88K easements

Adequate compensation in Easements

This article will discuss the third element that must be satisfied for a court to create an easement under s 88K of the Conveyancing Act 1919 (NSW). This element requires the court to be satisfied that the owner of servient land can be adequately compensated for any loss or other disadvantage that would arise from the imposition of the easement.

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). It has been noted that the Court should not err on the side of generosity and that although the applicant may generate profit from the development in connection with which the easement is sought, this does not justify any departure from the basic principles of compensation discussed below (Mitchell v Boutagy (2001) 118 LGERA 249, [31]).

There is a requirement for a causal relationship between the loss or disadvantage for which the claim is made and the imposition of the easement (Mitchell v Boutagy (2001) 118 LEGRA 249, [26]).

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]). It will also cover compensation for loss of the proprietary rights taken by the easement and for the disturbance effected by carrying out the initial work and subsequent repair and maintenance (Tregoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15, 845). An offset for any compensating advantages is allowed, so that the final amount is a reflection of the real detriment suffered (Wengarin Pty Ltd v Byron Shire Council [1999] NSWSC 485, [26]).

The onus of proof in a case for compensation is borne by the applicant (Mitchell v Boutagy (2001) 118 LGERA 249, [34]). This is part of their duty to satisfy the Court that the person can be adequately compensated (117 York St Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504, 516).

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]).

Generally, if the court 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]). However, in some cases, the Court may determine that compensation is not payable because of special circumstances (Property Partnerships Pacific Pty Ltd v Owners of Strata Plan 58482 [2006] NSWLEC 709, [11]).