Should the right of way be extinguished or modified on the alternative ground in s 89(1)(a)?
99 The alternative ground for extinguishing or modifying an easement under s 89(1)(a) is that the continued existence of the easement would impede (or would impede, unless modified) the reasonable user of the servient tenement, without securing practical benefit to the persons entitled to the easement. Case law on this requirement is usefully summarised by Young CJ in Eq in Castagna v Great Wall Resources Pty Ltd [2005] 12 BPR 23,363, at [42] [43].
100 In my opinion this ground is inapplicable, because the evidence does not show that the continued existence of the right of way, if used in accordance with the terms of the grant, would in any way impede reasonable user of the plaintiffs' land. The plaintiffs' land contains shops which do not encroach upon the passageway that is subject to the right of way, and the tenants of some of those shops from time to time use the passageway for deliveries to the rear area. I see nothing in the evidence to suggest that continuation of the right of way impedes the plaintiffs' reasonable user. There is some evidence, of course, as to what would happen to the plaintiffs' prospect of developing their land if part of the passageway were to become a means of fire egress satisfying the BCA. But that is not the issue raised by the wording of s 89(1)(a). The issue under the statutory wording relates to the continued existence of the easement, as it now is.
101 Even if the plaintiffs were able to show that continued existence of the right of way would impede their reasonable user of Lot 78, they would not be able to establish the other part of this ground, namely that the continued existence of the right of way would not secure practical benefit to Autor. Autor may well wish to rely on the right of way, in accordance with its proper scope, if it chooses to modify its development plans.
Modification of the right of way under s 89(1)(c)
102 During the course of his final submissions, counsel for the plaintiffs raised the question whether the right of way might be modified under s 89(1)(c). When I expressed some interest in a modification that would alter the terms of the right of way to make it is clearly a right of way for fire egress, but over only a part of the passageway, on the basis that the remainder of the passageway would be released to the plaintiffs in fee simple, counsel for the plaintiffs sought a brief adjournment to obtain instructions. When the hearing resumed he informed me (T 152) that his instructions were to submit that the right of way could be modified so as to reduce the width of the passageway, without altering the terms of the right of way by making it into a right of fire egress. After further discussion, in which counsel for the plaintiffs submitted that the parties would need access to planning advice on any proposal for modification of the right of way (T 155), I made consent orders for mediation.
103 Mediation having been unsuccessful, the hearing resumed and the defendants adduced additional evidence from Mr Lilli, their expert building certifier, in a report dated 25 June 2007.
104 Mr Lilli said that the unobstructed clear width of a fire escape path of travel from the defendants' land to Coles Parade over the passageway would be 1 m. It appears from his report that an extra 0.5 m would need to be allowed in order to ensure unobstructed clear width of 1 m. Substantially the same question was addressed by Dr Hutcheson in response to an earlier report by Mr Lilli. Dr Hutcheson said (page 13 of his second report) that under para D1.10 and para D1.6 of the BCA the width of the passage would depend on the number of persons using it. But Mr Lilli firmly reiterated his opinion and was not challenged in cross-examination. I accept Mr Lilli's evidence.
105 Mr Lilli also said in his report that, although he believed the plaintiffs were not legally entitled to use the airspace over the right of way for development purposes, if that were to occur, the defendants would require an unobstructed clear width of 3 m for the fire escape path from the development to Coles Parade, and in order to provide an unobstructed clear width of 3 m a total width of 3.5 m would be needed. Mr Lilli's evidence that 3.5 m would be needed was not challenged and I accept it.
106 Counsel for the plaintiffs submitted that in light of Mr Lilli's evidence, if it was not prepared to extinguish the right of way, the court should modify it under s 89(1)(c) by narrowing the width of the passageway to 1 m or 1.5 m and releasing the remainder of the present passageway to the absolute ownership of the plaintiffs. He opposed any modification of the permitted user so as to authorise fire egress in express terms, on the ground that the court has no power to make such a modification. Counsel for the defendants submitted that it would be consistent with Mr Lilli's evidence for the court to modify the right of way by narrowing the width of the passageway, and that it was not necessary to alter the uses to which the passageway could be put because the grant on its proper construction permitted the use for fire egress that Autor proposed.
