Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445
• Hearing dates: 6, 7 and 10 August 2012
• Decision date: 21 December 2012
• Before: Bathurst CJ, Beazley JA, Meagher JA

Decision

1. Set aside orders 1, 2, 4, 5 and 7 of the orders made by the primary judge.

2 Release the respondent from the undertaking referred to in par [8] of the orders of the primary judge.

3 Direct the matter to be remitted to a judge or an associate judge of the Equity Division of the Court to be dealt with in accordance with pars [256]-[260] of this judgment.

4 Each party pay its costs of the appeal.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: REAL PROPERTY - easements - Conveyancing Act 1919 s 88K - preconditions to imposition - whether easement can be imposed subject to undertaking to extinguish it if certain future events do not occur - obligation to assess preconditions in s 88K in light of circumstances existing at time of hearing.; REAL PROPERTY - easements - Conveyancing Act 1919 s 88K - power to order conditional easements - obligation to impose conditions as term of order imposing easement.; REAL PROPERTY - easements - Conveyancing Act 1919 s 88K - preconditions to imposition - reasonable necessity - whether obligation to consider effect on servient tenement.; REAL PROPERTY - easements - Conveyancing Act 1919 s 88K - preconditions to imposition - reasonable necessity - whether easement reasonably necessary for effective use and development of land - obligation to consider whether proposed development appropriate and economically rational - obligation to consider alternative methods of achieving development.; REAL PROPERTY - easements - Conveyancing Act 1919 s 88K - preconditions to imposition - reasonable necessity - effect on servient tenement - whether servient tenement "sterilised" by imposition.; REAL PROPERTY - easements - Conveyancing Act 1919 s 88K - preconditions to imposition - compensation - whether servient tenement able to be adequately compensated - whether possible to assess compensation where easement would create uncertainty as to development of servient tenement.; REAL PROPERTY - easements - Conveyancing Act 1919 s 88K - compensation - appropriate measure of compensation - diminution in land value - whether sufficient evidence to calculate compensation payable.
• Legislation Cited: Conveyancing Act 1919 (NSW) s 88K, s 89; Environmental Planning and Assessment Act 1979, s 75B s 80, s 82, s 97, s 97C, s 122, Part 3A; Environmental Planning and Assessment Regulation 2000 cl 51; Land and Environment Court Act 1979 s 39, s 40; Supreme Court Act s 75A
• Cases Cited: 117 York Street Pty Limited v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504; Bloom v Lepre (2008) 13 BPR 24,923; Blulock Pty Limited v Majic [2001] NSWSC 1063; (2001) 10 BPR 19,143; Botany Bay City Council v Premium Custom Services Pty Limited [2009] NSWCA 226; (2009) 172 LGERA 338; Evans v Cornish Nominees Pty Ltd [2009] NSWSC 1295; (2009) 14 BPR 27257; Grattan v Simpson (1998) 9 BPR 16649; ING Bank Australia Limited v O'Shea [2010] NSWCA 71; (2010) 14 BPR 27,317; Kenny & Good Pty Limited v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413; Khattar v Wiese [2005] NSWSC 1014 at [27]; 12 BPR 23,235; Lonergan v Lewis [2011] NSWSC 1133; Mitchell v Boutagy [2001] NSWSC 1045; (2001) 10 BPR 19187; Moorebank Recyclers Pty Ltd v Liverpool City Council [2009] NSWLEC 100; Nelungaloo Pty Ltd v The Commonwealth (1948) 75 CLR 495; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451; Rainbowforce Pty Limited v Skyton Holdings Limited [2010] NSWLEC 2; (2010) 171 LGERA 288; Spencer v The Commonwealth (1907) 5 CLR 418; Swann v Spiropoulos [2006] NSWSC 860; (2006) ANZ ConvR 496; Sydney City Council v Claude Neon Pty Limited (1989) 15 NSWLR 724 at 732; Sydney City Council v Ipoh Pty Limited [2006] NSWCA 300; (2006) 68 NSWLR 411; Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; (2004) 219 CLR 165; Tregoyd Gardens Pty Limited v Jervis (1997) 8 BPR 15845; Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259; Wengarin Pty Ltd v Byron Shire Council [1999] NSWSC 485; (1999) 9 BPR 16985; Western Exports Services Inc v Jireh International Pty Limited [2011] HCA 45; (2012) 86 ALJR 1; Woodland v Manly Municipal Council [2003] NSWSC 392; (2003) 127 LGERA 120; Zhang v Canterbury City Council [2001] NSWCA 167; (2001) 51 NSWLR 589
• Category: Principal judgment
• Parties: Moorebank Recyclers Pty Ltd (Appellant); Tanlane Pty Ltd (Respondent)
• Representation: G Inatey SC and J Lazarus (Appellant); T Hale SC and Z Steggall (Respondent); Mark McDonald & Associate Lawyers (Appellant); Minter Ellison Lawyers (Respondent)
• File Number(s): 2012/73508
• Publication restriction: No

Decision under appeal

• Jurisdiction: 9111
• Citation: Tanlane Pty Ltd v Moorebank Recyclers Pty Ltd (No 2) [2011] NSWSC 1286; Tanlane Pty Ltd v Moorebank Recyclers Pty Ltd (No 3) [2012] NSWSC 90
• Before: Young JA
• File Number(s): 2008/277351

HEADNOTE

The respondent Tanlane Pty Ltd sought an easement over land owned by the appellant Moorebank Recyclers Pty Ltd under s 88K of the Conveyancing Act 1919. The purpose of the easement sought was to allow Tanlane to build a road bridge that it contended would provide access from its land to a nearby road (Newbridge Road), thus allowing it to pursue a planned residential development on its land. Moorebank opposed the imposition of an easement on the basis that the construction of the bridge would prevent it from gaining access to the same road from its own land. Such access was necessary for Moorebank to pursue the development of a planned materials recycling facility on its land.

Two access plans were proposed by Moorebank and Tanlane respectively. Tanlane supported a plan providing for the bridge sought by it to be built with ramps (the Ramps proposal), which it contended would also allow Moorebank access to Newbridge Road. An alternative access plan proposed by Moorebank (the Marshall plan) would have provided Moorebank with such access without the need for a bridge, but would have denied Tanlane access from its land to Newbridge Road. It was common ground that the two access plans could not co-exist. Each access plan involved the use of land owned by Liverpool City Council

In 2011, the council determined to oppose Moorebank's proposed materials recycling facility and stated it would not consent to Moorebank having access over council land for that purpose. As the council was landowner such consent was necessary to effect both the Ramps proposal and Marshall plan.

In those circumstances, Moorebank contended that the imposition of the easement sought would lead to the economic sterilisation of its land, as the Ramps proposal could not be effected. It further contended that the planned ramps may not have the load bearing capacity to accommodate the trucks it required. Moorebank also contended that Tanlane did not require access to Newbridge Road, as alternative access from its land to a public road was available. In those circumstances Moorebank submitted that the conditions in s 88K for the imposition of an easement, and in particular the precondition that the easement be "reasonably necessary for the effective use or development of other land", had not been made out.

In two judgments, of 4 November 2011 and 21 February 2012, the primary judge found in favour of Tanlane, imposing an easement on the condition that Tanlane undertake to extinguish the easement if, despite the best endeavours of the parties, Moorebank was unable to obtain access to Newbridge Road by means of the Ramps proposal. Moorebank appealed. By Notice of Contention, Tanlane contended that notwithstanding any errors by the primary judge, the easement should be imposed, on an unconditional basis.

The issues for determination on appeal were whether:

(i) The primary judge erred in imposing an easement conditional on an undertaking to extinguish it in certain circumstances.

(ii) The precondition of "reasonable necessity" in s 88K(1) had been satisfied.

(iii) The precondition that Moorebank be capable of being adequately compensated for the imposition of the easement in s 88K(2)(b) had been satisfied.

(iv) The primary judge erred in his calculation of the compensation payable to Moorebank.

The Court held, allowing the appeal in part but ordering that an easement be imposed in the terms of paragraph [256] of the judgment and following assessment of compensation payable pursuant to s 88K(4):

In relation to (i):

(1) By imposing an easement subject to an undertaking to the Court to apply for it to be extinguished if certain events did not occur, the primary judge effectively failed to fulfil the obligation to determine the question of whether the conditions in s 88K were satisfied in the circumstances which existed at the time of the hearing: [97] - [98].

(2) An easement can be subject to conditions and restrictions on its enjoyment, however these conditions must be specified in the order imposing the easement and not in an order or undertaking independent of the easement: [99].

In relation to (ii):

(3) Determining the question of reasonable necessity requires that there be taken into account the effect that the easement would have on the enjoyment of the servient tenement, including the property rights of the owner thereof: [114].

(4) The greater the burden of the easement on the servient tenement, the stronger the case needed to justify a finding of reasonable necessity. If the effect of the imposition of an easement is to effectively preclude a reasonably available development or use of the servient tenement appropriate to that land, then it would require a strong case of reasonable necessity before the easement would be imposed: [156] -[157].

(5) Establishing reasonable necessity requires the applicant for an easement to demonstrate that the proposed development is one which is appropriate to the area in which the land is situated and is at least an economically rational use of the land, as well as requiring a consideration of the alternative methods by which such use or development could be achieved: [155], [158].

(6) The possibility that the planned ramps may not have sufficient load bearing capacity to accommodate the trucks required by Moorebank could be overcome by specifying in the easement that any bridge constructed would have the capacity to accommodate such trucks: [183].

(7) Moorebank, irrespective of the grant of the easement, did not have an immediate right to the access it sought. The grant of the easement would put it out of Moorebank's power to pursue the Marshall plan but would leave it with the opportunity to take steps to implement the Ramps proposals. The prospects of success of either proposal were uncertain, but there was nothing to suggest that one was more likely to be successful than the other. In those circumstances the precondition of reasonable necessity had been made out: [202]-[205].

In relation to (iii) and (iv):

(8) It was possible to calculate adequate compensation, notwithstanding uncertainty as to prospects of future development of the Moorebank land arising from the grant of the easement: [237] -[238], [243].

(9) The relevant measure of compensation is the diminution in the value of the land, to be assessed by a consideration of what would be paid by a willing but not anxious buyer to a willing but not anxious seller before and after the grant of the easement, together with any expenditure wasted as a result of the easement's imposition: [238] -[239], [245].

(10) The appropriate approach to calculation of compensation when faced with unsatisfactory valuation evidence is for the Court to put itself in the position of a juror and assess as best as it can what was the compensation payable: [248].

(11) If there is no evidence from which compensation can be assessed, no order granting the easement should be made, as the precondition in s 88K(2)(b) will not have been made out: [249].

(12) The evidence established that the grant of the easement would not have a detrimental effect on the value of the Moorebank land. However, as the Court approached the matter on a different basis to that of the primary judge, the matter should be referred back to a judge or an associate judge for a final determination of compensation: [250] -[251].

Judgment

1 THE COURT: This is an appeal from orders made by Young JA, sitting as a single judge in the Equity Division, under s 88K of the Conveyancing Act 1919 (NSW) ("the Act") imposing an easement in favour of the respondent ("Tanlane") over certain land of which the appellant ("Moorebank") was the registered proprietor. The orders were made following the delivery of three judgments, the first delivered on 15 December 2008 (Tanlane Pty Ltd v Moorebank Recyclers Pty Ltd [2008] NSWSC 1341), the second delivered on 4 November 2011 (Tanlane Pty Ltd v Moorebank Recyclers Pty Ltd (No 2) [2011] NSWSC 1286) and the third delivered on 21 February 2012 (Tanlane Pty Ltd v Moorebank Recyclers Pty Ltd (No 3) [2012] NSWSC 90).

Background to the proceedings

A The land in question

2 Attached to this judgment is a plan ("Attachment 1") showing the relevant features of the land the subject of the proceedings. The land of which Moorebank is the registered proprietor is the land mainly to the southeast on the plan and shown as Lot 6 in DP 1065574. The land owned by Moorebank includes the narrow corridor etched in orange leading to Newbridge Road ("the panhandle"). The area coloured yellow immediately to the east of the panhandle is an easement for drainage.

3 The land of which Tanlane is the registered proprietor is the land coloured light and dark green on the attached plan, as well as the land described as Lot 7 in DP 1065574 and the land coloured light blue and described as B6 on the plan to the north of Lot 7 and facing Newbridge Road.

4 The land described as Lot 2 in DP 602988 is owned by Flower Power ("Flower Power"). Immediately to the east is part of the land owned by Tanlane, presently zoned Private Recreation and, further east, presently zoned Public Recreation. Adjacent to the latter part of that land is a public road, Davy Robinson Drive.

5 Lot 310 in DP 1118048, the land coloured orange immediately to the west of the Moorebank land and the panhandle zoned Environmental Protection - Conservation ("the 7(C) land") was formerly owned by Boral Bricks Pty Limited ("Boral") but was dedicated to the Liverpool City Council ("the Council") and transferred on 19 January 2010.

6 Immediately to the west of the 7(C) land, on the land coloured pink, is a road, Brickmakers Drive, which leads in its northerly direction to Newbridge Road. Brickmakers Drive has been constructed but it is yet to be dedicated as a public road although it has been agreed between the Council and Boral that this will take place.

7 Lot 309 in DP 1118048 ("the 2A land"), which is shown on the plan as intersecting the northern portion of Lot 310 between the panhandle and Brickmakers Drive, is now owned by the Council. It was formerly owned by Boral but was dedicated and transferred to the Council on 23 January 2008. The balance of the land to the west of the panhandle, Lots 301 and 303 to 308 in DP 118048 and Lots 200-201 in DP 117280 (previously Lot 302 in DP 118048), is owned by Boral.

8 It was common ground between the parties that where the 2A land abuts the panhandle, the land on either side of the panhandle is some 6 metres higher than the panhandle itself.

B Development and access proposals for the Moorebank land and the Tanlane land

9 Because of the way the parties put their case, it is necessary to outline the history of the proposed development of the land and the respective proposals to enable them to obtain access from their properties to Newbridge Road.

(1) Developments from 2000 to 2006

10 Prior to the rezoning which resulted in the current zoning of the properties in the area, the Moorebank land was zoned as to part 1(a) Rural and as to part 7(a) Environmental Protection - Waterway. It was and remains undeveloped.

11 The Tanlane land was zoned 1(a) Rural. Under existing use rights that land has been used for extractive industry with some recycling of building materials and waste.

12 The Moorebank land and Tanlane land has access to the public road system via Newbridge Road. The Moorebank land has that access by use of the panhandle.

13 The Boral land was zoned as to part 7(c) Environmental Protection - Conservation and as to part 2(a) Residential.

14 From about 2000 there were discussions concerning the proposed redevelopment of the land owned by Boral, Moorebank, Tanlane and Flower Power. One of the issues raised was the construction of a service road providing access to Newbridge Road from any development undertaken on these lands.

15 In a report dated 25 February 2002, officers of the Council reported that the Boral Moorebank Structure Plan had been developed for the area. The report stated that some land, such as that owned by Moorebank (described in the report as Concrete Recyclers) and Tanlane (described in the report as Benedict Sands), warranted a long-term environmental planning strategy, given its history of use and location within the Georges River floodplain. Consistently with the then existing zoning, the Structure Plan showed part of the Boral land as zoned Residential. It described the use of the Tanlane and Moorebank land as Existing Waste and Recycling Uses/Open Space with a note "Other uses subject to detailed investigations".

16 That Structure Plan, subject to certain amendments which are immaterial for present purposes, was adopted by the Council on 25 February 2002.

17 On 29 May 2002 Moorebank and Tanlane entered into a deed, by which Moorebank agreed to grant Tanlane an easement over the panhandle of an area 12 metres wide, in a location to be specified by Tanlane but within an area hatched on a plan annexed to the deed. That easement was to permit the construction of a road bridge between the Boral land and the Tanlane land adjacent to the area which is now the 2A land. The deed gave Moorebank a right to terminate that agreement if the construction of a bridge over the servient tenement did not commence within five years. In those circumstances Tanlane was required to take steps to apply to extinguish the easement, if registered.

18 Moorebank sought to exercise its right to terminate the deed on 6 November 2007 on the ground that construction of the bridge had not commenced. Tanlane challenged Moorebank's entitlement to terminate the deed and in the alternative sought the grant of an easement under s 88K of the Act for the purpose of the construction and use of a bridge over the panhandle to enable access from the panhandle to Brickmakers Drive. In his judgment dated 15 December 2008, the primary judge dismissed Tanlane's claim so far as it challenged Moorebank's right to terminate the deed but stood over the claim under s 88K of the Act. We will deal with that judgment later to the extent necessary. There is no challenge in this appeal to any of the orders made by the primary judge in that judgment.

19 On 3 July 2003 the Roads and Transport Authority of NSW ("RTA") wrote to Mr Steglick, a Town Planner engaged by Tanlane, saying it would support a rezoning of the area that provided for the relocation of all existing frontage access from the southern side of Newbridge Road between Davy Robinson Drive and Governor Macquarie Road to a service road to be built as part of the redevelopment. That service road was to include a bridge over the panhandle in the area of what is now the 2A land so as to provide access from the land on the eastern side to Brickmakers Drive, via the service road, and then to Newbridge Road at Governor Macquarie Drive.

20 The RTA made its position clear in July 2004, when it wrote to the Council in respect of Draft Local Environmental Plan 1997 (Draft Amendment No 76) in the following terms:

"Previous correspondence between the RTA and Council outlined the need to remove existing access points along Newbridge Road in the event of redevelopment of land owned by Concrete Recyclers, Benedict Sands and Flower Power and the upgrading of the Newbridge Road/Governor Macquarie Drive Intersection. The intention of the proposed service road, shown in draft Liverpool 1999 Amendment No. 75, was to provide vehicular access for Concrete Recyclers, Benedict Sands and Flower Power once development of their lands occurred and existing access on Newbridge Road is removed."

