Arcidiacono v The Owners - Strata Plan No 17719; Arcidiacono v The Owners - Strata Plan No 61233 - [2020] NSWCA 269 - NSWCA 2020 case summary

Court of Appeal (NSW)|2020-06-04|Before: Macfarlan JA, White JA, McCallum JA

tate Rail Authority of New South Wales (2004) 60 NSWLR 286; [2004] NSWCA 179 Texts Cited: Peter Butt, "Use 'as of right'" (2004) 78 ALJ 162 Brendan Edgeworth, Butt's Land Law (7th ed, 2017, Lawbook Co) Sir Frederick Jordan, Select Legal Papers (Legal Books, 1983) Category: Principal judgment Parties: Proceedings No 2019/335719: John Anthony Arcidiacono (First Appellant) Anna Marie Arcidiacono (Second Appellant) The Owners - Strata Plan No 17719 (Respondent)

Proceedings No 2019/335731: John Anthony Arcidiacono (First Appellant) Anna Marie Arcidiacono (Second Appellant) The Owners - Strata Plan No 61233 (Respondent) Representation: Counsel: T S Hale SC / R M Higgins (Appellants) C A Webster SC / N Kabilafkas (Respondent - Strata Plan No 17719) A G Rogers (Respondent - Strata Plan No 61233)

Solicitors: David Mulcahy, Solicitor (Appellants) Jane Crittenden, Lawyer (Respondent - Strata Plan No 17719) Peter Prior & Co Solicitors (Respondent - Strata Plan No 61233) File Number(s): 2019/335719, 2019/335731, 2020/70625, 2020/70655 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Citation: [2019] NSWSC 1307 Date of Decision: 30 September 2019 Before: Henry J File Number(s): 2016/187360, 2016/187385

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] Two small parcels of land in Sydney's CBD (the "Dock" and the "Passage") were sold by Sydney City Council to the appellants in 2008 as a result of rates being unpaid. The identity of previous owners of the parcels was largely unknown. The respondents, who were owners of neighbouring land at 71 York Street and "Clarence House" on Clarence Street, claimed in the proceedings that they had easements over the Dock and Passage. The primary judge held that the respondents had established easements by prescription for rights of carriageway over the Dock and Passage based on long open use. Her Honour also stated that if that were not the case, she would have ordered easements to be imposed under s 88K of the Conveyancing Act 1919 (NSW) and awarded limited amounts of compensation. Her Honour also imposed easements under s 88K over the Dock and Passage in favour of 71 York Street for overhanging and encroaching structures to remain and for services and repairs. The principal issues on appeal were: (1) Whether the respondents had established easements by prescription over the Dock and Passage. (2) Whether easements for rights of carriageway should have been imposed over the Dock and Passage under s 88K. (3) Whether other easements (for overhanging and encroaching structures and for services and repairs) should have been imposed under s 88K. The Court granted leave to appeal but dismissed the appeal: In relation to Issue 1: (Per Macfarlan JA, McCallum JA agreeing at [149]): An easement by prescription will arise if, over the requisite period, an owner knows that their land is being used by a third party seemingly as of right, but in fact without authority, and the owner does not assert their rights: [43]. Owners of property who are unaware of that ownership may be fixed with knowledge of adverse user of the property on the basis that a prudent owner would have been aware of that ownership and user: [44], [57]. The appellants did not discharge their onus of establishing that the owners of the Dock and Passage from time to time were, for some good reason, not aware of the relevant user: [57]. The use of the Dock and Passage by the respondents was open and would have been obvious or apparent to any reasonable observer: [59]. Gangemi v Watson (1994) 11 WAR 505; Fernance v Simpson [2003] NSWSC 121; 11 BPR 20,955, applied. Hamilton v Joyce [1984] 3 NSWLR 279; Sunshine Retail Investments Pty Ltd v Wulff [1999] VSC 415, distinguished. (Per White JA): Acquiescence does not, in all cases, lie at the root of easements by prescription; rather it is the open and uninterrupted use without licence that gives rise to the easement by prescription: [137]-[140], [144]-[145]. Acquiescence, as distinct from use pursuant to licence, arose from the need to infer a grant of an easement under the former law of England and thereby the landowner's acquiescence (consent): [107]-[109], [118]-[119], [128]-[130], [142]. The High Court's rejection in Delohery of the fiction of lost modern grant militates against the need for acquiescence as the latter arose in support of the former: [137], [139]-[140], [142]. If acquiescence is, in all cases, a fundamental precondition to the existence of an easement by prescription, then the previous owners of the Dock and Passage did not acquiesce in the use, as he, she or it could not have known they owned the Dock or Passage: [82]-[83]. The doctrine of constructive knowledge should not be extended so that the relevant knowledge is imputed to the previous owners: [147]. Delohery v Permanent Trustee Co of New South Wales [1904] HCA 10; (1904) 1 CLR 283, applied. Dalton v Henry Angus & Co (1881) 6 App Cas 740, considered. In relation to Issue 2: (Per Macfarlan JA, White and McCallum JJA agreeing at [80] and [149]): Reasonable necessity for the purpose of s 88K means that the use or development with the easement must be at least substantially preferable to the use or development without it: [61]. The primary judge's decision that access over the Dock and Passage was "substantially preferable" was an evaluative one and it was not shown to be unreasonable: [63]-[65]. Further, the evidence did not establish that the imposition of an easement would have been against the public interest: [67]. Finally, the appellants could be and would have been adequately compensated by the primary judge's assessment of compensation: [72]. 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504; Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445, applied. In relation to Issue 3: (Per Macfarlan JA, White and McCallum JJA agreeing at [80] and [149]): The primary judge exercised her discretion to impose the relevant easements and no error was shown in her decision: [74], [77]. The inferences she made were reasonably open to her on the evidence and did not involve a reversal of the onus of proof: [76]. House v The King (1936) 55 CLR 499; [1936] HCA 40, applied.

Judgment

MACFARLAN JA: These are applications for leave to appeal and purported appeals against a decision of Henry J of 30 September 2019 concerning two small parcels of land in the CBD of Sydney ([2019] NSWSC 1307). Her Honour found that the present respondents, who are owners of properties adjoining the parcels, are entitled to easements by prescription over them. If her Honour had not held that the respondents had a present entitlement to those easements, her Honour would have made orders under s 88K of the Conveyancing Act 1919 (NSW) imposing relevant easements.
The appellants own the servient tenements and also another two adjacent allotments of land. They appeal on the grounds that the requirements for the establishment of easements by prescription were not satisfied, nor were those for the imposition of easements under s 88K. As to the former, the appellants contend that the respondents did not establish knowledge by previous owners of the parcels of their adverse use and that there was in any event insufficient evidence of such use to give rise to easements by prescription. As to the latter, the appellants contend that it was not reasonably necessary to impose the easements, that their imposition would be inconsistent with the public interest, that the appellants were not able to be properly compensated for the loss or disadvantage to them resulting from imposition of the easements and, in respect of one parcel, that her Honour erred in assessing the amount of compensation to be awarded.
For the reasons that follow, the appellants' challenges to the primary judgment should be rejected. As I have concluded that the appellants' substantive arguments should be rejected, it is convenient to dispose of the proceedings in this Court by granting leave to appeal to the extent necessary and dismissing the appeals without resolving the contested issue of whether the appellants have rights to appeal.

THE SERVIENT AND DOMINANT TENEMENTS

The parcels of land which the primary judge held to be subject to easements were described in the proceedings as the "Dock" and the "Passage". They, and adjacent properties, but not the extent to which buildings occupy the properties, are shown on the plan annexed to this judgment. The Dock has an area of approximately 5.75 square metres and the Passage has an area of approximately 94.18 square metres. They are owned by the appellants, as is 100 Clarence Street and another small adjacent parcel, referred to in the primary judgment as the "8 ft lane". Clarence House and 71 York Street are the allotments that the primary judge found to be entitled to the benefit of easements. Clarence House is owned by the respondents in appeal proceedings 2019/335719 (those owners are referred to in this judgment as "Clarence House"). 71 York Street is owned by the respondents in appeal proceedings 2019/335731 (those owners are referred to as "71 York Street"). 65 York Street is in other ownership, as is 5-7 Barrack Street. The appellants purchased the Passage and the Dock in 2008 when they were sold by the Sydney City Council as a result of rates being unpaid.
The buildings at 71 York Street and Clarence House are each heritage listed buildings which do not occupy the whole of the allotments on which they are erected. In particular, there is an area at the rear of each which is open and over which vehicles may travel. Similarly, there is no structure on the Dock or the Passage. As a result, vehicles and pedestrians accessing the rear of Clarence House and 71 York Street can, and do, travel back and forward along the Passage and over the Dock. The extent of that usage was in issue in the proceedings.
Apart from the easements that are in issue in the present proceedings, there were at all relevant times in existence easements giving rights of passage in favour of 65 York Street, 71 York Street and 5-7 Barrack Street over the Passage.

71 York Street conclusions

As 71 York Street has an existing right of way over the Passage recorded on its title, the primary judge declined to make a declaration as to its existence. Her Honour however found that an easement by prescription for a right of carriageway over the Dock had arisen "based on long open use in the years prior to 1927".
If her Honour had not concluded that an easement by prescription had arisen over the Dock, she would have made an order under s 88K of the Conveyancing Act imposing a corresponding easement and assessing the appropriate amount of compensation at $6,000 (excluding reasonable legal costs).
Her Honour further held that orders should be made under s 88K imposing easements for the benefit of 71 York Street over the Passage and the Dock for overhanging and encroaching structures to remain, and for services and repairs, the appropriate amount of compensation being $2,000 for each easement (excluding reasonable legal costs).

Clarence House conclusions

The primary judge held that easements by prescription for rights of carriageway over the Passage and the Dock had arisen for the benefit of the Clarence House land based on open user of these parcels since 1981. Her Honour's reference to user since 1981 is explained by the condition her Honour imposed on the grant of leave to Clarence House to amend its pleading to allege an easement by prescription. To avoid the appellants being prejudiced by the amendment, Clarence House was precluded from relying on user prior to 1981.
Her Honour indicated that if she had not concluded that easements by prescription had arisen, she would have made orders under s 88K imposing corresponding easements over the two parcels and fixing the amount of compensation at $6,000 for each easement (excluding reasonable legal costs).

Previous ownership of the Passage and the Dock

The primary judge found that the Passage and other surrounding property formed part of a Crown grant made to Hugh McDonald on or about 20 May 1819 and until the time that the appellants purchased the Passage in 2008 it "appears to have remained undistributed as part of Mr McDonald and his beneficiaries' estate". There was no evidence as to the identity of those beneficiaries.
Her Honour found that the Dock formed part of a Crown grant made to John Terry Hughes on 10 May 1829 and was subsequently conveyed as part of a larger area of land first to David William Jamieson and George Cooper Turner in 1841 and then to Patrick Erwin on 1 May 1847. Her Honour held that the Dock remained undistributed as part of Mr Erwin's estate when it was purchased by the appellants in 2008.
Her Honour then proceeded on the basis, unchallenged on appeal, that the identity of the owners of the Dock and Passage at the time of the appellants' purchase was unknown. More particularly, her Honour proceeded upon the basis that their identity was not known "during the period from the late 1880s to 2008".

