Scharer v State of New South Wales

The proposal for and the construction of the road 6 It appears that in 1959 or thereabouts the original access to the property was going to be cut off by the flooding of the valley in which the property was situated, presumably as a consequence of the construction of Warragamba Dam. Hence, on 1 June 1959, Mr Miller applied to the Water Board, through his solicitors, to use an alternative access to the north east along the Nattai River to Sheehy's Creek Road. On 19 August 1959, this request was denied by the Water Board. Throughout 1960 and 1961, Mr Miller's neighbour, Mr H C Mallam, made strong and persistent representations to the Water Board for the use of that access via Sheehy's Creek Road, but his request was also denied. 7 On 18 January 1961, in the context of reporting on Mr Mallam's representations, the acting chief maintenance engineer noted that Mr Miller intended to "proceed to make the Starlight Track trafficable". This was a reference to a possible access to the property from the south east. This would comprise the use of a road from Hilltop called Wattle Ridge Road, and thence to the property from a landholding known as "Wattle Ridge" owned by a Mr Coates. Although the distance from Wattle Ridge to the property was about ten kilometres, the terrain was very steep and the actual length of the road would be greater (Mr Scharer's estimate of its ultimate length is 25 kilometres). 8 In December 1961, Mr Miller discussed his proposal with Mr M E T Wootten, who was an officer with the Water Board. On 2 January 1962, Mr Miller wrote to the Water Board putting his proposal, seeking to know whether the Water Board had any objection to the proposal and seeking "help in some way", the latter apparently being a request for financial assistance. 9 Mr Wootten prepared a report on the matter for the signature of the resident engineer of the "headworks" section of the Water Board. The report, dated 12 February 1962, was initialled by Mr Wootten and signed by the resident engineer. The report noted that a detailed contour plan had been prepared by the Water Board upon which Mr Miller had marked the location of the proposed road. In his evidence, Mr Wootten said that a plan showing the access road was prepared by the Water Board and designated PNRC-3-1, and that plan, which was tendered in evidence, bears an endorsement that it was the plan referred to in the report. According to Mr Wootten's evidence, an earlier plan had been prepared about 22 January 1962 by the Water Board and a plan of that description was also tendered, and it shows, marked in red and purple, the route of the road proposed by Mr Miller.

10 The report of 12 February 1962 made the following points: i. A road capable of being traversed by conventional drive truck was proposed, and explosives would be necessary only in one section of it; ii. Construction would "give access to unauthorised persons to the catchment". This could be overcome by a gate on the western side of the Nattai River where the road enters the proclaimed catchment; iii. The Water Board should raise no objection to the construction of the proposed road; iv. The Water Board should consider "help in some way". 11 After consideration of the proposal by the Water Board's chief maintenance engineer and its real estate officer, on 20 March 1962, the Water Board wrote to Mr Miller (under the hand of its secretary), communicating its response in the following terms: The Board will have no objections to your constructing a road, in accordance with the sketch submitted, to provide access to your property on the Allam (sic) River within the Board's Warragamba Catchment Area, provided access to the inner Catchment Area is controlled by a gate on the western bank of the Nattai River. The Board will provide and erect the gate on the understanding that you will ensure it is kept locked. It is regretted that the Board is unable to assist in any way in the construction of the road. 12 On 26 March 1962, the real estate officer of the Board noted that Mr Miller had called in, and that "[h]e is at present negotiating with the Department of Lands re the necessary authority to traverse the Crown lands concerned and will advise the Board when arrangements have been made". Around the same time, the Water Board approved the relocation of the site of the gate. 13 Mr Miller proceeded to construct the road. It took many years to do so, and it was not completed until 1971. During the final stages of construction, Mr Miller erected a gate, which became known as "Miller's Gate". He retained a key and gave a duplicate key to an officer of the Water Board at its request. He handed his key to Mr Scharer when he sold the property to him. 14 The Water Board called the road "W11E". There was evidence from Mr D Ashton, a former employee of the Water Board, that, throughout his employment in various capacities with the Water Board during the period 1968 to 1992, he used the road for Water Board purposes, and, in particular, to collect water samples from the Allum and Nattai Rivers, and to carry out management activities of fire fighting, hazard reduction and pest control. Within the catchment area? 15 In par 9, I referred to two plans prepared by the Water Board. One is designated PNRC-3-1. The other is a plan prepared about 22 January 1962. Both show, outlined in green, an area designated as "Proclaimed Warragamba Catchment Area Boundary". On each of them there is depicted a logging track running from the vicinity of Hilltop, and from the end of that logging track, there is depicted the proposed road. In the first plan, the proposed road is designated as "Road proposed by E B Miller vide letter of 2.1.62". In the second plan, the proposed road is designated as "Road to be constructed by E. Miller". However, in each case the majority of the road is shown beyond, and not within, the area outlined in green. At first glance, the inference might suggest itself that most of the road was not to be constructed within the catchment area. 16 I recalled counsel for the parties and drew this matter to their attention, requesting elucidation. After investigation, both counsel confirmed to the Court that the road was constructed by Mr Miller wholly within the proclaimed catchment area, and Mr Ireland formally read a further affidavit on the matter sworn by Mr Wootten. 17 By reference to the gazetted proclamation of the catchment area on 8 July 1955, which noted the total area of the catchment as being 3383 square miles, Mr Wootten stated that the eastern boundary of the proclaimed catchment area was "well to the east" of the location of the road. He explained that, in 1962, the Water Board used the term "inner catchment" to refer to land proclaimed as a catchment area under s 55 of the MWS&D Act, and the term "outer catchment" to refer to the land added to that catchment area by virtue of a proclamation under s 56A. This evidence is corroborated, first, by reference to a file note dated 19 January 1962, which carries an endorsement under the hand of the chief maintenance engineer dated 2 February 1962 and stating that "[m]uch of the proposal is beyond the 'Inner Catchment' boundary", and, secondly, by reference to the report dated 12 February 1962, to which I have referred in pars 9 and 10, in which the statement is made that "[m]uch of the road is outside the inner catchment area". 18 All this evidence supports the basis upon which the proceedings were conducted, namely, that the whole of the road is situated within the proclaimed catchment area, and it supports an inference that the green markings on the two maps to which I have referred designate the boundary between the inner catchment and the outer catchment. Having regard to this evidence, and in the light of the parties' express adoption of it, I am content to proceed to determine the case on this basis.

