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M Salazar Properties Pty Ltd v Jeffs[2024] QSC 9

M Salazar Properties Pty Ltd v Jeffs[2024] QSC 9

SUPREME COURT OF QUEENSLAND

CITATION:

M Salazar Properties Pty Ltd v Jeffs [2024] QSC 9

PARTIES:

M Salazar Properties Pty Ltd

(applicant)

v

Justin Noel Jeffs

(respondent)

FILE NO:

BS10187/22

DIVISION:

Trial division

PROCEEDING:

Originating application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

29 February 2024

DELIVERED AT:

Brisbane

HEARING DATE:

7, 8 September 2023

JUDGE:

Hindman J

ORDERS:

  1. On conditions to be recorded in a final order, the Court imposes on Lot 197, RP116684, title reference 14287174 a statutory right of user pursuant to section 180(1) of the Property Law Act 1974 (Qld), in favour of Lot 199, RP116684, title reference 14287176.
  2. The parties are directed to, by 4pm on 27 March 2024, deliver by email to the associate to Hindman J draft orders agreed by the parties to reflect the Court’s reasons or if there is not agreement, draft orders each party contends reflects the Court’s reasons. 
  3. The parties are directed to, by 4pm on 27 March 2024, advise the associate to Hindman J by email if they wish to be heard in relation to the issue of the costs of the proceeding.

CATCHWORDS:

REAL PROPERTY – EASEMENTS GENERALLY – GRANT OF EASEMENT – STATUTORY RIGHT OF USER – where applicant seeks grant of easement pursuant to s. 180 of the Property Law Act 1974 (Qld) – where an easement was sought over the servient land for stormwater drainage – whether the applicant had made out the requirements in s. 180 of the Property Law Act 1974 (Qld) –  whether compensation offered for burdening the servient land is sufficient – whether the refusal of the owner of the servient land is unreasonable – where applicant seeks the Court to determine the terms of the easement, including compensation, on just and fair terms.

Property Law Act 1974 (Qld), s. 180

2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS 39149 [2016] QSC 40

Grittner & anor v Hadley [2008] QSC 268

Mitchell v Boutagy [2001] NSWSC 1045

Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445

Naylor & anor v Pierce & anor [2010] QSC 399 

Pacific Coast Investment Pty Ltd v Cowlishaw [2005] QSC 259

Peulen & anor v Agius & anor [2015] QSC 137

Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd [2010] NSWLEC 2

Re Kindervater [1996] ANZ Conv R 331

Tregoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15,845

Ward v Hull [2019] QSC 32  

Wengarin Pty Ltd v Bryon Shire Council [1999] NSWSC 485

COUNSEL:

Nil

SOLICITORS:

Nil

ADVOCATES

(with leave):

J Merlo for the applicant

D Jeffs for the respondent

Introduction

  1. [1]
    It happens from time to time that the owner of land will require some form of access to, or use of, part of neighbouring land, where that access or use is not agreed by the neighbour.  Section 180 of the Property Law Act 1974 (Qld) (PLA) is the legislature’s answer to that perceived problem.  Subsection (1) provides:
  1. 180
    Imposition of statutory rights of user in respect of land
  1. (1)
    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.
  1. [2]
    Subsection (2) provides for the form of the statutory right of user that can be imposed and other conditions.  Subsections (4) to (5) provide for procedural type orders to facilitate the imposition of the statutory right of user. 
  2. [3]
    An order is not to be made under subsection (1) for the imposition of a statutory right of user unless the requirements of subsection (3) are satisfied.  They are, relevantly here:
  1. (3)
    An order of the kind referred to in subsection (1) shall not be made unless the court is satisfied that —
  1. (a)
    it is consistent with the public interest that the dominant land should be used in the manner proposed; and
  1. (b)
    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; and
  1. (c)
    either -
  1. (i)
    the owner of the servient land has refused to agree to accept the imposition of such obligation and the owner’s refusal is in all the circumstances unreasonable; or
  1. (ii)
  1. [4]
    Further, subsection (1) requires that the imposition of a statutory right of user must be reasonably necessary in the interests of the effective use in any reasonable manner of the dominant land. 
  2. [5]
    Even when all of the requirements of subsection (3) and the “reasonable necessity” requirement of subsection (1) are satisfied, the imposition of a statutory right of user is still discretionary (indicated by the use of the word “may” in subsection (1)).  Thus, there are a number of requirements for an applicant in an application of this kind to satisfy to obtain relief under section 180 of the PLA.
  3. [6]
    In this case, I consider that:
    1. had the applicant acted in a more neighbourly and reasonable way, this application likely would never have been necessary as the consent of the respondent likely would have been obtained to a reasonable easement over his lot;
    2. regardless, all requirements of s. 180 of the PLA are satisfied at the time of the hearing of this application and accordingly a statutory right of user should be imposed on the respondent’s lot, on conditions.  In that respect, refer to [159] to [162] below. 

Background facts

  1. [7]
    The applicant, a company carrying on the business of property development, purchased a residential block of land referred to in the proceeding as lot 1 (the street address is 86-88 Rosemary Street, Bellbird Park; also referred to as lot 199[1]) (lot 1) in 2021, pursuant to a contract dated in May 2021 (which settled at the end of July 2021).  The applicant has acted through:
    1. Maricris (Monica) Salazar, who is a director of the applicant and by profession is both an accountant and a real estate agent; and
    2. John Merlo, who is formerly a solicitor, and the life partner and a business associate of Ms Salazar.
  2. [8]
    Lot 1 is a large lot of 2,959 square metres, with one house situated on it.  Lot 1’s frontage is to Rosemary Street.  Its rear boundary is part of the side boundary of lot 2 (also referred to as lot 197[2]) (lot 2).
  3. [9]
    Lot 2 (the street address is 65-67 Fiona Street, Bellbird Park) is owned by the respondent who resides at that premises.  It is also a large lot (2,936 square metres) with one house situated on it.  The respondent is a part-time turner and fitter, and a musician.  Lot 2’s frontage is to Fiona Street.  Lot 2 has rear access to Perdita Street. 
  4. [10]
    Lot 3 (also referred to as lot 200[3]) (lot 3) is to the left of lot 1.  It is another large residential block with one house situated on it, owned by Jared Pressler.  Lot 3’s frontage is to Rosemary Street.  Lot 3 also has rear access to Perdita Street.  The general layout of the three abovementioned lots and relevant streets is contained in the diagram following.

