DOOLEY v STURGESS CONSULTING LIMITED [2016] NZHC 1905

DOOLEY v STURGESS CONSULTING LIMITED [2016] NZHC 1905 [16 August 2016]IN THE HIGH COURT OF NEW ZEALANDNELSON REGISTRYCIV 2013-442-278[2016] NZHC 1905UNDER the Property Law Act 2007BETWEEN BRUCE ROSS DOOLEY AND JOHNROBIN HOLMES AS TRUSTEES OFTHE BOLINAS TRUSTPlaintiffsAND STURGESS CONSULTING LIMITEDDefendantHearing: 9 and 10 February 2016Appearances: R D C Hindle and L Almoayed for the plaintiffsJ M Fitchett for the defendantJudgment: 16 August 2016Reissued: 26 August 2016 and 18 October 2016Effective dateof Judgment:26 August 2016JUDGMENT OF MALLON JTable of contentsIntroduction ....................................................................................................................................... [1]Background facts ............................................................................................................................... [2]The legislation .................................................................................................................................. [12]Compensation .................................................................................................................................. [15]Approach to compensation ........................................................................................................... [15]Case law examples ....................................................................................................................... [21]Conclusions from these cases ....................................................................................................... [38]Evidence as to negotiations .......................................................................................................... [42]Do these negotiations assist with determining compensation ...................................................... [64]Valuation evidence ........................................................................................................................ [68]Legal costs .................................................................................................................................... [84]My assessment .............................................................................................................................. [86]Other terms ...................................................................................................................................... [96]Result .............................................................................................................................................. [100]Postscript........................................................................................................................................ [101]Postscript no 2: 18 October 2016 ................................................................................................ [107]Introduction[1] The Bolinas Trust, represented by Dr Dooley, seeks a registered right of way over a small piece of road which is located on the property of Sturgess Consulting Limited (SCL), represented by Mr Sturgess. The issue before me is the amount the Bolinas Trust must pay to SCL for the right of way. This is to be determined under the landlocked land provisions in the Property Law Act 2007 (the Act). Costs of this proceeding are also in issue.Background facts[2] The parties own neighbouring properties in the Puramahoi area of Golden Bay (located in the north west of the South Island). They are substantial properties with views over Golden Bay. The map below shows their location in connection with each other:[3] The property owned by the Bolinas Trust (the Dooley property) is outlined in pink. There is a residence and a guest house on the property. It was purchased by the Bolinas Trust in 2003. Dr Dooley and his family, who are from the UnitedStates, live there for part of the year, and in Florida for the rest of the year. The guest house is rented out from time to time. Dr Dooley has plans to construct a studio (an office, artist studio, entertainment and fitness facility) on the property and has obtained consent from the Tasman District Council to do so.[4] The property outlined in green is owned by Dominique de Borrekens (the de Borrekens property).1 There is a residence on the property. Ms de Borrekens lives there with her partner.[5] The relevant boundaries of properties owned by companies associated with Mr Sturgess are outlined in yellow (the Sturgess properties). The Sturgess properties which are adjacent to State Highway 60 (SH 60) are owned by SCL. They were purchased in 2009 and are used for farming purposes. There is no residence on these properties. The Sturgess property between the Dooley and de Borrekens properties is owned by Lone Star Farms Limited (a company controlled by Mr Sturgess). It was purchased in 1995. It is farmed in conjunction with the SCL properties. Mr Sturgess has a residence on the property although his principal residence is in Nelson. Mr Sturgess is also from the United States, but he has lived in New Zealand for many years.[6] The red line is SH 60 which runs between Collingwood (in the direction of the top of the map) and Takaka (in the direction of the bottom of the map). The black line is a formed legal road which connects SH 60 with the Dooley and de Borrekens properties (the legal road). It is understood to have been formed by the person who originally subdivided the relevant land. The dotted line is a paper road (the paper road). From the point marked A to the point marked B, which is a distance of about 200 m, the paper road is a formed legal road. From the point marked B to the point marked C, it is a paper road only.[7] Prior to 14 December 2011, vehicular legal access to the Sturgess, Dooley, and de Borrekens residences was over the legal road. On 14 December 2011 there1 The property is registered in the name of Ms de Borrekens and Ross McKechnie, who aretrustees of the Te Wai Kaha Trust, which is understood to be Ms de Borrekens' trust.was severe rainfall which caused part of the legal road to subside.2 This was part way along the portion of the legal road which divides the SCL properties and before the legal road reaches the Dooley property. This subsidence prevented vehicular access across that part of the road. Mr Sturgess arranged for Dr Dooley and Ms de Borrekens to have temporary access over across a farm track on the Sturgess property.[8] By March 2012 Mr Sturgess had formed a deviation around the area ofsubsidence. This deviation was constructed on SCL's land on the western side of thelegal road. The deviation connected with the legal road before and after the subsidence so as to once again enable continuous vehicular access from SH 60 to the Dooley, de Borrekens and Sturgess residences.[9] It is now accepted that the deviation over SCL land provides the only practical means of vehicular access to the Dooley property.3 It is accepted that, without this access, the Dooley property is landlocked. Mr Sturgess has always permitted Dr Dooley to use the newly formed road to access his property. However, despite negotiations over a number of years, the parties were unable to resolve the terms on which this access would be formalised.[10] The parties therefore seek an order from this Court granting reasonable access to the Dooley property and specifying the conditions on which that access is to be granted. By the time of the closing submissions they had resolved the terms of access. The issues that remain for consideration are compensation and costs:(a) Mr Sturgess seeks $167,931.95 plus interest in compensation made up as follows:(i) $21,763.89 for the costs in forming the access;(ii) $6,715 for conveyancing expenses;2 The uncontested expert evidence is that, although the immediate cause of the subsidence was the severe rainfall, a contributing factor was a blocked culvert. Inadequate formation of the road by the previous owners was probably also a factor.3 Throughout the course of the negotiations other options were raised.(iii) $2,875, being one third of the diminution in value of SCL'sland (from loss of grazing);(iv) $25,000 for betterment to Dr Dooley's land;(v) $100,000, being 50 per cent of the increased value to DrDooley's land from obtaining legal vehicular access asassessed by Mr Bowie (a valuer); and(vi) $11,578.06 for legal costs incurred by Mr Sturgess from the date of the slip to the date of the issue of proceedings.(b) Each party says the other should pay increased costs to them.[11] Ms de Borrekens has not sought any order under the Act. She does not havea registered right of way over the newly formed access. Mr Sturgess' advises that hehas permitted her to use the newly formed access without requiring any payment towards the costs of forming it or otherwise. He has done so on the basis of mutually cooperative good neighbourly relations and, he believes, a verbal agreement that he has a first right of refusal over her land.The legislation[12] Section 328 provides the Court with jurisdiction to make an order for access as follows:328 Court may grant reasonable access to landlocked land(1) A court, on an application under section 327, may—(a) make an order granting reasonable access to the landlocked land; and(b) for that purpose, specify in the order that—(i) any other piece of land (whether or not adjoining the landlocked land) must be vested in the owner of the landlocked land; or(ii) an easement over that other piece of land must be granted for the benefit of the landlocked land.