Legal principles

The primary judge's uncontentious summary of the relevant legal principles included the following: "[300] In NSW, easements by prescription arise at common law under the doctrine of lost modern grant. By continued use for at least 20 years, a trespasser may acquire rights in respect of land, by way of an easement, consistent with that use. The law creates a fiction that requires a court to presume, even if contrary to the truth, the existence of an express grant allowing such use which has been lost: Williams v State Transit Authority of NSW (2004) 60 NSWLR 286; [2004] NSWCA 179 … at [79]. … [304] It is for the party seeking to assert the right by way of prescription to demonstrate the acts of user of the requisite character and the circumstances which show that the owner of the servient tenement acquiesced in the use as an established right. As Parker J stated in Mills v Silver [1991] 2 Ch 271 at 290: 'The true approach is to determine the character of the acts of user or enjoyment relied on. If they are sufficient to amount to an assertion of a continuous right, continue for the requisite period, are actually or presumptively known to the owner of the servient tenement and such owner does nothing that is sufficient' [305] If the servient owner has no actual or constructive knowledge of the user, a prescriptive right will not arise. The test of constructive knowledge is objective: was the use of a kind that an owner, reasonably diligent in the protection of his or her interests, would or should have discovered? See generally Fernance v Simpson [2003] NSWSC 121; Gangemi v Watson (1994) 11 WAR 505; Milne v James (1910) 13 CLR 168. The doctrine does not reward inactivity: R (Beresford) v Sunderland City Council [2004] 1 AC 889, approved in Williams v State Transit Authority at [85]. … [308] In the case of qualified title (such as the Passage and the Dock), if an easement by prescription was in the course of being acquired when the land was being brought under the Real Property Act or arose prior to that time, the easement can still be registered: s 42(a1) of the Real Property Act. In this case, the defendants accept that the qualified titles to the Passage and the Dock mean that use that begins at least 20 years prior to 6 June 2016 (being when the defendants advised they were closing off the Passage by the [installation of a] gate) can be relied on for prescriptive easements to arise …"
Having summarised the parties' submissions, her Honour then examined relevant authorities and concluded: "[357] In my view, the correct approach, as applied by Windeyer J [in Fernance v Simpson] and in the other cases relied on by the defendants, is for the Court to consider whether the unknown owners of the Dock and Passage, acting diligently and taking reasonable care for their interests, would have been aware of the use to which the land has been put, based on the evidence of use relied on by 71 York Street and Clarence House. If the Court concludes that the owners would have become aware, then the presumption is satisfied and the burden shifts to the defendants to establish there was no knowledge on the part of the owners. [358] I do not accept the defendants' submission that where the evidence indicates that the identity of the owners of the Passage and the Dock at the time of the use is unknown, the presumption is rebutted as the only reasonable inference is that the owner was unaware of their rights and did not know of the use. Approaching the presumption of the knowledge required for a prescriptive easement in that way is not supported by any authority referred to by the defendants. To the contrary, the authorities relied on by the defendants seem to me to support the approach of Windeyer J in Fernance v Simpson, rather than undermine it. … [370] To allow the defendants to negate easements by prescription being recognised because the identity of the owners of the Dock and Passage was unknown would, in my view, amount to an injustice if there is evidence of sufficiently open use that the owners - whoever they were - being reasonably careful of their interests, would have known about and could have put a stop to if they had wished."

Usage and knowledge of use of the Passage and the Dock

On the issue of whether a prescriptive easement over the Dock arose in favour of 71 York Street, her Honour relied on evidence that commencing in 1877 Mr William Gardiner acquired various parcels of land on York and Clarence Streets, including what is now 71 York Street, and that he and, later, companies with which he was associated, used the Dock to provide access for carts and wagons to what is now the rear of 71 York Street. This occurred in conjunction with their use of the Passage in relation to which 71 York Street had an express right of carriageway.
Her Honour then concluded: "[375] I am satisfied that such use was sufficiently open and of a character that the owner of the Dock at that time, being reasonably diligent and careful about their interests, could and should have been aware of the use by the predecessor in title to 71 York Street. Crossing the Dock from the Passage to gain access to the rear area and loading yard at the back of the warehouses to load and unload wagons must have been obvious to any reasonable observer. No submission was made by the defendants to the contrary. [376] Adopting the approach of Windeyer J in Fernance v Simpson, I have, therefore, concluded that the continuous open use by 71 York Street's predecessors in title gives rise to the presumption of grant and that 71 York Street's claim to an easement by prescription for a right of way has been made out on the basis of use up to 1927."
Her Honour held that the easement that arose extended to its use by motor vehicles, by foot and by other modes of transport.
In relation to Clarence House, the primary judge referred first to the evidence of Mr Anthony Cook who was the registered proprietor of the lots that comprise the ground and lower ground floors of Clarence House. He operated the Clarence Street Cyclery from those lots from 1981 to 30 July 2018. Her Honour also referred to the evidence of Ms Jill Yates who is the owner of a lot in Clarence House, having purchased it in the mid-1990s. Her Honour held that the evidence of Mr Cook and Ms Yates was sufficient to show that "the Dock and the Passage were used by residential occupants of Clarence House" for at least the required 20 year period.
Her Honour found that the "nature of the use of the Passage and the Dock by the occupants of Clarence House was open and would have been apparent to any reasonable observer" and that "the use of the Passage and the Dock by Clarence House since 1981 justifies making a finding of constructive knowledge of use on the part of the unidentified owners".

Alternative claims for s 88K Orders

The primary judge set out the terms of s 88K of the Conveyancing Act which are as follows: 88K Power of Court to create easements (1) The Court may make an order imposing an easement over land if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement. (2) Such an order may be made only if the Court is satisfied that - (a) use of the land having the benefit of the easement will not be inconsistent with the public interest, and (b) the owner of the land to be burdened by the easement and each other person having an estate or interest in that land that is evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act 1900 can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement, and (c) all reasonable attempts have been made by the applicant for the order to obtain the easement or an easement having the same effect but have been unsuccessful. (3) The Court is to specify in the order the nature and terms of the easement and such of the particulars referred to in section 88(1)(a)-(d) as are appropriate and is to identify its site by reference to a plan that is, or is capable of being, registered or recorded under Division 3 of Part 23. The terms may limit the times at which the easement applies. (4) The Court is to provide in the order for payment by the applicant to specified persons of such compensation as the Court considers appropriate, unless the Court determines that compensation is not payable because of the special circumstances of the case. …
Her Honour noted that s 88K(2)(c) was satisfied in relation to both 71 York Street and Clarence House as the appropriate efforts had been made to obtain the easements by negotiation and concluded that if the remaining conditions specified in s 88K were satisfied that the orders sought should be made. The issues to be addressed were therefore reasonable necessity for the easements, consistency with the public interest and compensation.

Whether the rights of carriageway over the Passage and the Dock were reasonably necessary

Her Honour first noted that "reasonably necessary" in this context "means something more than mere desirability or preferability over the alternative means available, but does not mean absolute necessity" and that it may exist "even if the claimant's land could be effectively used or developed without the easement".
Her Honour then cited Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445 which approved the following statement of principles by Hodgson J in 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504 at 508-9: "It is clear that 'reasonably necessary' in s 88K(1) does not mean 'absolutely necessary', and thus that the requirement may possibly be satisfied even when the plaintiff's land could be effectively used or developed without the easement: Tregoyd Gardens v Jervis (Hamilton J, 25 September 1997, unreported); Goodwin v Yee Holdings Pty Ltd (Windeyer J, 6 November 1997, unreported); Re Seaforth Land Sales Pty Ltd's Land [No 2] [1977] Qd R 317. In my opinion: (1) the proposed easement must be reasonably necessary either for all reasonable uses or developments of the land, or else for some one or more proposed uses or developments which are (at least) reasonable as compared with the possible alternative uses and developments; and (2) in order that an easement be reasonably necessary for a use or development, that use or development with the easement must be (at least) substantially preferable to the use or development without the easement. The first of those requirements may seem contrary to a statement by Hamilton J in Tregoyd Gardens (at 14) that the Court 'is not to judge upon the reasonableness of the particular development'. However, that statement is qualified by the words 'at least in this case'. If there are some possible reasonable uses or developments of the land for which a proposed easement is not reasonably necessary, then it seems to me that the easement cannot be 'reasonably necessary for the effective use or development' of the land, at least unless there is some proposed use or development, for which the proposed easement is reasonably necessary, which is itself a reasonable use or development. It may be that the particular proposed use or development would need also to be preferable to the alternatives; but whether or not that is so, it would in my opinion certainly need to be at least reasonable."
In relation to 71 York Street's claim for an easement over the Dock, her Honour noted that "[t]he rear area of 71 York Street is used for a variety of purposes, such as fire egress, deliveries and dispatch of goods and materials, access for tradespeople to undertake maintenance and repairs, and for garbage storage and collection".
After considering the relevant evidence, her Honour rejected the appellants' contention that use of the Dock as part of the path for exiting the rear of 71 York Street in the case of fire was not reasonably necessary because a fire isolated passage within the 71 York Street building could be constructed as an alternative means of fire egress. Her Honour found that construction of such a passage would involve "not insignificant delay, cost and inconvenience given the need for council approval, the heritage nature of the 71 York Street building" and the evidence of Allan Harriman, a fire safety consultant who gave evidence.
Her Honour concluded that "use of the rear area [of 71 York Street] with a right of carriageway over the Dock is substantially preferable to use without that right. Not granting a right of carriageway over the Dock would prevent 71 York Street from accessing the rear area of its land via the Passage which, not only would negate the benefit of its right of its way over the Passage but, would also limit the uses to which the rear area of land can be put".
In relation to the reasonable necessity for Clarence House to have rights of carriageway over the Dock and the Passage, her Honour first noted that two fire isolated exits discharge from Clarence House to its rear and that Sydney City Council approved the strata plan for Clarence House on the condition that the occupants could exit from the rear of the building and travel over the Dock and Passage onto York Street. Her Honour found that there would be considerable disadvantages in instead constructing and utilising a fire isolated passage through Clarence House to Clarence Street as well as considerable difficulty and expense in constructing it.
Her Honour concluded on the issue: "[482] Rights of carriageway are, in my view, reasonably necessary to enable all the occupants of Clarence House, their tradespeople, couriers and the like to continue to enjoy a more ready means of access to the rear area to the building for the uses to which that area has been put in the past and to which it is currently put. This is particularly the case for Clarence Street Cyclery which, the evidence indicates, uses the rear area on a daily basis for its business and needs access to do so via a path over the Dock and the Passage."

