Aussie Skips Recycling Pty Ltd v Strathfield Municipal Council

1. [1]

   BASTEN JA: The second appellant, Isas Pty Ltd, is the owner of a parcel of land in South Strathfield of an irregular shape, bordering the Cox’s Creek drainage channel. The first appellant, Aussie Skips Recycling Pty Ltd, is the lessee which operates a waste recycling business on the land. There is a narrow strip of land owned by Strathfield Municipal Council between the appellants’ land and the drainage channel. In the course of building a high “acoustic wall” along the boundary of the appellants’ land and the Council land, the appellants incorporated some 341m2 of Council land within their operations. On becoming aware of the intrusion, Council requested that a predecessor of the first appellant cease to occupy the land and, in October 2018, commenced Class 4 enforcement proceedings in the Land and Environment Court seeking to restrain the first appellant from carrying out development on the Council’s land.

2. [2]

   On 15 July 2019 the appellants commenced proceedings in the Supreme Court seeking the imposition of four easements over that part of the Council land which they were using for their business. Those proceedings were transferred by consent to the Land and Environment Court, which, on 20 March 2020, refused the application for the imposition of easements: Aussie Skips Recycling Pty Ltd v Strathfield Municipal Council. [1] This appeal is brought from the dismissal of the application for the easements.

The assumed jurisdiction of the Court

1. [3]

   The power of the Court to impose an easement depended upon the application of s 88K of the Conveyancing Act 1919 (NSW). Section 88K provides:

2. [4]

   It is accepted that an “easement” for the purposes of s 88K(1) extends only to rights in the nature of an “easement” as understood under the general law. Accordingly, an application must identify such rights. A condition of engagement of the power to impose an easement is that it be “reasonably necessary for the effective use or development of” the dominant tenement. The primary judge in the Land and Environment Court (Duggan J) held that neither of these requirements was satisfied. As a result, the primary judge did not need to consider the requirements set out in s 88K(2), nor whether, as a matter of discretion, the Court would have been minded to make the order sought, assuming the power was engaged.

3. [5]

   There is an aspect of the operation of s 88K which does not need to be resolved in this matter, but which should not go unnoted. The Council land in question was “community land”, the use and management of which is subject to extensive and detailed regulation under Ch 6, Pt 2, Div 2 of the Local Government Act 1993 (NSW). The Council may have had no power to grant the easement sought. The proposition that the general power conferred on the Court to grant an easement over the opposition of a land owner extends to community land owned by a council is an issue which requires further consideration. Further, the inability to grant such an easement, or use its own land for the appellants’ business purpose, would appear to preclude consent to a development which required such use pursuant to an easement. If that were correct, the costs associated with an eight day hearing in the Land and Environment Court and an appeal to this Court were all wasted because the proceeding should have been dismissed at the outset for want of jurisdiction. This issue will be explained further after addressing the issues raised by the parties.

4. [6]

   Whether the Council did lack power to use the community land for the purposes of a waste recycling business (as a “public utility”) arose tangentially as relevant to the exercise of the Court’s discretion, if the power were engaged. Although that issue did not arise either, it will be convenient to address it briefly.

Proposed easements

1. [7]

   The proposed easements, which it was said were to be read as a “composite package”, [2] were as follows:

   1. (1)

      easement for encroaching structure to remain;

   2. (2)

      easement for services;

   3. (3)

      right of carriageway;

   4. (4)

      easement for access and use for waste transfer and recycling facility.

2. [8]

   A plan showed each of the easements covering the same area, which was the bulk of Lot 1, DP 107494, being the strip of Council land between the drainage channel and the appellants’ land. A copy of the plan appears below:

3. [9]

   The terms of proposed easement (1) conferred on the appellants the right to:

4. [10]

   The easement was to be in place for a period of 30 years, or until the waste transfer and recycling facility ceased operating, whichever occurred first. The other three easements supplemented the underlying terms and purpose of easement (1).

