Castagna v Great Wall Resources Pty Ltd [2005] NSWSC 942 | Case summary

"Subject to a right of way as shown on Deposited Plan No. 10858 Reservations and conditions if any contained in the Crown Grant." 9 Above that heading there was a blank space which was preceded by the words "And the transferree covenants with the transferror" and then there was a horizontal line to the right end of the page which passed through that sentence which linked with a diagonal line which passed at 45 degrees to the horizontal line down to close to where the heading "Encumbrances,&c.," appeared on the form. There was then typed in this space, it would seem over the diagonal line the following words: (I say "over the diagonal line" because the word "wide" has its "e" obviously over the top of the diagonal line) "And the Transferrors reserve to themselves their heirs executors administrators and assigns a right of way as appurtenant to Lot 4 on Deposited Plan 10858 over the piece of land 50 links wide passing through the subject land." 10 The defendant submits that the document on the face of it shows that the proposed reservation of easement was crossed out and there was no warrant for the Registrar General to register the easement. It has taken the view that there is no easement and that it has been entitled to repel all attempts to use the easement. 11 I reject this view. There is no evidence that the reservation of easement was crossed out of the transfer. It is almost certain just looking at the transfer that what happened is that the drafter originally inserted the right of way in the Memorandum of Encumbrances on the basis that it had been created by the registration of the Deposited Plan. The Registrar General drew attention to the fact that the plan did not create the right of way and it would have to be created by reservation in the Transfer and the Transfer was amended accordingly. 12 The Registrar General made a memorial stamp on Certificate of Title Volume 1960 Folio 137 that the transferees were now the registered proprietors (reserving right of way) of Lot 2 and a new Certificate of Title Volume 3283 Folio 54 issued to the purchasers. 13 When later Certificate of Title Volume 3294 Folio 165 issued for Lot 4 the easement was noted on that title as being appurtenant to Lot 4, the servient tenement being Lot 2. Lot 4 is now the plaintiffs' land; Lot 2 the defendant's land. The defendant argues that the reservation of the easement was crossed out on the Transfer so that it should never have got on to the title. To my mind this is just a complete misconstruction and misreading of the Transfer. The Transfer was altered, but for technical reasons and the Registrar General properly registered it. In any event, there being an easement on the title, any mistake that the Registrar General might have made (and to my mind he made no mistake), the doctrine of indefeasibility would have produced the same result. 14 Accordingly, I turn to the claim that the easement should be modified or extinguished. 15 For a while I understood that the defendant/cross claimant was putting that the easement had been abandoned. However, certainly by the time final addresses were made in September, that claim was either itself abandoned or alternatively played down to such an extent that I need not take it further. However, the question of abandonment does feature in connection with s 89 of the Conveyancing Act 1919. 16 Section 89(1) of the Conveyancing Act empowers the Court to modify or wholly or partly extinguish an easement if the applicant can drive its case through one of the "gateways" set out in the section. The "gateways" are as follows (my paraphrase): The Court may by order modify or wholly or partially extinguish an easement upon being satisfied - (a) (i) by reason of change in the user of any land having the benefit of the easement; or (ii) in the character of the neighbourhood; or (iii) other circumstances of the case which the Court may deem material, the easement ought to be deemed obsolete; or (iv) that the continued existence thereof would impede the reasonable user of the land subject to the easement without securing practical benefit to the persons entitled to the easement; or