Whether rights of carriageway inconsistent with the public interest

The primary judge noted that in both the 71 York Street and Clarence House proceedings the appellants submitted that the creation of rights of carriageway would not be in the public interest as it would lead to vehicles having to reverse back across the Dock and down the Passage and, dangerously, back on to the busy York Street. The appellants relied on the evidence of Mr Ken Hollyoak, a chartered professional engineer, to the effect that vehicles above a certain size would not be able to turn in the area at the rear of Clarence House and 71 York Street without encroaching on the appellants' land at the rear of 100 Clarence Street. Her Honour noted in this context that vehicles had been accessing the rear area for many years and there was no evidence of any accidents having occurred.
The primary judge summarised her reasons for concluding that the proposed easements were not inconsistent with the public interest as follows: "[497] Granting easements in the nature of general rights of carriageway over the Dock and the Passage will simply continue the status quo of many years. Those easements will continue to facilitate the use of landlocked areas behind buildings in the central business district where there are limited available alternatives for loading and unloading on the street. It is also relevant, in my view, that rights of way already exist over the Passage that allow for vehicle access by other properties, including 71 York Street based on the terms of the Book 8 grant. [498] Easements over the Dock and Passage for fire egress from the rear of 71 York Street and Clarence House are also clearly in the public interest. There was no submission made that easements enabling pedestrian access over the Dock and the Passage for use of the land at the rear of 71 York Street and Clarence House would impair or be inconsistent with the public interest."

Whether the appellants could be adequately compensated

This issue is relevant by reason of s 88K(2)(b) of the Conveyancing Act (see [22] above). It arose in the Clarence House proceedings only, as the appellants accepted that they could be adequately compensated if an easement over the Dock was imposed for the benefit of 71 York Street.
The appellants did not make the same concession in respect of Clarence House's claim for easements over the Dock and the Passage. Based on evidence given in cross-examination by Ms Dimity Marshall, a valuer, that the grant of an easement over the Passage would be a "very valuable commercial advantage to Clarence House", the appellants submitted to the primary judge that they could not be adequately compensated for the imposition of such an easement. This was due to the intangible nature of that advantage which they said would be of significance in the event of any redevelopment by the appellants of the Dock and the Passage.
The principal reasons that her Honour gave for rejecting the appellants' submissions on this topic were as follows: "[513] It is … difficult to see what real and tangible financial loss or other disadvantage will arise for the defendants if they are required to negotiate with Clarence House in circumstances where they need to negotiate with adjoining property owners (71 and 65 York Street) as well as another non-adjoining property owner with rights of way over the Passage, being 5-7 Barrack Street, before any development could proceed. Ms Marshall's evidence that Clarence House would be in a very advantageous position to negotiate a favourable deal … did not take account of 5-7 Barrack Street. [514] There is also evidence from both Ms Marshall and Mr Dale which indicates that it is possible to quantify an amount of compensation for loss that will arise from the grant of any easements over the Dock and the Passage. I deal with the level of that compensation below."
The primary judge did not accept the appellants' submission that the evidence indicated that there was a likelihood of development of the Passage and the Dock and accepted the opinions of the two valuers who gave evidence, Ms Marshall and Mr Paul Dale, that the grant of easements over the Passage and the Dock "would not have a detrimental effect on their value and that compensation should be payable in a small amount reflecting the associated blot" on the title of the appellants.

The amount of compensation

The appellants do not challenge the amount of the compensation that her Honour would have awarded in the 71 York Street proceedings under s 88K.
Her Honour did not accept the appellant's submission in respect of the Clarence House proceedings that the evidence indicated a likelihood of development of the Passage and the Dock and found that "granting easements under s 88K would not cause any additional loss to the [appellants], given the existing and continuing commercial advantages enjoyed by 65 York Street, 71 York Street and 5-7 Barrack Street". Her Honour indicated that she would have awarded compensation of $12,000 (excluding any reasonable legal costs incurred by the appellants) if she had made an order under s 88K.

Other s 88K easements in favour of 71 York Street

The primary judge concluded that orders should be made under s 88K imposing easements over the Passage and the Dock in favour of 71 York Street for overhanging and encroaching structures to remain, and for repairs and services. Her Honour considered that these were reasonably necessary for the effective use of 71 York Street and that they would not "have any real impost" on the appellants. Her Honour determined that compensation in the amount of $2,000 for each easement (excluding reasonable legal costs) was appropriate.

CONSIDERATION OF THE APPELLANTS' CHALLENGES TO THE PRIMARY JUDGMENT

Easements by prescription

As can be seen from [304] of the primary judgment (quoted in [15] above), the primary judge proceeded upon the basis that a party seeking to establish the existence of an easement by prescription had to prove not only relevant acts of user but also circumstances which showed that the owner of the servient tenement acquiesced in the use as an established right. This reflected the authorities to which her Honour referred in this context, including Mills v Silver [1991] 2 Ch 271 at 290 and the decision of this Court in Williams v State Transit Authority of New South Wales (2004) 60 NSWLR 286; [2004] NSWCA 179 at [79]-[85]. A question however arose in the course of the appeal hearing as to whether the statements to this effect in modern authorities accurately reflected older authority. In particular, it was noted that in Dalton v Henry Angus & Co (1881) 6 App Cas 740, Lord Blackburn appeared to proceed on the basis that demonstration of acquiescence was unnecessary. As a result, the parties were given leave to lodge short supplementary written submissions on this issue, which they did.
However, in the absence of any attempt by the respondents to establish that authorities such as Williams v State Transit Authority are plainly wrong, in my view the Court should assume the correctness of the statement of the law on this point in Williams v State Transit Authority. This is particularly so as, on my view of the evidence in the proceedings, the element of acquiescence was in any event established.

Acquiescence

As the primary judge concluded (see [305] quoted in [15] above) and as Williams v State Transit Authority indicates at [85], the knowledge that an owner must have of adverse use of his or her property may be actual or constructive. The test is: "was the use of a kind that an owner, reasonably diligent in the protection of his or her interests, would or should have discovered?" (Williams at [85]).
It is clear that if the owner of the land alleged to be the servient tenement knows that, over the requisite period, his or her land is being used by another party seemingly as of right, but in fact without authority, an easement by prescription will arise if the owner stands by and does not assert his or her rights. It is clear that that is the case also if the owner does not know of the user but a reasonably diligent owner would have.
In the present case, a variant on these situations arises because, despite extensive evidence as to the history of the parcels and the land in their vicinity, the identity of the owners of the Dock and the Passage for many years prior to the appellants' purchases in 2008 is not known. Moreover, it cannot simply be inferred that the owners of the parcels from time to time, whoever they might have been, must, if they had been reasonably diligent in looking after their property interests, have known of the adverse user of the parcels, with the result that it should be concluded that these owners had relevant constructive knowledge. Instead, an inference is available that, by reason of the smallness of the parcels, the absence of dealings with them and the dealings from time to time over many years with adjoining parcels of a far greater size, the subject parcels were simply overlooked and whoever had, or came to have, ownership of them was unaware of that ownership. The question then arises whether owners of property who are unaware of that ownership may be fixed with knowledge of adverse user of their properties on the basis that a prudent owner would have been aware of that ownership and user?
The appellants relied on the decision of Powell J in Hamilton v Joyce [1984] 3 NSWLR 279 as support for their contention that an owner of allegedly servient land could not acquiesce in an adverse user of his or her property if the owner was not aware of that ownership. That decision is in my view however of only limited, if any, authority for that proposition.
The relevant passage in the case refers to a Mrs Horsfield who was the owner of one of the allegedly servient tenements and is as follows: "Although there is no direct authority on the point … it seems to me that, where there are serious doubts as to the true state of the title of the owner of 'the servient tenement', the failure of the owner to assert a claim can hardly be regarded as acquiescence so as to permit a presumption of a lost grant. Since, in this case, Mrs Horsfield believed 'the right of way' to be a public thoroughfare, and since, even now, the exact location and extent of the 'right of way' remains a question of doubt, I am, I believe, bound to hold that the facts necessary to permit the presumption of a lost grant to arise have not been made out" (at 290-291).
This passage is at least in part concerned with the owner's uncertainty as to the boundaries of her property. In any event the state of mind of the relevant owner (Mrs Horsfield) was in fact known so that she was able to, and did, rebut a presumption of knowledge on her part of what she owned: she did not believe that she owned the land and it does not appear to have been suggested that that lack of belief arose from unreasonable conduct on her part. As said in Brendan Edgeworth, Butt's Land Law (7th ed, 2017, Lawbook Co) at [16.430], "once the claimant proves open use for the twenty-year period, the servient owner has an 'evidentiary onus' of proving lack of knowledge". That onus was discharged in Hamilton v Joyce but not in the present case.
The claim in Hamilton v Joyce that there was an easement by prescription over the other servient tenement (of which a Mrs Jeffries was the owner) also failed, first, because Mrs Jeffries' property had been let to tenants during the relevant period. Relying on R E Megarry and H W R Wade, The Law of Real Property (3rd ed, 1966) at 837, Powell J held that this precluded an easement by prescription arising because, as the owner did not have a right to possession, she did not have a right to prevent an adverse use (but see Butt's Land Law at [16.480] referring to doubts about the correctness of this proposition as expressed in Rodwell v GR Evans & Co Pty Ltd [1978] 1 NSWLR 448 at 451).
The second reason that the claim against Mrs Jeffries' property failed was that Powell J inferred from the evidence before him that usage of the right of way over her property had not been "as of right" but had in fact been permitted by the occupants of it from time to time.
The appellants also relied upon the decision of Hedigan J in Sunshine Retail Investments Pty Ltd v Wulff [1999] VSC 415. As the primary judge in the present case pointed out, there were two aspects to that decision but neither of them assisted the present appellants. First, Hedigan J found that the owner of the putative servient tenement did not know of the adverse user because she did not know that the people she saw using the relevant path were owners or residents of the putative dominant tenements. That conclusion is not applicable in the present case in which, as the primary judge held, it would have been obvious that people were going to and departing from Clarence House and 71 York Street via the Dock and the Passage. Secondly, as in Hamilton v Joyce, the servient tenement had been leased out in the relevant period. This was not shown to have occurred in the present case.
In short, as the primary judge in the present case said in relation to Hamilton v Joyce and Sunshine v Wulff, "the owners of the servient tenements were known and gave evidence. It was that evidence which rebutted any presumption from the existence of long user" (at [344]). There was no such evidence in the present case.
Support for the respondents' position can however be found in Gangemi v Watson (1994) 11 WAR 505. In that case Mr Frank Sedgley owned the putative servient tenement (a laneway) from 1912 until his death in 1958 when his daughter Miss Sedgley became the owner. The Full Court of the Supreme Court of Western Australia held that an easement by prescription had arisen over that land as a result of adverse use of it as a right of way in the period 1932 to 1958. Miss Sedgley gave evidence that was held to discharge her evidentiary onus of proving that she did not have actual or constructive knowledge of the use during her period of ownership (commencing in 1958). However, her evidence that her father, Mr Sedgley, had forgotten he owned the laneway was held to be insufficient to discharge the evidentiary burden in relation to his knowledge, actual or constructive (at 516).
The Court said that Mr Sedgley, as the owner between 1932 and 1958, was "under a duty to act diligently in the protection of his interests" and that "[a]n owner acting diligently does not put his ownership out of mind for a quarter of a century with the result that he never visits his land and therefore never observes the evidence of an adverse claim" (at 515-6). This reasoning appeared to involve an implicit adoption of the following statement that the Court quoted at [514] from the judgment of Simonsen J in Capar v Wasylowski (1983) 4 WWR 526 at 533: "An owner must be expected to exercise reasonable diligence to learn what he owns. Such diligence was not exercised in this case. They made no search or inquiry whatever. It must, therefore, be concluded that acquiescence or consent of the defendants was imputed because they failed to diligently inquire as to the ownership."
Further support for the respondents' position can be found in the decision of Windeyer J in Fernance v Simpson [2003] NSWSC 121; 11 BPR 20,955, on which the primary judge principally relied. In that case there was adverse use for at least 20 years of an alleged right of way over land which the defendant came to own. It was not however clearly proved who owned that land for most of that period. Windeyer J found that an easement by prescription had arisen, stating: "[33] On the facts of the instant case, it is my opinion that any owner of the subject property taking reasonable care for his or her interest, would have been aware of the use of the land. If such an owner abandons the land then it seems to me that it would be entirely illogical to hold that abandonment results in some benefit. But in any event the defendants bore the onus and did not discharge it … "
Windeyer J took the view, consistent with that which I have expressed in [45] above, that Hamilton v Joyce was not authority for the proposition that it "is not possible to establish a prescriptive easement in a case where the legal owner did not have knowledge of ownership" (at [34]).
The decision in Fernance v Simpson is usefully summarised by Professor Butt in his article "Use 'as of Right'" (2004) 78 ALJ 162 at 166 as follows: "Windeyer J held (as is undoubtedly the case) that a claimant's inability to prove ownership of the servient tenement does not bar the acquisition of an easement by prescription. The crucial issue is whether the use was sufficiently open that servient owners - whoever they are - reasonably careful of their interests, would have known about the use and so could have put a stop to it had they wished. When it is said that 'acquiescence' lies at the root of prescription, what is meant is that the servient owners - whoever they are - have the means of knowing of the use being exercised but do not interrupt it. On the facts [in Fernance v Simpson], the use was open and obvious, so that the owner - whoever that person was - had either actual or constructive knowledge of the use. It followed that the claimant had made out the necessary element of 'acquiescence', even without being able to clearly identify who owned the servient land."
As I consider the reasoning in Gangemi v Watson and Fernance v Simpson to be sound, they should be followed. The upshot is that in my view the appellants have not proved any error in the primary judge's conclusions concerning acquiescence. Her Honour was correct to consider whether prudent owners of the Dock and Passage would have known of their ownership and of the persistent adverse user of their land. As her Honour held, the appellants did not discharge their onus of establishing that the owners from time to time were, for some good reason, not aware of that user.