Mr Scharer's use of the property and the road - 1973 to 1991 19 Mr Scharer planned to use the property for farming and agricultural activities, and to build a house there. Between 1973 and 1991, he cut some timber from the property and grew some vegetables there. 20 In January 1991, he made a development application for consent to use the property for market gardening and forestry. This was refused in May 1991. In June 1991, he made another development application, this time for approval to erect a dwelling on the property. This was refused in February 1992. 21 Mr Scharer replaced the original Miller's gate, which had been damaged, with a heavier gate. He provided a key to his neighbour, and a key to the Water Board. The lock was replaced from time to time by him initially and later by the Water Board, but on each occasion, he was provided with a key. 22 During the period 1973 to 1991, Mr Scharer maintained the road with the use of earthmoving machinery. The standard of maintenance was not always to the satisfaction of the Water Board. On 19 March 1990, Mr Ashton inspected the road with another Water Board officer, Mr J Mulligan, and they inspected it again on 31 March 1990. On each such inspection, they saw machinery being used to maintain the road, but Mr Ashton's notes record his dissatisfaction with the standard of the work. On the latter inspection, they met Mr Scharer on the property, and, amongst other points of discussion, they asked him to remove old caravans and a campsite used by him but situated outside the boundaries of the property. On 12 April 1990, a meeting on the property took place between Mr Scharer, Mr Ashton and Mr B Waldron, another Water Board employee. That meeting was followed by a letter dated 21 May 1990 from the Water Board to Mr Scharer, in which the Water Board specified remedial works it required to be carried out to the road by Mr Scharer, including the seeding of disturbed areas. According to Mr Scharer, he made arrangements to carry out the remedial work and the seeding, and he removed the caravans and the campsite on to the property. A diary note of Mr Ashton of 30 August 1990 recorded that the work had not been carried out, and a further diary note of 23 October 1990 recorded that the seeding was not carried out until then. However, Mr Ashton recorded that, on an inspection of the property with Mr Mulligan on 27 October 1990, he observed that most of the remedial work had been satisfactorily carried out. 23 On 1 April 1990 Mr Ashton raised the question of the "legal" status of the road. On 23 April 1990, Mr Waldron referred that question to the Water Board's "real property search & drafting". An entry in Mr Ashton's diary for 15 November 1990 records the advice of the Department of Lands that Mr Scharer had no "legal" access to the property via the road, but that it would not deny access to him.

