Australia: Developers, love thy neighbour – Accessing neighbouring land to undertake development

Last Updated: 9 August 2018
Article by Scott Alden, Tony Britt and Christopher Yong
Most Read Contributor in Australia, September 2018

Despite what appears to be a slight 'correction' to house prices in NSW with property values dropping, the pace of development continues to rise at a rapid rate. It is often the case with these developments, that developers need some kind of temporary access to a neighbouring property for a variety of reasons including air rights and sometimes land rights. This access can be obtained by agreement with the neighbouring landowner or through legislation. We discuss below the various ways of obtaining the access as well as common issues that arise under the different options.

How is access granted?

Deed of Access

A Deed of Access is used where the parties come to an agreement as to the terms upon which access will be granted. Where there are two neighbouring developers this Deed of Access often gives reciprocal rights of access on common terms where each developer gives the other the required access to carry out their respective development. Where there is only one developer, the neighbour will often negotiate a fee for the rights of access which will vary for each development.

Statutory easement or court order

Where the parties are unable or unwilling to agree a Deed of Access, it is possible for a developer to obtain required access through a statutory easement or court order as follows:

  • an easement (under section 88K of the Conveyancing Act 1919 (NSW), or section 40 of the Land and Environment Court Act 1979 (NSW))
  • an order (such as a neighbouring land access order, or utility service order under the Access to Neighbouring Land Act 2000 (NSW)).

However, these options involve the developer making a court application, and takes control away from the neighbouring landowner.

Access for what?

The extent, duration and type of access required by a developer will vary depending on the development itself, but the most common are:

  • rights to the airspace over neighbouring land to allow for crane swing
  • access onto and over the boundary of the neighbouring land for scaffolding, and the erection of hoardings
  • access across and to the neighbouring land for workers, vehicles, plant, tools, equipment, and materials
  • access to drainage
  • the installation (and subsequent removal) of subsurface rock anchors.

What should Deeds of Access cover?

Where the parties agree a Deed of Access, the following matters should be addressed:

  • Type and extent of access –the nature and extent of the access granted and any restrictions must be described with certainty. For example, where a developer intends to operate a crane, the Deed of Access should identify whether the crane can pass materials over the neighbouring property, and whether it will 'weather vane' when not in use.
  • Length of access –the permitted duration of the access granted, any restriction on the days and hours of access, and the date the access licence ends must be stated. Where rock anchors are installed, it is appropriate to consider whether the rock anchors will remain or be removed from the neighbouring land after they are destressed.
  • Insurance –the insurance the developer is required to have in place should include, as a minimum, public liability insurance.
  • Indemnity –an indemnity should be included for any loss or damage caused by the developer (including damage to property or personal injury), or in circumstances where the developer breaches their obligations under the Deed of Access.
  • Health and Safety –appropriate safety requirements, including a Safety Plan should be covered, including an obligation on the developer to comply with its legislative duties regarding safety.
  • Neighbour Directions –the developer should remain subject to any reasonable directions of the neighbour.
  • Suspension –circumstances that may give rise to a suspension of access by the neighbouring landowner, whilst also ensuring the developer has suitably certain rights of access for the purposes of its development.
  • Compensation – where the neighbour is receiving a monetary sum for the access, provisions regarding the amount of compensation and the timing and method of payment will be required.
  • Additional matters – some additional matters that the parties sometimes include are:
    • the right to review a works program and technical specifications
    • matters relating to the type or standard of the particular crane.

A significant issue with Deeds of Access is the fact that they confer personal rights and obligations only and do not 'run with the land'. This means that if the neighbour sells part way through the development then the Deed of Access will need to be assigned or novated to the incoming purchaser or a subsequent Deed of Access negotiated with the incoming purchaser. This however cannot be guaranteed and may leave the developer having to pay additional compensation to the incoming purchaser or being deprived of the agreed access part way through the development. As a result, it is common for the neighbour to state that the Deed of Access only binds the neighbour whilst they remain the registered proprietor of the property. One way a developer may mitigate this risk in part is to seek to negotiate an obligation on the neighbouring landowner to use best endeavours to procure an assignment or novation to an incoming landowner (although an actual assignment / novation cannot be guaranteed as the incoming neighbouring landowner cannot be bound by the terms of the Deed of Access between the developer and the outgoing neighbouring landowner).

Statutory alternative to the Deed

Where a Deed of Access cannot be successfully negotiated, or where the developer is seeking additional certainty of access where the property is at risk of being sold, the developer may consider a statutory easement, or court order as an alternative.

While statutory avenues are available, they are not ideal, as they often result in significant initial costs such as the legal costs involved in lodging applications, and compensating the neighbouring landowner for the diminished value of the neighbouring land where an easement is recorded on title. There are also potential future costs associated with removing the easement from title.

For example, in Twelve Walker Street Pty Ltd v Lee [2017] NSWSC 1807, the court awarded compensation in the sum of $267,000 to the neighbouring landowners – "$10,000 for blot on title, $52,000 for a "rock anchor installation fee", and $205,000 in respect of additional excavation costs." In support of this, Darke J stated that "compensation in that amount is appropriate to adequately compensate the defendants for the losses or other disadvantages that will arise from imposition of the easement sought by the plaintiffs."

Conclusion

In order to obtain necessary access to neighbouring land, developers should always try to negotiate an agreement with a relevant neighbour first. Where this fails, alternative statutory avenues may be explored, however these can be time consuming, costly to obtain and lead to surprisingly high levels of compensation being ordered for the affected neighbouring landowner.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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