BODY CORPORATE 193056 v CHIN YUN HOLDINGS LIMITED [2021] NZCA 411

BODY CORPORATE 193056 v CHIN YUN HOLDINGS LIMITED [2021] NZCA 411 [31 August 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA601/2020[2021] NZCA 411BETWEEN BODY CORPORATE 193056AppellantAND CHIN YUN HOLDINGS LIMITEDSecond AppellantAND PAIHIA PROPERTY HOLDINGSCORPORATE TRUSTEE LIMITEDRespondentHearing: 23 June 2021Court: Gilbert, Mander and Hinton JJCounsel: D K Wilson for First and Second AppellantL M Van and R A Idoine for RespondentJudgment: 31 August 2021 at 9.30 amJUDGMENT OF THE COURTA The appeal is allowed.B The High Court judgment modifying the right of way easements is set aside.C The High Court costs judgment is set aside. Costs in the High Court are tobe determined by that Court in the light of this judgment.D The respondent must pay costs to the appellants for a standard appeal ona band A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)[1] This is an appeal against a judgment of Downs J modifying, by completelyrelocating, right of way easements over the respondent's land that provide access tothe appellants' property.1 The order was made pursuant to s 317(1)(d) of theProperty Law Act 2007 (the Act); the Judge being satisfied the proposed modificationwould not substantially injure the appellants.2Background[2] The second appellant, Chin Yun Holdings Ltd, owns and operatesthe Paihia Beach Resort & Spa (the resort), a luxury five-level hotel situated at130 Marsden Road (the benefitted land) on the beachfront at Paihia in the Bay ofIslands. The resort is a unit title development comprising of 28 principal units.The first appellant is the body corporate that owns the common property andthe registered owner of the benefitted land.[3] The respondent, Paihia Property Holdings Corporate Trustee Ltd, isthe registered owner of the adjoining land at 116–128 Marsden Road (the burdenedland), which is comprised of three titles and is currently undeveloped.[4] Resource consent for the development of the resort was originally granted bythe Far North District Council (the Council) in June 1996. The right of way easementswere registered on 1 October 1999, providing access to the resort by cutting acrossthe burdened land. At that time, both the benefitted land and the burdened land werein the common ownership of a company called Paihia Beach Resort Hotel Ltd.Vehicular access to the resort has always been provided by way of a 55-metresingle-lane, one-way, driveway to the east from Marsden Road. The driveway crossesthe burdened land and leads directly to the reception and parking areas. Vehicles exitby continuing through the undercover car park area and out onto Davis Crescent onthe western side of the resort. Davis Crescent links back to Marsden Road.[5] Attached to this judgment as Appendix 1 is a plan showing the present locationof the right of way easements. The resort (on the benefitted land) is lot 1 on this plan.1 Paihia Property Holdings Corporate Trustee Ltd v Body Corporate 190356 [2020] NZHC 2462,(2020) 21 NZCPR 385 [High Court judgment].2 At [45].The burdened land to the east comprises lots 2, 17 and 18 and the right of wayeasements are over those areas marked C, A and B on these lots.[6] In early 2014, Northland Corporate Trustees Ltd, the then owner of the landand a company associated with Paihia Beach Resort Hotel Ltd, decided to sellthe whole of the land, both the burdened land and the resort/benefitted land. It soldthe burdened land to the respondent on 19 May 2014. At that time,Marble International Ltd (Marble) was in the process of acquiring the resort.Marble expressed interest in also acquiring the burdened land from the respondent.In its reply letter dated 27 May 2014, the respondent agreed that common ownershipof the land was "desirable" and "should prevail into the future". The respondent notedthat a resource consent had been granted in May 2012 to expand the resort facilitiesby adding 85 accommodation units, conference facilities, a new restaurant and bar andassociated parking and facilities. The respondent observed that the combined landtherefore had "significant approved development capability". The respondent wenton to caution Marble about what it perceived to be difficulties with the existing rightof way easements, including that an extension to the reception area had restrictedaccess to the basement area of the resort. We will return to this issue later inthe judgment. The respondent concluded by saying:It is clear that separate ownership of the Paihia Beach Resort and the adjoiningMarsden Road Land is not an ideal situation. A merging of ownership interestsoffers significant operational benefits to the Resort together with enablinga profitable development opportunity on the land.[7] Despite the obvious synergies, the discussions about merging the ownershipinterests came to nothing. Marble completed its purchase of the resort on29 August 2014 and transferred title to a related entity, Kai Trustee Ltd (KTL), on9 September 2014.