Ashoil Pty Ltd v Fassoulas & Ors

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2825/03 ASHOIL HOLDINGS PTY LTD v ATHANASIA FASSOULAS & ORS JUDGMENT 1 The plaintiff as registered proprietor of a servient tenement sought an order for extinguishment of an easement against the defendants as registered proprietors of the dominant tenement. 2 Both pieces of land have a frontage to The Boulevarde at Punchbowl in Sydney. The easement is a right of way some eight feet wide running off The Boulevarde along the boundary of the properties. It was created in January 1920 to give access to the rear of the buildings to be erected on the two sites. 3 The properties now abut Turner Lane at their rears. It was constructed in sections, that accommodating the properties being approved in October 1935. 4 In the 1960s, the area to the rear of shops fronting onto The Boulevarde was a paddock. Turner Lane was a dirt track. There was no discernable right of way. It was dirt and grass. A paling fence existed across The Boulevarde end of the right of way. 5 In the early 1970s, the predecessor in title to the defendants sought the approval of the registered proprietor of the servient tenement to the construction of a shoe repair shop on the easement. A development application to the local authority was successful, but the venture did not go ahead. 6 In November 1982, a development application to construct a new bank building on the servient tenement was approved. A survey of areas to be demolished, carried out in February 1982, showed a covered area built over the right of way. 7 The bank approached the then owner of the dominant tenement in the 1970s seeking her permission to the removal of the paling fence and the opening of a pathway along the right of way. She agreed provided the pathway was opened during the bank's business hours only. 8 The bank created a pathway over the right of way with a gate and padlock at each end. In 1994 or 1995 the then manager of the bank caused the gates to be closed at the end of business hours and opened at the commencement of the next business day. He said the padlocks were often broken. He persisted in replacing them for some six to twelve months but then left the gates open. The right of way was used by the public as a means of access to The Boulevarde from a car park off Turner Lane. The bank ceased to operate from the servient tenement in September 2000 and the gates remained open until the plaintiff acquired the property. 9 The structure on the dominant tenement contained a downstairs shop opening on to The Boulevarde and an upstairs residential flat. The only window in the upstairs flat and some windows in the downstairs shop opened onto the right of way. There is no parking on The Boulevarde and deliveries to the shop are made from the right of way. While the dominant tenement has access to Turner Lane that access was not used by the tenants of the shop because the rear door was locked from the inside. 10 The defendants acquired the dominant tenement in February 1995. A Chinese restaurant had been established in the shop by the previous owner and it continued until February 1996. In 1997 it became a grocery shop. 11 There was a gate in the fence along the boundary of the dominant tenement that gave access to the right of way. The evidence was that the gate had been locked from 1992 until about the time the plaintiff acquired the servient tenement. 12 The defendants' father recommended the purchase of the premises to his children. He arranged finance and contributed some cash. Each of the defendants contributed cash to differing degrees. They accepted that the decision to purchase the property was his and they exercised no independent assessment and sought no advice about the right of way. They thought it was a public thoroughfare. 13 Nonetheless, they each said they had no intention of abandoning the right of way which they regarded as valuable in attracting future tenants. The father had utilised the right of way to carry out repairs to the building on the dominant tenement. 14 When the plaintiff acquired the servient tenement in March 2002, it locked the gates at both ends of the right of way. When this occurred the tenant of the shop on the dominant tenement said his business was affected and it was subsequently closed. 15 In March 2003, the plaintiff obtained approval of a development application to the local authority to construct two shops and five commercial suites on the servient tenement. The local authority and the local police expressed concern that the right of way was used by drug users and they preferred that it was closed. 16 The plaintiff's primary argument was that the easement had been abandoned well before the defendants acquired the dominant tenement. Indeed, counsel for the plaintiff conceded that if abandonment had not by then occurred, it never occurred. 17 The Conveyancing Act 1919, s 89(1)(b) provided in part that the court might modify or wholly or partially extinguish an easement if satisfied that the persons from time to time entitled to it, by their acts or omissions, might reasonably be considered to have abandoned it. 18 It has been held that the principles to be applied under this provision are no different from the common law doctrine of extinguishment by abandonment (Grill v Hockey (1991) 5 BPR 97,365). 19 A useful discussion of the principles is contained in the judgment of Austin J in Long v Michie [2003] NSWSC 233. In Gotobed v Pridmore (1970) 115 SJ 78, Buckley LJ said: "To establish abandonment the conduct of the dominant owner must have been such as to make it clear that he had at the relevant time a firm intention that neither he nor any successor in title should thereafter make use of the easement. The circumstances might be that he was estopped from denying such an intention. Abandonment was not to be lightly inferred. Owners of property did not normally wish to divest themselves of it unless it was to their advantage notwithstanding that they might have no present use for it." 20 That passage was cited with approval by the Court of Appeal in Williams v Usherwood (1981) 45 P & CR 235 at 256. It was adopted by McLelland J in Grill. 