FREESTYLE ENTERPRISES V STARFIN GRP AND ANOR HC AK CIV 2006-404-007820

FREESTYLE ENTERPRISES V STARFIN GRP AND ANOR HC AK CIV 2006-404-007820 19 July 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2006-404-007820BETWEEN FREESTYLE ENTERPRISES LIMITED Plaintiff AND STARFIN GROUP LIMITED First Defendant AND AUCKLAND CITY COUNCIL Second Defendant Hearing: 23 & 24 May 2007 Appearances: G M Harrison for the Plaintiff I J Thain and P Murray for the First Defendant D J Barr for the Second Defendant Judgment: 19 July 2007RESERVED JUDGMENT OF PRIESTLEY JThis judgment was delivered by me on 19 July 2007 at 4.00 pm pursuant to Rule 540(4) of the High Court Rules. Registrar/Deputy Registrar Date: Counsel/Solicitors: G M Harrison, Barrister, P O Box 4338, Auckland T J Goulding, Daniel Overton & Goulding, P O Box 13017, Onehunga I J Thain/ P Murray, DLA Phillips Fox, P O Box 160, AucklandThe Issue[1] In the context of a proceeding where injunctions are sought, the parties have presented a single issue for this Court to decide. It is possible determination of that issue will resolve both this proceeding and a closely linked proceeding in the Auckland District Court. [2] The issue is whether the registered proprietor of the land to which a right-of- way easement is appurtenant can use the right-of-way to obtain access to an adjoining parking area created by a subsequent easement and appurtenant to the same land.Background[3] The plaintiff owns a commercial lot which runs between Mt Smart Road and Campbell Road close to the Royal Oak roundabout ("6 Mt Smart Road"). [4] The first defendant owns two adjoining lots at 8 and 10 Mt Smart Road. [5] The second defendant is the territorial authority which issued a resource consent to the first defendant to build four shops on its land. Although properly joined in the injunction proceedings, on the issue currently for determination the second defendant made no submissions and abides by this Court's decision. [6] The plaintiff seeks two injunctions. The first is to order the first defendant to remove various obstructions to the plaintiff's right-of-way created by the first defendant's building work. The second injunction seeks to restrain the first defendant (along with its servants, employees, agents, tenants, invitees, or lessees) from accessing the car park area on the plaintiff's land from the right-of-way. [7] Counsel were agreed that the issues raised by the second injunction might well determine both this proceeding and an application under s 126G(1) of the Property Law Act 1952 brought by the first defendant in the Auckland District Court.[8] The issue essentially revolves around the interplay between two easements created at separate times. [9] To make sense of the relevant topography I replicate below a helpful diagram which was prepared by the first defendant's junior counsel. It is accepted that the diagram has been accurately abstracted from relevant deposited plans and certificates of title. By way of explanation the areas designated "A", "B", and "C" show the right-of- way that runs across the lots of both plaintiff and first defendant. In general terms both parties are able to exercise right-of-way over the other's land. The irregular quadrilateral marked "D" is the parking area lying at the heart of the issue. [10] In 1967 all three lots had the same registered proprietor. The entire site was used as a service station. Probably to ensure ease of access for vehicles using the service station, mutual rights-of-way were created over all three lots by an easement certificate registered against the three relevant certificates of title on 2 October 1985. The title to 6 Mt Smart Road has appurtenant to it the rights-of-way specified in the registered easement certificate and is similarly subject to the right-of-way created by the same easement certificate. Conversely, the two certificates of title for each of thefirst defendant's two lots have the same rights-of-way appurtenant to them and are subject to the same right-of-way. [11] The registered easement certificate (B465190.7) creates the right-of-way comprising "A", "B", and "C" in the above diagram. The rights and powers of right- of-way are those specified in the Seventh Schedule of the Land Transfer Act 1952. That Schedule has since been replaced by s 6 of Schedule 4 of the Land Transfer Regulations 2002, but nothing material hangs on that legislative change. [12] In September 1995 the then owner of the three lots, Mobil Oil New Zealand Limited, sold 6 Mt Smart Road to the plaintiff's predecessor in title. The transfer for that sale created a car parking easement on 6 Mt Smart Road which is "D" in the above diagram. That easement was depicted in Plan 168951 and achieved registration contemporaneously with the transfer to the plaintiff's predecessor in title on 23 November 1995. A previous attempt to register the easement certificate on 2 August 1995 was unsuccessful, the certificates of title showing registration being rejected. [13] The terms of the parking easement contained in Transfer C924772.1 are relevant. In consideration of the sum of $390,000 plus GST, Mobil transferred 6 Mt Smart Road, which was described as "the servient land", to the new registered proprietor. The transferor reserved as an appurtenant right to "the dominant land and any part of it" the full free and uninterrupted right for the Transferor and other authorised persons, (at all times and at any time by day and by night) to stop, leave, park and remove vehicles of all descriptions on the parking area for the use and enjoyment of the dominant land and to have full and free vehicular and foot access over the parking area to enable the Transferor and other authorised persons to stop, leave park and remove vehicles on the parking area.The easement created would remain in full force and effect in perpetuity ("for all time") until the transferor (the successor in title to whom is now the first defendant) surrendered the easement.