CORNES v VILLAGE RESIDENTIAL LIMITED [2021] NZCA 216

CORNES v VILLAGE RESIDENTIAL LIMITED [2021] NZCA 216 [31 May 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA526/2020[2021] NZCA 216BETWEEN DAVID IAN CORNES AND REI KAHUIJONESAppellantsAND VILLAGE RESIDENTIAL LIMITEDRespondentHearing: 16 March 2021Court: Clifford, Brewer and Dunningham JJCounsel: D J O'Connor and J C Heaphy for AppellantD M Kerr for RespondentJudgment: 31 May 2021 at 10.30 amJUDGMENT OF THE COURTA The appeal is dismissed.B The appellants must pay the respondents costs for a standard appeal on aband A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Dunningham J)Introduction[1] The appellants, Mr Cornes and Ms Jones, own a property at 24 Lucknow Roadin Havelock North. It comprises a large back section of over 1500 square metresincluding a strip of land extending to Lucknow Road which contains their driveway.Its legal description is Lot 2 Deposited Plan 8107 (Lot 2).[2] In mid-2018 the respondent, Village Residential Ltd (VRL), agreed to purchasethe property at 26 Lucknow Road which sits in front of the appellants' property.VRL's property comprises a large section of just over 2000 square metres and its legaldescription is Lot 1 Deposited Plan 8107 (Lot 1). Although Lot 1 has frontage ontoLucknow Road it, too, uses the appellants' driveway for access pursuant to a right ofway easement registered against the title when the lots were created.[3] The driveway which serves both properties was once partially or fully sealedbut now consists of a combination of disintegrating seal and loose metal. It has a stormwater sump located approximately halfway down it which was installed around10 years ago. The sump is described by VRL's advisors as inadequate to managestormwater on the shared driveway which slopes downhill towards Lucknow Road.[4] Subdivision of Lot 1 is a controlled activity under the Hastings District Planand on 8 July 2019 the Hastings District Council (the Council) granted subdivisionconsent to VRL on various conditions. VRL is now in the process of subdividing Lot 1into five lots, two of which will have access directly from Lucknow Road, while theother three will have access via the existing right of way.[5] The resource consent for subdivision of Lot 1 is conditional on the drivewaybeing upgraded and a new drainage sump being installed within it to provide betterstormwater management and reduce potential runoff. The approved plans showthe driveway will be constructed of reinforced concrete with a new kerb and channel,and there will be a drainage sump installed at the lower end of the driveway close tothe road. There will also be a drainage sump installed at the head of the driveway,but within VRL's land, to collect stormwater that would otherwise flow downthe driveway.[6] The appellants do not want the driveway upgraded as proposed. They arecontent to have it maintained, but not upgraded as is required to complete theapproved subdivision. The affidavit evidence indicates the appellants are concernedthe development of Lot 1 will erode the privacy and amenity values theycurrently enjoy. They are opposed to the development proceeding.The application to the High Court[7] In the face of the appellants' strong objection to work occurring on thedriveway, VRL applied for orders under s 313 of the Property Law Act 2007 (PLA)confirming it was entitled to carry out the construction on the driveway.1[8] Section 313 of the PLA empowers the Court to make orders, on any conditionit thinks fit, concerning:(a) the existence of an easement;(b) the enforceability of an easement;(c) the question of whether any work is required to be done under the termsof the easement, and the nature and extent of such work;(d) who should bear the cost of any required work;(e) the entry onto any land for the purpose of doing any required work andthe use of vehicles or machinery on that land for the purpose of carryingout that work; and(f) any other matters arising in relation to a question or dispute concerningthe existence or effect of an easement.The right of way easement[9] There is no dispute that Lot 1 enjoys a right of way easement over theappellants' land created by memorandum of transfer dated 30 May 1951 and recordedon the titles as a right of way created by Transfer 98046. It covers the full width ofthe 5.2 metre wide strip of land that gives the appellants access to Lucknow Road.