M Salazar Properties Pty Ltd v Jeffs

This case involved consideration of the threshold requirements of s 180 sub-s (1) and sub-s (3) Property Law Act 1974 and the considerations relevant to the exercise of the Court’s discretion whether or not to to impose a statutory right of user. While Hindman J was critical of the way the one of the applicant’s agents had conducted herself in dealings with the respondent, the pre-conditions in s 180 Property Law Act 1974 had been satisfied and the exercise of the discretion weighed in favour of imposing a statutory right of user over the respondent’s land. In the result, the statutory right of user sought by the applicant was imposed subject to conditions with the parties to be heard as to the appropriate form of order.

Hindman J

29 February 2024

Background

The applicant was a property development company. [7]. The applicant owned a property which it intended to develop by reconfiguring the lot and building additional residential dwellings. [12]. However, the addition of any further residential dwellings requires a stormwater drainage solution. [13]. The applicant’s proposed stormwater drainage solution required an easement over one of two properties adjacent to the applicant’s property (the “stormwater drainage easement”). [13]. The respondent is the owner of one of these adjacent properties. [9]–[11]. The applicant offered to compensate the respondent if he agreed to the stormwater drainage easement: see [24]–[26], [40]–[64]. However, the parties were unable to reach an agreement and the applicant commenced a proceeding seeking relief under s 180 Property Law Act 1974 which relevantly provides:

“180Imposition of statutory rights of user in respect of land

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

(2)…

(3)An order of the kind referred to in subsection (1) shall not be made unless the court is satisfied that–

(a)it is consistent with the public interest that the dominant land should be used in the manner proposed; and

(b)the owner of the servient land can be adequately recompensed in money for any loss or disadvantage which the owner may suffer from the imposition of the obligation; and

(c)either—

(i)the owner of the servient land has refused to agree to accept the imposition of such obligation and the owner’s refusal is in all the circumstances unreasonable…” [1]–[3].

Whether the pre-conditions to a statutory right of user were satisfied

The statutory pre-conditions to an order under s 180 Property Law Act 1974 had been satisfied: see [90]–[117]. The stormwater drainage easement is reasonably necessary in the interests of effective use of the applicant’s property and it is in the public interest that it be developed: see sub-s (1) and sub-s (3)(a). [90]–[98]. The fact that the other adjacent owner may consent to the stormwater drainage easement over his property, rather than the respondent’s property, is not a barrier to the stormwater drainage easement being “reasonably necessary” for the purpose of sub-s (1). [93]. It was not in dispute that the respondent could be adequately recompensed in money and in the final offer the applicant left assessment of compensation to the Court: see sub-s (3)(b). [99]–[102]. In relation to whether the respondent’s rejection of the final offer was unreasonable, Hindman J concluded:

“ … [W]here the applicant has broadly identified the type of statutory right of user required and has otherwise offered to effectively leave it to the Court to determine appropriate terms and compensation … the respondent’s refusal of that offer … is unreasonable in the sense required by the [Property Law Act 1974]”. [117].

Whether the discretion weighed in favour of imposing the statutory right of user

Justice Hindman held that it was appropriate to exercise the discretion in favour of imposing the statutory right of user in the form of the stormwater drainage easement subject to conditions (and a related licence to facilitate construction works): see [118]–[132]. Uncertainty surrounding development consent, while relevant to the exercise of the discretion, was not fatal in the circumstances of this case: see [118]–[121]. The power to adjust property rights is not simply “there for the taking”. [126]. However, once the threshold in s 180 Property Law Act 1974 is satisfied, then there is no reason why the remedy should be withheld or granted sparingly. [126]. Other factors were also taken into account including, inter alia, that: the applicant purchased the property knowing of the stormwater drainage difficulties; and the heavy-handed manner in which the applicant dealt with the respondent. [127].

Whether insurance should be a condition of the statutory right of user

Justice Hindman considered that in the circumstances of this case it was just and equitable to make insurance a condition of the statutory right of user: see [122]–[124]. A condition of the stormwater drainage easement should be that the applicant, as the owner of the dominant land, maintain insurance in respect of the area of the easement over the servient land. [123], [161(e)]. A similar condition should also be required for the related licence for the construction works to insure against any damage that may result from the construction works undertaken on the respondent’s property. [123], [162(e)]. Justice Hindman observed that the alternative would be to compensate the respondent for any additional insurance burden that would arise as a result of the statutory right of user, but there was no evidence before the Court upon which such an assessment could be made. [124].

Disposition

A statutory right of user was imposed subject to conditions. [130]–[132], [157]–[162].

D Kerr