Mr Scharer's use of the property and the road after 1991 24 On 13 December 1991, by proclamation published in the Government Gazette, the Nattai National Park and Wilderness Area were established. The control of the whole area of Crown land including the catchment area passed to the National Parks and Wildlife Service ("the NPWS"). 25 Some time in 1994, the NPWS constructed a second gate on the road, this time about 500 metres from "Wattle Ridge". Initially, the second gate was not locked. However, there were fires in the area in 1997, and the road was damaged. The NPWS took steps to repair the road, and a new Miller's gate was constructed. Both Miller's Gate and the second gate were then locked. 26 On 31 October 1998, Mr Scharer discovered that contractors (whom he believed to be acting under instruction from the NPWS) had carried out work on the road which had the effect of preventing any vehicular access. On 2 November 1998, a letter was sent by Mr G Tedder, district operations manager for the south metropolitan district of the NPWS to Mr D Johnson of the Department of Land & Water Conservation ("DLAWC") in which Mr Tedder confirmed instructions previously given to close the road and overlay it with timber and rock to prevent unauthorised access. Mr Scharer took strong objection to this turn of events, and his protests led to another letter, dated 9 November 1998, being sent by Mr Tedder to Mr Johnson instructing the latter to reopen the road, and stating, amongst other things: "The legality of access along this trail is now under investigation by our legal unit. Until the legal issue is resolved, I am compelled to have the trail reopened". 27 On 23 November 1998, Mr P Stevens, the district manager of the south metropolitan district of the NPWS, wrote to Mr Scharer stating that, until legal issues regarding the road were determined, he would be permitted "temporary access" upon four conditions, namely, that he give prior notice to the NPWS, that he indemnify the NPWS in respect of his use of the road, that he would use the road only for driving to the property, and a key would be issued to be returned to the NPWS after each access. 28 This state of affairs did not suit Mr Scharer, and through correspondence between his solicitors and the NPWS he endeavoured to obtain unrestricted access to the property via the road. This did not eventuate, and on 29 September 1998, he commenced proceedings in the Supreme Court of New South Wales. On 25 October 2000, Santow J order the transfer of the proceedings to this Court (Scharer v State of New South Wales (2000) 111 LGERA 124) and his Honour's order was upheld by the Court of Appeal on 10 October 2001 (Scharer v State of New South Wales (2001) 53 NSWLR 299). Mr Scharer's case 29 Mr Scharer claims that he is entitled to a perpetual and general right of way over the that part of the Crown land which comprises the road. (I will refer to that part as "the roadway Crown land".) 30 The case put by Mr Ireland QC, appearing on behalf of Mr Scharer, may be summarised as follows: i. The events, conversations and dialogue between Mr Miller and the relevant authorities from 1962 until construction of the road and thereafter constituted a proprietary estoppel in favour of Mr Miller and binding upon the Crown; ii. Such proprietary estoppel prevents the Crown from unconscionably insisting on its strict legal right to impede access over the roadway Crown land because of the circumstances in which the Water Board led Mr Miller to believe that he had a right to construct the road and to use it for access to the property; iii. The circumstances were that the Water Board encouraged Mr Miller to construct the road, and he undertook substantial work and detriment in doing so; iv. The equity which thus vested in Mr Miller passed to Mr Scharer upon the transfer of the property to him by virtue of the operation of s 68(1) of the Conveyancing Act 1919; v. Upon the proclamation establishing the Nattai National Park, the right of way continued in force by operation of s 153(3) of the National Parks and Wildlife Act 1974. [This aspect of Mr Scharer's claim was determined by the Court of Appeal in the earlier proceedings (referred to in par 28 above). It was held (by Stein and Hodgson JJA, Davies AJA dissenting) that, where land becomes reserved as a national park, s 153(3) of the National Parks and Wildlife Service Act operates to save and continue any pre-existing easement. The Court of Appeal did not, however, deal with the question (now before this Court) as to whether Mr Scharer's claim to a perpetual and general right of way is established.]

The respondent's case 31 The respondent's case is that a claim based on estoppel has not been established, and Mr Scharer's claim against the respondent must fail. 32 Mr Leeming, appearing for the respondent, submitted that the roadway Crown land was at all times, and still is, vested in the Crown. The Water Board had no power to grant or confer any right of way over the roadway Crown land, although, since the roadway Crown land was part of the Warragamba Catchment Area, the power of the Minister to grant a lease, licence or permit in respect of it required the concurrence of the Water Board under s 55(4) of the Crown Lands Consolidation Act 1913 ("the Crown Lands Act"). 33 The Water Board's dealings with Mr Miller were no more than a non-objection to what Mr Miller proposed to do. They did not constitute a consent to the construction of the road, nor a grant of an interest in the roadway Crown land. 34 Nor is it unconscionable for the Crown to insist upon its legal rights. It has not been established that the Crown (as opposed to the Water Board) encouraged Mr Miller's activities, nor even that it knew of those activities. Furthermore, Mr Scharer purchased the property without any legal title to access (as any solicitor acting upon the conveyance would have known), paid a modest price for it, and proceeded for more than 20 years with an uncertain right to access. These facts establish that Mr Scharer placed no, or limited, reliance on the entitlement which he now claims.