5. [11]

   Easement (1) conferred rights on “the grantor” which was identified as the owner of the lot burdened, namely the Council. For example, cl 3.2 of the terms of easement (1) originally read as follows:

6. [12]

   Further the Council was given “step-in rights” to rectify any failure of the appellants to maintain the “acoustic enclosure” in a good standard of repair fit for its intended use and to keep the enclosure in a “clean and tidy condition to a standard appropriate for a waste transfer and recycling facility”, to ensure that the enclosure was safe and structurally sound, to rectify any defect and to maintain any equipment in operational and safe condition. [3]

7. [13]

   On the sixth day of the trial the appellant filed an amended summons which replaced cl 3.2 of the terms of the easement with the following:

8. [14]

   No one appears to have questioned how the grantor, which was not the Council (it had no power to make such a grant), could exercise these powers on community land, given the controls imposed by the Local Government Act which did not extend to the conferral of such powers. The effect of the imposition of an easement in these terms by the court would have involved the conferral of powers on the Council by the court; it is not clear that s 88K vests any such power in the court.

9. [15]

   It may be added that if, as the Council contended, none of the development consents for the operation of the waste facility extended to the operations on Council land, that operation, sought to be the subject of the easement, was and remains presently unlawful. There was no explanation as to how the Court, by the imposition of an easement, could render lawful that which under the Environmental Planning and Assessment Act 1979 (NSW) was unlawful.

10. [16]

    In the introductory parts of her reasons, the trial judge noted:

11. [17]

    At least on one view, the issues raised in the other proceedings did more than provide the judge with “context” to the s 88K application: they suggested a fatal flaw in the underlying premise of the application.

12. [18]

    The judge identified as the “first issue” raised in the proceedings, the question whether the proposed easements could properly be so described or whether the easements amount to the grant of exclusive occupation. [4] That was seen to depend upon the general law. However the judge also identified a second issue in the following terms:

13. [19]

    Treating the issue as capable of determination first under the general law avoided answering the question as to the operation of the statute. Had the latter question been addressed, the fundamental problem which has been adverted to above, might have been confronted, with much saving of costs and avoidance of delay.

Nature of an “easement”

1. [20]

   The capacity issue was addressed by the judge in terms of the fourth limiting factor identified in Re Ellenborough Park, [5] namely:

2. [21]

   After a careful consideration of the circumstances, including the nature of the land owned by the Council, and the nature of the rights of occupation and use proposed under the easements, the primary judge concluded:

3. [22]

   In reaching that conclusion, the judge found that the rights of access purportedly conferred on the Council were “in truth an illusion”, asking, “what purpose the access would serve?” [6] The suggestion that the Council retained a right to develop the airspace over the land and the subterranean space was described as a “notional potential, it is not a real one.” [7] That was patently correct, even without regard to the fact that this was community land. Taking its status as community land into account, the submission was best characterised as fanciful. The narrow strip of Council’s land taken by the appellants served no useful purpose to either party in isolation from the rest of the appellants’ land. To suggest Council officers had any purpose in accessing that strip was fanciful; to suggest they had a “right” to access that strip inside the appellants’ wall, but not of course the rest of the appellants’ land, was to construct a fantasy on a fantasy.

4. [23]

   The fact that an easement may impinge upon the rights of the owner of the servient tenement is not in doubt. The rights conferred on the dominant tenement may be extensive and provide for exclusive occupation of the land, but must be compatible with the continued beneficial ownership of the servient tenement. [8] As Judge Paul Baker QC explained in London & Blenheim Estates Ltd v Ladbroke Retail Parks Ltd: [9]

5. [24]

   This reasoning was adopted by Bryson J in Klos Farming Estates Pty Ltd (Receivers and Managers appointed) v Easton, [14] which in turn was cited with approval by Buss JA in The Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd, [15] and by this Court in Stolyar v Towers. [16]

6. [25]

   In the present case, the appellants had enclosed an area constituting 68% of the Council’s lot, in a manner which practically excluded the Council from any use of the enclosed land. As a matter of degree, the appellants’ claim could not qualify as an easement, but as the appropriation of a large part of the Council’s lot for the appellants’ commercial benefit.

