Frasers Lorne Pty Ltd v Joyce Goldsworthy Burke & ors

Frasers Lorne Pty Ltd v Joyce Goldsworthy Burke & ors - [2008] NSWSC 743 - NSWSC 2008 case summary — Zoe

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5065/07 Frasers Lorne Pty Ltd v Joyce Goldsworthy Burke & 2 ors JUDGMENT 1 HIS HONOUR: Deposited Plan 547371, registered on 17 March 1971, created a four-lot subdivision on the northern side of Lorne Avenue, which runs approximately east/west between the North Shore railway line and the Pacific Highway at Killara. Fronting Lorne Avenue were Lots 1 (to the west) and 4 (to the east), while Lots 2 and 3 were battleaxe allotments - Lot 2 to the rear (north) of Lot 1, and Lot 3 to the rear of Lot 4 - with their access handles, each 3.66 metres in width, adjacent to each other between Lots 1 and 4. Rights of carriageway were created over each access handle - the handle of Lot 2 was burdened by a right of carriageway in favour of Lots 1, 3 and 4; and the handle of Lot 3 was burdened by a right of carriageway in favour of Lots 1, 2 and 4 - so that each lot enjoyed access over a carriageway 7.32 metres wide in all. 2 The first defendant Mrs Joyce Goldsworthy Burke is the registered proprietor of Lot 4 (23 Lorne Avenue), and the second and third defendants Ms Kim Huong Dinh and Mr Donald Keith Martin are the registered proprietors of Lot 3 (25 Lorne Avenue). Formerly, premises known as 27 Lorne Avenue stood on Lot 1, and 25A Lorne Avenue stood on Lot 2. On or about 5 May 2006, Lots 1 and 2 were consolidated with Lot B/335075, on which stood 29 Lorne Avenue, into Lot 1/1096159, of which the plaintiff Frasers Lorne Pty Limited is the registered proprietor. 3 On 6 May 2005, Frasers Lorne lodged Development Application 425/05 with Ku-ring-gai Council, for the construction of a five storey residential apartment building on the consolidated Lot 1. Ku-ring-gai Planning Scheme Ordinance, clause 25I, stipulated as a minimum standard relating to "deep soil landscaping" - defined to mean "a part of a site area that (a) is not occupied by any structure whatsoever, whether below or above the surface of the ground (except for paths up to one metre wide) and (b) is not used for car parking" - applicable to multi-unit housing on a site with an area of 1800 square metres or more, that at least 50 per cent of the site area must be preserved for deep soil landscaping. The plans submitted with the development application proposed that, in order to achieve the requisite space for deep soil landscaping, the right of carriageway over (former) Lots 1 and 2 be partially extinguished, reducing the width of the access to Lots 3 and 4 from 7.32 metres to 3.66 metres - except for at the northern end, opposite the entry to the garages at the rear of Lot 4, where the carriageway would retain almost its original width, forming a "paddle" shape. As depicted on the annexed plan, that part designated (AV) would be extinguished, leaving only that part designated (A). 4 On 22 August 2005, Council informed Frasers Lorne of various "concerns" pertaining to the shared driveway area, including a recommendation that it obtain the consent of the adjoining property owners to enable deep soil landscaping as proposed in the area of the right of carriageway. On 8 September 2005, Council expressed to Frasers Lorne its concerns that the possibility of providing deep soil landscaping within the easement remained "highly unlikely and at best uncertain", and that an amendment of the terms of the easement ought to be resolved if it was intended to rely upon that part of the site as landscape curtilage. Nonetheless, on 7 February 2006, Council resolved to grant Frasers Lorne Development Approval in accordance with its application. The effect and impact of that approval on the easement was a major issue before the Council, and in the course of the meeting an officer of Frasers Lorne acknowledged that if unsuccessful in obtaining agreement of the adjoining owners to variation of the easement (or, failing that, extinguishment of the easement pursuant to an order of this Court), then Frasers Lorne could not act on the Development Approval nor apply for a construction certificate, adding: We would like to be very clear that there is no intention to take away or extinguish the rights of carriageway, the rights enjoyed by the adjoining neighbours.

