FUGE & ORS v WIMAX NEW ZEALAND LIMITED [2022] NZHC 2922

FUGE & ORS v WIMAX NEW ZEALAND LIMITED [2022] NZHC 2922 [8 November 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-000202[2022] NZHC 2922BETWEEN MICHAEL and JULIA FUGE, BRYCEMARLOW TOWN, CHLOE ANNE FUGEand JULIA ELIZABETH FUGE as trusteesof the Aberdeen Four TrustApplicants/AppellantsAND WIMAX NEW ZEALAND LIMITEDRespondentHearing: (On the papers)Counsel: Adam Ross KC, Phil Ahern and Rayhan Langdana for theApplicant/AppellantsKelly Quinn and Carter Pearce for the RespondentJudgment: 8 November 2022JUDGMENT OF MOORE J[Leave to appeal]This judgment was delivered by me on 8 November 2022 at 3:30 pmpursuant to Rule 11.5 of the High Court Rules.Registrar/ Deputy RegistrarDate:Background[1] Michael, Julia and Chloe Fuge occupy a property owned by their family trust,named the Aberdeen Four Trust ("the Trust"). Their property shares a driveway withanother property owned by Wimax New Zealand Ltd ("Wimax") and occupied by thedirectors and shareholders, Brett and Averley Dennerly.[2] The parties are embroiled in a dispute over their driveway, which they referredto the Hon Paul Heath KC for arbitration. The arbitrator found that the structuresplaced by Wimax on the easement area were not an unlawful infringement with theeasement because they did not substantially interfere with the use of the driveway.[3] The Trust then applied for leave to appeal on two questions of law. Katz Jgranted leave on the following two questions:1(a) Question 1: Did the arbitrator err by interpreting the rights set out in theeasement instrument, and implied by the Land Transfer Regulations2002 ("the 2002 Regulations") and the Property Law Act 2007 ("thePLA") to mean that, in circumstances where there is an existing formeddriveway, structures that otherwise encroach within the full width of aright of way will only give rise to an actionable infringement if theywere to obstruct a grantee's ability to use and enjoy that existing formeddriveway?(b) Question 2: Did the arbitrator err by failing to apply the relevant legaltest, which is whether the obstructions or impediments Wimax placedor allowed to be placed on the ROW Easement were substantial, andtherefore actionable?1 Fuge v Wimax New Zealand Ltd [2021] NZHC 2470.[4] On 20 May 2022, I answered both questions in the affirmative and allowed theTrust's appeal.2 I found that the right conferred by the easement was to pass and re-pass over the entirety of the easement facility, not only the driveway.3 The arbitratortherefore applied the wrong legal test when determining whether Wimax's structuresconstituted a substantial interference with the easement.4 I remitted the matter to thearbitrator to consider the appropriate remedy.5[5] Both parties now seek leave to appeal my decision on different grounds:(a) Wimax seeks leave to appeal on the basis that I erred by answeringQuestions 1 and 2 in the affirmative and by concluding that it wasinescapable some structures substantially interfere with the easement.(b) The Trust seeks leave to appeal on the basis that I erred as a matter oflaw by finding that there was a broad discretion as to remedy unders 313 of the PLA and remitting the matter to the arbitrator.[6] The parties each oppose one another's applications.Legal principles – leave to appeal[7] Leave is required to appeal against a High Court determination of an appealagainst an arbitral award on a question of law.6 The primary focus is whether thequestion of law is worthy of consideration.7 The applicable principles are that:8(a) the appeal must raise some question of law capable of bona fide andserious argument in a case involving some interest, public or private, ofsufficient importance to outweigh the cost and delay of the furtherappeal;2 Fuge v Wimax New Zealand Ltd [2022] NZHC 1121.3 At [68]–[69].4 At [77]–[78].5 At [89].6 Arbitration Act 1996, sch 2 cl 5(5).7 Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd [2007] NZCA 355,[2008] 2 NZLR 591 at [33].8 At [33] citing Cooper v Symes (2001) 15 PRNZ 166 (HC) at [12].(b) upon a second appeal, the Court of Appeal is not engaged in the generalcorrection of error. Its primary function is then to clarify the law andto determine whether it has been properly construed and applied by theCourt below; and(c) not every alleged error of law is of such importance either generally orto the parties as to justify further pursuit of litigation that has been twiceconsidered and ruled upon by a Court.Should Wimax's application for leave to appeal be granted?[8] Mr Quinn, for Wimax, advances five proposed grounds of appeal. These canbe broadly summarised as:(a) the Court erred by holding that the right conferred by the easement isto pass and re-pass over the entirety of the easement facility and thusanswering Question 1 in the affirmative;9(b) the Court erred by answering Question 2 in the affirmative;10 and(c) the Court erred by finding that because there are several permanentstructures which encroach into the easement area, the conclusion thatthose structures substantially interfere with the easement isinescapable.11[9] Mr Quinn submitted that these grounds relate to legal issues with broadongoing significance. He submitted that they go to the heart of the dispute betweenthe parties. They are also seriously arguable, given that a highly respected arbitrator,who is a former judge of this Court, expressed a different view of the law at firstinstance. It follows, in his submission, that the threshold for leave is met.9 This reflects the grounds at [3(a)] and [3(b)] of Wimax's application for leave to appeal.10 This is the ground at [3(c)] of Wimax's application for leave to appeal.11 This reflects the grounds at [3(d)] and [3(e)] of Wimax's application for leave to appeal.[10] I accept that the first two grounds expressed above are capable of seriousargument. As noted by Mr Quinn, the arbitrator is a highly respected former judge ofthis Court. His contrary view at first instance is an indicator that Questions 1 and 2are capable of serious argument. The questions of law are also complex.