21 On 9 July 2004 Local Environment Plan 1997 (Amendment No 75) was gazetted. The amendments related primarily to the development of the Boral land. It provided that Council must not grant consent to the development for the purpose of dual occupancy housing, dwelling houses or multiple dwellings unless arrangements were made for appropriate provision of a road from Nuwarra Road at New Brighton Golf Course to Newbridge Road at Governor Macquarie Drive.

22 On 23 September 2005 Amendment No 76 to the Liverpool Local Environmental Plan was gazetted. It permitted a materials recycling yard to be conducted on part of the Moorebank land. Following an application on behalf of Moorebank, on 19 December 2005 the Director-General of the Department of Planning, as delegate of the Minister for Planning, declared the proposal for a materials recycling facility be one to which Part 3A of the Environmental Planning and Assessment Act 1979 ("the EPA Act") applied for the purpose of s 75B of that Act. The effect put shortly was that the relevant approval entity for the purpose of any such development would be the Planning Assessment Commission, as delegate of the Minister, rather than the Council. Further, Parts 4 and 5 of the EPA Act, which relate to development and environmental assessment do not apply except to a limited extent in respect of an approval sought under Part 3A.

23 On 1 May 2006 Moorebank, in its capacity as registered owner, consented to the lodgement by Tanlane of a development application for the construction of a road bridge over that part of the panhandle within the area of the proposed easement. On 2 May 2006 Moorebank lodged an application with the Department of Planning for approval under Part 3A of the EPA of a materials recycling facility on the Moorebank land. Receipt of that application was acknowledged by the Department on 8 August 2006. That response also advised the Director-General's requirements as including that Moorebank demonstrate that suitable site access arrangements were in place prior to the lodgement of the draft Environmental Assessment.

(2) Access

24 To put the events which subsequently occurred in context, it is convenient to describe the alternative proposals providing access to and from Newbridge Road to the Tanlane and Moorebank land which were put forward by Tanlane and Moorebank.

25 The proposal put forward by Tanlane in May 2006 and the one in respect of which the easement was sought was that the land to the eastern side of the panhandle would have access to Brickmakers Drive via the 2A land and across a bridge spanning the panhandle at that point. As part of the proposal as originally envisaged, the bridge could have ramps which would enable trucks travelling to and from the Moorebank land to gain access to Brickmakers Drive which at its northern end would intersect with Newbridge Road. A truck travelling south from Newbridge Road and along Brickmakers Drive to the Moorebank land would turn left into the service road and down a ramp. The vehicle would then turn right under the bridge and onto the panhandle and travel down the panhandle to the Moorebank land. Vehicles travelling from the Moorebank land to Newbridge Road would travel along the panhandle to a point just south of the 2A land, turn left and travel up a ramp which would provide access to the service road and then proceed along that road to Brickmakers Drive, turn right and then proceed in a northerly direction to Newbridge Road.

26 One significant feature of that proposal was that the proposed ramps would need to traverse the 7(C) land which was zoned Environmental Protection - Conservation. This proposal was commonly referred to as the "Ramps proposal" or the "Option A proposal". For convenience we shall describe it as the "Ramps proposal".

27 An alternative proposal proffered by Moorebank was designed by Mr Lyle Marshall, an engineer engaged by Moorebank. The proposal, somewhat grandiloquently, was described as the "Marshall plan". It did not involve any bridge providing access to the Tanlane land. Instead, a truck travelling north from the Moorebank land would turn left on a roadway which would follow the slope of the land up to the 2A land where it abuts the panhandle so as to provide access by turning right onto Brickmakers Drive.

28 Under the Marshall plan trucks travelling from Newbridge Road to the Moorebank land would turn left from Brickmakers Drive onto the 2A land and then travel down the slope of the land to the panhandle, turn right and proceed south along the panhandle.

29 An advantage of the Marshall plan was that it did not involve any construction or use of the environmentally sensitive 7(C) land. Its disadvantages included that it would prevent access by a bridge and service road to Brickmakers Drive from the Tanlane land and other land east of the panhandle. They also included that it would not provide flood free access.

30 The following matters were common ground between the parties in relation to these two proposals.

(a) The Ramps proposal and the Marshall plan were mutually exclusive. If the bridge was built over the panhandle the Marshall plan could not be put into effect. Similarly, implementation of the Marshall plan would prevent construction of the bridge.

(b) It followed that implementation of the Marshall plan would deny to the land to the east of the panhandle, including the Tanlane land, access to Brickmakers Drive.

(c) If the bridge was built without ramps or if the bridge and the ramps were not of sufficient strength to accommodate the trucks proposed to be used in the Moorebank recycling business, Moorebank would be unable to carry on that use of its land. That was because although Newbridge Road would still be physically accessible from the panhandle, the position of the RTA was that access to Newbridge Road for the purposes of a materials recycling facility would only be permitted via Brickmakers Drive.

(3) May 2006 to December 2008

31 On 30 May 2006 Tanlane lodged a development application with Council seeking consent to construct a bridge on the 2A land. Although Moorebank had given consent to the lodgement of the development application, on 14 July 2006 the town planner engaged by it, Mr Neil Kennan, wrote to the Council expressing reservations in respect of the proposal. He asserted that the proposal was premature as the Tanlane land had not been rezoned and that in any event the proposed bridge did not connect to Brickmakers Drive. More importantly, he submitted that the proposal did not secure Moorebank access to Newbridge Road. He referred to a plan jointly commissioned by the appellant and respondent showing bolt-on ramps and which he stated provided for ingress to and egress from the Moorebank land. He summarised Moorebank's position in the following terms:

"In light of the above, we are of the opinion that the Council should not grant consent to the proposed incomplete access and should only consider a development application which not only provides for access to the Benedict Sands site but also caters for access to Brickmakers Drive and provides for access to the Moorebank Recyclers' land.

In order to achieve the above, it is our opinion that the applicant should be requested to amend the Application so that it provides for access to Brickmakers Drive and also provides for the future access to the Moorebank Recyclers' land. It will also be necessary for the applicant to gain owners consent from Boral for that amended application."

32 On 26 July 2006 the Council adopted Development Control Plan No 50. That indicated that the preferred method of access for properties to the east of the panhandle was by a road connecting to Brickmakers Drive, crossing the panhandle in the area suggested by the respondent and then travelling over the 2A land.

33 On 24 April 2007 the Council consented to the Tanlane development application. It stated that the consent would lapse on 24 April 2009 unless construction of the bridge had physically commenced at that time. There were two conditions of importance. They were as follows:

"7. Consent is not granted nor implied to any future usage of the road bridge as a private road that provides access to development that is not permissible within a Residential 2(a) zone.

"14. The bridge is to be designed and constructed such that it is able to accommodate the access ramps (Concrete Recyclers Access Option A) as designed in concept by Patterson Britton and Partners Pty Ltd."

The Patterson Britton and Partners Pty Ltd concept design was the concept design jointly commissioned by Moorebank and Tanlane to which we have referred in paras [25] [26] and [31] above.

34 The development consent was modified on 25 May 2007. The only modification of any significance was that Tanlane was required to provide detailed plans to the Council showing the road bridges full connection to Brickmakers Drive and demonstrating the ability of the connection to accommodate the traffic that was intended by Tanlane to access the bridge, prior to a construction certificate being issued.

35 Notwithstanding some uncertainty as to the extent to which the development consent had extended beyond 24 April 2009, no point was raised in respect of this question either in the proceedings before the primary judge or on appeal.

36 On 8 August 2007 Moorebank commenced Class 4 proceedings in the Land and Environment Court challenging the validity of the development consent.

37 As we indicated earlier Moorebank, purported to terminate the deed for the granting of an easement on 6 November 2007. Tanlane commenced proceedings challenging that termination on 6 February 2008.

38 On 11 June 2008 Tanlane entered into a voluntary planning agreement with the Council ("the VPA"). It will be necessary to refer to the VPA in detail when dealing with one of the grounds of appeal. It provided that if Council granted development consent to a subdivision of Tanlane's land into up to 225 residential lots, Tanlane would dedicate and transfer certain designated land to the Council and make what was described as a works contribution by carrying out certain works.

39 On 7 July 2008 the Department of Planning issued modified requirements of the Director-General for the Moorebank waste recycling project. Relevantly those amended requirements directed attention to two key issues. First, Moorebank was required to demonstrate that suitable arrangements had been made to secure access to the site, including written evidence of the relevant landowner's consent for the proposed site access works. Second, the Director-General requested details of the traffic volumes likely to be generated during construction and operation.

40 By its letter dated 1 August 2008, the RTA made clear that it was not prepared to permit Moorebank to have temporary access to Newbridge Road via the panhandle to service a proposed materials recycling plant. The letter so far as relevant was in the following terms:

"An assessment and review of the original 250,000 tonne and current Part 3A - 500,000 tonne recycle waste and product proposal has been undertaken. The assessment and review identifies concerns about the operation and safety of the proposed temporary left-in and left-out access arrangement within the fabric of the existing roadway. The proposal has the following noteworthy implications.

The 60m length within the auxiliary land will expose pedestrians to turning trucks thus creating an unacceptable potential pedestrian hazard on the southern side of Newbridge Road.

The design vehicle turning movements require more width to turn than the narrow property frontage/access way affords, the design vehicle swept path swings into the westbound through lane and therefore there is potential for the ladened and unladened recycle, waste and product trusts to cause conflict (e.g. crash) and/or interfere with westbound traffic flow efficiency.

The narrow width of the access way restrict simultaneous inbound and outbound truck movements. Exiting truck drivers' line of sight distance (or visibility) of oncoming vehicles would be restricted by inbound trucks. Outbound trucks waiting for a suitable gap in the traffic flow would impede inbound truck turning movements, potentially causing trucks to queue back into the kerbside through traffic lane and therefore cause a conflict and/or interference to westbound traffic flow efficiency.

Construction would significantly impact on existing utility services located in the footway and there is no adjacent space provided (e.g. footway) to relocate services.

Civil works for a footway to contain the services adjacent to the inbound and outbound auxiliary lane inside the adjoining property has the potential to have an unacceptable environmental impact on a listed threatened flora species and the functioning of the existing stormwater systems. Property acquisition would also be required which may not be agreed to by the respective owners.

The work required to address the issues and concerns above would require significant investment for a short-term solution.

There is alternative access planned in Liverpool City Council's DCP planning framework preferred by the RTA. The preferred road network is shown on each DCP plan with the Moorebank East DCP (Benedict Sand and Gravel) showing a collector street that provides an east-west road link from Brickmakers Drive on the Boral site, across Lot 6's access way and, then through Benedict Sands Site to Davy Robinson Drive. The local area planning provides access to the site via the planned road network hierarchy shown in Council's Development Control Plans.

Mindful of the abovementioned concerns and the knowledge of a preferred safer alternative the Roads and Traffic Authority would not support direct access between Newbridge Road and the proposed material recycling development."

41 On 29 August 2008 the Liverpool Local Environment Plan 2008 was gazetted. That part of the Tanlane land comprising Lot 7 in DP 1065574 was zoned Medium Density Residential. The Moorebank land continued to be zoned E2 Environmental Conservation but cl 11 of Sch 1 to the plan provided that that part of the Moorebank land being Lot 6 in DP 1065574 could be used with consent for the purpose of a resource recycling facility. However, it also stated that the clause was repealed from 1 September 2018.

42 On the same day Liverpool Council adopted a Development Control Plan for the area. It stated that one of its objectives was to ensure a clear relationship between accessibility and land use. In that regard it proposed a road link from Brickmakers Drive to Davy Robinson Drive, although it stated this was not intended as a shortcut from Newbridge Road. It provided that subdivision of the land the subject of the plan should incorporate a link road between Brickmakers Drive and Davy Robinson Drive and that flood free access via a road bridge to Brickmakers Drive should be provided prior to any subdivision of Lot 7 in DP 1065574. It also stated that direct road connection was to be provided from the road bridge through the residential area to the private open space. That area is that part of Tanlane's land zoned RE2 Private Recreation as depicted on the plan Marked 1 attached to this judgment. Figure 2 in the Development Control Plan identified the location of the road bridge in the vicinity of the 2A land where the easement was sought.

(4) The first judgment of the primary judge

43 The primary judge delivered his first judgment on 15 December 2008. He found that Moorebank had validly terminated the deed and dismissed the respondent's claim so far as it sought a declaration that the deed remained on foot. As there is no appeal from this order, there is no need to refer to his reasoning on this issue.

44 So far as the respondent's application for an s 88K easement was concerned, after considering the competing submissions of the parties, the primary judge reached a preliminary view that an easement was reasonably necessary. He stated that it was not inconsistent with the public interest and that he saw no reason why a court could not assess compensation. In particular he noted the appellant's submission that if the easement was granted the great probability was that Moorebank's land would be denied access to a public road in all practical senses. He said that this provided a reason why no final decision should be made until Moorebank's challenge in the Land and Environment Court to development consent had been determined. His ultimate conclusion on this issue was as follows:

"[118] I should note (this is not an order), that as the evidence stands at this stage, I would favour the grant of an easement under s 88K to the plaintiff to line up with the 2a land provided that there is the existing development consent or a subsequent substantial equivalent and the question of compensation is adequately resolved."

45 No party suggested that the primary judge was doing other than expressing a tentative view on this issue. No appeal has been brought from the judgment but equally no reliance was placed upon it for the purpose of the appeal.

(5) 2009 to 2012

46 On 23 July 2009 Lloyd J dismissed Moorebank's appeal against the grant of development consent to Tanlane: Moorebank Recyclers Pty Ltd v Liverpool City Council [2009] NSWLEC 100. One of the issues raised was whether the proposed development (i.e. the construction of the bridge) would prevent Moorebank having access to Newbridge Road for its commercial purposes. In this regard Moorebank had submitted that the Council had failed to consider whether the bridge would harm Moorebank's access and had failed to consider that the design and structure of the road bridge was insufficient to allow access for the purpose of materials recycling, a permitted used of Moorebank's land. Lloyd J rejected these submissions reaching the following conclusion (at [50]):

"[50] I conclude from this evidence, therefore, that condition 45 of the development consent which requires the bridge to be designed in accordance with the loads prescribed in AS5100 would be sufficient to deal with the trucks and loads required for Moorebank's future use. Even if cl 1.2 of AS5100 allowed Council to modify the requirements of load prescriptions, I reject any suggestion that the Council had modified those requirements, merely by virtue of the stamped approved plans showing a design vehicle with a load capacity lower than the standard loads prescribed by AS5100. I also reject Moorebank's submission that condition 45 was ambiguous."

47 On 27 January 2009 the Council, as owner of the land, consented to the lodgement by Moorebank of an application under Part 3A of the EPA in respect of its proposed materials recycling yard. That consent was in the following terms:

"We refer to your letter dated 22/12/2008 and confirm that Council grants consent for the lodgement of the Part 3A Project Application with the Minister for Planning in relation to the abovementioned Land for access purposes to the proposed materials recycling yard."

48 Notwithstanding that it had given that consent, the Council, prompted by agitation from local residents, on 15 June 2011 passed a resolution that it do the following:

"That Council:

1. Writes to the State Government immediately to recommend refusal for this development as the proposed use of this site is incompatible with the current and planned residential and recreational uses of the area.

2. Writes to Moorebank Recyclers clearly stating that approval will not be granted for access over Part Lot 310 and Lot 309 in DP 118048 for waste management/recycling purposes.

3. Makes submissions to the Director General which summarises and comments on the community concerns and such submissions should note that Council does not support the application."

49 Following that resolution the Council wrote to Moorebank on 14 July 2011 in the following terms:

"I write in regard to your company's proposal for a Resource and Waste Project on the abovementioned property. It is noted that the Department of Planning has issued modified Director-General's requirements for the project.

A key issue that is noted in the letter from the Department of Planning dated 7 July 2008 regarding the Director-General's requirements is relating to access.

Council considered this matter at its meeting of 15 June 2011, and resolved that Council does not support the application, and that approval for access over Part Lot 310 and Lot 309 in DP 1118048 will not be granted for the proposed project."

50 It was suggested in argument that the change in the Council's attitude was inspired by opposition from Tanlane and Boral to the Moorebank proposal. However, it was not suggested this was a relevant factor to take into account in deciding whether or not to exercise any discretion to grant the easement.

51 On 12 October 2011 the Department of Planning sent an email to Moorebank representatives in the following terms:

"In response to questions raised in our conversation on 5 October 2011, the DGRs require the Proponent to demonstrate that suitable site access has been obtained, including written evidence of the relevant landowner's consent for the proposed site access work.

As such, an 'adequate' EA must include land owner's consent for the proposed site access work, not just consent for the lodgement of the Part 3A application."

52 It was clear from this email that the consent to the lodgement of the application given in January 2009 was not sufficient for the Department's requirements to constitute a consent from any relevant landowners to access for the purpose of undertaking any works.

53 On 18 October 2011 the Department sent a further email stating that any undetermined Part 3A application in the system after 1 October 2011 would be revoked where an environmental assessment (EA) had not been lodged by 1 October 2013, unless the Director-General determined before that date that substantial progress had been made in finalising the EA. This was consistent with the transitional arrangements adopted as a result of the repeal of Part 3A of the EPA Act.

54 A further hearing of the proceedings took place before the primary judge on 8 to 10 August 2011 and his Honour delivered his second judgment on 4 November 2011.

55 Prior to dealing with that second judgment, it is convenient to set out s 88K in full:

"88K Power of Court to create easements

(1) The Court may make an order imposing an easement over land if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement.

(2) Such an order may be made only if the Court is satisfied that:

(a) use of the land having the benefit of the easement will not be inconsistent with the public interest, and

(b) the owner of the land to be burdened by the easement and each other person having an estate or interest in that land that is evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act 1900 can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement, and

(c) all reasonable attempts have been made by the applicant for the order to obtain the easement or an easement having the same effect but have been unsuccessful.