I have omitted the statutory (b1) because that only applies to public authorities. 17 Mr Ashhurst for the defendant/cross claimant put as his principal argument under s 89 that the purpose of the right of way has become obsolete, as the purpose was access to Lot 4 where previously none existed. There now is access via a public road system and this is a change in the neighbourhood. Alternatively, the easement should be partly extinguished because if this were so, the plaintiffs would have access via the easement to a public road and the portion from the public road to the Princes Highway would be useless and the easement over it obsolescent. 18 The cross claimant thus relies on (a)(ii), a(iv) and (c) listed above. 19 In order to understand these arguments I need to sketch in some detail the topography and history of the land. 20 As I have said, the easement was created in 1921. The title documents show that the subject land was brought under the Torrens Act by Primary Application 15317 made by two Sydney solicitors. As there was a Registrar General's caveat on the title, presumably the solicitors acted as trustees of an estate. The original certificate of title covered a large area of 1,614 acres 3 roods and extended all the way down to Lake Illawarra. Deposited Plan 10858, which seems to have accompanied the Primary Application, subdivided the land into 9 lots, Lot 2 appearing to be 205 acres 2 roods and Lot 4, 211 acres no roods 10 perches. At that stage Lot 2 fronted the Princes Highway though it also extended to what is now Yallah Road. Lot 4 had a frontage to what is now Marshall Mount Road as well as having access to the Princes Highway, then called Main South Coast Road via the right of way. 21 The initial transferees of Lot 2 were Mr and Mrs Condon who are described on the Transfer as "Farmer and his wife" and it is clear that both Lot 2 and Lot 4 were primarily used for dairy farming for a long while from 1921. At one stage there was an abattoir on part of Lot 2 and various cattle yards were erected to hold cattle and there were various tracks from neighbouring properties as well as Lot 4 to get animals to the meatworks. All these activities have ceased and have ceased for quite a long while. 22 At the present time, one cannot enter the right of way from the Princes Highway because of a high wire fence. However, one is entitled to deviate and by a short deviation one can access the right of way. 23 At the time of the view we moved across Lot 2 and Mr Surveyor Yates pointed out to us the site of the easement on the map which was to our right as we moved from the Princes Highway. He had set up a series of markers. The land over which the right of way ran was overgrown, it was littered on the eastern part with old bits of wood and tyres and one had to be very careful where one walked because of long grass and underlying debris. The evidence shows that at some stage there was a man living in a derelict bus on Lot 2 and he collected scrap metal and tyres and that when he decamped he left a lot of this material on site and no-one has taken the trouble to clear it. 24 A small part of the land adjoining Princes Highway is used for office and other buildings, but behind that the land is still undeveloped, though (and doubtless this is the purpose of the current proceedings), the defendant has plans to subdivide it. One proceeds generally uphill until one reaches what is now a tarred road. This road is significant and I will refer to it as "the Yellow Road" that being the way it is marked on the Plan MI 1001. 25 However, I should mention, before further mentioning the Yellow Road, that the servient land is just south of where the Illawarra Freeway currently finishes. The plans show that a wide strip of the servient land approximately 180 metres east of the Princes Highway has been either resumed, or at least reserved, for future extension of the Freeway. 26 The Yellow Road was recently constructed as part of the defendant's scheme to have the land subdivided. It has been dedicated to the public and gazetted as a public road. It is a tarred road 15 metres wide and extends in a southerly direction to Yallah Road. In order to make this more meaningful I should say that if one continues south on the Princes Highway not too far down the road one comes to a road branching off the Highway to the left, this is Yallah Road. This continues in a slight curve to the west until it meets up with Marshall Mount Road and then there is a left hand turn and one goes up Marshall Mount Road in a south westerly direction and comes to the boundary of Lot 4. 27 However, if one continued across the Yellow Road, the right of way bends to the south before it enters Lot 4 through a gate. Lot 4 then continues to go uphill before one gets to the crest and then it goes down the other side to its most westerly boundary. Theoretically, one can get to Marshall Mount Road from there, but unfortunately, in one sense, there are some very tall trees in the way as well as deep depressions. Although there was no water in the depressions when the view was held, one can easily see that after rain this would be impassable. 