[14] There are other covenants of little relevance, apart perhaps from covenant 7(c) which prohibits the transferee from obstructing or interfering with the transferor's access to the parking area. [15] The transfer sets out the full legal description of 6 Mt Smart Road as a servient tenement and also contains the full legal descriptions of both lots of the first defendant which are described as "the dominant land". Both servient land and dominant land are described as "subject to" the right-of-way contained in easement certificate B465190.7 (the 1985 easement) and "together with" the same the right-of- way easement. [16] Although there is no direct evidence on the point, I am satisfied on the basis of Mr Thain's submission and an examination of the relevant plans, that the car park, as shown in the diagram, shares as one of its four sides the same line as most of one of the sides of the "A" triangle. [17] The plaintiff purchased 6 Mt Smart Road in 2002 becoming its registered proprietor on 11 April that year. During the first half of 2006 there were various discussions between Mr Patton, on behalf of the plaintiff, and Messrs Rathbone and Loader, on behalf of the first defendant, relating to the first defendant's plans to develop the site. These discussions included a possible realignment of the "B" and "C" portion of the right-of-way. [18] The first defendant was able to obtain a resource consent in April 2006 from the second defendant. Since there are issues arising out of that process which are best canvassed in the injunction proceedings and are not relevant to the single issue I have to determine, I say no more on that topic.Discussion[19] Two competing policy factors are brought into play by the facts. One is the policy preventing an illegitimate extension of an easement. The other is the ability to use an easement for purposes ancillary to the dominant tenement.[20] The plaintiff's core submission advanced by Mr Harrison is that the first defendant has no right to access the parking area from "A" of the right-of-way. Mr Thain for the first defendant submits that, both as a matter of construction and as a matter of law, the first defendant can indeed access the parking area from "A". Both counsel presented focused and comprehensive submissions supporting their competing positions. [21] Hinde, McMorland, & Sim, Land Law in New Zealand (para 16.021) accurately distils the relevant principles to be gleaned from the case law.A right of way which is appurtenant to a dominant tenement may be used only for the enjoyment of the dominant tenement and not for the enjoyment of other land. Thus in Smith v Smith [(1895) 14 NZLR 4, 6] Richmond J referred to the general doctrine "that a private right of way into one close must not be used with the real intention of passing on thence to another adjacent close in respect of which the way was not granted". So a way may not be used to go to the dominant tenement and from there to a point beyond; nor may it be used to go to a point between the public road and the dominant tenement. This general principle is subject to certain qualifications. A dominant owner is entitled to use a way for access to land near the dominant tenement if access to that land is ancillary to the enjoyment of the dominant tenement. An easement of way appurtenant to land A over part of land B may be used to access land C where land C is used as a parking lot for those visiting the office building on land A and land C cannot be used for any other purpose. This qualification needs to be considered with care. A way granted for the benefit of land A can be exercised for the purpose of constructing on part of land A works intended for the benefit of land B.[22] The circumstances and construction of the creation of an easement are thus summarised in Halsbury Laws of England (Vol 16(2), para 56):The nature and extent of an easement created by express grant primarily depend upon the wording of the instrument. In construing a grant of an easement regard must be had to the circumstances existing at the time of its execution; for the extent of the easement is ascertainable by the circumstances existing at the time of the grant and known to the parties or within the reasonable contemplation of the parties at the time of the grant, and is limited to those circumstances.