(3) The Court is to specify in the order the nature and terms of the easement and such of the particulars referred to in section 88 (1) (a)-(d) as are appropriate and is to identify its site by reference to a plan that is, or is capable of being, registered or recorded under Division 3 of Part 23. The terms may limit the times at which the easement applies.

(4) The Court is to provide in the order for payment by the applicant to specified persons of such compensation as the Court considers appropriate, unless the Court determines that compensation is not payable because of the special circumstances of the case.

(5) The costs of the proceedings are payable by the applicant, subject to any order of the Court to the contrary.

(6) Such an easement may be:

(a) released by the owner of the land having the benefit of it, or

(b) modified by a deed made between the owner of the land having the benefit of it and the persons for the time being having the burden of it or (in the case of land under the provisions of the Real Property Act 1900) by a dealing in the form approved under that Act giving effect to the modification.

(7) An easement imposed under this section, a release of such an easement or any modification of such an easement by a deed or dealing takes effect:

(a) if the land burdened is under the Real Property Act 1900, when the Registrar-General registers a dealing in the form approved under that Act setting out particulars of the easement, or of the release or modification, by making such recordings in the Register kept under that Act as the Registrar-General considers appropriate, or

(b) in any other case, when a minute of the order imposing the easement or the deed of release or modification is registered in the General Register of Deeds.

(8) An easement imposed under this section has effect (for the purposes of this Act and the Real Property Act 1900) as if it was contained in a deed.

(9) Nothing in this section prevents such an easement from being extinguished or modified under section 89 by the Court."

(6) The second judgment of the primary judge

56 The primary judge set out the pre-conditions to the making of an order under s 88K contained in subs (1) and (2) of that section and recognised that he had a residual discretion as to whether or not to grant an easement.

57 He referred to his first judgment and stated that the principal problem for the grant of an easement at that time was whether Moorebank's loaded trucks would have been able to safely access the road bridge over the panhandle and make their way to Brickmakers Drive.

58 He referred to the lodgement by Moorebank of the Part 3A application and the proposed access by way of the Marshall plan. He referred to Moorebank's submission that the easement was not reasonably necessary because of the detriment it would suffer if the easement were granted, namely, the inability to use the land for recycling purposes.

59 The primary judge then expressed the view that the question of detriment to the servient tenement was not a matter which fell for consideration in considering whether the easement was reasonably necessary for use or development of the applicant's land as required by s 88K(1), but was rather a discretionary matter which was required to be taken into account if the pre-conditions to the grant of the easement in s 88K(1) and (2) were made out.

60 The primary judge rejected the contention that Tanlane had not demonstrated that the easement was reasonably necessary, as it had not shown that the grant of the easement increased the value of its land or even what was its highest and best use. The primary judge held that these matters were irrelevant. He held that if the proposed use of the land was reasonable as against the possible alternatives and the proposed easement was reasonably necessary for that use, then Tanlane had satisfied the requirements in s 88K(1).

61 The primary judge held that the proposed use of the land was not inconsistent with the public interest, so that the pre-condition in s 88K(2)(a) was made out.

62 The primary judge then turned to the question of compensation. Following Preston J in Rainbowforce Pty Limited v Skyton Holdings Limited [2010] NSWLEC 2; (2010) 171 LGERA 288 at [111], he stated that compensation ordinarily has three elements:

(a) the diminished market value of the affected land;

(b) associated costs that would be caused to the owner of the affected land; and

(c) an assessment of compensation for insecurity and loss of amenities, such as loss of peace and quiet.

It should be noted that on the third day of the hearing of the appeal, senior counsel for Moorebank stated that the only loss identified before the trial judge was the loss of value of the land. In making this concession senior counsel was not abandoning the other heads of compensation ordered by the primary judge or the additional compensation to which Moorebank asserted it was entitled in Ground 19(a) of the Notice of Appeal.

63 His Honour stated that it was not uncommon in cases dealing with valuation of land that a Court has to make assumptions as to the capacity of the land to be rezoned and that the determination of whether the potential servient tenement can be adequately compensated is not "stymied by ... the assessment process".

64 His Honour concluded that the difficulties in assessing compensation could be overcome by making what he described as a conditional order. The approach he adopted was summarised in the following terms:

"[67] I will make a conditional order below which removes the effect of most of the uncertainties. If the local authorities kybosh the ramps, etc (preventing access to the Moorebank Land), then the easement will be extinguished and compensation refunded. Thus, compensation can be assessed on the basis that the ramp proposal, discussed in detail under E, is viable."

65 The primary judge then proceeded, as part of the exercise of his discretion, to consider the claim that the Moorebank land would be sterilised. He noted that the zoning permitted use of the land for recycling purposes and Moorebank's submissions that the construction of the road bridge would prevent that occurring, because having regard to the Council letter of 14 July 2011 (see par [49] above) it was clear that Council would not consent to ramps being built for the purpose of use by its proposed trucks. His Honour also noted Tanlane's submission that the bridge with bolt-on ramps was the approved means of access and that the Marshall plan would deny landholders to the east of the panhandle access to Newbridge Road, unless they could obtain access directly on to that road or from Davy Robinson Drive. He noted Tanlane's submission in reliance on Mr Mitchell, an expert town planner engaged by Tanlane, that the development of the Tanlane land could not occur without the link to Brickmakers Drive and that Moorebank's most likely prospect of obtaining access to Newbridge Road was through implementation of the ramps proposal.

66 The primary judge stated that he did not have sufficient material to make a judgment as to who was right in their predictions as to what planning authorities might do, but that access for Moorebank by way of the ramps proposal was "not hopeless". The primary judge also noted Moorebank's submission that the VPA entered into by Tanlane required Tanlane to dedicate the bridge to Council and that as Tanlane would not be the owner of the land on which the bridge was constructed, it would not be able to do so. He seemed to accept this submission but stated that it did not have great significance because it simply meant that "some more work ha[d] to be done on adjusting the terms of the consent and the development concept to remove anomalies".

67 The primary judge noted there were very significant problems with Moorebank having access over the bridge. The first was that there was some doubt as to whether the bridge was "sufficiently strong to take 48 tonne laden trucks" and, second, whether approval to construct the ramps would be obtained. In relation to the first of these matters he referred to the judgment of Lloyd J in Moorebank Recyclers Pty Limited v Liverpool Council, supra, and stated that although it did not give rise to any issue estoppel he could proceed, having regard to the findings of Lloyd J, on the basis that the bridge would support Moorebank's trucks.

68 His Honour also considered that whilst it was correct that the Council had indicated in its letter of 14 July 2011 that it would not grant access to the 2A land for the purpose of Moorebank's recycling proposal, this was not conclusive. He stated that the Council could change its mind, Tanlane could make an application under s 88K for the grant of an easement over the 2A land or there could be an administrative law review. He ultimately concluded, however, that the sterilisation of the Moorebank land was a "real possibility". He came to the view that this could be largely overcome by a conditional order. He stated that conclusion as follows:

"[142] Thus I should grant an easement on terms that Tanlane undertakes to the Court to have the easement extinguished, if, despite the best endeavours of both parties (ie there is to be no undermining directly or indirectly of each other's efforts), after all appeals to the Land and Environment Court (or appeals therefrom) are exhausted, Moorebank cannot obtain access for 48 tonne trucks from its land across the proposed easement to Brickmakers Drive.

[143] Should the easement be extinguished, Moorebank is to undertake to the Court to return the compensation with simple interest at, say, 8%.

[144] It follows that, if the 3A Application succeeds, it cannot be fully implemented unless this order is set aside or the easement granted by this order is later extinguished."

69 His Honour directed the parties to bring in short minutes to give effect to those conclusions.

70 The primary judge then turned to the question of compensation, by reference to the three elements referred to in Rainbowforce, supra, at [111] (see par [62] above).

71 His Honour first referred to the evidence of a valuer engaged by Tanlane, Mr Wotton, who assessed the quantum of compensation arising from the imposition of the proposed easement at less than $10,000.

72 The primary judge described this as a "very rubbery figure". He noted that it was based on an assumption that Moorebank's land was worth about $5 million or $24.35 per square metre and that the affected land comprised 120.89 square metres, its value thus being $2,944.23. He noted that Mr Wotton discounted this value by 30 percent as an easement only was being taken and thereby arrived at a compensation figure of $883.27 to which he added an allowance for "the blot on title", to bring the figure to $10,000.

73 His Honour noted the contrary evidence of Moorebank's valuer, Mr Dempsey, who said the land should be valued at its highest and best use, namely, as a recycling facility. He noted that Mr Dempsey's evidence was that if used in that way the land had a value of $25,249,118, whereas if this use was denied the land would only be worth $6,159,000. In those circumstances Mr Dempsey assessed Moorebank's loss at $19,100,000.

74 His Honour then noted that Mr Dempsey's figure did not relate to the value of "the land being taken out of Moorebank's ownership" but the consequential loss in value of Moorebank's remaining land.

75 In those circumstances his Honour assessed what he described as the value of the land taken at $1,500. His reasoning was as follows:

"[152] So far as the value of the land taken is concerned. I think it appropriate to take Mr Dempsey's $30 per square metre, multiply by Mr Wotton's 120.89 and discount 30%. This gives a figure of $1088. What Mr Wotton refers to as the 'blot on the title' will be dealt with as injurious affectation under (c). I will thus fix land value at $1,500."

76 His Honour then addressed "associated costs" caused to Moorebank as owner. He stated that the grant of the proposed easement would render "useless" costs expended by Moorebank on possible reasonable future use of the subject land. He also referred to the fact that Moorebank was paying rates and other outgoings on land which it could not use productively. His Honour, with respect arbitrarily, assessed compensation for these costs in an amount of $175,000.

77 Finally, his Honour dealt with what he described as "injurious affectation", which he said was the same factor as the blot on the title referred to by Mr Wotton. He stated that as Moorebank, would in his view likely be able to use its land for its highest and best use, this factor was minimal. He concluded that Mr Wotton's estimate was a little low and ultimately fixed on a figure of $25,000.

78 The primary judge fixed Moorebank's overall compensation at $201,500. However, he recognised the arbitrary nature of the $175,000 awarded for costs and as compensation for insecurity and loss of amenities. He stated that should Moorebank elect to do so, it could have an inquiry before an Associate Judge as to the appropriate order for these heads of compensation.

(7) The third judgment of the primary judge

79 His Honour gave a third judgment on 21 February 2012 following a hearing on 7 February 2012.

80 In this judgment the primary judge in effect settled the orders to be made as a result of the findings in his second judgment. He said that the statement in his reasons that Moorebank should be entitled to elect to a hearing on the question of compensation before an Associate Judge was limited to what he had described as "other factors" (in respect of which he had indicated $175,000 compensation was appropriate) and did not extend to compensation for land value or injurious affectation, which he said he had already assessed.

81 He stated that in respect of the inquiry on what were described as the "other factors" his expectation was that Moorebank would recover costs on that inquiry if the actual finding exceeded his estimation of $175,000, but that it was a matter ultimately in the discretion of the Associate Judge who heard it.

82 In the result the primary judge made orders in the form suggested by the respondent, subject to certain variations. Regrettably these orders do not appear to have been taken out. However, taking into account the trial judge's amendment to the draft short minutes, the orders made by him are as set out in a Schedule to this judgment.

(8) The Notice of Appeal

83 Because of the complexity of the issues raised, it is appropriate to set out the grounds of appeal in full:

"1. His Honour erred in failing to take into account the question of detriment to, or the burden on, the appellant, in considering the issue of reasonable necessity under s.88K(1) of the Conveyancing Act 1919 (NSW) (second judgment, [36]).

2. His Honour erred in failing to find that the imposition of the easement sought by the respondent would effectively sterilise the Moorebank Land for the purposes of materials recycling (second judgment, [48], [139]), and that the proposed easement would therefore fail the test of reasonable necessity.

3. His Honour erred in holding that that the following matters were irrelevant to the question of reasonable necessity:

(a) the only reason for the proposed easement is that the respondent wished to change the use of its land;

(b) there was no evidence that the changed use makes the Tanlane Land more valuable; and

(c) there was no evidence as to the highest and best use of the Tanlane Land

(second judgment, [38]).

4. His Honour erred in failing to find that the matters identified in ground 3 above, together with the absence of detail as to the nature of the proposed development on the Tanlane Land, and the fact that no approval had been given in respect of any such proposed development, had the consequence that the requirement of reasonable necessity was not satisfied.

5. His Honour erred in finding that the proposed easement was reasonably necessary in circumstances where the Tanlane Land could not be lawfully developed for residential use (given that the respondent could not lawfully dedicate the part of the pan handle over which the easement has been imposed, as required by the provisions of the VPA) (second judgment, [99]).

6. His Honour erred in finding that the proposed easement was reasonably necessary, having regard to the uncertainty of all relevant approvals or consents being obtained, and other events that needed to take place, in order to effectuate the ramp proposal.

7. His Honour erred in finding that the Tanlane Land would be virtually sterilised if the proposed easement is not granted, and the bridge is not constructed (second judgment, [84]).

8. His Honour erred in failing to take the following matters into consideration in deciding the issue of reasonable necessity (second judgment, [39]);

(a) alternative points of access to the Tanlane land (if it was redeveloped in accordance with its current zoning) were identified in the appellant's expert planning evidence;

(b) the current use of the Tanlane Land for the purposes of waste storage and recycling had intensified significantly since 2008;

(c) the approved bridge could be designed with a load bearing capacity that would be inadequate for Moorebank's trucks; and

(d) there was uncertainty as to whether the approved road bridge could be constructed within the area of the proposed easement or at all.

9. His Honour erred in finding that the proposed use of the Tanlane Land would not be inconsistent with the public interest pursuant to s.88K(2)(a) of the Conveyancing Act, in circumstances where the construction, dedication and transfer of the bridge to the Council, including the part of the bridge over the pan handle, in accordance with the provisions of the VPA, could not lawfully occur.

10. His Honour erred in deciding that the Court was only prevented from making an order under s.88K(2)(b) where any alleged disadvantage to the Moorebank Land was one which was going to occur as a matter of virtual certainty (second judgment, [56]).

11. His Honour erred in:

(a) finding that the Moorebank Land could be used for whatever it wanted to use it for and access was available (second judgment, [65]); and

(b) failing to find that the imposition of the easement sought by the respondent would effectively sterilise the Moorebank Land for the purpose of materials recycling.

12. His Honour erred in deciding for the purpose of s.88K(2)(b) of the Conveyancing Act that the appellant could be adequately compensated for any loss or disadvantage that might arise:

(a) despite having concluded that any intending purchaser of the Moorebank Land would be put off or would offer less (second judgment, [140]); and

(b) in light of the uncertainty of all relevant approvals or consents being obtained, and other events that needed to tale place, in order to effectuate the ramp proposal.

13. His Honour erred in:

(a) finding that the proposed bridge would support the appellant's laden trucks (second judgment, [130]), without having considered the evidence relevant to that topic, in circumstances where he had rejected the respondent's argument that the parties were bound by an issue estoppel arising from the decision of Lloyd J in Moorebank Recyclers Pty Ltd v Liverpool City Council [2009] NSWLEC 100; and

(b) failing to find that the proposed bridge would not support the appellant's 48 tonne trucks.

14. His Honour erred in taking into account the fact that the parties entered into a Deed in 2002 and that an easement was not granted in the correct location due to an error on the part of the respondent's surveyor, in circumstances where the Deed was no longer in force (second judgment, [110] to [112] and [137] to [138]).

15. His Honour erred in the exercise of his discretion by:

(a) imposing an easement in circumstances where the easement sought by the respondent would effectively sterilise the Moorebank Land for the purpose of materials recycling (second judgment, [48], [139]);

(b) imposing an easement in light of the uncertainty of all relevant approvals or consents being obtained, and other events that needed to take place, in order to effectuate the ramp proposal; and

(c) finding that the Council could change its mind in relation to its previous opposition to the ramps proposal (second judgment, [101]), in circumstances where there was no evidence of any such change of position.

16. His Honour erred in:

(a) deciding that the Court had the power under s.88K to impose an easement which was conditional upon the taking place of certain events, including the obtaining of development consents for the construction of ramps of structural capacity to carry up to 48 tonne trucks, including the undertaking of litigation (and any appeals therefrom) (second judgment, [108]); and

(b) making such a 'conditional order' (third judgment, [20]).

17. His Honour erred in failing to impose as conditions of the easement requirements concerning the timing and the method of construction of the proposed bridge, in addition to the simultaneous construction of the ramps.

18. His Honour erred in:

(a) failing to take into account in his assessment of compensation under s.88K(4) his findings that the sterilisation of the Moorebank Land was a real possibility and that any intending purchaser would be put off or would offer less (second judgment, [139], [140]);

(b) finding that Mr Dempsey, the appellant's expert valuer, gave no guidance as to how a reasonable but willing purchaser might discount the value of the Moorebank Land because of the possibility of sterilisation (second judgment, [165]); and

(c) failing to find that compensation in respect of injurious affection should be calculated on the basis of such a methodology, and failing to conduct that analysis.

19. His Honour erred in failing to make provision in his assessment of compensation under s.88K(4) for:

(a) the costs of obtaining the approvals for the construction of the ramps, including the costs associated with the proposed s.88K proceedings for the ramp proposal (including the payment of compensation to the Council and its costs of the proceedings) and the costs associated with the construction and connection of the ramps to the approved bridge; and

(b) the costs arising from the delay in obtaining an approval for the Part 3A application as a result of the requirement to pursue the ramp proposal.

20. His Honour erred in ordering that the costs of the hearing before the Associate Judge would follow the event, contrary to the terms of s.88K(5) of the Conveyancing Act."