Usage and knowledge of use of the Passage and the Dock

The appellants contended that the evidence of Mr Cook and Ms Yates relating to the Clarence House proceedings, upon which the primary judge relied in relation to user, was "vague and impressionistic" and for that reason insufficient to establish relevant use. As it related to evidence of everyday activities, including in times long past, the evidence was necessarily general in character. It was however in my view sufficient to found Her Honour's findings (see [20]-[21] above).
The appellants also submitted that, in relation to both 71 York Street and Clarence House, her Honour erred in finding that knowledge of use of the Passage and Dock had been established. Her Honour held that the use of the Passage and Dock by both 71 York Street and Clarence House residents was open and would have been obvious or apparent to any reasonable observer (see [17]-[21] above). This finding was clearly justified by the evidence before her Honour.
The appellants contended on appeal that the Passage had "so many different people legally entitled to pass over [it]" that an observer would not have been aware that some of those people had no right to do so, and further that such use has "left no lasting indicia, such as a fixed gate or worn path", resulting in an insufficiency of evidence to establish relevant knowledge. Her Honour however addressed these points directly in her judgment at [396]-[399] and no error has been shown in her conclusions.

Whether the rights of carriageway were reasonably necessary

The primary judge correctly approached consideration of this issue by applying the principles stated by Hodgson J in 117 York Street Pty Ltd v Proprietors of Strata Plan No 16123, as approved by this Court in Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd. These indicate that the expression "reasonably necessary" in s 88K(1) does not refer to absolute necessity but, rather, indicates that the relevant "use or development with the easement must be (at least) substantially preferable to the use or development without the easement" (see [24]-[25] above). Hodgson J's discussion of the position where there are multiple actual or potential uses does not arise for consideration in this case as there is consistency and probably continuity, at least in the short term, of the existing uses of Clarence House and 71 York Street.
Amongst the primary judge's reasons for finding that it was reasonably necessary for 71 York Street to have rights of passage over the Dock is that it is part of the route by which occupants may egress in the event of fire. As indicated at [27] above, her Honour rejected the appellants' contention that construction of a fire isolated passage within the 71 York Street building would provide a reasonably acceptable alternative means of egress in the case of fire. Her Honour found that construction of such a passage would involve "not insignificant delay, cost and inconvenience given the need for council approval, the heritage nature of the 71 York Street building" and the evidence of Allan Harriman, a fire safety consultant who gave evidence. On appeal, the appellants argued that 71 York Street's evidence "went no higher than Mr Harriman accepting that it would involve a difficult process" and that the primary judge's finding "reversed the onus of proof".
Mr Harriman's evidence and the other matters to which her Honour referred were however well sufficient to found her Honour's conclusion that access over the Dock was "substantially preferable" to the construction and use of a fire isolated passage. Her Honour's conclusion was an evaluative one, in respect of which minds might well differ. It involved determining whether the imposition of an easement would be "substantially preferable" or, as the appellants contended, simply a matter of convenience for 71 York Street. For good reason, appellate courts should exercise restraint before intervening in respect of such decisions (see Singer v Berghouse (1994) 181 CLR 201 at 211-2; Minister for Immigration v SZVFW (2018) 264 CLR 541; [2018] HCA 30 at [45]).
Further, the appellants did not establish that the possibility of access for other purposes through 71 York Street's underground carpark to the rear of the building rendered her Honour's conclusion that access over the Passage and Dock was "substantially preferable" not open to her.
Likewise, the appellants' submission in the Clarence House proceedings that the evidence did no more than establish that it was convenient for users of that building to have a right to pass over the Passage and Dock should be rejected. Whether that access was "substantially preferable" or simply a matter of convenience was for her Honour's evaluative decision which was not shown to be unreasonable.

Whether s 88K orders were inconsistent with the public interest

The appellants contended that permitting vehicular access to Clarence Street over the Dock and Passage would be contrary to the public interest because it would give rise to a danger to pedestrian traffic in busy York Street. They relied on the evidence of Mr Hollyoak, the expert traffic engineer, to contend that there was insufficient room for vehicles to turn in the area behind Clarence House and 71 York Street without trespassing on the appellants' land at the rear of 100 Clarence Street. Hence, so the appellants contended on appeal as they did at first instance, vehicles which drove down the Passage and over the Dock would have to reverse out onto York Street when leaving. The primary judge's reasons for rejecting this argument are referred to at [31]-[32] above.
It is sufficient to dispose of the challenge on appeal to her Honour's conclusion to note, first, that Mr Hollyoak's evidence did not apply to all vehicles but only those above a certain size. Thus, even on Mr Hollyoak's evidence, use of the easement could be made by some smaller vehicles without the potential for danger. Secondly, the evidence of present and past usage did not, for whatever reason, suggest that vehicles have been backing out of the Passage onto York Street. Thirdly, the purpose of imposition of an easement would not have been only to enable vehicles to access the rear area of the buildings but, importantly, to facilitate access by persons on foot. In summary, the evidence did not establish that imposition of an easement would be pointless or that drivers of any vehicles were likely to be encouraged to act in a dangerous fashion. If drivers of vehicles thought they could not safely exit onto York Street, presumably they would not use the Passage and Dock. Her Honour was accordingly entitled to find that imposition of the easements would not be against the public interest.
I should add that I do not accept the appellants' submission that her Honour effectively reversed the onus of proof. As s 88K(2)(a) provides, and as I have said, her Honour was satisfied that imposition of the easements would not be against the public interest.

Whether the appellants in the Clarence House proceedings could be adequately compensated

As indicated at [34] above, the appellants contended that imposition of the relevant easement would cause them loss and that they were not capable of being adequately compensated for the loss. There are two answers to this contention.
First, no error has been demonstrated in her Honour's finding that the appellants would not in fact suffer any significant loss. The finding was based on the opinions of the two valuers who gave evidence (see [36] above) and the undoubtedly correct proposition that the appellants were already in the position where, in the case of any redevelopment of the Dock and the Passage, they would have to obtain the agreement of other nearby owners, being the owners of 65 and 71 York Street and 5-7 Barrack Street in relation to the Passage.
Secondly, if it had been found that the appellants were likely to suffer some loss as a result of the imposition of the easement, there is no reason why the Court could not have attributed a value to that loss and thus adequately compensated the appellants. As counsel for Clarence House pointed out, courts regularly award damages which are difficult to assess, for example in defamation proceedings for an injury to a person's reputation.

The amount of Clarence House's compensation

The primary judge said in passing, when referring to the evidence of Mr Dale, one of the valuers, that she did not consider that special value in the sense of "the additional amount that a prudent person would pay for land rather than lose it" was compensable under s 88K of the Conveyancing Act (at [527]). If, which it is not clear, this was stated by her Honour as a proposition of general application, I would, with respect, not agree with it. I do not consider that such a limitation can be read into the general words of s 88K(4) which provides for the court to order payment of "such compensation as the Court considers appropriate". Her Honour's statement is not however of any present significance as her Honour considered on its merits the claim that the appellants advanced (that they would suffer a commercial disadvantage by having to negotiate with Clarence House in the event of redevelopment) and rejected the contention that the appellants would suffer any such loss. The appellants' challenge to her Honour's assessment of the appropriate compensation that should be paid in respect of Clarence House in the event an easement were imposed accordingly fails.