[10] The terms of the right of way easement include the following provision:1 Mr Cornes is alleged to have stood in the hole dug for the new driveway drainage sump to preventwork proceeding and to have parked the appellants' car across the driveway to prevent VRL'scontractor from accessing the site.2. THE [Transferor] reserves unto himself his executors administratorsand assigns a full and free right and liberty for him or them and his or theirservants visitors tenants and licensees and all persons having bona fide andlawful business with him or them in common with all other persons havingthe like right at all times hereafter by day or night with or without horses cartsor other vehicles of any description for all purposes connected with the useand enjoyment of Lot 1 on Deposited Plan Number 8107 for whatever purposethe said land may be lawfully used and enjoyed to pass and repass along thatpart of Lot 2 on Deposited Plan 8107 being thereon coloured yellow for thepurpose of giving access to the said Lot 1 or any part or parts thereof and toand from the public road delineated on the said plan and thereon named atLucknow Street. TO THE INTENT that such easement of right-of-way herebycreated shall be forever appurtenant to the said Lot 1.In summary, the easement permits the owner of Lot 1 to have access over the markedright of way on Lot 2, including vehicular access, "for whatever purpose [Lot 1] maybe lawfully used".[11] Clause 3(c) of the transfer records the transferor and transferee (and theirsuccessors in title) are to share equally " the cost of maintenance and repair of thesaid right-of-way and of any gate and gate posts erected at the entrance of the saidright-of-way".[12] No other provision in the transfer appears relevant to the dispute which is thesubject of this appeal.[13] The parties accept the easement is also subject to statutory implied covenants.Specifically, s 297 of the PLA provides that every vehicular right of way contains theimplied covenants in sch 5 of the PLA, including:22 Right to establish and maintain drivewayThe owners and occupiers of the land for the benefit of which, and the landover which, the right of way is granted have the following rights against oneanother:(a) the right to establish a driveway on the land over which the right ofway is granted, and to make necessary repairs to any existingdriveway on it, and to carry out any necessary maintenance or upkeep,altering if necessary the state of that land; and2 Property Law Act 2007, sch 5 cl 2.[14] At issue is whether expressly or by implication, the terms of the easement allowVRL to upgrade the driveway as the conditions of subdivision consent require.The High Court decision[15] Doogue J heard VRL's application on 12 August 2020 and issued her decisionon 14 August 2020.3 After setting out the facts which led VRL to make the application,the Judge summarised the respective positions of the parties.4[16] VRL submitted that Mr Cornes and Ms Jones had an improper motive inopposing the proposed works of to the driveway, saying they were doing this merelyto slow or impede the progress of the subdivision. VRL maintained it had the impliedright under sch 5, cl 2(a) of the PLA to make necessary repairs to the driveway and tocarry out necessary maintenance or upkeep, including altering the state of the landif necessary. This right was sufficient to allow it to carry out the proposed upgrades.[17] Mr Cornes and Ms Jones, however, submitted the terms of the easementand the implied rights under the PLA only permitted repairs and maintenance of thedriveway, and not the right to upgrade it or to install a drainage sump as proposedby VRL.[18] The Judge accepted that provisions in the Land Transfer Regulations 2018(initially relied on by VRL and which expressly permitted the replacement of theeasement facility), did not apply because the section of the Land Transfer Act 2017under which the Regulations were made did not have retrospective effect.5[19] However, the Judge found the implied covenants in cl 2 of sch 5 of the PLAgave VRL the right to construct the Council approved works, and in doing so, to alterthe land. Doogue J noted the existing driveway surface was deficient and neededstabilizing and permanent surfacing.6 She accepted that this work should beconstructed in accordance with current Council requirements and that it was3 Village Residential Ltd v Cornes [2020] NZHC 2064, (2020) 21 NZCPR 282.4 At [17]–[22].5 At [23]–[26].6 At [34].reasonable to allow VRL to meet these requirements in order to use its land ina lawful way by subdividing it.7[20] Doogue J also noted the existing provision for water drainage off the drivewaywas inadequate,8 and the proposed works for draining surface water off the driveway(being the kerb and channel and the new sump) were integral to supporting thenew sealed driveway surface.9 Accordingly, she confirmed VRL's entitlement to carryout the proposed upgrade of the driveway as recorded in the conditions of subdivisionconsent and made orders to facilitate that.10 Those orders included formalisingthe offer made by VRL to meet all the implementation costs.This appeal[21] The issues on appeal are limited. They are whether, as the appellants say,the Judge erred:(a) by finding that VRL had the right to "upgrade" the driveway when boththe express and implied rights for such an easement only allow forrepair, maintenance and upkeep of the driveway, not its upgrade; and(b) by effectively recognising "drainage rights" to VRL under the impliedrights for a right of way easement under the PLA.