[8] As alluded to by the respondent in its correspondence with Marble, the locationof the driveway across the middle of the flat section of the burdened land significantlyconstrains its development potential.3 In late 2016, the respondent approached KTLwith a proposal to relocate the driveway in order to overcome this problem.3 There is a steep bank on the southern part of the land.The proposal was that KTL would surrender the existing easements over lots 2, 17 and18 and the respondent would grant a new right of way easement over lot 2 to provideaccess from Marsden Road on a new driveway it would construct along the boundarybetween lots 1 and 2. KTL did not agree to this proposal.[9] In an attempt to progress the matter, and notwithstanding the lack of anyagreement with KTL, the respondent applied to the Council in early 2018 for consentto create the proposed right of way on lot 2.4 Consent was duly granted in May 2018.[10] The appellants acquired the resort from KTL on 29 May 2018 withoutknowledge of the respondent's discussions with KTL about "merging" ownershipinterests or the proposal to relocate the driveway.[11] In September 2018, after learning that the appellants had acquired the resort,the respondent advanced the same driveway relocation proposal to them.However, like KTL, the appellants were not prepared to agree to this.[12] A year later, in September 2019, the respondent again wrote to the appellantsseeking agreement to the relocation proposal. On 26 September 2019, the appellantsresponded stating that they did not agree to any variation of the easements. No reasonswere provided for declining to consent.High Court proceedingsOriginating application[13] In April 2020, the respondent filed an originating application in the High Courtat Auckland seeking an order under s 317 of the Act that the right of way easementsbe "modified" in the manner set out in a plan, a copy of which is attached to thisjudgment as Appendix 2. This plan was the same as the proposal advanced to KTL in2016 and to the second appellant in 2018.4 This was necessary as the terms of the easements required Council consent to be sought and givenin writing.[14] The modification was described in the application as the "Adjusted EasementRights". The application was made on the ground that:The proposed modification or extinguishment will not substantially injure[the appellants]:(i) The Adjusted Easement Rights preserve [the first appellant's] existingnature and level of access to the [benefitted land].(ii) [The respondent] has arranged for a right to convey water easementfor [the first appellant] to cover an existing storm water pipe, which isnot currently documented by an easement.(iii) The Adjusted Easement Rights will make the use of the entryway saferfor vehicles accessing the [benefitted land].(iv) [The respondent] has offered to pay for all reasonable costs associatedwith the extinguishment of the existing [right of way] Easements andthe registration of instruments to give effect to the Adjusted EasementRights.(v) [The respondent] has made multiple attempts to engage with[the appellants] on the relocation of the [right of way] Easements andto seek their consent.(vi) [The appellants] have not provided any meaningful response to thoserequests nor has it asserted that it will be prejudiced bythe modification/extinguishment of the [right of way] Easements andthe granting of the Adjusted Easement Rights.Affidavits[15] The application was supported by an affidavit from Mr Ross Porter, assetmanager for Urban Partners Ltd, a group of companies involved in propertyinvestment. The respondent is a special purpose vehicle and is part of that group,having been incorporated in May 2014 to acquire and hold the burdened land.Mr Porter set out the relevant background and detailed the proposal to extinguishthe existing easements on lots 2, 17 and 18 and create a new easement on lot 2.Mr Porter referred to the extension to the reception area that had been carried out sometime prior to the appellants acquiring the resort. He said this extension impedesvehicular access to the basement along the route of the existing easements and createsa tight turning circle for vehicles entering and exiting the basement. He said the gapbetween the extended reception area and the easement boundary is now only2.45 metres which he understands is less than the minimum required by the Council.[16] Mr Porter concluded by stating his belief that: the proposed adjusted easement rights maintain the position of[the appellants] (and in some instances, betters its position), because:(a) It regularises access and use rights in relation to the Land (currentlynon-compliant due to location of reception area).(b) It preserves access rights to the Resort .(c) It now provides for drainage rights, where before there was none.And that: there is no substantial injury/prejudice to [the appellants] if the Courtapproves the new proposed easement rights for registration. In addition tothe above, it is important to note that [the appellants] will not be left out ofpocket, because [the respondent] has already offered to meet all the costsassociated with the surrender of the existing Easements and creation of anynew easements. It has also paid for the cost of seeking Council consent andobtaining survey plans, and it has offered to contribute to some of[the appellants'] legal costs.