The applicable principles 35 Mr Ireland put Mr Scharer's case upon the basis of proprietary estoppel as formulated by Lord Kingsdown in a statement in his dissenting judgment in Ramsden v Dyson (1866) LR 1 HL 129 at 170. That statement has been applied in succeeding cases, for example, Crabb v Arun District Council (1976) 1 Ch 179, and its more modern formulation is to be found in the following passage from the joint judgment of Mason CJ and Wilson J in Waltons Stores (Interstate) Ltd v Maher and Anor (1988) 164 CLR 387 at 404: The decision in Crabb is consistent with the principle of proprietary estoppel applied in Ramsden v Dyson . Under that principle a person whose conduct creates or lends force to an assumption by another that he will obtain an interest in the first person's land and on the basis of that expectation the other person alters his position or acts to his detriment, may bring into existence an equity in favour of that other person, the nature and extent of the equity depending on the circumstances. And it should be noted that in Crabb , as in Ramsden v Dyson , although equity acted by way of recognizing a proprietary interest in the plaintiff, that proprietary interest came into existence as the only appropriate means by which the defendants could be effectively estopped from exercising their existing legal rights. 36 These and other relevant authorities are discussed in Clancy and Anor v Salienta Pty Ltd and Ors [2000] NSWCA 248 - see in particular, the judgment of Beazley JA at pars 37 - 51, and the judgment of Giles JA at pars 165 - 168. At par 168 Giles JA noted: What is essential is unconscionability. If on the faith of an expectation created or encouraged by the defendant the plaintiff expends money on the defendant's land, and it would be unconscionable in the circumstances for the defendant to assert his legal ownership of the land without recognition of the expenditure, a court of equity may give a remedy to the plaintiff. The remedy may be by compelling the defendant to give effect to the expectation. It need not be so: for example, it may be that the plaintiff's equity will be satisfied by a charge over the land for the expenditure. 37 The following passage from the judgment of Lord Scarman in Crabb v Arun at pp 192 - 193 seems to me, with respect, to be particularly pertinent to the questions for determination in the present proceedings. His Lordship described the cause of action before the English Court of Appeal as follows: The plaintiff and the defendants are adjoining landowners. The plaintiff asserts that he has a right of way over the defendants' land giving access from his land to the public highway. Without this access his land is in fact landlocked, but, for reasons which clearly appear from the narration of the facts already given by my Lords, the plaintiff cannot claim a right of way by necessity. The plaintiff has no grant. He has the benefit of no enforceable contract. He has no prescriptive right. His case has to be that the defendants are estopped by their conduct from denying him a right of access over their land to the public highway. If the plaintiff has any right, it is an equity arising out of the conduct and relationship of the parties. In such a case I think it is now well settled law that the court, having analysed and assessed the conduct and relationship of the parties, has to answer three questions. First, is there an equity established? Secondly, what is the extent of the equity, if one is established? And, thirdly, what is the relief appropriate to satisfy the equity? 38 The relief appropriate to satisfy the equity, if it has been established, depends on the circumstances. The Court must look at the circumstances in each case to determine the extent of the equity, and the appropriate relief to satisfy it - Plimmer and Anor v The Mayor of Wellington (1884) 9 App Cas 699 at 713 - 714; Inwards and Ors v Baker (1965) 2 QB 29 at 37.