[22] We discuss each ground accordingly.The driveway upgradeSubmissions[23] Mr O'Connor, counsel for the appellants, submitted that the Judge was wrongto find the easement permitted the upgrade of the driveway. In his submission thereare no implied rights under either the terms of the easement, or under the PLA,7 At [36].8 At [30].9 At [35].10 At [46].to "upgrade" the driveway. The terms "repair", "maintenance" and "upkeep", used inthese documents, can only permit the driveway to be returned to its original formedstate. They did not permit the driveway to be developed beyond the condition in whichit was originally established. Thus, if a driveway was originally gravelled, the ownerof the benefited land could never insist on it being developed further by, for example,sealing the driveway or installing kerbing, unless the owner of the burdenedland consented.11[24] Mr Kerr for VRL, however, submits the Judge made no error in findingthe rights implied into the right of way easement are sufficiently broad to cover thedriveway upgrade. These rights include to establish a driveway, to carry out necessaryrepairs, maintenance and upkeep, and to alter the state of the land.Analysis[25] The issue on appeal is whether the rights granted to the benefited land, Lot 1,expressly or by implication, include the right to undertake the works proposed.That begins with considering the terms of the right of way easement itself and thepurpose for which it was granted. As was said in Body Corporate 34118 v DistrictCourt at Auckland:12[18] In New Zealand the interpretation of easements and covenantsaffecting land has been undertaken by the same objective, purposive approachtaken for other commercial contracts of identifying the parties' intentions bydiscerning "the meaning which the document would convey to a reasonableperson having all the background knowledge which would reasonably havebeen available to the parties in the situation in which they were at the time ofthe contract". Care is required in concluding that the natural and ordinarymeaning of the words read in the relevant context would produce acommercially absurd result, especially in formal documents, [26] Applying that approach to the present case, the terms of the right of wayeasement are clear. The owner of Lot 1, VRL, may use the identified right of way onLot 2 for access, including vehicular access, for any lawful purpose for which VRL'sland can be used.11 We use the modern terms of benefited land (formerly the dominant tenement) and burdened land(formerly the servient tenement), even when referring to older cases where the former terms wouldhave been used.12 Body Corporate 34118 v District Court at Auckland [2015] NZCA 393, (2015) 16 NZCPR 667(footnotes omitted).[27] The references to maintenance and repair of the right of way in the transferitself is only included to ensure both the benefited and burdened land bear the costsof such work equally. Nothing in the terms of the easement prohibit the constructionof a driveway by the benefited land owner, if that is required to enable the use of theright of way for a purpose Lot 2 could lawfully be put.[28] The provisions of sch 5 of the PLA do not change that conclusion. They spellout, in more detail, the rights to establish and maintain a driveway. They do not, in ourview, limit the ability of the owners and occupants of the benefited land, to upgradeany driveway formed across the right of way if that is required to lawfully use thebenefited land at any point in time.[29] Schedule 5 allows the owners of both the benefited and burdened land to:(a) establish a driveway on the land over which the right of way is granted;(b) make necessary repairs to any existing driveway; and(c) carry out any necessary maintenance or upkeep of the driveway.The owners are also expressly permitted to alter, if necessary, the state of the land overwhich the right of way is granted. The party who undertakes such works is thenentitled to a reasonable contribution towards the cost of such works under cl 2(d).Clause 3 of sch 5 envisages that cl 2(a) is not exhaustive, noting that when a personhas undertaken work "in accordance with the right conferred by Clause 2(a), orwith an order of the Court",13 then they must restore the land as far as possible to itsformer condition (except for the existence of the driveway). Nothing in sch 5 isincompatible with, or precludes, the owner of the dominant land upgrading thedriveway to exercise the access rights which were granted in the original transfer.Indeed, both parties have the right to "establish a driveway" on the land. There isnothing to suggest that is not an ongoing right to create a driveway that is suitable foreither party's use at the time subject to a decision as to how the costs of that workshould be borne.13 Property Law Act, sch 5 cl 3(1) (emphasis added).