ATO jobkeeper cash flow boost backs down in Court


An easement is a legal right that allows one party to use or access another party’s land for a specific purpose. This can include rights such as the right to access a shared driveway or to use a shared water source.

In New South Wales, s 88K Conveyancing Act 1919 gives the court power to create easements under certain conditions. This provision was inserted in 1995 to enable applicants to obtain easements over neighbouring land in circumstances deemed ‘reasonably necessary’.

If all of the following elements are fulfilled, the court may make an order for an easement, specifying its nature and terms (Gordon v Lever (2018) 97 NSWLR 90, [97]:

  1. The easement is reasonably necessary for the effective use or development of the other land that will have the benefit of the easement (‘dominant tenement’) (s 88K(1)).
  2. The use of the land having the benefit of the easement will not be inconsistent with the public interest (s 88K(2)(a)).
  3. The Court is satisfied that the owner of the land to be burdened by the easement (‘servient tenement’) can be adequately compensated for any loss or other disadvantage that will arise from the imposition of the easement (s 88K(2)(b)).
  4. The Court is satisfied that all reasonable attempts have been made by the applicant to obtain the easement but have been unsuccessful (s 88K(2)(c)).

Reasonably necessary:

In determining whether the easement is reasonably necessary for the effective use or development of the land, the threshold is above something that is simply convenient but it is less than absolute necessity (D & D Corak Investments Pty Ltd v Yiasemides [2006] NSWSC 1419, [13] (Young J)). Therefore, an easement can be granted even if the land could theoretically be effectively used and developed without it (117 York St Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504).

However, the Court must be satisfied that the proposed use or development is reasonable in comparison with possible alternatives. In Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445, it was found that it is sufficient to show that the proposed development is economically rational and appropriate to the area. In Arcidiacono v Owners of Strata Plan No 17719 [2020] NSWCA 269, the Court found that reasonable necessity means that the use or development of the land with the easement must be at least substantially preferable to the use or development without it.

A salient consideration is the impact on the servient tenement (ING Bank (Australia) Ltd v O’Shea (2010) 14 BPR 27, 325 [48]-[49]). The greater burden on the servient tenement, the stronger the applicant’s case needs to be to justify a finding of reasonable necessity (Aussie Skips Recycling Pty Ltd v Strathfield Municipal Council [2020] NSWLEC 22). Accordingly, the applicant’s past use of the land and the servient tenement’s past consent are relevant to the possible impact on the servient tenement but it cannot be solely used to manufacture ‘reasonable necessity’ (Gordon v Lever (2018) 97 NSWLR 90).

This element was not made out in Aussie Skips Recycling Pty Ltd v Strathfield MC [2020] NSWCA 292, where the Court found that the proposed easement was incompatible with the continued beneficial ownership of the servient tenement as it would enclose the area constituting 68% of the Council’s land. It was therefore incapable of comprising an easement.

Use of land not inconsistent with the public interest

The easement will not be granted if the use of the dominant land would be illegal (Gordon v Lever (2018) 97 NSWLR 90, [97]). However, the necessity for the use of the land to not be inconsistent with public interest is a lower threshold than being in the public interest.

Adequate compensation

To grant an easement, the Court needs to be satisfied that the servient tenant can be adequately compensated for any loss or other disadvantage that will arise from the easement. If it cannot make a determination as to the compensation payable at the time the order is made, it has no power to grant the easement (Studholme v Rawson [2020] NSWCA 76, [46]).

The compensation amount is determined by reference to the loss incurred by the servient tenement and not the benefit derived by the dominant tenement (Rainbowforce Pty Ltd v Skyton Holdings Pty Ltd (2010) 171 LEGRA 286). Compensation will cover the diminished market value of the affected land and associated costs, as well as any loss arising from insecurity or loss of amenities such as the loss of peace (Wengarin Pty Ltd v Byron Shire Council (1999) 9 BPR 16, 985; Acorp Developments Pty Ltd v HWR Pty Ltd [2018] NSWLEC 68, [153]).