[23] Flowing from these two commentaries is the observation that a right-of-way easement is created for a specific purpose. A right-of-way constitutes a defined benefit for the use of the dominant land and constitutes a restriction on the use of theservient land. For that obvious policy reason, courts tend to construe right-of-way easements strictly and are reluctant to extend their ambit. [24] Consistent with that approach is the English Court of Appeal case Harris v Flower (1904) 74 LJ Ch 127. The defendant in that case had a right-of-way over the plaintiff's land to certain land "coloured pink" on a plan. The defendant also owned the adjoining land "coloured white" which was, for various reasons, land-locked. Although access to the white land could only be by using the right-of-way and passing over the pink land, the Court of Appeal held that the use of the right-of-way for the purpose of accessing part of a factory erected on the white land was in excess of the grant. a right of way of this sort restricts the owner of the dominant tenement to the legitimate user of his right; and the Court will not allow that which is in its nature a burthen on the owner of the servient tenement to be increased without his consent and beyond the terms of the grant. The burthen imposed on the servient tenement must not be increased by allowing the owner of the dominant tenement to make a use of the way in excess of the grant. [per Vaughan Williams LJ at 132][25] The Court of Appeal relied in part on the old authority of Williams v James(1867) LR 2 CP 577, 580 where Bovill CJ said:It is also clear according to the authorities, that where a person has a right of way over one piece of land to another piece of land, he can only use such right in order to reach the latter place. He cannot use it for the purposes of going elsewhere.[26] New Zealand authorities do not depart from this approach. In Smith v Smith(1895) 14 NZLR 4 Richmond J, following Williams v James in respect of an access right-of-way to draper's premises, held the right-of-way could not be used for the purpose of gaining access to land adjacent to but not forming part of the dominant tenement. The principle was also approved in Paterson & Barr Ltd v University of Otago [1925] NZLR 191. [27] A more recent authority is Hammond J's judgment, White v Chandler [2001] 1 NZLR 28. The plaintiffs in that case were the registered proprietors of Lot 2 which had appurtenant to it a long right-of-way giving access to their home from the main road. On either side of the right-of-way two separate lots, 1 and 4, wereoperated by the defendants as a dairy farm. Lot 1 was accessed by the same right-of- way but Lot 4 could be accessed directly from the main road. [28] The defendants constructed cattle races adjacent to the right-of-way on both Lots 1 and 4 with the intention of herding their dairy cattle across the right-of-way from one of their lots to the other. The plaintiffs claimed the defendants were not entitled to do this under the right-of-way easement. [29] Hammond J referred to National Trust v White [1987] 1WLR 907 to which I shall shortly refer. His Honour considered the defendants could not be prevented from entering Lot 4 from the right-of-way stating the right-of-way could not as against Lot 4 " be some kind of cage, at least without express words in the conveyancing documents" (at [58]). But the real issue was whether driving cattle across it was a legitimate or illegitimate use of the right-of-way (at [57]). On that substantive issue His Honour held:[66] Returning now to the present case, it is clear that the right-of-way in question is a private one. As such the [the defendants] can find no support in the case law for an argument (which I assume, on their behalf) that they are merely entering the right-of-way from a different place than at the "usual and accustomed part". Even were the case law on this point more favourable to [the defendants], they would nevertheless be entering the right-of-way from a property other than the dominant tenement whenever they entered it from lot 4. All the cases which I have referred to, consider entry from a different point on what would still be the dominant tenement. In the final analysis, here too [the defendants] simply cannot surmount the fact that, as it is not the dominant tenement, lot 4 has no rights vis-à-vis- the right-of-way.[30] On the basis of these authorities Mr Harrison submitted that the right-of-way easement created in 1985 did not grant any right of access to the parking easement "D" created 10 years later. For such access to be permissible, an amendment would be required to the 1985 easement. There was none. [31] In Mr Harrison's submission strong authority for the plaintiff's position could be found in the English Court of Appeal decision Das v Linden Mews Ltd [2002] 2 EGLR 76; 2002 EWCA Civ 590. That case involved two facing properties at the end of a mews both accessed by a carriageway. Across the end of the mews, was a wall behind which was a garden area owned by the owners of both properties.