Pennant Hills Golf Club Limited v Roads and Traffic Authority of New South Wales

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

HANDLEY JA STEIN JA GILES JA

PENNANT HILLS GOLF CLUB LIMITED v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES

The appellant owns and operates a golf course at Beecroft which is adjacent to the M2 tollway. By notification in the Government Gazette on 31 May 1996 the respondent compulsorily acquired certain rights in the appellant's land for the purpose of installing underground rock anchors in a stratum of land below the surface of the golf course as part of the work on the M2. The Gazettal referred to an easement for rock anchors in a certain Memorandum.

This case involved a preliminary question of law, namely: Whether the land compulsorily acquired from the applicant by the respondent consists only of an easement, or right to use land, under the surface for construction and maintenance of works within the meaning of s62(1) [of the Land Acquisition (Just Terms) Compensation Act 1991, (NSW)].

In the Land and Environment Court, Lloyd J answered the preliminary question in the affirmative and determined compensation under the Land Acquisition (Just Terms) Compensation Act as nil.

(1) answering the preliminary question in the affirmative.

(2) finding that the right not to have soil or other material in the land acquired disturbed in any way, and not merely a right not to have the soil or other material disturbed in so far as such disturbance might adversely affect the performance of the rock anchors was merely incidental to the acquisition of the easement for rock anchors.

(3) finding that the right to remove soil from the land was a right incidental to the acquisition of the easement for rock anchors.

The respondent's right to have the soil within the servient tenement remain undisturbed is not separate from any right to construct and maintain rock anchors. Rather, it should be construed as part of a complex of rights acquired by the RTA and is necessarily incidental or ancillary to an easement to construct and maintain.

The grant does not wholly deprive the appellant of its property rights, as the rights of the appellant in respect of the surface of the land remained unaltered by the acquisition. However, the rights of the appellant in respect of the land below the surface are affected. The subject grant undoubtedly affects the right of the appellant to use the land in the easement, but it does not altogether extinguish it. The grant does not purport to vest unlimited or unconstrained rights in the RTA, nor does it give any right of possession to it beyond that which is necessary to house the rock anchors. The right to remove soil of the servient tenement to such an extent as may be necessary cannot be regarded as a profit `a prendre. The grant does not purport to confer rights which are different from or in excess of an easement. Further, the rights in the grant do not amount to a covenant. ORDERS

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

HANDLEY JA STEIN JA GILES JA

PENNANT HILLS GOLF CLUB LIMITED v ROADS AND TRAFFIC AUTHORITY OF NEW SOUTH WALES

2 STEIN JA : This is an appeal from a decision of Lloyd J in the Land and Environment Court on a preliminary question of law. The question is:

Whether the land compulsorily acquired from the applicant by the respondent consists only of an easement, or right to use land, under the surface for the construction and maintenance of works within the meaning of s62(1). 3 Section 62(1) of the Land Acquisition (Just Terms) Compensation Act 1991 (the Act) provides:

If the land compulsorily acquired under this Act consists only of an easement, or right to use land, under the surface for the construction and maintenance of works (such as a tunnel, pipe or conduit for the conveyance of water, sewage or electrical cables), compensation is not payable except for actual damage done in the construction of the work or caused by the work. 4 His Honour answered the question in the affirmative. Accordingly, he determined compensation under the Act as nil.

5 The appellant owns and operates a golf course at Beecroft. It is adjacent to the M2 tollway which adjoins its southern boundary. By notification in the Government Gazette on 31 May 1996 the respondent compulsorily acquired certain rights in the appellant's land. The purpose of the resumption was to install underground rock anchors in a stratum of land below the surface of the golf course as part of the work on the M2. The Gazettal referred to an easement for rock anchors as described in a certain Memorandum.

6 The Memorandum detailing the rights provided to the respondent was filed in the Land Titles Office. The 'easement' acquired is 20m wide adjacent to the southern boundary of the property extending for 417.5m and at a depth below the surface which at the top varies, according to the Deposited Plan, between 2.07m to 5.8m. The volume beneath those levels is unlimited in depth.

