VCAT Raises the bar for developers who wish to acquire easements over neighbouring properties

17 November 2022

The 10 October 2022 decision of the Victorian Civil and Administrative Tribunal (Tribunal) in Australia Red Hill Real Estate Group Pty Ltd v Melton CC [2022] VCAT 1165,1 has raised the bar for developers who wish to acquire an easement over neighbouring property, for the purposes of servicing a new subdivision pursuant to section 36 of the Subdivision Act 1988 (Vic). The Tribunal adopted a strict view of the meaning of section 36 when refusing to grant the Applicant sewerage and drainage easements over neighbouring land.

Section 36

Section 36 of the Subdivision Act 1988 (Vic) is a mechanism by which VCAT may grant a landholder holder leave to acquire an easement over neighbouring land and can be a useful tool to overcome sequencing issues particularly in the servicing of greenfield developments.

The key considerations of section 36 are whether an easement is “required” “for the economical and efficient subdivision of the land, and whether the acquisition will not result in an “unreasonable loss of amenity in the area affected by the removal or acquisition.” The Tribunal observed that “section 36 itself provides little guidance to the Tribunal on the circumstances in which it should exercise its discretion to grant leave to acquire an easement”.

Strict Application of section 36

The Tribunal endorsed the reasoning in JT Snipe Investments Pty Ltd v Hume CC (Red Dot) [2007] VCAT 1831, where the Tribunal noted:

the consequence of the section 36 process is the compulsory acquisition by one private landowner of an interest in the land of another private landowner. This may have potentially significant impacts for the landowner whose interest is sought to be acquired… Despite the potential for compensation to be paid, a provision that facilitates compulsory acquisition and affects private interests in land in this way must be very carefully considered and strictly applied.

(emphasis added)

The Tribunal indicated that just because the easements would be the most economical and efficient way to service the Applicant’s development, the purpose of section 36 is not to facilitate easements which are merely useful, desirable or convenient. Rather, if there are alternatives that still may be considered economic and efficient, albeit less economic and efficient than the proposed easement, they may be preferred above the grant of an easement.

The Tribunal was also swayed heavily by the amenity impacts of the easements on the Respondent. The Members espoused a wide view of amenity impacts, suggesting that “amenity” for the purposes of section 36 is not limited to “unpleasantness” but rather extends to a balancing of the net benefit of the easement to the Applicant, against the disadvantage to the Respondent. Despite the fact that the proposed easement would be located on a part of the Respondent’s property that is essentially unused and would need to be developed as a future road in accordance with the Precinct Structure Plan, the Tribunal considered that the impacts on the Respondent when he proceeds to develop on his land, outweighed the benefit for the Applicant.

This decision indicates a reluctance on the part of the Tribunal to interfere with the property rights of private landowners, unless the alternatives to the proposed easement are significantly less economical and efficient than the proposed easement. This strict approach is likely to be problematic particularly for developers in greenfield areas where it is necessary to service land through neighbouring property.

The Tribunal’s approach also indicates that relevant alternatives will include a requirement for land to not be developed until downstream infrastructure is in place. In this case, a permit condition requires stormwater to be limited to pre-development levels until ultimate wetland infrastructure further downstream is completed, irrespective of the development of the Respondent’s land. Therefore, the drainage easement was sought only for the purpose of constructing the subterranean pipes, to avoid damage to the Respondent’s land which could arise from pumping the water out of the basin to allow for surface-level drainage. Notwithstanding those challenges, the Tribunal was not satisfied that all potential alternatives had been fully explored.

Is there a role for public authorities?

Ultimately the infrastructure will be vested in public ownership. It is also noteworthy that the Council refused to endorse a further temporary pumping solution, which necessitated the Section 36 application by the private landowner.

The Tribunal noted in its decision that “in circumstances where there is a real public need for this infrastructure, then we would expect that a public authority would step in and use the powers available to them to acquire the relevant land and provide the infrastructure”.

How can we help?

HWL Ebsworth Lawyers has advised extensively on greenfield development, servicing issues and land use rights including easements. We would be happy to discuss the implications of the Tribunal’s decision in relation to your specific project.

This article was written by James Lofting, Partner, Alex Gelber, Partner and Shae Kirby, Law Graduate.

The decision currently refers to ‘Melbourne CC’, which is an error and is the subject of a current request to the Tribunal for a correction order.

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