[17] The appellants filed a notice of opposition asserting that the proposedextinguishment of the easements and replacement with a new easement wouldsubstantially injure them. The appellants filed four affidavits in support of itsopposition, including one from an expert transportation engineer and one from anexpert planner. The respondent filed two affidavits in response, one from an experttraffic engineer and the other from an expert planner. We briefly summarisethe substance of these affidavits below.[18] Ms Yuhan Yang is a director of the second appellant. She said that whenthe appellants purchased the property (two years earlier, in May 2018), they weresatisfied with the existing arrangements for access to the property and had no idea ofany issues between the respondent and the previous owners. Ms Yang saidthe appellants were "alarmed" when they received the respondent's proposal inSeptember 2018 to change the access arrangements. After taking legal advice,the appellants advised that they would not agree to the proposed changes. Ms Yangsaid she was not aware of any stormwater issue but would rectify this if discharge wasoccurring.[19] Ms Yang described the present access as being "easy", by way of a "virtuallystraight one way route of approximately 55 metres leading to the reception andthe carparking". She said the "access widens at the end providing ample space in frontof the reception area for cars, taxi vans and minivans to safely and comfortablymanoeuvre". Although the appellants had not yet obtained expert advice, Ms Yangsummarised what she considered were the disadvantages of the proposed new accessas follows:5[T]he alternative accessway proposed by the [respondent] does not havethe same safe and ample manoeuvring area at the end of it.[T]he accessway proposed has a very sharp right turn into the carparking andcomes too close to our car park 10.[I]t would be much more difficult to reverse from the carparking orthe reception to the road along the proposed alternative access.[T]he proposed accessway goes right in front of our accommodation andrestaurant and is likely to detrimentally affect our guests' enjoyment by reasonof vehicle noise and lights.[T]he change proposed by the [respondent] to the access will affectthe desirability and therefore the value of the property.[20] Mr Peter Kelly is a senior transportation engineer retained by the appellants.In his affidavit, Mr Kelly set out his views on the disadvantages of the proposedaccessway. In summary, these were:(a) Hazard — Mr Kelly considered that the 90-degree corner into the oftencongested car park area near the reception would present a hazard forguests and motorists. He said that a motorist's visibility could bereduced at this point while performing a relatively tight turningmanoeuvre.(b) Loss of car park 10 — vehicles making the right turn into the car parkarea were not likely to be able to consistently manoeuvre around anyvehicle parked in the first space on the inside of the right angle corner5 Ms Yang explained that the appellants had difficulty instructing experts at that time because ofproblems associated with the COVID-19 level 3 lockdown.opposite reception (car park 10). Mr Kelly produced vehicle trackingcurves to demonstrate this.(c) Impact on the usability of car parks 9 and 10 — Mr Kelly consideredthat the proposed right of way would negatively impact the usability ofcar park 10 and the next car parking space (car park 9) noting that, fora vehicle to enter car park 9, "fairly precise manoeuvres are required inaddition to the 90-degree turn into the carpark area".(d) Less desirable entrance from Marsden Road — Mr Kelly consideredthe current obtuse angle of the existing entrance from Marsden Road issuperior to that proposed because it complements the direction ofmovement to the site and offers better visibility for motoriststhroughout its full length. By comparison, the proposed accesswaywould require visitors to execute two 90-degree corners carrying anincreased risk of pedestrian/vehicle conflict.[21] Mr John Parlane is also an experienced traffic engineer. He was engaged bythe respondent to comment on the views expressed by Mr Kelly. Mr Parlaneconsidered that there were a number of issues with the present access to the resortmaking it unsuitable for use by many larger vehicles:(a) There are several bends in the existing access that do not meetthe recommended minimum clearance for vehicles larger thana standard passenger car.(b) The height of the egress from the parking area is limited to two metres,restricting the size of vehicles that can use this exit.(c) The width of the egress is also below the minimum recommendedclearance, limiting the size of vehicle that can safely utilise it.(d) Access to the parking area is restricted by the extension to the receptionsuch that larger vehicles would have less than 85mm of clearance tothe respondent's land, well below the minimum recommendedclearance.[22] Mr Parlane also considered there are problems with the existing car parkingspaces. He notes that the affected car park spaces referred to by Mr Kelly (9 and 10)are not marked and he does not believe that all four car parks in this line (7 to 10)could be used simultaneously because they are positioned too close to each other.He also said car park 10 is directly in front of a door to the pool room which hesuggested would be unusable if this car park was in use.