Legal costs are usually payable by the applicant unless the servient tenement’s conduct warrants an adverse costs order. Behaviour that might warrant that includes presenting false evidence or manufacturing a case (Bilton v Ligdas (206) 18 CBPR 36, 379) but does not include refusing a reasonable offer (Owners Strata Plan No 13635 v Ryan [2006] NSWSC 342, [32]).

All reasonable attempts have been made to obtain the easement

This element was incorporated into s 88K to encourage applicants to initiate negotiations and treat s 88K as a last resort (New South Wales, Parliamentary Debates, Legislative Council, 4 December 1995, 4000 (Douglas Moppett).

In assessing reasonableness, the court must consider the likelihood that consensus would be reached if further steps had been taken (Coles Myer New South Wales Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14). The Applicant does not have to show that they offered an amount that was later considered fair compensation by the court, as long as they showed a willingness to negotiate and respond to the other party reasonably (Katakouzinos v Roufir Pty Ltd [1999] NSWSC 1045, [75]

In Bilton v Ligdas (2016) 18 BPR 36, this element was found to be satisfied when the servient tenement had rejected an offer that was double the maximum market value as assessed by experts.

The court retains discretion

The court retains the discretion to refuse an application for an easement even if the applicant has satisfied all the requirements (Khatter v Wiese (2005) 12 BPR 23, 235, [59]; Bloom v Lepre (2008) 13 BPR 24, 923[ 100]-[104]). In Bloom v Lepre, the applicant was refused an easement for a wider driveway because he purchased the property knowing of its existing narrow driveway. It was noted that the Court’s discretion is to be exercised having regard to the purpose of the second, which was to facilitate the reasonable development of land.

Another reason that an application may be denied despite meeting all of the requirements is that no payment will be able to compensate the burdened owner for the imposition of the easement. This is especially so if it interferes with the peace or privacy of the landowner or is ultimately detrimental to their lifestyle (Wengarin Pty Ltd v Byron Shire Council [1999] NSWSC 485, [26]).

Courts have also refused applications upon considerations of safety. In Sodhi v Stanes [2007] NSWSC 177, the court refused an applicant’s request for an access road to their banana plantation on the basis that expert evidence suggested that the road which would have a very steep gradient would be dangerous.

Further, the court will generally not impose an easement where the servient tenement prefers utilising a license to achieve the same result (Vella v Nergl Developments Pty Ltd [2020] NSWSC 1405, [166]]).

The court needs to specify terms

It has been consistently held that the Court approving a request for an easement needs to outline its terms (Studholme v Rawson [2020] NSWCA 76, [44] (Basten JA; Bell P and Gleeson JA agreeing); Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445; Gordon v Lever (2018) 97 NSWLR 90, [97] (Sackville AJA, McColl and White JJA agreeing)). The relevant terms include time limitation (under s 88K (3)) and compensation, unless the Court determines that compensation is not payable because of a special circumstance (under s 88K(4)).

Other ways the court may grant an easement

The Land and Environment court may also grant an easement as an ancillary order to the grant of development consent, under s 40 of the Land and Environment Court Act 1979 (NSW).


How ATO Super Penalties Work

Employers may face a 200% penalty rate + interest for late or unfulfilled superannuation contributions. Although this has been the case for years, the ATO previously had adopted a lenient and forgiving approach. In many cases, where the employer had fulfilled the required contribution past the due date, they walked away with a small 5% or 10% penalty. Furthermore, between 24 May 2018 and 7 September 2020, the ATO provided employers with an Amnesty period, If they voluntary disclosed  liabilities for quarters from 1 July 1992 to 31 March 2018 , they would be exempt from the 200% Super Guarantee Charge (SGC).

As of 25 November 2021, the ATO is guided by the new Practice Statement Law Administration 2021/3 (PS LA 2021/3), which tightened the rules and made it more likely for employers to incur a harsh penalty unless they lodge the Superannuation Guarantee Statement (SGS) in time. 