107 I have rejected the defendants' contentions on the construction of the terms of the grant. As I understand the position of counsel for the defendants, if I were to reach that decision on the matter of construction he would invite me to consider modifying the right of way so as to make it clear that the proposed use for fire egress is permitted. In any event, that is a prospect that I raised, of my own motion, during the trial. I regard it as necessary to consider whether I can and should do so.
108 The case law dealing with the construction of s 89(1)(c) was usefully set out by Campbell J in Tujilo v Watts (2005) 12 BPR 23,257 at [36]-[40]. It is not necessary to traverse that territory here, having regard to the view I take as to the court's power. Here the question to be considered is whether s 89(1)(c) allows the court to modify an easement by changing the permitted use in a manner which increases the burden on the servient tenement (and so, to convert a right of way into an easement for fire egress).
109 In Hoy v ALL ERton [2001] QSC 440 at [29] Atkinson J expressed the opinion that the word "modify" has as its primary meaning to "limit or restrain", and consequently the court's power to modify an easement is a power to limit or restrain rights given under the easement, rather than to expand or replace them. Atkinson J did not cite any authority for this view.
110 The Macquarie Dictionary gives as the first meaning of the word "modify" "to change somewhat the formal qualities of; alter somewhat". The Concise Oxford English Dictionary gives as the first meaning of the word "modify" "to limit, restrict or make less". The latter definition was relied upon by counsel in Manly Properties Pty Ltd v Castrisos [1973] 2 NSWLR 420, 424, to support a submission that this is the "primary ordinary meaning" of the word. Holland J noted that the same dictionary offered some subsidiary meanings, including the meaning of making partial changes in, or altering, without radical transformation. He found it unnecessary to decide which meaning of the word was to be preferred.
111 Like its smaller sister, the Oxford English Dictionary (2nd edition, 1989) gives as the first meaning of "modify" "to limit, restrain, keep within bounds and measure", but (unlike the Concise Oxford) it identifies this meaning as obsolete. Apart from technical usages (such as in philosophy or grammar), the principal modern meaning is "to make partial changes in; to change (an object) in respect of some of its qualities; to alter or vary without radical transformation". The New Shorter Oxford English Dictionary (1993) likewise gives, as a meaning of the word "modify", "limit, restrain; appease, assuage" and it says that this meaning is obsolete. It also gives the broader meaning adopted by the longer dictionary, while adding a helpful explanation:
"3. Make partial or minor changes to; alter without radical transformation. Orig. esp . qualify or moderate (a statement etc.), alter so as to make less severe; now freq., alter so as to improve."
112 The dictionary definitions point to the conclusion that in modern usage, the word "modify" means to change without transforming, and therefore it is not confined to changes that limit the dominant owner's rights. That conclusion is supported by the decision of Hutchison ACJ in Re Lewis [1959] NZLR 1040. That case that has been disapproved in Australia (Tujilo v Watts (2005) 12 BPR 23,257 at [52] per Campbell J, citing other authority), but not on this point. Hutchison ACJ held that in the New Zealand legislation, which was to be interpreted liberally in accordance with the Acts Interpretation Act (NZ), the word "modification" meant "alteration or change" (at 1041).
113 Therefore I do not accept that the use of the words "modify" and "modification" in the section confines the court's power to limiting or restraining rights given under an easement. But I respectfully agree with Atkinson J's conclusion that the court's power is restricted in this way, for other reasons which I set out below.