Other s 88K easements in favour of 71 York Street

As indicated in [39] above, the primary judge concluded that easements should be imposed in favour of 71 York Street for overhanging and encroaching structures to remain, and for repairs and services.
In relation to overhanging and encroaching structures, the appellants contended that her Honour placed "too great an emphasis on what was desirable" (as distinct from what was "substantially preferable") and failed to give "proper weight" to what they described as an "alternative statutory remedy" of an order under the Encroachment of Buildings Act 1922 (NSW). Even if these submissions had merit (which I do not consider to be the case) they would not provide a proper basis, consistent with the principles stated in House v The King (1936) 55 CLR 499; [1936] HCA 40, for challenging her Honour's exercise of discretion as they were essentially concerned with the weight given to various matters.
Likewise, I reject the appellants' submission that her Honour effectively "misplace[d] the onus of proof": her Honour considered the correct statutory issues by reference to the whole of the evidence before her, drawing appropriate inferences about the necessity for the easements from 71 York Street's viewpoint and the extent of any "impost" that they would cause to the appellants.
Her Honour referred to evidence that the relevant structures, which included windowsill mouldings, parapet, corbel, downpipes, electrical conduits and fire system pipes, either "form[ed] part of or [were] affixed to" the 71 York Street building, with some of these structures having been in place since "at least 1919" (at [574]-[575]). Her Honour then went on to say that she had "no doubt" that the effective use of the building required the continued existence of these structures. Her Honour's inference that at least some of these structures would need to be maintained in their current positions due to the heritage status of the building, and in the case of others such as the fire system structures for "self-evident" reasons, was reasonably open to her on the evidence and did not involve a reversal of the onus of proof.
In relation to the easements for repairs and services, the appellants submitted that the primary judge failed to give proper weight to various factors, including the availability of alternative remedies under the Access to Neighbouring Land Act 2000 (NSW). Again, the appellants' contentions did not demonstrate any error in the exercise of her Honour's discretion (see House v The King). Further, her Honour's rejection of the appellants' submission that negotiation between the parties for access for repairs and services was a "viable option for the future" was open to her, particularly in light of the evidence before her Honour of the relevant circumstances, which included a previous negotiation for "urgent repairs to [71 York Street's] fire drencher system" taking eight months to reach agreement. No error has therefore been shown in her Honour's conclusions.