M Salazar Properties Pty Ltd v Jeffs [2024] QSC 9

  1. [11]
    Each of lots 1, 2 and 3 slope from the front of the blocks to the rear of the blocks (down towards Perdita Street).  The grades of the relevant areas of land of lots 2 and 3, where lots 2 and 3 abut and along the short common boundary between those lots, are quite similar.[4]
  2. [12]
    In purchasing lot 1, the applicant intended to develop the lot in some way, to include additional residences.   
  3. [13]
    The addition of any further residences to lot 1 requires a roof water/stormwater solution, to deal with the water collected and discharged from any additional residences on the lot.  The obvious solution, given stormwater usually acts under gravity, is for lot 1’s stormwater to be discharged to council drains in Perdita Street (downhill, beyond the rear of the lots).  But lot 1 (unlike lots 2 and 3) does not have rear access to Perdita Street.  Accordingly, that solution necessarily requires lot 1 having an easement, for the purpose of stormwater drainage, over either of lot 2 or 3, adjacent to the common boundary between those two lots, and out to Perdita Street.
  4. [14]
    The applicant began consulting with a town planning consultant as early as 8 April 2021 (pre-contract) about the possible development of lot 1,[5] and at least by June 2021 about the need for a stormwater drainage solution in any development of lot 1.[6]
  5. [15]
    Shortly after purchasing lot 1, Ms Salazar and Mr Merlo enquired of the respondent (the owner of lot 2) whether he would be interested in selling the whole or part of lot 2 to them. 
  6. [16]
    The applicant also commenced discussions with Mr Pressler (the owner of lot 3) about obtaining a stormwater easement over lot 3 out to Perdita Street, amongst other proposals.  The easement being requested was proposed to be 5m in width and approximately 20m in length (running along the boundary with lot 2).  Those initial discussions with Mr Pressler ceased around July 2021. 
  7. [17]
    An offer was made to the respondent containing three alternatives (to facilitate the development of lot 1) on 3 August 2021.[7]  The respondent was not interested.
  8. [18]
    By 7 August 2021, it was being suggested by Mr Merlo to the respondent that a granny flat was to be constructed on lot 1.  There were discussions between Mr Merlo and the respondent about a possible barter arrangement whereby the respondent would allow stormwater from the new granny flat to flow through lot 2 infrastructure.    
  9. [19]
    There was a disagreement between Mr Merlo and the respondent as to whether an enforceable agreement about that had been reached.  Mr Merlo threatened proceedings against the respondent to enforce the alleged agreement, but proceedings never eventuated.  The nature of the disagreement can be seen in a series of emails exchanged between Mr Merlo and the respondent from about 10 August 2021 to 20 August 2021 at enclosure 5 to exhibit MS-39, affidavit of Salazar, court document 7.  The applicant’s version of those events is dealt with at [167]-[178] of the affidavit of Salazar, court document 4, and [6]-[55] of the affidavit of Salazar, court document 22.  It is not necessary for the purpose of this proceeding to make any findings about that disagreement.  It is only relevant to mention because, unsurprisingly, the applicant’s conduct, through Mr Merlo, made the respondent cautious about the applicant and its development plans for lot 1 from at least that point onwards.     
  10. [20]
    Likely prompted by that breakdown in the relationship between the applicant and the respondent, the applicant recommenced negotiations with Mr Pressler (the owner of lot 3) in September 2021.  The applicant made an offer to Mr Pressler on 1 November 2021 of $40,000 to secure a stormwater easement over lot 3 to facilitate the subdivision of lot 1.  Mr Pressler was amenable to considering that offer.  But the applicant withdrew from negotiations only a day later on 2 November 2021.  It is plain from the evidence of Ms Salazar that she had a change of heart about the amount of the offer the applicant had made and decided that she did not want to pay that sum of money to secure the easement the applicant sought.  She considered it uneconomical.  In a later affidavit she alleges that Mr Pressler was “playing games and attempting to extort unreasonable compensation from us” and was “trying to extort an unfair compensation from me”.[8]  That is difficult to reconcile with the applicant having made the offer to Mr Pressler.   
  11. [21]
    Around the same time (about October 2021), the idea of building a granny flat on lot 1 was abandoned by the applicant and the applicant’s development plans for lot 1 changed to the subdivision of the lot into four lots.[9]
  12. [22]
    The applicant recommenced negotiations with the respondent for an easement over lot 2 to facilitate the lot 1 subdivision.  
  13. [23]
    Possible solutions to have stormwater discharge from a developed lot 1 to Rosemary Street have been exhausted – discharge to Perdita Street is the only reasonably available solution.[10]  Dealing with stormwater on-lot (for example, by way of rubble pits[11]) is not available.
  14. [24]
    On 25 March 2022, the applicant served on the respondent its first offer of compensation to secure a statutory right of user over lot 2, pursuant to the terms of the PLA.  The respondent retained legal representation in April 2022 that he maintained until June 2023 when the ongoing costs of legal representation became too prohibitive for him.
  15. [25]
    The applicant served further offers of compensation pursuant to the terms of the PLA as follows: 
    1. second offer on 27 June 2022;
    2. third offer on 6 September 2022;
    3. fourth offer on 3 April 2023;
    4. fifth offer on 5 July 2023;
    5. sixth offer on 4 August 2023.
  16. [26]
    This proceeding was commenced after the second offer, on 25 August 2022.

Purpose of the easement sought

  1. [27]
    One of the matters the local council will consider in assessing a development application is the ability of fire services to attend to a fire at any proposed dwelling.  Sufficient coverage depends on the distance between dwelling and fire hydrant locations (taking into account the length of hose run and spray length). 
  2. [28]
    In terms of the development application material so far lodged in respect of lot 1, there is an element of uncertainty as to how appropriate fire coverage will be achieved.[12]
  3. [29]
    At some stage what has been proposed to the local council shows firefighting access over the proposed easement on the respondent’s land to provide adequate coverage to the back of the proposed subdivision of lot 1.[13]
  4. [30]
    However, the proposed easement sought in this proceeding in its terms contains nothing about an easement for firefighting access. 
  5. [31]
    The evidence is not clear as to whether fire services would have a right to run hoses through lot 2 to fight a fire on a subdivided lot 1, or whether an easement would be required (or whether the local council might require an easement if that were the proposed firefighting solution).[14]
  6. [32]
    It appears that a later solution to the fire services issue involves the expansion of fire hydrants in Rosemary Street and would not require the use of the proposed easement.[15]
  7. [33]
    Further, I note that in the second amended originating application (court document 51) the relief sought extends the proposed easement to dealing with “roof water and storm water and other utility” (see paragraphs 1 and 2).  However, there was no evidence about the proposed easement being used for “other” utilities.
  8. [34]
    Accordingly, as I presently understand it, the easement is sought only for the purpose of stormwater drainage.  Therefore in this proceeding I am not considering whether an easement should be granted for any purpose except for stormwater drainage. 

The size of the easement and construction zone sought

  1. [35]
    The evidence of Mr Tuxworth (civil and structural engineer) was that for the stormwater drainage infrastructure contemplated to support the subdivision of lot 1 (namely, drainage pipe of 300mm diameter[16] and two drainage pits 600x600mm in size[17]):
    1. the Queensland Urban Drainage Manual recommended a minimum of a 3m wide easement;[18]
    2. the typical minimum width of an easement required by the local council (that would take precedence[19]) was 2m wide;
    3. certain council documents (Ipswich City Council (ICC), Standards for Design Stormwater Drainage, part 2 at [2.1] and [2.2.3]) indicate the required easement could be 2.7m wide;[20]
    4. it is proposed by the applicant to see if the ICC will accept an easement of only 1m wide[21] so as to reduce any perceived impact on the affected lot (that is, lot 2);[22]
    5. there is uncertainty about whether that would be acceptable to the ICC and it will ultimately depend on what the ICC will accept:[23] no detailed meetings have yet been had with the ICC about same.[24]
  2. [36]
    The required easement width on lot 2 may also be affected by lot 3 apparently having a sewer pipe in the general location of the proposed easement (albeit on lot 3): see T1-78, LL1-58.  But the evidence about that is not presently clear, and ultimately the precise dimensions of the easement required on lot 2 will be for the ICC to determine as part of the development application for lot 1.    
  3. [37]
    At it presently stands, the proposed length of the permanent easement sought is approximately 20.6 metres. 
  4. [38]
    The proposed easement (with a width of 1m) therefore is approximately 21 square metres in area.  However, an easement area of 27 square metres was commonly referred to during the hearing (equating to an easement width of 1.3m), and I will take that as the easement sought.  
  5. [39]
    A temporary wider and longer construction zone is also required by the applicant and is subject to potential change.[25]  The second amended originating application mentions an area of 144 square metres (6m wide x 24m long) and seems to seek to require the respondent to remove certain fencing around lot 2 to allow construction to take place (paragraph 7) (without any apparent compensation or obligation on the applicant to reinstate same).

The offers of compensation made by the applicant

  1. [40]
    There are many criticisms that can be made of the first five offers of compensation made by the applicant to the respondent and the applicant’s conduct towards the respondent at the time of those offers being made.  The applicant’s correspondence and conduct demonstrate an entitled and bullying attitude by both the applicant and its representatives, which persisted even at the trial. 
  2. [41]
    It is not necessary to delve into detail about the first five offers of compensation and why the rejection of those offers by the respondent was not unreasonable, as this application will turn on a consideration of the most recent offer (the sixth offer) and whether it has been unreasonably refused by the respondent.  However, it is necessary to have some understanding of the history of offers made by the applicant and the applicant’s other conduct. 

First offer of 25 March 2022

  1. [42]
    The applicant’s first offer of 25 March 2022 appears as exhibit MS-16, affidavit of Salazar, court document 4, and comprises: 
    1. a four page letter;
    2. a fourteen page Annexure A;
    3. enclosure 1 (four pages): offer of reasonable compensation of $11,114.40 (breakdown provided);
    4. enclosure 2: Allan Van Planning, Planning Advice dated 10 March 2022; Built Environment Collective Pty Ltd, stormwater drainage option advice dated 25 February 2022; Herron Todd White, valuation report re: easement over residential property dated 3 February 2022;
    5. enclosure 3: BEC drawings and plans for subdivision; 
    6. enclosure 4: draft deed of agreement to grant easement with attachments;
    7. enclosure 5: BEC conceptual downstream drainage layout drawing; 
    8. enclosure 6: draft originating application; 
    9. enclosure 7: draft order for imposition of statutory right of user.
  2. [43]
    The first offer was said to expire at 4pm on 1 April 2022.

Correspondence subsequent to first offer

  1. [44]
    One day before the first offer was to expire, Ms Salazar wrote to the respondent:[26] 
    1. attaching an affidavit of service and draft legal proceedings;
    2. noting “Should you not accept my offer, as discussed I intend to file legal proceedings after the expiry of that time tomorrow.  If you have any questions concerning my offer would you please contact John [Merlo] on [number] as a matter of urgency.”
  2. [45]
    Some 40 minutes before the first offer was to expire, Ms Salazar wrote to the respondent again noting when the offer would expire and stating that the deadline would be extended until 9am on 4 April 2022 given the respondent had not yet replied.  Again legal proceedings were threatened, this time with the threat of costs: “Should you not accept my offer, as discussed I intend to file legal proceedings after the expiry of that time…  I will rely on this correspondence, and any further failure to respond to my offer, as to the question of costs in proceedings.”[27]  Of course, at that point in time there had been no “failure” to respond to any offer as the original time for acceptance of the first offer had not then even expired.   
  3. [46]
    Unsurprisingly, given what had occurred previously between Mr Merlo and the applicant (see [19] above), and considering the tone of the correspondence being received, the respondent did not immediately respond to the applicant and instead sought advice. 