[13] The power is therefore discretionary. The Court "may" make an order granting "reasonable access". Section 329 then specifies what the Court must haveregard to in determining an application for reasonable access, as follows:329 Matters court must consider in determining application for order for reasonable accessIn determining an application for an order under section 328, the court must have regard to—(a) the nature and quality of the access (if any) to the landlocked land at the time when the applicant purchased or otherwise acquired the land:(b) the circumstances under which the land became landlocked:(c) the conduct of the parties, including any attempts they have made to negotiate reasonable access to the landlocked land:(d) the hardship that would be caused to the applicant by the refusal of an order, in comparison with the hardship that would be caused to any other person by the making of an order:(e) any other relevant matters.[14] If the Court exercises its discretion to make an order for reasonable access it can do so subject to conditions. Section 330 provides:330 Court may impose conditions in making order for reasonable access(1) In making an order under section 328, a court may impose any conditions it thinks fit, including conditions relating to the following:(a) the payment of reasonable compensation by the applicant to any other person:(b) the exchange of any land between the applicant and any other person:(c) the fencing of any land and the upkeep and maintenance of any fence:(d) the upkeep and maintenance of any land over which an easement is to be granted:(e) the carrying out of a survey of any land:(f) the time within which any work necessary to give effect to the order is to be carried out:(g) the execution of any instrument or the doing of any other thing necessary to give effect to the order:(h) any other matters that the court considers relevant, including any question arising under section 331.CompensationApproach to compensation[15] The issue of compensation arises under s 330(1)(a). Compensation can be imposed as a condition of an order granting reasonable access. The Court is not required to order compensation, as s 330 provides it is to be ordered if the Court"thinks fit". If compensation is ordered, this must be "reasonable" compensation.Beyond that, it is necessary to obtain guidance from case law.[16] The leading authority on how compensation is to be assessed is the Court of Appeal decision of Jacobsen Holdings Limited v Drexel.4 It appears that prior to this case, there were differing views in the High Court as to how compensation should be approached.5 The High Court Judge had followed the approach which involved calculating compensation solely on the basis of the loss or detriment to thedefendant's property in providing the legal access to the plaintiff.[17] The Court of Appeal overturned the High Court decision. As Cooke Pexplained, the High Court's approach did not take into account what an owner lost by a compulsory order granting access, which was the potential to bargain with the plaintiff, as a purchaser of the access, for whom that access has particular value. The correct approach was to consider what a willing seller might reasonably expect to obtain from a willing buyer in the particular circumstances.6 That hypothesises a friendly negotiation rather than one where there is compulsion by either side. As Cooke P explained:74 Jacobsen Holdings Ltd v Drexel [1986] 1 NZLR 324 (CA).5 At 332.6 At 328.7 At 329. See also Somers J at 333: the general purpose is to strike a "reasonable compromise Compulsion on either side is to be disregarded: the seller is not to be treated as one forced by circumstances to sell his potentiality for anything he can get, the buyer is not to be treated as one driven to buy. It is the price that willing parties would arrive at in friendly negotiation that has to be found, on such materials as are available.[18] The Court is not required by the section to award compensation. As Cooke P said:8Under the section the Court is not bound to award compensation, but usually it will be equitable between the parties to do so and to assess it on the footing of what a willing grantor and grantee of an easement or vendor and purchaser of the fee simple would agree in a friendly negotiation.[19] As to what may be relevant to the willing seller and willing buyer negotiation Cooke P said:9In assessing compensation purely sentimental matters have to be put aside: ... So too of course any question of personal impecuniosity or affluence: ... But the present case does not raise such issues. Subject to those qualifications, all factors of benefit or detriment on either side are material under the section, including for instance any inconvenience or disturbance that the owner of the servient or transferred land may suffer and any advantage that he may gain. These are all considerations which would legitimately influence the parties in the hypothetical friendly negotiation. They all go to what sum is reasonable as the value or price or consideration or compensation – terms which seem to me to be interchangeable and identical in effect when a fair figure has to be arrived at as between the parties and there are no special limiting statutory provisions.[20] Accordingly the approach to compensation is:(a) Compensation need not always be ordered (it is discretionary).(b) However it will ordinarily be fair to order compensation, because the defendant (the provider of access) is required by the Court to provide something of value to the plaintiff (the owner of the landlocked land) and potentially to the detriment of the defendant.between two property owners who do not agree"; and at 334 "an inquiry into compensation mustinclude consideration of the sum which a reasonable purchaser placed in the position of the [plaintiffs] would be willing to pay for the right of way. This will no doubt reflect the need for the way and the increase in value which it gives the landlocked area. But the hypothesis also includes a reasonable seller so that no case of "blackmail", of a price forced to unreasonable heights by necessity, can arise." See also Casey J at 335.8 At 329.9 At 329.(c) The amount of compensation is the fair consideration which a willing buyer and willing seller would agree to in a friendly negotiation.(d) In ordering compensation it is relevant to consider both the benefits and detriments to either side in providing the access because they are factors a willing seller and a willing buyer would take into account.(e) But the amount ordered must be "reasonable" in the circumstances and not an amount which is forced to "unreasonable heights by necessity".10Case law examples[21] The cases that follow the Court of Appeal's decision in Jacobsen illustrate the application of this approach in the particular circumstances of the case. First, is theJacobsen decision when it was referred back to the High Court Judge to determine compensation.11[22] The circumstances were that the plaintiff's property had de facto access over the defendant's land for many years prior to the plaintiff's purchase of the property.This access came to an end when the plaintiff was developing the property for a commercial enterprise. The plaintiff was using the road to convey materials, machinery and workmen. The parties had a disagreement and the defendant refused to allow access until the plaintiff paid $45,000.[23] The defendant's valuation evidence was that having legal access increased the value of the plaintiff's property by $50,000. The plaintiff's valuation evidencewas that legal access increased the value of its land by only $2,000. The High Court Judge considered the increase in value was likely to be in the region of $30,000. Heconsidered the detriment to the defendant's land to be "negligible" as it was a "strip of poor land at the back of the farm".12 On the basis of the willing buyer and willing10 Jacobsen Holdings Ltd v Drexel, above n 4, at 329 (as cited at above n 7).11 Jacobsen Holdings Ltd v Drexel [1987] 2 NZLR 52 (HC).12 At 54.seller approach, which the Judge found difficult to apply on the evidence, he fixed the amount of compensation at $6,000.[24] That sum was, as I understand it, exclusive of the costs of the survey and any expenses incidental to the creation and registration of the easement. Exclusive of these costs, the defendant received by way of compensation 20 per cent of the increase in value of the plaintiff's land.13 In this case the plaintiff had purchased the land which had de facto, but not legal, access. Access was needed for a commercialenterprise. The access was only required by the plaintiff's land. The accessprovided no value to the defendant's property, negligible detriment to the defendant'sland, and no value to any other property.[25] The next case to reach the Court of Appeal was Lowe v Brankin.14 This case involved a developer who had purchased land zoned residential knowing that it did not have vehicular access to enable the land to be developed. A right of way needed to be obtained over a lane which already provided access to nine other residential properties. It was accepted that the developer would pay the costs of upgrading the lane, which were estimated to be approximately $68,510.25.