The penalty system:

As an employer, if you fail to make your required superannuation contributions in full and you do not lodge an SG statement within 28 days after the relevant quarter, you will be liable to a penalty made up of:

  • Super Guarantee Charge – 200% of the original amount (on top of the original amount)
  • Nominal annual interest which you will accrue until the SGS has been lodged, rather than until you have completed the payments 
  • Administration fee of $20 per employee per quarter

The ATO can make penalty remissions so that the SGC is reduced to less than 200%. However, their discretion has been limited through the 4 Step Penalty Remission Process, which caps the available remissions for certain circumstances.

The 4 Step Penalty Remission Process

Step 1: The ATO considers remission based on the employer’s attempt to comply with obligations through making late payments, according to the table below. This guideline did not exist pre-2021.

Late Payments ComplianceRemissionLiable SGC
Late payment in response to ATO compliance action such as audit10%180%
Late payment made after initial ATO contact but before compliance action15%170%
Late payment 9 months after due date before ATO contact30%140%
Late payment 6-9 months after due date before ATO contact33%134%
Late payment 3-6 months after due date before ATO contact36%128%
Late payment less than 3 months after due date before ATO contact40%120%

Step 2: The ATO considers remission based on the employer’s attempt to comply with obligations through lodgement SGS. The table below compares the similar 2021 and 2020 remission limits in this aspect.

SGS compliance2021 Remission2020 Remission
Employer has demonstrated repeat disengagement to previous SGC assessments or is engaging in a phoenix arrangement*0%0%
Employer failed to lodge SGS or provide relevant information in response to ATO compliance action25%25%
Employer gives information after lodgement due date in response to ATO compliance action40%40%
Employer lodges SGS in response to ATO compliance action60%50%
Employer lodges SGS prior to SGC assessment after due date and initial ATO contact before ATO compliance action80%80%
Employer lodges SGS after due date before ATO contact90%90%
* A phoenix arrangement is where a company is liquidated to avoid paying its debts and a new company is started to continue the same business activities.

Note that the remission percentages are added to those from step 1. For example, if, according to step 1, an employer is entitled to a 10% remission for making a late payment in response to ATO action, and they also lodged a SGS in response to ATO action, they would be entitled to an additional 40% remission. That means they would be entitled to a 50% remission and only liable for 100% (50% x 200%) SGC. The exact process occurs through step 3 and 4.

Step 3: The ATO considers remission based on the employer’s compliance history. The ATO considers the employer’s history in the three years leading up to the disclosure or ATO compliance action.

Compliance History2021 Remission2020 Remission
Good 15%No change
NeutralNo change-5%
Extremely poor-30%-10%

Note the greater emphasis on compliance history in 2021. If an employer is found to have extremely poor compliance and they are not entitled to remissions in any other steps, they will be liable for a 260% (200% x 130%) SGC.

Examples of poor compliance include:

  • Lodging SGS late
  • Not adequately addressing outstanding SGC debt
  • Previously issued with SGC default assessment

Examples of extremely poor compliance include:

  • Repeatedly failed to meet obligations after multiple ATO compliance actions
  • Repeatedly attempted to obstruct or hinder compliance action

Step 4: The ATO considers mitigating factors. The ATO will not consider factors already considered in earlier steps in this step. While the 2020 PS LA did not pose percentage limits and provided broad discretion, the new 2021/3 PS LA categorises mitigating factors under 5%, 10%, 20% and 50%.

Limiting FactorsRemission
Honest mistake 
Issue is addressed
Payment arrangement is entered 
Non-compliance occurred in the first year of operation and principals had no previous business experience10%
Ill health of employer or key employee
Significant proportion of superannuation is paid on time
Miscalculation due to complex legal interpretative issue
Third party compliance issue
Malfunction of key ATO system
Natural disaster significantly impacting ability to comply with obligations
Misclassifying workers despite reasonable steps to classify them correctly

What can employers do?

Fill out the form as accurately as possible as soon as possible. This will ensure you will no longer accrue unnecessary interest, and it will also increase your chances of reducing SGC.

If you are unhappy with the assessment outcome, you can appeal to the tribunal, which does not necessarily have to follow the practice statement. 

If you have any questions, please contact us.