Loclot Pty Ltd v Pullen and Others

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1061/02 LOCLOT PTY LTD V WILLIAM HAYDEN PULLEN AND OTHERS JUDGMENT 1 The plaintiff seeks an order for modification of a right of carriage way over its land under the Conveyancing Act 1919 ("Act"), s 89. The plaintiff's land is at 51 Ethel Street, Seaforth. It is Lot 36 on deposited plan 7532. Ethel Street is to the north of Lot 36. 2 The first defendant is the owner of Lot 14 and the second defendant is the owner of Lot 15 on the same deposited plan. Lot 15 adjoins Lot 36 to the south. Lot 14 abuts Lot 15 to the west. The subject right of carriage way runs from Ethel Street up the western side of Lot 36. The first defendant gains the benefit of the easement by a short easement in the north west corner of Lot 15. 3 The plaintiff has been granted development consent by Manly Council to demolish a building on Lot 36 and erect a three storey mixed commercial and residential development with basement car parking. The development consent allows the building of structural support for a facade for a width up to 160 millimetres from the western alignment of Lot 36 along the northern portion of the right of carriage way. The defendants have no objection to a modification of the right of carriage way to exclude a strip 160 millimetres wide along the western boundary of Lot 36 for 17 metres from the boundary with Ethel Street and its replacement to the east of the right of carriage way for that distance so that it remains at a width of 3.05 metres over that length and thereafter at a width of not less than 3.05 metres up the remaining western alignment of the property. 4 Section 89(1)(c) of the Act provides, inter alia, that where land is subject to an easement, the court may, on the application of any person interested in the land, by order modify or wholly or partially extinguish the easement upon being satisfied that the proposed modification or extinguishment will not substantially injure the persons entitled to the easement. 5 In my view the extinguishment of the 160 millimetre strip and the realignment of the right of carriage way to the east will not substantially injure the defendants. 6 In Re Lewis [1959] NZLR 1040, Hutchison ACJ in an ex tempore judgment concluded that a substitution of a right of way on the side of a section of land for a right of way in the centre of the land was a modification for the purposes of the like provision in the Property Law Act 1952 (NZ), s 127. In Manly Properties Pty Ltd v Castrisos [1973] 2 NSWLR 420 Holland J disagreed. In that case what was proposed was the substitution of a right of way along the northern boundary of one lot for a right of way along the southern boundary of an abutting lot. In his Honour's view, the relocation of the easement constituted the extinguishment of one easement and the creation of another. With respect to Hutchison ACJ, that must be so. 7 In the instant circumstances, however, the bulk of the right of carriage way is to remain in its current location with but a small alteration of its boundaries at its northern extremity. I regard that change in alignment as a modification within the meaning of the Act. I am prepared, therefore, to modify the right of carriage way. 8 The development consent entitles the plaintiff to build over a portion of the right of carriage way at a height of 4.2 metres from the surface of the easement. The first defendant asked me to make it a condition of the modification that a clearance of 4.2 metres above the surface of the right of carriage way be maintained. The plaintiff opposed the imposition of such a condition. 9 It is not clear to me that the court can impose conditions upon the exercise of power under s 89(1)(c) of the Act. The provision is silent in this respect. It stands in stark contrast to the correlative power of the court to create easements. In that case, s 88K(3) provides that the court is to specify the terms of the easement. On its face, s 89(1) seems to me to be limited to mere modification or extinguishment. 10 The comparable provision in s 84(1)(c) of the Law of Property Act 1925 (UK), was amended by the Law of Property Act 1969 (UK) to include s 84(1C) which specifically declares that the power conferred by the section to modify a restriction includes power to add such further provisions restricting the user of, or the building on, the land affected as appears to the Lands Tribunal to be reasonable in view of the relaxation of the existing provisions and as may be accepted by the applicant and the Lands Tribunal may accordingly refuse to modify a restriction without some such addition. Similar provisions are contained in the Property Law Act 1974 (Qld), s 181(3) and in the Conveyancing and Law of Property Act 1884 (Tas), s 84(C)(4). There has, however, been no such amendment in this State. 