Galye Christine McDonald v David Alexander Wills

Judgment 1The plaintiff, Ms Gayle Christine McDonald, and the defendants, Mr David Alexander Wills and Ms Alexis Clare Wills, are neighbours in Mosman. They are the registered proprietors respectively of 32 Queen Street and 34 Queen Street. 2On 18 January 2005, upon the registration of DP 1075426, whereby the lots that constitute 32 and 34 Queen Street were created, a right of access was created pursuant to s 88B of the Conveyancing Act 1919 (NSW) (the Act) over 34 in favour of 32 Queen Street. The right of access is 4 m wide. 3Apparently, previous owners of 34 Queen Street erected structures and planted vegetation on the area burdened by the right of access, and so effectively used that area as if it was an unencumbered part of the property. Subsequently, 34 Queen Street was purchased by Mr and Ms Wills. Ms McDonald now wishes to construct upon that part of 34 that is burdened by the right of access part of a driveway from Queen Street on to 32. As Mr and Ms Wills have not agreed to Ms McDonald using the right of access in the manner in which she wishes to use it, Ms McDonald has instituted proceedings to enforce her rights under the right of access. 4Ms McDonald has been given leave to file an amended statement of claim, although that pleading has not yet actually been filed. The present application was conducted on the basis of the allegations and claims made in the draft amended statement of claim. Counsel for Mr and Ms Wills informed the court that the defence to the amended statement of claim will raise additional issues to those that are contained in the defence to the statement of claim. Accordingly, I have considered the present application on the basis that the issues that will be raised at the hearing by Mr and Ms Wills are those that have been identified in written and oral submissions provided to the court by their counsel, as well has those issues that have been raised by Mr and Ms Wills' cross-claim, in which they seek orders which, if granted, will have the effect that 34 Queen Street is not burdened by the right of access. 5Ms McDonald has by notice of motion sought the following order: 1. An order pursuant to rule 28.2 of the Uniform Civil Procedure Rules 2005 that the issue of the quantum of the plaintiff's claim for damages in these proceedings be determined separately from and subsequently to the balance of the issues in the proceedings. 6The making of that order is opposed by Mr and Ms Wills. 7Ms McDonald alleges in the amended statement of claim that the right of access gives her the rights described in s 181A and Schedule 8 Part 14 of the Act. Relevantly for present purposes, Ms McDonald asserts that the right of access is not limited to pedestrian traffic, but permits her to use the area burdened by the right of access for vehicular traffic, and also that she has the right to construct a driveway over the area. 8She pleads that the structures and vegetation on the area the subject of the right of access that presently prevent her from passing over that area, either on foot or by vehicle, consist of a brick fence that has been constructed across the land, an electric gate to which Ms McDonald has not been given a key, vegetation that has been planted in a manner that obstructs passage across the land, and a temporary timber fence that has been erected along the eastern side of the right of access on the boundary between the two properties. Ms McDonald claims that these structures and vegetation constitute a nuisance. 9In her claim for relief Ms McDonald relevantly claims a declaration that the right of access gives her all of the rights that she alleges, as well as an order that Mr and Ms Wills remove all structures and vegetation obstructing the right of access within 30 days. 10In par 11 of the amended statement of claim Ms McDonald alleges: 11. The Plaintiff will suffer loss in the event that she is unable to apply for and construct the driveway referred to in paragraph 8 above. Particulars The plaintiff will be deprived of the opportunity to construct a driveway, which would make [34 Queen Street] more valuable. 11The reason for Ms McDonald's application for an order under rule 28.2, that the issue of the quantum of her claim for damages be determined separately from and subsequently to the balance of the issues in the proceedings, is that, if she succeeds in obtaining the declaration and the order that she seeks, she will not suffer any damages for which she seeks compensation. That is reflected in the way par 11 of the amended statement of claim is drawn. The damages claim is a true alternative to her primary claims for relief. If the primary relief is granted, all of the steps in the proceedings necessary to deal with the damages claim will entirely be wasted. 12Moreover, in a conventional way Ms McDonald has formulated her damages claim on the basis of the decrease in the value of 32 Queen Street that is reflected in the difference between the value of the property if it had practical enjoyment of the right of access and the driveway that she contemplates will be constructed along the right of access, and the value of the property without those benefits. 