An equity established? 39 That passage I have quoted from Crabb v Arun in par 37 above describes the situation which has arisen here. The property is landlocked. Mr Scharer has no grant of a right of way, nor an enforceable contract. He has no prescriptive right since, by virtue of s 178 of the Conveyancing Act, mere use of land will not constitute an easement by prescription against the Crown. To succeed in gaining a right of unimpeded access to the property, therefore, Mr Scharer must establish that he has an equity arising out of the conduct and relationship between Mr Miller and the Water Board, which passed to him upon his acquisition of the property by the operation of s 68 of the Conveyancing Act. 40 I return to the facts as found. The Water Board had knowledge of what Mr Miller proposed. Its officers discussed his proposal with him, and they themselves prepared the formal plans that showed the proposed location of the road. His proposal was formally reported upon and considered at various levels within the Water Board. Furthermore, an inference can be drawn that the Water Board encouraged Mr Miller in the implementation of his proposal. The Water Board was well aware that the proposal was made in the context of its refusal to him and to Mr Mallam (despite the latter's vigorous representations) to permit them use the only other available access to the north east via Sheehy's Creek Road. And it not only drew up formal plans for the location of the road, it prescribed the installation of a gate as a condition of it raising no objection to the construction and use of the road. It conveyed its position in clear terms in its letter of 20 March 1962. On the faith of that encouragement and knowledge, Mr Miller went ahead and constructed the road, no doubt at some cost and with considerable difficulty, considering the terrain. Thereafter, the Water Board gave the road a formal number, W11E, and itself used the road for access. Furthermore, on the faith of the encouragement and knowledge I have described, Mr Miller and subsequently Mr Scharer used the road for access to the property, and maintained it, for more than 30 years. 41 I do not accept the respondent's assertion that Mr Scharer placed no, or limited, reliance on the entitlement he now claims (see par 34). There is no evidence to show that he paid a modest price for the property, or that he was aware that he had no formal legal right to access. He used the road for access, and, until the NPWS took steps in 1998 to obstruct access, neither the Water Board nor the NPWS led him to believe the access was in jeopardy. 42 I would have no hesitation of holding, on these facts, that the conduct of the Water Board and the relationship between it and Mr Miller established an equity in favour of Mr Miller against which it would be unconscionable to assert strict legal rights. The equity consisted of a right to enter upon the Crown land, to construct a road upon the Crown land roadway, to maintain the road, and to use it as a means of permanent access to the property. Although Mr Leeming submitted that, if any equity were established, it could be no more than a mere licence to use the Crown land roadway, I think that the inescapable inference from the facts and circumstances of the case is that the equitable interest is akin to a right of way - Mr Miller acted on his understanding that he could pass and repass, with or without vehicles, over the road he had constructed. 43 However, that conclusion raises three further issues in this case. The first is the position of the Crown. The Water Board was not the legal owner of the Crown land roadway: that land was vested in the Crown. In that circumstance, the question arises - was the interest of the Water Board in that land sufficient to establish an equity in Mr Miller's favour? The second question is related to the first. Do the provisions of the Crown Lands Act operate to defeat the establishment of any equitable right, or to restrict the equitable relief which may be granted? The third question concerns the environmental consequences of the use of the road, and whether, and to what extent, those consequences should be taken into account in moulding relief to satisfy the equitable interest. I deal with each question in turn.

