The case of M Salazar Properties Pty Ltd v Jeffs [2024] QCA 257 concerned an appeal to the Queensland Court of Appeal (Court of Appeal) in respect of the decision of the Supreme Court of Queensland (Supreme Court) in the case of M Salazar Properties Pty Ltd v Jeffs [2024] QSC 9 which imposed, under the statutory right of user provisions in section 180 of the Property Law Act 1974 (Qld) (PLA), an easement for the construction and maintenance of drains for stormwater subject to conditions (Easement).

The landowner benefitting from the Easement (Dominant Tenement Holder) appealed against some of the Easement conditions imposed by the Supreme Court. The landowner whose land is burdened by the Easement (Servient Tenement Holder) cross-appealed against the decision of the Supreme Court, alleging that the Supreme Court erred in making the Easement because it lacked sufficient clarity, in deciding that the Servient Tenement Holder's refusal to agree to the Easement was unreasonable, and in deciding the amount of an award of costs in favour of the Servient Tenement Holder (at [2]).

The Court of Appeal held that the Easement lacked sufficient clarity to enliven the Supreme Court's discretion under section 180 of the PLA to grant a statutory right of user. Thus, the Court of Appeal dismissed the appeal and allowed the cross-appeal.

The Servient Tenement land relevantly fronts Rosemary Street and has rear access to Perdita Street. The Dominant Tenement land also fronts Rosemary Street, but does not have rear access to Perdita Street (at [8]).

The Dominant Tenement Holder purchased the Dominant Tenement land with the intention of carrying out a residential subdivision and understood, based on town planning advice, that to facilitate the subdivision, water drainage would be required to collect stormwater runoff from the additional residences and carry it from Rosemary Street through to Perdita Street (at [9]).

Prior to the proceedings in the Supreme Court, the parties had unsuccessful negotiations about the potential sale of part or all of the Servient Tenement land to facilitate the relevant drainage works (see [10] to [13]). The Dominant Tenement Holder also made six offers of compensation, which were stated to be offers under the PLA, and commenced the Supreme Court proceedings after the third offer (see [14] to [16]). The Supreme Court relevantly held that offers one to five were not reasonable, but that the final sixth offer was reasonable because it was to the effect that it would be on the terms and compensation amount determined by the Supreme Court (at [17]).

The terms of the order sought in the Supreme Court were that the dimensions of the Easement area and proposed drainage would be in the terms and dimensions approved by the Ipswich City Council (Council) in a development permit for reconfiguring a lot (at [19]). A draft deed of easement presented to the Servient Tenement Holder as part of offers one to five also included a description of the Easement area to this effect, as well as clauses permitting the Council to require a new agreement or a variation to the agreement to ensure the Easement or its area is suitable for the drainage works (see [22] to [26]).

The Supreme Court held that it would not grant an easement on terms to be determined by the Council because it would lack sufficient clarity (see [40] and [82]). The Supreme Court determined, having regard to evidence from a civil and structural engineering expert as to the possible dimensions of the Easement and offers one to five, that the Easement sought was 27 m² (see [28] to [31]).

The Dominant Tenement Holder appealed the Supreme Court's order that the Easement be 27 m² and sought an order changing the description of the Easement to be for an area of no more than the area required for the drainage infrastructure required by the Council (see [53] to [61]).

The Court of Appeal held that the Supreme Court erred in giving the Easement an area of 27 m², because the Dominant Tenement Holder actually sought the Easement in dimensions to be determined by the Council and it was not for the Supreme Court to alter the proposal (see [30] and [83]).

The Court of Appeal also held the safeguards in sections 180(3), (4), and (6) of the PLA must be met before a Court can interfere with a landowner's rights (at [67]). In particular, those safeguards necessitate that a proposal for an easement has sufficient clarity to enable the Court to "properly assess the merits of the application" and "settle on conditions to accompany the grant" (at [71]).

The Court of Appeal held that the power of the Supreme Court under section 180 of the PLA cannot be vested in another authority such as the Council, because the legislature intended the power be vested in the Court (at [80]). It is not appropriate for an application to the Supreme Court to be variable at the discretion of a third party, and it would be better for an application to the Supreme Court to be made after the grant of the relevant development approval which can be conditional upon the Court making an order of easement (at [81]).

The Court of Appeal held that the Court's jurisdiction under section 180 of the PLA was not engaged because the Dominant Tenement Holder's application did not include a proposal that the safeguards under section 180 of the PLA could be properly assessed against (at [81]).

The Court of Appeal further rejected an argument by the Dominant Tenement Holder that the Supreme Court should have made an order permitting interference with existing infrastructure on the Servient Tenement land, as required by the Council in its discretion, because it would defer the Court's discretion under section 180 of the PLA to the Council (at [87]).