Response to first offer

  1. [47]
    The respondent emailed Ms Salazar directly in response to the first offer on 5 April 2022.  He noted that he had sought legal and technical advice, he rejected the offer, he asked for some additional information from the applicant, said he remained open to negotiation, and he indicated that he considered compensation of $40,000 would be fair and reasonable.[28]
  2. [48]
    The applicant responded to the respondent on 6 April 2022 advising him that he had not received good legal advice, amongst other matters, and gave the respondent until the following day to accept her offer.[29]
  3. [49]
    The respondent had his solicitors, HWL Ebsworth (HWLE) (specifically Messrs Bittner and Pryor of the Brisbane office) respond on 8 April 2022.[30]  The letter set out in brief terms: 
    1. why it was considered an application for an easement was misconceived;
    2. any such application made would be opposed;
    3. the respondent remained open to considering sensible and reasonable offers;
    4. HWLE had instructions to accept service;
    5. a request that the applicant not further directly communicate with the respondent and direct all future correspondence to HWLE.
  4. [50]
    Ms Salazar’s view of the above exchanges is described in her affidavit of 22 July 2022, court document 4, at [221]-[222]:

“I believe I have made every reasonable attempt to settle this matter in a neighbourly way and provided the Respondent every reasonable opportunity to accept reasonable compensation and to avoid these proceedings. 

As Respondent has taken legal advice and given that the Respondent has stated he wants $40,000 as reasonable compensation I believe the Respondent is unreasonable, intransigent, and un-neighbourly and attempting to ransom me for the easement the Applicant seeks.”

Second offer of 27 July 2022

  1. [51]
    The applicant’s second offer of 27 July 2022 appears as exhibit MS-18, affidavit of Salazar, court document 13, comprising:
    1. a two page letter dated 25 July 2022 – described as a “final offer to avoid proceedings” (addressed to the respondent only, despite there being solicitors acting for the respondent);
    2. the letter indicates it encloses by way of service an affidavit of Salazar sworn 22 July 2022 and an “initiating application Supreme Court of Queensland”; 
    3. a three page offer of reasonable compensation of $11,114.40 (breakdown provided).
  2. [52]
    Highlights of the letter that assist in demonstrating the manner in which the applicant was then dealing with the respondent include:

“Your lawyers have given you bad advice.  Lawyers are paid by the hour to look at your case and defend your case right or wrong, win or lose.  So you are paying them expensive money for a losing outcome.  I suggest you take better legal advice without delay.  I am going to spell this out for you.’

“I suggest you seek legal advice from better specialised expert who would put your interest first over their fees.”

“You are only entitled to $5,500 compensation and I have offered you $11,114.40.  Do you really want to pay your lawyers $10,000 to read this affidavit??  Do you really want to pay your lawyers $10,000 to prepare your response to go to court?  Do you really want to pay your lawyers $15,000 to go to court? 

Let me be absolutely clear. 

You have wasted enough of my time and money.

I am not prepared to enter into any negotiation concerning my offer, which is more than reasonable. 

Do not presume to have your Lawyers write back to me other than to accept the offer unconditionally.  I will not enter into any further correspondence about this matter. 

I will not be put to any further expense by you and I will not hesitate to take you to court if you not accept my offer.”

Correspondence to HWLE of 28 July 2022

  1. [53]
    Following on from the second offer, the next day the applicant emailed HWLE, copied to the respondent.[31]  Extraordinarily, the letter was addressed to one Mr Martinez.  Mr Martinez at the time was the senior managing partner of HWLE based in the firm’s Melbourne office.  He had no involvement whatsoever with the respondent’s file.  The correspondence was copied to Messrs Bittner and Pryor of HWLE (who had the conduct of the respondent’s file in Brisbane) and also to the respondent personally. 
  2. [54]
    The letter is approximately twelve pages long.  It is replete with rudeness, unprofessionalism, uneducated commentary, and scandalous allegations.  It can only be construed as an attempt to bully and intimidate.   
  3. [55]
    Highlights (or perhaps more accurately, lowlights) of the letter include:  

“I am entirely unimpressed by your firm, your firm’s correspondence, and what I perceive as your firm’s grasp of the law in respect of this matter.  I encourage you to seek the advice of Senior Counsel….It seems to me a reasonable third person might think your firm is bent on sending your client haplessly into the teeth of the Supreme Court at the cost of first his fees to you, and secondly, possibly costs in the matter to him.”

“Your Mr Pryor’s allegation is somewhat embarrassing.  Perhaps your Messer’s Pryor and Bittner are unsuited to the carriage of this file?”

“It would appear that your Messer’s Pryor and Bittner ought to be more careful about representing your firm and client, as to what falls from their lips.”

“The Supreme Court will expect that as lawyers, you will know the law, properly advise your client, and not waste the courts time and resources.  I would invite you to consider whether the Supreme Court would find it embarrasses the profession that a lay person needed to tell your Messer’s Pryor and Bittner the law??  I would invite you to consider whether the Supreme Court would expect your firm to understand the correct operation and interpretation of the law?  I would invite you to consider whether the Supreme Court would think your firm has mislead your client about the law and facts of this matter?”

“You might like to consider your firms exposure to indemnity costs as well, if this matter proceeds to Court.”

“Perhaps you might like to advise Messer’s Bittner and Pryor about the peril of placing your firm in open correspondence without prudence aforethought in consideration of your lawyers ethical responsibilities?  I respectfully suggest you assign this client’s file to someone who properly appreciates the law and the question of costs in the proceedings.  A Justice of the Supreme Court might find it was imprudent to make baldly bellicose and impotent statements on your client’s and firms behalf?  Perhaps someone more experienced ought to properly read by affidavit and correspondence dated 25 March 2022 (Now Exhibit 16) and properly advise your client??”

Proceeding commenced 25 August 2022

  1. [56]
    The applicant’s originating application was filed on 25 August 2022.

Third offer of 6 September 2022

  1. [57]
    The applicant’s third offer of 6 September 2022 appears as exhibit MS-20, affidavit of Salazar, court document 13, comprising:
    1. a nine page letter dated 6 September 2022 (addressed to both the respondent and his solicitors[32]); 
    2. annexure A: offer of reasonable compensation of $7,094.80 (breakdown provided) (note the reduction in offered compensation); 
    3. enclosure 1: draft deed of agreement to grant easement; 
    4. annexure B: copy of the first offer of 25 March 2022 and all of its attachments;
    5. annexure C: copy of letter of 6 April 2022 and its enclosure; 
    6. annexure D: copy of HWLE letter of 8 April 2022; 
    7. annexure E: copy of the second offer of 27 July 2022 (without enclosures); 
    8. annexure F: copy of letter of complaint about HWLE dated 28 July 2022 (without attachments) (sent to HWLE and copied to the respondent); 
    9. annexure G: HWLE’s letter of 1 August 2022. 
  2. [58]
    The nine page letter continued the discourteous tone of the applicant’s correspondence.  It included conclusory remarks, namely:
  1. “In the Sixth Correspondence you said your client “remains willing to discuss a fair commercial arrangement.”
  1. In fact, your client has never been willing to entertain the burden to be assumed. 
  1. Your correspondence is remarkable for which it now says, which is that you now realise the correctness of our position, and that your client ought to accept our offer, but wants to be paid for the trouble of his late realisation.
  1. By now it ought to be abundantly clear to a competent legal practitioner that:
  1. 1.
    Your client has acted in an intransigent and unneighbourly fashion;
  1. 2.
    Your client has imprudently refused each of several offers of reasonable compensation for the burden to be assumed;
  1. 3.
    Your firm (and client presumedly), has made allegations which ought never to have been made in wilful disregard of known facts and in disregard of established law, causing the undue prolongation of this case by groundless contentions, and by support of your clients imprudent refusal of an offer to compromise.
  1. 4.
    Your firm has churlishly failed to accept the correct legal position and caused proceedings to be filed by not addressing reasonable questions put to you.”
  1. [59]
    A further letter of 7 September 2022 from the applicant, equally as discourteous, continued in the same vein.[33]

Fourth offer of 3 April 2023

  1. [60]
    The applicant’s fourth offer of 3 April 2023 appears as exhibit JJ03-10, affidavit of Jeffs, court document 45, comprising:
    1. a two page letter (addressed to HWLE); 
    2. annexure A: document regarding the law;
    3. enclosure 1: offer of reasonable compensation of $11,749.60 (breakdown provided) (note, slightly increased from the first two offers); 
    4. enclosure 2: draft deed of grant of easement; 
    5. enclosure 3: plan of easement area document; 
    6. enclosure 4: form of easement document.

Amended originating application

  1. [61]
    The applicant filed an amended originating application on 6 April 2023 (court document 28).