13In substance, Mr and Ms Wills' response to Ms McDonald's claim for relief in the amended statement of claim will involve the following issues: (1)They say that, by reason of the dimensions of the area burdened by the right of access and the physical layout of the two properties, the right of access does not lend itself to vehicular access onto Ms McDonald's property, as it would require an awkward dog-leg or S-bend entry, by reason of which the right of access should be interpreted as being limited to permitting access on foot. (2)The right of access has been abandoned. (3)Mr and Mrs Wills, and, or alternatively, their predecessors in title, adopted and acted in reliance upon an assumption that the right of access had been abandoned. (4)Mr and Mrs Wills, and, or alternatively, their predecessors in title and Ms McDonald and, or alternatively, her predecessors in title, have adopted a common assumption that the right of access has been abandoned. (5)The right of access ought to be deemed obsolete, or alternatively, the continued existence of the right of access would impede the reasonable use of the land subject thereto without securing practical benefit to Ms McDonald, or would, unless modified, so impede such user. (6)Ms McDonald, and, or alternatively, her predecessors, by their acts and omissions may reasonably be considered to have abandoned the right of access wholly or in part or waived the benefit thereof wholly or in part. 14By their cross-claim, which essentially raises the issues set out above, Mr and Ms Wills seek substantially the following relief: (1)A declaration that there has been laches and acquiescence by Ms McDonald, and, or alternatively, her predecessors, and it would be inequitable to enforce the right of access. (2)A declaration that the right of access has been abandoned. (3)A declaration that Ms McDonald is estopped from seeking to rely upon the right of access. (4)A declaration that the right of access ought to be deemed obsolete, or alternatively the continued existence thereof would impede the reasonable user of the land subject thereto without securing practical benefit to Ms McDonald or would, unless modified, so impede such user. (5)A declaration that Ms McDonald and, or alternatively, her predecessors, have abandoned the right of access wholly or in part or waived the benefit thereof wholly or in part. (6)An order pursuant to s 89 of the Act extinguishing or modifying the right of access in whole or in part to such an extent as to the court may seem just. 15These claims for relief may overlap. It is not necessary to consider the relationship between the various claims in detail. 16Counsel for Mr and Ms Wills informed the court that they would seek the statutory relief under subs(1)(a), (b) and (c) of s89 of the Act. Accordingly, the issues to be raised in the claim for statutory relief will involve whether, by reason of change in user of 32 Queen Street, the right of access ought to be deemed obsolete; or the continued existence of the right of access would impede the reasonable user of the land burdened; whether the right of access may reasonably be considered to have been abandoned or waived; and whether the modification or extinguishment of the right of access will not substantially injure Ms McDonald. 17The principles upon which the court acts in deciding whether it is proper to invoke rule 28.2 are well known, and do not require further exposition in these reasons. I accept that the starting point is the principles stated by Giles CJ Comm Div in Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141-142, as adopted by Leeming JA (with whom Barrett JA agreed) in AAI Ltd (t/as Vero Insurance) v Solarus Projects Pty Ltd (Receivers and Managers appointed) (in liq) [2014] NSWCA 168 at [9]. 18I also note the view of the members of the Court of Appeal in Solarus Projects at [13] and [22] that the Civil Procedure Act 2005 (NSW) now obliges the court to have regard to the matters contained in ss 56, 57 and 58(2)(b) in making orders of a procedural nature such as those that can be made under UCPR rule 28.2. 19I respectfully adopt the useful summary of the applicable principles that are set out by Hallen AsJ (as his Honour then was) in Southwell v Bennett [2010] NSWSC 1372 at [15]. 20I also note, and agree with, the observation made by Beech-Jones J in Crawley v Vero Insurance Ltd [2012] NSWSC 593 at [20] that, in a general but not universal way, the adverse consequences that have often been found to flow from the separation of the hearing of issues by the court "are less likely where the separate question is relatively narrow and will be decided after all other issues in the proceedings". Furthermore, an order under rule 28.2 can be revoked if appropriate. 21The reasons put by Ms McDonald in support of the making of an order under rule 28.2 for the determination of the quantification of her damages claim after all other issues in the proceedings have been determined, are relatively obvious. As I have noted above, if the court declines to make the declaration she seeks as to the terms and validity of the right of carriageway, her case will fail, and she will not be entitled to damages. If she succeeds in obtaining both the declaration and the injunction, she will have all of the relief she seeks, and will not suffer any damage. If she succeeds in obtaining the declaration as sought, but by reason of laches and delay the court declines to grant her the equitable relief of an injunction, her entitlement to damages for the tort of nuisance will not be affected. The need to deal with damages will only arise if the validity of the right of access is established, but she fails to get the benefit of an injunction because of the equitable defence of laches and delay. 22As I understood counsel for Ms McDonald, the interpretation that the court gives to the right of access may also affect whether her entitlement to damages remains a live issue. I will return to this question below. 23Counsel for Ms McDonald also made the point, which I think has significant strength, that if all of the other issues in the case are decided in a way that leaves the need for damages to be quantified, there must be a considerable likelihood that the parties will be able to compromise that aspect of the claim, by reason of the difficulty and expense of litigating the issue. 