[23] Mr Parlane then addressed the proposed access way. He put to one sideMr Kelly's concerns regarding larger vehicles because he did not consider the existingarrangements offer feasible access for these vehicles in any case. He suggested a smallmodification to the proposed accessway to alleviate the concern about the adequacyof clearance at the 90-degree turn into the parking area. He described this level ofclearance as consistent with the egress to the parking area and considered it "both safeand tolerable for the site".[24] Mr Holton Liu is the office and administration manager employed by the firstappellant. He completed an affidavit in response to Mr Parlane's affidavit. Mr Liuconsidered the current access arrangements work well. He said there have been noincidents with people entering and exiting the reception into the parking area.He considered that the proposed accessway requiring a sharp turn intothe underground parking across the pedestrian access would be less desirable from anaccessibility perspective and also because those staying at the resort would be moreexposed to vehicle movement, both visually and audibly.[25] Mr Liu noted that consent for the extension of the reception area was grantedin 2008 and the original requirement for 22 car parks was reduced to 16 in a consentvariation granted in 2014. He said that car park 10 has been used by the resort and itscustomers for years without difficulty. The doors to the pool service area in front ofcar parks 9 and 10 open inwards and access is not hindered by vehicles parking inthese spaces unless they are parked too close to the doors. Mr Liu also said there hadnever been a problem using car parks 7 to 10 at the same time and he produceda photograph depicting this. Finally, Mr Liu disputed that stormwater is dischargedfrom the resort on to the respondent's land. He produced a photograph of a drainagepit near the exit of the parking area and said this is where stormwater discharges.[26] Mr David MacPherson is an experienced planner engaged by the appellants.Mr McPherson expressed the view that any change to the access arrangements wouldcompromise the existing resource consent held for the resort because this wasapproved on the basis of the existing easements, which therefore form an integral partof the consent.[27] The final affidavit came from Mr David Badham, a planning consultantengaged by the respondent to reply to Mr MacPherson's affidavit. Mr Badhamconsidered that no further application to vary the resource consent would benecessitated by the proposed relocation of the driveway. However, he said thata discretionary activity resource consent would be required under the relevantprovisions of the Far North District Plan prior to the use of the proposed accessway.Hearing[28] On 6 July 2020, Moore J made timetable directions for the completion of replyevidence and the exchange of submissions. He allocated a fixture for the matter to beheard on 15 September 2020.6[29] Downs J was assigned to hear the application. The Judge issued a minute on9 September 2020 advising that he would like to view the properties because the issueswere intensely factual and he considered the photographs were not informative.The Judge proposed that instead of conducting a hearing, a site view would be takenon the scheduled hearing date and he would decide the matter on the papers withthe benefit of that view.76 Paihia Property Holdings Corporate Trustee Ltd v Body Corporate 193056 HC AucklandCIV-2020-404-593, 6 July 2020 (Minute of Moore J).7 Paihia Property Holdings Corporate Trustee Ltd v Body Corporate 193056 HC AucklandCIV-2020-404-593, 9 September 2020 (Minute of Downs J).[30] A telephone conference was convened the following day. The parties agreedto the Judge's proposal and he then made the following directions regulating the view:8[5] The sequence at the view is to be this:(a) Ms Van [counsel for the respondent, who was the applicant inthe High Court] should first identify all areas of interest andconcern to her client. At each, Ms Wickes [then counsel forthe appellants] may make a brief response.(b) Ms Wickes is then to identify all areas of interest and concernto her clients. Ms Van may make a brief response at each.(c) I will then ask to be shown anything I consider potentiallyimportant. Ms Van may make a brief statement in relation toeach, followed by a brief statement by Ms Wickes.(d) My associate will make a shorthand note as we go (so a recordexists).[6] I do not expect the view to take long.[7] This leaves one matter. Ms Wickes said if I find against her clients,she would like the opportunity to address compensation. Ms Van wascircumspect about this, observing [the appellants] had long known ofthe possibility of the easements being varied. I will reflect on thisissue. My judgment will address it and related arrangements, if any.[31] The view duly proceeded in this manner and the Judge issued his judgment oneweek later.9High Court judgment[32] The Judge commenced his analysis by referring to the view that had takenplace in substitution for a hearing. He stated:10The visit could not have been more helpful. What might otherwise have beenan abstract, even arid, exercise based on diagrams and photographs wasilluminating, indeed decisive.8 Paihia Property Holdings Corporate Trustee Ltd v Body Corporate 193056 HC AucklandCIV-2020-404-593, 11 September 2020 (Minute No 2 of Downs J)9 High Court judgment, above n 1.10 At [19].