Fifth offer of 5 July 2023

  1. [62]
    The applicant’s fifth offer of 5 July 2023 appears as exhibit MS-10, affidavit of Salazar, court document 39, comprising a two page letter (addressed to the respondent).  The letter re-opened the previous offer for acceptance until 4pm on 12 July 2023.

Sixth offer of 4 August 2023

  1. [63]
    The applicant’s sixth offer of 4 August 2023 appears as exhibit MS-11, affidavit of Salazar, court document 39, comprising:
    1. a five page letter (addressed to the respondent);
    2. enclosure 1: offer of reasonable compensation;
    3. annexure 1: a drawing.
  2. [64]
    I will return to the detail of the sixth offer later in these reasons. 

Second amended originating application

  1. [65]
    The applicant filed a second amended originating application on 21 August 2023 (court document 51).  That is the current version of the originating application. 

The respondent’s refusal to agree to the first five offers was not unreasonable 

  1. [66]
    In circumstances where the applicant’s present application for a statutory right of user is based on the applicant’s sixth offer of compensation, it is not strictly necessary to determine whether the respondent’s refusal to agree to any of the first five offers made by the applicant were unreasonable. 
  2. [67]
    However, there are several bases upon which, had it been necessary to determine, the respondent’s refusal to agree to any of the first five offers was not unreasonable. 
  3. [68]
    I mention specifically the proposed terms of the easement that was consistent across all five offers.  When the precise terms of the easement then sought are considered, it is plain that the offers of compensation made were manifestly inadequate bearing in mind the onerous obligations of the easement sought to be imposed on the respondent.
  4. [69]
    The draft deed of easement accompanying the first offer of compensation is at enclosure 4 of exhibit MS-16, affidavit of Salazar, court document 4.  The easement at that time was contemplated to be a take of 27 square metres. 
  5. [70]
    I note the calculation of compensation in the first offer (that was slightly increased in the fifth offer) was as follows:

Fixed par value or face value of land (27m2 at $220 per m2) (nominal)

$2,970

Blot on title

$2,000

Legal costs

$3,779.60

Allowance for disturbance caused by carrying out initial work and subsequent repair or maintenance (nominal)             

$1,000

Diminution in market value of land (nominal)

$500

Allowance for associated costs caused by imposition of easement

$864.80

Allowance for loss of privacy amenity and quiet enjoyment during works for 7 days (nominal)

$500

Loss of property rights (nominal)

$500

Uplift for benefit obtained by lot 1 (nominal)

$500

Other disadvantage (nominal)

$500

Less value of upgrade for future development of lot 2 (nominal)

-$1,000

Less appreciation in value of lot 2 because of lot 1 development

-$1,000

Total

$11,114.40

  1. [71]
    Unnecessarily onerous obligations proposed (and not properly compensated for) in respect of the proposed statutory right of user at the time included:
    1. the express terms of the offer included that the respondent “do all things reasonable (sic) necessary by us to lodge and secure our development application within the time stipulated or otherwise as reasonably required.”[34]
    2. the express terms of the offer included a condition that “development approval for subdivision in same or like terms to those express in this correspondence is granted by Ipswich City Council.”[35]
    3. clause 2.4(c) extended the easement to “other water”, not merely roof water or stormwater, and to electric and other substances (clause 2.4(e));
    4. clause 3.1 permitted a variation of the easement without the consent of the respondent in certain circumstances;
    5. clause 5.1 restricted the respondent’s ability to dispose of his land;
    6. clause 5.1(f) obliged the respondent to do certain things if he disposed of his land;
    7. clause 5.3 restricted the respondent’s ability to create a security interest in respect of his land;
    8. clause 8 required the respondent to effect certain insurances for the benefit of the applicant;
    9. in addition to the easement, the terms required the respondent to allow access to some unspecified “construction zone” for an unspecified period of time, and required the respondent to maintain and control the “construction site” (clauses 2.4(b), (f)(i), (f)(iii), (f)(vii), (f)(xi)).    
  2. [72]
    It was not unreasonable for a statutory right of user in such terms, and with such compensation, to be rejected by the respondent. 

Credit findings

Ms Salazar

  1. [73]
    Ms Salazar affirmed several affidavits in support of the applicant’s proceeding and was cross-examined at the trial. 
  2. [74]
    Some key aspects of her evidence were: 
    1. Ms Salazar is a director of the applicant.  She is also a certified practising accountant and a licensed real estate agent. 
    2. In purchasing lot 1, Ms Salazar did not have any intentions of subdivision of the lot in the short term; she was looking for a buy and hold investment.  The building of a granny flat on the lot was one possibility. 
    3. In purchasing lot 1, Ms Salazar did not consider any possible development plans would be impeded by a lack of direct access to Perdita Street.  She thought at the time that it was likely possible to construct rubble pits for roof water drainage purposes for additional dwellings.[36]
    4. For various reasons, Ms Salazar decided that a subdivision approval for lot 1 should be secured. 
    5. The applicant initially negotiated around October 2021 with the owner of lot 3 for an easement for access and drainage, based on a proposed three to five lot subdivision of lot 1 that was later abandoned.[37]  The idea of a granny flat was still on the table as an alternative.
    6. Ms Salazar claimed an agreement was reached with the respondent in about August 2021 about drainage from lot 1 through lot 2, which she alleged the respondent repudiated.[38]
    7. Upon the first offer of compensation being rejected, Ms Salazar was of the view that the respondent was “unreasonable, intransigent and un-neighbourly and attempting to ransom me for the easement the Applicant seeks”.[39]
  3. [75]
    Ms Salazar’s correspondence of 7 September 2022 that responded to correspondence from HWLE about how the originating application ought to proceed again reveals her attitude to any person who did not agree with her (exhibit MS-21, affidavit of Salazar, court document 13).  It is an extraordinary piece of correspondence – discourteous in the extreme.   
  4. [76]
    Ms Salazar was an unimpressive witness.  She was evasive and argumentative.  She was unduly critical and dismissive of the respondent and demonstrated no real insight into the bullying nature of her dealings with the respondent.  She would not make appropriate concessions, and she advocated for her position rather than just answering the questions directly asked of her. 
  5. [77]
    Where Ms Salazar’s evidence is contradicted by other evidence (such as the evidence of the respondent), I give more weight to the other evidence.

Mr Jeffs

  1. [78]
    I consider the key aspect of the evidence of the respondent to be that he is concerned that any easement imposed on his property (lot 2) may adversely impact any future development of his land, although he has no specific plans in that respect and perceives development of his land as a long-term proposition.  He is also concerned about being required to have any ongoing dealings with the applicant.  
  2. [79]
    I generally accept the factual evidence of the respondent, including as to him holding particular subjective concerns.   

Jared Pressler and Cassandra Willmot

  1. [80]
    Mr Pressler (owner of lot 3) and Ms Willmot, the life partner of the respondent until early June 2023, both gave evidence.  I generally accept their evidence, but it is not determinative of the proceeding. 

Overview of the expert valuation evidence

Mr Hyne

  1. [81]
    Mr Hyne of Herron Todd White (HTW), valuer for the applicant, provided a valuation of compensation in a report dated 3 February 2022.[40]
  2. [82]
    He assessed compensation on the basis of an easement of 1.3m in width, 20.6m in length, with a larger construction zone for seven days (6m x 24m).  He was not provided with a copy of the proposed easement deed that was a part of the first five offers made by the applicant.[41]
  3. [83]
    The valuation of compensation undertaken by him assumes that the construction zone will be required for a period of 7 days (page 5 of the report).  He did not appreciate that the construction zone would remain available for use indefinitely under the proposed easement terms (as accompanied the first five offers), or value the effect of that.[42]
  4. [84]
    That was important in circumstances where lot 2’s boundary to Perdita Street is only of 12.5m in width.  If the construction zone was required to be kept permanently clear (6m of 12.5m in width), that may significantly affect the type of future development that could be carried out on lot 2 in the future.  This was explored during the cross-examination of Mr Hyne from T1-127, L40. 
  5. [85]
    Nor did he value the effect, if any, of the proposed easement terms (as accompanied the first five offers) requiring the respondent to obtain the applicant’s approval to the creation of any new security interest, requiring the respondent to obtain certain insurances, requiring the respondent at his own cost to ensure any purchaser of the land signs an equivalent deed.[43]  That is, certain burdens that at the time were being proposed by the applicant were not assessed by him.  
  6. [86]
    He was not persuaded that the aboveground inclusions in the proposed easement of two stormwater pits justified the inclusion of compensation for injurious affection on the basis that the property size of lot 2 was large, and the pits would be unobtrusive and distant from the house itself.  He acknowledged though that most owners would prefer not to have such structures on their land.[44]
  7. [87]
    He assumed (page 6 of the report):
    1. the proposed easement will comprise underground pipework with grated or closed lidded pits finishing at surface level;
    2. the adoption of a piecemeal approach on a ‘before and after’ basis, by direct comparison adopting a $m2 based upon relevant sales within the broader area;
    3. a diminution rate that reflects the impact upon lot 2, being an easement and infrastructure in the main belowground.
  8. [88]
    The calculation of compensation posited by Mr Hyne is then as follows:

Easement Compensation Assessment

 

Real Estate Take

 

‘Before’

2,936m2 @ $220/m2, equates to

$645,920

‘After’

2,909m2 @ $220/m2, equates to

27m2 @ $220/m2, 50% Diminution equates to

$639,980

$2,970

$642,950

Difference

$2,970

Disturbance

 

Blot on title

$2,000

Total Compensation

$4,970

For practical Real Estate Purposes,

Adopt $5,000

Construction and Laydown Compensation

 

144m2 @ $220/m2, equates to $31,680. Adopt 7% Capitalisation Return, $2,218 per annum. Equates to $45 (Rounded) over the 7 days. This is below an expected rate of compensation to the land owner.