[32] Each owner had opened up gates in the wall so that they could drive vehicles into the garden area to park. [33] Under one of the quirks of English land title the carriageway was owned by someone else. There was a dispute as to whether the residents of the seven houses in the mews could park in the carriageway. That issue was not material to the appeal. It was accepted, in respect of one of the two properties, the carriageway easement permitted access by vehicles to put down passengers. [34] But so far as access to the garden parking area was concerned, the Court of Appeal, after considering both Harris v Flower and National Trust v White, held that there was no right to pass and re-pass over the carriageway for the purpose of accessing the garden area. The Court of Appeal considered the facts before it were significantly different to the facts of National Trust v White. [35] Delivering the main judgment, Buxton LJ said (at 79):The great benefit of access to the garden ground is not simply to be able to access no 4, because that can already be done by using the easement according to the grant. What the garden ground adds is somewhere where the car can be left: a parking space. I have no doubt that is a separate use from mere access. It is a use that takes place other than on the dominant tenement, and by using the carriageway to access that parking space the owner extends the dominant tenement.[36] Pointing to the relevant topography, Mr Harrison submitted that it was clear access to "D" could only be exercised from 6 Mt Smart Road. The transfer creating the parking easement specified both 8 and 10 Mt Smart Road jointly as the dominant tenement. Thus there could be no several rights of access to "D". [37] Although Mr Harrison did not put it this way, it is apparent from the authorities on which he relies that he contends access to "D" from "A" constitutes an impermissible extension of the right-of-way easement. [38] Mr Thain would have none of this. He referred to the judgment of Romer LJ in Harris v Flower (op cit) at 132:If a right-of-way be granted for the enjoyment of Close A the grantee, because he owns or acquires Close B, cannot use the way in substance for passing over Close A to Close B.[39] In counsel's submission the use of the words "in substance" recognised that a permissible use for the right-of-way would be access to non-dominant land if that use was in fact for the benefit of the dominant land. [40] This attempt at distinction tied in with further submissions of counsel that it is important to realise "D" was on the servient tenement and that, furthermore, the entire parking easement had been created by the registered proprietor of all three lots immediately after transferring 6 Mt Smart Road to the plaintiff's predecessor in title in 1995. [41] Mr Thain was on stronger ground, however, when he submitted that, as a matter of construction, the 1995 easement clearly contemplated accessing the newly created parking space through "A". First, as a matter of construction, the transferor in 1995, at a time when he was selling one of the three lots he then owned, clearly intended to create a parking area which he could use. The words used in the transfer (supra 13]) created an unrestricted right of access appurtenant to the dominant land for use of the car park by both the transferor and other authorised people. In counsel's submission it would be inconceivable that the owner of the property, who at the time of sale could pass across either "A" en route to "B" and "C", or "B" and "C" en route to "A" under the 1985 easement, would create a situation whereby he could still use the 1985 right-of-way across "A" to access what is now the first defendant's land, but could not pass across "A" to access the "D" car park which he had specifically created for his own benefit. [42] There is, in my judgment, huge force in that argument when one considers the principle (supra [22]), that in construing the grant of an easement, regard must be had to the circumstances existing at the time of its execution. [43] On the construction of the 1995 parking easement, Mr Thain pointed to the fact (supra [15]) that the dominant land was specifically defined as the first defendant's two lots, "together with" the 1985 right-of-way easement registered inB465190.7. Thus, counsel submitted, as a matter of construction, the defined dominant land, which under the easement is entitled to the use of "D", included the right-of-way. [44] As a further submission Mr Thain relied on National Trust v White [1987] 1 WLR 907. I say at the outset, as a first instance decision, that authority is not as persuasive as Court of Appeal decisions in the same jurisdiction. [45] National Trust, in counsel's submission, was authority for the proposition that a right-of-way easement can permit access to adjoining land if that adjoining land is an ancillary use to the use of the dominant tenement. [46] Warner J was faced with an interesting situation. Since 1930 the National Trust had owned Figsbury Ring, an Iron Age hill fort, dating from approximately 500 BC, four miles from Salisbury. Access to the site was by a right-of-way easement along a track across a farm branching off a main road. The National Trust saw its right-of-way as allowing access for its staff, to farmers to whom it had granted grazing rights, and to the general public wishing to visit the Ring. [47] In 1970, as a result of difficulties created by visitors parking their cars on the track, the