The position of the Crown 44 No question about the position of the Crown would arise if, by its own conduct and relationship with Mr Miller, the Crown itself encouraged the construction and use of the road and Mr Miller had proceeded upon the faith of the Crown's involvement as well as that of the Water Board. Endeavours were made to obtain relevant records from the Department of Land and Water Conservation, but to no avail - it stated in a letter dated 10 January 2000 to the NPWS that early records relating to the construction of the road were not available from its office. 45 The only evidence about the involvement of the then Department of Lands is a note dated 26 March 1962 signed by the real estate officer of the Water Board. I have referred to it in par 12. It states that Mr Miller had called in and seen the real estate officer, and it contains the statement, referring to Mr Miller, that "[h]e is at present negotiating with the Department of Lands re the necessary authority to traverse the Crown lands concerned and will advise the Board when arrangements have been made". This does not prove any relevant fact. It does not prove and the Court cannot infer that Mr Miller actually negotiated with the Department of Lands about the proposal to construct and use the road; or that the Department knew of that proposal, or that, if it did, what action or non-action it took in regard to it. On the obverse side, it does not prove that the Department of Lands denied any authority to construct and use the road. 46 On the evidence, then, the Court is not able to conclude that there was any relevant involvement of the Crown directly with Mr Miller. However, that is not the end of the matter. There was, as I have found, an involvement of the Water Board and Mr Miller. The question then is whether the Water Board was the Crown, or was acting on behalf of the Crown. The answer to this question depends upon consideration of the MWS&D Act and the Crown Lands Act. 47 It is clear, I think, that the Water Board was not itself the Crown. There was no provision in the MWS&D Act stating that the Water Board constituted pursuant to its provisions was the Crown. An inference to the contrary may be derived from the constitution of the Water Board, for under s 7 there were to be seven members of the Water Board, two to be appointed by the Governor, and the remaining five members to be elected for constituencies and in accordance with a specified procedure. Mr Leeming pointed to the judgment of Meagher JA in Sydney City Council v Reid (1994) 34 NSWLR 506 at 521, where, in dealing with the issue as to whether employees of a municipal council are "in the service of the Crown", his Honour pointed out that "[t]he aldermen of a council are elected by popular suffrage, not appointed by the Crown." 48 It is necessary, then, to consider the powers and duties of the Water Board under the MWS&D Act, especially in relation to catchment areas. 49 Pursuant to s 7 of the MWS&D Act, the Water Board was established to carry out the provisions of that Act. Section 30 conferred upon it general powers with respect to the supply of water, sewerage and drainage. Division 4 of pt IV contained provisions relating to water supply, and one of those provision was s 55, which, as I have earlier said, authorised the establishment of catchment areas by proclamation. 50 Section 55(4) provided as follows: (4) It shall not be lawful - (a)(i) to make any conditional or other sales under the Crown Lands Consolidation Act 1913, as amended by subsequent Acts, of any Crown lands within any catchment area other than Crown lands within a city, town or village; (ii) … (b) except with the concurrence of the board and subject to such conditions as the board may determine - (i) to grant any lease, license (sic) or permit under the said Act, as so amended, of any Crown lands within any catchment area. 51 Section 56 of the MWS&D Act set out the powers of the Water Board exercisable with respect to a catchment area for the purpose of preservation of the purity of the water supply and the prevention of the pollution of the catchment area. Included amongst those powers was the general power specified in s 56(2)(n) expressed in the following terms: (n) and generally to control and regulate or prohibit the doing or continuance of anything likely to cause the pollution of a catchment area or the water supply. 52 Furthermore, the Water Board was deemed to have all the powers conferred upon trustees under the Crown Lands Act. Thus, s 56(4) of the MWS&D Act relevantly provided as follows: 56(4) The board may, upon Crown lands, dedicated lands, or resumed lands upon any catchment area, assume all the rights, powers, obligations, privileges, and immunities as are conferred or imposed upon trustees by the … Crown Lands Consolidation Act, 1913, and shall require no further warrant than this Act so to do … 53 One of the provisions of the Crown Lands Act, in force during the relevant time of the relationship between Mr Miller and the Water Board, was s 26 (1) which empowered the Minister to appoint trustees "… to be charged with the care and management …" of certain lands. Section 26(2) relevantly provided as follows: (2) Trustees appointed under subsection one of this section…may make rules and regulations for and with respect to - (a) the care, control and management of the land of which they are the trustees; (b) the regulation of the use and enjoyment of such land; … 54 In my opinion, the provisions of both Acts which I have outlined make it clear that the Water Board represented the Crown in relation to Crown lands within the catchment area. It had the powers of a trustee in relation to the Crown land; and it had the care, control and management of the Crown land, including the power to regulate the use and enjoyment of the Crown land. 55 Certainly the Water Board held itself out as having control of the proclaimed catchment area including the Crown land within it. It dealt with both Mr Miller and Mr Mallam on that basis. In a letter dated 19 August 1959 written to Mr Miller's solicitors in relation to the initial proposal to use Sheehy's Creek Road for access, the Water Board stated that it was "… unable to see its way to grant permission for Mr E B Miller to use its land for the purpose of gaining access …". It wrote in similar terms to Mr Mallam on 21 December 1960 - the following passages from that letter are relevant: As I have mentioned, it is imperative that everything possible be done to maintain the purity of the water supply, and with this in view the Board has established the two mile zone within which no activities by the public are permitted … The track you desire to use crosses the river at several points and runs parallel and close to the river for practically the whole of its distance. Even if cattle were transported by a float a definite hazard would still exist, which would be increased upon the Dam reaching full storage. In any case any relaxation of the Board's general policy in your case would surely weaken its control of the Warragamba Catchment, as it would be difficult to refuse other similar requests from people who could be encouraged to take the view that they had right to take up property in the valley and claim the same right of access. As I have already mentioned, one nearby owner has already been refused permission to use the Board's road. 56 I conclude from this analysis that, although the Water Board was not itself the Crown, it represented the Crown, and, in the circumstances of its power and exercise of control over the Crown lands in the catchment area, an equity in favour of Mr Miller was capable of being established against which it would be unconscionable for the Crown to insist on its strict legal rights.