11 The first defendant's submission finds some support in the authorities. In Re Roseblade, Re Foenander [1964-5] NSWR 2044 different parcels of land were subject to a restrictive covenant requiring only a dwelling house to be erected on them. In the one case, the applicant wished to subdivide his land into three lots. In the other, the transferee of portion of two lots so restricted wished to erect a house on his portion. 12 In each case, to overcome objections, the applicants proposed the imposition of further conditions. In the first case, buildings on two of the subdivided lots were to be restricted to a single storey, the size of the dwellings were to be constrained, development was to be set back a specified distance from the boundary of one of the subdivided lots and trees and shrubs were to be maintained in the setback. In the second case, the building on one of the lots was to be restricted in height. 13 Else-Mitchell J modified the restrictive covenants to allow residential development on each of the lots and proposed to make orders imposing the proffered conditions. The orders appear to have been entertained as a matter of consent. There was no discussion of the power of the court to impose such conditions in the absence of consent. 14 In Manly Properties, Holland J was not called upon to make an order. The plaintiff merely sought the view of the court as to an appropriate substitution for the right of way. His Honour said at 425: "In my opinion, it is open to the court to deal with an application so put and to indicate what order the court would be prepared to make in the event that certain conditions were fulfilled. I think that that is only procedurally different from an order that an easement be extinguished subject to certain events occurring, such as by postponing the date on which the extinguishment should take effect or by ordering extinguishment subject to certain specified events that were capable of being certainly established having taken place. I think it would be an undue restriction on the jurisdiction of the court under a section such as this to hold that the only order that in effect the court could make would be an order for extinguishment after the circumstances justifying it had already occurred."

That observation falls short of supporting the proposition advanced in this case. All his Honour said was that the court could order a mere extinguishment to take effect consequent upon the happening of a future event. Further, his Honour was not imposing the future event on the parties. The substitution of another easement was proffered by the plaintiff and it was the happening of that event that would dispose the court to extinguish the existing easement. 15 In Ex parte Proprietors of "Averil Court" Building Units Plan [1983] Qd R 66 at 70, Matthews J followed Manly Properties and indicated that subject to the performance of conditions offered by the applicant to create an alternative right of way and to pay the applicant a specified amount, he would order extinguishment of the existing easement. Again, that did not involve an extinguishment of an easement subject to conditions, nor the imposition of conditions upon the applicant. It involved an indication that the court would order a mere extinguishment consequent upon performance of the proffered conditions. In any event, as I have already mentioned, there was in Queensland explicit statutory power to impose further restrictions upon a modification or extinguishment of an easement. 16 In Durack v De Winton (1998) 9 BPR 16,403 the plaintiffs had the benefit of both a right of carriage way and a drainage easement over the defendants' land. Einstein J had before him rival applications by the plaintiffs under s 88K of the Act and by the defendants under s 89. His Honour, in an ex tempore judgment, followed the approach of Holland J in Manly Properties by indicating that if the right of carriage way were widened to take a drain as the defendants had offered, the court would extinguish the drainage easement. Again, that did not involve an extinguishment of an easement subject to conditions, nor the imposition of such conditions. 17 In the course of his judgment, however, Einstein J, having referred to the above passage from Manly Properties and having agreed with Holland J that the proposed replacement of the drainage easement in an extended right of carriage way was not a modification for the purposes of s 89, said that the court was not powerless and could deal with the matter in the way Holland J had done. At 16,434 his Honour went on to say: "The Court, in my view, has power to order that the existing easement be extinguished subject to a new easement being created and it seems to me that in this fashion the flexibility of the jurisdiction is maintained to produce a proper result fair to both parties which is capable of being achieved."