24In opposition to the order sought by Ms McDonald, Mr and Ms Wills rely upon the related propositions that there may be intertwined issues of fact and law between the separated questions, and there may be an overlap of the evidence to be given by the witnesses. Furthermore, it is suggested that Ms McDonald will have to give evidence at both stages of the hearing, and a challenge will be made to her credit. It is suggested that Ms McDonald's credit is likely to be in issue at the first hearing in relation to matters such as her knowledge of the easement; her actions and acquiescence in relation to the construction and maintaining of the gate, the fence and the vegetation; her failure to assert an entitlement to the easement or take steps to enforce it; the availability to her of alternative access routes; and the reality of her asserted continuing intention to construct a driveway over the burdened land. The reference to alternative access routes arises because 32 Queen Street does have a frontage to that street, and access can be gained to the back of 32 Queen Street from another street. Mr and Ms Wills assert that many of these matters will also arise in relation to the quantification of Ms McDonald's damages. 25I am sceptical about the reality of these claims. It is no part of the present application that I should embark on a speculative attempt to anticipate the issues of fact that will arise at the hearing, or how Mr and Ms Wills will attempt to put their case. Furthermore, if counsel for Mr and Ms Wills says that it is proposed to put the issues outlined above, and to attack Ms McDonald's credit, there is nothing that the court can presently do to stop them proceeding in that way. 26It is fair to say, however, that it is obvious that Ms McDonald must have known of the existence of the easement. The construction of the structures and the planting of the vegetation that is impeding her use of the right of access must always have been obvious. It seems clear that she has not taken any earlier proceedings to enforce her right to the benefit of the right of access. Mr and Ms Wills have not pleaded in their defence or cross-claim that any estoppel arises by reason of any statements made by Ms McDonald, so her credit will not be called into question in relation to communications with Mr and Ms Wills or their predecessors. The suggestion that there can be a real issue as to whether Ms McDonald intends to construct a driveway over the area burdened by the right of access is tenuous given that Ms McDonald has gone to the trouble and expense of instituting proceedings in the Supreme Court for relief that will enable her to do so. 27Counsel for Mr and Ms Wills suggested that the quantum of the damages to which Ms McDonald would be entitled for nuisance will be relevant to the other issues in the proceedings. It is not easy to see why. Prima facie, a plaintiff will be granted a perpetual injunction in order to restrain trespasses or nuisances to his or her land and other such breaches of his or her rights: see the statement by Dr Spry in Equitable Remedies (9th ed 2014, Lawbook Co) at 470. However, as Dr Spry acknowledges at 414 and 476, a plaintiff who seeks an injunction to protect his or her proprietary rights from a nuisance may be deprived of the remedy in special circumstances. The possibility that Mr and Ms Wills may be able to avoid suffering an injunction against them by demonstrating that the nuisance will not cause Ms McDonald any loss, or that her loss will only be de minimus, cannot entirely be excluded, however unlikely it may appear to be. 28This is not the place to consider the manner in which s 89 of the Act could apply to the present dispute, but I note the observation of Brereton J in Frasers Lorne Pty Ltd v Joyce Goldsworthy Burke [2008] NSWSC 743 at [26] and [27] where his Honour said, by reference to earlier authorities, that proof that there will be no loss of value in the property with the benefit of the interest which has been infringed, if the owner is deprived of its enjoyment, is not necessarily a decisive factor, especially where the particular interest (in that case a covenant) was not created to preserve the value of the dominant property. See also Destri Enterprises Pty Ltd v Maxwell [2912] NSWSC 295 per Slattery J at [71]. Proof by Mr and Ms Wills that the value of 32 Queen Street will only marginally be decreased if Ms McDonald is deprived of the benefit of the right of access is in my view a dubious basis for Mr and Ms Wills' claim that the relief sought by Ms McDonald should be denied. 29I am also sceptical that any evidence that Ms McDonald might be able to give, or might be required to give, in relation to her subjective intentions in constructing a driveway on the area burdened by the right of access, or the alternative choices she might make as to how she could construct a driveway onto 32 Queen Street, either from that street or the street at the rear of the property, could have any significant relevance to the determination of the value of the property with, and without, the benefit of the right of access. Almost certainly the valuation exercise must depend upon the objective circumstances of the property and the market. 30Notwithstanding these concerns on my part, I cannot rule out the possibility that in fact Mr and Ms Wills will run their case in a way that attempts to make Ms McDonald's credit an issue at both stages of the hearing, and that suggests that Ms McDonald's subjective intentions are relevant to the value of the property. Furthermore, if I make the orders sought by Ms McDonald on this application, Mr and Ms Wills may serve evidence concerning the differential value of 34 Queen Street for some purpose connected with the first hearing. 31I have come to the view nonetheless that I should make the order sought by Ms McDonald. 