[33] The Judge then addressed the issues under three headings, being (1) "Morenoise? Visual disturbance?", (2) "Fewer carparks? Greater risk?", and (3) "Planningharm?".11[34] As to the first of these — noise and visual disturbance — the Judge wassatisfied the proposed modification would not have the effects identified by Ms Yang(detrimental effect to guests' enjoyment by reason of vehicle noise and lights) forthe following reasons:[22] I am satisfied the modification will not have the effects Ms Yangidentifies. No guest rooms adjoin the proposed right of way; this is becausethere are no guest rooms on the ground floor. The Resort's restaurant is onthe first floor. It runs parallel to the proposed right of way. Those seated atthe tables closest to the proposed right of way will struggle to see vehiclesentering the Resort (below) because of the height of the windows and(parallel) line of travel — something I specifically noted during my visit.For the same reasons, it will be difficult to see vehicles from any other part ofthe restaurant if the modification is allowed.[23] The modification will not impair the view from guest rooms either.While guests may see vehicles turning into the resort from their rooms, theyalready look out onto Marsden Road (beyond which is the beach andTe Ti Bay).[24] Any increase in noise will be negligible. Under existingarrangements, vehicles already pass below the restaurant and underneaththe Resort.[35] Turning to the second issue of car parking, the Judge stated:[34] I am satisfied the Resort does not really have 16 carparks, sothe modification will not cause significant injury through compromisinga legal requirement vis-à-vis number of carparks. This was self-evident atmy visit. Carpark 16, which is just outside reception, is encroached bya large stairwell. It would accommodate only a very small vehicle; say,a Mini or Suzuki Swift. Carpark 7 would not fit any car. A part ofthe building that houses the spa encroaches at least a third of this parkingspace. For this reason, a car in this area would need to park further tothe right, thereby encroaching carpark 8 and causing a domino effect onthe remaining carparks (9 and 10).[35] Carpark 10 is problematical in any event. The position of receptionmeans an incoming car will often have to deviate beyond the existingeasement (a little further onto the burdened land) to use this carpark.The same would be true when a car leaves carpark 10.11 At [20], [25] and [41].[36] All this may explain why these carparks are not marked, which israther unusual. Most resorts, hotels and motels have clearly markedcarparks, for obvious reasons. I consider it all but certain only three carsreally fit across the space theoretically dedicated to the four carparksnumbered 7, 8, 9 and 10 opposite reception.[37] This means modification will not compromise the true carparkingspace in this area, even if a very large vehicle enters the Resort.Moreover, very large vehicles should not enter the Resort for the reasonsMr Parlane identifies. Mr Kelly's concerns about carpark 9 are notsignificant.(Footnotes omitted.)[36] The Judge rejected Mr Kelly's evidence about the increased risk posed bythe 90-degree turn in front of reception that would be required if the driveway wasrelocated:[39] I am satisfied the risk is more theoretical than real. Reception'sexternal walls comprise large glass windows and doors. Someone insidereception has an excellent view outside. Oncoming traffic would be clearlyvisible. A driver approaching reception using the modified right of way willhave a clear view of that area before and during the turn. So too the areaoutside reception (where people may be). Moreover, while the turn is90 degrees, the existing arrangement requires a slight twist to the right, thena correction. It is far from obvious this is any safer than what is proposed.Traffic flow should also be improved through the modification as the turn isclean; no correction is needed.[37] The final issue was described as "[p]lanning harm". After reviewingthe competing contentions of the two experts as to the necessity of amendingthe existing resource consent by virtue of relocating the driveway, the Judge preferredMr Badham's analysis:[43] I prefer Mr Badham's analysis for the reasons he gives and one other.I have already concluded the Resort does not really have 16 carparks. This istrue irrespective of the outcome of this application. It follows any parkingproblems arising from possible breach of the resource consent held bythe Resort are not a product of modification of the easements or right ofway. The same reasoning applies to the Resort's inadequate space for verylarge vehicles and resource consent implications, if any. True, thislitigation has revealed these matters, but neither arises becausethe easements have been modified.