[26] There was evidence that the increased value of the developer's land withlegal access over the lane was between $250,000 and $500,000. The owners sought compensation of $300,000. The Court of Appeal considered this was too much. Iteffectively sought all or a considerable portion of the developer's gain. The Courtconsidered the owners must be taken to know that the developer would pay a premium for access, but the developer would also consider there needed to be a gain for him. The Court settled on $125,000 as the appropriate level of compensation if the nine owners had remained in the case. This was the figure which at various points of time the valuers for both parties had arrived at. This was reduced to $100,000 because two of the owners had not pursued the matter.[27] As I understand it this sum was intended to also cover the owners' loss ofamenities in giving up their exclusivity over the lane, transaction costs in the form of13 The detriment to the defendant's land was considered to be $500. The survey and legal costs inobtaining the easement were around $1,250. See Jacobsen Holdings v Drexel, above n 4, at 329.14 Lowe v Brankin (2005) 6 NZCPR 607 (CA).their own time and attention in dealing with this matter and legal costs prior to the issue of proceedings. The seven owners therefore received by way of compensation approximately 27 per cent of the mid-point of the estimated range of the increased value of the developer's land but this sum was inclusive of all detriments to theowners.15[28] The next case to reach the Court of Appeal was Hajnal v Asmussen.16 In thatcase the respondent's property had vehicular access by a driveway that ran across the appellant's property. Successive owners had used that driveway for more than 50years but there was no formal right of way in place protecting that use. The appellant purchased the land knowing this was the position. He had plans to develop his residential property utilising the driveway which provided vehicular access to therespondent's property. The High Court ordered a right of way over the driveway andawarded compensation to the appellant of $35,000. On appeal the compensation was increased to $50,000.[29] The diminution in value of the appellant's property from the land for thedriveway being subject to the right of way was assessed in the High Court as being$30,000. The increase in value of the respondent's property from having legalvehicular access was considered to be $55,000 (the current value was $305,000 and with legal access it would be $360,000). The Court of Appeal considered a willing buyer and willing seller would be likely to agree to price that included more than $5,000 for the benefit the respondent received from obtaining legal vehicular access. The price would also take into account any dangers of over-capitalisation and the respondent's expenses in bringing the driveway up to Council standards. There wasno evidence as to the amount of the latter. The Court decided on the $50,000 figure because it considered an offer made by the respondent to pay this sum provided good evidence of what a willing buyer would pay.[30] The compensation awarded to the respondent therefore included around 36per cent of the increased value to the plaintiff's property.17 This is a greater15 The estimated range of the increased value was $250,000 to $500,000. The mid-point of this is $375,000.16 Hajnal v Asmussen [2010] NZCA 410, (2011) 12 NZCPR 169.17 The $50,000 compensation included a diminution in value of the defendant's land of $30,000. The amount of compensation for the increase in value to the plaintiff's land was thereforearound $20,000.percentage than that awarded in Jacobsen and Lowe. The circumstances are similarin that the legal access over the appellant's property had been provided for many years. The detriment to the appellant's property was greater than in Jacobsen andLowe (because of the plans for the appellant had for the property) and the access was needed by the respondent for a residential property rather than, as in Jacobsen andLowe, for commercial activities. The outcome in Hajnal is explained by theevidence of a willing buyer's view from the $50,000 offer and that a smallercontribution to the increased value of the respondent's property (as ordered in theHigh Court) was regarded as insufficient.[31] The next Court of Appeal case is MacRae v Walshe.18 In that case theMacRaes had a registered right of way over Mr Walshe's property but it permitted use by one dwelling only. The MacRaes subdivided their property and contended they could still rely on the right of way for both properties. Alternatively they claimed relief under the Act to amend the right of way so as to enable access to both properties.19 The High Court granted the application for relief and ordered compensation of $289,365.75.20 This was a figure derived from the evidence of oneof three valuers who gave evidence. It comprised the full amount of, the valuer'sview of, the diminished value of Mr Walshe's property in providing the additional right of way ($90,000) and 50 per cent of, the valuer's view of, the increased value of the MacRaes' property ($370,000).[32] The Court of Appeal decreased the compensation payable to $100,000. Thisfigure did not include any amount for a decrease in value of Mr Walshe's property.This was because the Court was not satisfied there would be any decrease. The location and nature of the access meant that the Walshe property would be unaffected by increased traffic over the driveway and in any event offset by the improvement to the driveway by the MacRaes sealing it. The compensation sum was derived by applying 27 per cent of the increase in value of the MacRae property. The Court of18 MacRae v Walshe [2013] NZCA 664, (2013) 15 NZCPR 254.19 The claim was commenced by Mr Walshe contending the MacRaes were in breach of the terms of the right of way. The MacRaes counterclaimed for relief under s 317(2) of the Act. The Court of Appeal accepted the approach to compensation under this section should be the same as that which applies under s 330 of the Act.20 It also awarded compensation for loss and inconvenience in respect of matters which the Court of Appeal held were not recoverable as compensation.Appeal did so noting that the valuers for Mr Walshe considered it would beappropriate to apply 50 per cent to the increased value whereas the MacRaes' valuer considered 10 per cent was appropriate, and neither side's evidence was tested incross examination. The 27 per cent was close to the mid-point of the percentage put forward by each side.[33] The percentage applied is similar to the percentage applied in Lowe, a little above that applied in Jacobsen and lower than Hajnal. The facts have greater similarities to Lowe than the other cases. The MacRaes had carried out the subdivision with the knowledge of the restriction of the right of way and had sold the subdivided lot (presumably with a view to realising the value of their property). Unlike Hajnal, evidence of prior negotiations was regarded as not helping theCourt's assessment of reasonable compensation. This was because the negotiationstook place many years ago, those negotiations were between different parties, they had not resulted in any agreement, and it was not shown that they were based on any reliable valuation framework or the applicable compensation principles. The sum awarded was not disproportionate to the overall value of the property on the lot retained by the MacRaes (for which the valuations in evidence varied from $637,500 to $1,500,000).[34] The next Court of Appeal decision is Squally Cove Partnership v Wagg.21 It does not particularly assist in the present case. No concluded view on compensation was given because the Court of Appeal declined to exercise its discretion to award any relief under the Act. The decision does indicate, however, that compensation will ordinarily be granted where the right of way interferes with the private rights of a landowner and any contrary conclusion based on unusual circumstances would need to be properly justified on the evidence.2221 Squally Cove Forestry Partnership v Wagg [2013] NZCA 463, [2013] 3 NZLR 793.22 The High Court (a decision of mine) had granted relief and confined compensation to the loss oftrees on the appellant's property potentially affected by the grant of relief: Wagg v Squally Cove Forestry Limited [2012] NZHC 2763, (2013) NZCPR 798. That was for a number of particular factual features of the case, as I found them to be on the evidence before me, not present in the usual case. While not reaching a concluded view on the matter, the Court of Appeal considered it highly arguable that compensation would have been awarded and that my conclusion was not supported on the evidence (at [54]).[35] Two decisions of the High Court illustrate unusual features which may warrant the conclusion that compensation should not be granted. The first isReikorangi Forest Ltd v Charman.23 In that case a number of landowners had vehicular access over a private road which was subject to a registered easement. In some minor respects the road deviated from the easement as it passed through thedefendant's property. The defendant sought to block the plaintiff's access over theirproperty but did not seek to do so in respect of the other five landowners who used the area.[36] The second case is Macken v Jervis.24 In that case, in subdividing a property, it was intended to create two strips along a common driveway for each of the properties but subject to mutual rights of way. However, a mistake was made when completing the subdivision such that one of the properties did not have a right of way over the other. Although the Court declined relief, it indicated that an appropriate solution was mutual rights of way without the need for any money to change hands.