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· To ensure the amenity of numbers 23 and 25 Lorne Avenue is maintained an acoustic fence shall be constructed along the entire common boundary within the development site. The fence shall be in accordance with the driveway alignment notated in red on approved plan DA-04039-01 Rev. 3 and Figure 1. The fence shall be 1.2 metres high in the front setback area but will step up in height to 1.8 metres approximately 15 metres from the street boundary. … CONDITIONS TO BE COMPLIED WITH PRIOR TO OCCUPATION 113. Prior to the release of any occupation certificate, a compliance certificate must be obtained from an accredited certifier, certifying that the building works for the building to be occupied comply with the plans and specifications approved by this development consent; and any construction certificate associated with this consent for the buildings to be occupied. … 124. The landscape works, shall be installed in accordance with the approved plan/s and/or conditions of consent, be completed prior to release of Occupation Certificate and be maintained in a healthy and vigorous condition at all times. 6 Frasers Lorne commenced construction in about April 2006. It did not attempt to negotiate with Mrs Burke until 27 February 2007, when it wrote to her, relevantly as follows: In respect of the ongoing relationship between ourselves and you as our neighbour, we draw your attention to the new alignment of the shared driveway as granted in the above consent. The attached drawing, "figure 1", is an extract from the consent document from Ku-Ring-Gai Council which shows the amended driveway (shaded), that will permanently remain in operation to serve your property and No 25 toward the rear, when the new development work is completed. It will no longer serve our property. Modifications to the existing shared driveway were determined in consultation with Council to ensure full and complete access remains to the garage under your home. This is reflected in the retention of the area opposite your garage to facilitate turning, manoeuvring and passing space. Materially, there will be no detrimental impact upon access to your property. The Council approved deep soil planting and the erection of a fence on that part of the existing access way which will not be included in the modified access way, and we wish to be in a position to carry out the planting and erect the fence in a timely manner. I would greatly appreciate your agreement to a variation of the legal document (the easement or "Right of Way"), which governs the part of the access way over our land, so as to give effect to the proposed modification of the access way. In return for your agreement we are prepared to pay you $10,000. We are also prepared to pay your reasonable legal fees. Please contact me on 8823 8800, or ask your representative to contact me, if you need any additional information. Alternatively, your solicitor can contact our solicitors, Holding Redlich, Mr David Brigden, on 8803 0498. In any event, we would be pleased to hear from you with your response to our request. Once we hear from you we will ask our solicitors to prepare the necessary legal documents to give effect to the modification.

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7 Frasers Lorne first approached Mr Martin and Ms Dinh, by a similar letter, on 3 April 2007. 8 On 27 July 2007, Frasers Lorne applied to the Council under (NSW) Environmental Planning and Assessment Act 1979, s 96, to amend the condition in respect of occupation certificates so as to permit their issue notwithstanding that deep soil planning was not completed; this was refused by Council. Nonetheless, marketing of units commenced in September 2007. On 12 October 2007, Frasers Lorne filed an appeal to the Land and Environment Court from the refusal of its s 96 application. The appeal was heard on 14 December 2007 and 27 February 2008; judgment stands reserved. Meanwhile, on 21 December 2007, Frasers Lorne made an application to the Council to vary the requirement for deep soil planting in the right of carriageway. Council refused this application on 28 February 2008. Construction works were substantially completed by about May 2008. 9 Meanwhile, by summons filed on 18 October 2007, Frasers Lorne instituted these proceedings, claiming orders under (NSW) Conveyancing Act 1919, s 89, modifying the right of carriageway in accordance with the annexed plan. As had been proposed in its Development Application, the effect would be to narrow the available access from 7.32 metres to 3.66 metres over approximately the first half of the access way proximate to Lorne Avenue, but to reduce only very slightly the width over the second half, thus preserving some manoeuvring space in order to facilitate access into the garages on Lot 4. In addition, the right of carriageway enjoyed by (former) Lots 1 and 2 over Lots 3 and 4 would be extinguished, since the consolidated Lot 1 would now have its access directly from Lorne Avenue and not require use of the right of carriageway. Although, in the course of the proceedings, some minor modifications to the original proposal were adopted, they do not materially affect the outcome. 10 Section 89(1) relevantly provides as follows: (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