ORDERS

As I indicated earlier (see [3] above), the appellants should be granted leave to appeal to the extent that that leave may be necessary. As each of the appellants' challenges to the primary judgment has however failed, their appeals should be dismissed with costs.
WHITE JA: The circumstances giving rise to this appeal are set out in the reasons for judgment of Macfarlan JA which I have had the advantage of reading in draft. I agree with his Honour's proposed orders. I conclude that the primary judge's finding that the respondents are entitled to easements by prescription over the Passage and the Dock should be upheld for different reasons.
I agree, for the reasons given by Macfarlan JA, that if the appeal from the primary judge's finding that the respondents were entitled to easements by prescription over the Passage and the Dock were to be allowed, the primary judge's conclusions and reasons in relation to the making of orders under s 88K of the Conveyancing Act 1919 (NSW) should be upheld.
The appellants became legal owners of the Passage and the Dock by purchase from the Sydney City Council in February 2008 when those lands were sold by the Council for unpaid rates (J [9]). They submit that before it can be concluded that either of the respondents is entitled to a right of way by prescription over the Passage or the Dock, it must first be concluded that for a period of at least 20 years the then legal owners of the Passage and the Dock acquiesced in the use of the Passage and the Dock by the owners or occupants of 71 York Street and Clarence House. In the case of the easements by prescription claimed by Clarence House, the use and, so the appellants claimed, the acquiescence in that use by the owners of the Passage and the Dock, was to be considered only from 1981 (per Macfarlan JA at [10]).
The appellants' challenge to the sufficiency of the evidence of open user was rejected by the primary judge. I agree with Macfarlan JA that that challenge was rightly rejected. The appellants' primary case was that the owners of the Passage and the Dock did not acquiesce in the use. This was not merely because those owners are unknown. More fundamentally, it is because no-one could know whether he or she (or it) owned the Passage or the Dock because ownership of those areas is lost in the mysteries of time.
If, as the appellants submit, acquiescence by the owner of the servient tenement is, in all cases, a fundamental precondition to the existence of an easement by prescription, then I would agree with this submission. For the reasons which follow I do not accept the premise of the appellants' submission.
Macfarlan JA observes (at [44]) that there is an available inference that whoever had, or came to have, ownership of the Passage and the Dock was unaware of that ownership. That inference is overwhelming. Nor is it the case that the servient owner or owners, whoever he, she or it might be, abandoned the property during the period of proved open user, or, if exercising reasonable diligence, ought to have known or even could have known of any right to object to the adverse user.
The primary judge summarised the evidence of the ownership of the Passage and the Dock so far as that could be traced from documents filed with the Registrar-General.
Land of which the Passage formed part was conveyed to Hugh Macdonald by Crown Grant on 20 May 1819 as part of Allotment 2 of section 52 of the Town of Sydney (J [56]).
Mr Collyer, a registered surveyor, deposed that at the time ownership of the passage was transferred by the Council to the appellants on 8 February 2008 the Passage was still held under Old System Title in the name of Hugh Macdonald. What that means is that Mr Collyer is aware of no later documentary title.
On 30 September 1839 members of the Macdonald family (Mary Ann Rochfort described as "widow", Steven Macdonald and his wife Mary Ann, Thomas Coulson and his wife Elizabeth (formerly Elizabeth Macdonald), Macquarie Macdonald and Campbell Leverston Macdonald) conveyed land which is now part of 71 York Street to a Henry MacDermott (being part of Allotment 2) and granted a right of way over the Passage in favour of Henry MacDermott, his heirs and assigns upon and over the land described as "Reserve Road or passage" which includes the Passage (Book 8 No. 383).
It is by this conveyance that 71 York Street is entitled to a right of way by grant over the Passage.
On 28 and 29 November 1839 members of the Macdonald family conveyed part of land now known as 65 York Street to a Hugh Nolan and granted a right of way over the passage in favour of the conveyed land (Book 13 No. 293).
Mr Collyer's affidavit disclosed that thereafter on 13 and 14 January 1840, and 5 and 6 October 1841, the Macdonald family conveyed other lands now known as 1 and 5-7 Barrack Street and 100 Clarence Street.
On 2 July 1997 the Land Titles Office advised MinterEllison, solicitors apparently acting for the owners of 65 York Street, that title to the Passage "remains in the Crown Grant for Allotment 2 in city section 52 ... dated 20-5-1819 and stands in the name of MacDonald".
In an earlier interlocutory application, the appellants sought leave to file a cross-claim seeking an order for the removal from the register of notations recording the grants of rights of way over the Passage effected by Book 8 No. 383 and Book 13 No. 293. The evidence on that application established that Hugh Macdonald died on 9 September 1819 leaving a wife and four children and that he left his estate to his executors on trust to be converted into money and then to be divided equally between his wife and children. Legal title to the land passed to the persons named as executors not in that capacity, but as devisees under the will who held it on the trusts of the will. After the executors renounced probate the Supreme Court appointed a James Scott and the eldest son of Hugh Macdonald, Steven Macdonald, as trustees of Hugh Macdonald's estate. Following the death of James Scott, the property became vested in Steven Macdonald as the surviving trustee (Arcidiacono v The Owners - Strata Plan 61233 [2019] NSWCA 46 at [17]-[18]).
The conveyances referred to above were effected by Hugh Macdonald's widow and his children and, in some cases, their spouses not as legal owners, but as beneficiaries of Hugh Macdonald's estate. This was so, notwithstanding the recital in the indentures that the conveying parties were seised in fee simple in possession. A mortgage of the lands had been granted in 1835, but on 27 and 28 February 1840 the land was reconveyed to the mortgagor. Notwithstanding the recitals in the conveyances of 1839, the grantors of the easements over the lands now held by the appellants did not have the legal estate at the time the easements were granted. Nonetheless, as the legal estate was reconveyed to Steven Macdonald in 1840, this conferred on the transferees of the lands and their successors in title full title to the easements by estoppel (Arcidiacono v The Owners - Strata Plan 61233 at [30]-[35]).
It may be taken that the legal estate over the Passage was vested in Steven Macdonald in 1840, not beneficially, but as trustee of the trusts of the will of the late Hugh Macdonald. Thereafter, the evidence is silent as to the ownership of the Passage. As explained further below, if Steven Macdonald died before 1890 (which it may be inferred he did) and devised his real estate including the Passage, then legal title to the Passage would have passed to his devisee or devisees, but subject to the trusts of Hugh Macdonald's will. If he made no such devise and died before 1862, legal title to the Passage would probably have passed to his heir-at-law. If he died intestate after 1862 and letters of administration were obtained, legal title would have passed to his administrator. After 1890, following the death of the then legal owner, legal title would have vested in the executor or administrator on the grant of probate or letters of administration and after 1893, if there were no such grants the legal estate would vest in the Chief Justice or later the Public Trustee (now the NSW Trustee and Guardian) (Deigan v Fussell [2019] NSWCA 299; 19 BPR 39,853 at [99], [102]-[105], [110], [114]). The legal owner of the Passage would not hold the legal title beneficially but on the trusts of Hugh Macdonald's will. Had any beneficiary known that the Passage had not been conveyed in 1839, and sought to enforce the trust, it would have been necessary to obtain the appointment of a trustee.
In 2003 Bryson J had to consider the ownership of the Passage because the owner of 65 York Street sought the imposition of an easement over it under s 88K of the Conveyancing Act 1919 (NSW) to comply with the condition of a development consent (Pasade Holdings Pty Ltd v Sydney City Council [2003] NSWSC 515; 11 BPR 21,001). His Honour said: "4 ...[N]o person can be identified by searches in the General Register of Deeds or elsewhere who appears to have a documentary title to the passageway, and there is no person who in the present age is behaving as its owner by exercising or purporting to exercise acts of ownership. So far as evidence shows the last purported act of ownership was a grant of a right of way in 1839. ... ... 6 Except for this one document creating an easement, searches including a Registrar General's Official Search have not located any registered document dealing with title to the passageway after the Grant. It is not possible to establish rigorously that there is no such document because of the nature of the register which is indexed to names of parties to documents. Macdonald, in various spellings, was a very common name in 19th Century Sydney as it still is. There are untraceably numerous possibilities about the names of persons who may have conveyed interests in the land, whether the five members of the Macdonald family referred to by name in the will or executors, administrators or other successors in title of any of them. Those five members of the Macdonald family (with the husband of one of them) purportedly dealt with title to the land when they granted the easement. Their interests under the will were equitable interests; under the law as it was in 1820, the legal estate in Hugh Macdonald's land passed to the trustees to whom it was devised in his will whether or not they took out probate; army officers may have soon left New South Wales; they may have done nothing in the estate, but they were entitled to deal with land devised to them even if they did not administer personal assets. The interests of Mary Ann Macdonald and her children were equitable interests and they could not convey the legal estate. Registration of deeds was not essential for validity in the absence of some competing dealing. Interests in land may have been conveyed by sheriffs under executions, or by bankruptcy receivers or like officers; the possibilities are endless. Under the law of that time husbands could, in some circumstances, effectually convey real property vested in their wives. All that can be said is that searches which appear to me to be reasonably complete show no registered dealings. I find that no owner of the passageway can be identified and I will deal with the application on that basis."
The position in respect of ownership of the Dock is similar. The primary judge found that the land which is now the Dock was within the metes-and-bounds description of land the subject of a Crown grant made in favour of a John Terry Hughes on 10 May 1829 (J [57]). This was called the "Allotment 3 land". It faced Clarence Street. By a succession of conveyances the Allotment 3 land was conveyed to a Patrick Erwin on 1 May 1847. Mr Erwin acquired other land on Clarence Street to the north and south of Allotment 3 (J [65], [66] and [68]). Mr Erwin developed his landholding into at least 18 lots linked by three private lanes which connected with the Passage (J [69]).
Mr Erwin died in 1871 and his land was the subject of a deed of partition and plan of subdivision (J [70]). It appears from a conveyance made by a Mr Joseph Rose that Mr Erwin "... after making certain specific devises devised his property in the city of Sydney to his trustee William Brien and the said Joseph Rose upon trust ... for the benefit of his wife and children ...".
In 1871, land devised by will passed directly to the devisee, in this case the trustees, Messrs Brien and Rose. It appears from the recital to an indenture made on 21 April 1871 that Mr Brien renounced his powers and authorities as trustee and that Mr Rose thereafter conveyed various parcels of land in accordance with the trusts of the will. The lands so conveyed did not include the Dock (J [72]-[74]).
There was no evidence as to when Mr Rose died or whether he died testate or intestate. If he died testate before 1890, the legal title to the Dock which he held as trustee would have passed directly to his devisee. If he died intestate before 1890, the legal title to the Dock would have passed to his legal representative if a grant of letters of administration were obtained (Real Estate of Intestates Distribution Act 1862 (NSW) (26 Vic No. 20) ("Dr Lang's Act") s 1; Deigan v Fussell [2019] NSWCA 299 at [99]).
What the position would be if Mr Rose had died intestate and no letters of administration were taken out is unclear, but the better view would seem to be that the land would have passed to his heir at law. Neither a devisee of Mr Rose, administrator, nor heir-at-law, would have held more than the bare legal title to the Dock (a small parcel of about two metres by three metres). Because the trust on which Mr Rose held the land was a personal office, neither his devisee nor administrator nor heir-at-law would have assumed the office of trustee under the trusts established by the will of the late Mr Erwin (In re Crunden and Meux's Contract [1909] 1 Ch 690 at 696-697; Sir Frederick Jordan, Select Legal Papers (Legal Books, 1983) 93).
If Mr Rose died after 1890 then legal title to the Dock would have passed to his executor or administrator (Probate Act 1890 (NSW) (54 Vic 25 ss 15 and 32). If any such legal owner died intestate without taking out a grant of letters of administration, or left a will of which probate was not granted, legal title would have vested in the Chief Justice and later in the Public Trustee and the NSW Trustee pursuant to what is now s 61 of the Probate and Administration Act 1898 (NSW). Those persons had no active duties and no relevant powers (Deigan v Fussell at [93]-[95], [104], [114]).
The primary judge held (at J [360]) that: "While the identity of the particular persons who owned the Passage and the Dock may have been unknown during the periods of use relied on by the parties, the legal estates must have been vested in some persons until the defendants acquired them in 2008: Fernance v Simpson [2003] NSWSC 121] at [36]. Based on the evidence before the Court, those persons were the beneficiaries of the estates of Messrs McDonald and Erwin."
With respect, that misstates the position. The beneficiaries of the estates of Messrs Macdonald and Erwin did not acquire legal title to the land. The legal title passed either to the devisees of the land under the wills of Mr Macdonald and Mr Erwin, and after their deaths (assuming they died before 1890), either to the devisees under their wills, or to their heir at law or, if they died intestate and after Dr Lang's Act came into force, to their administrator if letters of administration were obtained and, after 1890, to their executors or administrators if probate or letters of administration were taken out. Otherwise, after 1890, where the deceased died intestate, or 1893, if the deceased died testate, the land became vested in the Chief Justice or the Public Trustee or the NSW Trustee and Guardian unless and until probate or letters of administration were granted (Deigan v Fussell at [99]-[106]).
The persons who acquired the legal title held the land on trust for the beneficiaries under the wills of Mr Macdonald and Mr Erwin, or after their deaths, for the persons entitled to the undistributed beneficial shares, assuming bankruptcies did not intervene. Although the trusts will not fail for want of trustee it does not appear that anyone was ever appointed to seek to enforce those trusts after the deaths of the original trustees. The prospect that anyone would or could reasonably know that they might have an interest in these small parcels of land, whether legal or equitable, is so remote as to be negligible.
Not only are the legal owners of the Passage and the Dock unknown, the inference is that, notwithstanding searches, it has not been possible to identify who the legal owners of the Passage and Dock might be. There is no reason that any individual might think that he or she or it is the legal owner of the Passage or the Dock. There is no reason for anyone, acting diligently with care for his or her own interests, to think that there was any reason to consider the use made of the Passage and the Dock, any more than any individual might consider the use of any piece of land with which he or she is unacquainted.
English courts adopted the doctrine of easements by prescription through the fiction of lost modern grant where the use or enjoyment of the servient tenement had enured for at least as long as the period of limitation for commencement of action to assert title against a person in adverse possession. The use sufficient to give rise to an easement by prescription must be of the same character as adverse possession can give a trespasser title, i.e., open (not secret), without force, and without licence. An easement could only be granted at law by deed. The courts adopted the fiction that an easement had been granted by deed but the deed had been lost where there was a sufficiently long period of use or enjoyment. The difficulties in this and other cases lie in trying to accommodate the fiction. A grant implies the consent of the servient owner. But by analogy to the acquisition of title to land by prescription through adverse possession, the use implying consent is not by permission, but through toleration, i.e. acquiescence. It is in this context that it was held in England that acquiescence was the root of easements by prescription, although that was never wholly true.