[38] The Judge therefore concluded that the statutory test under s 317(1)(d) ofthe Act was met in that the proposed modification of the easements would notsubstantially injure the appellants.12 Indeed, the Judge went further and said everyonewould be better off if the easements were modified. In reaching this conclusion,the Judge acknowledged that the appellants' real concern related to the likelydevelopment of the respondents' land and how this might affect the resort.However, the Judge considered this was beyond the scope of the relevant enquiry forthe purposes of the present application:[46] For completeness, I accept Paihia Property's submission [that]everyone will be better off if the easements are modified.Existing arrangements are frankly, dotty. A first-time guest at the Resort likelyspends some time looking for the entrance, which is approximately 40 metresaway from the Resort, and unmarked. To avoid access to the burdened landmuch beyond the easements, a very low (and unattractive) fence winds acrossthe burdened land to reception. I would be surprised if guests were not a littlebemused by these arrangements, which must sit awkwardly with its market.Modification will make access obvious and direct, with no significant injuryto the Resort. I acknowledge what may be the Resort's real concern: it cannotknow what may be built next door. This, however, is beyond my purview.(Footnote omitted.)[39] The Judge granted the application and directed that the right of way easementsbe modified in the manner specified in the schedule attached to the application(as shown in Appendix 2 to this judgment).13 He expressed his provisional view thatthe appellants should pay costs but set a timetable for the filing of submissions if thiswas opposed. The Judge addressed the appellants' wish to be heard on the topic ofcompensation as follows:Compensation?[49] [The appellants wish] to be heard on this. Submissions and evidenceon this topic must respect this judgment's findings. No collateral attack willbe countenanced; error, factual or otherwise, is for the Court of Appeal.Subject to these remarks, evidence and submissions in relation to possiblecompensation are to be filed and served [in accordance with a timetable set].[40] The Judge subsequently awarded costs and disbursements of $19,995 tothe respondent.1412 At [45].13 At [47].14 Paihia Property Holdings Corporate Trustee Ltd v Body Corporate 190356 [2020] NZHC 3030[High Court costs judgment].AppealAppellants' submissions[41] Mr Wilson, for the appellants, contends there were deficiencies in the hearing.He notes that the respondent's application was filed on 20 April 2020, during the firstCOVID-19 lockdown. The case proceeded to a hearing in September 2020, during anAuckland lockdown. Mr Wilson suggests the decision to have a site visit without anyactual hearing may have been a response to the COVID-19 restrictions, but hecontends it has led to several unsatisfactory aspects in respect of the conduct ofthe case. In particular he submits the judgment was overly influenced by the Judge'ssite visit, rather than an analysis of the evidence. Further, there was no cross-examination and the "hearing" was somewhat rushed.[42] Mr Wilson observes that the application is in effect for the extinguishment ofthe existing right of way and the creation of a new one. He says a generousinterpretation is required to view this as a modification. However, Mr Wilson did notpress this point before us and invited us to proceed on the basis that the proposedrelocation can be brought within the meaning of the word "modify" in s 317 ofthe Act.15[43] Nevertheless, Mr Wilson argues that the complete relocation of the drivewayis itself a detriment to the appellants generally in two respects (leaving asidethe specific issues addressed by the High Court such as car parking and noise).First, he points out that the easements were formed in 1999 (when all of the land wasin common ownership) and it can be inferred that it was established in this particularlocation because it enhanced access to the entrance to the resort. This is supported bythe appellants' evidence that the current access works well for them and they wish toretain it. Mr Wilson submits that the existing driveway is more satisfactory because ithas only two small bends and leads straight to the resort whereas the proposeddriveway requires two sharp right-hand turns. He says the appellants take strongexception to the Judge's remark that the existing arrangements are "dotty".1615 See Re Lewis [1959] NZLR 1040 (SC) at 1041, where a change in the position of a right of wayeasement from the centre of the burdened land to the side was considered to be a "modification".This decision was followed in Organic Farming Ltd v Bryson (2007) 7 NZCPR 939 (HC) at [59].16 High Court judgment, above n 1, at [46].Mr Wilson submits that the resort operators should be taken to be the best people todecide which form of access is better for the resort and the Judge's site visitimpressions have been taken too far on this point.[44] Secondly, Mr Wilson argues that the Judge was wrong to disregardthe appellants' concern about future development on the respondent's land as beingbeyond his purview. Mr Wilson submits that the Judge should have taken into accountthe likelihood, or almost certainty, that there will be a building close to the boundaryif the driveway is relocated. This would result in the luxury resort being left withaccess by way of what he describes as "a mean looking alleyway between twobuildings".