7. [26]

   The appellants contended that there was no major restriction on the Council’s use of the residue of its lot. However, once it is accepted that the bulk of the lot was no longer available to Council for a permissible use, there is no need to determine whether the residue was also unusable in practical terms, or was restricted in its availability, or its continued usage was unaffected. The extent to which the use of the residue of the Council’s land was restricted depended upon the available purposes. It was true that when the whole of the area was available to Council, prior to the construction of a hardstand and the acoustic wall, which occurred between 2003 and 2010, the land had been left in its natural state. That was consistent with the uses permitted under the deed governing use of the reserve of which the lot was a part. The residue could continue in that state, but the effect in providing an area for recreation, or enhancing the amenity of recreation lands on the other side of the drainage channel, was substantially reduced.

8. [27]

   It follows that the judge’s conclusion that the proposed easements were incapable of comprising easements at law [17] was correct. The appeal should be dismissed on this basis.

Reasonable necessity

1. [28]

   Although the judge disposed of the matter on the ground set out above, she continued, considering, whether the easement satisfied the requirement in s 88K(1) as being “reasonably necessary for the effective use or development” of the appellants’ land. Because the judge was correct to dispose of the matter on the basis set out above, it is not necessary for this Court to address the further ground. However, for the reasons set out below, the judge’s conclusion in this regard also was correct.

2. [29]

   The reasons for that conclusion may be stated briefly. However, there was an issue raised in this Court as to the proper approach to be taken in reviewing an evaluative judgment of the kind required to determine whether the criterion of engagement in s 88K(1) had been established. It is convenient to refer to that matter first.

3. [30]

   The respondent submitted that the constrained standard of review identified in House v The King [18] applied, relying on City of Canterbury v Saad, [19] and Community Association DP 270447 v ATB Morton Pty Ltd. [20] The respondent submitted that that standard should be applied, but noted that the submission had been rejected in ING Bank (Australia) Ltd v O’Shea, [21] and in Gordon v Lever (No 2). [22]

4. [31]

   Reliance on City of Canterbury v Saad was misplaced. The passage from the reasoning of Beazley P (with which Meagher JA and Leeming JA agreed) was directed to the exercise of the discretionary power. [23] There is no doubt that, once engaged, there may be a lively discretion to be exercised in determining whether or not to impose an easement. This case does not involve that issue, but, depending on the precise issues to be resolved, the application of the constrained scrutiny required by House would be appropriate.

5. [32]

   A similar point may be made with respect to the second case, Community Association v ATB Morton. There Leeming JA stated, with the agreement of Bell P and Payne JA:

6. [33]

   The reasoning in Gordon v Lever (No 2) is, however, squarely on point. Bell P stated (with the agreement of Payne JA and Emmett AJA):

7. [34]

   The judge approached the matter correctly. She accepted that “reasonably necessary” conveyed a higher standard than that of mere convenience, but also accepted that questions of practicability were in play. She stated that the case was not equivalent to an application for an easement over a landlocked site, where the test could readily be met without significant evidence. [25] This was not such a case. The judge stated:

8. [35]

   There were in substance two primary factors relied on by the appellants to support their case. The first was that, at least with the current configuration of the buildings and placement of stockpiles on its own land, there was difficulty in 19 metre trucks with trailers manoeuvring on the hardstand. To the extent that reconfiguration was required, the evidence did not permit the judge to determine that reconfiguration was not reasonably possible, at a reasonable expense. It was essential for the applicant to establish the relevant facts in order to demonstrate that the power it sought to have the court exercise was engaged.