84 The orders sought by the appellant in the Notice of Appeal were as follows:

"1 Appeal allowed.

2 The judgment below be set aside.

3 In lieu thereof, order that:

(a) The proceedings be dismissed.

(b) Alternatively, the proceedings be referred to a Judge or an Associate Judge of the NSW Supreme Court for determination in accordance with the reasons of this Court.

4. The respondent pay the appellant's costs of the appeal, and the whole of the appellant's costs of the proceedings below."

85 By a Notice of Contention, Tanlane contended that to the extent the primary judge erred in not taking into account the detriment to the appellant in deciding whether the easement was reasonably necessary, his Honour should have found that the easement was reasonably necessary after taking such detriment into account. It also contended that to the extent that the primary judge erred in imposing the easement on the condition the respondent gave the undertaking in order 8, his Honour should have ordered the easement unconditionally. Finally, it contended that to the extent the primary judge erred in relying on the decision of Lloyd J in reaching the conclusion the Ramps proposal could accommodate the trucks proposed to be used by Moorebank in its recycling business, he should have found that on the true construction of conditions (14) and (15) of the Tanlane development consent, the bridge was of sufficient capacity and design to accommodate Moorebank's heavy vehicles.

86 It is convenient to deal first with Grounds 16 and 17 of the Notice of Appeal, which relate to the question of whether the judge had power to make the so-called conditional order.

C Grounds 16 and 17 of the Notice of Appeal

(i) The parties' submissions on Grounds 16 and 17

87 Moorebank submitted that whilst the Court had power to specify in the order the nature and terms of the easement, it had no power to make an order imposing an easement on terms that it be extinguished if certain events did not take place.

88 It also submitted that there was considerable difficulty attending the efficacy and practicability of the two methods by which the trial judge contemplated that the easement would be extinguished, namely, pursuant to liberty to apply or an application under s 89(1) of the Act to extinguish the easement. In relation to the former it submitted that liberty to apply can only be invoked to enable further orders to be made necessary for giving effect to the principal relief whilst the grounds on which an easement can be extinguished pursuant to s 89 are limited to the circumstances referred to in s 89(1)(a), (b) and (c). It also submitted that only the registered proprietor of the servient tenement was entitled to apply to the Court under s 89 to extinguish the easement.

89 Moorebank also pointed to the fact that another significant problem with the orders was that they effectively cast on Moorebank the obligation to minimise its detriment, including by making an application under s 88K of the Act for an easement to enable the ramps to be constructed. It pointed to the fact that the order expressly contemplated further litigation. It also submitted that the order did not make provision for what was to occur in the event that the Tanlane land was subdivided and sold.

90 Moorebank also submitted that even if a conditional order was appropriate, the imposition of the easement should have been conditional upon the simultaneous construction of the road bridge and access ramps. This was because if consent to construct such ramps was refused, construction of the bridge would still have the effect of leaving the Moorebank land "sterilised", that is without access. It submitted that any application for development consent for construction of the ramps was likely to be rejected. Moorebank also pointed to the fact that the orders provided no time limit for the construction of the bridge.

91 Moorebank further submitted that any condition imposed had to form part of the easement and could not be a condition imposed as a term of the order granting the relief sought. It then submitted that the order made by the primary judge, or perhaps more accurately the acceptance of the undertaking as a corollary of the grant of the easement, was either without power or an error in the exercise of discretion.

92 In oral argument, senior counsel for Moorebank put this argument slightly differently. He submitted that the power under s 88K does not extend to the making or receiving of an undertaking which is not itself part of the easement but which has the effect of ex post facto establishing the matters required by s 88K.

93 Moorebank submitted that notwithstanding the Notice of Contention, if the Court found that his Honour had erred in imposing the easement, the appeal should be allowed, as an unconditional easement would subvert the primary judge's solution to the purported sterilisation of the Moorebank land.

94 Tanlane submitted that because of its remedial nature, s 88K of the Act should not be interpreted in an inflexible way. It submitted that the undertaking it gave in the Court below provided both Tanlane and the Council with an incentive to ensure that Moorebank had access to Brickmakers Drive, as the effect of the undertaking was that the easement would only survive and Tanlane would only have access to Brickmakers Drive if consent to the ramps was given. Tanlane submitted that this was a practical solution which minimised the risk that Moorebank's land would be sterilised. It submitted that if its land was sold it could apply to the Court to have "another party" substituted as the grantor of the undertaking.

95 Orally senior counsel for Tanlane submitted that it was an appropriate exercise of the Court's discretion to accept an undertaking in the nature of that given in conjunction with ordering an easement under s 88K of the Act. He said that what the judge had sought to do by accepting the undertaking was to ensure that neither the Council "or more particularly my client would bring about a state of affairs which would frustrate the planning scheme that had been adopted and the development consent which had been adopted which was to give Moorebank access via the on/off ramps which it had proposed and the Council accepted".

(ii) Consideration

96 Section 88K(1) of the Act empowers the Court to impose an easement if the Court considers it reasonably necessary for the effective use and development of the land that will have the benefit of the easement. It was not disputed in the present case that the requirement of reasonable necessity is to be decided in light of the circumstances that existed at the time of the hearing: 117 York Street Pty Limited v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 at 511; Rainbowforce, supra. It would seem to follow that the discretion to grant an easement would need to be exercised having regard to the circumstances which existed at the time of the hearing.

97 Although the primary judge found that the easement was reasonably necessary for the effective use and development of the Tanlane land the approach he ultimately took did not reflect this. By imposing the easement subject to an undertaking to the Court to apply for it to be extinguished if certain events did not occur, his Honour effectively failed to determine the question whether the easement was reasonably necessary in the circumstances which existed at the time of the hearing. His Honour only determined that the easement would be reasonably necessary if certain events occurred in the future, namely, the consent of the Council to the construction of the on/off ramps. That is not the task required by the terms of s 88K(1) of the Act.

98 Further, s 88K(4) of the Act provides that the order imposing the easement also deal with any compensation which is to be paid. Even if liberty to apply can be reserved to affected persons to apply for further compensation if some unforeseen event occurs (as to which, see Rainbowforce, supra, at [115]; 117 York Street supra at 516; Tregoyd Gardens Pty Limited v Jervis (1997) 8 BPR 15845 at 15856), the subsection does not, in our opinion, enable an order that compensation ordered be refundable in certain circumstances, or adopting the equivalent approach, an order on condition that there is an undertaking to that effect. Further, it must be remembered that s 88K(2)(b) provides that the Court must be satisfied, as a precondition to the grant of an easement, that persons having any estate or interest in the servient tenement can be adequately compensated. If the Court cannot make a determination as to the compensation payable at the time the order is made, there is no power to grant the easement. The need to satisfy that precondition cannot be avoided by providing for payment of an amount subject to a refund if certain events do or do not occur.

99 There are other problems with the order of the primary judge. Although an easement can be subject to conditions and restrictions on its enjoyment, these conditions must in our opinion be specified in the order imposing the easement and not in an order or undertaking independent of the easement: 117 York Street, supra at 522. There is good reason for this. The easement will take effect on registration and persons dealing with the dominant and servient tenement will only be bound by what appears on the register, not by some extrinsic order or undertaking which is made between parties to litigation.

100 Allied to the matters to which we have referred is the question of what is to occur if the dominant tenement is subdivided and sold. The registered proprietors of the subdivided land would not be bound by the undertaking. It does not seem to us that the problem can be assumed away, as counsel for Tanlane suggested, by the possibility of an application to the Court substituting a series of registered proprietors of the subdivided land as the grantors of the undertaking.

101 Further, there is force in Moorebank's submission that if the easement were extinguished after the bridge was constructed, Moorebank would remain unable to obtain access to Brickmakers Drive, its alternate plan (ie the Marshall plan) being impeded by the existence of the bridge.

102 However, we do not agree with Moorebank's submission that there would be no power to extinguish the easement in the circumstances envisaged by the primary judge. Section 89(1)(b) of the Act empowers a court to extinguish an easement when all persons over the age of 18 years with full capacity entitled to the benefit of the easement consent to its extinguishment. At least while the land remains in the hands of Tanlane the undertaking would effectively require it to give such consent.

103 Notwithstanding our disagreement with the submission referred to in par [102] above, for the other reasons to which we have referred, the primary judge erred in making his orders. Subject to the matters raised in the Notice of Contention, the appeal, therefore, should be allowed.

104 By that notice, Tanlane contended that to the extent the primary judge erred in granting the easement on the condition that the respondent give the undertaking in Order 8, the easement should have been granted unconditionally. That in effect is the order which was sought by paragraph 13(c) of Tanlane's Further Amended Statement of Claim of 27 October 2008. Further it appears that the case was argued on the basis that an unconditional easement should be granted, the question of conditions or undertakings of the nature of those ultimately ordered, first being raised by the primary judge.

105 Although the point was not taken, it does seem to us that the matter would more appropriately have been raised by a cross-appeal rather than a Notice of Contention. However, notwithstanding it did not take this point, Moorebank submitted the Court should not consider the matter, presumably on the basis Tanlane had accepted the form of order made by the primary judge, voluntarily given the undertaking and not made any formal application to be released from it.

106 In our opinion the Court should consider this issue. It was raised in a Notice of Contention, filed without objection and is consistent with the manner in which the case was argued at trial. In these circumstances it is consistent with the obligation of the Court under s 75A of the Supreme Court Act to deal with the matter on a rehearing.

107 No separate submissions were made on the Notice of Contention. However, the submissions raised by the parties on the appeal traversed all issues relating to the grant of an unconditional easement. It is convenient to deal with the issue by reference to those submissions.

D Reasonable necessity

1 Is it necessary to take into account the effect of the easement on the servient tenement to determine if the easement is reasonably necessary for effective use and development of the land?

108 A preliminary issue raised in the appeal is whether, in deciding if the easement was reasonably necessary for the effective use and development of the proposed dominant tenement it is necessary to take into account any effect the easement would have on the servient tenement. In the Court below each party accepted, consistent with the decision of this Court in ING Bank Australia Limited v O'Shea [2010] NSWCA 71; (2010) 14 BPR 27,317, that it was necessary to take into account the effect on the servient tenement in determining the question raised by s 88K(1) of the Act.

109 However, notwithstanding that common ground between the parties, the primary judge concluded that the question of detriment to the servient tenement was a matter to be considered on the exercise of discretion rather than in considering the question of reasonable necessity as a pre-condition to the existence of the discretionary power. With respect to the primary judge, his Honour did not provide any detailed reasons for coming to that conclusion, perhaps because he saw very little practical difference in the matter being dealt with in that way.

110 In its written submissions Tanlane submitted that O'Shea in fact did not decide that in determining reasonable necessity it was necessary to consider all potential adverse impacts on the servient tenement as distinct from it being permissive to take such matters into account. Alternatively, it submitted without any supportive reasoning that O'Shea was wrongly decided.

111 In oral submissions, senior counsel for Tanlane submitted that the ratio of O'Shea was that the effect of the imposition of an easement on the servient tenement can be a relevant consideration in determining whether an easement is reasonably necessary in particular circumstances and generally will be. In this regard he seemed to accept that O'Shea required all relevant matters to be taken into account. He subsequently seemed to submit that O'Shea only required the physical impact of the easement on the servient tenement to be taken into account but not any economic impact. He submitted this was consistent with what was said by Brereton J in Khattar v Wiese [2005] NSWSC 1014 at [27]; 12 BPR 23,235 at 23,242.

112 In support of the proposition that O'Shea was incorrect, senior counsel for Tanlane referred to the remedial nature of the legislation by reference to the Second Reading Speech, but otherwise did not elaborate on the submission.

113 In O'Shea Giles JA, with whom Campbell JA agreed, made the following remarks:

"[48] 'Reasonably necessary' is a composite phrase, in which the necessity is qualified so that it must be a reasonable necessity. Necessity is quite an absolute concept. The qualification is not of the use or development, so that it must be reasonable, although no doubt reasonableness of the use or development comes into reasonable necessity for that use or development. It is of the necessity.

[49] A qualification which did no more than reduce the necessity to a less absolute level is unlikely, and if that were intended some other word could have been used such as 'convenient'. Qualification whereby the necessity must be reasonable is apt to, and in my opinion does, permit regard to matters beyond the relatively absolute necessity for the effective use or development of the dominant tenement. It calls for an assessment of that necessity having regard to all relevant matters, according to the criterion of reasonableness. The impact of the easement on the servient tenement, and the fact that ordering an easement detracts from the property rights of the owner of the servient tenement, are matters readily to be taken into account in that assessment. It is difficult to see how reasonable necessity for an easement for the use or development of a dominant tenement, as distinct from necessity, can be arrived at without regard to the effect on the enjoyment of the servient tenement and on the property rights of the owner of the servient tenement."

Young JA reached the same conclusion (at [141]-[161]).

114 It seems to be abundantly clear from the passages to which we have referred that the Court in O'Shea decided that the question of reasonable necessity requires that there be taken into account the effect that the easement would have on the enjoyment of the servient tenement including the property rights of the owner thereof. That would seem to include economic effects, including diminution in value of the property.

115 In the passage in Khattar v Wiese relied upon by senior counsel for the appellant in support of his submission, Brereton J said that the extent of the burden of the proposed easement on the servient property is a relevant consideration, in that the greater the burden, the stronger the case needed to justify a finding of reasonable necessity. There is no reason to treat these remarks as limited to physical as distinct from economic impacts on the enjoyment of the servient property. To do so would be inconsistent with O'Shea.

116 Leave should not be permitted to argue that O'Shea was wrongly decided. It was a recent unanimous decision of this Court consistent with the approach taken to the construction of s 88K(1) up to that time (see Rainbowforce, supra at [77] and the cases there cited) and it has not been subsequently questioned. It was not submitted at the trial that it was incorrectly decided and no formal application was made to argue its correctness so as to give the Court an opportunity to constitute a five judge bench if it thought fit to do so. Most significantly, no argument of any substance was put in support of the proposition that it was incorrect.

117 For these reasons the question of whether the easement was reasonably necessary for the effective use and development of the Tanlane land needs to be considered having regard to the effect it would have on the enjoyment of the Moorebank land and on the property rights of the owners of that land.

2 Is the easement reasonably necessary for the use and development of the Tanlane land?

(i) The submissions of Moorebank

118 Although Tanlane bears the onus of establishing that the easement is reasonably necessary, it is convenient having regard to the structure of the written submissions to deal first with the submissions made by Moorebank. Those submissions were encompassed in its composite submissions in respect of Grounds 2, 6, 8(c), 8(d) and 13 of the Grounds of Appeal, its submission in relation to Ground 5 and its composite submissions in relation to Grounds 3, 4, 7, 8(a) and 8(b) of the Grounds of Appeal.

119 The primary submission made by Moorebank was that the easement would "sterilise" its land. What was meant by this was that the easement, if granted, would prevent access being obtained to Brickmakers Drive by implementation of the Marshall plan. This, it was submitted, would prevent the land being used for a material recycling facility as permitted by the Liverpool Local Environmental Plan (see pars [22] and [41] above). That would result because, although there would still be physical access to Newbridge Road via the panhandle, the RTA would not permit that access to be used for the purpose of the recycling facility (see par [40] above).

120 Moorebank submitted that the only alternative proposal providing it with access was the Ramps proposal. It submitted that there were numerous objections to the Ramps proposal, noting that the evidence of each town planner was that the Council, as owner of Lots 309 and 310, would be unlikely to give consent to the lodgement of any development application, having regard to its resolution of 15 June 2011 and its letter to Moorebank of 14 July 2011 (see pars [48]-[49] above). It submitted that the town planners agreed on that point. That was the evidence of Mr Kennan, the town planner engaged by Moorebank. However, the evidence of Mr Mitchell, the town planner engaged by Tanlane, was more ambivalent. In the passage relied upon by Moorebank in support of this submission, Mr Mitchell made the following comments:

"I think it's likely that the consent authority would give consent for the ramps and usage of the bridge in accordance with condition 14 of the approval for construction of the bridge. I think the Council in its role as land owner in terms of making the application may resist that."

In its written submissions in reply, Moorebank submitted that in giving that evidence Mr Mitchell assumed that condition 14 required the ramps to be built.

121 Moorebank noted that the primary judge rejected these objections to the Ramps proposal for three reasons. First, Council could change its mind, second, Moorebank could make an application against the Council under s 88K for an easement to build the ramps and, third, there might be administrative law remedies.

122 In relation to the first matter, Moorebank submitted there was no evidence that Council would change its mind. As to the second, it submitted that the prospects of obtaining such an order was speculative and that there was no evidence which would support the inference that there were reasonable prospects of obtaining it.

123 So far as the third reason given by the primary judge was concerned, Moorebank submitted that the prospects of a judicial review were speculative. So far as an appeal under s 97 of the EPA Act was concerned, it submitted that Council had a dual role as consent authority and as landowner. Whilst it accepted that the Land and Environment Court had power under s 39(2) of the Land and Environment Court Act 1979, to give the consent of Council as landowner on an appeal from a refusal of Council to give a development consent (see Sydney City Council v Ipoh Pty Limited [2006] NSWCA 300; (2006) 68 NSWLR 411 at [6], [9], [10] and [34]), it submitted that the application still needed to be made and refused by Council and the prospects of a successful appeal under s 97 were uncertain. Further it submitted, that the Council could reject the development application pursuant to cl 51(1)(b) of the Environmental Planning Regulations on the basis that it was not accompanied by the owner's consent in which case no appeal under s 97 would be available.

