenement may be relevant in calculating the “compensation or consideration” payable.  In that case, Thomas J held that:

In assessing "compensation or consideration" the detriment to the servient land or the value of the interest taken from it is usually the primary consideration, but it may also be relevant to note other factors such as the extent of the benefit that will result to the dominant land.[53]

[84] Similarly, in Pacific Coast investments Pty Ltd v Cowlishaw,[54] Re Seaforth Land Sales Pty Ltd[55]  and Ex Parte Edward Street Properties Pty Ltd,[56] the Queensland Supreme Court suggested that any benefit which might be obtained by the dominant tenement may, in some circumstances, be relevant to the quantification of compensation or consideration.  However, none of those cases specifically determined the compensation payable by reference to the benefit obtained by the dominant tenement through the use of the easement.

[85] However, the decision of Towerpoint is somewhat inconsistent with the reasoning of Douglas J in Peluso, where his Honour held at [36] that:

In the absence of the statutory language, this restitutionary approach to the problem may have some merit in placing some of the focus on the position of the trespasser who may gain a significant benefit for little, if any, loss to the land owner. The trespasser/developer may well be prepared to pay more for the privilege because of the inconvenience it will save otherwise. It seems to me, however, that there is sense in the approach adopted in New South Wales that the statute was not designed to compensate the servient owner for the loss of the opportunity to extract money which would have been available had s. 180 not been enacted. Otherwise there would have been little point in the legislation. Its primary focus is on compensation or consideration for loss or disadvantage.[57]

[86] In Peluso Douglas J also cited with approval the abovementioned statement of Windeyer J in Goodwin. However, Douglas J does not appear to have entirely excluded the prospect of the compensation or consideration being influenced by the benefits obtained by the dominant tenement, merely that the “primary focus is on compensation or consideration for loss or disadvantage”.

[87] Accordingly, in New South Wales and Queensland jurisprudence remains conflicted regarding the relevance of any benefit obtained through an easement to the quantification of compensation or consideration payable.

[88] A general rule of statutory interpretation is that all words in a statute must be given meaning and effect.[58] The term “consideration” under the Queensland Property Law Act 1974 s 180(4)(a) justifies the court factoring any benefit of the dominant tenement into the quantification of any amount payable to the servient tenement owner.  This is clearly distinguishable from the phraseology of s 88K of the Conveyancing Act in New South Wales and therefore supports a different interpretation. However, even in New South Wales, where the legislation merely refers to compensation, there remains debate surrounding whether the benefit to the dominant tenement is a significant factor in quantifying the compensation payable.

[89] To interpret “consideration” to mean “consideration for loss or damage” would effectively render the use of the term otiose, as it would be substantially coextensive with “compensation”.  Accordingly, the better view is that the court may have regard to the benefit to the dominant tenement in quantifying the value of compensation to be awarded. This is far removed from any contention that the servient tenement should be entitled to hold the owner of the dominant tenement “to ransom” in negotiations by making unreasonable requests for compensation or consideration.

[90] However, to say that the court may consider the benefit to the dominant tenement does not mean that it should.  The calculation of compensation is unquestionably a discretionary decision of the court. Furthermore, consistently with the weight of jurisprudence in Queensland and New South Wales, the primary focus of any award under s 180(4)(a) should be compensation for loss damage or harm.  Therefore, it would be uncommon for the court to determine the amount payable to the owner of the servient tenement by reference to the benefit to the owner of the dominant as a result of the imposition of the statutory right of user.

Compensation for Loss of Proprietary Rights

[91] The applicants have contended that on an outright purchase basis the value of the 75m2 of land over which the easement will attach is $1,210.50.  This is calculated on the basis of an estimated value of $16.14/m2 derived from valuation evidence offered by Sites 4 Sales.  The applicants then claim that a further reduction must be made reflecting the infrequency of use of the proposed tenement.

[92] However, the market value of the land to which the easement attaches may be an indicator of the value of the loss of proprietary rights, but is hardly conclusive.  Despite this, it may be a useful starting point, and was used as a method for calculating the loss of proprietary rights in Rainbowforce.

[93] On balance, it is submitted that the loss of proprietary rights should be valued at $1,100 because there will be infrequent and low intensity usage of the carriageway, the easement confers limited proprietary rights on the applicant, and the easement does not significantly interfere with the crossing of commercial or domestic vehicles of equipment.  Counterbalanced against these factors is the fact that the easement may impact on future subdivisions of Lot 6, although any such proposals are probably unrealistic and unlikely to receive council approval.

Compensation for Loss of Security, Amenity, Privacy, and/or Quiet Enjoyment, and for any increased Nuisance

[94] The proposed easement will likely only be used for residential vehicular access purposes.  The proposed easement is not proximate to the dwelling of the respondents.  There is no evidence that the respondents use the existing carriageway for access purposes.  Indeed, the respondents claim the access points used by the respondents are on Erinagh Road and south of Lot 6. Accordingly, it is unlikely that the proposed use of the easement will create a sound nuisance or increase traffic impeding the respondent’s use of his own access routes.