28 However, the proposal last put by the defendant is that the easement should terminate so that its terminus a quo is the boundary between Lot 2 and Lot 4 and its terminus ad quem is at a pink access strip which the defendant proposes to construct. This pink access strip in turn leads on to a Green Road which will connect with the Yellow Road which then proceeds to exit the defendant's subdivision at Yallah Road. The provision of the Green Road is contained in the cross claimant's application for subdivision. 29 Thus the cross claimant's general proposal is that there be an exit from the right of way on to Yallah Road via the Yellow Road and that the easement be terminated at a point where there is a public road. This would either be at the end of the Pink Road, or I believe far more practically at a point half way along the Green Road and I have marked this connection on MI 1001 with a purple line. 30 The advantage of connecting the purple line up with the green line is that the plaintiffs complain that they would need to get heavy trucks on to their land, and that if they had to make a sharp left hand turn from the purple right of way to the Pink Road then a right hand turn from the Pink Road to the Green Road and then a left hand turn from the Green Road to the Yellow Road, they would have difficulty in manoeuvring. This argument does not really impress me, but certainly if it had any validity it would be minimised by connecting the Purple Road with the Green Road which would eliminate a left hand and a right hand turn and substitute a bend of approximately 130 degrees. 31 I should note here that the present state of the right of way on the ground is such that no-one could drive any truck over it in any event. This, of course, is not the be all and end all of the matter because a person is entitled if they have the benefit of a right of way, to improve it so that they can get vehicles across it. 32 There was no challenge before me as to the right of the plaintiffs to drive a truck along the right of way. It will be remembered that the reservation was merely of a right of way 50 links or 10.06 metres wide. It will be remembered too that s 181A of the Conveyancing Act which defines expressions such as "right of carriageway" etc only came into the Conveyancing Act to apply after 1 January 1931. However, with a right of way of this width, the probabilities are that the right of way was intended for vehicles such as trucks and their 1921 equivalent. 33 Mr Ashhurst argues that the construction of the Yellow Road as a public road is a change of neighbourhood within the meaning of what I have termed above, gateway (a)(ii). He relies on the decision of Hasluck J in the Supreme Court of Western Australia in Oleander Nominees Pty Ltd v Owners of Lakeside Villas Strata Plan 14025 (8 November 2002, unreported, BC 2002 06653). 34 That case concerned s 129C(1)(a) of the Western Australian Transfer of Land Act 1893 which is in almost identical terms to s 89(1)(a) of the NSW Conveyancing Act. 35 The basal facts were that a right of way was originally provided to the dominant land across the servient land to Aileen Street. Since the right of way was granted, Shannon Road, a permanent public road, had been constructed between the dominant tenement and Aileen Street. At the time of the application, the Judge found that all vehicular and other traffic used Shannon Road rather than the right of way. The right of way was obstructing the development of the servient land, the proprietors of which wished to use it for subdivision. The Judge found that the right of way served no practical benefit. It provided an impediment to the servient owners and the reasonable use of their land and it should be extinguished. Such order would not substantially injure the defendant. 36 Mr Ashhurst submits that the construction of the roads means that there has been a change in the neighbourhood. I do not consider that there is anything in the Oleander case which would lead to this conclusion and indeed, it is a submission against the trend of authority. Generally speaking, the word "neighbourhood" in this section means "the immediate vicinity of the subject site including those lots whose owners might reasonably expect to gain benefits from restriction on the use of such site if it existed in their favour … . [The term] will vary according to the facts and circumstances of the case and may cover an even wider area": Wall v Australian Real Estate Investment Co Ltd [1978] WAR 187 at 191; Straven Services Ltd v Waimairi County [1966] NZLR 996 at 1003. Generally speaking, what the section is looking to is the surrounding locality generally. It does not seem to me that generally, and in particular in this case, the mere fact that there are some sealed roads now constructed in an area that once was open dairying land is sufficient to amount to a change in the neighbourhood. What one normally looks for is a far greater change in character than that. 37 Although it was not argued, I have considered the point that the construction of the sealed road might bring the case within (a)(iii), viz other circumstances rendering the easement obsolete. However, of itself, the Yellow Road could not constitute such circumstances. 