county council constructed a car park adjacent to the track. The entrance of this car park was approximately 300 yards from the main road. Visitors leaving their vehicles in the car park could climb over a stile and walk to the Ring on foot. This inevitably led to an increase in the volume of traffic using the track, thus incurring the wrath of the farmers who owned the servient tenement. [48] Warner J granted an injunction to the National Trust prohibiting the farm owners from trying to block or discourage vehicular access down the track to the car park. The Judge, applying Harris v Flower, accepted the owner of a right-of-way was not entitled to increase the burden on the servient tenement by enlarging the dominant tenement so as to include land which was not appurtenant to the grant. He held, however, the National Trust was entitled to use the right-of-way for access to land near the dominant tenement if access was ancillary to the enjoyment of the dominant tenement. But access to the car park, in the view of the Judge, was not forthe enjoyment of the car park itself, but in order to visit the site. Thus vehicular use was ancillary to the site-visiting purpose and came within the terms of the grant. [49] On the construction of the conveyance itself (which had created the right-of- way in 1921) the Judge (at 915) saw nothing which would restrict the use to which the right-of-way was put. Its primary purpose was to permit access over a specific width, in very general terms, to an archaeological site. It was for site access that the vehicles were using the track up to the point of the car park. [50] Mr Thain understandably saw a parallel between National Trust and the "D" car park easement. In his submission the parking easement could only be used for the benefit of the first defendant's dominant land. Thus, use of the "A" section of the right-of-way to access "D" was merely ancillary to the use of the dominant land. [51] With respect, I consider the decision in National Trust to be an expansive example of the ancillary use approach. In my judgment, courts need to exercise considerable care before permitting a somewhat slippery concept, such as "ancillary use" to become a platform for expanding a right-of-way easement far beyond what the grant originally contemplated. For example, in White v Chandler (supra [27]) it might have been possible to argue that driving cows across the right-of-way was merely "ancillary" to the use of the dominant lot. National Trust was cited to Hammond J and indeed it was submitted to him that taking cows to Lot 4 for milking and returning them was merely ancillary. Hammond J, rightly in my view, regarded such a submission on the facts as flying in the face of reality (at [49]). He also articulated as an overriding policy, discernible in Harris v Flower: the principle that the dominant tenement cannot inappropriately be permitted to increase pressure on a servient tenement. For, to do so, would be to exceed the grant." [at [47]][52] Significantly, National Trust v White was distinguished and explained by the Court of Appeal in Das v Linden Mews Ltd (op cit). The Court of Appeal stressed that Warner J had made it plain the use of the car park was ancillary to or part and parcel of the original grant of getting to the Ring. The abutment of the car park to the access track was seen as important, and the Court of Appeal did not consider the Figsbury Ring situation was analogous to the Linden Mews situation where "theprincipal or real use of the way that is asserted is a right to use the way to access land that is not part of the dominant tenement" (at 78). [53] Nonetheless, in cases which on the face seem unobjectionable, the ancillary use doctrine has won some favour in Commonwealth courts. A Full Bench of the Supreme Court of Western Australia in Shean Pty Ltd v Owners of Corinne Court[2001] 25 WAR 65 considered use of a car park on adjacent land (Lot 20). A right- of-way easement in respect of which Lot 19 was the dominant tenement had been created over Lot 18. The car park was used by tenants and others for the purposes of building on the dominant Lot 19. [54] The Court saw the situation as distinguishable from Harris v Flower because every user of the carriageway was one for the "proper enjoyment" of Lot 19. The Court considered the situation facing it was "no different" from that confronting Warner J in National Trust (at 75). [55] As a result, the Court considered the use of the carriageway was connected with the use and enjoyment of Lot 19 and fell within the plain meaning of the terms of the easement (ibid). The Court also considered there was no practical difference between additional car parking space being provided under the office building which sat on Lot 19 or adjacent to it. [56] A week after the hearing, counsel for the first defendant, in accordance with his obligations to the Court, filed a memorandum drawing the Court's attention to a decision of the Ontario Court of Appeal which had been overlooked. This wasMacKenzie v Matthews 180 DLR (4th ) 674. I did not consider the case affected counsel's submissions to the degree that further submissions should be invited. [57] The dispute involved a right-of-way providing access to the owners of two islands on a lake. A further easement was registered over adjoining land for a "vehicle turnaround" which had the function the name suggests, and permitted the launching of boats.