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NSW Government Bulletin: Four steps for valuing easement acquisitions in NSW

14 December 2023

#Government, #Planning, Environment & Sustainability

Published by:

Christine Jones (Editor), Caitlyn Trussell

NSW Government Bulletin: Four steps for valuing easement acquisitions in NSW

An easement is a right annexed to land to utilise other land of different ownership in a particular manner or to prevent the owner of the other land from utilising land in a particular manner.

Easements come in various forms, including rights of way, rights of support, easements for services, easements for light and air and the like. They often allow a person or authority to do things that would otherwise be trespassing on private or public land.

Easements are acquired – whether that is by extinguishment or creation – by certain public authorities of the Commonwealth, States and Territories over land, including in circumstances where there is significant redevelopment of a precinct, where easements are no longer needed or when there is a change in public works layout.

In NSW, an easement is an “interest” in land for the purposes of the Land Acquisition (Just Terms Compensation Act) 1991 (JTCA) and will therefore trigger the requirements of the JTCA in relation to the payment of compensation on acquisition, with some exceptions. As a result, the owner of the land benefitted by an easement (known as the ‘dominant tenement’) is entitled to be paid compensation for acquisition in accordance with section 37 of the JTCA.

At present, an acquiring authority must follow the provisions of the JTCA in paying market value for the acquisition of an easement interest. In NSW, the broader compensation principles presently applied by the courts for easement acquisition include the following:

  • the market value paid for the easement is assessed at the date of the acquisition (even if the easement is to be temporarily removed)
  • for extinguishment, an assessment is made of the natural and reasonable consequences caused by acquiring an easement and the resulting loss and damage to the dominant tenement. The test is the attitude of the hypothetical prudent purchaser and the extent to which the claimant’s (being the dominant tenement) has suffered diminution in the value of their property (see Giessauf v Prospect County Council (Unreported, NSW Land and Environment Ct, 27 April 1987))
  • the “before and after” approach is often the preferred valuation method adopted by the court for acquiring easements (see Chino Pty Ltd v Transport Infrastructure Development Corporation [2006] NSWLEC 768)
  • a construction inquiry is undertaken so that a question is asked regarding what the dominant owner could possibly do in the exercise of its rights (see Besmaw Pty Ltd v Sydney Water Corporation [2001] NSWLEC 15)
  • the court will consider the construction of the easement terms by reference to its registered terms and not by reference to extrinsic material, except for the physical characteristics of the dominant and servient tenements at the time of creation (see Tempe Recreation Reserve Trust v Sydney Water Corporation [2013] NSWLEC 221)
  • considering whether severance and injurious affectation damage principles apply in the circumstances under the JTCA, based on the evidence before the court.

The awarding of compensation varies largely from case to case. Sometimes the courts have held that the amount of compensation for extinguishment of easements is for all intents and purposes, nominal, for example where there is resumption of an easement for electricity transmission lines (see Giessauf v Prospect County Council (Unreported, NSW Land and Environment Ct, 27 April 1987). Yet the court has also previously held that the creation of an easement over a reserve for the purposes of water legislation can be valuable (in the realm of $100,000 for market value) where that reserve was used for public recreation (see Tempe Recreation Reserve Trust v Sydney Water Corporation [2013] NSWLEC 221).

Considering the above matters, the valuation of easement acquisitions is factually driven and can vary widely from one case to another, depending on the property, the right that is being acquired and its appropriate construction.

If you are involved in an easement acquisition, we recommend taking four steps.

Step 1: Identify the correct interpretation of the acquired easement

This will involve considering the terminology and wording used in the instrument itself and what it does, or does not, permit. It will often be the case that a claim will collapse if the instrument is not interpreted correctly. For example, does your easement allow permanent works above the surface of the relevant land?

Step 2: Adopt a practical view

The correct approach is not just to read the grant of the easement and assume the worst but to adopt a practical view of the matter and conduct enquiries which would lead to an intelligent assessment of the risk of future intrusion. Although this is an approach adopted in QLD case law, we consider it is useful to adopt in the NSW jurisdiction

Step 3: Engage an experienced valuer

In our view, it is important to engage a valuer and any other experts relatively early on in the process (including town planners or environmental consultants, where appropriate) that will consider the above points and provide practical advice in relation to valuation.

Step 4: Adopt the correct valuation approach

Consider whether your valuer should be adopting the “before and after” approach when conducting the valuation, or the piecemeal approach.

Ultimately, claims for compensation must be based on statutory provisions in the JTCA and the above matters require detailed consideration and assessment. We consider that the time is ripe for further judicial authority in this area in an appellate court to consolidate existing principles relating to valuation assessment.