38 As Mr Loewenstein points out, even though at the top of the hill one can look to the right and see the development sprawl of the Sydney-Wollongong conurbation, particularly the Dapto end of it, and one can see the end of the Sydney Expressway, the immediate locality of the subject land has not yet been enveloped in those changes. I do not consider that the plaintiffs pass through the gateway of "a change in neighbourhood". 39 The next attack is that the dominant owners have by their act or omissions put themselves in a position where they may reasonably be considered to have abandoned the easement in whole or in part. 40 As I once wrote in note [32253.20] of Butterworth's Annotated Conveyancing and Real Property Legislation: "A person seeking to argue that there has been an abandonment by act or omission faces a hard task. Abandonment is not lightly to be inferred: Gotobed v Pridmore (1970) 115 Sol Jo 78 and Grill v Hockey (1991) 5 BPR 11,421. Non user alone is insufficient to establish abandonment: Swan v Sinclair [1925] AC 227 and more must be shown than no assertion on the part of the proprietor of the dominant tenement to use the easement: James v Stevenson [1893] AC 162. In general, see Treweeke v 36 Wolseley Road Pty Ltd (1973) 128 CLR 274 … . Abandonment occurs when the dominant owner has made it clear that neither that owner nor successors in title will make use of the easement." 41 In the present case, the view made it quite clear that the easement has not been substantially used for quite some time. However, to my mind the evidence does not show that the non-user goes so far as to indicate that the proprietor will never make use of the easement. Indeed, the present plaintiffs have been the owners of the land for some time and have at the very least made attempts to use the right of way. However, the resistance to these attempts based on the belief of the defendant that there was no such right has hindered its user and this again is a discounting factor against abandonment. 42 Accordingly, I must pass to (a)(iv) 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 dominant tenement. 43 Although different views have been taken in the ACT (see Morpath Pty Ltd v ACT Youth Accommodation Group Inc (1987) 16 FCR 325) and the Court of Appeal has left the question open (see TZ Developments Pty Ltd v Rickman Pty Ltd (1993) 7 BPR 14,605), the prevailing view in this State is that to get through this gateway an applicant must show not merely that what it wishes to do on the subject land is reasonable, but rather that no reasonable user of the land is possible unless the easement is restricted. This flows from the decision of Myers J in Heaton v Loblay (1959) 60 SR (NSW) 332 at 335 and the decision of Simos J in Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 9 BPR 16,939 at 16,955-6. See also the decision of the Privy Council in Stannard v Issa [1987] AC 175. The evidence here gets nowhere near establishing what needs to be established. It is clear that even with the easement in place the servient land can be used for all sorts of purposes including subdivision though not, of course, as extensively as it could be if the right of way were extinguished. 44 Accordingly, I need to consider whether the cross claimant passes through gateway (c), that is, that the proposed extinguishment or modification will not substantially injure the persons entitled to the easement. As has been pointed out in the authorities, when looking at gateway (c), the inquiry concerns the effect of the desired modification whereas under the para (a) gateways, the inquiry concerns the effect of the easement if not extinguished or modified. Under gateway (c) the only question is whether the proposed modification would substantially injure the present plaintiff (Heaton v Loblay at 335). 45 In this area as indeed with (a)(iv) one comes face to face with the age old problem of judging between private property rights on the one hand and the public purpose of not having land sterilised on the other. Mr Loewenstein for the plaintiffs relied on expressions of the value of the former such as those of Farwell J in Re Henderson's Conveyance [1940] Ch 835 at 846 where his Lordship said of the corresponding English section: "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 do not think the section was designed with a view to benefiting one private individual at the expense of another private individual." 