[30] In addition to our reading of the terms of the transfer and of the statutoryimplied covenants, we consider that VRL's proposed works are also supported by thecommon law, which confers ancillary rights to the terms of the easement. As is statedin Hinde, McMorland and Sim:14The grant of an easement carries with it such ancillary rights as are reasonablynecessary for the effective and reasonable exercise and enjoyment of the rightsexpressly granted. However, those ancillary rights are restricted to theexercise of the rights expressly granted and any user of the burdened landbeyond those rights and purposes is a trespass, not being authorised bythe grant.[31] In Gregory v E K Trust, Katz J recently observed that ancillary rights wereanalogous to implied terms in contract law which are always subject to the termsof the contract (the grant).15 While in that case the issue was whether the installationof a gate was reasonably necessary for the effective and reasonable exercise of a rightof access across land, she made the following observation:[32] Ancillary rights will generally include a right for the dominant ownerto alter the surface of the land so as to better facilitate access to the propertyowned by the servient owner, for example, by putting down gravel, sealing aright of way, or cutting steps into a steep slope.(Footnote omitted.)[32] The appellants submitted that the rights conferred did not permit developmentbeyond the land's original condition at the time the grant was made. However, whilethe physical circumstances of the burdened land at the time of the grant are relevantfor the purposes of interpreting the grant,16 the position at least at English commonlaw appears to be that the benefited land owner can undertake such improvements asare necessary to serve the purposes for which the grant was made. Here the grant wasmade to provide access, including vehicular access, to Lot 1 for any lawful purpose.[33] Two English cases are illustrative of this point. In Newcomen v Coulson,a right of way existed over a cart track.17 It was originally used for agricultural14 D W McMorland and others Hinde McMorland and Sim Land Law in New Zealand (online ed,LexisNexis) at [16.038] (footnotes omitted).15 Gregory v E K Trust Ltd [2015] NZHC 1785, (2015) 16 NZCPR 519 at [29].16 Paterson and Barr Ltd v University of Otago [1925] NZLR 191 (Compensation Court), cited inHandforth v Kokomoko Farms Ltd (2010) 11 NZCPR 171 at [13].17 Newcomen v Coulson (1877) 5 ChD 133 (CA) at 143.purposes, including horse and foot travel, carts and carriages, and movementof animals to the tenants' and farmers' respective allotments. The terms of the grant,however, did not limit it to agricultural purposes. A hundred years after the grant wasmade, the owner of the benefited land wanted to lay down a metalled road to service26 homes built on one of the allotments.[34] The English Court of Appeal held the agricultural purposes did not limitthe benefited land owner's rights which, they found, did extend to putting down ametalled road. Lord Jessel MR explained the rationale for that conclusion as follows:Now it was conceded to be the principle of law that the grantee of a right ofway has a right to enter upon the land of the grantor over which the wayextends for the purpose of making the grant effective, that is, to enable him toexercise the right granted to him. That includes not only keeping the road inrepair but the right of making a road. If you grant to me over a field a right ofcarriage-way to my house, I may enter upon your field and make over it acarriage-way sufficient to support the ordinary traffic of a carriage-way,otherwise the grant is of no use to me, because my carriage would sink up tothe naves of the wheels in a week or two of wet weather. It cannot becontended that the word "repair" in such a case is limited to making good thedefects in the original soil by subsidence or washing away, it must include theright of making the road such that it can be used for the purpose for which itis granted.[35] Continuing that theme, even significant modifications to the burdened land bythe owner of the dominant land have been allowed, even after a considerable periodof time, to facilitate the use of the easement for purposes not anticipated at the time ofthe grant. For example, in Dand v Kingscote, the owner of land on which there werecoalmines had a right of way to and from the mines across burdened land.18More than 200 years after the original grant, the benefited land owner wanted toconstruct a railway to transport the coal from the pits across the burdened land.The Court of Exchequer held such modifications came within the grant. Parke B,delivering the Court's judgment, said the purpose of the easement was to enablethe coal mine owner to transport their coal. There was nothing expressly limiting howthat purpose was to be fulfilled, and so "the owner is not confined to such descriptionof way as in use at the time of the grant".19 Because the railway was convenient forthe purpose of the mine, it was allowed by the easement.18 Dand v Kingscote (1840) 6 M & W 174 (Exch).19 At 198.