Therefore, we adopt $500 compensation for the 7 days.

Other

  1. [89]
    I note reference in evidence of Ms Salazar of obtaining a valuation for the proposed easement over lot 3, where the nominal value assessed was $10,500.[45]  No detail or valuation was provided and accordingly that evidence is of little evidentiary value. 

Pre-conditions to an order under s. 180(1) PLA

Subsection (1) – reasonably necessary

  1. [90]
    Subsection (1) requires that the proposed easement be reasonably necessary in the interests of the effective use of the dominant tenement in any reasonable manner. 
  2. [91]
    A stormwater drainage easement is reasonably necessary in the interest of the effective use of lot 1, to permit its subdivision.  No development approval will be granted to subdivide lot 1 without a solution for the management of stormwater from the lot being implemented.  That will require a stormwater easement over either lot 2 or lot 3: that is a reasonable manner in which the subdivision of lot 1 can be achieved.  
  3. [92]
    The owner of lot 3 appeared willing to agree to an easement over his lot for a price that had been offered by the applicant, but such offer was quickly withdrawn by the applicant.
  4. [93]
    I do not consider that the fact that lot 3 may consent (or may have previously consented) to an easement at a particular price stands in the way of the applicant satisfying the criteria of s. 180(1) PLA.  As Hamilton J said in Tregoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15,845 at 15,854:

“It cannot be the intention of the Act that if an easement would be equally efficacious over two pieces of land it cannot be granted over either because it cannot be said that it is necessary for it to be granted over that piece of land as opposed to the other.”

  1. [94]
    Whilst the applicant sought to maintain some justification for seeking an easement over lot 2 rather than lot 3,[46] I do not accept that justification as valid.  In my view, the applicant has proceeded to seek an easement over lot 2 because it considered that a cheaper option.  But that does not mean the easement is not reasonably necessary over lot 2.  I do not think there is a proper evidentiary basis to conclude that there is a particularly stronger case for an easement over either of lot 2 or lot 3.  Neither is easier or more convenient in any substantial way.  Here, there is not such a dramatic difference between the easements that would be required over either of lot 2 or 3 that it could be concluded that an easement over one lot rather than the other would only be reasonably necessary. 
  2. [95]
    The requirement of s. 180(1) of the PLA is satisfied.     

Subsection (3)(a) — consistent with the public interest

  1. [96]
    It is consistent with the public interest that the dominant land (lot 1) should be used in the manner proposed (that is, subdivided for residential purposes).
  2. [97]
    It is no fault of the applicant that subdivision of lot 1 requires a stormwater drainage solution, which is apparently best achieved by stormwater from lot 1 being directed downhill to Perdita Street, that in turns requires an easement through either lot 2 or lot 3.  There is no fault in the applicant purchasing lot 1 for subdivision even if she knew that a stormwater drainage solution for any proposed subdivision might involve a stormwater drainage easement through an adjoining block of land.     
  3. [98]
    Whilst it will ultimately be for the local council to determine any development application made by the applicant, the development of the dominant land from one parcel to into four (or some other number) for residential purposes is consistent with the public interest, particularly in circumstances where the State has a well-publicised housing crisis.  The requirement of s. 180(3)(a) of the PLA is satisfied. 

Subsection (3)(b) — adequate compensation in money

  1. [99]
    There is no dispute that as a general proposition the respondent can be adequately compensated in money for any loss or disadvantage suffered by reason of the imposition of a statutory right of user.
  2. [100]
    The basis upon which the applicant sought to make offers of compensation in its first five offers was plainly inadequate given the onerous terms of the easement then proposed. 
  3. [101]
    In the sixth offer (and by the second amended originating application, particularly paragraph 10), the applicant in effect leaves the matter of adequate compensation for the Court to determine. 
  4. [102]
    In this case it will need to be considered whether there is adequate evidence upon which the Court can act to make an assessment of compensation.  Any difficulty though in that respect does not mean that this element is not satisfied.[47]  The requirement of s. 180(3)(b) of the PLA is satisfied. 

Subsection (3)(c)(i) — refusal to agree unreasonable 

  1. [103]
    The sixth offer is in a substantially different form to the earlier offers. 
  2. [104]
    It identifies:
  1. (a)
    a permanent easement take of 27 square metres;
  1. (b)
    a more extensive (temporary) construction zone;
  1. (c)
    the terms of the easement can be on terms the Court considers just and fair, and as required by the ICC;
  1. (d)
    compensation (initially it appears with a $1,000 deposit[48]) comprising:
  1. (i)
    $225 per square metre for the easement take or such other amount as is assessed by the Court to be just;
  1. (ii)
    $2,000 compensation for blot on title or such other amount as is assessed by the Court to be just;
  1. (iii)
    $500 per 7 day period or part thereof whilst the construction zone is in use or such other amount as is assessed by the Court to be just;
  1. (iv)
    such other amount as is assessed by the Court to be just.  
  1. [105]
    Carmody CJ in Peulen & anor v Agius & anor [2015] QSC 137 at [74] in considering the issue of whether a respondent’s refusal was unreasonable said:

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

  1. The absence of any significant detriment, loss or harm to the respondent;
  2. The significant cost associated with establishing any alternative access;
  3. [not relevant here]
  4. Whether the refusal was motivated by ill-will, malice, or acrimony;
  5. Refusal of reasonable offers subject to appropriate conditions.”
  1. [106]
    If the permanent easement is in fact restricted to the proposed 27m2, I do not think the imposition of the easement would cause any significant detriment, loss or harm to the respondent.  The infrastructure sought to be constructed is mainly underground and is not otherwise overly obtrusive.  It is not adequately demonstrated that there is a real risk the permanent easement sought would interfere with any future development that the respondent may wish to undertake on lot 2.
  2. [107]
    There is no real viable alternative to lot 1, apart from a like easement through lot 3.   
  3. [108]
    Whilst there are various allegations of ill-will, malice and acrimony made by Ms Salazar against the respondent, I reject all such allegations.  I also reject Ms Salazar’s allegations against the respondent that he was, variously, “trenchantly intransigent”, “unwilling to consider any offer”, “very unreasonable”, “always had a closed mind”, “not a particularly smart nor capable man”, “a bit strange” and so on.  The respondent acted entirely understandably and appropriately in the context of the way he and his solicitors were being dealt with by the applicant and Ms Salazar.        
  4. [109]
    I note the comments of Burns J in 2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS [2016] QSC 40 at [39]-[41]:

“As Andrew J held in Ex parte Edward Street Properties Pty Ltd, in order to justify the imposition of a statutory right of user, the case in favour the case in favour of the applicant should be “clear and persuasive”.  Furthermore, such a case must establish the conditions for the making of an order with an equal degree of clarity.  If the applicant does not discharge that burden then “the occasion to include in any such order terms and conditions that are just does not arise”.  

This does not mean that every detail of an applicant’s proposal must be worked out in a final way or that every necessary approval or permission is obtained in advance of the hearing of the application, but it does mean that matters of substance are satisfactorily defined and established by the evidence.  If otherwise then the court cannot properly assess the merits of the application, let alone settle on conditions to accompany the grant.  The words in s 180(3)(a) PLA, “in the manner proposed”, contemplate that an applicant for relief “will come to court with a particular proposal – to use the land in a particular manner”, and that expectation will not be met where, as here, there are substantial gaps in the detail of what is proposed. 

Furthermore, without appropriate definition in detail of the proposal, an applicant for relief runs the risk that it cannot be established that the respondent has unreasonably refused to accept the imposition of the statutory right of user.  That is in fact what happened in this case.”