[95] There is some evidence that the use of the easement may have a minor impact on the commercial farming operations of the respondents because their vehicles “turn around” in the vacant space occupied by the driveway. However, the driveway has been used for several with very little complaint made by the respondents regarding its impact on their farming operations. Accordingly, this only requires very minor compensation.

[96] As the dwelling of the respondents is not proximate to the driveway, the respondents do not use the driveway for access purposes, and the driveway is only proposed to be used for residential access, it is highly unlikely that there will be significant disturbance to the security, amenity, privacy or quiet enjoyment of the property of the respondent.  Accordingly, only a nominal amount should be allowed under this head of loss.

[97] Therefore, the value of any loss of security, amenity, privacy or quiet enjoyment, and increased nuisance, by the use of the easement would be limited.  There are no compensating advantages to offset this potential loss.

Compensation for Diminution of Market Value of the Servient Tenement

[98] The Court must provide compensation for the diminution of market value of the servient tenement.  However, the court must also avoid excessively compensating the respondents by excluding any loss of proprietary rights or amenity from consideration.

[99] The respondent’s expert valuer has not provided a clear assessment of compensation for any diminution of market value.  However, the expert valuer did state that “the loss in value to the parent allotment of 75 square metres of land is nominal, however it does affect the future use of the block and if an easement is granted there will be a “blot” on the title.”

[100] Aside from the consideration given to the loss of proprietary rights and amenities, the only relevant factor ostensibly impacting on market value is the purported “blot” on the title of the respondent.  Significantly, the expert valuer nevertheless described the loss in value as “nominal”.  Without further direct evidence of any loss of value, this Court should provide nominal compensation to rectify any potential loss of value.

Associated Costs Caused by the Imposition of the Easement

[101] There is no evidence of any associated costs caused by the imposition of the easement.

Disturbance Caused by Carrying Out Initial Work and Subsequent Repair or Maintenance

[102] The driveway is already constructed.  As discussed below, a condition should be imposed that the applicants are responsible for the full costs associated with maintaining and repairing the driveway.  Accordingly, any disturbance under this head of loss would be nominal.

Consideration of Value of Easement to the Dominant Tenement

[103] As discussed above, the primary focus of s 180(4)(a) is compensation for loss or damage.  However, courts may have regard to the benefit to the dominant tenement as a result of the easement.  This benefit has been assessed by a valuer at approximately $30,000.

[104] The applicant, however, argues that the land was purchased in an arms’ length transaction where they did not have knowledge of the lack of the easement and therefore paid the market value of the property with the proposed easement.

[105] In Tran v Cowan the applicants had also purchased residential land without knowledge of the lack of an access easement.  The respondents sought to obtain consideration in the measure of $50,000 reflecting the appreciation in the value of the dominant tenement if the easement were imposed.  The applicants resisted this claim, asserting that they had already paid fair market value in an arms’ length transaction for the allotment under the assumption that it benefited from an easement.  The court held that:

The critical point is the one I have mentioned: that the applicants paid fair market value for the land burdened with an easement of right of way in favour of Lot 250. The price they agreed to pay was for land burdened with an easement. They will suffer no loss by reason of the imposition of such a statutory right of user assuming it be right that the land without the easement is worth $50,000 more than with the easement imposed. To order compensation in that, or another, sum would not be to compensate the respondents for loss but to reward them for taking opportunistic advantage of the surveyor’s mistake to their neighbours’ detriment. By reason of the mistake they have received a windfall in the form of improved value to their land. It would not be just to require the applicants to pay the value of the enhancement.[59]

[106] The principle in Tran is applicable to this case. The evidence indicates that the applicants paid fair market value for the premises in an arms’ length transaction.  Accordingly, it would be unfair and unreasonable to reward the respondents for taking opportunistic advantage of the mistake made by the solicitors of the applicant. This is not an appropriate case within which to measure the amount payable to the respondents by reference to the benefits obtained by the applicant. Therefore, only a nominal uplift should be provided to reflect the benefit obtained by the applicants. 

Conclusion on Quantum of Compensation

[107] The applicants contend that the appropriate quantum of compensation is $2,000.  This comprises of $1,210.50 for the full purchase value of the land burdened by the easement, plus an uplift reflecting the other relevant considerations.

[108] Although this Court considers the submissions of the applicants reasonable, I would quantify compensation at $2,500.  This is calculated by a synthesis of each of the abovementioned factors.  I have included a minor uplift to reflect the benefit secured by the applicants through obtaining the statutory right of user. 

Orders

[109] The orders of the Court are that:

1. A statutory right of user in the form of an easement for right of way be imposed over Lot 6 in favour of Lot 5 in respect of the land currently occupied by the driveway lined with palm trees connecting Lot 5 with Maraju-Yakapari Road, the precise dimensions of which are to be agreed by the parties or, failing agreement, determined by the Court.
2. The applicants must keep the portion of land subject to the statutory right of user, and any fixtures, structures or plants located thereon, in a reasonable state of repair and maintenance.  The repair and maintenance may be carried out by the applicants, or by any employees, agents, independent contractors, or subcontractors engaged directly or indirectly by the applicants.
3. The applicants pay $2,500 in compensation to the respondents for the imposition of the statutory right of user.