If you have any questions or need further legal advice in relation to the above, please contact us below.

Authors: Lucinda Morphett

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Cases

Tiny Town Childcare Centre (Portjazz Pty Ltd) v Secretary, Department of Education [2023] NSWCATAD 321
ADMINISTRATIVE LAW – Children (Education and Care Services) National Law (NSW) – decision to cancel provider approval by the regulatory authority – stay sought – relevant principles – stay granted on conditions.
Children (Education and Care Services) National Law (NSW); Civil and Administrative Tribunal Act 2013 (NSW); Education and Care Services National Regulations (2011).

Ramsay v Minister for Lands and Water; Hospitality and Racing, the Minister administering the Water Management Act 2000 [2023] NSWCA 299
ENVIRONMENT AND PLANNING – jurisdiction of Land and Environment Court to hear Class 1 appeals – ss 368(1)(a) and (c) of the Water Management Act 2000 (NSW) – where floodplain harvesting (regulated river) access licence not granted in relation to share component said to have been sought – whether determinations of Minister to grant licences with lower share components than had been sought amounted to refusals to grant access licences – whether decision as to share component for access licence constituted imposition of a discretionary condition.
Land and Environment Court Act 1979 (NSW) s 17(c); Water Management Act 2000 (NSW) ss 3, 45, 56, 57, 57A, 61, 63, 66, 67, 68, 68A, 368, Sch 9 cl 98; Water Management Amendment Act 2014 (NSW); Uniform Civil Procedure Rules 2005 (NSW) r 13.4; Water Management (General) Regulations 2018 (NSW) regs 23A-23L; Water Management (Application of Act to Certain Water Sources) Proclamation 2022; Water Sharing Plan for the Macquarie and Cudgegong Regulated Rivers Water Source 2016 (NSW).

Zgrivets v Chief Commissioner of State Revenue [2023] NSWCATAD 314
TAXES AND DUTIES – dutiable transfers – exemptions – First Home Buyers Assistance Scheme – principal place of residence – occupation as a principal place of residence for a continuous period of at least 6 months.
Administrative Decisions Review Act 1997 (NSW) Duties Act 1997 (NSW); First Home Owners Grant Act 2000 (NSW); Taxation Administration Act 1996 (NSW).

Styles v Wollondilly Shire Council [2023] NSWCATAD 315
ADMINISTRATIVE LAW – freedom of information – access to information – administrative review of decision under Government Information (Public Access) Act 2009 – whether reasonable searches undertaken for information responsive to access application – burden of proof that reasonable searches undertaken on agency – whether public interest considerations against disclosure made out – burden on agency to demonstrate each public interest consideration against disclosure relied on – no such burden on access applicant.
Administrative Decisions Review Act 1997; Civil and Administrative Tribunal Act 2013; Evidence Act 1995; Freedom of Information Act 1982 (Cth); Government Information (Public Access) Act 2009.

Webb v iCare NSW [2023] NSWCATAD 316
ADMINISTRATIVE LAW – Government Information (Public Access) – grounds for refusing access – whether information requested is government information held by an agency.
Administrative Decisions Review Act 1997 (NSW); Civil and Administrative Tribunal Act 2013 (NSW); Government Information (Public Access) Act 2009, ss 3, 4, 53, 58(1)(b), Sch 4, cl 12.

Finniss v State of New South Wales [2023] NSWCA 292
TORTS – negligence – occupier’s liability – school cleaner injured by striking head on a storeroom doorframe – storeroom contained cleaning products and other items – whether occupier was negligent – whether relocating entire contents of storeroom was a reasonable precaution – whether burden of taking precaution was overly onerous – where burden included burden of taking similar precautions – cleaner’s contributory negligence – where risk of harm was patently obvious to person in cleaner’s position – apportionment of liability between occupier and cleaner’s employer – assessment of damages for non-economic loss.
COSTS – party/party costs – costs of appeal – where appellant succeeded on several grounds – where respondent wholly successful on notice of contention – where respondent did not lead primary judge into error.
Civil Liability Act 2002 (NSW) ss 5B, 5C, 5D, 5F, 5G, 5H and 16; Workers Compensation Act 1987 (NSW) ss 151H and 151Z.

