Most Read Contributor in Australia, September 2016
Many developments do not proceed due to the difficulty of obtaining easements for access or drainage or other services over adjoining land. In some instances neighbouring owners will be opposed to a proposed development and will refuse to give easements in an endeavour to thwart the proposed development. In other cases, there will be a failure to negotiate a mutually acceptable purchase price or other terms of agreement.
Policy makers have long recognised this difficulty and have been particularly concerned that the overall public interest inherent in the implementation of public planning policies should not suffer. They have been equally concerned not to unfairly interfere with basic property rights.
These competing interests are now accommodated by section 40(2) of the New South Wales Land and Environment Court Act, as amended in 2002:
Section 40(2) states that a Court can order an easement over land if:
it is reasonably necessary for the development to go ahead, and it is in keeping with the development consent;
it does not effect the public interest in a negative way;
the affected neighbour can be adequately compensated for any loss or disadvantage that the easement causes; and
the developer has made reasonable attempts to negotiate with the neighbour to put the easement in place.
In a recent case, Antipas v Kutcher, Justice Lloyd of the Land and Environment Court gave a model judgment of how section 40(2) can work. While each case will obviously depend on its own facts, the judgment gives valuable guidance to both developers and their neighbours in negotiating agreements for easements.
In short, the messages to be gained from the judgment are these:
If a development consent has been given, especially if it has been given by the Court, and that consent contemplates the granting of an easement over neighbouring property, there is a high probability that the Court will find that the first criteria under section 40(2) had been satisfied (i.e. that the easement is reasonably necessary for the development). This is because the Court is likely to find that the consent authority has considered relevant environmental planning concerns and formed the requisite views.
Especially for a right of way, an appropriate method of valuation to determine compensation may be the "before and after approach". This approach has the added advantage of encompassing and overcoming the difficulties that otherwise may exist in trying to determine the monetary value of the impacts of an easements.
While a reasonable effort has to be made by a developer to reach agreement with a neighbour, the developer cannot be expected to be held to ransom. However a developer should carefully document the negotiation process and his attempts to achieve a negotiated agreement.
But a note of caution. An easement is unlikely to be given if it seriously interferes with the reasonable use and enjoyment of the neighbours land, or if there is interference with the amenity and enjoyment of the property for which compensation is difficult to assess or cannot be adequately determined (for example if the easement results in a loss of views). The facts in the Antipas case were in some regards unique. There was an existing easement in favour of one of the parcels of land owned by the developer. The purpose of the application to the Court was to extend the benefit of that easement to an adjoining parcel of land owned by the developer so that both parcels could be redeveloped as the one development. The Court held that the neighbour could be adequately compensated for the interference caused by the easement, which was reasonable in the circumstances.
Also, on a practical basis, a developer in making an offer to a neighbour should be aware that even when the developer is successful before the Court, the Court is most likely to order the developer to pay the neighbour’s costs. Neighbours will be aware of this fact and a developer will have to make a commercial decision as to whether it is better to litigate or capitulate. The developer will also need to put a value on obtaining certainty which might come from a negotiated agreement with a neighbour, as opposed to the risks of litigation.
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