124 Moorebank elaborated on these propositions in a note handed up during the course of the hearing. It submitted that for the Ramps proposal, Council's consent as owner of Lots 309 and 310 was required to accompany the development application. It submitted that if the consent was not provided Council could either "reject" the development application under cl 51(1)(b) of the EPA Regulation or refuse the application either by determining it adversely or by deemed refusal by lapse of time (EPA Act s 80(1)(b), s 82(1)). It submitted that if the Council rejected the application Moorebank would need to apply to the Court for an easement under s 88K and then seek an ancillary order that the Council give owner's consent to the lodgement of a development application. It would then need to lodge a development application. If the application was refused by Council, Moorebank would have to appeal under s 97 of the EPA Act. Moorebank submitted it was not required to make these applications in order to enable Tanlane to be granted the easement which it sought.

125 Moorebank contended that whilst the context of the letter from the Council of 14 July 2011 was a Part 3A application, the letter expressed the opposition of Council to both the Marshall plan and the Ramps proposal to the extent that either enabled access to Brickmakers Drive for the purpose of conducting the recycling facility. It pointed out that both the resolution and the letter of 14 July 2011 referred to access to both Lots 309 and 310 although the Marshall plan only required access to Lot 309.

126 Moorebank noted that the development application approval did not require or permit connection of the ramps. It submitted that Boral would object to any such proposal. It also suggested that it was not clear if the proposal was feasible from an engineering viewpoint, relying on evidence from the engineers called in the proceedings that the edge strip would require careful analysis and design.

127 Moorebank also submitted that as the ramps traversed environmentally sensitive land, cl 7.6 of the Liverpool Local Environment Plan (see par [41] above) would have to be satisfied although it acknowledged that the same requirements would have to be met in constructing a road over Lot 309. Moorebank also submitted, contrary to the submissions of Tanlane, that this provided a rational basis for refusing to consent to the Ramps proposal.

128 Further, Moorebank submitted that there was no guarantee that the bridge would be constructed with a load bearing capacity which would be sufficient to accommodate Moorebank's heavy vehicles. It referred to the evidence of Mr Taylor to the effect that the development application did not require the bridge to be constructed so that it would have sufficient load bearing capacity for Moorebank's trucks. Moorebank noted that it was acknowledged by the parties' respective engineers that a loading known as SM1600 would be sufficient to enable the trucks to use the bridge and ramps, but submitted the consent left open whether that standard was required to be met. It submitted the primary judge erred in accepting the views expressed by Lloyd J on the issue in Moorebank Recyclers Pty Ltd v Liverpool City Council (see par [46] above) and that he should have considered this matter for himself.

129 Senior counsel for Moorebank did accept that if the bridge had the load bearing capacity required by SM1600, the ramps would be constructed to have the same capacity. He also submitted that the design only accommodated vehicles of smaller capacity.

130 Moorebank submitted that to the extent the evidence in chief of the engineer called by Tanlane, Dr French, was to the contrary, he had conceded in cross-examination that it was only at the time of the issue of a construction certificate (which would take into account the usage of the bridge), that the load bearing capacity of the bridge would be finally determined and that the owner might persuade the consent authority to approve the bridge for residential loads only.

131 In its written submissions in reply Moorebank emphasised that where there was an "indefinite appropriation of a part of a person's land in the sense that that land will be sterilised insofar as the person's own building is concerned, the court is not necessarily quite so favourable to the application [to grant an easement]", citing Bloom v Lepre (2008) 13 BPR 24,923 at [38]. It emphasised this would be the result in the present case, as the Marshall plan and the Ramps proposal cannot coexist.

132 Moorebank submitted that there was no basis in the evidence for asserting that the Part 3A application had little prospect of obtaining approval, provided appropriate access could be provided. It pointed out that the Council had given owner's consent to the application and submitted that that consent could not be withdrawn. It pointed out that the land was zoned to permit the recycling facility and that the consent authority was not the Council but the Planning Assessment Committee, which was not bound by Council policies such as those contained in the Development Control Plan (see par [42] above).

133 Senior counsel for Moorebank submitted that even if the Marshall plan was unlikely to be approved, Moorebank suffered a detriment because of all the steps surrounding the effectiveness of the Ramps proposal. He submitted approval of this proposal was remote and, implicitly, less likely than approval of the Marshall plan.

134 Moorebank also submitted that it was significant that it had only limited time to obtain approvals as one key aspect was site access and Moorebank was required to demonstrate suitable arrangements had been made for access to the site. Further, it pointed out that unless substantial progress was made in finalising the environmental assessment by 1 October 2013, the project declaration would be revoked. In these circumstances it stated that it would not have sufficient time to obtain approval for the Ramps proposal. It was emphasised that Tanlane bore the onus of showing that Moorebank would not be deprived of access.

135 In his oral submissions senior counsel for Moorebank acknowledged that, in the absence of Council consent, to implement the Marshall plan his client would require an easement over Lot 309. He acknowledged that consent to the lodgement of the Part 3A application did not enable Moorebank to access Lot 309 and if consent to such access was not granted his client would require an s 88K easement over that land. Moorebank submitted it was uncertain what would occur if the declaration of the materials recycling yard as a major project was revoked (see par [22] above).

136 In addition to its submissions concerning the effect the imposition of the easement would have on its land, Moorebank submitted that the easement was not in fact reasonably necessary for the effective use of development of the Tanlane land, irrespective of the effect on its own land. It submitted there was no evidence that the proposed use made the land more valuable and that the mere fact that the zoning permitted a maximum of 216 dwellings on the land did not make out a compelling case for the reasonable necessity of the easement for the effective use and development of the Tanlane land, particularly when it was currently used for the purpose of waste storage. It submitted that even if the easement was not granted the land remained available for its current use.

137 Moorebank also submitted that Tanlane had an alternative means of access through Davy Robinson Drive. It acknowledged the evidence of Mr Mitchell to the effect that this would not be favoured by the RTA or the Council, because planning had proceeded on the basis that access to Newbridge Road from the land east of the panhandle would be obtained via Brickmakers Drive. It also acknowledged his evidence that Davy Robinson Drive was flood prone which might pose a safety issue. Moorebank, however, referred to the evidence of its town planner, Mr Kennan, to the effect that all the land, including Brickmakers Drive, was flood prone and submitted that Mr Kennan's evidence was that it would be preferable that access be provided by way of Davy Robinson Drive rather than Brickmakers Drive. So far as the question of the land being flood prone was concerned, Mr Mitchell disagreed with Mr Kennan's assessment, making the following comment:

"Brickmakers Drive is not flood prone, nor is the majority of the Tanlane land that is proposed for residential development and the Davy Robinson Drive is adjacent to the river channel and is much more likely to experience high velocity flood flows which would make it impassable and dangerous in a flood period. The further away from the Georges River the more likely it is to be what is termed a flood storage area where volumes of flow are very minor and it would be much more appropriate and safe to build an access road in these flood fringe areas or flood storage areas."

138 Further, Mr Kennan's evidence to the effect that access to Newbridge Road was preferable via Davy Robinson Drive was in fact as follows:

"4.1.8 Figure 2 of Part 2.10 of DCP 2008 provides for a collector street (link road) to facilitate traffic generated by any development of both the Tanlane Land and the Flower Power Land.

4.1.9 The collector street is to connect to Davy Robinson Drive.

4.1.10 Access to any development of the Tanlane Land could be achieved by way of the collector street to Davy Robinson Drive and then to Newbridge Road. Any such access would, however, be subject to a merits assessment at the development application stage of any development.

4.1.11 Condition 7 of the development consent for the approved road bridge states:

'Consent is not granted nor implied to any future usage of the road bridge as a private road that provides access to development that is not permissible within the Residential 2(a) zone.'

4.1.12. From condition 7, it is clear that any development on the B6 zoned land owned by either Tanlane or Flower Power would not be accessible over the approved road bridge and, hence, over the proposed easement. That access would need to be provided either directly to Newbridge road, or preferably from a town planning perspective, by way of the collector street and Davy Robinson Drive."

That evidence does not suggest access to Newbridge Road via Davy Robinson Drive was preferable to access via Brickmakers Drive. It proceeds on the basis that access over the road bridge could not be achieved and that in those circumstances the preferable access was by way of Davy Robinson Drive.

139 Moorebank also pointed to the fact that access for Davy Robinson Drive was the means of access provided for on Figure 2 of Pt 2.10 of the Development Control Plan adopted in 2008.

140 Moorebank also pointed to authority to the effect that where a proposed easement involves appropriating another person's property and there is alternate means of access, there must be "considerable advantage" in obtaining the easement rather than developing the alternative: Grattan v Simpson (1998) 9 BPR 16649 at 16651; Woodland v Manly Municipal Council [2003] NSWSC 392; (2003) 127 LGERA 120 at [11]. It submitted that the evidence failed to show such a considerable advantage. In this context senior counsel for Moorebank emphasised that Tanlane had not taken any steps to investigate the alternate access.

141 The final matter put by Moorebank on this issue was that it was impossible for Tanlane to comply with its obligations under the VPA and hence it would not be able to obtain the subdivision certificate it required to create the first residential lot within the development on its land. Put shortly, it was submitted that the VPA required Tanlane to dedicate land to the Council which was not owned by it and its inability to do so meant it could not comply with its obligations under the VPA and that as a result any residential development would be illegal.

142 Moorebank submitted that the effect of the VPA was to require Tanlane to dedicate the bridge as well as certain specified land. It said that the land to be dedicated was what was defined as Designated Land and that that land was required to be designated to the Council free of any trusts, estates, interests, covenants and encumbrances (VPA cl 3.1(2)). It referred to the fact that the Designated Land, as defined in Sch 2 of the VPA, was that part of the land outlined in blue on the plan which was Annexure 1 to the agreement. It submitted that that land included the panhandle.

143 Moorebank referred to the fact that dedication was required to occur prior to the issue of a subdivision certificate creating the first residential lot within the development. It submitted that Tanlane would be unable to satisfy this condition because it would not be able to dedicate the Moorebank land and therefore it would not be entitled to a subdivision certificate.

144 Moorebank submitted that non-compliance with a VPA is deemed to be a breach of the EPA Act (s 122(a) and s 122(b)(vi)). In these circumstances it submitted that s 80(2) of that Act required Council to refuse development consent. It submitted that it could not therefore be said the easement was reasonably necessary for the use and development of the Tanlane land.

(ii) The submissions of Tanlane

145 Tanlane placed particular reliance on the planning history relating to the precinct, of which its land and the Moorebank land formed part, in its submission that the easement was necessary for the effective use and development of its land. We have summarised this history in section B of this judgment (pars [9]-[53] above). It submitted that if the easement was not granted use of the land would be restricted to sand extraction and material recycling, now a non-conforming use under the Local Environmental Plan but available pursuant to existing use rights. It submitted that the grant of the easement would permit the land to be developed for residential purposes as envisaged by the Local Environmental Plan and in the manner set out in the Development Control Plan. It submitted that this use was substantially preferable to its use without the easement. It pointed to the fact that in his first judgment, the primary judge had found that on all the evidence the requirement that the easement be reasonably necessary for the use and development of the land was made out as without access to Brickmakers Drive the land would be "virtually sterilised".

146 In relation to the prospect of alternative access, Tanlane relied on the evidence of Mr Mitchell to the effect that "Davy Robinson [Drive] [was] not central to the area that is being developed and does not service it effectively whereas Brickmakers Drive is central to the Boral and lands to the east and Davy Robinson Drive is adjacent to the Georges River and highly flood prone and so therefore wouldn't provide safe access or access in conditions where flooding occurred". It also pointed to the fact that the RTA, in its letter dated 1 August 2008, to which we have referred above (at par [40]), indicated that the preferred road network was that shown on the Development Control Plan with a collector street that provides an east-west road link from Brickmakers Drive "across Lot 6's access way" and then through the Tanlane land to Davy Robinson Drive. This, it submitted, was inconsistent with direct access from Davy Robinson Drive.

147 In this context senior counsel for Tanlane emphasised the importance of the Development Control Plan as a fundamental element or focal point of the decision making process in respect of development applications, having regard to the provisions of s 79C(1)(a)(iii) of the EPA Act: Zhang v Canterbury City Council [2001] NSWCA 167; (2001) 51 NSWLR 589 at [75]; Botany Bay City Council v Premium Custom Services Pty Limited [2009] NSWCA 226; (2009) 172 LGERA 338 at [4], [26].

148 Tanlane submitted that the resolution of the Council of 15 June 2011 and its letter of 14 July 2011 only related to access by way of the Marshall plan. It submitted the reason was that the Marshall plan would prevent access to Brickmakers Drive from the land to the east of the panhandle.

149 Tanlane also submitted that there was little prospect of Moorebank obtaining consent to the Marshall plan, contending that it was contrary to the planning history for the area and would deny access to Brickmakers Drive to landholders to the east of the panhandle. It submitted no evidence was led to the effect that the Marshall plan would be approved.

150 At the hearing senior counsel for Tanlane emphasised that all that the Council had done in relation to Moorebank's Part 3A application was to give consent to it being lodged. It had not consented to access to implement it. He submitted there was no prospect of Moorebank obtaining consent to the Marshall plan whereas, he submitted, the evidence established Council would give consent to the ramps. In making this submission he relied on the planning history relating to the precinct and cl 14 of the consent to Tanlane's development application (see par [33] above).

151 Tanlane submitted the primary judge was correct in finding that the proposed bridge would have the capacity to accommodate Moorebank's trucks. He submitted this was the combined effect of conditions 45 and 14 of that development consent. It submitted that that was the evidence of Dr French who stated that as a normal design function it is generally as economical to design for a full SM1600 load as to design for a lesser load because standard bridge planks are generally used which are capable of carrying the full SM1600 load.

152 Tanlane also submitted that Moorebank's argument based on the VPA would not be accepted. It pointed to the obligation in cl 13.1 of the VPA to carry out a good faith review of the agreement if requested by either party to do so. It submitted that the obligation in Sch 3 to construct and dedicate the road bridge would be construed as dedicating the bridge to the extent the respondent was able to do so. It also relied on the definition of Designated Land and the definition of Land in the VPA in support of its contention that the land to be dedicated was limited to land owned by Tanlane.

(iii) Consideration

153 Although as we have indicated it is necessary to take the effect on the servient tenement into account in determining whether or not the proposed easement is reasonably necessary for the effective use or development of the proposed dominant tenement, it is convenient to deal first with the question of whether, absent consideration of such an effect, the easement sought in this case is reasonably necessary.

154 The requirement that the easement be reasonably necessary for the effective use and development of the land means something more than mere desirability or preferability over the alternative means available: Rainbowforce supra at [76]. However, reasonable necessity does not mean absolute necessity. The correct approach to the question, in our opinion, was stated by Hodgson J (as his Honour then was) in 117 York Street supra as follows:

"It is clear that 'reasonably necessary' in s 88K(1) does not mean 'absolutely necessary', and thus that the requirement may possibly be satisfied even when the plaintiff's land could be effectively used or developed without the easement.

In my opinion: (1) the proposed easement must be reasonably necessary either for all reasonable uses or developments of the land, or else for some one or more proposed uses or developments which are (at least) reasonable as compared with the possible alternative uses and developments; and (2) in order that an easement be reasonably necessary for a use or development, that use or development with the easement must be (at least) substantially preferable to the use or development without the easement.

The first of those requirements may seem contrary to a statement by Hamilton J in Tregoyd Gardens (at 14) that the Court 'is not to judge upon the reasonableness of the particular development'. However, that statement is qualified by the words 'at least in this case'. If there are some possible reasonable uses or developments of the land for which a proposed easement is not reasonably necessary, then it seems to me that the easement cannot be 'reasonably necessary for the effective use or development' of the land, at least unless there is some proposed use or development, for which the proposed easement is reasonably necessary, which is itself a reasonable use or development. It may be that the particular use or development would need also to be preferable to the alternatives; but whether or not that is so, it would in my opinion certainly need to be at least reasonable." (at 508-509 citations omitted)

155 In Rainbowforce supra, Preston CJ of the Land and Environment Court, gave a relatively wide meaning to the concept of effective use and development (at [72]) stating that if use or development of land for some planning purpose such as residential, commercial or industrial cannot be achieved without the creation of the easement, the easement is reasonably necessary for such use or development to be effective. To the extent that Preston CJ was suggesting that subject to the other matters which he stated required consideration, an easement would be reasonably necessary for the effective use and development of the land if it was required for any proposed development, regardless of the development's desirability or economic effect, the proposition, with respect, is too wide. That approach would not take adequate account of the word effective. Equally, we do not believe, as suggested by Moorebank, that it is necessary to show that the easement is necessary to achieve the highest and best use of the land. In a case such as the present, where the easement is said to be necessary for the commercial development of the land, it is sufficient in our opinion to show that the proposed development is one which is appropriate to the area in which the land is situated and is at least an economically rational use of the land. That in our opinion is consistent with what was said by Hodgson J in 117 York Street supra in the passage which we have cited above (see also Lonergan v Lewis [2011] NSWSC 1133 at [22]).

156 That is not to say that an easement will always be granted in these circumstances. As we have indicated the authorities have established that the concept of reasonable necessity requires consideration of the effect of the grant of the easement on the servient tenement: O'Shea supra. Further, it is correct in our opinion, that the greater the burden on the servient tenement, the stronger the case needed to justify a finding of reasonable necessity: Rainbowforce supra at [77]; Khattar v Wiese supra at [27]; Woodland v Manly Municipal Council, supra at [12]; Lonergan v Lewis supra at [22].

157 As we indicated earlier (par [131]) in Bloom v Lepre supra, Young J stated that where the effect of the easement was to sterilise the servient tenement insofar as the person's own development or use is concerned, the Court is not necessarily quite so favourable to the application. We would put the proposition more strongly. If the effect of the imposition of an easement was to effectively preclude a reasonably available development or use of the servient tenement appropriate to that land, then it would require a strong case of reasonable necessity before the easement would be imposed.

158 The determination of whether an easement is reasonably necessary for the use or development of the land also involves consideration of the alternative methods by which such use or development could be achieved. That is implicit in the concept of reasonable necessity. In the present case it involves the consideration of whether there is alternative access to give effect to the development.