7 The text of the Memorandum is important in order to determine the nature of the interest in land acquired by the respondent. The Memorandum provides as follows:

Easement for Rock Anchors FULL AND FREE right, title, liberty and licence for the Authority, its successors or assigns (being a public or local Authority) to have the soil and/or other material of the easement within the servient tenement remain undisturbed AND TOGETHER WITH full and free right, title, liberty and licence for the Authority, its successors or assigns and every person authorised by any of them with any tools, implements and machinery necessary for the purpose to enter from the dominant tenement underground upon the easement within the servient tenement and to remain there for a reasonable time for the purposes of constructing placing leaving inspecting repairing maintaining or removing such rock anchors or any parts thereof in the easement within the servient tenement AND for any of the aforesaid purposes to open the soil of the servient tenement within the easement and to remove it to such an extent as may be necessary PROVIDED THAT the Authority, its successors and assigns and every person authorised by any of them shall take all reasonable precautions to ensure as little disturbance as possible to the servient tenement. The person having the right to release, vary or modify the said easement is the Authority, its successors or assigns. Definition In this Memorandum the words "rock anchors" mean any underground rod or cable of metal or other composition howsoever set in place and or cemented to the rock or other substratum surrounding it with grout or cement or any other adhesive material whatsoever. 8 The rights acquired by the respondent leave the rights of the appellant unaffected in respect of the surface of the land, the column of air stretching up and the land below the surface down to the planes identified in the Deposited Plan. Below those planes the rights of the appellant are affected.

9 Because the 'first right' acquired under the Memorandum (as it has been referred to in submissions) is to have the soil within the servient tenement remain undisturbed, this would prevent the construction of works which would intrude into the servient tenement. That is, without the consent of the respondent. The appellant argues that this involves the loss of significant property rights. For example, it would prevent the club from making any changes to the design or topography of the golf course which intrude into the land in which the RTA rights apply. It is submitted by Mr Campbell QC, on behalf of the appellant, that the right to have the soil remain undisturbed is separate from any right to construct and maintain rock anchors. It is not incidental to, nor dependant on, or for the purpose of, any rock anchors.

10 The appellant's submission on the proper construction of the 'first right' in the Memorandum is, I think, an unduly narrow one. The nature of that right cannot be ascertained in isolation. A proper understanding of the rights conveyed requires the examination of the grant as a whole. The plain purpose of the acquisition is to enable the respondent to construct the M2 on the adjoining land. The golf course land was not required for any other public purpose. Specifically, the acquisition was to enable rock anchors to be secured into the stratum of land the subject of the easement. The rock anchors are to secure the wall in the road cutting against any failure. Accordingly, the 'first right' should be construed as part of a complex of rights acquired by the RTA for the stated public purpose.

11 I accept the submission made on behalf of the respondent that the so-called first right is not a separate, independent and freestanding right having no relationship with the remainder of the grant or its identified purpose. The right to have the soil remain undisturbed must be limited to and subservient to the purpose of constructing and maintaining rock anchors.

12 The appellant further submits that there was no obligation on the respondent, at the time of Gazettal, to construct the M2 and if the project had been abandoned so that the retaining walls were no longer necessary adjacent to the golf course, the soil would still be unable to be disturbed. This argument overlooks the fact that easements may be abandoned, cancelled or revoked.

13 Next the appellant submits that s 62 should be construed strictly since it involves dispossession of an individual's property rights. Although there is no equivalent to s 51(xxxi) of the Commonwealth Constitution in the NSW Constitution, the submission may be accepted in general terms. However, in construing the section, the court may not ignore any clearly stated intention of the Legislature to deprive owners of compensation rights that they might otherwise be entitled to. A purposive approach to construction is not excluded where ambiguity in expression may give rise to uncertainty in meaning. Further, a strict approach to construction does not require the acceptance of an absurd or highly inconvenient outcome or one which does not give recognition to clear legislative intention.

14 To construe s 62 in such a way as to limit non-compensible acquisitions to the purpose solely of construction and maintenance of works and no more, even if incidental to the purpose, would lead to an illogical, absurd or inconvenient result and one which should be avoided.