[11] I further accept that the proposed questions of law relate to a legal principle ofgeneral significance. In Katz J's words:12"[57] The 2002 Regulations were in place for more than 16 years beforethey were replaced by the 2018 Regulations. During those 16 years there willhave been a large number of subdivisions in Auckland (and New Zealand),with the associated creation of numerous right of way easements. In addition,there will be a number of older right of way easements that were updated andregistered in a new form between 2002 and 2018 (such as the easement atissue in this case).[58] The 2002 Regulations therefore have broad ongoing application. TheCourt's clarification of their scope has the potential to provide guidance to asignificant number of property owners, as well as lawyers, conveyancingpractitioners, valuers and others in the industry who are advising prospectivepurchasers, owners, and/or developers."[12] It is evident that the issues are of significance to the parties. They haveinvested considerable time and resources into the dispute thus far. Since it is acceptedthat Wimax's structures intrude into the easement area, the formulation of the legaltest may well be determinative of the outcome.[13] I therefore consider that the first two grounds expressed above are worthy ofconsideration.[14] I do not consider that leave should be granted on the third ground expressedabove. The impugned part of the reasoning is repeated below:13"[77] It is undisputed that there are several permanent structures whichencroach into the area of the ROW Easement. When viewed from thisperspective, the conclusion that those structures substantially interfere withthe easement is inescapable.12 Fuge v Wimax New Zealand Ltd [2021] NZHC 2470.13 Fuge v Wimax New Zealand Ltd [2022] NZHC 1121[79] Answering both questions in the affirmative leads to the conclusionthat the arbitrator erred in law. The finding that the structures are a substantialinterference with the easement necessarily leads to the question of remedy."[15] This was expressed in general terms. The particular structures which interferewith the easement are not identified. That is because the appeal was focused only onthe determination of Questions 1 and 2. Applying the law as stated by this Court andidentifying the particular structures which constitute a substantial interference with theeasement is a matter for the arbitrator. This is a necessary precursor to the question ofremedy, which was remitted to the arbitrator.[16] It does not follow that in the context of this case, where it was undisputed thatthere were several permanent structures placed on the easement area, that this Courterred by stating that it was "inescapable" that some structures would substantiallyinterfere with the easement. That statement forms part of the explanation why thearbitrator must have applied the wrong legal test. Moreover, it is the application ofthe legal test stated by this Court to the facts as the arbitrator found them – not a purelyfactual finding.[17] The proposed ground is not a point of law of sufficient importance to justifyfurther consideration. Unlike the previous two grounds, this is not a legal issue withbroad ongoing application. Nor does it require clarification.[18] I therefore consider that Wimax should be granted leave to appeal on the firsttwo grounds identified above.14Should the Trust's application for leave to appeal be granted?[19] Mr Ross KC seeks leave to appeal on the basis that I erred as a matter of lawby finding that there was a broad discretion as to remedy under s 313 of the PLA andremitting the matter to the arbitrator.1514 These are expressed as grounds [3(a)-(c)] in Wimax's notice of application for leave to appealdated 17 June 2022.15 Mr Ross originally sought leave to appeal on a second ground relating to the arbitrator's costs.This was withdrawn after the parties resolved this issue on application to the arbitrator.[20] Mr Ross submitted that s 313 does not confer the broad discretion suggestedby the Court. He argued that the discretion must be limited, so as to protect theintegrity of registered land rights. It follows, in his submission, that the remedy in thiscase was obvious and should have been awarded by this Court.[21] This is a matter which the Court of Appeal will confront if the Trust issuccessful in defending Wimax's appeal. The Court will then be required to disposeof the proceeding. It might remit the matter to the arbitrator in light of its interpretationof the law, as this Court did. If Mr Ross is correct in his ground of appeal, it may remitthe question of remedy to this Court. Little cost or delay would be associated witheither outcome on appeal, as the Court of Appeal need not consider the substance ofthe dispute as to remedy.[22] Alternatively, the Court of Appeal may determine the appropriate remedy andmake orders accordingly. This approach will also result in limited additional cost anddelay, as the matter will be before the Court and must be determined at some pointregardless. The prospect of finality supports this issue being argued.[23] I therefore consider that the Trust should be granted leave to appeal on thisground.Result[24] Wimax's application for leave to appeal on the grounds identified at [8](a) and[8](b) is granted.[25] The Trust's application for leave to appeal on the ground identified at [19] isgranted.Costs[26] Both parties succeeded in their applications for leave to appeal. Each party'ssuccess was symbiotic with the other. My preliminary view is therefore that costsshould lie where they fall. Should the parties be unable to resolve any costs issuesbetween themselves, leave is reserved to file memoranda.[27] I direct that any memorandum on behalf of either party is to be filed and servedno later than 5:00 pm on Friday, 9 December 2022.Moore JBarristers/Solicitors:Mr Ross KC, AucklandMr Ahern, AucklandMr Langdana, AucklandMr Quinn, AucklandMr Pearce, Auckland