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· pursuant to s 89(1)(a), on the basis that the continued existence of the easement unmodified would impede the reasonable user of its land without securing practical benefit to the owners of Lots 3 and 4; and · alternatively, pursuant to s 89(1)(c), on the basis that the proposed modification would not substantially injure the owners of Lots 3 and 4. 12 Ms Culkoff, for the defendants, submitted that neither of those conditions was satisfied, and that in any event the Court ought as a matter of discretion decline to grant the relief sought. The easement unmodified does not impede reasonable user of the servient land 13 The purpose of s 89 as a whole is to enable covenants which have no practical utility to the dominant land to be removed, so as to clear the title of the servient land [Re Mason and the Conveyancing Act (1961) 78 WN (NSW) 925; [1962] NSWR 762]. 14 In this State, to establish that a covenant impedes the reasonable user of the servient land requires that no reasonable user of the land be possible unless the easement or restriction is modified or extinguished [Heaton v Loblay (1960) 60 SR (NSW) 332, 335 (Myers J); Coles Myer NSW Ltd v Dymocks Book Arcade Ltd (1996) 9 BPR 16,939, 16,955-6 (Simos J); Castagna v Great Wall Resources Pty Ltd [2005] NSWSC 942; (2005) 12 BPR 23,363, [43] (Young CJ in Eq)]. 15 It is true that in Morpath Pty Ltd v AC Youth Accommodation Group Inc (1987) 16 FCR 325, the Full Court of the Federal Court, on appeal from the Supreme Court of the Australian Capital Territory, rejected, as too narrow, the view that the requirements of (ACT) City Area Leases Ordinance 1936, clause 11A(1) - which provided that the court may vary any provision, covenant or condition of a lease in relation to the purpose for which the land subject to the lease may be used, but not "unless the Court is satisfied that there are such circumstances existing as in the opinion of the Court make it desirable to vary the provision, covenant or condition in order that the reasonable user of the land should not be impeded" - were satisfied only if no reasonable use of the land was possible unless the change of purpose were granted. However, the ACT legislation was rather different, and the construction of s 89 has a long and well-established authoritative history in this Division from which I ought not depart - even if I thought it were incorrect, which I do not [cf Pink v Cummings [2000] NSWSC 1114; (2000) 10 BPR 18,721, [14], in which Macready AsJ also preferred to follow the New South Wales line of authority]. I therefore adhere to the position, as I endeavoured to summarise it in Trewin v Felton [2007] NSWSC 851; (2007) 13 BPR 24,579 (at [60]): [60] As to impeding reasonable user of the servient land, it is insufficient that the applicant's proposal is a reasonable use of the servient land; the applicant must show that no reasonable use of the land is possible unless the easement (or restriction) is extinguished or modified [ Heaton v Loblay (1959) 60 SR (NSW) 332, 335 (Myers J)], and that the continuance of the easement unmodified "hinders, to a real, sensible degree, the land being reasonably used, having regard to the situation it occupies, to the surrounding property, and to the purpose of the [easement]" [ In Re Ghey & Galton's Application [1957] 2 QB 650, 663].

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The continued existence of the easement unmodified secures practical benefit to the defendants 17 With respect to the phrase "without securing practical benefit to the persons entitled to the easement", Farwell J in Re Henderson's Conveyance [1940] Ch 835 said (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… 18 In TZ Developments Pty Ltd v Rickman Pty Ltd (1993) 7 BPR 14,605, Sheller JA, after referring to that observation, referred with evident approval to the quotation by the Privy Council in Stannard v Issa [1987] AC 175, 186, of the dissenting judgment, in the Jamaican Court of Appeal, of Carey JA (at 14,610-11): Carey JA said that if the evidence indicates that the purpose of the restriction is still capable of fulfilment the onus on the applicant for modification has not been discharged. If the question is posed whether reasonable use and enjoyment of the right of way over the servient tenement or the disputed section of it is still capable of fulfilment the answer in accordance with Bryson J's findings of fact must be in the affirmative. Accordingly in my opinion the appeal on this ground must fail. 19 Both parties adduced evidence from traffic experts, who ultimately agreed that, subject to some modifications (which Frasers Lorne was prepared to accept), the easement, if modified as proposed, would provide "practical access" to 23 and 25 Lorne Avenue. However, the circumstance that "practical access" can be provided by the right of way if modified as proposed does not mean that the right of way without modification does not secure some practical benefit to the defendants over and above that which would be afforded by the modified right of way. Unmodified, the access way is, throughout its length, sufficiently wide for two vehicles to pass, whereas the modification would reduce it, for more than half its length, to one lane. The modification would also reduce visibility - particularly where the access way enters Lorne Avenue - tighten the turns from the access way into Lorne Avenue, and produce narrower dimensions which would require greater caution of drivers using it and reduce the margin for error; in particular, it would make access more difficult for large vehicles such as removal vans or emergency vehicles. 20 My conclusion that the easement as modified would be less convenient than the easement in its present form is supported not only by my own observations on the view. The joint statement of traffic experts - Mr Chris Hallam for the defendants and Mr Tim Rogers for the plaintiff - contained the following (emphasis added): 7. CH [Chris Hallam] has suggested modifications to the driveway across the footpath between the property boundary and Lorne Avenue, as shown on Figure 2. This would make the outer (western) edge of the driveway in a straight line with the splay shown on the [right of carriageway] within the property boundary, and make this outer (western) edge meet the curb at right-angles. This would change the details of the approved landscaping plan where they showed feature within the road reserve. These changes would improve the access to 23 and 25 Lorne Avenue over that shown in the approved plans, although it would not be as convenient as that previously existing. CH and TR [Tim Rogers] agree that the driveway edge shown on Figure 2 would provide practical access. … 21 In his report, the defendants' town planner Eugene Sarich observed (emphasis added): The subject carriageways are (from the DP) twelve feet each wide. Twelve feet converts to 3.658m or rounded to 3.66m. The subdivision was compliant with the subdivision code. The width ensured adequate general provision for site circumstances such as sight lines, gradients and passing room. In this case, passing room and access to the garage of number 23 are compromised as a result of the potential suspension of the easement on the development site side of the boundary .