9. [36]

   The second issue was the cost of removing and reconstructing the present wall on the appellants’ own land. That would, as the judge noted, involve both inconvenience and cost. [26] However, the judge rejected a submission that “an easement was reasonably necessary, in part, because it was regularising a pre-existing circumstance”. The judge correctly noted, in that respect:

10. [37]

    The appellants complained that the primary judge drew an incorrect comparison between “the needs of Lot 1” and circumstances “primarily personal or commercial to Aussie Skips.” [27] As the appellants correctly submitted, such a distinction would be a departure from the test set out in s 88K(1), which requires a determination as to whether the easement is reasonably necessary “for the effective use or development of” the appellants’ land. However, read in context, the language used in this passage complained of cannot be understood as a departure from the statutory test. It is clear that the judge evaluated various factors relevant to the development and use of the appellants’ land. Indeed, in the paragraph following that containing the offending words, she accepted that the use of that land was “dynamic.” [28]

11. [38]

    In concluding that use of the Council’s land in the way proposed was not reasonably necessary for the development and use of the appellants’ land, the judge stated:

12. [39]

    The appellants contended that reference to a set of “serendipitous circumstances” was an error. Why that was so was unclear. The apparent intention was to summarise a series of circumstances whereby developments for which Council had given consent on several occasions, by reference to the appellants’ land alone, had come to be constructed on, or too close to, the Council’s land. Senior counsel for the appellants submitted in the course of oral argument: [29]

13. [40]

    At no point did the primary judge suggest that the unlawfulness of the development on the Council’s land precluded the grant of an easement to the appellants. Nor was the case put by Council in that way. The fact that the cost of removing the wall and reconstructing it on the appellants’ own land was considered to be a relevant factor supports the view that the illegality was not taken to preclude the grant of an easement. On the other hand, use of the land over a period of years without objection did not give rise by prescription to an entitlement to an easement. Satisfaction of the criterion of engagement specified in s 88K(1) was at all stages treated by the primary judge as a live issue requiring an evaluative judgment. No error was demonstrated in the way that the judge dealt with the issue.

Appellants’ business – public utility

1. [41]

   The jurisdictional question noted above, but not requiring determination, depended on the correctness of the assumption that Council had no power to grant the easement sought by the appellants over land designated community land. The submission that community land could be lawfully used for the purpose of a public utility was said to undermine the conclusion that the easements sought were not of a kind known to the law. As originally stated, that proposition was identified in grounds 3 and 4 of the notice of appeal as a failure to determine “a principal contested issue between the parties as to the impact of the easements on the Council land as ‘community land’”. Those grounds were not pressed on that basis; however, the issue of whether the land was capable of being used for the purpose of a public utility was said to be relevant to whether the easement was reasonably necessary, on the basis that the appellants’ use of their land was that of a public utility, because they operated a waste recovery and recycling business.

2. [42]

   The logic of that submission is not self-evident. However, although it has been observed that absence of a power in the Council to grant an easement in a particular form does not prevent the court granting such an easement, it may be arguable that the consideration would be relevant to the exercise of the court’s discretion, if the power were engaged. Again, the matter may be briefly disposed of.

3. [43]

   The land originally comprised part of the land subject to a trust declared by the Council of the Municipality of Strathfield on 15 October 1952, “for the purpose of providing public garden and recreation space”. Despite that, it was submitted by the appellants that the land was capable of being leased for the provision of “public utilities” in accordance with s 46 of the Local Government Act, which relevantly provided:

4. [44]

   This proposition was relied on in the appellants’ written submissions in support of an argument that it was appropriate to grant the easements sought. That was because the term “public utilities”, although not expressly defined in the Local Government Act, included the supply of any services essential to the community, including garbage collection and waste disposal. Senior counsel for the appellants submitted that the mere fact that they were private profit-making entities did not mean that the use did not constitute a “public utility”. [30] The submission should be rejected, largely for the reasons articulated for the Council. [31] That response had three limbs.