[37] Finally, the High Court's decision in JT Jamieson & Co Ltd v Inland Road Ltd provides an illustration of circumstances where a small percentage of the increased value to the property gaining access formed part of the compensation.25 Inthat case, due to changes in possession from the exercise of mortgagees' rights, theland had become landlocked. The cost of constructing new access was high ($120,000) relative to the total value of the land ($175,000). This cost would be borne by the party seeking access. In addition the Court ordered compensation of $64,000 comprising $54,000 for the detriment to the party on whose land the access was to be provided over and $10,000 for the increased value of the land which would gain access. The $10,000 represented 12 per cent of the amount of that increase (an increase assessed as being $82,500). The smaller percentage than in Lowe, MacRaeand Jacobsen is explained by the special features of that case: namely the significant cost of constructing the access relative to the value of the land and the significantdetriment to the defendant's land.23 Reikorangi Forest Ltd v Charman HC Wellington, CIV-2004-485-1255, 15 October 2007.24 Macken v Jervis [2014] NZHC 3408.25 JT Jamieson & Co Ltd v Inland Road Ltd [2013] NZHC 3313, (2013) 16 NZCPR 237.Conclusions from these cases[38] The cases indicate that the plaintiff will ordinarily need to pay the following by way of compensation:(a) The costs associated with obtaining legal access. This will include the cost of constructing or upgrading the access and legal costs directly associated in granting the legal access. Legal costs up to the issue of proceedings are also potentially recoverable.(b) All of the diminution in the value of the defendant's land attributableto granting legal access to the plaintiff, if there is any such diminution properly proven on the evidence.(c) Around 20 to 36 per cent of the increased value of their land from obtaining legal access.26[39] A different approach might be appropriate where there are special circumstances:(a) These special circumstances might relate to what a willing buyer and willing seller would agree to in the situation. For example, where a payment on the above approach would lead to an overall payment which is too great relative to the cost of forming access and the value of the property; or27(b) they might relate to whether compensation is payable at all. For example, where legal access was always intended but a mistake was made in attending to its creation.28[40] Overall the Court is seeking to arrive at a fair price for the legal access in the particular circumstances of the case. The assessment is not an exact science.26 Jacobsen Holdings Ltd v Drexel, above n 4; Lowe v Brankin, above n 14; Hajnal v Asmussen, above n 16; MacRae v Walshe, above n 18.27 JT Jamieson & Co Ltd v Inland Road Ltd, above n 25.28 Macken v Jervis, above n 24.Valuation evidence is relevant when assessing the loss to the defendant and the gain to the plaintiff if legal access is granted over the defendant's land. Valuationevidence may also extend to a view about the overall sum that a willing buyer and willing seller might agree to in the circumstances.29 Negotiations between the parties might also assist in determining the compensation that would be agreed between a willing buyer and willing seller.30 However such evidence may be unhelpful if the negotiations have not been based on any reliable valuation framework or on the applicable compensation principles or there are other reasons why they do not provide good evidence of a willing buyer/willing seller negotiation.31[41] I consider the evidence in light of these conclusions.Evidence as to negotiations[42] The farm track which was made available to the Dooley and de Borrekens properties was a temporary measure only. It was therefore necessary for the parties to consider a more permanent solution. Accordingly on 11 January 2012, one monthafter the slip, Mr Sturgess' solicitors wrote to the Dooley and de Borrekens trustees seeking proposals as to a permanent solution to restoring vehicular access.[43] Reinstating the legal road was quickly ruled out as impracticable due to the estimated cost which was in excess of $400,000.32 Possible options raised on behalf of Dr Dooley were to create usable access over the paper road or to reach an agreement on terms for a grant of a right of way over whatever permanent access Mr Sturgess established for his own purposes. Mr Sturgess favoured the second of those while raising the issue of compensation. Dr Dooley carried out preliminary work on how access over the paper road might be achieved as a back drop against which to consider the economics of the right of way option.3329 Lowe v Brankin, above n 14, at [39]; and MacRae v Walshe, above n 18, at [65]-[71].30 Hajnal v Asmussen, above n 16.31 MacRae v Walshe, above n 18.32 Mr Sturgess obtained a "guesstimate" in the region of $600,000.33 Even at this early stage of the matter, the correspondence suggests some annoyance on each side about the actions of the other. This was against the background of matters in the past where the actions of one or the other of Dr Dooley and Mr Sturgess had caused annoyance to the other.[44] On 10 February 2012 Mr Sturgess' solicitors advised that Mr Sturgess had decided to form an access around the area of the legal road which had subsided. The work would be carried out at his cost. It was proposed that the Dooleys and the de Borrekens would have permission to use the access but this access could be terminated by Mr Sturgess. The owners could later avail themselves of the provisions of the Act if they wished to obtain legal vehicular access or if Mr Sturgess sought to cancel his permission to use the access. This was accepted as a sensible solution for providing interim access.34[45] Mr Sturgess proceeded to create the deviation around the subsided part of thelegal road. By letter dated 6 December 2012 Mr Sturgess' solicitor advised that thecost of forming the new access was $85,374.02 (inclusive of GST). He advised there were two options available to Dr Dooley:(a) One option was continuing the current de facto access subject to Dr Dooley paying a one third share of the costs of the new access (that is, $28,458.01). This would provide a licence personal to the Dooley interests which would not be transferrable to any purchaser. The licence could be withdrawn on three months notice.(b) The other option was legalised vehicular access. This would involve the grant of a right of way subject to usual terms including paying a one third share of future maintenance expenses. In return the Dooley interests would pay one third of the costs of the new access and"substantial" compensation which could be fixed by the High Courtunder the Act or by arbitration.[46] Dr Dooley wished to pursue legalised vehicular access although neither party sought to have the matter immediately determined by the Court or by arbitration. Instead lengthy negotiations over the basis on which legal access would be granted34 In agreeing to proceed on this basis, Dr Dooley responded to concerns raised by Mr Sturgess.These were about trees which had been trimmed on Mr Sturgess' property by Dr Dooley (Dr Dooley apologised) and the placing of a caravan (being used as a builders' shed) on Dr Dooley'sproperty which Mr Sturgess regarded as an eyesore (Dr Dooley would look at moving it out of the view of Mr Sturgess). These matters are relevant only in that they are part of the background which gave rise to some annoyance between the two parties.began. The first proposal discussed a transfer of part of Dr Dooley's land to Mr Sturgess, by way of a boundary adjustment, in exchange for a right of way over the new access. A discussion about this took place in March 2013 between Mr Sturgess and Dr Dooley. They reached a "hand shake" agreement about this although, at leastso far as Dr Dooley was concerned, this was subject to the approval of their respective wives.35[47] The land to be transferred to Mr Sturgess overlooked his property. It was on this land that Dr Dooley planned to build his studio. A caravan, used as a builder'sshed, was positioned on that land. In addition to the rearrangement of boundaries, the proposed agreement included that Dr Dooley was not to further subdivide his property without Mr Sturgess' consent, the caravan was to be re-sited out of view ofMr Sturgess' property, and Dr Dooley could build his studio elsewhere on hisproperty. Mr Sturgess was also to make a payment to Dr Dooley of $10,000 and the Dooley property would pay 25 per cent of reasonable ongoing maintenance costs of the legal road (rather than the one third originally proposed in the 6 December 2012).[48] This agreement was set out in a letter dated 26 March 2013 from MrSturgess' solicitor. There is no dispute that this letter accurately set out what had been discussed.36 The letter attached a plan identifying the area of the Dooley property that would be subject to the boundary adjustment. Evidence was given at the hearing about whether this plan represented what had been discussed but this was not material to the reason this agreement did not proceed. Rather it did not proceed because Dr Dooley received advice from his co-trustee that the value of the land to be transferred was considerably greater than the amount he would have to pay as compensation if the matter was determined by the Court. This was conveyed to Mr Sturgess by letter dated 22 April 2013. It was proposed that compensation be determined by issuing court proceedings.