21 A slightly different emphasis was given by the Court of Appeal in Tehidy Minerals Ltd v Norman [1971] 2 QB 528 at 553: "Abandonment of an easement or of a profit à prendre can only, we think, be treated as having taken place where the person entitled to it has demonstrated a fixed intention never at any time thereafter to assert the right himself or to attempt to transmit it to anyone else." 22 That approach was adopted by Powell J in Guth v Robinson (1977) 1 BPR 97017 at 9214 and by Needham J in Proprietors Strata Plan No 9968 v Proprietors Strata Plan No 11173 [1979] 2 NSWLR 605 at 617. 23 In Treweeke v 36 Wolseley Road Pty Ltd (1972-1973) 128 CLR 274, a right of way over impassable terrain to a waterfront was granted in 1927. A chain wire fence erected in 1933 and later renewed crossed the right of way. It had been erected for safety reasons. In 1956 the owner of the servient tenement installed a swimming pool partially on the right of way and in 1958 she erected an iron fence across it. The owners of the dominant tenement used an alternative route over other land to gain access to the waterfront. The entirety of the right of way had never been used by the occupiers of the dominant tenement. The owner of the servient tenement failed to obtain a declaration that the right of way had been abandoned. The fences could be removed. There was a complaint about the swimming pool when it was discovered that it had been constructed partly on the right of way. At 302, Mason J explained that mere non-user, even for a long period of time, did not necessarily indicate an intention to abandon: "It has been said, for instance, that mere non-user of a right of way the subject of a grant, even for a long period of time, does not necessarily indicate an intention to abandon ( Ward v Ward (1852) 7 Ex 838 (115 ER 1189)). Non-user may be referable to the absence of a need to use the right of way and the use of an alternative and more attractive means of access; then it may be thought that the non-user indicates, not so much an intention to abandon the right of way, as a preference for the alternative means of access so long as it remains available." 24 There were long periods of non-user in McIntyre v Porter [1983] 2 VR 439 and in Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd (2000) 10 BPR 97,830 but those decisions to extinguish the easements turned on other grounds. 25 Little is to be served by an analysis of the facts of decided cases. The question whether an easement has been abandoned is essentially one of fact (Treweeke at 302). In my view, neither the paling fence nor the covered area was a sufficient obstruction of the right of way to justify the inference of abandonment by the defendants' predecessor in title. Nor do I think that one should infer abandonment from the development application to use part of the right of way as a shoe repair shop. That venture having failed to eventuate, one cannot infer any intention on the part of the former owner of the dominant tenement to use the right of way for other purposes. 26 There was the gate in the fence along the boundary of the dominant tenement that gave access to the right of way. While the evidence revealed the gate had been locked from 1992 until about the time the plaintiff acquired the servient tenement, there was no evidence that it had not been used in the past as a means of access to the right of way. Indeed, the very purpose of such a gate was to achieve that end. 27 In McIntyre, Anderson J at 442 concluded that the owner of the servient tenement was entitled to a declaration that an easement had been abandoned by reason of its uninterrupted occupation and use and assumption of ownership over the land on which the right of way had been created. His Honour found that the assumption of proprietorship was evidenced by the exclusive and unchallenged occupancy and use, the payment of rates, the erection of double gates at road frontage, the nailing up of a small picket gate, the construction of a new fence along the boundary of the defendant's land without any provision for an entry from it to the right of way. Those facts are far removed from the instant circumstances. 28 Nor do I regard the construction of Turner Lane to the rear of the dominant tenement, thereby creating alternative access to it, as a sufficient basis for inferring that the predecessors in title to the defendants had evinced an intention to abandon the right of way. One can infer from the existence of the paling fence that the original purpose of the right of way, to gain access from The Boulevarde to the rear of the dominant tenement, was not exercised. But that does not mean that the right of way was not used for other purposes. The defendants' father had used it for the purpose of effecting repairs to the building on the dominant tenement. A building on that land existed for as long as the memory of the witnesses extended. There was no other obstruction to the right of way. It was open grass and dirt. It cannot safely be inferred that the predecessors in title to the defendants made no use of the right of way. And even if they did not, I am of the view that mere non-use was insufficient evidence from which an inference of abandonment might be drawn. 29 In my judgment the plaintiff failed to establish an entitlement to an order under the Conveyancing Act 1919, s 89(1)(b). 30 The plaintiff also relied on both limbs of the Conveyancing Act 1919, s 89(1)(a). The first limb provided that the court might modify or extinguish an easement upon being satisfied that, by reason of change in the user of any land having the benefit of the easement or in the character of the neighbourhood or other circumstances that the Court might deem material, the easement ought to be deemed obsolete. 