Shapkin v The University of Sydney [2023] NSWSC 1534
ADMINISTRATIVE LAW – whether judicial review proceedings ought to proceed concurrently with statutory appeal – not satisfied there are circumstances making it appropriate for concurrent appeal and judicial review proceedings.
Civil and Administrative Tribunal Act 2013 (NSW) ss 3483; Residential Tenancies Act 2010 (NSW); Residential Tenancies Regulation 2010 (NSW) reg 31; Supreme Court Act 1970 (NSW).

C-Corp Nominees Pty Ltd v Inner West Council [2023] NSWLEC 1746
DEVELOPMENT APPLICATION – demolition of existing structures and construction of a residential flat building – existing use – impact on the heritage significance of the heritage conservation area.
Environmental Planning and Assessment Act 1979, Div 4.11, ss 4.15, 4.65, 8.7; Land and Environment Court Act 1979, s 34; Inner West Local Environmental Plan 2022, cll 4.4, 4.6, 5.10.

Gallo v Chief Commissioner of State Revenue [2023] NSWCATAD 311
MERITS REVIEW – REVENUE LAW – jurisdiction of the Tribunal – onus – surcharge land tax on residential land – foreign person – effect of submissions without supporting evidence or relevant authority.
Administrative Decisions Review Act 1997 (NSW); Civil and Administrative Tribunal Act 2013 (NSW); Land Tax Act 1956 (NSW); Taxation Administration Act 1996 (NSW).

Holt Avenue Cremorne Pty Ltd v North Sydney Council [2023] NSWLEC 1736
APPEAL – development application – residential flat building in medium density zone – breach of height development standard – now a prohibited use – whether compatible with zone – building design – privacy impacts.
Environmental Planning and Assessment Act 1979, ss 4.15, 8.7; Environmental Planning and Assessment Regulation 2000, cl 55, Sch 1; Heritage Act 1977, s 25; Land and Environment Court Act 1979, s 39; North Sydney Local Environmental Plan 2013 (Amendment No 35); North Sydney Local Environmental Plan 2013, cll 1.2, 1.8A, 4.3, 4.6, 6.10; Standard Instrument (Local Environmental Plans) Amendment (Exceptions to Development Standards) Order 2023; Standard Instrument (Local Environmental Plans) Order 2006, cl 8; State Environmental Planning Policy (Resilience and Hazards) 2021, s 4.6; State Environmental Planning Policy No 65 – Design Quality of Residential Apartment Development, cll 6A, 28, 30.

Trappel v Industrial Relations Secretary on behalf of the Legal Aid Commission of NSW [2023] NSWCATAD 304
HUMAN RIGHTS – discrimination – pregnancy – carer responsibilities direct and indirect discrimination – condition or requirement – failure to offer employment following expiry of short, fixed term contracts.
Anti-Discrimination Act 1997 (NSW), ss 24, 25, 49S, 49T, 49V; Civil and Administrative Tribunal Act 2013, s 38; Government Sector Employment Act 2013 (NSW); Government Sector Employment (General) Rules 2014, r. 12.

Chaouk v Chief Commissioner of State Revenue [2023] NSWCATAD 305
ADMINISTRATIVE REVIEW – Privacy and Personal Information Protection Act – application for dismissal under s 55 Civil and Administrative Tribunal Act 2013 (NSW).
Administrative Decisions Review Act 1997 (NSW); Civil and Administrative Tribunal Act 2013 (NSW); Privacy and Personal Information Protection Act 1998 (NSW).

Lewis v Commissioner of Police [2023] NSWIRComm 1117
EMPLOYMENT AND INDUSTRIAL LAW – Industrial Relations Commission – Procedure and powers – motion to set aside summons to produce – relevant principles.
Industrial Relations Act 1996 (NSW); Police Act 1900 (NSW); Civil Procedure Act 2005.

The Australian Workers’ Union, New South Wales v Industrial Relations Secretary in respect of the Department of Planning and Environment [2023] NSWIRComm 1118
EMPLOYMENT AND INDUSTRIAL LAW – Industrial disputes – allegation that respondent failing to comply with applicable award in establishing rosters – notifier seeking interpretation of award and recommendations – whether evidence reveals breach of award – whether Commission’s intervention warranted.
Fair Work Act 2009 ss 114, 116; Industrial Relations Act 1996 s 130, 136.

SafeWork NSW v Think Tank Building Solutions Pty Ltd [2023] NSWDC 532
CRIMINAL LAW – SENTENCE – objective seriousness – mitigating factors – aggravating factors – plea of guilty – appropriate discount for the utility of the plea – general deterrence – specific deterrence – remorse and contrition – maximum penalties – COSTS – prosecutor’s costs.
Crimes (Sentencing Procedure) Act 1999 (NSW); Criminal Procedure Act 1986 (NSW); Fines Act 1996 (NSW); Work Health and Safety Act 2011 (NSW).