[36] This case illustrates that the owner of benefited land is not bound to maintainthe right of way's condition at the time of the grant. The rights conferred by aneasement can respond to evolving circumstances so that they are sufficient to enablethe lawful use of the benefited land at any given time.[37] In our view, given the subdivision of Lot 1 is lawful, as it received a subdivisionconsent, the upgrading of the access way required by the Council as a condition ofsubdivision consent, ought to be permitted. It is required to enable access, includingvehicular access, to the subdivided lots of the benefited land. Any other reading wouldfetter VRL's ability to exercise the access rights which have been granted.[38] This ground of appeal therefore fails.The drainage argument[39] The second point raised by the appellants is that the Judge erred by effectivelygranting VRL a drainage easement. This is because she has permitted surface waterto be drained along the driveway and collected in a drainage sump within the drivewayas part and parcel of the proposed works. Mr O'Connor points out a drainage easementis a different class of easement from a right of way easement and the Judge hadno power to make such a grant when determining the scope of work authorised bythe right of way easement.[40] Mr O'Connor also says that although a drainage easement was granted as partof the 1951 transfer, it cannot permit works to facilitate stormwater drainage withinthe right of way itself. That easement related to a tile drain which, runs from VRL'sproperty across the appellants' driveway to a neighbouring property, and not down theappellants' driveway to Lucknow Road. In conclusion, VRL has no right to drainwater on the appellants' land, and the Judge was wrong to conclude that drainage was"part and parcel of the driveway".[41] In reply, VRL submits that the appellants are wrong to contend the Judgegranted it drainage rights. While the driveway upgrade included measures for drainingwater off the driveway to the road, those measures were integral to the design andconstruction of the driveway itself. They did not require the grant of rights to conveyor drain water and the Judge did not do so. Accordingly, the respondent arguesthe appeal should be dismissed.[42] Before discussing these submissions, it is necessary to describe the worksproposed. VRL plans to install a sump within its land above the point where the upperthree lots of its subdivision would enter the right of way. This is to capture stormwaterbefore it enters the driveway on the right of way. VRL's surveyor confirms there willbe no additional stormwater directed onto the shared driveway as a consequence ofthis work. In fact, the combination of kerb and channel and a sump at the bottom ofthe new driveway is intended to reduce the runoff which presently occurs onthe appellants' land.[43] We do not consider permitting these works constitutes the grant of a drainageeasement. A drainage easement allows water from one property to be drained,usually via a pipe or channel, over another property. It is not required for managementof natural water flows within a property, as is proposed here, nor to authorise receiptof water which is received by "natural servitude", that is, to receive water that naturallydrains from one property to another by virtue of the topography of the land.[44] Nothing in the works proposed requires Lot 2 to receive drainage water fromLot 1 that it did not already receive in high rainfall events, and thus no drainageeasement is required, or has been granted.[45] The installation of the drainage sump on VRL's land is of no concern tothe appellants and they cannot object to it. The installation of the drainage sump atthe bottom of the driveway is, as Doogue J accepted, a key component of the sealingof the right of way and is intended to improve stormwater management and reducerunoff nuisance. Accordingly, we agree it was appropriate to authorise all the worksrequired to construct a driveway to the requisite Council standard, including as tomanagement of water runoff from the drive.[46] This ground of appeal also fails.[47] The only other point raised by the appellants during submissions and inaffidavit evidence, albeit not a formal ground of appeal, was that they would beunfairly burdened with 50 percent of the costs of maintaining the more expensive drivewhen they are only one of four property owners who will be using it when thesubdivision is complete.[48] We agree that seems inequitable. If the parties cannot agree to a modificationof the terms of the easement, it is a matter they would need to resolve through theCourts.Result[49] The appeal is dismissed.[50] The appellants must pay the respondents costs for a standard appeal on a bandA basis together and usual disbursements.Solicitors:Heaphy & Co, Hastings for AppellantsS J Scannell & Co, Hastings for Respondent