159 None of the factors to which we have referred above can be considered in isolation from the others. Ultimately the question of whether an easement is reasonably necessary for the use or development of the land will be determined by an evaluation of those factors in conjunction with each other.

160 In the present case, use and development of the Tanlane land for residential purposes is an effective use and development within the meaning of s 88K(1) of the Act. The land was rezoned for that purpose in 2008. The Development Control Plan approved at the same time (see par [42] above) referred to the Tanlane land in the following terms:

"The sand extraction industry has reached the end of its economic life. Landfill has been placed over some of the site to a level above the one percent flood on the Georges River. It is proposed to be redeveloped for residential and business uses with possibly private recreation along the foreshore."

161 The Development Control Plan lists a series of social and environmental benefits which could be derived from a subdivision in accordance with the plan, which provided for development to a maximum of 216 dwellings of various size and subject to various controls.

162 There was no direct evidence that the sand extraction industry operated by Tanlane had reached the end of its economic life, or for that matter that the land as developed would be more valuable than without its intended use. However, it seems to us that when a comparison is made between a subdivision of the land in accordance with the Development Control Plan and a non-conforming use pursuant to existing use rights for excavation and recycling, it must follow that the proposed development is at least reasonable compared to the alternative.

163 The next question is whether the easement is reasonably necessary for that use and development. As Hodgson J pointed out in 117 York Street supra, the development with the easement must be substantially preferable to development without the easement. This is particularly the case if the grant of the easement would cause significant detriment to the servient tenement.

164 This raises the issue of whether access from the Tanlane land to Davy Robinson Drive is a viable alternative to the grant of the easement. In our opinion this question should be answered in the negative. First and most importantly, as we have said, the Development Control Plan makes it clear that the link road to Brickmakers Drive is a necessary precondition of the subdivision, the Development Control Plan stating that the link road was required to be a minimum of 20 metres wide and able to accommodate a bus route. The reason for this, it was stated, is to provide flood free access. As we have pointed out, the Development Control Plan emphasised that Davy Robinson Drive was not to be a shortcut onto Newbridge Road. In this context the evidence of Mr Mitchell to the effect that Davy Robinson Drive was adjacent to the Georges River and highly flood prone is of particular relevance.

165 As Tanlane submitted, the importance of the Development Control Plan cannot be underestimated. In Zhang supra, Spigelman CJ described it as a focal point or fundamental element to be taken into account in a decision whether or not to grant a consent (at [75]-[77]). In that context it seems to us that the prospect of Council granting development consent utilising Davy Robinson Drive as the main thoroughfare for public and private transport from the Tanlane land to Newbridge Road is remote. Even if it were a possibility (although, in our opinion, a faint one) development with the easement would be substantially preferable to development without it, the only alternative raised being access to Newbridge Road via Davy Robinson Drive.

166 Moorebank also submitted that the easement was not reasonably necessary because if it was granted Tanlane would not be in a position to satisfy the conditions contained in the VPA. We have set out Moorebank's submissions in pars [141]-[144] above. For the reasons set out below, in our opinion, these submissions are incorrect and must be rejected.

167 Clauses 3.1 and 3.2 of the VPA provide as follows:

"3.1 Designated Land

(1) The Developer must dedicate and transfer the Designated Land to the Council by the date or time specified for the relevant item in Schedule 3.

(2) The Designated Land must be dedicated to the Council:

(a) free of any trusts, estates, interests, covenants and encumbrances (other than those specified in this agreement); and

(b) at no cost to Council.

3.2 Works Contribution

(1) The Developer must carry out and complete the Works in accordance with this agreement.

(2) The Council may refuse to issue the relevant Subdivision Certificate for the Development if the relevant portion of the Works identified in Schedule 3 has not been carried out in accordance with this agreement."

168 Schedule 3 of the VPA sets out the works to be carried out pursuant to the Agreement and makes provision for the periodical release of a bank guarantee required to be provided by Tanlane pursuant to cl 11 of the VPA, the release occurring as individual items of work are completed. Item 7 of Schedule 3 described one item of work in the following terms:

"Construction and dedication of road bridge over drainage channel, embankment and road to Brickmakers Drive as shown on the plan attached as Annexure 1 and marked as 'F'."

169 We have attached a copy of the plan referred to in Item 7 of Schedule 3 as "Attachment 2". The legend to the plan identifies the land in dark blue and marked E as a dedicated drainage channel. It is apparent from the drawing that the drainage channel is on Tanlane land running north/south along the western boundary of that land.

170 The land hatched in yellow on the plan is identified in the legend as Item F. Both in the legend and in the notation alongside that area appear the words "Construct and dedicate bridge including two vehicle lanes and bike/pedestrian path over drainage channel". That would tend to indicate that what is to be dedicated is that part of the bridge which runs over the drainage channel, which is land owned by Tanlane, although it must be accepted that the blue lines running across the whole of the bridge are described in the legend as "Boundary of Designated Land".

171 Designated Land is defined in the VPA as that part of the Land outlined in blue on the plan that is Annexure 1 to the Agreement. Again this seems to be capable of referring either only to the drainage channel or, as Moorebank contended, to the drainage channel together with the bridge.

172 However, reliance by Moorebank on the definition of Designated Land fails to take into account that Land itself is a defined term. Land is defined in Schedule 2 as the "Land set out in Schedule 1". Schedule 1 defines the Land as the whole of the Land in Certificate of Title Folio Identifier 7/1065574 and known as 146 Newbridge Road Moorebank. That is the land owned by Tanlane.

173 It seems to us that in those circumstances the obligation of Tanlane under the VPA to dedicate land to the Council is limited to that part of the land outlined in blue on the attached plan, namely, the drainage channel including that part of the channel traversed by the bridge and does not include land which it does not own. That construction takes account of the fact that the defined term Land is incorporated into the definition of Designated Land and is consistent with a notation Item F on the plan and in the legend to the plan.

174 To the extent there is ambiguity, it is appropriate to take into account the fact that each of the parties to the VPA were aware that the bridge traversed not only land owned by Tanlane but also land owned by Moorebank: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451; Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; (2004) 219 CLR 165; Western Exports Services Inc v Jireh International Pty Limited [2011] HCA 45; (2012) 86 ALJR 1. The Council was aware that the bridge traversed land other than that owned by Tanlane from the fact that it had previously granted consent to the development application which showed the bridge was over land owned by Moorebank.

175 In these circumstances it would be surprising that the Council and Tanlane had reached an agreement containing obligations which Tanlane was unable to perform. Although for the reasons we have given, a literal construction of the VPA leads to a conclusion contrary to that contended for by Moorebank, the surrounding circumstances to which we have referred fortify that view.

176 It follows that Moorebank's contention that the VPA would prevent Tanlane from taking advantage of the easement for the use and development of the land is not made out.

177 Thus far we have dealt with the issue of reasonable necessity without having regard to the effect of the imposition of the easement on the land owned by Moorebank. That raises two questions. The first is whether or not the easement should be refused because it would have the effect of preventing the Moorebank land being used as a recycling facility, as permitted by the zoning of the land under the 2008 Liverpool Local Environment Plan (see par [41] above). The second, and what might be described as the subsidiary issue, is whether if the easement is imposed Moorebank's proposed use of the land could be frustrated by the proposed bridge not having the capacity to accommodate the trucks which would be used by Moorebank in carrying out a recycling business. We will deal with the subsidiary issue first.

178 The development consent for the construction of the bridge specified by cl 45 that the bridge is to be certified so that it complies with AS5100-Bridge Design Code. Clause 14 of the consent provided that the bridge is to be designed and constructed such that it is able to accommodate the access ramps (Concrete Recyclers Access Option A) as developed in concept by Patterson Britten & Partners Pty Limited.

179 The debate on the appeal centred on two issues. The first was whether the standard AS5100 mandated a load bearing capacity SM1600 which the parties accepted would be sufficient to accommodate the trucks to be used by Moorebank for the purpose of its development. Even if it mandated this capacity, the second issue was whether the Council and Tanlane would be able to vary this requirement at the construction stage so that ultimately a bridge of lesser load bearing capacity was constructed.

180 AS5100 is the Australian standard bridge design. Clause 6.2 of Part 2 of that standard mandates in effect that to comply with the standard, a bridge must have the capacity to carry loads represented by the abbreviation SM1600. In a joint report prepared by the experts called on this issue, Mr Taylor and Dr French, they agreed that if the bridge and ramps were designed to comply with AS5100 loading SM1600, all currently legal trucks would be able to access the bridge from a design load viewpoint.

181 However, a note to cl 1.2 of Pt 2 of AS5100 provides that the authority with power to approve the design of the bridge may vary any of the specified loads.

182 In these circumstances it seems to us that notwithstanding cll 45 and 14 of the development consent, there is a possibility that Tanlane and the Council could agree to vary the load bearing capacity, in which case Moorebank could not use the bridge for its intended purpose.

183 However, this difficulty could be overcome in our opinion by specifying in the easement that any bridge constructed would have the capacity to accommodate Moorebank's trucks. The Court, in our opinion, has the power to impose such a requirement. Section 88K(3) requires the Court to specify the nature and terms of the easement but imposes no limitation on the terms which can be imposed. Thus, for example, in 117 York Street supra, Hodgson J imposed a condition on the easement requiring the owner of the proposed servient tenement to grant owner's consent to the lodgement of a development application by the plaintiff (at 522).

184 In Rainbowforce supra, Preston CJ rejected the application by the defendant to impose suggested conditions on road and bridge construction as a term of the instrument creating the easement. However, he declined to do this not because of an absence of power to impose the terms but because he considered the matters in question were matters for the Council to consider on a development application (see at [206]-[209]). However, in the circumstances of the present case, where a development consent has been given containing the conditions, this problem does not arise.

185 Moorebank also submitted that the design of the ramps only accommodated vehicles of lesser capacity than that contemplated by SM1600. Once again this matter can be dealt with by imposing a term that the bridge has the capacity to accommodate on/off ramps which themselves have the capacity to bear loads up to standard SM1600.

186 The most significant argument raised by Moorebank against the grant of the easement was the contention that it should not be granted because it would sterilise Moorebank's land.

187 It is important to bear in mind what is meant by sterilisation. At the present time, Moorebank only has access from its land to a public road (Newbridge Road) via the panhandle. The proposed easement does not affect that access at all. Moorebank's submission was that the grant of the easement would prevent its proposal to use the land for a recycling facility as it would not be able to obtain access to Newbridge Road over the Council land (the 2A land) and then to Newbridge Road via Brickmakers Drive.

188 It is well established that the requirement of reasonable necessity must be considered in light of the circumstances which existed at the time of the hearing of the application: 117 York Street supra at 511; Rainbowforce supra at [82]. To some extent the submissions of each party failed to reflect this principle. Thus, Moorebank, placing reliance on the Council resolution of 15 June 2011 and letter of 14 July 2011 contended that it had no prospect of obtaining consent to the Ramps proposal whereas it would obtain consent to the Marshall plan, presumably on the basis that a different consent authority was involved. By contrast Tanlane contended that the Marshall plan had no prospects of success but that there was a real likelihood that the Ramps proposal would succeed.

189 Neither approach, in our opinion, reflected the reality of the situation. So far as the Ramps proposal is concerned, although Council has given consent to the construction of the bridge over the panhandle, it has not consented to the construction of the on/off ramps. The Planning Authority has not approved the Marshall plan and by its letter of 12 October 2011 (see par [51] above) indicated it would not proceed further until it received a consent to the proposed site access works. Council by its letter of 14 July 2011 indicated it did not propose to give such consent.

190 In this context, senior counsel for Moorebank correctly did not contend that the consent to the lodgement of the Part 3A development application amounted to an agreement to site access to carry out the works necessary to complete the proposal. This was consistent with the approach of the Department of Planning in its email of 12 October 2011. He acknowledged that in these circumstances Moorebank could only obtain access by way of a successful application under s 88K for an easement over that part of the Council land necessary to implement the Marshall plan. However, he made no submission as to the reason that it would be in the public interest to grant such an easement, particularly having regard to the fact that it would frustrate the Council's Development Control Plan so far as the land to the east of the panhandle was concerned.

191 The evidence of the town planners is of little assistance. Mr Kennan, the town planner engaged by Moorebank, stated the land was suitable for use as a materials recycling facility due to the proximity of major roads and the presence of substantial natural buffers around the site to mitigate any potential environmental impacts. He also stated it would assist the State Government in meeting its target for reduction in material going to landfill.

192 In his town planning report of 14 June 2011, Mr Kennan repeated a view he expressed in an earlier town planning report of 14 May 2010, that having regard to Council policy for the precinct, the position of the RTA regarding access to Newbridge Road for a materials recycling facility and the improbability of gaining access over land owned by the Sydney Water Board and Boral, it would be impossible for Moorebank to gain access to Brickmakers Drive other than via the Marshall plan.

193 In the joint experts' report of 19 November 2010 Mr Kennan expressed the following opinion:

"3.5.4(i) The construction of the approved road bridge would preclude access to the Moorebank Land over the 18 metre wide strip of R3 zoned land as proposed in the Moorebank Part 3A Application.

(ii) A further development consent would be required to allow the construction of access ramps for use by Moorebank Recyclers with no certainty that such a consent would be forthcoming.

(iii) There would likely be significant objection from Tanlane to any Part 3A Application for a materials recycling facility on the Moorebank Land.

(iv) Construction of the approved road bridge would raise uncertainty with regard to the development of the Moorebank Land in that the approved road bridge has not been designed to accommodate the truck traffic and loads proposed as part of the Part 3A Application.

(v) The consent for the approved road bridge does not involve connection of the road bridge to Brickmakers Drive.

...

4.2.3 Mr Kennan is of the opinion the granting of the proposed easement would raise doubts with regard to the gaining of any access to the development of the Moorebank Land as proposed in the Part 3A Application. These include:

(a) From a town planning perspective, there is potential for conflict between the traffic generated by the Moorebank development and the traffic (vehicular, bicycle and pedestrian) generated by the Tanlane development. It would be preferable if there are separate access points to the Tanlane and Moorebank developments. This position is supported by the Boral Moorebank Structure Plan which seeks a separate road connection point to Brickmakers Drive for Concrete Recyclers to avoid land use conflict...

(b) The construction of the approved road bridge would raise uncertainty with regard to the development of the Moorebank Land in that it would make the granting of approval of the Part 3A Application more difficult because, as agreed, the approved road bridge and the proposed access to the Part 3A Application could not co-exist.

(c) Use of the approved road bridge for access to the residential component of the Tanlane Land would most likely result in stricter conditions being imposed on any Part 3A Approval on the Moorebank Land for a materials recycling facility in relation to hours of operation, noise levels and truck movements.

(d) Further development consent would be required to use the approved road bridge and there is no certainty that such a consent would be granted.

(e) The approved road bridge is for part of a private road with no certainty that it would, after construction, be dedicated to the Council as such a dedication would require approval from Moorebank as landowner.

(f) Landowner's consent pursuant to Clause 115 of the Environmental Planning and Assessment Regulation 2000 would be required for the lodgement of any s.96 applications to modify development consent No.1552/06 with no certainty that such consent would be forthcoming."

194 Mr Kennan also expressed the view in the joint experts' report that access via the Marshall plan could be achieved. He did not elaborate on this opinion in the joint report.

195 Mr Mitchell, in his town planning report of 10 September 2010, expressed the view that development of the Tanlane land would not be permitted to occur without access to Brickmakers Drive. He expressed the opinion that the Minister, in determining the Part 3A Application made by Moorebank, would mandate the use of the bridge. He contended that the construction of the road bridge would advance Moorebank's prospects of being able to use its land for a recycling facility. He repeated these views in the joint experts' report of 19 November 2010.

196 One difficulty with those reports is that they were prepared prior to the resolution of Council of 15 June 2011 and letter of 14 July 2011 and thus did not take account of either the resolution or the letter.

197 Mr Kennan and Mr Mitchell gave concurrent evidence at the hearing on 8 August 2011 that it would be necessary to obtain Council consent as owner to implement the Ramps proposal.

198 The competing views of Mr Kennan and Mr Mitchell were summarised in this exchange which took place during the course of their evidence:

"WITNESS KENNAN: No. My fundamental is concern is that in the initial stages of this whole strategic approach that council took to the so-called Moorebank area, or the Boral Moorebank area, was to provide access to all land owners and the 2A strip of land that was rezoned to allow access in that regard was put there to access all land owners, not simply one landowner. My problem from a fundamental planning point of view, as Mr Mitchell said, is that granting an easement and if a bridge was constructed as so approved gains access to only one of those three landowners, that being Tanlane. If, as I put forward to the council right at the start of the strategic process, that any application that was lodged and therefore determined by the council should take into account access for all landowners and that hasn't occurred where the access is only for one landowner to the detriment to the others, most importantly to Moorebank, to the point where I don't think that is strategically good planning when there are other alternatives to the development of the Tanlane land other than to go across a bridge through the 2A land.

HIS HONOUR: Mr Mitchell, you are nodding. You approved with That or part of that?

WITNESS MITCHELL: If I was nodding, your Honour, I was meaning to shake my heard because I disagree with that proposition of Mr Kennan's. A consequence of the approval of the development consent, the rezoning of the Tanlane land and the development of a development consent of a subsequent subdivision would be dedication of a road system that would enable access to the other properties including the Moorebank Recyclers' land.

HIS HONOUR: Mr Kennan, do you want to comment on that?