  1. [110]
    Whilst there are gaps in a detail of what is proposed by the applicant (because it leaves some of the detail to the Court), I do not consider those gaps rise to the level that there is not an actual plan that can be assessed. 
  2. [111]
    Having said that, I would certainly not order an easement “on such other terms as the ICC may impose as part of a development application” because that does lack sufficient clarity at the present time.  The Court must be able to finalise the precise terms of the easement, including because the assessment of compensation depends on the terms of the easement. 
  3. [112]
    I note that subjective matters can be relevant to the assessment of whether a rejection of an offer is unreasonable.[49]  In that respect, the respondent holds genuine and understandable concerns, given the way in which the applicant, Ms Salazar and Mr Merlo have dealt with him to date.  He is concerned about the imposition of an easement over his land for the benefit of the applicant.  He has expressed concern that the imposition of the proposed easement may adversely impact on development opportunities for lot 2 in the future.  I accept that lot 2 is narrower at the Perdita Street end and that the proposed easement will intrude on the width there available for development.  But there are no certain development plans in that respect – either in the short or medium term.  It is speculation that the proposed permanent easement would adversely affect a development of lot 2 in some real way.  I consider that issue ought to be dealt with in a similar way to the case of Peulen & anor v Agius & anor [2015] QSC 137 at [53]-[54] where it was held:

“Unrealistic or speculative expectation 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.

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.”

  1. [113]
    That is, that concern will not prevent the imposition of a statutory right of user but can be relevant to the assessment of adequate compensation.
  2. [114]
    Insofar as the respondent holds concerns that the imposition of an easement will require him to have ongoing dealings with the applicant, whilst I can appreciate the basis for that concern, I think conditions can be imposed that address that concern to some extent, and it otherwise of itself does not justify a complete refusal to impose a statutory right of user. 
  3. [115]
    The final offer made by the applicant (the sixth offer) which is to be considered, allows for the Court to determine what is the proper compensation.  That is similar to what occurred in Pacific Coast Investment Pty Ltd v Cowlishaw [2005] QSC 259.  In that case, whilst the applicant had made earlier offers of compensation that the respondent contended she had reasonably rejected because the compensation offered was not adequate, by the time the matter came on for determination before the Court, the applicant had made clear that it clear that it would pay whatever compensation was assessed by the Court to be just.  McMurdo J dealt with the issue at [24]-[25] as follows:

“Plainly the respondent has refused to agree to accept the imposition of an obligation of user.  She has not indicate that she would agree to on certain terms but not on others: her refusal is unqualified.  Yes one argument advanced for her is that her refusal is reasonable, because she has not been made a reasonable offer.  She argues that the applicant must prove that by the commencement of the proceedings, there had been a reasonable offer which she had refused.  The applicant had offered to pay her $30,000 as the consideration for this easement by the time the proceedings were commenced.  She argues that because that consideration was inadequate, it was not a reasonable offer and she had not unreasonably refused to agree to the easement at what she says us the critical point in time: the commencement of the proceedings.    

In my view that misconstrues the section.  The preconditions to the conditions to the exercise of the power under s 180 must exist when the power is exercised; they need no have existed when the proceedings were commenced.  By the conclusion of the hearing, the applicant had made it clear that it sought an order for the imposition of an obligation of user upon condition that it pay such amount as was assessed to be just compensation or consideration pursuant to subsection (4)(a).  In particular the applicant made it clear that if the amount of $80,000, derived from the respondent’s valuation evidence, was considered to be just compensation, the applicant sought an order upon condition that that amount be paid.”

  1. [116]
    Insofar as the applicant seemed very critical of the respondent for not engaging in negotiations with her, that criticism is unfounded.  As was said in Naylor & anor v Pierce & anor [2010] QSC 399 at [98]:

“The applicants’ attitude seems to be that the unreasonableness of their proposal was not relevant – it was then a matter of the respondent being unreasonable in failing to negotiate with them.  It is true that Mr Pierce was in no mood to negotiate but that is not what the legislation requires – the onus is on the applicants to put forward a proposition that it would be unreasonable for the respondent to refuse, not for him to come up with a proposition that he finds acceptable.”

  1. [117]
    I conclude that where the applicant has broadly identified the type of statutory right of user required and has otherwise offered to effectively leave it to the Court to determine appropriate terms and compensation, that the respondent’s refusal of that offer (the sixth offer) is unreasonable in the sense required by the Act.  The requirement of s. 180(3)(c)(ii) of the PLA is satisfied.   

The uncertainty of what might be approved by the ICC

  1. [118]
    There appears to be a significant amount of uncertainty as to whether a permanent easement of only 1m (or 1.3m) in width will be acceptable to the ICC in any development approval given in relation to lot 1.  If I were positively satisfied that ICC would not grant approval on that basis, then I would not be prepared to exercise the discretion to grant the proposed easement, as such relief would lack practical utility. 
  2. [119]
    However, as was held in Peulen & anor v Agius & anor [2015] QSC 137 at [56]-[58] (footnotes omitted):

“[W]here 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.

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.  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”.

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.”

  1. [120]
    The possibility that the ICC will refuse development approval without a wider easement does not preclude the imposition of the proposed easement (in the dimensions sought) at the present time. 
  2. [121]
    To be clear though, if any wider easement were required and then sought by the applicant, that would more sharply bring into issue the impact that a wider permanent easement may have on the development potential for lot 2 (particularly near Perdita Street), which might in turn lead to the rejection of any application for a wider easement, or significantly increased compensation.   

Required condition of the statutory right of user – insurance

  1. [122]
    Here I mention specifically one of the conditions of the statutory right of user that I consider just and equitable to impose in the context of this case.  It concerns insurance which was a topic dealt with in the proposed easement terms accompanying the first five offers – see at [71 (h)] above. 
  2. [123]
    It should be a condition of any easement imposed that the applicant maintain insurance in respect of the area of the easement, including in respect of any person that may enter upon the easement or damage that may result from any of the infrastructure contained in the easement.  The insurance would need to benefit not only the respondent but his mortgagee (if any).  There needs to be a mechanism by which the respondent can ensure the applicant’s compliance with that condition.  The same applies in respect of the temporary construction zone and any damage that may result from the construction undertaken.  
  3. [124]
    The alternative would be to compensate the respondent for any additional insurance burden that would arise on him because of the easement and construction zone, including others access to the easement/construction zone, the risk of damage from the infrastructure installed on the easement, and the risk of damage from construction.  But no party has produced any information that would allow me to properly assess that.     

The discretion

  1. [125]
    There remains a discretion to exercise before relief can be granted in favour of the applicant, even though (as above) I am satisfied that the other requirements for the imposition of a statutory right of user are met.   
  2. [126]
    The respondent is correct to observe in his written submissions that the power to adjust property rights is not simply “there for the asking”.[50]  However, equally, once the pre-conditions are met, then there is no reason why the remedy should be withheld or granted sparingly.[51]
  3. [127]
    It is relevant to take into account, in addition to the analysis conducted above, the following matters, although none of them are determinative of how the discretion should be exercised: 
    1. the applicant purchased lot 1 knowing of stormwater difficulties;
    2. the applicant ceased negotiations with Mr Pressler, it seems to get cheaper access from the respondent;
    3. the manner in which the applicant dealt with the respondent, that described kindly was heavy-handed.   
  4. [128]
    The applicant’s conduct does not rise to the level of the disgraceful conduct of the applicant in the case of Naylor & anor v Pierce & anor [2010] QSC 399, so as to disentitle the applicant to the discretion being exercised in its favour.  The facts of that case are very different to those here. 
  5. [129]
    I exercise the discretion in favour of a statutory right of user being imposed. 

Outcome – imposition of statutory right of user on conditions

  1. [130]
    I am prepared to impose a statutory right of user on lot 2 on conditions. 
  2. [131]
    I will impose a statutory right of user in the form of an easement, and a licence in respect of the construction zone required for initial construction works. 
  3. [132]
    I will set out some proposed conditions later in these reasons – see [160] to [162] below.  

Compensation – preliminary matters 

  1. [133]
    Turning then to the assessment of compensation for the imposition of the statutory right of user that will be imposed on lot 2.
  2. [134]
    Guidance as to how the assessment of compensation might be approached is set out in the NSW judgment of Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd [2010] NSWLEC 2, which was referred to with approval in Ward v Hull [2019] QSC 32 at [22].  Nine principles are referred to – it is not necessary to set them out in detail here. 
  3. [135]
    It seems to me that compensation for the loss or disadvantage that would arise from the imposition of the statutory right of user in this case would at least comprise:
  1. (a)
    diminished market value of the servient land (including its potential usage);[52]
  1. (b)
    compensation for the loss of propriety rights caused by the imposition of the statutory right of user;[53]   
  1. (c)
    costs caused to the owner of the servient land;
  1. (d)
    loss of amenity, security, privacy and quiet enjoyment of lot 2, and any increased nuisance caused by the use of the statutory right of user, associated with –
  1. (i)
    the disturbance caused by the initial works being carried out;
  1. (ii)
    the visible aspects of the works to be installed (particularly drainage pits);
  1. (iii)
    additional time and effort involved in maintenance around the installed works (for example, making mowing the area more tedious);
  1. (iv)
    loss of peace and quiet when easement used to maintain, etc the installed works.
  1. [136]
    It is important in assessing such heads of damage to be mindful to prevent double compensation.[54] 
  2. [137]
    This is not an exceptional case where the assessment of compensation is so difficult that compensation might instead be assessed by reference to the profits the applicant stands to make if its development proceeds.[55]  And I am not sufficiently confident in the evidence as to likely profits to make that method of assessment of compensation reasonable in any event.  
  3. [138]
    I am not prepared to allow any offset against the identified loss and damage for any compensating advantages to lot 2 because I do not think that there are any of substance.  In that respect:
    1. insofar as it might be suggested that the stormwater drainage works to be installed in the easement may be of some benefit to the respondent at some point in time should he ever choose to develop his land, that is too speculative to properly take into account;[56]
    2. there is no evidence to support a suggestion that there will be an increase in the value of lot 2 as a consequence of the development of lot 1 as proposed.[57]
  4. [139]
    It is unclear whether the imposition of the proposed easement will create any additional rates burden on lot 2 that ought be taken into account.  Rates on lot 2 may in fact decrease if the imposition of the easement causes a decrease in the rateable value of lot 2.  But there is insufficient evidence for me to factor that into my assessment either way.   