[49] This led to further communications over the next few months about the value of the land which was to have been subject to the boundary adjustment. In this35 Mr Sturgess did not recall this reservation, but at the hearing he did not dispute Dr Dooley'srecollection about this.36 A letter from Dr Dooley's co-trustee dated 22 April 2013 confirmed it set out the general thrust of what had been agreed.context Dr Dooley's solicitor/co-trustee referred to earlier discussions between Dr Dooley and Mr Sturgess concerning a possible sale of the land which had taken place in 2009.37[50] Against the background of the 2009 negotiations, Dr Dooley's view was thatthe value was $300,000 to $400,000 in the present context. His solicitor and co- trustee advised that negotiations over a boundary adjustment might be progressed if Mr Sturgess was prepared to contemplate a figure in that range. He also advised that if the matter proceeded to court determination, there was a real prospect the Court would order only nominal compensation. However, on a without prejudice basis, he advised they would accept that compensation in the region of $25,000 might be ordered by the Court.[51] In response Mr Sturgess gave two months notice that permission to use the access was withdrawn and proceedings would need to be issued by the Dooley interests. Mr Sturgess subsequently agreed to allow the existing access to continue so Dr Dooley would not be required to obtain injunctive relief. Correspondence between the solicitors continued about the basis on which the Court would ordercompensation. On 16 July 2013 Mr Sturgess' solicitor sought Dr Dooley's "best" offer. Dr Dooley's solicitor considered the parties were too far apart to respond tothat invitation and the present proceeding was commenced on 25 July 2013.[52] The next attempt to resolve the matter was a proposal to settle the matter onwhat was described as "a good neighbour basis". This proposal was set out in a letter dated 4 September 2013 from Mr Sturgess' solicitor. It was proposed that DrDooley would make a payment of $42,300. This sum was to cover the one third37 Dr Dooley obtained a valuation in July 2009 of the same land under discussion in March 2013, being an area of 8,500 m2, if subdivided, for $510,000. Dr Dooley then offered the land to Mr Sturgess for $410,000. That offer was on the basis that Dr Dooley would consent to any application for subdivision or for a second dwelling on the land and Mr Sturgess would have a first right of refusal to purchase his remaining property for a period of two years. Alternatively Mr Sturgess could purchase the land for $280,000 on the basis that there was a restriction on any building on the site for a period of 25 year. In January 2010 Mr Sturgess counter-offered. He advised the land had been appraised at $175,000 as is and $370,000 if on a separate title. He offered to purchase the land for $200,000 and he would pay an additional $200,000 if it ever became separately titled or had a house built on it. However the plan attached to this offer was much larger than the 8,500 m2 area which Dr Dooley had offered. This annoyed Dr Dooley so he decided not to respond and not to progress these negotiations further at this time.share of the costs of forming the access ($28,458.01) plus legal fees incurred by Mr Sturgess and yet to be incurred up until registration of the right of way.[53] This proposal was subject to a number of terms, which were set out in the letter, including:(a) The Dooley interests' obligations as to future maintenance of the right of way would be 20 per cent, with the Sturgess and de Borrekens'interests covering the other 80 per cent.(b) The documentation would include a term that only one user of the Dooley property was to have the benefit of a right of way. Effectively, therefore, there would be a prohibition against future subdivision of the Dooley property without the consent of Mr Sturgess.(c) The right of way would be surrendered if there was a change of use or new commercial use in respect of the Dooley property.[54] This offer was accepted "in principle" by letter dated 16 September 2013from Dr Dooley's solicitor. This acceptance was subject to approval of the easement documentation. As to that, it was proposed that there be provision for a substitute easement over the SCL land if the present access suffered the same fate as the legal road. It was also proposed that payment of the $42,300 be made at a slightly later date.[55] In the ensuing correspondence on the detail of the agreement, a settlement on this basis unravelled:(a) In the course of this correspondence Mr Sturgess' solicitor soughtpayment of further costs on the basis that the 4 September 2013 estimate of costs had understated them and there was an issue over GST. Dr Dooley agreed to these items, bringing the amount to bepaid up to $44,400 (GST inclusive), notwithstanding he regardedthem as "shift[ing] the goalposts".(b) For his part, however, Dr Dooley sought to review the "change of use" prohibition. He explained he understood its purpose was to reinforce the prohibition on subdivision which he considered to be "asignificant concession, and which in itself would have a detrimental effect on the future value of the property". If the "change of use"prohibition was to extend beyond this, it was not acceptable to him.[56] The "change of use" prohibition was the ultimate sticking point in thenegotiations during this phase. The key positions taken by each side involved:(a) A letter dated 4 October 2013 from Mr Sturgess' solicitor explainingthe change of use prohibition was more important to Mr Sturgess than the subdivision prohibition. This was because Mr Sturgess had received resource management advice that the Dooley property would not be able to get Council consent for a subdivision. Mr Sturgess had no objection to the current use (residence and the cottage rental business) but did not want further buildings to be erected and rented out nor for there to be any increase in commercial use of the property.(b) Dr Dooley indicated he might wish to expand the tourist accommodation and he still had plans to construct his proposedstudio. Other uses were prohibited by the Council's resourcemanagement plan and on this basis the change of use condition was not needed.(c) For his part, Mr Sturgess remained insistent on the no change of usecondition if a right of way was to be granted "without compensation"(that is, on the basis of the $44,400). He invited Dr Dooley to put forward his position on compensation if there was to be no prohibition on change of use in the right of way documentation.[57] Further communications during this period did not resolve the matter. By this stage each side was finding the position of the other a source of aggravation. Mr Sturgess valued his privacy and had been interested in a resolution which achieved that. The agreement discussed in March 2013 would have met his objectives in this regard. Alternatively, the 4 September 2013 "good neighbour" proposal, with thechange of use prohibition, would have similarly met his objectives. He regarded Dr Dooley as having agreed to matters only then to withdraw from them. Dr Dooley, however, regarded Mr Sturgess as seeking to take unfair advantage of the situation caused by the severe rainfall event.[58] In January and February 2014 Dr Dooley offered to sell the Dooley property to Mr Sturgess for US$2.3 million on the basis that it was also being marketed internationally. Mr Sturgess regarded Dr Dooley as having an unrealistic view of the value of his property. He offered to purchase the property on the basis of an agreed valuation process. Dr Dooley did not agree to this. With no progress on a resolution SCL filed a statement of defence in the proceeding. This pleading set out that Dr Dooley had not paid anything to the costs of forming the deviation.[59] It appears that this pleading led to Dr Dooley tendering payment of $28,458.01 on 21 March 2014 for a one third share of the costs claimed for forming the road and legalising access. In tendering this payment it was noted that this payment effectively included $2,500 towards compensation. This was because the one third share of out of pocket expenses claimed, included a one third share of the value of grazing land lost by the creating the access over SCL's property. It was explained that, in tendering this payment, Dr Dooley was "not asking that it be received in settlement of the compensation issue" which remained to be determinedby the Court or arbitrator.3838 A letter dated 23 July 2014 referred to the Dooley interests having "not only offeredcompensation of $2,500 but they have paid it along with their one third share of the costs offorming the route that is being used at present." Counsel for the Dooley interests contended this may have been an error and was intended to refer to an earlier offer of $25,000 which had been referred to in earlier in the negotiations and also in the pleadings which had been filed. I do not agree. It does not make sense in the context of the sentence, which refers to the $28,458.01 tendered payment which included $2,500 compensation.