114 First, in my opinion the wording of s 89(1)(c) supports the view that only a limiting modification is permitted. Section 89(1)(c) permits the court to modify or extinguish an easement if it is satisfied that the proposed modification or extinguishment "will not substantially injure the persons entitled to the easement". Literally that criterion can be applied where the question before the court is whether to expand the range of permitted uses under the easement or to alter the permitted uses so as to make them conform to the dominant owner's wishes, but if s 89(1)(c) applies in such cases, where the modification is clearly for the benefit of the dominant owner, the criterion that it prescribes will necessarily be satisfied. It would be odd for the legislature to confer a power on the court that is available only when a stated criterion is satisfied, if the criterion is bound to be met. On the other hand, where the proposed modification restricts the dominant owner's rights, it is sensible for the criterion of availability of the court's power to refer to whether the dominant owner will be substantially injured. Denham's case is a good example of a case where the court's order took away rights of the dominant owners but it was held that the order did not substantially injure them. In summary, the criterion for availability of the power in s 89(1)(c) suggests that the legislature intended the power to be exercised to restrict but not to expand the dominant owner's rights.
115 Secondly, the more restricted construction is also supported by the introductory language of s 89(1). Section 89(1) empowers the court to modify or extinguish an easement "on the application of any person interested in the land". The "land" there referred to is "land [that] is subject to an easement", in other words the servient tenement. Therefore an application under s 89(1) for modification or extinguishment can be made only by the servient owner or someone else who is interested in the servient owner's land. The section does not authorise an application to be made by the dominant owner. If the legislature had intended to permit the court to modify an easement by enhancing the dominant owner's rights or increasing the burden on the servient tenement, one would have expected it to authorise proceedings to be taken by the dominant owner.
116 Thirdly, there is some support for the more restrictive construction in s 89(2). Section 89(2) provides that where proceedings are instituted to enforce an easement, any person against whom the proceedings are instituted may apply for an order under s 89 in those proceedings. As a matter of ordinary language, proceedings to "enforce" an easement are proceedings brought by the dominant owner to require the servient owner or someone else to permit the exercise of the rights conferred by the easement. Proceedings to prevent the dominant owner from acting in excess of the terms of the easement are not aptly described as proceedings to "enforce" the easement. Therefore what s 89(2) does is to permit the defendant in proceedings by the dominant owner to respond to the dominant owner's assertion of rights under the easement by seeking to limit or remove those rights.
117 Finally, such case law as there is supports the idea that s 89(1)(c) permits only the limitation or extinguishment of an easement. I have already referred to Atkinson J's decision in Hoy v ALL ERton [2001] QSC 440. In Manly Properties Pty Ltd v Castrisos [1973] 2 NSWLR 420 Holland J considered whether a proposal by the servient owner to replace a right of way with another one in a different place could be described as a modification authorised by s 89(1). In Re Lewis (cited above) it had been held under the New Zealand legislation that a proposal to change the locus of a right of way from the centre of the applicant's land to the side of the same piece of land was a modification. Holland J did not follow that decision. Although he acknowledged that the court should not unduly restrict the operation of the language of s 89, he held that it would be playing with words to say that the easement was merely relocated and therefore modified, rather than extinguished, however broad the concept of modification may be. His Honour's reasoning on that point has been followed in subsequent cases, and the law now seems to be that a relocation of the site of an easement so that it traverses a completely different track is outside the power conferred by s 89(1)(c): Tujilo v Watts (2005) 12 BPR 23,257 at [52] per Campbell J.
118 Holland J took the view that the court has the power to order that an easement be extinguished subject to certain events occurring, such as the granting of another easement, without waiting for those events to have already occurred. Importantly for present purposes, his Honour made an observation supporting the view that the orders authorised by the section are orders of limitation or extinguishment (at 424):
"The section is designed to relieve wholly or partly, in a proper case, a land owner from the burden of restrictions and easements whilst at the same time recognizing the legal rights of the owners of the dominant tenement, and ensuring that they will not be unduly prejudiced by the proposals of the applicant."