31 As Campbell J pointed out in Lolakis v Konitsas [2002] NSWSC 889 at par 43, notwithstanding the reversal of his decision on appeal in Durian, Young J's analysis of the authorities concerning obsolescence for the purpose of the provision in Cavacourt Pty Ltd v Durian (Holdings) Pty Ltd (1998) 9 BPR 97,761 at 16,836-16,837 remains an accurate statement of the law. 32 In Re Truman, Hanbury, Buxton & Co Ltd's Application [1956] 1 QB 261 at 272, Romer LJ, with whom the other members of the Court of Appeal agreed, spoke of obsolescence in the sense that the original purpose could no longer be served. The construction of Turner Lane meant that access could be gained to the rear of the dominant tenement. That did not mean that the original purpose of the easement could no longer be served. Access could still be gained to the rear of the dominant tenement from The Boulevarde along the right of way. The paling fence was not such an obstacle that would prevent the original purpose of the easement being achieved. 33 Furthermore, there was no evidence that the establishment of Turner Lane constituted a change in the user of the dominant tenement as was submitted by the plaintiff. There was evidence that a dirt track preceded the establishment of the lane. It is not clear whether that dirt track was in use as a means of access to the dominant tenement when the easement was granted in 1920. For the same reasons it was not establishment that the establishment of Turner Lane constituted a change in the character of the neighbourhood. 34 In Re Mason and The Conveyancing Act (1960) 78 WN (NSW) 925 at 927, Jacobs J treated obsolescence as meaning that the object was incapable of fulfilment or, perhaps, that it served no present useful purpose. In that dictum Mason P agreed in Durian at 18,100. In Mason the original purpose of a restrictive covenant was to preserve the privacy of and views from a cottage. The cottage was subsequently demolished. His Honour was of the view that the covenant could not be so narrowly limited. It must have had a contemporary usefulness if it preserved benefits for those entitled to the dominant tenement. As Young J observed in Cavacourt, this approach flowed from the principle that the grant was construed most strongly against the grantor (Williams v James (1867) LR 2 CP 577 at 581). 35 It was clear that the right of way served useful purposes to the defendants. Not only was access to the tenant's premises conveniently obtained by patrons traversing the right of way from Turner Lane to The Boulevarde, but also it provided a means for repair and maintenance of the structures on the dominant tenement adjoining the right of way and it provided the benefit of light to windows within that structure. 36 In Durian, the Court of Appeal found that there had been a change in the user of the dominant tenement and in the character of the neighbourhood. A right of way that had not been used for nearly 30 years was blocked by a fence and the construction of a car park on the servient tenement almost 20 years previously. The surface level of the dominant tenement had been raised a distance that made it impossible for vehicular traffic to use the right of way. The formerly land-locked dominant tenement had since been provided with access from another road and access via the servient tenement had become prohibited by planning restrictions that reflected the long-term attitudes of the police and road traffic authorities. Those facts stand in stark contrast to the instant circumstances where, until the recent closure of it by the plaintiff, the right of way was used by the public, including patrons of the defendants' premises, to gain access to and from The Boulevarde to the parking facilities off Turner Lane. 37 The second limb of the Conveyancing Act 1919, s 89(1)(a) required the court to be satisfied that the continued existence of the easement would impede the reasonable user of the servient tenement without securing practical benefit to the persons entitled to the easement. 38 In Re Henderson's Conveyance [1940] 1 Ch 835 at 846, Farwell J said of such a provision that it was not designed to enable a person to expropriate the private rights of another purely for personal profit. The provision might be utilised in a case where it seemed necessary to do so because it prevented in some way the proper development of the neighbouring property. His Lordship went on to say that if a case was to be made out there needed to be some proper evidence that the restriction was no longer necessary for any reasonable purpose of the person who was enjoying the benefit of it. Those often quoted propositions were endorsed by Menhennitt J in Re Alexandra [1980] VR 55 at 59. 39 In my view the plaintiff failed to demonstrate that the right of way was no longer necessary for any reasonable purpose of the defendants for the reasons expressed above. 40 In Heaton v Loblay (1960) 60 SR (NSW) 332 at 335 Myers J expressed the view that if extinguishment was sought under the provision, it had to appear that no reasonable user of the land was possible unless the restriction was extinguished. The provision related to the use that could be made of the land in the hands of any owner. In so saying, his Honour adopted what had been said by Lord Evershed MR in Re Ghey and Galton's Application [1957] 2 QB 650 at 663 that it must be shown that the continuance of the unmodified covenants hindered to a real, sensible degree, the land being reasonably used, having due regard to the situation it occupied, to the surrounding property and to the purpose of the covenants. In Stannard v Issa [1987] 1 AC 175 at 186 the Privy Council endorsed the view expressed in a dissenting judgment below that the restrictions must be shown to have sterilised the reasonable use of the land. 41 All that was shown in the instant circumstance was a local authority approval of a development application that involved construction over the right of way. No evidence was led that the land could not be developed maintaining the right of way. 42 In my view, the plaintiff failed to establish a case under the second limb of the Conveyancing Act 1919, s 89(1)(a). The plaintiff did not seek to make a case under s 89(1)(c). In the result, the summons should be dismissed with costs.

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