[60] After this there followed a series of "without prejudice save as to costs"letters exchanged by the solicitors:(a) By letters dated 20 and 24 October 2014 Mr Sturgess made an offer of settlement. Privilege has been claimed over the contents of that offer.(b) A further offer of settlement was made on 7 November 2014. This offer claimed privilege over the compensation figures but set out other terms of the offer. This included that Dr Dooley would pay 30 per cent of maintenance costs and SCL would have a right of first refusal to purchase the Dooley property. This offer included a sum of compensation to be paid that was less than the sum in the October offers, which did not include the first right of refusal condition.(c) A few days after this the tendered payment of $28,458.01 was returned by Mr Sturgess with interest.(d) By letter dated 25 November 2014 Dr Dooley advised he would pay the $28,458.01 plus interest but no further compensation if the settlement was to include a right of first refusal. The letter also offered a settlement sum over which privilege was claimed.(e) Further without prejudice save as to costs offers were made by letters dated 9 and 19 January 2015 and 10 September 2015 from MrSturgess' solicitors.[61] At a telephone conference before the Associate Judge on 18 February 2015, the defendant was directed to specify in its defence the compensation that was sought. In accordance with that direction, on 27 February 2015 a fourth amended statement of defence was filed.39 This pleading set out the compensation award sought. That was a sum of not less than $127,875 plus interest, made up as follows:(a) $2,875 (inclusive of GST) for one third of the lost grazing land;39 This pleading also sought a right of first refusal in the defendant's favour to purchase the plaintiff's property.(b) $25,000 to reflect betterment to the Dooley property;(c) $100,000 (being 50 per cent of the difference in value of the Dooley property with legal access).[62] In addition the pleading claimed:(a) $21,763.89 (being one third of the cost incurred in forming the access) plus interest;(b) one half of the survey and conveyancing costs; and(c) reimbursement of the defendant's legal expenses from the date of the slip to the issue of proceedings.[63] Lastly, in September 2015 Dr Dooley proposed selling the 8,500 m2 area of his land (which had been the subject of the previous discussions) to Mr Sturgess for a price of $200,000 plus GST in exchange for a legal right of way over the access. Correspondence over this offer ensued but did not result in any agreement.Do these negotiations assist with determining compensation[64] Each of the parties relied upon the negotiations as evidence supporting their respective view as to the appropriate compensation. For Mr Sturgess it is contended that the March 2013 oral agreement is evidence that a willing buyer would pay $160,000 to purchase the right of way.40 I do not agree with this submission because:(a) It is apparent that Dr Dooley considered that land to be worth more than that in 2009. At that time he had offered to sell the land for $285,000 subject to a 25 year building restriction41 and he did not40 This was on the basis that Dr Dooley accepted in cross examination that he considered the land to be transferred was worth a minimum of $200,000. Taking that figure, Mr Sturgess' counselthen deducted the saved formation and legal costs and the $10,000 he was to receive from Mr Sturgess under the March 2013 agreement.41 He had also offered to sell the property for a higher price but this was based on a subdivision valuation which did not take into account the prospects of obtaining consent for a subdivision or the costs involved in that.reply to Mr Sturgess' counter offer (to purchase the land for $200,000and to pay an additional $200,000 if it ever became separately titled or had a house built on it).42(b) The March 2013 agreement did not proceed because Dr Dooley's co- trustee, whose agreement Dr Dooley also needed, considered the deal was to the Dooley interests' disadvantage. As his co-trustee explained in the correspondence which followed, it was their view that the land under discussion was worth $300,000 to $400,000.(c) Dr Dooley's offer in September 2015 to sell the land to Mr Sturgessfor $200,000 was, as I understand it, on the basis that Mr Sturgess would pay this sum to him in addition to Dr Dooley obtaining legal access.[65] For Dr Dooley it is contended that the best yardstick by which to measure reasonable compensation is the 4 September 2013 offer and the correspondence which followed it. That offer was for $43,200 and became $44,400 (inclusive ofGST). However that offer was expressly put on a "good neighbour" basis. It wassubject to the condition effectively preventing subdivision and, critically, the no change of use condition. Mr Sturgess must have regarded that condition as being of value to him because he was insistent on it. Therefore all that can be taken from theSeptember to October 2013 negotiations is that Mr Sturgess' view of the appropriate compensation was a figure in excess of $44,400 if there was to be no such condition and Dr Dooley was prepared to pay $44,400 without any such condition.[66] Mr Sturgess submits in determining compensation the Court should give weight to the annoyance caused to Mr Sturgess when, on at least two occasions, he thought he had achieved a deal, only to find that it collapsed. I am not prepared to give this any weight. I note that in almost all of the landlocked land cases that come42 As noted, the plan attached to Mr Sturgess' offer was much larger than the 8,500 m2 area which Dr Dooley had offered. At the hearing Mr Sturgess said the attached plan was based purely onthe advice of his planner, the additional area was not of much value because it was "just scrub"and would typically sell for a few tens of thousands of dollars and he was focussed on the 8,500 m2 area. He had not intended to mislead Dr Dooley about the area of land he was intending to purchase and had apologised for this at the March 2013 meeting.before the Court for determination, relations between the particular parties have broken down.43 Compensation under the Act is approached on the basis of a hypothetical friendly negotiation between a willing seller and willing buyer in the position of the parties. The test is about two hypothetical parties, not these particular parties who have each aggravated the other.[67] In the present case these proposals involved possible solutions, potentially of mutual interest to the parties, other than a court determination involving a payment of compensation and usual right of way terms. Mr Sturgess saw value in them from his perspective, but it was open to Dr Dooley to take a different view and to withdraw from them notwithstanding his initial agreement to them. The on-going correspondence between the lawyers was undoubtedly frustrating for both sides but it was open to each side to press on with a court determination if they so wished.Valuation evidence(a) Evidence as to increased market value of plaintiff's land[68] Mr Bowie, the valuer called by SCL, practises principally in Nelson, Motueka and Golden Bay. He has practised for 22 years. His valuation experience covers residential, commercial and industrial properties, small holdings, horticultural properties and development blocks.[69] He assesses the capital value of the Dooley property, as it presently is, as being $665,000 (inclusive of GST). This value is on the basis that it can be legally accessed only by foot or helicopter and vehicular access over the deviation formed by Mr Sturgess is pursuant to a licence which can be cancelled by SCL at any time. He also assumed the owners of the Dooley property would have an excellent prospect of obtaining interim relief to restrain any threatened cancellation of the licence.43 See, for example, Macken v Jervis, above n 24, at [3]: "Although it is clear that the right of wayto be enjoyed over the Jervis property had been inadvertently omitted from the subdivision plan, it has proved impossible for the intelligent people who live [beside each other] to resolve theirdifferences in a pragmatic manner."[70] Mr Bowie was cross examined about his assumptions and valuation. He explained that the property is beautiful and is in a very good location. He did not regard helicopter access as a necessarily unlikely proposition for this type of property, noting that his neighbour owned a helicopter. He took into account the prospect of interim relief under the Act and his interpretation of the market with which he is familiar. I consider his approach to be appropriate. He is familiar with the market and he has taken into account relevant matters.[71] Mr Bowie assesses the capital value of the Dooley property on the basis that it has legalised vehicular access over the formed access as being $865,000 (including GST). His written brief of evidence initially provided this valuation on the basis that the right of way would be on usual terms, including a term requiring the Dooley property owners to pay one third of on-going maintenance costs, and would also provide Mr Sturgess with a first right of refusal to purchase the Dooley property. He amended his evidence orally, so that his valuation was on the basis of the property with access as it was prior to the legal road subsiding.