Assessment of compensation

  1. [140]
    I consider and assess the heads of loss and damage I have identified at [135] above. 

Diminished market value of the affected land (including its potential usage)

  1. [141]
    This head concerns the effect of blot on the title of lot 2 consequent upon the easement. 
  2. [142]
    Mr Hyne suggests a valuation of blot of $2,000. 
  3. [143]
    I do not think that properly takes into consideration potential usage of lot 2, particularly including that the easement at the Perdita Street boundary impacts on an area that is only 12.5m wide to begin with.  Nor does it properly take into consideration the position of the easement against the boundary limiting plantings that may be done around the boundary of lot 2 (which would be common with blocks of this nature), thereby possibly impacting on the privacy of lot 2 from lot 3. 
  4. [144]
    The value of lot 2 at the time of Mr Hyne’s valuation in February 2022 was suggested to be $645,920. It is likely to have increased since then.  I consider an assessment of $12,000 for this head of loss and damage is appropriate.  That reflects less than 2% of the lot’s value (without further regard to potential usage), which I consider is a modest assessment.   

Compensation for the loss of propriety rights by the imposition of the easement   

  1. [145]
    An outright purchase value of the land the subject of the proposed easement may be an indicator of the value of the loss of propriety rights, but it is not conclusive. 
  2. [146]
    Mr Hyne seems to value this head of compensation under the title “Real Estate Take”, at an amount of $2,970 (based on 27m2 at $220 per m2). 
  3. [147]
    I am prepared to accept that valuation of this head of loss and damage (rounded to $3,000).

Costs caused to the owner of the affected land

  1. [148]
    I consider this head of damage ought properly include the costs incurred by the respondent about this proceeding, including any costs incurred pre-proceeding when the proposed easement was under discussion between the parties.  There is evidence of legal costs incurred by the respondent of $40,000.  I see no reason why the respondent should not be fully compensated for those costs that appear reasonable for the legal work undertaken. 
  2. [149]
    Further, I consider it will be necessary for the respondent to obtain legal assistance so that an easement can be formally registered on lot 2 consistent with these reasons.  I estimate the reasonable cost of that at $5,500 which the applicant should also pay.  If for any reason those costs actually incurred exceed that amount, then I will give the respondent liberty to apply for a variation of the compensation payable by the applicant. 
  3. [150]
    I assess this head of loss and damage at $45,500, subject to the liberty to apply that I have mentioned.

Loss of amenity, security, privacy, quiet enjoyment of lot 2, and any increased nuisance caused by the use of the easement

  1. [151]
    The proposed easement is not proximate to the existing dwelling on lot 2. 
  2. [152]
    The visible drainage infrastructure to be installed in the easement (two drainage pits, 600x600mm, at ground level) whilst certainly not an attractive feature to have on one’s land, in the context of the large residential block size of lot 2 should not be viewed as creating a significant loss of amenity. 
  3. [153]
    After the drainage infrastructure in the easement is installed, there should be only limited occasions on which the easement will need to be accessed by the dominant tenement.  There would not be expected to be any significant noise or nuisance issues after the initial construction is complete. 
  4. [154]
    There will be the annoyance and extra time likely spent mowing and/or whipper-snippering around the visible drainage infrastructure to keep the area tidy. 
  5. [155]
    The disturbance caused by the initial works being carried out is likely to be significant, albeit estimated to be over a period of approximately 7 days (and by conditions I propose to limit the construction period to a maximum of 30 days).
  6. [156]
    I consider a global sum of $2,500 would properly compensate for this head of loss and damage. 

Outcome – statutory right of user

  1. [157]
    I am prepared to impose a statutory right of user on lot 2 on conditions. 
  2. [158]
    I will impose a statutory right of user in the form of an easement, and a licence in respect of the construction zone required for initial construction works. 
  3. [159]
    Whilst I will hear from the parties about the precise terms of the orders to be made, I envisage orders as follows, consistent with the reasons I have given. 
  4. [160]
    First, in terms of the imposition of the statutory right of user:
    1. Upon the applicant paying to the respondent the sum of $63,000 as compensation, the Court imposes on lot 197 on RP116684, title reference 14287174 (the servient land), a statutory right of user in favour of lot 199 on RP116684, title reference 14287176 (the dominant land) on the terms set out in this order.
    2. The statutory right of user is to take the form of an easement and a licence. 
  5. [161]
    Second, in terms of the easement:
  1. (a)
    The easement is a permanent easement in respect of an area of the servient land and is to have the dimensions of not more than 20.6m in length and 1.3m in width as demonstrated (not to scale) on the diagram below.

M Salazar Properties Pty Ltd v Jeffs [2024] QSC 9

  1. (b)
    The easement entitles the owner of the dominant land and their servants or agents, whether on foot or by vehicle, to break the surface of, dig, open up and use the easement to construct, lay down, install, deepen, use and manage, maintain, repair, alter, renew, remove, replace or inspect drains or drainage pipes or drainage pits or any other drainage infrastructure installed for the purpose of draining or transmitting roof water or stormwater from the dominant land to Perdita Street.
  1. (c)
    The easement does not entitle any interference with existing drainage infrastructure servicing the servient land.
  1. (d)
    The drainage infrastructure permitted within the easement:
  1. (i)
    insofar as it includes drainage pipes, must be pipes of not less than 300mm in diameter;
  1. (ii)
    insofar as it includes any infrastructure visible or at or above ground must be no more than two drainage pits with dimensions each of no more than 600x600mm.
  1. (e)
    There are conditions of the easement that:
  1. (i)
    except in an emergency situation, any access to the easement must be notified in writing to the owner of the servient land not less than 2 business days before access;
  1. (ii)
    after any access to the easement, the easement must be reinstated by the owner of the dominant land to the condition it was in prior to access;
  1. (iii)
    the owner of the dominant land is to at all times maintain insurance over the easement (for the benefit of the owner of the servient land and any mortgagee of the servient land) for any damage suffered by any person as a consequence of accessing the easement or relating to the drainage infrastructure installed within the easement;
  1. (iv)
    the owner of the dominant land is required to produce evidence of the insurance held pursuant to the preceding clause to the owner of the servient land within 2 business days’ of written request;
  1. (v)
    the owner of the dominant land is responsible for all maintenance of the drainage infrastructure installed in the easement.  
  1. [162]
    Third, in terms of the licence:
  1. (a)
    The licence is a temporary licence in respect of an area of the servient land having the dimensions of 24m in length and 6m in width as demonstrated (not to scale) on the diagram above (the construction zone).
  1. (b)
    The temporary licence is for a period of 30 days (consecutive) (the construction period) to commence upon the giving of not less than one week’s written notice from the owner of the dominant land to the owner of the servient land.   
  1. (c)
    The temporary licence entitles the owner of the dominant land and their servants or agents, during the construction period, whether on foot or by vehicle, to access and use the construction zone for the once off purpose of constructing and installing drains, drainage pipes, drainage pits and any other drainage infrastructure in the easement for the purpose of draining or transmitting roof water or stormwater from the dominant land to Perdita Street.
  1. (d)
    The temporary licence entitles the owner of the dominant land and their servants or agents to remove fencing adjacent to the construction zone on Perdita Street to the extent necessary to facilitate access to the construction zone during the construction period on condition that:
  1. (i)
    the owner of the dominant land advises the owner of the servient land in writing as to when the fencing is to be removed;
  1. (ii)
    the owner of the dominant land must reinstate some form of fencing overnight such that the servient land is secure overnight;
  1. (iii)
    the fencing must be reinstated by the conclusion of the construction period in the same condition that it was in prior to access.
  1. (e)
    The owner of the dominant land is to, during the construction period, maintain insurance over the construction zone (for the benefit of the owner of the servient land and any mortgagee of the servient land) for any damage suffered by any person as a consequence of accessing the construction zone or relating to the construction.
  1. (f)
    The owner of the dominant land is required to produce evidence of the insurance held pursuant to the preceding clause to the owner of the servient land at least 2 business days’ prior to the construction period commencing.
  1. (g)
    The temporary licence does not entitle any interference with existing drainage infrastructure servicing the servient land.
  1. (h)
    The construction zone is to be reinstated by the owner of the dominant land to the condition it was in prior to its use by the owner of the dominant land, within the construction period.