32It is too early to know exactly how the valuation issues will emerge if it becomes necessary for the quantification of Ms McDonald's damages to be assessed. It seems that the damages will depend on the assessed value of 32 Queen Street based upon different assumptions. The most obvious competing assumptions are, on the one hand, the value of the property in its present state without the benefit of the right of access, and, on the other, the value that it would have if the property had the benefit of the right of access claimed by Ms McDonald, and, I assume, the driveway had been constructed on the area burdened, and whatever other work had been done on 32 Queen Street that was appropriate to achieve its highest and best use, having regard to its present use as a residential property, and the only change being the ability to extract the greatest benefit possible from the right of access. 33My own experience of such matters suggests to me that this, if done properly, is likely to be a much harder and more expensive exercise than Mr and Ms Wills appear to believe. Residential properties generally have to be valued on the basis of comparable sales, and it is a fair surmise that at a particular time there will not be many sales in the Mosman market of properties comparable to 32 Queen Street in its present state on the one hand, and 32 Queen Street with the benefit of the driveway and related structures on the other. There is a high likelihood that the valuation issue will come down to expressions of judgment by competing expert valuers. 34Additionally, there is an unexpressed assumption in what I have said above that Mosman Council will approve a development application for Ms McDonald to carry out the work that she wishes to undertake. There is an element of contingency in the exercise, which may require the evidence of planning experts. Unfortunately, assumptions cannot usually be made as to what local councils will permit. 35In principle, the assessment of Ms McDonald's damages would require, first, that the loss of the additional value in 32 Queen Street be assessed, and then the cost that Ms McDonald would have to expend in obtaining council approval and constructing the driveway deducted. That issue would require evidence as to the probable cost of the project. 36It is also relevant that counsel for Mr and Ms Wills made it clear that they will attack Ms McDonald's claim that, on its proper interpretation, the right of way entitles her to use the area burdened for vehicular access to her property. 37That is significant in my view, because it has the result that, if the quantification of Ms McDonald's damages is required to be determined at the same time as all other issues, the valuation exercise will have to be carried out on different and alternative assumptions as to the rights that the right of access confer on the owner of 32 Queen Street. Put perhaps simplistically, one alternative is that the nuisance will deprive Ms McDonald of a right of footway, and the other is that she will be deprived of a right of carriageway. In principle those alternatives should have different consequences to the loss of value. 38Ms McDonald's solicitor has estimated that the hearing of all issues other than damages will take about 2 - 3 days, and the addition of the damages issue will double that. That is a reasonable forecast in my opinion. The costs of preparation will also be increased significantly, as expert witnesses will need to be retained. This is a dispute between neighbours. The need for parties to waste legal costs should be avoided, if possible. The absolute amount of the costs may not be huge, but there is some chance that separating the issue of damages out may half the costs, or thereabouts, depending upon the outcome of the first hearing. That is a significant consideration. 39These matters, in my view, justify the making of the order sought under rule 28.2. For reasons that I have set out above, I cannot rule out the possibility that, by reason of the forensic approach that Mr and Ms Wills decide to take, the division between the two hearings will not be as complete as I think it should, and it is even possible that they will bring the whole valuation issue into the first part of the hearing. 40Considerations of the overriding purpose of the Civil Procedure Act have caused me to conclude that it is most likely that the just, quick and cheap resolution of the real issues in these proceedings will be facilitated, if the issue of the quantification of Ms McDonald's damages is deferred to such time as it appears clear that it is a real issue. 41If the course of the proceedings in the future proves me to be wrong, it will not be beyond the court to reassess the position and correct the consequences of my order. I should not decline to make it simply because I can see ways that one side of the record may pursue the case in a manner that undermines what I believe is the commonsense way for this case to proceed. 42Ms McDonald has sought an order that Mr and Ms Wills pay the costs of this application. It is true that Ms McDonald has succeeded, but it is not clear that this is the type of matter in which costs should automatically follow the event. While I have not accepted the arguments put forward by Mr and Ms Wills, I accept that they are genuine, and reflect the way in which their counsel apprehends their case will be run. As I have acknowledged, there is some possibility that it will ultimately appear that for practical reasons I am wrong. This is a case management issue. 43I will make the following orders at this stage: (1)Order pursuant to rule 28.2 of the Uniform Civil Procedure Rules 2005 that the issue of the quantum of the plaintiff's claim for damages in these proceedings be determined separately from and subsequently to the balance of the issues in the proceedings. (2)Direct the parties within 7 days of the publication of these reasons for judgment to provide any written submissions that they wish to make on the issue of the costs of the notice of motion to the Associate to Robb J.