I do not understand his Honour to be saying anything more than Holland J had said: that the court had power to indicate that if the new easement were created as the defendants had offered, the existing easement would be extinguished. That was the course his Honour adopted. 18 In my view, it is an over-generous interpretation of the power in the s 89 of the Act to "modify or wholly or partially extinguish" an easement, profit à prendre, restriction or obligation to conclude that the power extends to the imposition of conditions upon a modification or extinguishment. 19 In any event, I am not prepared to impose a height restriction on development over the modified right of carriage way. That seems to me to be a matter appropriate for the consideration of Manly Council and the Land and Environment Court upon any appeal. It does not seem to me to be appropriate in an application such as this to embark upon town planning issues or to exercise any power that extinguishes rights of property of the owner of the servient tenement other than those restricted by the right of carriage way. 20 The right of carriage way is, pursuant to s 181A(1) and Sch 8, Pt 1 of the Act the full and free right to go, pass and repass at all times and for all purposes with or without animals or vehicles or both to and from the dominant tenement. That is the extent of the rights. The owner of the servient tenement retains an estate in fee simple in the land and is thus entitled to exercise the rights of ownership including the right to develop the land at a sufficient height above the easement not to interfere with the exercise of the right of carriage way (Ex parte Purcell [1982] Qd R 613 at 615 per McPherson J). 21 The real dispute between the parties is as to the location of a temporary right of way during the construction work on Lot 36 which is expected to take nine months to complete. Redsave Pty Ltd is the owner of Lot 35 on the deposited plan 7532. It abuts Lot 36 to the east. Redsave executed a deed, to be executed by the plaintiff as well, requiring the plaintiff to construct a driveway and carport at the rear of an existing building on Lot 35 and to construct and later remove a temporary right of way linking the driveway to the western boundary of Lot 35 a short distance from its southern boundary. By this means, a temporary right of way is proposed to be made available to the defendants up an existing driveway from Ethel Street along the eastern alignment of Lot 35 to the new driveway servicing the carport and thence to the western alignment of Lot 35. 22 The plaintiff proposes to construct a temporary right of way, 4 metres in width, up the eastern alignment of Lot 36 with a turn towards its southern boundary and thence by a 6 metre wide strip along the southern boundary to the western alignment of Lot 36. The plaintiff proposes that during construction work it should, at its option, cause to be provided to the defendants vehicular and personal access to Lots 14 and 15 via the temporary right of way on Lot 36 alone or via the temporary rights of way on Lot 35 and the southern portion of Lot 36. 23 The first defendant objects to any right of way over Lot 35. He is content with the proposed temporary right of way over Lot 36. The second defendant is happy with the location of each of the proposed temporary rights of way. 24 The plaintiff did not ask me to make the provision of a temporary right of way a condition of the modification of the right of carriage way. Instead, it proposed that upon its undertaking to cause a temporary right of way to be made available to the defendants, I should restrain them from bringing suit to prevent interference with their respective existing rights of carriage way. Neither of the defendants objected to an order in the form of an injunction upon provision of a suitable substituted temporary right of way. 25 The first defendant objected to the provision of alternative rights of way at the discretion of the plaintiff on the basis that there would be no certainty as to which mode of access was available from time to time. The plaintiff offered the right of way over Lot 35 and the southern part of Lot 36 alone if it were thought that the alternative routes caused confusion and confusion was undesirable. 26 If it were necessary for me to decide that issue, I would have rejected the proffered alternatives on the basis that a precise substituted right of way is an important consideration and opposition on that account from a party being asked to forego its legal rights should be given significant weight. As will appear below, however, it is unnecessary for me to decide this issue. 27 Secondly, the first defendant submitted that there was a lack of security with respect to the right of way proposed over Lot 35. 28 The deed executed by Redsave provides that the construction work on Lot 35 is to be completed by the plaintiff prior to the commencement of construction work on Lot 36 and prior to any interference with the existing right of carriage way. It was submitted that this requirement gives adequate security to the defendants. If the plaintiff does not complete the construction of the temporary right of way on Lot 35, it may not commence work on Lot 36. 