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22 As I sought to explain in Trewin v Felton, interference with an easement, which makes it less convenient although it remains passable, is an actionable nuisance [Jalnarne v Ridewood (1991) 61 P & CR 143; Trewin v Felton, [68]-[70]], and constitutes a substantial interference. As Hywel Moseley J said in Jalnarne (at 150): The plaintiffs are entitled pursuant to the grant in the conveyance to a right of way over that part of the access road which lies within the compound perimeter. I was satisfied by the evidence that lorry drivers would find it easier to reverse their lorries if they could before reversing enjoy that right of way by drawing forward onto that part of the access way which lies within the compound. The compound prevents them from drawing forward onto that part of the access road and makes reversing lorries more difficult. Irrespective of the fact that the plaintiffs are not particularly concerned that their access to the disused railway line is blocked by the compound, I am therefore satisfied that the compound interferes with the right of way, and does so substantially. For that reason it is a nuisance. 23 Similarly here, the greater convenience, which the wider carriageway affords when compared to the proposed modification, is a practical benefit to the dominant owners. The proposed modification would substantially injure the dominant owners 24 For the purposes of s 89(1)(c), a substantial injury is one that has real and present substance, but it need not necessarily be large or considerable [Re Mason]. 25 Each party retained a valuer. It was the opinion of Fraser Lorne's valuer, Mr Covey, that modification of the easement would have no adverse impact on the freehold value of 23 and 25 Lorne Avenue and would occasion no diminution in value, and assessed $25,000 in respect of each lot as fair compensation for modification of the easement. Mr Wolf, the valuer retained by the dominant owners, initially reached quite a different conclusion (because he apparently misunderstood the extent of the modification proposed), but ultimately the valuers agreed that fair compensation for the loss of the proprietary rights of the dominant owners would be $25,000 for each lot. 26 There can be "substantial injury" for the purpose of s 89(1)(c) even if the proposed extinguishment or modification would not detrimentally affect the value of the dominant land. In Heaton v Loblay, Myers J said (at 335-6): I turn to par. (c). Under this paragraph the only question is whether the proposed modification would substantially injure the plaintiff. In my opinion it would. Expert evidence has been tendered on behalf of the defendants to prove that the modification would not depreciate the value of the plaintiff's property. I do not pause to consider that point because loss of value is not necessarily a decisive factor and where, as in this case, the covenant was not exacted to preserve the value of the covenantee's land but for another and different purpose, value is not a factor at all. The plaintiff has a most unfortunately and seriously afflicted husband and son. To them and to her the maximum degree of privacy which they can obtain is valuable. At present they enjoy a substantial measure of privacy on the veranda of their home. The terrace, if it is built, will be supported by a high brick wall nineteen feet long, right on the boundary of the plaintiff's land and will be on the same level as the plaintiff's veranda. 27 In Webster v Bradac (1993) 5 BPR 12,032, the then Chief Judge wrote (at 12.035): I turn now to the question raised by para (c) of s 89(1), namely whether the proposed modification will substantially injure persons owning (or having an interest in) other lots in the subdivision. As I said in Mogensen v Portuland Developments [1983] NSW Conv Rep 55-116 at 56,856-7, in this context "substantially" connotes injury which has substance in the sense of being real or appreciable. The kind of injury contemplated in para (c) is injury to the relevant person in relation to his ownership of (or interest in) the land benefited. The injury may be of an economic kind, for example, reduction in the value of the land benefited, or of a physical kind, for example, subjection to noise or traffic, or of an intangible kind, for example, impairment of views, intrusion upon privacy, unsightliness, or alteration to the character or ambience of the neighbourhood. These arbitrary categories, whilst serving to illustrate the ambit of the concept of injury for the purposes of the paragraph, are neither mutually exclusive nor necessarily exhaustive, and what I have described as injuries of a physical or intangible kind could well also affect the value of the land in question. However, it is clear that a person may be "substantially injured" within the meaning of para (c) notwithstanding that the value of his land would be unaffected or even increased by the proposed modification. It is also clear, particularly in the case of injuries of what I have called an intangible kind, that the subjective tastes, preferences or beliefs of particular individuals may, within limits of reasonableness, give rise to injury in the relevant sense to those individuals. 28 For the same reasons that support the conclusion that the easement unmodified secures a practical benefit to the dominant owners, it cannot be said that the proposed modification will not substantially injure them. It will leave them with a less convenient access than that which they presently enjoy. The reduced convenience to the dominant owners afforded by an access way half the width of that they currently enjoy is a real and appreciable detriment, and an injury of substance. The circumstance that the narrower access might comply with current planning guidelines does not deny this. This ground is not made out. Relief should be refused on discretionary grounds 29 The grant of relief under s 89 is discretionary [Pieper v Edwards [1982] 1 NSWLR 336, affirming Edwards v Pieper [1981] 1 NSWLR 46; Re Cook [1964] VR 808, 810; Re Markin; Re Roberts [1966] VR 494, 498; Perth Construction Pty Ltd v Mount Lawley (1955) 57 WALR 41, 48]. It has often been emphasised that great caution is required in acceding to an application for the extinguishment or modification of an easement, which after all is a proprietary right. Thus in Tomara Holdings Pty Ltd v Pongrass [2002] NSWSC 195; (2002) 10 BPR 19,531, Hamilton J said (at [20]): In determining an application for extinguishment or modification there must be borne in mind the potentiality of such an order to expropriate proprietary rights. In the often cited words of Farwell J in Re Henderson's Conveyance [1940] 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.'