15 This, of course, still leaves to be considered whether the rights in the grant are an easement or right to use land under the surface for the construction and maintenance of works, or something else? If they are the latter, then s 62(1) does not apply.

16 Lloyd J found that the right to have the soil remain undisturbed is only an incident of the grant of the easement for rock anchors. He added that it was no more than the law would, in any event, imply. The appellant submits that his Honour was wrong in so holding. It is contended that, as a matter of construction, it is a separate and independent right and more extensive than an 'easement or right to use land … for the construction and maintenance of works'.

17 I think that Lloyd J was correct. To succeed in its task, a rock anchor needs to be inserted into material which remains static and stable in order to ensure its integrity. The anchor's ability to so remain must recognise the need to have the soil remain undisturbed around it. It must therefore be a right which is necessarily incidental or ancillary to an easement to construct and maintain. Any common sense approach to construction would lead to this result. I also agree with his Honour that had the words not appeared in the Memorandum, they would have been implied.

18 It was further submitted on behalf of the appellant that the RTA's right to have the soil remain undisturbed was a right to exclusive use of the land within the easement and that Lloyd J was wrong to hold otherwise. The appellant submits that the respondent's rights have destroyed the fundamental property rights of the appellant as owner of the stratum of land. The rights, so it is contended, completely destroy the appellant's right to use that land. The appellant cannot, without consent, use that land because any utilisation will necessarily involve disturbing the soil. It follows that the resumption has had the effect that the RTA has acquired the exclusive right to use the appellant's land and the appellant has been deprived of any right to use or utilise it without the consent of the respondent. It is contended that in law, this cannot be classified as an easement and s 62(1) cannot apply.

19 For this proposition, reliance is placed on the fourth requirement for the validity of an easement referred to in In Re Ellenborough Park [1956] 1 Ch 131 at 163 - 4. That is, that the rights would 'amount to joint occupation or would substantially deprive the … owners of proprietorship or legal possession'. See also Reilly v Booth (1890) 44 Ch D 12, Grigsby v Melville (1972) 1 WLR 1355, Bursill Enterprises Pty Ltd v Berger Bros. Trading Co Pty Ltd (1971) 124 CLR 73 and Gale on Easements, 16th Ed (1997) para 1 - 03.

20 It is not obvious to me that the grant wholly deprives the appellant of its property rights in the land. As mentioned by leading counsel for the respondent, the appellant is entitled to the right to support of the surface and that right is unaffected by the grant. It is in fact often an ordinary consequence of many utility easements that there be a constraint upon disturbance of the soil within the easement, either expressly or by implication. A ready example is a drainage easement where the owner of the servient tenement is denied the capacity to interfere with the soil within the easement which may support the walls and bed of the channel or disturb the soil around a pipe in the easement. This is not very different from the instant case. Although the subject grant undoubtedly affects the right of the appellant to use the land in the easement, it does not altogether extinguish it. It must be kept steadily in mind that the respondent enjoys no positive right to use the land within the easement other than for the purpose of constructing or maintaining works. The right acquired by the respondent by reason of the grant does not deprive the appellant of its legal ownership or its de facto possession of the land. Neither is purported to be transferred, nor does the respondent assert or purport to exercise ownership or possession. The respondent's right is limited to installing the rock anchors and maintaining them and no more.

21 The limited nature of the respondent's rights make the cases relied on by the appellant distinguishable. Reilly v Booth was a grant of 'exclusive use' by its very terms. Grigsby v Melville was a case decided on its own facts which are very different from the present. It is, however, indicative of how the actual terms of the grant are important in any given situation. In Copeland v Greenhalf [1952] Ch 488, there was no grant and the case was based on an allegation of a prescriptive right to unconstrained use and occupation.

22 The approach of the High Court in Bursill does not, it seems to me, assist the appellant. The court held that unlimited and unconstrained rights of user and occupation, reserving no rights to the owner, are the fruits of a conveyance and not the incidents of an easement.

