Ash Oil Holdings Pty Ltd v Fasoulis

Supreme Court of NSW|2007-10-29|Before: Hamilton J

CITATION : Bona Vista Properties Pty Ltd [2007] NSWSC 1278

DECISION : Easement extinguished as obsolete.

CATCHWORDS : REAL PROPERTY [418] - Easements - Easements generally - Abandonment, suspension or extinguishment - Extinguishment - Obsolescence - Procedure on application to Court.

Ash Oil Holdings Pty Ltd v Fasoulis [2005] NSWCA 80 Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd [2000] NSWCA 28 CASES CITED : Re Mason and the Conveyancing Act [1962] NSWR 762 Webster v Bradac SCNSW 21 June 1993 unreported Neville and Ashe, Equity Proceedings with Precedents (New South Wales) 1981 [1024]

PARTIES : Bona Vista Properties Pty Ltd (P)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

4419/07 BONA VISTA PROPERTIES PTY LTD JUDGMENT 1 HIS HONOUR: These proceedings arise from the changing use of land in the vicinity of Pitt Town near the Hawkesbury River. Pitt Town is one of the old agricultural settlements of the County of Cumberland. At the present time it is undergoing considerable expansion by the conversion of previously agricultural land for residential developments. Two of the pieces of land which are involved in that process are land which I shall call "the Fernadell land" and land which I shall call "the Bona Vista land". 2 Both the Fernadell land and the Bona Vista land are to the south of the Hawkesbury River. The Bona Vista land in general terms lies north of the Fernadell land. There is a considerable distance between the northern boundary of the Bona Vista land and the river. Until about 2000 there was a pipeline through which water was drawn from the Hawkesbury River for agricultural use on the Fernadell land. The immediate relevance of this to the present proceedings is that the water was drawn in a pipe through the Bona Vista land and that pipe lay in an easement, which had been granted under old system conveyancing by a deed dated 27 February 1946 and registered Book 2012 Number 887, which easement authorised the maintenance of the pipe in the Bona Vista land and the drawing of water through it. 3 The application is an application under s 89 of the Conveyancing Act 1919. The relevant portions of s 89 are as follows: " Power of Court to modify or extinguish easements, profits à prendre and certain covenants

(1) Where land is subject to an easement or a profit à prendre or to a restriction or an obligation arising under covenant or otherwise as to the user thereof, the Court may from time to time, on the application of any person interested in the land, by order modify or wholly or partially extinguish the easement, profit à prendre, restriction or obligation upon being satisfied: (a) that by reason of change in the user of any land having the benefit of the easement, profit à prendre, restriction or obligation, or in the character of the neighbourhood or other circumstances of the case which the Court may deem material, the easement, profit à prendre, restriction or obligation ought to be deemed obsolete, or that the continued existence thereof would impede the reasonable user of the land subject to the easement, profit à prendre, restriction or obligation without securing practical benefit to the persons entitled to the easement or profit à prendre or to the benefit of the restriction or obligation, or would, unless modified, so impede such user, or (b) that the persons of the age of eighteen years or upwards and of full capacity for the time being or from time to time entitled to the easement or profit à prendre or to the benefit of the restriction, whether in respect of estates in fee simple or any lesser estates or interests in the land to which the easement, the profit à prendre or the benefit of the restriction is annexed, have agreed to the easement, profit à prendre, restriction or obligation being modified or wholly or partially extinguished, or by their acts or omissions may reasonably be considered to have abandoned the easement or profit à prendre wholly or in part or waived the benefit of the restriction wholly or in part, ………………… or (c) that the proposed modification or extinguishment will not substantially injure the persons entitled to the easement or profit à prendre, or to the benefit of the restriction or obligation. ………………… (4) Notice of any application made under this section shall, if the Court so directs, be given to the council of the area (within the meaning of the Local Government Act 1993) in which the land is situated, and to such other persons and in such manner, whether by advertisement or otherwise, as may be prescribed by rules of Court or as the Court may order. (5) An order under this section shall, when registered as in this section provided, be binding on all persons, whether of full age or capacity or not, then entitled or thereafter becoming entitled to the easement or profit à prendre, or interested in enforcing the restriction or obligation and whether such persons are parties to the proceedings or have been served with notice or not. ………………… (8) This section applies to land under the provisions of the Real Property Act 1900, and the Registrar-General shall, on application made in the form approved under that Act, make all necessary recordings in the Register kept under that Act for giving effect to the order." 4 There are a number of grounds upon which the application is put. Many (but not all) of the proprietors of land within the dominant tenement consent to the extinguishment of the easement. But the ground on which the application is primarily put is that the easement is obsolete. 5 I have already indicated that both the Bona Vista land and the Fernadell land are now contemplated for residential development. The relevant history is as follows. Parts of the original Fernadell land have already been subdivided out. Those parcels of land were not near the pipeline through which water was carried on to the Fernadell land and do not have any easement or right to draw water from the pipe through the portions of the Fernadell land (now in different ownership) that intervene between the pipe and the subdivided parts. Furthermore, those parts all have their own water supply and are not in agricultural use. The Court has evidence, as I have said, of the use of the Fernadell land as an agricultural property and that formerly water was drawn through the pipeline for agricultural use on the Fernadell land. But the drawing of water had totally ceased by the year 2000, at which time all agricultural use of the Fernadell land had also ceased. The existence of the easement is an impediment to the proposed residential subdivision of the Bona Vista land. 6 It may be noted that a further difficulty with any continued use of the easement to convey water to the Fernadell land is that, despite the fact that water was drawn up the pipe, Fernadell does not have and apparently never had an easement to draw the water across Bootles Laneway, lying between the Bona Vista land and the Fernadell land, nor was or is there any easement for the maintenance of the pipe and the drawing of water from the river to the Bona Vista land, to justify the piping of water from the river to that point, although, as I have said, this was obviously done for many years. The line of the pipe through which water was drawn to the Bona Vista land was, in general terms, along the line of Hawkesbury Street. 7 The application for the extinguishment of this easement has been prepared by the plaintiff's solicitors with creditable diligence and care and provides great detail about various relevant matters. It is without any disrespect to the care and detail with which the matter has been prepared that I find the above short statement of the facts sufficient to dispose of this application as a substantive matter. 8 In a useful written submission, the plaintiff's counsel has given me references to the decision of McLelland CJ in Eq in Webster v Bradac SCNSW 21 June 1993 unreported and the decision of the Court of Appeal in Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd [2000] NSWCA 28 approved in Ash Oil Holdings Pty Ltd v Fasoulis [2005] NSWCA 80 at [40] per Tobias JA with whom Handley JA and Campbell AJA agreed. In Durian (Holdings) Mason P said at [3] - [6]: "3 In Re Truman, Hanbury, Buxton & Co Ltd's Application [1956] 1 QB 261 at 272 Romer LJ explained that the word 'obsolete' was used in the sense that the original purpose of the easement or covenant can no longer be served. This interpretation has been applied in later cases (see, eg Re Miscamble's Application [1966] VR 596 at 601, Re Martin (1988) 57 P & CR 119 at 125). However, a less exacting standard is suggested by Wilson J in C Hunton Ltd v Swire [1969] NZLR 232 at 234 ( 'no longer relevant to the circumstances presently obtaining' ). In Re Mason and the Conveyancing Act [1962] NSWR 762 at 764, Jacobs J said: 'I consider that the word "obsolete" can be taken to mean that the object of the covenant is now incapable of fulfilment or perhaps that it serves no present useful purpose.'