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32 This is a case in which from the outset Frasers Lorne has determined to seek to maximise the commercial potential of its own property by achieving a modification of the right of carriageway. The position in which it finds itself is one entirely of its own making. It ignored recommendations to explore whether it could obtain consent before embarking on construction works. Although Mr Hale SC for Frasers Lorne stressed that, in the passage in Re Henderson's Conveyance cited by Hamilton J in Tomara Holdings and extracted above, Farwell J acknowledged the possibility that an order might be made modifying an easement, over the opposition of the dominant owner, in a case where it seemed necessary to do so because it prevented the proper development of the servient land, the present case is one in which Frasers Lorne seeks to get a benefit by being freed from the restrictions imposed on its property in favour of a neighbour merely because it will make its property more convenient for its own purposes. 33 The position is not relevantly different from that described by Palmer J in Natva Developments Pty Ltd v McDonald Brothers Pty Ltd [2004] NSWSC 777; (2004) 12 BPR 22,287 (citing Young J, as the Chief Judge in Equity then was, in Butler v Muddle (1995) 6 BPR 13,984) as follows (at [90]-[91]): It seems to me that the position in which the Plaintiff now finds itself is the very position referred to by Young J in Butler v Muddle ( supra ), namely, the Plaintiff has a difficult problem because it has deliberately designed its development based upon access from the [right of carriageway] at the point of its own choosing, regardless of the Defendants' rights, and has proceeded with construction of that design after warning from the Defendants that they would insist upon their rights. [91] As Young J observed, to allow the Plaintiff to have the benefit of having taken that position would really be to allow it to appropriate the Defendants' land and use it without the Defendants' consent as if the land were its own. 34 The case for declining relief as a matter of discretion, even if one of the statutory grounds were established, is overwhelming. Conclusion 35 The continued existence of the right of carriageway without modification does not impede the reasonable user of Frasers Lorne's land, which could still be used for multi-residential unit development, albeit on a marginally smaller scale than the present approved proposal.

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