23 The instant grant does not purport to vest unlimited or unconstrained rights in the RTA, nor does it give any right of possession to it beyond that which is necessary to house the rock anchors. Again, in my opinion, Lloyd J was correct in his conclusion.

24 Even if the grant is not an easement, that does not dispose of the respondent's case under s 62(1) because the provision refers to an easement 'or right to use land'. So long as the use of the land is for the construction and maintenance of works within the provision, even if it involves the right of exclusive use (which the respondent does not accept), it will not be taken outside the section.

25 The next argument of the appellant is that if it is an easement, then it is a negative easement. That is, a right to stop the servient owner from doing something on its land. The right to have soil remain undisturbed is not a right hitherto recognised as an effective easement. Further, an easement never gives the right to take away any part of the soil. The right relates only to user of land, to utilise the servient tenement in a particular way. This is in contrast to a profit a prendre. The appellant relies on Bevan v the London Portland Cement Company Ltd (1892) 67 LT 615 and other authorities in support of its submission that the right to excavate and remove part of the soil of the servient tenement for sub-surface works cannot be an easement. It is submitted that the right in the Memorandum 'to open the soil of the servient tenement within the easement and to remove it to such an extent as may be necessary' goes beyond any right under an easement. Rather, it is consistent with a right of ownership in fee simple or a profit a prendre.

26 I cannot accept that the right to remove soil is to be seen as a profit `a prendre. The soil is not removed for any commercial gain which is a normal incident of a profit, although not universally required. The relatively small amounts of soil removed are limited to what is necessary to insert the rock anchors. The right to remove soil in this case is little different to many other rights which are clearly easements. For example, a right to remove soil in a drainage easement which is incidental to the principal purpose. Other examples have been provided by the respondent which are equally relevant. Again, I think that Lloyd J was correct in his conclusion.

27 The appellant's next submission places emphasis on the word 'only' in s 62(1) of the Act. Senior counsel for the appellant submits that the rights in the grant do not consist only of an easement or right to use the land for the purposes specified in the section. Rather, it goes further and purports to confer rights which are different from or in excess of an easement. This is because of the right to have the soil remain undisturbed, even by the appellant owner. Therefore, so the argument goes, the rights acquired do not consist only of an easement or right to use the land for the purpose of construction and maintenance of works. They also include a negative easement preventing the owner from disturbing the soil within the easement. Alternatively, it is submitted that the right amounts to an enforceable covenant. This is an 'interest in land' (see definition in s 4) outside an easement or right to use land for construction and maintenance works and, accordingly, s 62(1) has no operation.

28 I do not accept the appellant's submission. It is not self evident that s 62 is limited to positive easements. This is particularly so when considering the maintenance of works. I agree with Mr Tobias QC when he submits that works are often best maintained by leaving them undisturbed. This is surely so when one is dealing with rock anchors. The submission also reads too much into the inclusion in the section of the word 'only'. Indeed, more than was likely intended by the Legislature.

29 I am also unable to accept the alternative argument that the rights amount to a covenant. Apart from the artificial and excessively semantic reasoning which is needed to support this approach, the right is patently not an enforceable covenant.

30 It is further submitted that the easement is not for the construction and maintenance of works but is an easement for support of the retaining wall of the dominant tenement. Therefore, it is outside the scope of s 62(1). I accept the respondent's submission that the ultimate purpose (to provide support for the wall) is a function of the adequacy of the works, not the easement. Contrary to the appellant's submission, the passage of Bryson J in Manson v RTA (Court of Appeal, unreported 6 May 1996) relied on, does not assist it.

31 Finally, there is a submission which was not put to Lloyd J. It is said that the easement for rock anchors envisages more than permitted by s 62(1) because it also confers rights to remove the rock anchors. Described by the respondent as a submission of desperation, it is plain that the right to construct always carries with it the right to remove. Likewise, the right to maintain carries the right to remove and replace if necessary. Any purposive approach to construction of s 62 would recognise that 'the construction and maintenance' of works is not limited in the way contended for. So to limit the meaning would lead to an absurdity.

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