29 There are, in my opinion, at least three respects in which the deed provides insufficient security to the defendants. First, the defendants are not party to the deed and they do not have the benefit of the provision that work on Lot 35 must precede work on Lot 36. Secondly, the deed provides that the plaintiff is not to permit construction vehicles intended for Lot 36 to use the temporary right of way and any breach of that term enables Redsave to terminate the provision of the right of way to the defendants. Their benefit of the temporary right of way can be cancelled for a circumstance beyond their control. Thirdly, Redsave is not a party to these proceedings and will not be bound by any order I might make with respect to the proffered right of way. 30 The first defendant is a ship's engineer who spends three months at sea followed by three months on land. He is concerned that his elderly wife will find it difficult to walk the extra distance involved in the proposed right of way over Lot 35 and the extra distance to the taxi rank in Ethel Street to the west of Lot 36, which she utilises frequently during her husband's absence at sea. He was also concerned that taxis might refuse to drive up the right of way on Lot 35 thereby making it necessary to walk back the extra distance. 31 Evidence was given on behalf of the plaintiff that two methods of excavation on Lot 36 are possible. If the temporary right of way is confined to Lot 36, a rock breaking method of excavation will be necessary. It is noisy. If the right of way includes Lot 35, a rock quarry method could be used which is much quieter, but takes more time. 32 If the temporary right of way is limited to Lot 36, construction will take place in two stages: first, over the existing right of carriage way and then over the balance of the site including the temporary right of way. A two-stage construction has its complications. The plaintiff is also concerned that a deep excavation adjacent to the narrower portion of the temporary right of way on Lot 36 raises safety concerns that do not arise with respect to Lot 35. 33 The first defendant is not concerned with noise, or with the safety issue. It was submitted on his behalf that a chain wire fence along the right of way is sufficient protection from the adjacent excavation. 34 In my view, the first defendant's concerns are legitimate and the legitimate concerns of the owner of a dominant tenement are to be given significant weight. In the end, the plaintiff's opposition to a temporary right of way confined to Lot 36 is based on the safety problem and the complication of building in two stages. Those concerns do not, in my view, outweigh the concerns of the first defendant. 35 It follows that I decline to impose an injunction on the first defendant upon any undertaking by the plaintiff to provide temporary access over Lot 35. 36 While the second defendant raised no objection to either of the proposed temporary rights of way, it was submitted on his behalf that in case there was a change in the tenancy of the premises on Lot 15 and a new tenant took a different view of the temporary right of way, an order should be made for the provision of compensation. 37 Unlike s 88K(4) of the Act, which empowers the court upon making an order imposing an easement over land to provide for payment of compensation, s 89(1)(c) contains no such power. Furthermore, compensation upon the imposition of an easement is directed to those having an estate or interest in the servient tenement. The second defendant is the owner of one of the dominant tenements. 38 It was submitted that I might make such an order as a condition of granting injunctive relieve. I would not take that course. The second defendant put no evidence before the court as to the tenure of the existing tenant, the likelihood of a change of tenancy during the nine month construction period, or diminution in the value of a tenancy of Lot 15 due to a restraint against the enforcement of the existing right of carriage way during that period conditional upon the availability of a temporary right of way over Lot 35 and 36 or over Lot 36 alone. 39 In my view, the approach of Holland J in Manly Properties was not abstract or hypothetical in the sense discussed by Heydon JA, with whom Sheller JA and Einstein J agreed, in Victims Compensation Fund Corporation v District Court of New South Wales [2002] NSWCA 355 at par 27. There was a legal controversy between the parties and his Honour's expression of opinion was directed to a conclusive and final decision based on a concrete situation. I propose to follow his example. 40 I indicate that if the plaintiff offers to deliver to the defendants a deed creating a right of carriage way over Lot 36 in the location identified in par 5(b) of the further amended summons, including a plan in registrable form, and if in consequence the defendants are prepared to undertake that they will not while that right of carriage way remains in force, seek to exercise any rights with respect to the existing right of carriage way, it would be appropriate for the court on the completion of the first stage of construction on lot 36 to extinguish the new right of carriage way and to modify the existing right of carriage way in the manner agreed in by the parties in exhibit 2. 41 I put the matter in that way because, unless the defendants consent to being enjoined, it is not clear to me that the court can restrain the exercise of a legal right in the absence of a recognised category of unconscionability (Meagher Gummow and Lehane's Equity Doctrines & Remedies, 4th ed, Butterworths Lexis Nexis, Australia, 2002, par 12-050, Spry, The Principles of Equitable Remedies, 6th ed, LBC Information Services, Australia, 2001, p 340). 42 I decline to make any order in terms of the further amended summons. I will stand the matter over to enable the parties to consider their positions and to enable the plaintiff, if it wishes to do so, to seek leave to further amend its summons. I will hear the parties on costs.

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