Rockliff Estate Pty Ltd v Liverpool City Council [2023] NSWLEC 1725
APPEAL – development application – earthworks – vegetation management and remediation – industrial development – permissibility – characterisation of purpose of development – vehicular access whether “road” or “industry” – “road” permissible but “industry” not permitted in zone.
Environmental Planning and Assessment Act 1979, s 8.7; Liverpool Local Environmental Plan 2008; Roads Act 1993.

Perez v Commissioner for Fair Trading [2023] NSWCATOD 179
ADMINISTRATIVE REVIEW – Property and Stock Agents Act 2002 – Application for restoration of real estate agent licence – extension of time for making application – whether just and equitable to restore the licence.
Administrative Decisions Review Act 1997; Property and Stock Agents Act 2002; Property and Stock Agents (Qualifications) Order 2019; Property, Stock and Business Agents Amendment (Property Industry Reform) Act 2018.

Legislation

Acts compilation

Australian Securities and Investments Commission Act 2001 (12/12/2023) – Act No. 51 of 2001 as amended
National Anti-Corruption Commission Act 2022 (12/12/2023) – Act No. 88 of 2022 as amended
Inspector-General of Animal Welfare and Live Animal Exports Act 2019 (12/12/2023) – Act No. 81 of 2019 as amended
Trade Marks Act 1995 (11/12/2023) – Act No. 119 of 1995 as amended
Crimes Act 1914 (11/12/2023) – Act No. 12 of 1914 as amended
A New Tax System (Family Assistance) Act 1999 (11/12/2023) – Act No. 80 of 1999 as amended
Australian Citizenship Act 2007 (11/12/2023) – Act No. 20 of 2007 as amended
Veterans’ Entitlements Act 1986 (11/12/2023) – Act No. 27 of 1986 as amended
Fair Work Act 2009 (9/12/2023) – Act No. 28 of 2009 as amended
Migration Act 1958 (9/12/2023) – Act No. 62 of 1958 as amended
Patients Act 1990 (8/12/2023) – Act No. 83 of 1990 as amended
Administrative Decisions (Judicial Review) Act 1977 (7/12/2023) – Act No. 59 of 1977 as amended
Health Insurance Act 1973 (7/12/2023) – Act No. 42 of 1974 as amended
Customs Act 1901(7/12/2023) – Act No. 6 of 1901 as amended
Criminal Code Act 1995 (7/12/2023) – Act No. 12 of 1995 as amended
Minister of State Act 1952 (4/12/2023) – Act No. 1 of 1952 as amended
Federal Circuit and Family Court of Australia Act 2021 (4/12/2023) – Act No. 12 of 2021 as amended
Corporations Act 2001 (4/12/2023) – Act No. 50 of 2001 as amended

Assented to

Climate Change (Net Zero Future) Act 2023 No 48 – assented to 11 December 2023
Building Legislation Amendment Act 2023 No 44 – assented to 11 December 2023
24-Hour Economy Commissioner Act 2023 No 54 – assented to 12 December 2023
Casino Control Amendment Act 2023 No 46 – assented to 11 December 2023
Emergency Services Legislation Amendment Act 2023 No 42 – assented to 11 December 2023
Crimes Amendment (Prosecution of Certain Offences) Act 2023 No 47 – assented to 11 December 2023
Centennial Park and Moore Park Trust Amendment (Car Parking) Act 2023 No 43 – assented to 11 December 2023
Strata Legislation Amendment Act 2023 No 45 – assented to 11 December 2023
Transport Administration Amendment (TAHE) Act 2023 No 50 – assented to 12 December 2023
Energy Legislation Amendment Act 2023 No 49 – assented to 12 December 2023
Greater Cities Commission Repeal Act 2023 No 52 – assented to 12 December 2023
Road Transport Legislation Amendment (Automated Seatbelt Enforcement) Act 2023 No 51 – assented to 12 December 2023
Electoral Funding Amendment Act 2023 No 55 – assented to 12 December 2023
24-Hour Economy Legislation Amendment (Vibrancy Reforms) Act 2023 No 53 – assented to 12 December 2023
Biosecurity Amendment (Independent Biosecurity Commissioner) Act 2023) No 56 – assented to 12 December 2023

Regulations and Miscellaneous instruments

Road Transport amendment (Electric Scooter Trial and Parking) Rule 2023 – LW 1 December 2023

Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Christine Jones (Editor), Caitlyn Trussell

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