In Delohery v Permanent Trustee Co Ltd (1903) 4 SR (NSW) 1 the question was whether the English law of prescription of ancient lights became part of the law of New South Wales so that a landowner had the right to the uninterrupted passage of light across his neighbour's land to his windows after 20 years' enjoyment. AH Simpson CJ in Eq held that it did not, opining (at 5-6): "As there is no local law dealing with the matter, the question is whether the doctrine of lost grant is applicable to this State. It is purely a legal fiction, for, in almost every case, I suppose, where a jury is asked to find, or the Judge finds the existence of a lost grant, it is well known that no such grant ever existed. The employment of such a fiction may be beneficial or otherwise according to the circumstances of time and place ... This particular fiction really amounts to making a law that after 20 years' enjoyment of access of light over adjoining land, the landholder shall have a right to such access. In England it must be taken that the employment of the legal fiction was beneficial, for the legislature has removed the necessity for having recourse to it by making the law as above indicated. See 2 & 3 William. IV. c. 71, 3. But in this State no such Act has been adopted. It is left, therefore, to the Court to say whether the use of the fiction in this country would be beneficial or not and on the whole I think that it would not."
On appeal the High Court said as to this (Delohery v Permanent Trustee Co Ltd (1904) 1 CLR 283 at 298-299; [1904] HCA 10): "If the question for our determination were only whether the legal doctrine or fiction of a lost grant in such cases is part of the substantive law introduced into New South Wales, either on settlement, or by the Act of 9 Geo. IV. c. 83, we might have some difficulty in coming to a different conclusion from that arrived at by the learned Chief Judge. There is indeed ground for saying that the doctrine of a lost grant never formed part of the substantive law of England, but was, at best, and for a short time only, adopted as an artificial rule of pleading, as will appear from the history of the law on the subject of ancient lights to which we shall presently refer. And the doctrine has of late years been much discredited in England, even if it is not now definitely discarded."
In Delohery the High Court was specifically considering a claim for the right to the passage of light. The result in Delohery has been overturned by statute in most but not all States (Conveyancing Act 1919 (NSW) s 179; Property Law Act 1958 (Vic) s 195; Property Law Act 1974 (Qld) s 178; Law of Property Act 1936 (SA) s 22; Property Law Act 1969 (WA) s 121).
That fact does not detract from the significance of Delohery for Australian courts in considering whether it is true that, in all cases, acquiescence by the servient owner is essential for the establishment of an easement by prescription. It is true, as Macfarlan JA observes, that in Williams v State Rail Authority of New South Wales (2004) 60 NSWLR 286; [2004] NSWCA 179 Mason P (with whom Sheller and Tobias JJA agreed) said (at [81]-[85]) by reference to English authority, that for an easement by prescription to arise it was necessary to show that the servient owner had actual or constructive knowledge of the use and acquiesced in it. Mason P said (at [85]): "If the servient owner has no knowledge of the user, a prescriptive right will not arise (cf 'nec clam'). Knowledge may be actual or constructive. The test is objective: was the use of a kind that an owner, reasonably diligent in the protection of his or her interests, would or should have discovered? (Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557 at 571; Milne v James [No. 2] (1910) 13 CLR 168 at 178; Gangemi v Watson (1994) 11 WAR 505).
Milne v James did not concern an easement by prescription, but an alleged agreement for an easement of support said to have been made in or about 1896, and said to have been capable of specific performance. The plaintiff alleged that a purchaser (whose purchase was completed in 1904) had constructive notice of the alleged equitable easement. Griffith CJ cited Union Lighterage Co v London Graving Dock Co for the purpose of distinguishing it on the facts (at 177-178). Barton J also cited that decision in support of his conclusion that the doctrine of constructive notice should not be extended (at 182-184).
In Williams there was no question such as arises in this case, where the servient owner could not reasonably know of his, her or its ownership, and for that reason could not know of the use. The State Rail Authority, or its statutory predecessor, at all times owned the land over which the easement for sewerage was claimed and the use for that purpose was open. It tolerated or acquiesced in the use without giving permission for it (at [95]). Accordingly, the present issue did not arise. The case was decided on other grounds: namely, that an easement by prescription under the doctrine of lost modern grant could not arise in respect of land under the Real Property Act 1900 (NSW) as an in personam exception to indefeasibility.
In England the advice of Fry J to the House of Lords in Dalton v Henry Angus & Co (1881) 6 App Cas 740 at 773 that: "the whole law of prescription and the whole law which governs the presumption or inference of a grant or covenant rest upon acquiescence. The Courts and the Judges have had recourse to various expedients for quieting the possession of persons in the exercise of rights which have not been resisted by the persons against whom they are exercised, but in all cases it appears to me that acquiescence and nothing else is the principle upon which these expedients rest", has prevailed.
Lord Blackburn took a different view about acquiescence, but in England his view has not prevailed (R (Beresford) v Sunderland City Council [2004] 1 AC 889 at 913 per Lord Walker of Gestingthorpe). But in Delohery, the High Court generally endorsed the reasons of Lord Blackburn in Dalton v Angus and described the presumption or inference of a prior grant as no more than "... an artificial or subsidiary rule designed for the purpose of giving effect to a substantial right" (at 309). The substantial right referred to arose by prescription from long, open and uninterrupted use or enjoyment.
Moreover, acquiescence is not at the root of all easements by prescription. Easements for access of light and easements for support do not depend on acquiescence. Also, the acceptance in Union Lighterage Co v London Graving Dock Co and subsequent cases that it is sufficient that the servient owner has the means of knowledge of the use, rather than actual knowledge of the use, is inconsistent with acquiescence being truly at the root of easements by prescription.
It is not open to a servient owner to deny the fiction that a grant of an easement was made at least 20 years earlier if the servient owner acquiesced in the use of its land and was capable of making the grant even though it is proved that no such grant was made (Tehidy Minerals Ltd v Norman [1971] 2 QB 528 at 552). The appellants can clearly establish the primary fact that no grant was made, because, particularly in the case of the Dock, there was no-one who knew they could make the grant. As the appellants are precluded from relying on that fact, it would be incongruous if they were nonetheless able to deny the grant of the rights of way because the unknown owners did not acquiesce in the grant.
Fry J was one of seven judges who provided advice to the House of Lords in Dalton v Angus (Pollock B, Field, Lindley, Lopes, Manisty, Fry, and Bowen JJ). One of the questions was whether under the doctrine of lost modern grant the owner of a modern building had acquired an easement by prescription, for support from adjoining land for the building (rather than the soil) after 20 years' support. In his advice to the House of Lords, Fry J said (at 772): "But I am unable to find any principle on which to justify the acquisition of the right to support by a house independently of express covenant or grant. For casting aside all technicalities, I think that the only principle upon which rights of a kind like the one in question can be acquired is that of acquiescence. But I further think that, as he who cannot prevent cannot acquiesce, and as the owner of adjoining land cannot prevent his neighbour from erecting a house upon his own land, he can never be said to have acquiesced in the construction of that house, or in the burthen which thence results. Such are the conclusions to which I should be driven by a consideration of this question on principle. When I turn to the authorities of our law bearing on the subject, I find, as it appears to me, that it has been decided that an ancient house does possess the right in question; that a new house does not possess this right; and, consequently, that the right is one which may be acquired independently of express covenant. All the efforts which I have made to find some principle upon which to justify the authorities, have to my own mind entirely failed".
Fry J also said (at 773-775): "... in my opinion, the whole law of prescription and the whole law which governs the presumption or inference of a grant or covenant rest upon acquiescence. The Courts and the Judges have had recourse to various expedients for quieting the possession of persons in the exercise of rights which have not been resisted by the persons against whom they are exercised, but in all cases it appears to me that acquiescence and nothing else is the principle upon which these expedients rest. It becomes then of the highest importance to consider of what ingredients acquiescence consists. In many cases, as, for instance, in the case of that acquiescence which creates a right of way, it will be found to involve, 1st, the doing of some act by one man upon the land of another; 2ndly, the absence of right to do that act in the person doing it; 3rdly, the knowledge of the person affected by it that the act is done; 4thly, the power of the person affected by the act to prevent such act either by act on his part or by action in the Courts; and lastly, the abstinence by him from any such interference for such a length of time as renders it reasonable for the Courts to say that he shall not afterwards interfere to stop the act being done. In some other cases, as, for example, in the case of lights, some of these ingredients are wanting; but I cannot imagine any case of acquiescence in which there is not shewn to be in the servient owner: 1, a knowledge of the acts done; 2, a power in him to stop the acts or to sue in respect of them; and 3, an abstinence on his part from the exercise of such power. That such is the nature of acquiescence and that such is the ground upon which presumptions or inferences of grant or covenant may be made appears to me to be plain, both from reason, from maxim, and from the cases. As regards the reason of the case, it is plain good sense to hold that a man who can stop an asserted right, or a continued user, and does not do so for a long time, may be told that he has lost his right by his delay and his negligence, and every presumption should therefore be made to quiet a possession thus acquired and enjoyed by the tacit consent of the sufferer. But there is no sense in binding a man by an enjoyment he cannot prevent, or quieting a possession which he could never disturb. ... And again, the cases of Chasemore v. Richards, Webb v. Bird, and Sturges v. Bridgman, have established a principle which was stated by Willes, J., in Webb v. Bird, in these terms. After alluding to the law relative to lights as exceptional, he proceeded, 'In general a man cannot establish a right by lapse of time and acquiescence against his neighbour, unless he shews that the party against whom the right is acquired might have brought an action or done some act to put a stop to the claim without an unreasonable waste of labour and expense.' 'Consent or acquiescence,' said Thesiger, L.J., in delivering the judgment of the Court of Appeal in Sturges v. Bridgman, 'of the owner of the servient tenement lies at the root of prescription and of the fiction of a lost grant, and hence the acts or user, which go to the proof of either the one or the other, must be, in the language of the civil law, nec vi, nec clam, nec precario, for a man cannot, as a general rule, be said to consent or to acquiesce in the acquisition by his neighbour of an easement through an enjoyment of which he has no knowledge, actual or constructive, or which he contests and endeavours to interrupt, or which he temporarily licenses. It is a mere extension of the same notion, or rather it is a principle into which by strict analysis it may be resolved, to hold that an enjoyment which a man cannot prevent raises no presumption of consent or acquiescence."
Fry J acknowledged that applying his statement of principle, an easement for support of a house by adjoining soil could not arise by prescription because it could not be prevented except by means that would be expensive, difficult and churlish and would require a man to destroy his own property in order to protect his rights to it (at 775). It should have followed, if acquiescence were truly at the root of all easements by prescription, that no such easement of support could arise.
There was a further ground upon which no such easement could arise if acquiescence were the root of the principle, namely, that the owner of the servient tenement would not have the requisite knowledge of the extent to which support of his soil was requisite for the support of the building on the adjoining property (at 777).
Nonetheless, Fry J advised the House of Lords that the verdict entered for the plaintiffs at trial was correct according to the law of England as it then stood. His Lordship said (at 779): "[The trial judge's] conclusion involves the proposition that, by the mere act of his neighbour and the lapse of time, a man may be deprived of the lawful use of his own land, a proposition which shocks my notions of justice, and against which I have struggled, but have struggled in vain; because, as I repeat with regret, I can find no reasonable proposition on which to rest the long line of decisions on the question before your Lordships. It would be presumptuous in me to inquire how far your Lordships will be bound by this long catena of authorities, or free to act on reason and principle, and I therefore humbly submit to your wisdom the conflict which appears to me to exist in this important case between the two governing principles of our laws."
There are two points to notice about these reasons. First, consistently with Fry J's proposition that acquiescence is at the root of easements by prescription, his Lordship said that necessary ingredients of acquiescence included knowledge of the person affected as well as the power of the person affected to prevent the act. Later cases have departed from a requirement of knowledge by the servient owner and instead have held that an easement by prescription can arise against a servient owner who has no actual knowledge, but has constructive knowledge, that is, means of knowledge, of the use said to give rise to the easement. This is not acquiescence. Leaving aside a use of the word "acquiescence" as synonymous with laches, acquiescence requires knowledge by the affected party of an act done to his or her prejudice to which he or she does not object (Cashman v 7 North Golden Gate Gold Mining Co (1897) 7 QLJ 152 at 153-154 (Griffith CJ); Meagher, Gummow and Lehane's Equity Doctrines and Remedies 4th ed at [36-095]; 5th ed at [38-015]).
The second point is that if acquiescence is in all cases the root of an easement by prescription, then, as Fry J said, the owner of the servient tenement must reasonably have the power to prevent the act, either by action in the courts, or by some act on his or her part. It is on this ground that it was said that there could be no easement for access to wind across an adjoining property, or uninterrupted flow of subterranean water in undefined channels (Sturges v Bridgman (1879) LR 11 Ch D 852 at 863-4).
But that does not explain the so-called negative easement for access to light. In Webb v Bird (1861) 10 CB (NS) 269; 142 ER 455 Willes J said that an easement for access of light was anomalous because the servient owner could not prevent it without unreasonable labour and expense (at 285, 461). But the High Court had no difficulty in recognising it in Delohery and did so without reference to the need for acquiescence or the suggested anomaly.
Fry J acknowledged that authority was against his proposition that an easement for support of a building on adjoining land could not arise because there was no practical way in which the landowner could interrupt the support.
In the House of Lords in Dalton v Angus Lord Selborne LC held that the right of support to the building on the adjoining land was in the nature of an easement and not an inherent proprietary right attaching to ownership of the land on which the building was constructed in the same way as the right of support to adjoining soil. He also held that the easement came within s 2 of the Prescription Act 1832 and was enforceable by virtue of 20 years' of user (at 798-800). Lord Selborne added that the same result would practically be reached by the doctrine of lost modern grant that is presumed after 20 years user and agreed with: "... the view of the authorities taken by Lush J, by the majority of the Judges and the Court of Appeal, and by all of the learned Judges who attended this House (unless Bowen J, who preferred to rely upon the equitable doctrine of acquiescence, is an exception) ...". (at 801)