I respectfully agree with this dictum, bearing in mind the latitude encompassed in a power expressed as one of being satisfied that the easement 'ought to be deemed obsolete'. 4 This said, the Court's focus must remain the language of the section. Section 89 necessarily qualifies the common law rights of the owner of the easement. The section is to be applied according to its terms, read fairly and without disregarding the conventional approach to legislation affecting common law property rights. The starting point is the easement itself, its terms and its objects derived from construing those terms in context (cf Re Mason at 764) and bearing in mind that the easement was created for an indefinite future and destined to enure in a changing environment (cf Armishaw v Denby Horton (NZ) Ltd [1984] 1 NZLR 44 at 47).

5 The Court was referred to the frequently cited words of Farwell J in Re Henderson's Conveyance [1940] 1 Ch 835 at 846: 'Speaking for myself, I do not view this section of the Act as designed to enable a person to expropriate the private rights of another purely for his own profit. I am not suggesting that there may not be cases where it would be right to remove or modify a restriction against the will of the person who has the benefit of that restriction, either with or without compensation, in a case where it seems necessary to do so because it prevents in some way the proper development of the neighbouring property, or for some such reason of that kind; but in my judgment this section of the Act was not designed, at any rate prima facie, to enable one owner to get a benefit by being freed from the restrictions imposed upon his property in favour of a neighbouring owner, merely because, in the view of the person who desires the restriction to go, it would make his property more enjoyable or more convenient for his own private purposes.'

6 This carefully qualified language makes the obvious point that the power is not available for the purpose of expropriating private rights for profit. The converse is equally true. It is no defence to a claim otherwise falling within the four corners of the section for the defendant to show that its ability to defend the statutory claim might be a possible source of money coming from a dominant tenant anxious to develop its own property. The section confers a power to abrogate existing rights (cf Australian Securities and Investments Commission v D B Management Pty Ltd [2000] HCA 7 at [44]." 9 Even exercising the caution bespoken in the above cited passage, it is clear from the short account of the history set out above that the easement has become obsolete in the sense laid down by Jacobs J in Re Mason and the Conveyancing Act [1962] NSWR 762 at 764 and accepted by Mason P in Durian (Holdings) at [3]. Subject to the matters of procedure which follow, the plaintiff has made out its case for the extinguishment of the easement. 10 It flows from the terms of s 89 that it is not necessary to join defendants to proceedings for extinguishment under that section: see specifically s 89(4). The practice of this Court has been that defendants are not initially joined in the summons for an order under s 89. On the first return of the summons, directions are given by the Court as to service of notice of the application. These directions will specify both the persons to be served and the form of the notice. The people specified to be served will be people who are likely to be affected by the order. In the case of a large residential subdivision, this will not necessarily include all persons who are entitled to the benefit of the easement or restriction. For example, in the case of a restriction as to the materials of a dwelling house, the owner of a lot distant from the relevant lot and unlikely to be affected by the visual impact of impermissible materials need not be joined. Those given notice who wish to oppose the making of the order may attend and do so at their own risk as to costs. For completeness, it should be stated that, if more than one objector appears, generally only one set of costs will be allowed in favour of successful objectors: see Neville and Ashe, Equity Proceedings with Precedents (New South Wales) 1981 [1024]. 11 In this case, on 28 September 2007, the Court gave directions as to the persons on whom notice was to be served and the form of notice which should be given to them. It has been established that all those persons have been given the requisite notice. No one has appeared to oppose the making of the order. 12 In the circumstances I make the following orders: (1) Order that the easement and right of way created by deed dated 27 February 1946 being old system register Book 2012 Number 887 be wholly extinguished. (2) Order that Exhibits A and B may be returned.

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