5. [45]

   First, the appellants’ facility was not a garbage collection service, nor did it receive waste from the public. Rather it recycled waste principally for the building industry. Secondly, it operated on a commercial and contractual basis and did not provide services to the Council or any other government entity responsible for public waste disposal. Thirdly, and consequently, the appellants did not operate as a public utility within the meaning of that term when applied to community land.

The power to grant an easement over community land

1. [46]

   This issue could not be relied on in this appeal without giving the parties an opportunity to address it. If the appeal were otherwise to be upheld, it might be necessary to take that course. Because the appeal is to be dismissed that course is not necessary. However, because it raises an important question as to the powers of the Supreme Court, and the Land and Environment Court where proceedings are transferred to it, and involves a question as to the interrelationship of two important statutes governing the use and development of private and public property, the issue should be flagged.

2. [47]

   There are authorities which support the view that, regardless of the incapacity of the Council to grant an easement for a particular purpose over community land, the Court may nevertheless exercise its power under s 88K to do so. The power to do so has rarely been addressed. There is one case in which the Court of Appeal has approved the grant of an easement, without consideration of the issue of power. [32] However, the issue appears to have been raised, though somewhat obliquely, in 2000 in Marshall v Council of the City of Wollongong. [33] In response to the possibility that the inability of the Council to grant such an easement might affect the powers of the court under s 88K, Bryson J stated:

3. [48]

   While it is true that there is no express provision in the Local Government Act which limits the powers of the Supreme Court under s 88K, and whilst it is true that there is a general principle of statutory construction which militates against reading implied limitations into a conferral of power on a superior court, [34] some powers will contain inherent limitations, constitutional or otherwise, which a Supreme Court is required to observe. There are four factors which suggest that the Court does not have power to impose an easement on community land.

4. [49]

   First, the fact that the local council in which the land is vested has no power to grant an easement suggests that, for the court to do so, would be to undermine the purpose and operation of the detailed statutory scheme found in the Local Government Act. The two statutes should be read so as to operate harmoniously together, [35] not so that one undermines the other, and certainly not so that the earlier general power undermines the effect of the later more specific power. [36]

5. [50]

   Secondly, s 88K provides that an order imposing an easement “may be made only if the court is satisfied that … 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”: s 88K(2)(c). That requirement carries within it the implication that the owner of the land over which the easement is sought has the legal capacity to grant such an easement. If that is not the case, par (c) has no ready application and the court therefore cannot be satisfied as to an essential condition of the exercise of the power.

6. [51]

   Thirdly, s 88K(6)(b), permitting the easement imposed by the Court to be modified by a deed between the respective landowners, again appears to assume that the owner of the servient tenement has power to grant an easement and modify it.

7. [52]

   Finally, s 88K(8), providing that an easement imposed under the section “has effect (for the purposes of this Act and the Real Property Act 1900) as if it was contained in a deed”, would create a curious legal anomaly if one of the parties had no power to enter into such a deed.

Conclusions and orders

1. [53]

   For the reasons indicated above, the judge was correct to dismiss the application before her on the basis that the package of easements sought by the appellants did not qualify as easements permissible under the general law. The appeal should be dismissed on that basis.

2. [54]

   There is a degree of artificiality in asking whether an easement in a form which was not known to the law was “reasonably necessary” for the effective use or development of the appellants’ land. Nevertheless, to the extent the question is capable of being answered, the judge’s conclusion that that criterion was not satisfied was also correct. The same result would follow: the appeal should be dismissed.

3. [55]

   The appellants sought payment of their costs in the event of success; there is no reason why they should not be required to pay the respondent’s costs in this Court.

4. [56]

   The Court should make the following orders:

   1. (1)

      Dismiss the appeal from the judgment and orders in the Land and Environment Court of 20 March 2020.

   2. (2)

      Order that the appellants pay the respondent’s costs in this Court.

5. [57]

   GLEESON JA: I agree with Basten JA.

6. [58]

   PRESTON CJ of LEC: I agree with Basten JA.