46 This philosophy tends to focus on the interpretation of the words "not substantially injure the persons entitled to the easement". In Henderson's Conveyance at 849, Farwell J said that it is a practical benefit to an owner of property to have an open space in the immediate neighbourhood of his property. There is a practical benefit in having a garden which is not overlooked by a house or houses immediately adjoining it. Although this may not be a very valuable asset, it is of practical benefit. 47 His Lordship set out the test at 846: "If a case is to be made out under this section, there must be some proper evidence that the restriction is no longer necessary for any reasonable purpose of the person who is enjoying the benefit of it or that … the restriction is one which is no longer to be enforceable or has become of no value." 48 I was referred to the decision of Campbell J in Tujilo v Watts [2005] NSWSC 209, where at [37] and following his Honour discusses the words "substantial injury" in s 89(1)(c) and reviews the cases. However, it does not appear to me necessary in the present case to deal with these matters in detail because the essential question is such a simple one. 49 Mr Ashhurst says that here we have a situation where the easement was created 84 years ago to give some access to Main South Coast Road. The track at the moment, 50 links or 10.06 metres wide, is overgrown or littered with rubbish and has been little used. Recently the Yellow Road was put in and duly constructed. The Green and Pink Roads will be built in the near future on the assumption that the subdivisional plans are approved by council. There is now access to Yallah Road and then on to the Princes Highway via a sealed strip that is wider than the right of way, being 15 metres wide. It provides better access to the Princes Highway than the current route. Accordingly, the extinguishment of the easement below the Yellow Road can cause no substantial detriment to the dominant owner. As to this, Mr Loewenstein really says two things: (a) the new route will have sharp left hand and right hand bends and it will be difficult to get a loaded truck around those bends; and (b) there will no longer be any direct access to the main road. 50 I do not consider that either of those objections is anything more than trifling. The present right of way could not, without a great deal of work, be used by a loaded truck and it is narrower than the Yellow Road. Extinguishment of the right of way below where the Purple right of way meets the Green Road on MI 1001 or where the Purple right of way meets the Pink Road on MI 1001, would provide superior, all-weather and sealed access to Yallah Road and thence to the Princes Highway. The former would actually only involve one left hand bend. 51 As far as direct access to the Princes Highway is concerned, I cannot, with great respect, see how this is of any great benefit at all. What is the difference between access on to a sealed public road which, within a few hundred metres, comes to an intersection with the Princes Highway and access to the Princes Highway in the middle of a block. 52 In my view the cross claimant/ defendant has made out its case within para (c) of s 89(1) of the Conveyancing Act and the easement should be partly extinguished accordingly. 53 I do not consider there is any jurisdictional problem of the type referred to by Campbell J in Tujilo's case at [52] in making the order for partially extinguishing the easement in the way in which I have indicated. 54 The only other defence was Mr Loewenstein's submission that I should not give the defendant/cross claimant any relief because of unclean hands. As I indicated when this was put during oral argument, the cross claimant is seeking not an equitable right but a statutory right and clean hands is probably not applicable. 55 Mr Loewenstein then said that the conduct of Mr Capocchiano (the controlling director of the cross claimant) in physically repelling use of the right of way should be sufficient to prevent this Court making an order in the cross-claimant's favour. I agree I can take that matter into account, but it does not seem to me that that gentleman's conduct in endeavouring to press what he thought were his legal rights is sufficiently serious to deny relief. 56 It may be that there is some reason why there is a better route for both parties that either connected the truncated right of way to the end of the Pink Road or the middle of the Green Road. This circumstance suggests that I should merely deliver these reasons and stand the matter over for short minutes to be brought in. It would probably be a good idea for the short minutes to be accompanied by a plan which could be lodged with the Registrar General. 57 I should also stand over the question of costs. The decision as to how the costs are to be paid and borne may be a very awkward decision to make. It seems to me that at least the following factors are relevant:

Castagna v Great Wall Resources Pty Ltd

At a glance

Court

Decision date

Before

Source

Judgment (21 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (3)

Cited By (6)