[58] The owners of the servient tenement had a concern that the right-of-way and the vehicle turnaround were being used on occasions by visitors to a commercial lodge, unassociated with the owners of the islands. [59] Although the Court of Appeal briefly considered both National Trust v Whiteand Harris v Flower, I do not consider the authority advances matters much. At first instance the Judge had ruled the right-of-way extended to benefit only the owners of the islands and their guests and tradespeople. The servient tenement owners were not entitled to fence their property in such a way as to prevent access to the turnaround, nor could they place a locked or unlocked gate across the right-of-way to block people not entitled to use it. [60] The Court of Appeal modified the first instance ruling slightly, holding that access to the turnaround on the adjacent lot was not an improper use of the right-of- way, but since there was some evidence of the right-of-way being used to gain access to the commercial lodge, the servient owners were entitled to erect an unlocked gate.Decision[61] More space has been occupied on an analysis of authorities than is strictly necessary. I have done so, however, out of recognition of the detailed submissions made by both counsel and to analyse some of the underlying policy issues. [62] A right-of-way easement over a servient tenement is undoubtedly an abridgement of the servient owner's rights. I consider the clearly discernible policy underpinning Harris v Flower, Smith v Smith, White v Chandler, and Das v Linden Mews is a policy courts should be reluctant to dilute. (There is an interesting examination of Das and the Harris v Flower "rule" in Paton and Seabourne, 'Can't get there from here?: Permissible use of easements after Das' [2003] 67 Conv.127 questioning the strictness of the "rule" from both a historical and a contemporary policy perspective. I have not, however, attempted to dilute the "rule".)[63] That said, I consider that Mr Harrison's submissions, based as they are on that policy, do not accord with the factual and legal realities surrounding the park easement "D". The easement, when created in 1995, was clearly and specifically intended to benefit the transferor. The parking easement serves no other purpose but to augment the use of 8 and 10 Mt Smart Road and is clearly an ancillary use of the dominant tenement. Thus, were I limited to applying the "ancillary use" approach evident in National Trust v White and similar authorities, I would have no difficulty in doing so. "D" has no other purpose but to provide authorised parking space for the ancillary use of the dominant tenement and use of the "A" portion of the right-of- way is not in my judgment an impermissible extension of the 1985 grant. [64] But even if I were wrong in that, or more importantly, if I had to decide the dispute without recourse to the "ancillary use" principle, I have no difficulty at all in construing the 1995 easement, both in its wording and in its circumstances, as permitting access to "D" over "A". The 1995 transfer expressly includes the 1985 right-of-way (which includes "A") as part of the dominant tenement and also as part of 6 Mt Smart Road as the servient tenement. I thus consider, that as a matter of construction, the 1995 easement expressly permits access to "D" over "A". [65] In the circumstances of the creation of the parking easement it would be extraordinary if that were not the result, given the fact that immediately prior to its creation the transferor owned all three lots and was specifically creating for his own benefit the "D" parking easement. It would defy common-sense to suggest the creator of the easement would have denied to himself the right to access "D" across "A" when his right to access "B" and "C" from "A" remained unimpeded. [66] For these reasons I thus find that the first defendant is permitted to access the parking easement "D" across the "A" portion of the 1985 right-of-way easement.Further Direction[67] Counsel specifically asked that, having reached a decision, I direct this proceeding to be listed for mention in the Duty Judge List. A reasonable period isjustified to enable the parties and counsel to try to resolve all outstanding matters in the light of this judgment. [68] Accordingly the proceeding is listed for mention in the Duty Judge List at 10 am on Thursday 13 September 2007. Counsel are directed to file a joint memorandum setting out what further needs to be done to bring the proceeding to conclusion by 5 pm on Monday 10 September.Costs[69] I have not heard counsel on costs. If costs cannot be resolved, leave is reserved to the first defendant to file a memorandum within two months of the date of this judgment with a memorandum from the plaintiff in reply 10 working days thereafter. Hopefully costs can be resolved as part of an overall settlement. Absent any memorandum, this Court will not revisit costs............................................ Priestley J