[45] Turning to the more specific issues that attracted attention in the High Court,Mr Wilson submits the Judge was wrong to find that these did not, even taken together,constitute substantial injury. He accepts that car parking issues in isolation would notamount to substantial injury under s 317(1)(d) to justify declining the respondent'sapplication. However, he says the Judge was in error to conclude there was no injurybecause there are existing problems with some of the car parks. Mr Wilson argues thatthe correct approach is to take the car parking as it is, with whatever faults exist, andassess whether the proposed relocation of the driveway will make it worse. Based onMr Kelly's evidence, the answer is there will be some loss of parking facility ifthe driveway is relocated. Mr Wilson also says that there will be increased noisebecause cars will be driving right beside the hotel building and will then make a sharpturn. Mr Wilson argues the resource consent issue ought not to have been put to oneside. He submits the Judge did not adequately explain why he preferred Mr Badham'sevidence over Mr MacPherson's expert evidence on this point. Finally, Mr Wilsonsubmits the Judge erred by not carrying out an overall assessment of whetherthe concerns, when taken together, amounted to substantial injury under s 317(1)(b).Respondent's submissions[46] Ms Van, for the respondent, submits there is no basis for criticism ofthe process adopted in the High Court. The Judge had jurisdiction to make directionsabout the conduct of the hearing and to conduct it on the papers following a site visit.17In any event, the appellants agreed to the process adopted.[47] Ms Van argues that the Judge made no error of law or fact and there is no basisfor this Court to intervene. The Judge considered the various complaints raised bythe appellants and found there was no substantial injury. Ms Van submits thatthe Judge's conclusions on these matters are well-supported by the evidence andcannot be impeached. The site visit gave the Judge a considerable benefit in assessingthese issues. This Court does not have that same advantage.Assessment[48] While the appellants are entitled to this Court's assessment, they carry the onuson appeal of persuading the Court that the Judge's factual findings were wrong.We agree with Ms Van that this Court should hesitate before interfering withthe Judge's conclusions given the real advantage he had of being able to assessthe evidence in the light of his observations at the site visit. We consider this isa particularly important consideration in respect of three of the sub-issues identifiedby the parties in their agreed list of issues — increased noise, increased danger topedestrians and reduction in parking and vehicle manoeuvrability. We are unable tosee any error in the Judge's analysis on these matters. Nor have we been persuadedthe Judge was wrong to conclude that the proposed relocation of the driveway wouldnot cause material injury in these three respects, whether considered alone or incombination. The Judge's findings on these issues were fully supported by evidencehe was entitled to accept.[49] The next sub-issue in the agreed list of issues is prejudice to the existingresource consent for the resort. We consider this to be something of a side issue thatcan be readily accommodated by making any modification order conditional on allnecessary resource consents being obtained at the respondent's cost.[50] In our view, the more significant issues are those advanced by Mr Wilson at[43] and [44] above. It appears that these matters received greater emphasis before us17 Relying on High Court Rules 2016, rr 7.43A and 19.11.than was the case in the High Court. This may explain why the Judge gave littleattention to them, focusing instead on the more tangible issues such as noise, visualdisturbance and car parking.[51] We respectfully disagree with the Judge that the likely redevelopment ofthe respondent's land that would be enabled by the relocation of the driveway isa matter beyond the Court's purview on an application such as this. Ms Van acceptedthis as a matter of law. However, she responded that it is a question of fact andevidence and here there was none. Ms Van argues that this is what the Judge meantby his "beyond my purview" comment. However, that is not how we read it.The statement — "beyond my purview" — would be an odd way of acknowledgingthe relevance of the appellants' "real concern" that "it cannot know what may be builtnext door" but dismissing this concern on the basis there was no evidence of what maybe built and therefore no injury.18[52] While Ms Van conceded the point as a matter of law, we think it appropriate torecord that we consider her concession was properly made. The issue was addressedby the Supreme Court of New South Wales in Tujilo Pty Ltd v Watts in the context ofs 89(1)(c) of the Conveyancing Act 1919 (NSW) which is in materially the same termsas s 317(1)(d) of the Act.19 Section 89(1)(c) provides that a court may modify orextinguish an easement, profit à prendre or restrictive covenant where "the proposedmodification or extinguishment will not substantially injure the persons entitled tothe easement". Campbell J noted that the grant of an easement over land permitsa particular type of activity on the burdened land but the grant of such an easementhas incidental benefits of preventing development of the land in a manner inconsistentwith the activities the easement expressly allows.20 The Judge considered suchbenefits could appropriately be taken into consideration when deciding whether therewas substantial injury to the grantee by a proposed modification or extinguishment ofan easement so long as there was a sufficient connection between the injury andthe grantee's ownership or interest in the benefitted land.2118 High Court judgment, above n 1, at [46].19 Tujilo Pty Ltd v Watts [2005] NSWSC 209, (2005) 12 BPR 23,257.20 At [40].21 At [86]–[88].