[72] The significance of this amendment is that the cross examination about theeffect on the property's value of the first right of refusal was irrelevant. In cross examination it was put to Mr Bowie that the terms of the right of first refusal were said to be unusual. This was because they effectively required Dr Dooley to disclose to Mr Sturgess the price someone was prepared to pay for the Dooley property before Mr Sturgess decided whether to exercise his right. It was put to Mr Bowie that Mr Sturgess, as a neighbour, would be the one party who might be expected to pay a premium for the property. Mr Bowie did not accept that proposition. He regarded the right of first refusal has having no negative effect on the property and this was the basis on which he had arrived at his $865,000 valuation. This was confirmed when he provided the same value on the basis of access to the property as it was prior to the subsidence.[73] On the basis of Mr Bowie's valuations, the difference in value between thepresent position and if the Dooley property had legalised vehicular access is $200,000 (including GST). Mr Sturgess seeks $100,000, that is half of the increased value, as part of the compensation under s 330 of the Act. That was the figure MrBowie considered would be arrived at on a willing buyer and willing seller basis noting the cases of Jamieson and MacRae.44[74] Dr Dooley did not adduce expert evidence to contest Mr Bowie's evidence.He was cross-examined about whether he had sought his own valuation evidence. He confirmed that he had. His recollection was that his valuer had valued his property with legal access at something over $1 million, possibly around $1.2 million (as had another valuer a number of years ago in respect of a divorce settlement), and the value of his property without access at around $300,000 to $400,000. As Dr Dooley was somewhat vague about this evidence and the valuer himself did not give evidence, this evidence is of little relevance other than toindicate that Mr Bowie's evidence appears not to overestimate the increased value of the property with legal access.[75] Dr Dooley also had his own view of the value of the property. He considered that New Zealand valuers did not value property unless it was suitable for productive use (such as grazing, an orchard or the like). He found it frustrating that, no matter how beautiful the bush, it did not have value. In the United States this was not the case. For that reason, if he were to sell his property, it would be to an international buyer. Consistent with this view, in early 2014 Dr Dooley was marketing his property at US$2.3 million. However, while there may well be people who would value the property in the same way as Dr Dooley, there is no evidence that he received any offers for his property at this level.[76] In any event this evidence does not assist with determining the appropriate level of compensation, on a with and without legal access basis. Moreover MrBowie's view is that US$2.3 million grossly overestimated the value of the property.I accept Mr Bowie's evidence as to value. He has the expertise in market values inthis region. I do not, however, accept his assessment that 50 per cent of the difference in value with and without legal access should form part of the44 JT Jamieson & Co Ltd v Inland Road Ltd, above n 25; and MacRae v Walshe, above n 18. DrDooley's counsel submitted this was a legal question rather than one for expert evidence.However it was regarded as relevant evidence in MacRae v Walshe. That said, Mr Bowie accepts it is a matter for the Court and there was difficulties in interpreting the relevant decisions.compensation. That percentage is much higher than in the cases I have discussed above.(b) betterment[77] Mr Bowie's evidence is that, if Dr Dooley obtains a right of way over the access formed by Mr Sturgess, this will result in betterment to the Dooley property. He considers the betterment arises because the access, which is now secure and lined with trees, is more attractive than it was previously. This provides some increased value to the Dooley property, which is a life-style property and is positioned relatively close to this more attractive access.[78] Mr Bowie explains that any betterment to the Sturgess and de Borrekens properties would be less, if present at all. This is because the Sturgess properties were substantial farming properties, comprising 77 hectares with a rating value in excess of $5 million. The improved legal road would have no impact on the overallvalue of the property. Additionally the Sturgess' and de Borrekens' residences werelocated further away from the more attractive access and so were less connected with it. Mr Bowie was cross examined about these matters but nothing arose which caused me to doubt his views on these matters.[79] That said, I do have some doubt about whether the compensation award should include an amount for betterment to the Dooley property. In the first place, it is difficult to put a dollar amount on the betterment value. Mr Bowie put forward a range of $15,000 to $30,000. The range was derived by applying 5 to 10 per cent of the site value. He was asked by counsel for SCL to put a specific figure on this. If required to do so, he was inclined to assess the value at the upper end of the range, that is, a value of $25,000. However he was more comfortable with expressing a range.[80] More significantly Mr Bowie accepts that the betterment is partly reflected in the formation costs of the road, to which Dr Dooley must contribute. He alsoaccepts that there is an element of "double dipping" because the betterment is reflected in the increased value of Dr Dooley's property from the legal access forwhich Dr Dooley must provide compensation. To that I would add that Mr Bowieconsiders the increased value to the Dooley property to be the same whether it is assessed on the basis of a right of way over the new road or as it was before the subsidence. That does suggest that any betterment from the more attractive access is minimal.(c) SCL's loss of grazing land[81] The new access is constructed on land that was previously used by SCL for grazing livestock. The area of land which is no longer available for grazing is half a hectare of land. In December 2012 Mr Sturgess estimated the value of this land as being $7,500 (plus GST). Mr Bowie does not take any different view about the value of the loss of this land.(d) Diminution in value of SCL's land[82] Mr Bowie considers that registration of the right of way in favour of theDooley property "slightly" demeans the value of SCL's land. He considers the value of SCL's property as it presently is (that is, with the access formed but not subject toany registered right of way) as being $1,075,000 (plus GST, if any). He considers the value of that land with a registered right of way in favour of the Dooley property is $1,060,000 (plus GST, if any). On that basis he considers the diminution in value of the SCL land is $15,000.[83] I accept that on the one hand there might be some small reduction in value. Mr Sturgess, for example, would not be able to exert control over those using the road in an undesirable fashion by terminating permission to use the road. On the other hand a registered right of way provides certainty for all parties. That certainty can assist in reducing aggravation between neighbours. I consider this needs to be factored in. I also note the Dooley and de Borrekens properties had legal access overSCL's land before the rain event and so, on a before and after basis, there is no diminution in value to SCL's land from a registered right of way over the newaccess.Legal costs[84] Legal costs directly arising from creating the access and the right of way are recoverable. I also accept that additional legal costs in negotiating proposals for access and the terms of a right of way are recoverable. These are transaction costs which a willing buyer and willing seller would take into account. The parties were prepared to pay $11,578.06 for legal costs when the 4 September 2013 proposal was under consideration. I consider that figure sufficiently represents appropriate compensation for legal costs prior to the issue of proceedings.[85] Mr Sturgess seeks greater reimbursement under this head because heconsiders Dr Dooley's approach was aggravating. He considers Dr Dooley wasdifficult to negotiate with and unreasonable in his expectations. As I have discussed Dr Dooley similarly regarded Mr Sturgess as unreasonable. He saw Mr Sturgess asseeking to gain unfair advantage from a situation that was not of Dr Dooley'smaking. I consider that each party was entitled to explore whether there might be a mutually acceptable solution short of a court determined resolution. Mr Sturgess was not unreasonable in exploring them but Dr Dooley was entitled to resist them. The legal costs associated with these negotiations should not be part of the compensation over and above the $11,578.06 figure.My assessment[86] I consider reasonable compensation in this case to be $96,000 (inclusive of GST where applicable) made up as follows:(a) $21,763.89 for costs in forming the access;(b) $6,715 for conveyancing expenses;(c) $2,875 for diminution in the value of SCL's land from lost grazing;(d) $54,000, being 27 per cent of the increase in value to the Dooley property with legal vehicular access;(e) $11,578.06 for legal costs between the subsidence and the issue of proceedings.[87] In arriving at this figure I have rounded down the items listed at (a) to (e) above. Overall I am satisfied this is fair compensation in light of the circumstances. It is not out of proportion to the value of the property.