Lord Selborne LC accepted that if an easement by prescription were to arise under the doctrine of lost modern grant, then it would be necessary to show that the owner of the servient tenement had the "knowledge or means of knowledge which man ought to be shewn to possess, against whom a right of support for another man's building is claimed" (at 801). His Lordship held that the adjoining landowner had imputed knowledge that a new and enlarged easement of support was going to be acquired against him, whatever its extent, unless he interrupted or prevented it (at 801). It was open to that landowner to do so, although no reasonable man would do so (at 796-7). Nonetheless: "But, on the other hand, it would not be reasonably consistent with the policy of the law in favour of possessory titles, that they should depend, in each particular case, upon the greater or less facility or difficulty, convenience or inconvenience, of practically interrupting them. They can always be interrupted (and that without difficulty or inconvenience), when a man wishes, and finds it for his interest, to make such a use of his own land as will have that effect. So long as it does not suit his purpose or his interest to do this, the law which allows a servitude to be established or enlarged by long and open enjoyment, against one whose preponderating interest it has been to be passive during the whole time necessary for its acquisition, seems more reasonable, and more consistent with public convenience and natural equity, than one which would enable him, at any distance of time (whenever his views of his own interest may have undergone a change), to destroy the fruits of his neighbour's diligence, industry, and expenditure." (Emphasis added.) (at 797)
In so far as these observations were applicable to the doctrine of lost modern grant, Lord Selborne LC upheld the easement by a fiction that the servient owner could be said to have acquiesced by not taking steps (that would admittedly have been unreasonable) to withdraw support. It was better to admit the fiction than deny the adjoining landowner's expectation of support.
This is to pile the fiction of acquiescence on the fiction of a lost modern grant, but then to ameliorate the consequences of doing so by resort to the servient owner's having the "means of knowledge" of the use as sufficient to establish acquiescence.
The law as thus expounded by Fry J and Lord Selborne LC assumed the usual case where the servient owner has the knowledge or means of knowledge and can interrupt the use or enjoyment of his property.
Lord Blackburn considered that it had been settled by the decision of the House of Lords in Backhouse v Bonomi (1861) 9 HLC 503; 11 ER 825 that the owner of land has a right to support from the adjoining soil which is infringed as soon as but not until, damage is sustained and consequence of the withdrawal of that support and that that right is more properly described as a right of property of the owner of the land which the owner of the adjoining land is bound to respect rather than as an easement imposing a restriction on the adjoining landowner. Importantly, he added that "... whether it is called by one name or the other is, I think, more a question as to words than as to things" (at 809). (This is not noticed in the summary in Tehidy Minerals Ltd v Norman at 549 of Lord Blackburn's reasoning in Dalton v Angus.) Lord Blackburn said that the right claimed could only arise from enjoyment in the manner and subject to the conditions and for the time required by law to give a title by prescription (at 809). As to this, his Lordship said (at 817-818): "... I cannot agree that the only principle upon which enjoyment could give the owner of property a prescriptive right over a neighbour's land exceeding what would, of common right, belong to the owner of that property, was acquiescence on the part of the neighbour. Nor even that it is the chief principle. In general such enlarged rights are of such a nature that those over whose property they are enjoyed could in the beginning have stopped them; and a failure to stop them is evidence of acquiescence, and may afford a ground for finding that there was an actual assent, but that is, in many if not in all cases, a fiction; there is seldom a real assent. But no doubt a failure to interrupt, when there is power to do so, may well be called laches, and it seems far less hard to say that for the public good and for the quieting of titles enjoyment for a prescribed time shall bar the true owner when the true owner has been guilty of laches, than to say that for the public good the true owner shall lose his rights, if he has not exercised them during the prescribed period, whether there has been laches or not; but there is not much hardship. Presumably such rights if not exercised are not of much value, and though sometimes they are 'Ad ea quae frequentius accidunt jura adaptantur.' This ground of acquiescence or laches is often spoken of as if it were the only ground on which prescription was or could be founded. But I think the weight of authority, both in this country and in other systems of jurisprudence, shews that the principle on which prescription is founded is more extensive."
Lord Blackburn said that the English law of prescription was derived from the Roman law (at 822) and said (at 826): "Now, if the motive for introducing prescription is that given in the Digest, lib. xli., tit. 3, art. 1, quoted before, I think it irresistibly follows that the owner of a house, who has enjoyed the house with a de facto support for the period and under the conditions prescribed by law, ought to be protected in the enjoyment of that support, and should not be deprived of it by shewing that it was not originally given to him. And I think that the decisions ending in Backhouse v. Bonomi [9 H.L.C. 503], which is put in a very clear light by Manisty, J., in his opinion, decide that he should not be deprived of it. Fry, J., thinks those decisions are contrary to principle, but too strong to be departed from. I have come to the conclusion, for the reasons I have given, that they are founded on principle."
The same passage from the Digest Lord Blackburn relied upon (at 818) was later cited and translated by the High Court in Delohery and is extracted at [138] below.
Lord Selborne LC's reference to constructive knowledge was taken up in Union Lighterage Co v London Graving Dock Co [1902] 2 Ch D 557 where the plaintiff claimed an easement for support for its dock that was supported to an adjoining structure by tie rods that were not themselves visible, but produced knots on the piles that were visible. This was held to put the owner of the servient tenement on notice because it had the "means of knowledge" of the easement or support claimed (at 569 (Vaughan Williams LJ), 571 (Romer LJ), 574 (Stirling LJ)).
This is remote from acquiescence.
In Delohery the High Court, in explaining the law of prescription in reference to the easement there in question, substantially adopted the reasons of Lord Blackburn in Dalton v Angus. Part of the reasons of the High Court are quoted at [109] above. The court continued that: "But the rejection of the fiction of a lost grant does not conclude the question whether the law of ancient lights is part of the law of New South Wales."
The High Court stated that title by prescription is a very ancient branch of the real property law of England and quoted from the Digest the same passage quoted by Lord Blackburn in Dalton v Angus which the High Court translated thus: "Title by prescription is introduced (into the law) for the public benefit, that is to say, in order that the rights of property with respect to certain things may not remain uncertain for a long time and practically forever in the space of a definite and prescribed time will be sufficient to enable the true owners to ascertain their rights." (at 300)
The High Court quoted the judgment of Littledale J in Moore v Rawson (1824) 3 B & C 332; 107 ER 756 that included the following (at 305-306): "'There is a material difference between the mode of acquiring such rights' (i.e., rights of common or of way) 'and a right to light and air. The latter is acquired by mere occupancy; the former can only be acquired by user, accompanied with the consent of the owner of the land; for a way over the lands of another can only be lawfully used, in the first instance, with the consent, express or implied, of the owner. A party using the way without such consent would be a wrong-doer; but when such a user, without interruption. has continued for twenty years, the consent of the owner is not only implied during that period, but a grant of the easement is presumed to have taken place before the user commenced. The consent of the owner of the land was necessary, however, to make the user of the way (from which the presumption of the grant is to arise) lawful in the first instance. But it is otherwise as to light and air. ... But if the light be suffered to pass without interruption during that period to the building so erected, the law implies, from the non-obstruction of the light for that length of time, that the owner of the adjoining land has consented that the person who has erected the building upon his land shall continue to enjoy the light without obstruction, so long as he shall continue the specific mode of enjoyment which he had been used to have during that period. It does not, indeed, imply that the consent is given by way of grant, for although a right of common (except as a common appendant) or a right-of-way, being a privilege of something positive to be done or used in the soil of another man's land, may be subject of legal grant, yet light and air, not being to be used in the soil of the land of another, are not the subject of actual grant; but the right to insist upon the non-obstruction and non-interruption of them more properly arises by a covenant which the law would imply not to interrupt the free use of the light and air.'"
The High Court then continued (at 306-309): "With reference to this last observation it may be remarked that, although the easement of light is often spoken of as a negative easement, there would not seem to be much difficulty in framing a grant of a positive easement of light over the land of the grantor. The importance of the passage lies, however, in this, that it is apparent that that very learned Judge regarded the consent of the owner of the servient tenement as the substance of the matter, and the means by which it is to be presumed to have been given as a mere question of form. ... Reviewing, then, this line of decisions, it appears to have been settled in England long ago that the right to the uninterrupted access of light over the land of another may be acquired by a 'long' and continual possession, without any formal instrument, and that the interpretation of the word 'long' has by degrees been altered by judicial decisions, and had come by the year 1786 to mean unexplained enjoyment for a period of 20 years or upwards. ... No doubt, in some cases, where the matter came before a jury, the jury were directed to presume that a grant of the right had once existed and had been lost. But, if the distinction between the substance of the law and its temporary formal expression is borne in mind, the difficulty was never very formidable. The law of prescription says that a right of property in certain things may be acquired by long, continual, and peaceable possession. The reason of the law is given in the passage above quoted from the Digest. It was adopted on grounds of public policy, in order that the right of property in these things might not be for ever uncertain. But it was assumed that the origin of the title thus recognized by the law was itself lawful and not unlawful. And, since an easement over the land of another could only be lawfully created by his consent, the law, as pointed out by Littledale, J., implied that that consent had been given. This was the substance of the law. The mode of giving the consent was an accident. But, as the usual mode of creating an easement was by grant, it was not a great step to take to say, when the conditions which conferred the right were proved to exist, 'Here is an incorporeal hereditament in lawful existence and of lawful origin. There must therefore at one time have been a grant.' ... It is quite plain, when all the cases are considered, that the doctrine of lost grant was never regarded as anything more than an artificial and subsidiary rule designed for the purpose of giving effect to a substantial right."
In response to the suggestion that the shortening of the period of legal prescription was a judicial usurpation, the High Court said (at 309): "... the Court's, so far from usurping the legislative function, would only have been reverting to the principle which had been the foundation of their original decisions, i.e., to follow with regard to easements, which may be considered as accessories to land, the positive rule laid down by the legislature with regard to the land itself."
The substance of this reasoning, as I apprehend it, is that the law as to ancient lights was rooted in prescription. The peaceable enjoyment of rights over or in respect of the adjoining landowner's land for a period of 20 years or more gave title by prescription to an easement in the same way as adverse possession gives title to the land itself. The doctrine of lost modern grant was nothing more than an artificial and subsidiary rule designed for the purpose of giving effect to a substantial right. Because an easement could only lie in grant, it was thought necessary to imply a grant, and for this purpose to imply a consent (for which read acquiescence, as use of land by permission would not give rise to a title by prescription). But the implication of a grant was artificial, and the right depended upon the nature and length of use or enjoyment.
If the cases of constructive knowledge are to be rationalised, then I agree with Professor Butt's analysis of Fernance v Simpson [2003] NSWSC 121; 11 BPR 20,955 in his note "Use 'as of right'" (2004) 78 ALJ 162 at 166 quoted by Macfarlan JA at [56] where he said: "When it is said that 'acquiescence' lies at the root of prescription, what is meant that the servient owners - whoever they are - have the means of knowing of the use being exercised but do not interrupt it. On the facts (in Fernance v Simpson) the use was open and obvious so that the owner - whoever that person was - had either actual or constructive knowledge of the use."
It followed in Fernance v Simpson that the claimant had made out the necessary element of 'acquiescence' even without being able to clearly identify who owned the land. But that demonstrates that in truth acquiescence does not, in all cases, lie at the root of easements by prescription, but rather emphasises that it is the open and uninterrupted use that gives rise to the easement by prescription. To say that the servient owners acquiesce in the use because, if they were aware of the use, the use was sufficiently open that they would have constructive knowledge of it, is to pile the fiction of acquiescence on the fiction of lost modern grant. In Delohery the High Court was dismissive of the fiction of lost modern grant as being nothing more than an "artificial and subsidiary rule designed for the purpose of giving effect to a substantial right".
That is not to deny that in most cases acquiescence by the servient owner is essential to an easement by prescription. If the use of the servient owner's land is open and without force but with permission, there can be no easement by prescription (R (on the application of Barkas) v North Yorkshire County Council [2015] 1 AC 195; [2014] UKSC 31 at [27]-[29]). Whether the servient owner has consented to the use or merely tolerated it may be critical.
I acknowledge that if these reasons are correct there may be implications in other cases, such as where the servient owner does not have the capacity to make a grant, or where the easement is claimed against an owner who has been out of possession because the land has been leased. But the implication arises not from my reasons but from the High Court's rejection in Delohery of the fiction of lost modern grant and insistence that the right claimed lay in prescription.
If I am wrong in my view that in the peculiar circumstances of this case the respondents are not required to prove that the servient owners, whoever they may be, acquiesced in the use of the Passage and the Dock, I would reluctantly conclude that the notion of constructive knowledge cannot be extended as far as proposed by the primary judge. To do so would be contrary to the warnings endorsed by Barton J in Milne v James that as constructive knowledge is itself a fiction it ought to be narrowly watched and not enlarged (at 189). It would be to pile fiction on fiction. In Williams Mason P cited the observations of Gummow J in Scott v Davis (2000) 204 CLR 333 at 376; [2000] HCA 52 that "the spirit of the times is unfavourable to the preservation of existing legal fictions and hostile to the creation of new ones" (at [130]).
But for these reasons I also would dismiss the appeal with costs.
McCALLUM JA: I agree with Macfarlan JA.

Amendments 30 November 2020 - In [65], [69], [70]: typographical errors corrected. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 November 2020

3 Will 4 c 71) (UK) Probate Act 1890(NSW)

Real Estate of Intestates Distribution Act 1862(NSW)

(Real Estate of Intestates Distribution Act 1862(NSW)

(Probate Act 1890(NSW)

States (Conveyancing Act 1919(NSW)s 179

Property Law Act 1969(WA)s 121, s 121).

Arcidiacono v The Owners - Strata Plan No 17719; Arcidiacono v The Owners - Strata Plan No 61233

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