The Crown Lands Act 57 It was put on behalf of the respondent by Mr Leeming that s 6 of the Crown Lands Act operated to prohibit the grant of any interest in the Crown land roadway by the Water Board and hence no equitable interest could arise in favour of Mr Miller. 58 Section 6 provided as follows: 6 Crown lands shall not be sold leased dedicated reserved or dealt with except under and subject to the provisions of this Act. 59 In Fensom and Anor v Cootamundra Racecourse Reserve Trust and Ors [2000] NSWSC 1072, Bryson J, at par 5, said that s 6 "… should be regarded as a constitutional principle for New South Wales" and that it had the effect of requiring all dealings with Crown land to be made in accordance with statutory authority. 60 The decision in Chalmers v Pardoe (1963) 3 All E R 552 is of a similar tenor. Mr Pardoe had a lease of certain land in Fiji, and he entered into an arrangement with Mr Chalmers whereby the latter would erect buildings on part of that land upon the basis that Mr Pardoe would either sublease that part to Mr Chalmers and surrender that part so that Mr Chalmers could himself obtain a lease of it. When the parties fell into disagreement, Mr Chalmers claimed an equitable charge on the land for the cost of the buildings he had erected. There was a relevant statutory provision to the effect that it was unlawful for any lessee to alienate or deal with the land comprised in his lease, "… whether by sale, transfer or sublease or in any other manner whatsoever …" without the consent of the Native Land Trust Board. The Privy Council held that the arrangement between the parties was a dealing with the land within the terms of the statutory provision, and, since the consent of the Board had not been obtained, the dealing was unlawful. Accordingly, it was held that equity could not lend its aid in implementing an unlawful transaction. 61 In my opinion, however, the contention that the Crown Lands Act defeats the establishment of an equity cannot be sustained in this case. As authorities such as Plimmer v Mayor of Wellington, Inwards v Baker and Crabb v Arun establish, it is necessary to determine, on the relevant facts and circumstances of each case, the extent of the equity established by the conduct and relationship of the parties. Here I have found (see par 42) that what was established was an equitable interest in the nature of a right of way. There was nothing akin to sale, lease, dedication or reservation of the Crown land. Nor was there a dealing with the Crown land in the sense of any similar alienation or disposal. It is this which distinguishes both Fensom v Cootamundra Racecourse and Chambers v Pardoe. In the former case, the plaintiffs' claim was, amongst other things, based on a contention that they should have been entitled to a long term lease of the caretaker's cottage on the racecourse, but, as Bryson J pointed out in par 74, it was beyond the capacity of the racecourse trust "to confer any lease or other interest". In the latter case, the statutory prohibition was against alienation or dealing in any manner whatsoever, and the House of Lords held that the particular arrangement was a dealing in the terms of the prohibition. 62 The approach that I have taken is analgous to the approach taken by the Full Court of the Supreme Court of Queensland in Wood v Browne (1984) 2 Qd R 593. In that case the question was whether an equity established upon the principle set out in Ramsden v Dyson would be defeated by the operation of the Land Act 1962 (Qld). Campbell CJ (with whom Kelly J agreed) and Macrossan J both proceeded first to determine the precise nature of the interest acquired by the appellants which equity would protect. It was held that the interest was not a lease, but rather a licence. Their Honours then considered the particular provisions of the Land Act and held that the legislation did not take away the power in the lessee to create and dispose of interests other or lesser than a transfer, assignment of a lease, sublease, mortgage, charge, easement or subdivision (see Campbell CJ at p 602, Macrossan J at p 608). 63 I think, however, that there is an alternative basis upon which to conclude that the Crown Lands Act does not operate to defeat the establishment of the equitable interest in this case. I am of the opinion that the Water Board's conduct in acquiescing in Mr Miller making and using the road was not unlawful and that it was, as s 6 contemplates, done "under and subject to the provisions of…"that Act. This is the consequence of s 56(4) of the MWS&D Act conferring upon the Water Board the powers of a trustee under the Crown Lands Act. By operation of s 26(1) of the Crown Lands Act, the Water Board was "charged with the care and management" of the Crown land in the catchment area. In that respect, it had, under s 26(2)(b), the power to make rules and regulations for the use and enjoyment of that Crown land. 64 It is true that s 26(2) did not, in terms, confer upon trustees any power to grant an interest in Crown Land. It is also true that the power conferred upon them by s 26(2) was to "… make rules and regulations for and with respect to …" the matters there specified. Moreover, there was no evidence that the Water Board had made any rule or regulation regarding the use and enjoyment of the Crown land roadway which met the formalities (as to publication and laying before Parliament) prescribed in that connection by s 26(3). However, the Water Board was acting with respect to the care and management of the Crown land, by raising no objection to the road and by requiring, as a condition of its acquiescence, the locking of a gate and, thereafter, the maintenance of the roadway. I accept Mr Ireland's submission that s 26(1) and (2) gave the Water Board a statutory warrant to act as it did, and its actions were not, therefore, unlawful.

Environmental consequences 65 Evidence was given by Mr M J Patrick, who is employed as Regional Manager South with the NPWS. He explained that the Nattai National Park and adjacent National Park reserves are included within the Greater Blue Mountains World Heritage Area and that part of the Nattai National Park was declared as a Wilderness Area in 1991. The Crown land roadway therefore falls within both the World Heritage Area and the Wilderness Area, and, as a consequence, it is subject to significant environmental and biodiversity protection. 66 Mr Patrick put a case for the road to be closed and rehabilitated. He asserted that:

i. The road is situated within an area of important habitat; ii. The road is frequently illegally accessed by recreational vehicles, leading to significant impact in terms of erosion; iii. Road maintenance increases sedimentation and turbidity in adjacent creeks, with consequences for Warragamba Dam; iv. The steepness of the road makes use of it unsafe; and works to ensure that it is safe will require substantial outlay; v. The use of the road increases the risk of fire ignition; and vi. Closure would be consistent with the Nattai Reserves Plan of Management. 67 Mr Leeming relied upon Mr Patrick's evidence, which was unchallenged, to submit that, if an equity was established in Mr Scharer's favour, the relief which should be granted should be no more than a licence to use the road for access. 68 It seems to me, however, that the matters raised by Mr Patrick are matters of management rather than irremediable consequences of the use of the road. In par 10 of his affidavit of 15 August 2002, Mr Patrick called them "… significant environmental management issues for the National Parks and Wildlife Service". In its dealings with Mr Miller, the Water Board was aware of some of these issues (see pars 10 and 11), and, for example, it insisted on a locked gate so as to restrict unlimited use of the road. Furthermore, it required maintenance of the road (see par 22) and, in my opinion, that requirement should be maintained. No doubt the continued use of the road will result in maintenance costs for both Mr Scharer and for the NPWS. But that does not require the Court to refrain from granting relief. 69 Nor do I think that a mere licence will satisfy the equity. Mr Miller and Mr Scharer invested time and money in the construction, use and maintenance of the road, successively for over 30 years, on the assumption that they would have a right of way. The form of relief does not necessarily require the making good of that assumption (The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 412, 443, 445 and 487) and some lesser basis for relief may, in some cases, be appropriate (Giumelli and Anor v Giumelli (1999) 196 CLR 101). 70 But nothing in the evidence of Mr Patrick nor in the Nattai Reserve Plan of Management provides any foundation, in my opinion, for less than the making good of the assumption, and the "minimum equity" to do justice to Mr Scharer is a grant of a right of way (cf Crabb v Arun at p 198; Hill v AWJ Moore & Co Pty Ltd (1990) 5 BPR 11359 at p 11365).

Summary 71 For the foregoing reasons, I hold that the Mr Scharer has established a case of proprietary estoppel against the Crown. I find that an equity has been established in favour of Mr Miller, which passed by operation of s 68(1) of the Conveyancing Act to Mr Scharer upon the latter's acquisition of the property. I further find that the equity so established consists of a perpetual and general right of way over that part of the Crown land now included in the Nattai National Park upon which the road known as W11E is constructed (as is shown on the map PNRC-3-1 referred to in par 9), and that the right of way now exists in favour of Mr Scharer, and his successors, assigns and invitees. The right of way is subject, first to a condition that it is to be maintained by Mr Scharer to the reasonable satisfaction of the NPWS and, second, to a condition that the gates are to be kept locked. I conclude that the Court should make orders appropriate to satisfy that equity. 72 In this connection, as I have pointed out in par 2, Mr Scharer sought an order that the respondent be restrained from obstructing the right of way, and an order requiring the respondent to furnish him with a key to the locks securing the two gates constructed across the right of way. 73 I would not wish to make an order restraining the respondent from obstructing the right of way. Whilst the prayer for such an order may have been provoked by the NPWS's actions in 1998 in placing rocks and timber across the road, I would expect it now to act in accordance with this Court's declaration of the existence of the equitable interest in favour of Mr Scharer. The correspondence to which I have referred in pars 26 and 27 suggests that it would do so if the legal position was established. 74 For the same reason, it is probably unnecessary to order the provision of a key to the locks on the two gates. However, it would be appropriate to make such an order so as to make it clear that the access is available to Mr Scharer and his invitees and not to anyone else, that being a condition imposed by the Water Board in its dealing with Mr Miller.

Damages 75 Mr Scharer sought the payment to him of damages allegedly suffered by him as a consequence of the obstruction of the road by the NPWS in 1998. Mr Ireland informed the Court during the hearing that Mr Scharer claimed the amount of $10,000 in this respect. The respondent opposes that claim. 76 No particular evidence was furnished to sustain this claim except as set out in Mr Scharer's affidavit sworn on 26 November 2002. He stated that, over the last four years, he has been inconvenienced by the necessity of collecting two keys from the office of the NPWS. On weekends this is sometimes impossible, and it has destroyed his flexibility in visiting the property at short notice. He stated that this need to make formal arrangements for the collection of keys has had "a stifling effect on my ability to visit and enjoy" the property, and has been "significantly detrimental" to his ability to use the property. 77 I am not prepared on these grounds to order damages in Mr Scharer's favour. The evidence does not establish a loss suffered by him which I would regard as compensable. He has not been prevented from using the road for access, although he has been inconvenienced and denied some flexibility of use by the arrangements required by the NPWS. There is, moreover, no evidence as to how the amount of $10,000 is calculated.

Conclusion 78 I direct the parties to bring in short minutes of orders within 14 days to give effect to this judgment and in particular to the proposed relief which I have outlined in pars 71 - 74.

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