[88] I have not allowed any interest on the costs of construction (item (a)). That is because a payment for these costs was tendered by Dr Dooley on 21 March 2014 on terms that made it clear compensation could be determined separately. That payment was returned.[89] It might be argued that 27 per cent of the increased value of Dr Dooley'sproperty (item (d)) is too high given Lowe and MacRae both involved parties who purchased the property/subdivided their property, knowing they would need to negotiate legal access in order to realise the profit they envisaged.45 However I accept the submission for Mr Sturgess that this is not a materially distinguishing factor. The fact of the matter is that once the rainfall event occurred, the Dooley property did not have vehicular access and Mr Sturgess had the ability to providethat access. Mr Sturgess' ability to provide that access had a value and a willing buyer/willing seller negotiation would recognise that value.[90] I consider a higher percentage, as taken in Hajnal, is not warranted – that percentage was influenced by an offer that was regarded as relevant in that case.46 I consider a lower percentage does not adequately take into account the material benefit which the Dooley property receives from legal vehicular access and the relatively low construction costs which Dr Dooley is required to pay to obtain this increased value.[91] I have not allowed any compensation for betterment. I consider it is not appropriate to make such an allowance given Dr Dooley will contribute to that through his share of the construction costs and the payment for the increased value45 Lowe v Brankin, above n 14; and MacRae v Walshe, above n 18.46 Hajnal v Asmussen, above n 16.of the Dooley property. Additionally, while the Sturgess' property may not haveincreased in value from the more attractive access it is clear that Mr Sturgess must have seen some aesthetic or other non-monetary benefit from forming the access in the attractive way he did.[92] I have also not allowed any compensation for detriment to SCL's land from aregistered right of way. Any such detriment would be small and offset to some degree in the way I have discussed above. I also take into account that the legal access was previously across the SCL property. Additionally, there is an argument that item (c) above is not necessary given that SCL would have lost that land anyway in order to provide suitable vehicular access to the Sturgess property. Possibly because of these factors, counsel for Mr Sturgess did not press for a separate award under this head.[93] I have not discounted the compensation payable because Mr Sturgess may ultimately receive compensation from the owners of the de Borrekens property. Whether any compensation will be received is speculative. The present arrangements may continue for many years to come. The compensation I have ordered reflects what I consider is a reasonable price for access to the Dooley property regardless of the position in relation to the de Borrekens property.[94] In addition, and subject to one point, I order costs of the proceeding on a 2Bbasis in SCL's favour together with disbursements. The disbursements include Mr Bowie's fee. This is the usual order in cases of this kind.47 I do not regard the conduct of either party as warranting any different approach.[95] The one point to which this order is subject concerns whether there should be any different approach because of the "without prejudice save as to costs" offers. The amounts involved were not disclosed to me. However I hope that the parties can resolve any necessary adjustment in light of these offers. It seems to me adjustment would only be necessary if Dr Dooley made an offer for a sum greater than that which has been awarded. In that event, 2B costs would not be payable from the47 As awarded in Lowe v Brankin, above n 14; MacRae v Walshe, above n 18; and Squally Cove Forestry Partnership v Wagg, above n 21.point of that offer. Leave is, however, reserved for the parties to apply should there be any material disagreement about this. Any memorandum filed pursuant to this leave must be brief and filed within one month of today's judgment.Other terms[96] By the close of the hearing the parties had agreed on the terms of the right of way subject to one point.[97] The agreement involved the terms as per the memorandum at tab 11 of the"bundle of pleadings and other court papers" provided for the hearing but with the following adjustments:(a) delete the first clause 1.3;(b) delete the words "the budget referred to in clause 1.3 or" in the secondclause 1.3; and(c) add the clauses quoted at items iv and v of page 84 of the "bundle of affidavits" (excluding exhibits).[98] The one item not resolved was the percentage which the grantee is to pay for reasonable costs of repair and maintenance. Dr Dooley sought 20 per cent, whereas Mr Sturgess sought 33 per cent. I order that this percentage is to be 25 per cent. This reflects that Mr Sturgess had previously proposed percentages less than 33 per cent and that a working farm is likely to cause greater wear and tear than the Dooley property.[99] Accordingly the terms of the right of way are as agreed but subject to my order that the percentage in clause 1.2 is to be 25 per cent.Result[100] The application for relief under s 328 of the Act is granted. It is subject to the terms set out in [96] to [99]. It is also subject to payment of compensation in thesum of $96,000. Costs of the proceeding are ordered in accordance with [94] to [95] above.Mallon JPostscript[101] This judgment was first issued on 16 August 2016. By memorandum dated 17 August 2016 the defendant sought recall of my judgment.[102] The principal basis for recall was that in para [86](d) of my judgment I had written "$27,000, being 27 per cent of the increase in value to the Dooley property with legal vehicular access;". As the defendant correctly identified, this was a mistake. I had accepted Mr Bowie's evidence that the increase in value to the Dooley property with legal vehicular access was $200,000 (see paras [73] and [76] of my judgment). In accordance with the case law discussed in the judgment I intended to apply the 27 per cent to the increase in value as I had found it to be. Accordingly, [86](d) should have said "$54,000, being 27 per cent of the increase in value to the Dooley property with legal vehicular access".[103] That mistake had a consequent effect on the total compensation I ordered. At para [86] my judgment stated "I consider reasonable compensation in this case to be $70,000 (inclusive of GST where applicable) made up as follows:" As explained in [87] of my judgment as issued I had slightly rounded up the figures listed under [86] so that the compensation was a round figure. If the figure in [86](d) had been correctly calculated the total compensation amount would have been $96,931.95. Accordingly the defendant sought a recall of my judgment substituting the sum of either $97,000 (if the sum was to be slightly rounded up) or $96,931.95.[104] Counsel for the plaintiffs had initially taken the view that the defendant should file a formal application for review. I issued a minute on 18 August 2016 confirming the defendant was correct as to the mistake I had made in [86](d) and asked if the plaintiffs accepted the matter should be dealt with by recall or wished to be heard on the matter. Counsel for the plaintiffs responded advising that they had no further submissions to make.[105] I was satisfied it was appropriate to recall the judgment. My arithmetic mistake gives rise to a "very special reason" where "justice requires that the judgment be recalled".48 The mistake meant that my compensation order did not reflect my findings. However it does not follow that the compensation order should be either $96,931.95 or $97,000. As explained in my judgment at [40], "overall the Court is seeking to arrive at a fair price for the legal access in the particular circumstances of the case. The assessment is not an exact science." I had regarded it appropriate to round up the compensation when the figures allowed for under [86](a) to (e) had totalled just under $70,000. Now that they total $96,931.95 it remains necessary for me to consider whether I am satisfied that this is fair compensation in light of the circumstances. Given the greater sum which the figures in fact produce, I considered it appropriate to round down the calculation so that the compensation order is for $96,000.[106] Accordingly, the reissued judgment amended para [86] from "$70,000" to "$96,000", at para [86](d) from "$27,000" to "$54,000", and para [87] from "slightly rounded up" to "rounded down". In addition I have made a correction to para [6], pursuant to the "slip rule", correcting the location of Collingwood and Takaka. As advised in my minute dated 18 August 2016, a further matter raised by the defendant was a new matter which was not appropriately a matter for recall nor correction under the slip rule.Mallon JPostscript no 2: 18 October 2016[107] Pursuant to the "slip rule" the judgment has been reissued for a second time to also amend the figure in para [100] from "$70,000" to "$96,000". The failure tomake this amendment was a (proofreading/checking) oversight at the time of reissuing the judgment on 26 August 2016. The effective date of the judgment remains 26 August 2016.Mallon J48 Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633.