[53] Substantial injury in terms of s 317(1)(d) means injury that is more thaninsignificant, unreal or trifling.22 Injury need not be physical, it may be intangiblesuch as an impairment of a view, intrusion upon privacy, unsightliness or an alterationto the character or ambience of the neighbourhood.23 Subjective tastes and preferencesmay qualify.24 The onus is on the applicant to show that the proposed modificationwill not cause any such injury.25[54] The respondent's efforts to relocate the driveway are obviously driven by itslegitimate commercial interests in maximising the development opportunities on itsland. However, despite needing to prove the appellants will not suffer any substantialinjury by the proposed modification, the respondent has not offered any evidence asto the likely development that will occur on its land if the driveway is relocated tothe boundary between lot 2 and the resort. We are not persuaded that any lack ofevidence on this issue counts against the appellants given the onus is onthe respondent. As the Judge correctly stated, the appellants "cannot know what maybe built next door".26[55] In assessing whether any substantial injury will be suffered, the court mustcarry out a counterfactual analysis comparing the appellants' position with the right ofway easements in their present location with their position if those easements areextinguished and granted over land along the boundary between the two properties.27An obvious consequence is that this will enable a much more substantial developmenton the respondent's land. There is evidence that a major extension to the existingresort has already been consented. While it is unlikely this will occur unlessthe ownership interests are merged, as earlier discussed with Marble, some othersignificant development on the land is likely, if not inevitable. The appellants' concernthat they will be left with access by way of "a mean looking alleyway between twobuildings" if the order is made seems to us to be a legitimate concern that cannot be22 Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657 at[104], referring to Plato v Ashton (1984) 2 NZCPR 191 (CA) at 194 and Jansen v Mansor (1995)3 NZ ConvC 192,111 (CA) at 192,115.23 Synlait Milk Ltd v New Zealand Industrial Park Ltd, above n 22, at [105].24 Mogensen v Portuland Developments Pty Ltd (1983) NSW ConvR 56,855 at 56,856; adopted inChand v Auckland Council [2021] NZCA 282 at [51].25 Chand v Auckland Council, above n 24, at [21].26 High Court judgment, above n 1, at [46].27 Synlait Milk Ltd v New Zealand Industrial Park Ltd, above n 22, at [106].discounted. Depending on the nature of the development enabled by the relocation ofthe right of way easements, the appellants may suffer other loss of amenity to the resortof a character recognised as constituting an injury for the purposes of s 317(1)(d).Absent any evidence to address this issue, we do not consider the respondent hasdischarged the onus on it of demonstrating that the appellants will suffer no substantialinjury, even of an intangible character, if the driveway is relocated.[56] We also accept Mr Wilson's submission that it is relevant that the driveway andcorresponding right of way easements were created in their present location some20 years ago when all of the land was in common ownership and there was freedomof choice. The then owners chose not to relocate the driveway even when they decidedto sell the whole of the land in parcels in 2014, presumably knowing that the value ofthe burdened land would be compromised by leaving the driveway where it is.Marble/KTL desired to retain the driveway in its present location. So too didthe appellants. It is a reasonable inference that all these owners and operators of thisluxury resort considered this was the preferred location for the driveway. We do notconsider their views should have been so readily disregarded by the Judge based onhis subjective impressions formed following a brief site visit.[57] In summary, we do not consider the respondent has proved that the appellantswill not suffer any substantial injury if the right of way easements are modified inthe manner proposed. We therefore conclude that the appeal must be allowed.Result[58] The appeal is allowed.[59] The High Court judgment modifying the right of way easements is set aside.[60] The High Court costs judgment is set aside. Costs in the High Court are to bedetermined by that Court in the light of this judgment.[61] The respondent must pay costs to the appellants for a standard appeal on a bandA basis and usual disbursements.Solicitors:Loo & Koo, Auckland for First and Second AppellantsAnthony Harper, Auckland for RespondentAppendix 1Appendix 2