Costs of the proceeding

  1. [163]
    As identified above, I consider that the legal costs the respondent has and will incur about the imposition of the statutory right of user (the permanent easement in particular that in the ordinary course would be registered) properly form part of the adequate compensation payable as a consequence of the imposition of the statutory right of user. 
  2. [164]
    However, if for any reason the applicant does not proceed with the statutory right of user (and so does not pay the compensation associated with it), the costs of the proceeding ought be dealt with. 
  3. [165]
    I am of the preliminary view that despite the applicant’s ultimate success in the proceeding, that the legal costs incurred by the respondent before and during the proceeding were properly and reasonably incurred at a time when the offers being made by the applicant, and the conduct of the applicant, were not at all reasonable.  In my view that justifies a separate order that the applicant pay the respondent’s costs of the proceeding, which I understand to have been incurred in the amount of $40,000 and in respect of which I would propose to fix at $40,000.  
  4. [166]
    If that is the costs order made, then there will need to be a mechanism in the order so that if the applicant pays those costs as part of the compensation for the statutory right of user as I have required, then that will be set-off against the separate obligation to pay the costs of the proceeding ordered.  That is, there is not to be double recovery.  
  5. [167]
    I will give the parties an opportunity to be heard about costs of the proceeding should they wish to be heard, but if not, I will order that:
    1. the applicant pay the respondent’s costs of the proceeding fixed in the amount of $40,000;
    2. those costs are not required to be paid in addition to the compensation ordered for the imposition of the statutory right of user and paid.    

Footnotes

[1]   Lot 199, RP116684, title reference 14287176.

[2]   Lot 197, RP116684, title reference 14287174.

[3]   Lot 200, RP116684, title reference 14287177.

[4] Evidence of Ebert, T1-56, LL46-47.

[5]  Evidence of Ebert, T1-56, LL1-7.

[6]  Evidence of Ebert, T1-54, LL12-38.

[7]   Exhibit JJ-01, affidavit of Jeffs, court doc 34.  See also at exhibit MS-41, affidavit of Salazar, court doc 7.

[8]  Affidavit of Salazar, court doc 39 at [103], [105].

[9]  There is evidence that three and five lot subdivisions were also considered, see affidavit of Salazar, court doc 39 at [104], [112].

[10]  Evidence of Ebert, T1-79, LL12-38.

[11]   This is a solution that the applicant incorrectly assumed would be available in any subdivision. See affidavit of Salazar, court doc 57 at [16]-[18].

[12]  Evidence of Ebert, T1-69, LL21-46.

[13]  Evidence of Ebert, T1-70, LL1-8. 

[14]  Evidence of Ebert, T1-71, LL37-47.

[15]  Evidence of Ebert, T1-83, L6 to T1-85, L35.

[16]  The pipe diameter could potentially be reduced to 225mm diameter but a 300mm pipe would properly accommodate any future development on lot 2, which a 225mm pipe would not.  Evidence of Tuxworth, T1-98, L40 to T1-99, L16.

[17]  Evidence of Tuxworth, T1-93, LL5-7.

[18]  Evidence of Tuxworth, T1-89, LL3-4.

[19]  Evidence of Tuxworth, T1-90, LL11-14.

[20]  Evidence of Tuxworth, T1-95, L5 to T1-97, L10.

[21]  Evidence of Tuxworth, T1-90, LL17-20; T1-94, LL6-8.

[22]  Evidence of Tuxworth, T1-89, LL41-46.

[23]  Evidence of Tuxworth, T1-97, LL10-36.

[24]  Evidence of Tuxworth, T1-97, LL33-45.

[25]  Evidence of Tuxworth, T1-91, LL3-17; T1-94, LL18-39.

[26]   Affidavit of Salazar, court doc 7, exhibit MS-47.

[27]  Affidavit of Salazar, court doc 7, exhibit MS-48.

[28]   Exhibit JJ-30, affidavit of Jeffs, court doc 34; also at affidavit of Salazar, court doc 7, exhibit MS-49.

[29]   Summarised at [187]-[191] of the affidavit of Salazar, court doc 4.  The relevant correspondence is not exhibited thereto.

[30]  Affidavit of Salazar, court doc 6, exhibit MS-18.

[31]   Affidavit of Salazar, court doc 13, exhibit MS-19.

[32]  Including Mr Martinez, managing partner of HWLE, again.

[33]  Affidavit of Salazar, court doc 13, exhibit MS-21.

[34]  [4] of the offer of compensation.

[35]  [5] of the offer of compensation.

[36]  That appears to have been the position in about 2007, but not since 2009 – refer to Queensland Urban Drainage Manual.

[37]  Affidavit of Salazar, court doc 4, [10]-[11].

[38]  Affidavit of Salazar, court doc 4, [13]-[14].

[39]  Affidavit of Salazar, court doc 4, [222].

[40]  Affidavit of Hyne, court doc 2, exhibit DH-1. See also affidavit of Hyne, court doc 24, exhibit DH-02.

[41]  Evidence of Hyne, T1-124, LL9-40.

[42]  Evidence of Hyne, T1-124, LL30-47.

[43]  Evidence of Hyne, T1-125, L35 to T1-127, L12.

[44]  Evidence of Hyne, T1-120, LL1-33.

[45]   Affidavit of Salazar, court doc 57, [49].

[46]    In submissions, at T2-126, LL5-12, it was submitted for the applicant that a sewerage main and more trees in a koala protection zone on lot 3 made lot 2 a more viable option.  That submission was not adequately supported by admitted evidence to be able to be assessed or accepted. 

[47] Re Kindervater [1996] ANZ Conv R 331 at 332-3 (Derrington J).

[48]   Although unstated it appears implied the balance of the compensation sum would be paid once the easement is in place.

[49] Grittner & anor v Hadley [2008] QSC 268 at [93] per Cullinane J, referred to with approval in Naylor & anor v Pierce & anor [2010] QSC 399 at [82] per McMeekin J.

[50] 2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS 39149 [2016] QSC 40 at [24]. 

[51] Re Kindervater [1996] ANZ Conv R 331 at 333 (Derrington J).

[52] Wengarin Pty Ltd v Bryon Shire Council [1999] NSWSC 485 at [26].

[53]  Mitchell v Boutagy [2001] NSWSC 1045 at [32].

[54]  Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd [2010] NSWLEC 2 at [159], [171]-[177].

[55]  See Wengarin Pty Ltd v Bryon Shire Council [1999] NSWSC 485 at [26]; but note the disapproval of the NSWCA in Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445 at [236].  The jurisprudence on this issue is also conflicted in Queensland – see Peulen & anor v Agius & anor [2015] QSC 137 at [83]-[87].  

[56]   cf the applicant’s offer which allowed a $1,000 offset in this respect.  See at [70] above. 

[57]  cf the applicant’s offer which allowed a $1,000 offset in this respect.  See at [70] above.  

Close

Editorial Notes

  • Published Case Name:

    M Salazar Properties Pty Ltd v Jeffs

  • Shortened Case Name:

    M Salazar Properties Pty Ltd v Jeffs

  • MNC:

    [2024] QSC 9

  • Court:

    QSC

  • Judge(s):

    Hindman J

  • Date:

    29 Feb 2024

  • Selected for Reporting:

    Editor's Note

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2024] QSC 929 Feb 2024Order imposing statutory right of user subject to conditions: Hindman J.
Primary Judgment[2024] QSC 8616 May 2024Form of orders and costs: Hindman J.
Notice of Appeal FiledFile Number: CA 3975/2428 Mar 2024Notice of appeal filed.
Appeal Determined (QCA)[2024] QCA 25717 Dec 2024Appeal dismissed; cross-appeal allowed; originating application dismissed; orders below set aside (save for varying order as to costs): Flanagan JA (Boddice JA and Kelly J agreeing).

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews [2016] QSC 40
3 citations
Grittner v Hadley [2008] QSC 268
2 citations
Mitchell v Boutagy [2001] NSWSC 1045
2 citations
Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445
2 citations
Naylor v Pierce [2010] QSC 399
4 citations
Pacific Coast Investments Pty Ltd v Cowlishaw [2005] QSC 259
2 citations
Peulen v Agius [2015] QSC 137
5 citations
Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd [2010] NSWLEC 2
3 citations
Re Kindervater [1996] ANZ Conv R 331
3 citations
Tregoyd Gardens Pty Ltd v Jarvis & Anor (1997) 8 BPR 15
2 citations
Ward v Hull [2019] QSC 32
2 citations
Wengarin Pty Ltd v Byron Shire Council [1999] NSWSC 485
3 citations

Cases Citing

Case NameFull CitationFrequency
M Salazar Properties Pty Ltd v Jeffs [2024] QCA 257 1 citation
1

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