WITNESS KENNAN: Well, no. With due respect to Mr Mitchell, that is fundamentally incorrect because if a bridge was constructed over the 2A land there isn't a way that you could also get an access to the Moorebank land without going across land adjacent to the 2A land which is zoned a different zone and is owned by the council and council hasn't given its consent to that. So that is where those other ramps that we were talking about beforehand would have to come into being because you can't physically go from the panhandle of Moorebank's land up to a bridge and then turn right. It just physically can't happen. You have to have a sweeping motion, as you shown in those diagrams at 320. Now, if the bridge was sitting in the middle of that 2A strip of land the only way that Moorebank could get access to that bridge is by the sweeping and curving underneath ramps that you were referring to before and to my mind a development consent is unlikely for those two ramps in the current state of play.

HIS HONOUR: Mr Mitchell?

WITNESS KENNAN: And also, sorry, we also need to bear in mind that the bridge that has been approved by the council doesn't connect to Brickmakers Drive. It stops short of Brickmakers Drive.

HIS HONOUR: Have you finished?

WITNESS KENNAN: Yes.

HIS HONOUR: Mr Mitchell?

WITNESS MITCHELL: The ramps that Mr Kennan is referring to are one design that would be conceptually appropriate, but there would be other designs that would be conceptually appropriate and, in fact, it would be almost certain that the designs that are there now would be redesigned in the light of a greater knowledge of the future land uses within the area. So it is not the design, it is a design. The other thing I would comment on is that Mr Kennan is correct that the road bridge doesn't link directly to -

HIS HONOUR: Brickmakers Drive?

WITNESS MITCHELL: But it links to the proposed and now being constructed street network in that area."

199 The thrust of this evidence seemed to be that Mr Kennan, accepting that the initial strategic approach was to provide access to all landholders, expressed the view that the Ramps proposal would not achieve that access so far as Moorebank was concerned, because that proposal would encroach on land other than the 2A land which is zoned differently and in respect of which Council had not consented to use for the purpose of the proposal.

200 Subsequently in his evidence, Mr Kennan said he had no idea what Council would do if there was an application to construct the ramps. It is not clear whether he had seen the letter of 14 July 2011 from the Council when he gave this evidence. However, he subsequently gave evidence that the letter reinforced the point he made previously that there was some doubt as to whether the proposed ramps connecting to the bridge which passed over the 7(C) land would be consented to. At a later stage in his evidence he stated that he doubted that Council would even give consent to the making of a development application for the ramps.

201 In cross-examination Mr Mitchell acknowledged that the Ramps proposal required that Council give both owner's consent and development consent. He said it was possible that such consent would be given. He acknowledged that the ramps would have to be placed on environmentally sensitive land. He acknowledged that he had not seen the letter of 14 July 2011 before he gave his evidence. He was asked whether, having regard to the letter, it was highly unlikely that Council would give consent to the ramps proposal and responded that it was likely that the consent authority would give consent for the ramps and usage of the bridge in accordance with Condition 14 of the approval for construction of the bridge, but that the Council in its role as landowner may resist it. He stated that he believed Council's letter related to the Part 3A proposal and use as a material recycling facility.

202 The position, in our opinion, can be summarised as follows:

(i) At the present time, having regard to the position adopted by the Council as expressed in its letter of 14 July 2011, Moorebank cannot proceed further with the Part 3A Application because it cannot obtain Council's consent to access the 2A land to carry out the work necessary to implement the Marshall plan. This is because the Planning Authority has indicated it will not proceed further until it has that consent.

(ii) Thus, for Moorebank to proceed further it will be necessary for it to obtain an easement under s 88K of the Act to construct a road on the 2A land and to use it for vehicle access, including vehicle access for trucks used in the recycling business. It is only if such an easement is granted that the Marshall plan can be taken any further. Moorebank could seek as a condition of the easement that Council provide to the Planning Authority its consent to the carrying out of the necessary works: 117 York Street supra at 522.

(iii) Having regard to the terms of the resolution of 15 June 2011 and the Council letter of 14 July 2011, Council would oppose the grant of the easement.

(iv) In any application for the grant of an easement significant questions of public interest would undoubtedly arise. Mr Kennan's view as to the suitability of the Moorebank site for a recycling facility may well be disputed in such proceedings. Further, the Court would have to take into account the fact that the grant of the easement would frustrate the Development Control Plan and at least significantly diminish the prospect of the development of the Tanlane land, in circumstances where it has at least obtained consent to a mode of access to and from Brickmakers Drive to enable such development to take place. Aligned to this, as no easement is sought over land owned by Tanlane, the Court in our opinion, would not have power to order any compensation for any loss Tanlane suffered by virtue of the imposition of the easement on its ability to develop the land. Even if this is not relevant to the public interest it will be a matter relevant to the discretion whether or not to grant an easement.

(v) Further, although Mr Kennan may well be correct as to the desirability of separate access points for the Tanlane and Moorebank development (see par 4.2.3(a) of the joint expert report set out in par [193] above), on the material available the only alternative proposal, namely, Davy Robinson Drive is not a realistic proposal.

(vi) Even if the easement over the 2A land was granted, Moorebank would still need to obtain development consent from the Planning Authority to the recycling facility on conditions acceptable to it.

(vii) Contrary to Tanlane's submission, in our opinion the position of Council expressed in the resolution of 15 June 2011 and the 14 July 2011 letter extends to the Ramps proposal. The resolution referred to both Lots 309 and 310 and stated in terms that Moorebank's proposed use was incompatible with the current planned residential and recreational use of the area.

(viii) For the Ramps proposal to be implemented, Moorebank would need to lodge a development application with Council which would require Council's consent as owner of the 7(C) and 2A land. Mr Mitchell acknowledged that Council may decline to give such consent. In our opinion it is extremely likely that Council will decline to grant it.

(ix) If Council decided to reject the development application under cl 51(1)(b) of the Regulations under the EPA Act and refused to review that decision under s 82A of that Act, then Moorebank's only option would be to seek an easement under s 88K over the 7(C) and 2A land. The grant of an easement of this nature would not affect the access to Brickmakers Drive by occupiers of land to the east of the panhandle, but there may be public interest considerations in granting an easement over the environmentally sensitive 7(C) land. If such an easement was granted, a condition that the Council grant owner's consent to the development application could be imposed. Moorebank would then need to lodge a development application. If Council rejected the development application Moorebank could have a right of appeal to the Land and Environment Court under s 97 of the EPA Act.

(x) If Council rejected the development application lodged without consent under s 80(1)(b) of the EPA Act or there was a deemed refusal for lapse of time under s 82(1) of that Act, Moorebank could appeal to the Land and Environment Court under s 97 of the EPA Act. That Court is entitled to exercise the powers and discretions of Council by virtue of s 39(2) of the Land and Environment Court Act 1979, including the power to give owner's consent: Sydney City Council v Claude Neon Pty Limited (1989) 15 NSWLR 724 at 732; Sydney City Council v Ipoh Pty Limited, supra at [9], [10] and [34]. The Land and Environment Court also has power, in a case where it determines to grant development consent under s 97, to provide for an easement necessary to give effect to the development (Land and Environment Court Act s 40).

(xi) As we indicated earlier Mr Kennan's principal concerns about the Ramps proposal seemed to be that it encroached on the environmentally sensitive 7(C) land and the desirability of separate access points for the Moorebank land and the Tanlane land. Mr Kennan's ultimate evidence was he doubted Council would give consent to the lodging of a development application for the ramps. Mr Mitchell by contrast stated that the Ramps proposal was the preferable option to the Marshall plan but acknowledged that Council as landowner may resist it.

203 The evidence establishes, in our opinion, that at the present time Moorebank, irrespective of the grant of the easement, does not have any immediate right to access to Brickmakers Drive. The effect of the grant of the easement would put it out of Moorebank's power itself to obtain an easement from Council as a consequence of s 88K proceedings and then proceed with a development application with access to Brickmakers Drive as set out in the Marshall plan. Instead it would be left with the opportunity to take similar steps to implement the Ramps proposal, namely, to seek an easement from Council over the 7(C) and 2A land and proceed with a development proposal. The outcome in either case is uncertain. However, there is nothing to suggest that one of the courses of action has better prospects of success than the other. If anything having regard to the planning history, the Development Control Plan, the requirements in cl 14 of the development consent (see par [33] above) and the position of the RTA as evidenced by its letter of 7 April 2008 (see par [40] above), the Ramps proposal would seem to hold better prospects of success than the alternative.

204 In these circumstances we are satisfied that notwithstanding the fact that the grant of the easement will deprive Moorebank of the opportunity to implement the Marshall plan, the easement is reasonably necessary for the use and development of the Tanlane land.

205 It follows that the precondition to the exercise of the discretionary power under s 88K(1) to impose an easement is made out.

E Public Interest

206 Section 88K(2)(a) requires the Court to be satisfied that the proposed easement is not inconsistent with the public interest. The only point taken by Moorebank in this regard was that the VPA would make Tanlane's proposed development illegal and to grant an easement to facilitate that would be against the public interest. Having regard to our conclusion on the construction of the VPA, this submission should be rejected.

F Compensation

207 Section 88K(2)(b) provides that it is a precondition of the imposition of an easement that parties having an interest in the burdened land can be adequately compensated, whilst s 88K(4) states that the Court "is to provide in the order for payment by the applicant to specified persons of such compensation as the Court considers appropriate". Although the issues are separate, it is convenient to deal with them together.

(i) The submissions of Moorebank

208 Moorebank submitted that the primary judge erred in construing the word "will" in the phrase in s 88K(2)(b) "can be adequately compensated for any loss or other disadvantage that will arise from the imposition of the easement" as any loss or disadvantage arising as a matter of virtual certainty. It submitted in reliance on Rainbowforce supra at [106], that the notion of adequate compensation in s 88K(2)(b) is the same as the compensation a Court may order under s 88K(4). It submitted that the appropriate heads of compensation were set out in par [111] of Rainbowforce and that the word "will" in s 88K(2)(b) denotes a causal relationship between the imposition of an easement and such loss or damage.

209 Moorebank submitted that what it described as the real possibility of the Moorebank land being sterilised was at the very least a disadvantage which would arise from the grant of the easement, being a matter which would lead to the diminution of the market value of the land. It submitted that loss or disadvantage was not limited to the current use of the land to be burdened.

210 It submitted that, taking these factors into account, it was not possible to conclude that Moorebank could be adequately compensated, submitting that the uncertainty as to the potential availability of the Moorebank land for development so affected Moorebank that it was not possible to conclude that adequate compensation could be ordered.

211 In relation to quantum, Moorebank submitted that Mr Dempsey's estimate of the loss of value of the land as a result of the easement, in the amount of $19,100,000, was correct. It submitted that the before and after analysis conducted by Mr Dempsey was in accordance with principle and that Mr Dempsey was correct in considering that the imposition of the easement would result in an unacceptable risk to a purchaser of ever achieving the highest and best of the Moorebank land.

212 Moorebank also submitted that in order for the Ramps proposal to come to fruition, it would need to make application for development consent and an application for an easement under s 88K over Lots 309 and 310. It submitted that the cost of such proceedings may be substantial and would include Moorebank and the Council's costs as well as any compensation ordered to be paid to the Council. It submitted that the order for compensation in its favour should include this amount together with an allowance for the design and construction of the ramp.

213 Senior counsel for Moorebank accepted that a valuer in valuing land can take into account the possibility of obtaining development consent. He agreed that Mr Dempsey arrived at a valuation on the basis that development consent for the Marshall plan was a certainty, although he stated that Mr Dempsey's report recognised there were risks in obtaining it. He accepted the only loss or damage identified at the hearing was the loss of value of the land. He submitted that as s 88K(4) specified the amount of compensation it was not possible for the Court to grant an easement and refer the question of compensation to a judge or associate judge.

(ii) The submissions of Tanlane

214 Tanlane submitted without elaboration, that the construction of the word "will" by the primary judge was correct and consistent with the policy of the section.

215 In relation to the question of quantum of compensation Tanlane submitted that Mr Dempsey proceeded on false assumptions, namely, that the application for a material recycling facility had resulted in an approval, that the land was immediately capable of being used as a recycling facility and that reasonable access was available through the 2A land for that use.

216 Senior counsel for Tanlane submitted that it was possible to assess compensation. He submitted the question of assessing compensation for the imposition of an easement was regularly undertaken in compulsory acquisition matters, generally on a before and after basis. In the present case, he submitted it involved looking at the before position on the basis that the bridge had been approved in accordance with Condition 14, that there was a Ramps proposal which might or might not be approved and that the prospect of alternate access through the Marshall plan needed to be taken into account.

217 Senior counsel for Tanlane accepted that the valuer engaged by his client Mr Wotton did not take into account the potential use of the land as a recycling facility. He submitted that the judge rejected both valuers because he was not prepared to accept the assumptions made by either of them. He submitted that even if the Court agreed with that conclusion, the precondition in s 88K(2)(b) was made out and this Court could be satisfied that adequate compensation could be ordered, notwithstanding the erroneous assumptions of the valuers. He submitted the question of quantum should be referred to an associate judge.

218 Tanlane also submitted that there was no reason compensation should include the cost of obtaining development consent to connect the Moorebank land to the bridge. It submitted that construction of the bridge saved Moorebank considerable cost.

(iii) The valuers' evidence

219 Before considering this issue it is necessary to consider the valuation evidence a little more closely. In his valuation dated 16 March 2010, Mr Dempsey set out what he regarded as background facts. It is not clear whether these were conclusions he reached from the material with which he was provided, or assumptions made by him. In the background facts he stated that if Moorebank was denied legal access for the purpose of a recycling yard and as a consequence the Part 3A Application was not approved, then the highest and best use of the land was passive open space with no material or economic benefit. He stated that the construction of the bridge may deny Moorebank access because of its inadequate design and the need to install ramps on the environmentally protected 7(C) land.

220 Mr Dempsey stated that the key issue in establishing the market value of the Moorebank land in a hypothetical transaction between a vendor and a purchaser was the ability to obtain access for any use. This is correct but that difficulty existed irrespective of the imposition of any easement.

221 Mr Dempsey then concluded that a before and after methodology based on comparable sales of properties whose highest and best use was for comparable purposes to the Moorebank land was the most appropriate method of valuation. Mr Dempsey stated that the best use must reflect the weight being given to its potential utility and the probability of consent to the development being given.

222 Mr Dempsey then conducted an analysis of comparable sales from which he concluded that the value of the Moorebank land at its highest and best use was $25,249,118; this was effectively his before valuation.

223 He then proceeded in accordance with his assumption that the grant of the easement would deny Moorebank access for such purposes. He stated that the easement would not impinge on the value of the land for passive recreation use, but that parties to a sale transaction would only pay for potential that may be reasonably achieved. In that context by reference to one comparable sale he discounted the value of the land after the imposition of an easement by 90 percent to reach a value of $6,150,000. He, accordingly, estimated the diminution in value at $19,100,000.

224 In his supplementary report of 18 May 2010, Mr Dempsey placed considerable reliance on the evidence of Mr Kennan. We have set this out above. However, he made one general comment of some significance:

"[22] Those who may have funds available for the acquisition of the land would not acquire the land for anything greater than any certainty relating to the land and would expect to be rewarded for eliminating the significant risks relating to the potential anticipated usage of the land. As a consequence, in my opinion a purchaser would pay no more than open space value as noted in my first report at paragraph 189."

225 As we have indicated, in the present case there is no certainty of either the Ramps proposal or the Marshall plan coming to fruition. In these circumstances there is no certainty that Moorebank will be able to use the land for recycling purposes. Mr Dempsey, however, concluded or assumed that without the bridge Moorebank could utilise the land for recycling purposes.

226 By contrast to his first report, Mr Dempsey did not appear to assume rejection of the Ramps proposal was a virtual certainty. He considered it as follows:

"[31] There arises a loss in value for the proposed use to Moorebank if no approvals are granted caused in part or whole by opposition from Tanlane arising from Tanlane's need for an easement.

[32] The granting of the easement would either prevent or restrict such use impacting the highest and best use potentials of the Moorebank Land.

[33] The effect of the granting of the easement will be to put Moorebank in a position of risk and uncertainty. This uncertainty equates to risk in relation to any future development of the Moorebank Land and thus in compensation.

[34] If Tanlane are granted the easement and as a consequence gain approval for the residential development of their land, it is likely that Moorebank will have significant constraints imposed on any approval assuming an approval is granted over the Moorebank Land, such as hours of operation, noise abatement to the extent of restricting the use potential of the land.

...

[39] The granting of the easement would result in an unacceptable risk to a purchaser ever achieving the highest and best use potentials of the Moorebank Land for waste recycling purposes."

227 Mr Wayne Wotton, the valuer engaged by Tanlane, adopted an entirely different approach to valuation. Mr Wotton adopted what was described by Preston CJ in Rainbowforce as the piecemeal approach. In his first report dated 29 September 2009, by reference to comparable sales of land used for passive or recreational purposes, he valued the Moorebank land within a range of $4,824,550 to $5,132,500. He calculated the area of land directly affected by the easement, that is the land over which the bridge was built, as having an area of 120.89m². He stated the value of this land as a proportion of the total area of the Moorebank land was $2,944.23. He then concluded that Moorebank could be compensated by payment of 30 percent of that value, namely, $883.27.

228 Mr Wotton considered compensation should also be allowed for what he described as a "blot on the title" caused by the easement. By this he was referring to the loss of value of the residue (cf Rainbowforce at [138]). He estimated the value of that blot on title as between $5,000 and $10,000 and calculated the appropriate overall figure for compensation at $10,000.

229 In a supplementary report dated 17 June 2011, Mr Wotton summarised his conclusions in the following terms:

"19. I do not consider that the Moorebank land is adversely affected by the imposition of the easement. I take this view for the following reasons:

a. The Moorebank land has no development consent and its ability to be used is very limited. The market at large would not penalise the value of the land by the existence of the easement;

b. The development potential of the Moorebank land is not affected by the imposition of the easement; the construction of a bridge within the easement has in fact the potential to provide an alternate access for the Moorebank land, such access appears to be a requirement in order for the Moorebank land to receive a development consent;

c. The bridge proposed for construction within the easement will be at a height permitting all traffic to flow below it, the bridge will thus not inhibit the free flow of traffic along the current access handle;

d. The permissible uses of the Moorebank land area are of a nature the existence of the bridge and any possible noise or visual impact emanating from this bridge will not impact on the value or amenity.

