How property developers are standing up (and increasing their yield)

What are our rights when it comes to pipes, cables and other authority items on our land?

Recently, I interviewed my colleague Anthony Whealy on this and found out how some developers and architects have stopped rolling over to councils, especially when it comes to stormwater pipes.

Anthony is a partner and leads the Planning and Environment team in NSW at law firm, Mills Oakley.

So we’ve been working together on a problem recently where council insisted, in the DA, on our client—let’s call her Harriet—relocating a stormwater pipe. A significant expense.

 She didn’t know about the pipe. Mostly because council did not have an easement on the title. 

 After a protracted process, council has backed down a bit. But it raised some interesting questions. So we’re here this morning to talk about this idea of councils (and other regulators) overstepping their rights in this area.

 Okay, so it centres on this idea of indefeasibility of title. Just to summarise it, it's the heart of the Australian property system. It means unless something's on title, it doesn't hold water (excuse the pun).

Yes that's right. Unless it's on title, then it's of no value at all, in terms of determining ownership of land, or interest in land.

Usually in property development there is a scenario where people claim to have an interest in someone else's land, perhaps because of verbal promises or handshake agreements.

And the courts say, “well you needed to have registered that on title.”

You might pay some stamp duty to record it, but the LPI has a record of title for a reason. To advertise to the world what the ownership of any parcel of land is.

So that's why I say it's at the heart at the property system. To have an interest in land it must be recorded on title. It's really quite simple when you put it that way.

If you think you've got an interest in land, go and get it recorded. I think it takes a month or so.

And of course, governments must follow the same laws.

That’s right. When governments try to appropriate parts of private land, they are subject to the same rules.

Let's say a local government thinks “well down the line we might want to widen our road. We might want to put it over part of that property”. So in their Local Environmental Plan, they will often show land that's marked for possible future acquisition. But what do the relevant laws say about that?

That would be regulated by the Just Terms Compensation Act. They actually have to serve you an acquisition notice and then, if they decide they do want to take an interest in your land, they have to actually acquire it. They must put it on title, before they can do anything with your land. Flagging their interest is not enough.

When it comes to things like pipes through people's land, it is the same. If council or any other authority wants to have an easement through your land, they must pay for it and put it on title. They cannot just point to an old pipe and say “well, it’s already there, and it’s our pipe, so that’s tough luck to you”. In most cases it will amount to a trespass, to be using someone else’s without permission. And to lay your infrastructure in someone else’s land without having their permission – and not having any interest recorded on title – is no exception. This is why we have a system under Australian Property laws of registering easements on title – so that future landowners can be aware of what exactly they are buying, and whether there are any encumbrances or other restrictions on the full and free use of the land.

This situation of councils (and other regulators) overstepping their rights in this area—how often does it come up?

It is probably very common—you would know better than I do as you guys working in this industry would see lots of these situations. It is probably hundreds of times a year.

But there are very few case precedents. I’m an expert in this area of law and in my 20-year career, I’ve only seen it come up a few times, and I think that has been because of a lack of understanding by property owners that they have rights in this regard, that councils or government authorities cannot just insist that they be granted free easements over private property, or that development projects be redesigned to avoid these existing council pipes that are not registered on title. I believe many landowners simply put up with being told that they have no rights in these scenarios.

Even in the times that I've dealt with it, and have gone through case law to try and work out the answers, it has barely been dealt with. There are some cases I can quote that touch upon aspects of it, but to me that means that there's a massive lack of knowledge out there about how to deal with scenarios like this.

How many people go off and seek legal advice, and get specialist's legal advice, and actually understand what their rights are?

I'd say that doesn't happen very often. But the last time it occurred for me, one ofmy clients was doing a big subdivision and it was worth it to them to take the council on. It was up at Warriewood. We did go to court, and the council ultimately backed down on the steps of the court.

So in that case, it took that much.

But it often doesn’t.

We see these problems a lot. For most clients going to court is probably not desirable. But signalling to council that you know your rights can create a lot of leverage during the technical negotiations we have.

Yes. You bring these council engineers to the table much faster. But the idea would be to convince a council to back down on the issue without needing to go to Court. Typically that is done by providing a fairly detailed legal advice, from a specialist, putting them on notice as to why their conduct is actually unlawful.

That’s right. So do you think going down this path a long-shot?

It has been quite effective in my experience.

The times when we have stepped in and had to, let's say, educate the councils about what their rights are, or are not, they do seem to have backed down. But perhaps not always immediately.

It's not like they say, "Oh well we have every right to have the pipe there, and you can't build over it." They turn around and say, "Well we don't know what to do. How about we negotiate something."

Most people hesitate to start down a potentially risky and expensive legal path. It’s hard to see the real cost of a forgone opportunity. And hard to know the probability of success. What’s the best place to start?

Something like what have we done here on Harriet’s matter. You went and obtained a letter of legal advice, and sent it to the council. It wasn't a huge outlay for her to get the council to change its mindset, and the planning panel that determined that DA, they obviously agreed with us completely.

Taking it to court; that's a much bigger deal obviously. So a good place so start would be: you get your lawyers to write a letter saying here are your rights. Then go and discuss them with the council. See if that just helps the negotiating position, and that's it.

Although we had another matter which went to the Land and Environment Court, where a Council wanted the whole development redesigned and moved away from a council pipe that ran through the client’s site with no easement. The Court agreed with us that Council’s position was “unreasonable in the extreme”. For that client, the costs of the Court action were a drop in the ocean, and the result was well worth the effort of going to Court. The Land and Environment Court is not necessarily an expensive court process, as far as they go. Naturally it depends on the size of the project. But that case, for example, related to quite a small DA for a dual occupancy. I can expand on that example later if you’d like me to.

So initially though, you could send a letter and really just issue a kind of low cost probe.

That’s right. For a few thousand dollars you can bring council to the table on a 6-figure question.

If that just assists to shift the council's whole attitude from being confident in their policies to one where they're not sure of themselves, then that's probably the best outcome. You don't have to go off to court. You don't have to have a big dispute. You just get somewhere better with the council.

I would say that the councils would roll over more often than not. Sometimes I think you just need their lawyers to say to the engineers, "What are you doing? We don't have any rights here."

If you can trigger that conversation internally, a well-researched legal letter can be great value.

What does it look like on the council side?

I’m just thinking about a friend who you know. He is a legal counsel for a major Sydney council. He probably doesn’t have this kind of knowledge to hand.  Would most councils be similar?

Good question.

They all have external lawyers that they hire on certain matters. Your friend is a smart guy with plenty of experience. He wouldn't need to go to external lawyers on everything but he was there at another council when we took them on.

It was a question that he and most lawyers don't know the answer to. You've got to really investigate and research a number of legal angles, and the first time I looked at it it was difficult, very difficult. We were tracing through old versions of old repealed Acts (in particular the now repealed Local Government Act 1919), to determine what right the council had to have even laid these pipes, back when they did, and then determine whether those rights carried trough to some current entitlement to keep the infrastructure buried within private property, and to continue to use it, in light of modern systems of legal title.

Now, your friend knows the upshot, as he’s seen us win this battle first-hand . Now he'd probably say to his colleagues at the Council,  “Yeah, the proponent is right. We don’t have the power to impose these requirements. Let’s not go there. It’s a bad look.”

But generally speaking, I think you would find that most councils don't know and they need to ask their lawyers. And their internal lawyers might go off and get a specialist solicitor or barrister's opinion. That's what would often happen – a legal opinion would be obtained from an experienced, specialist planning and environmental law solicitor or barrister. Certainly someone from o...