119 In Loclot Pty Ltd v Pullen (2003) 56 NSWLR 592 Gzell J had to consider whether the court could alter the boundaries of a right of way on the application of the servient owner, on condition (opposed by the servient owner) that a clearance of a specified height be maintained above the site of the right of way. He referred to the Manly Properties case and pointed out that Holland J was dealing with an extinguishment order to take effect on the happening of a future event, the future event being one desired by the parties (the consensual grant of a substitute easement). He referred to later cases that had followed Manly Properties and distinguished them on the same basis. He compared the New South Wales' provision, which is silent on the question of imposing conditions, with s 84(1C) of the Law of Property Act 1925 (UK), which (by amendment in 1969) 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 affected land as appear to the Lands Tribunal to be reasonable in view of the relaxation of the existing provisions, and as may be accepted by the applicant. He concluded (at 596) that it would be an "over-generous interpretation of the power in s 89 of the Act to 'modify or wholly or partly extinguish' an easement … to conclude that the power extends to the imposition of conditions upon a modification or extinguishment".
120 Loclot did not address the question whether an easement can be modified under s 89(1)(c) by expanding it or altering its character for the benefit of the dominant owner against the opposition of the servient; but if, as that case held, there is no power to impose conditions for the benefit of the dominant owner when modifying an easement by limiting it, it would be odd if there were a power of modification for the benefit of the dominant owner enabling the court to achieve the same outcome. Just as the legislature could amend s 89 so as to permit the imposition of conditions, it could amend so as to permit modifications for the benefit of the dominant owner, but it has not done so.
121 My conclusion is that the court cannot, under s 89(1)(c), make an order expanding a right of way or changing it to the benefit of the dominant owner. By application of that general proposition, the court cannot make an order changing the right of way in the present case into a right of fire egress over a smaller part of the passageway.
122 As to the plaintiffs' submission that the court should simply reduce the width of the passageway to which the right of way applies, in my view the plaintiffs have failed to discharge the onus of proof which they bear (see Tujilo v Watts at [36] per Campbell J) to show that the proposed modification would not substantially injure Autor, the person entitled to the right of way. Therefore an order cannot be made under s 89(1)(c).
123 The question of substantial injury is to be assessed on the basis that Autor has development consent for its proposed building, but an injunction will be granted in the present proceeding on the plaintiffs' application, which may require revision of the approved plans. That means that Autor may wish to use the existing right of way in accordance with the terms of the grant, if it abandons or modifies the proposed building. A restriction on the width of the passageway would prevent one vehicle from passing another on the passageway and may, depending upon the width of the remaining passageway, prevent any use of the right of way by vehicles.
Conclusions
124 The plaintiffs should be granted a declaration that the use of the passageway on that part of the plaintiffs' land that is subject to the right of way to provide fire egress in compliance with the BCA, as contemplated in Autor's approved plans, is not authorised by the right of way. The declaration should not, as proposed in the amended statement of claim, refer to the contemplation of the parties at the time the right of way was granted, having regard to the Perpetual Trustee case. The plaintiffs should also be granted a final injunction restraining Autor from using the passageway in the manner contemplated in the approved plans.
125 The plaintiffs have failed to establish grounds for extinguishment of the right of way under s 89 of the Conveyancing Act 1919 (NSW), or narrowing the width of the right of way, and that section does not permit the court to modify the right of way so as to change it into a right of fire egress. Consequently the right of way will remain in place.
126 These outcomes are unfortunate, in the sense that they are likely (having regard to the evidence of Mr Fleming to which I have referred) to prevent the building of a commercial residential and retail development in Newport that has the consent of Pittwater Council. The problem is that those who designed the development have sought to make use of land not owned by the company which proposes the development, and to make use of that other land in a way that is inconsistent with the landowner's rights. My decision vindicates rights of ownership.
127 It seemed to me during the trial, and it seems to me now, that a commercial resolution of the disagreement between the parties should be possible, along the lines that part of the passageway would be made subject to an easement for fire egress (or even be transferred to Autor in fee simple) while the remainder of the passageway would be released from the right of way so that the plaintiffs would have the unrestricted freehold. But the court does not have the power to impose such a solution. The mediation that I ordered during the trial, with a view to the parties reaching agreement on some such outcome, was unsuccessful. Resolution of the impasse that is likely to be produced by this judgment will have to depend on renewed commercial negotiations, hopefully infused with a measure of commonsense.