20. Compensation for the Moorebank land should be based around the diminished market value of the affected land, if any, associated costs caused to the Moorebank land, assessment of compensation for insecurity and loss of amenities, such as loss of peace and quiet, and assessment of any compensating advantages from the granting of the easement.

21. I do not consider there will be any substantial impact on the market value of the Moorebank land by the imposition of the easement. Also, I am not aware of any pile, stanchion or concrete or steel column actually being located on the Moorebank land."

230 In their joint experts' report the valuers maintained the positions adopted by them in their respective reports.

231 Mr Dempsey and Mr Wotton gave concurrent evidence. Mr Dempsey acknowledged that the primary assumption of his "before" valuation was that approval for recycling was in place and that the 3A Application had been granted. He stated this was a very important assumption. In cross-examination Mr Wotton stated that in his opinion the market for the Moorebank land, without a consent in place for a recycling facility, would place very little if no weight on the likelihood of getting that consent because it was so risky. He added the following comment:

"Well, in my view the hypothetical purchaser, there would be significant costs and time, and risk in applying to have a waste recycling facility approval granted on this land, that would deter them from paying any significant price, for the risk that they simply may not get the approval, or they may get an approval that was so burdened by conditions and financial implications of conditions that they would be reluctant to pay any significant premium over and above the underlying use of the land for a passive recreational purpose."

232 It should be noted that neither valuer updated his report to take account of the Council's letter of 14 July 2011 or the email from the Department of Planning to which we have referred in par [51] above, the latter being available for the final hearing which took place in February 2012. Nor was any reference made to this letter in the cross-examination of the valuers.

(iv) Consideration

233 As Ball J pointed out in Lonergan v Lewis, supra at [50], in considering whether the condition in s 88K(2)(b) is satisfied, the Court is required to consider whether the owner of land to be burdened can be adequately compensated for any loss or other disadvantage that will arise from the imposition of the easement. The focus is on the question of whether the owner will suffer a loss or other disadvantage. If the owner will and if the owner cannot be adequately compensated then no easement can be granted.

234 In Wengarin Pty Ltd v Byron Shire Council [1999] NSWSC 485; (1999) 9 BPR 16985, Young J as his Honour then was, identified the compensation ordinarily payable under a number of heads. His Honour said (citations omitted):

"[26](1) The compensation referred to in subs (4) is the same compensation as is referred to in subs (2)(b), that is adequate compensation for loss or other disadvantage.

(2) The compensation is not a substitute for the price that could have been exacted if the section did not exist.

(3) The compensation is not just the diminished value of the affected land.

(4) Ordinarily the compensation will be:

(a) the diminished market value of the affected land (including what is sometimes called the hope value, that is the potential use to which the subject land could have been put);

(b) associated costs that would be caused to the owner of the affected land;

(c) an assessment of the compensation for insecurity, loss of amenities such as loss of peace and quiet;

(d) the compensation is to be less compensating advantages, if any.

(5) There may be some exceptional cases which fall outside the net of s 88K(2)(b) yet are cases where it is extremely difficult to assess the compensation, but it is clear that the applicant is to derive a considerable benefit from the application. In such circumstances it may be appropriate to assess the compensation on a percentage of the profits that would be made."

235 The dictum of Young J in Wengarin has been followed on a number of occasions: Mitchell v Boutagy [2001] NSWSC 1045; (2001) 10 BPR 19187 at [28]: Lonergan v Lewis supra at [52]; Khattar v Wiese supra at [66].

236 Neither party suggested in this case that if compensation was to be payable it should be assessed as a percentage of profits earned by Tanlane as a result of the imposition of the easement. In these circumstances it is not necessary to finally determine whether subpar (5) of par [26] of his Honour's judgment in Wengarin is correct. For our part, however, we have some difficulty with this approach. Section 88K(4) will only be reached if the Court has determined under s 88K(2)(b) that the owner of the servient tenement can be adequately compensated. If it can be, even with difficulty, the Court is required by s 88K(4) to order the compensation it considers appropriate. It does not seem to us that that can be done by in effect awarding an account or partial account of profits. It is inconsistent with the approach to compensation in compulsory acquisition cases referred to by Dixon J, as his Honour then was, in Nelungaloo Pty Ltd v The Commonwealth (1948) 75 CLR 495 at 571, cited with approval by the High Court in Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 at [34].

237 In the present case it was not submitted that there were any intangible benefits lost to the Moorebank land or to Moorebank by the grant of the easement, in respect of which it was impossible to assess compensation: see Khattar v Wiese supra at [49]-[50]; Evans v Cornish Nominees Pty Ltd [2009] NSWSC 1295; (2009) 14 BPR 27257 at [65]-[73]. Rather, it was submitted that the uncertainty to the proposed development of the Moorebank land arising from the imposition of the easement and the potential sterilisation of the Moorebank land meant that it was impossible to assess compensation.

238 We do not agree. It was accepted that the relevant measure of compensation was the diminution in the value of the land, together with any costs incurred as a result of the imposition of the easement.

239 Compensation for diminution in value of the land is commonly assessed by a consideration of what would be paid by a willing but not anxious buyer to a willing but not anxious seller before and after the grant of the easement (or in many cases before and after a partial acquisition of the land in question): Spencer v The Commonwealth (1907) 5 CLR 418. What is involved in that approach was summarised by McHugh J in Kenny & Good Pty Limited v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413 at [49]-[50] in a passage approved by the High Court in Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority supra at [51] (citations omitted):

"Value is determined by forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property. In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will include the predicted impact of future events as well as the experience of the past and the rates of return on other investments. As Isaacs J pointed out in Spencer v The Commonwealth:

'We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.'

The market for the property is, therefore, assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property."

240 In the present case a willing but not anxious purchaser and a willing but not anxious vendor would take into account, in determining what to pay and accept, the matters referred to in subpars (i)-(vi) of par [202] and the consequent uncertainty of obtaining development consent and implementing the Marshall plan. After the easement was granted the willing but not anxious vendor and purchaser would take into account the matters in subpars (vii)-(xi) in par [202], the unavailability of the Marshall plan and again the consequent uncertainty of being able to obtain development consent and access to Brickmakers Drive.

241 Although this exercise on its face may appear difficult, it is one, in our opinion, which can be carried out in accordance with the principles outlined in Kenny & Good supra, in the passage referred to above.

242 Moorebank relied on certain dictum of Windeyer J in Blulock Pty Limited v Majic [2001] NSWSC 1063; (2001) 10 BPR 19,143. In that case the owners of a 10 storey warehouse sought an easement for light and air over the defendant's land which would have had the effect of preventing construction on any area within a six metre boundary on that land not built upon, essentially preventing further extension to any existing part of the building on the defendant's land within the six metre boundary. Windeyer J concluded that it was not established that the easement was reasonably necessary as there was no evidence that the proposed development was a sensible and reasonable development compared with alternatives: at [15]. However, against the possibility that he was incorrect he went on to deal with the question of compensation and made the following comments (at [18], the lot 5 referred to was the servient tenement):

"[18] There is no evidence of any value as to what might be a possible future development of Lot 5. According to Mr Majic's son-in-law there was some discussion about possible construction of additional office or commercial space over that part of the land which is at present vacant. Certainly it seems likely, if council maintains its present requirements, that any future development incorporating the defendant's land and the properties to the west of it would require some six metre gap between the eastern wall of such development and the wall of the next building to the east. On that basis, according to the plaintiff, Mr Majic would get $66,000 for something which he would be required to provide in any event. None of this is certain and it has no more certain basis that possibility. It seems to me that all property can be valued. Thus the diminution in value to Lot 5 caused by the creation of the easement could be ascertained. It follows from this that 'adequate compensation for loss or disadvantage' arising from the carving out of easement interest is not necessarily equivalent to the difference between the value of the property without the easement and the value with easement imposed plus on occasions some element for solatium. The encumbrance on the title if the imposition went ahead so affects the estate and interest of the owner of Lot 5 that I conclude the requirements of s88K(2)(b) have not been met."

243 The reasoning, with the greatest respect, is not entirely clear. To the extent that his Honour was saying that the difference in value as a result of the grant of the easement was not adequate compensation because the consequence on the possible future development of the servient tenement was unknown, that is not the case here. In the present case the consequence will be to prevent one manner of carrying out a particular potential development, namely the effecting of a particular access route. That consequence is capable of being taken into account in a valuation. If his Honour was referring to intangible benefits of the kind referred to Khattar v Wiese supra or Evans v Cornish Nominees Pty Limited supra, those intangible benefits are not relied on in the present case. However, if his Honour was stating that where there was uncertainty as to prospects of future development of the servient tenement arising from the grant of the easement, adequate compensation cannot be ordered, in our respectful opinion his Honour was incorrect. His Honour's statement that all property can be valued is certainly applicable to the position in the present case where a before and after valuation is capable of being carried out. Once that is accepted and in the absence of intangible benefits, provided the Court is in a position to assess the compensation resulting from the diminution in value, the pre-condition in s 88K(2)(b) is made out.

244 That does not mean that merely because valuation is possible, an easement will be imposed. The effect of s 88K(4) is that it is necessary for the Court to be in a position to order appropriate compensation at the time of ordering the grant of the easement. If it does not have sufficient evidence to carry out that task, an easement will not be imposed.

245 In the present case the appropriate measure of compensation, in our opinion, is the difference in the value of the land before the order imposing the easement and its value after, together with any expenditure wasted as a result of that occurring.

246 The next issue is whether the evidence before the Court was sufficient to enable the Court to make the appropriate order for compensation. The valuation evidence is not of great assistance. Mr Dempsey proceeded on what was a demonstrably false assumption, namely, that the approval of the recycling facility with access via the Marshall plan was a certainty. So far as Mr Wotton was concerned, it is not entirely clear what assumptions he in fact made. In any event neither valuer took into account the resolution of Council of 15 June 2011 or the Council letter of 14 July 2011 in the assumptions they made in reaching their conclusions.

247 The onus is on the party seeking the easement to establish what relevant losses and disadvantages will be suffered by persons having an interest in the servient tenement, as part of satisfying the Court that the persons affected by the easement can be adequately compensated: 117 York Street supra at 516-517; Rainbowforce supra at [116]. Nonetheless the courts have taken a relatively liberal approach to assessing compensation when faced with a paucity of evidence.

248 In Swann v Spiropoulos [2006] NSWSC 860; (2006) ANZ ConvR 496 Campbell J, as his Honour then was, faced with a paucity of evidence, stated that the appropriate approach was to put himself in the position of a juror and assess as best as he could what was the compensation payable. In Evans v Cornish Nominees Pty Limited supra, White J agreed that such an approach was appropriate. His Honour made the following remarks at [110]:

"[110] The result is that I find neither valuer's evidence persuasive. Although they reached agreement as to the current value of the defendant's land, their reasons, so far as they concern the value of the aggregated portions which would form a 40-hectare area for a new building site, are widely different. I am not able to accept either valuer's approach to assessing the effect on land value of the imposition of an easement. There is no certain answer to that question. I approach the question as did Campbell J (as his Honour then was) in Swann r v Spiropoulos [2006] NSWSC 860 where his Honour said (at [108]):

'It is necessary, it seems to me, to put myself into a position like that of a juror, and simply assess, as best I can, the amount of compensation that would be payable on that head. I recognise that I have criticised the valuers' evidence because they in effect acted as jurors. There is, however, a critical difference between the way in which expert evidence should proceed, - calling on expertise to produce a reasoned conclusion, where premises of the argument and steps of the reasoning can be evaluated by the court, - and the way in which the tribunal of fact at a court hearing can proceed. In this case I am the tribunal of fact, and so am entitled to proceed in the way a juror would.'"

249 It does not seem to us that this approach can extend to the situation where there is no evidence from which compensation can be assessed. In that case no order granting the easement should be made. However that is not the present case. That is because each of Mr Dempsey and Mr Wotten stated that a willing but not anxious purchaser would not pay any premium for a prospect of development of the land which was uncertain (in the case of Mr Dempsey) or any significant premium (in the case of Mr Wotten) (see pars [224] and [231] above).

250 It follows, in our opinion, that the matters referred to in par [202] of this judgment and the valuation evidence referred to above, establishes that the grant of the easement would not have a detrimental effect on the value of the Moorebank land. The primary judge effectively allowed compensation for diminution of value in an amount of $26,500. This figure was not challenged by Tanlane on the appeal and though we respectfully consider that the reasoning by which the primary judge arrived at the figure was incorrect, such an amount would in our view constitute at least appropriate compensation.

251 However, no detailed argument was presented to the Court on this issue and as we are approaching the matter on a basis different to that adopted by the primary judge, Moorebank should have the opportunity of arguing that notwithstanding the conclusion which we reached in par [202], compensation for loss of value of the land greater than $26,500 should be awarded. The matter should be referred back to a judge or an associate judge for this purpose.

252 The primary judge ordered that certain other heads of compensation should be referred to an associate judge for determination (see Order 3 of the Orders set out in the Schedule to this judgment). No challenge has been made to that order although Ground 19 of the Notice of Appeal asserts that the primary judge erred in failing to refer certain other heads of loss for assessment. We should say that although the orders made were not challenged, Order 3(d) and (e) seem to be based on what we regard as the highly unlikely assumption that development via the Marshall plan could be achieved.

253 We do not consider that Ground 19 of the Notice of Appeal has been made out. The costs referred to in paragraph 19(a) of the Notice of Appeal would seem to us, having regard to the unlikely success of the Marshall plan, to be costs which would necessarily be incurred in any development of the land. Further, there is nothing to suggest that the costs would be any greater than obtaining approval to the Marshall plan, which would also involve a s 88K application in respect of Council land. Paragraph 19(b) of the Notice of Appeal was not pressed.

254 Ground 20 deals with the cost of the reference before a judge or an associate judge. In our opinion, the primary judge was in error in stating that the cost of the reference should follow the event. Section 88K(5) has been construed as creating an entitlement on the part of the person affected by the imposition of the easement to have the costs of the Court determining whether circumstances appropriate to the grant of the easement have been made out, together with the cost of assessing the appropriate compensation. That entitlement is only lost by unreasonable conduct: 117 York Street supra at 523; Khattar v Wiese supra at [78]; Rainbowforce supra at [181]-[182].

G Discretion

255 We agree with Moorebank's submissions in Ground 14 of the Notice of Appeal that the deed of 29 May 2002 was not a relevant factor to be taken into account in considering whether to impose the easement. We have not taken it into account. There are no other discretionary factors raised by Moorebank.

H The way forward

256 It follows that subject to an order providing for compensation under s 88K(4) being made, we would make an order in favour of Tanlane, imposing an easement on the terms ordered by the primary judge (see Schedule), but adding the following terms as cll 2(ca) and (cb):

(ca) The bridge is to comply with AS5100/Bridge Design Code and have the load bearing capacity required by SM1600 referred to in cl 6.2 of Part 2 of the Code.

(cb) The bridge design is to be sufficient to accommodate access ramps to and from the servient tenement themselves having the load bearing capacity required by SM1600.

257 However, the easement should not be imposed until the compensation payable pursuant to s 88K(4) has been assessed. In those circumstances the matter should be referred to a judge or associate judge of the Equity Division to be dealt with in accordance with these reasons and in particular:

(a) To assess compensation for the loss and value of the Moorebank land by the grant of the easement sought on the basis we have indicated, taking into account the conclusions reached in par [202] of this judgment. Such compensation should be not less than $26,500.

(b) To assess compensation for the matters referred to in Order 3 of the orders made by the primary judge, taking into account the conclusions reached in par [253] of this judgment.

(c) Once compensation has been assessed, to impose an easement in favour of Tanlane in the terms outlined and to provide pursuant to s 88K(4) for compensation awarded under subpars (a) and (b) above.

258 It will be a matter for the judge or associate judge conducting the assessment to determine what additional evidence he or she will permit to be led in carrying out the assessment referred to in subpars (a) and (b) of par [257] above.

259 The parties should be free to make submissions before the judge or associate judge conducting the assessment as to the precise terms of the easement necessary to give effect to these reasons.

260 The costs of the proceedings before the judge or associate judge conducting the assessment should be dealt with in accordance with s 88K(5) of the Act.

I Costs of proceedings below

261 No challenge was made to the costs order made by the primary judge in the proceedings before him. Accordingly, that order should stand.

J Costs of the appeal

262 We do not believe s 88K(5) extends to an appeal from a decision of a primary judge whether or not to impose an easement. The proceedings referred to in that subsection are the primary proceedings in which the easement is sought.

263 In the present case although Tanlane was successful in obtaining an easement (at least subject to compensation being assessed) it succeeded only on the Notice of Contention and not in its defence of the reasoning of the Court below. Although this may not normally deprive a successful respondent of its costs, in the circumstances of the present case particularly having regard to the legislative policy underpinning s 88K(5) in our opinion there should be no order as to the costs of the appeal.

K Orders

264 In the circumstances the orders we make are as follows:

1 Set aside orders 1, 2, 4, 5 and 7 of the orders made by the primary judge.

2 Release the respondent from the undertaking referred to in par [8] of the orders of the primary judge.

3 Direct the matter to be remitted to a judge or an associate judge of the Equity Division of the Court to be dealt with in accordance with pars [256]-[260] of this judgment.

4 Each party pay its costs of the appeal.

 

**********

 

Schedule 1 (PDF)

Attachment 1 (PDF)

Attachment 2 (PDF)

 

 

Decision last updated: 18 June 2013