The Supreme Court held that the Dominant Tenement Holder's final sixth offer was reasonable because it was restricted to an area of 27 m² and would not "…cause any significant detriment, loss or harm to the [Servient Tenement Holder]. The infrastructure…to be constructed is mainly underground and not otherwise overly obtrusive. It is not adequately demonstrated that there is a real risk the permanent easement sought would interfere with any future development…" (at [38]).

The Supreme Court held that in circumstances where the Dominant Tenement Holder was prepared to pay whatever compensation determined by the Supreme Court, the Servient Tenement Holder's refusal was unreasonable in the sense required by section 180(3)(c)(i) of the PLA (at [43]).

The Servient Tenement Holder argued that the Supreme Court erred because it failed to take into account a relevant consideration, being that the terms of the Easement were not sufficiently detailed or were too broad (at [88]). The Court of Appeal agreed that this error was established (at [89]).

The Court of Appeal noted that the Supreme Court's finding that the Easement sought was 27 m² was an assumption and was not the easement proposed in the offers or by the Dominant Tenement Holder in the proceedings which were based on a future determination by the Council (see [90] to [92]). In those circumstances, the sixth offer was uncertain and it was not unreasonable for it to be refused (at [93]).

The Supreme Court later in the case of M Salazar Properties Pty Ltd v Jeffs [2024] QSC 86 made an order that the Dominant Tenement Holder and its director pay the Servient Tenement Holder's costs of the earlier proceedings in the amount of $40,000 (at [49]), which was based upon its findings in the earlier judgment that legal costs properly form part of the compensation payable as a consequence of the imposition of the Easement and a finding that the Dominant Tenement Holder and its director engaged in unreasonably aggressive and bullying conduct associated with the offers and proceedings.

The Dominant Tenement Holder appealed against the award of costs alleging that legal expenses are not costs contemplated by section 180(5)(e) of the PLA (at [97]). The Servient Tenement Holder cross-appealed on the basis that the costs actually incurred by the Servient Tenement Holder was $37,105.38 (at [49]).

The Court of Appeal held that the Servient Tenement Holder's costs were incurred after the commencement of the Supreme Court proceedings and the Court's discretion in respect of costs under section 180(5)(e) of the PLA is wide and unrestricted (see [97] and [98]). The Court of Appeal made an order substituting the Supreme Court's award of $40,000 with $37,105.38 (at [96]).

If the Supreme Court had decided to award costs in favour of the Servient Tenement Holder on an indemnity basis rather than fixing costs, the Court of Appeal noted that it would have considered it appropriate because the Dominant Tenement Holder's proposals were uncertain and thus incapable of succeeding and the conduct of the Dominant Tenement Holder and its director, which the Supreme Court held demonstrated "…an entitled and bullying attitude…which persisted even at trial", warranted costs on an indemnity basis (see [99] to [111]).

The Court of Appeal noted that section 180 of the PLA contemplates that there will be some animosity between an applicant and respondent but that does not mean an applicant has "free rein" in relation to an applicant's conduct when seeking an easement (at [111]).

The Court of Appeal, having found that the easement proposed by the Dominant Tenement Holder lacked clarity, made orders dismissing the Dominant Tenement Holder's appeal and allowing the Servient Tenement Holder's cross-appeal thereby setting aside the Easement. The Dominant Tenement Holder was ordered to pay the Servient Tenement Holder's costs of the cross-appeal (at [113]).

The Court of Appeal also made orders in relation to applications to adduce further evidence but these were not substantive in the Court of Appeal's reasons.

Litigants are reminded of the following important considerations in proceedings under the statutory right of user provisions:

• A proposal for a statutory right of user is to be sufficiently described so as to enable the Court to assess its merits according to the provisions of section 180 of the PLA. A proposal which defers to or is able to be varied by a third party authority is unlikely to be sufficiently described.

• The applicant for a statutory right of user bears the onus of presenting its proposal, and the Court's power under the provisions does not include the power to redescribe the proposal if it lacks clarity.

• That a development approval is yet to be obtained is not a bar to the imposition of a statutory right of user, so long as it is sufficiently described. However, the Court of Appeal's judgment in this case encourages applicants to obtain any relevant approval prior to making an application to the Court under the statutory right of user provisions.

• The Court has a wide and unrestricted power under section 180(5) to make orders as to costs, which includes the costs of the legal proceedings relating to the application for a statutory right of user.

• Applicants who engage in entitled and bullying behaviour when dealing with a potential servient tenement holder may open themselves up to indemnity cost orders.