Tujilo v Watts

Durack v De Winton (1998) 9 BPR 16,403 In re Ellenborough Park [1956] Ch 131 Illawong Village Pty Ltd v State Bank of New South Wales [2004] NSWSC 18 In Re Lewis [1959] NZLR 1040 Loclot Pty Ltd v Pullen (2003) 56 NSWLR 592 CASES CITED : Manly Properties Pty Ltd v Castrisos & Others [1973] 2 NSWLR 420 Re Mason and the Conveyancing Act (1960) 78 WN (NSW) 925 Mogensen v Portuland Developments Pty Ltd (1983) NSW ConvR 55 116 Re Parimax (SA) Pty Ltd (1954) 72 WN (NSW) 386 Stannard v Issa [1987] 1 AC 175 Webster v Bradac (1993) 5 BPR 12,032

Tujilo Pty Limited - Plaintiff Martin Jeremy Watts - First Defendant Gail Amanda Thompson - Second Defendant Brian Robert Knight - Third Defendant PARTIES : Barbara Dawn Knight - Fourth Defendant Alexander Craig McMorron - Fifth Defendant Jennifer Victoria McMorron - Sixth Defendant Judith Mary Howell - Seventh Defendant

M Tyson - Plaintiff COUNSEL : M J Watts - First Defendant M K Meek - Second to Sixth Defendants

Davidsons Solicitors - Plaintiff SOLICITORS : In person - First Defendant Robert T Dunn & Co - Second to Sixth Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

2430/04 TUJILO PTY LIMITED v MARTIN JEREMY WATTS & ORS JUDGMENT HIS HONOUR: Nature of the Application 1 This is an application for the court to modify, and to extinguish in part, certain easements. Lie of the Land, and Title to the Land 2 The plaintiff is the registered proprietor of a rural property known as "Milton Park", located outside Bowral. On it is erected what was once a grand country home. The original building has been added to, and is now used as a hotel and conference centre. The immediate vicinity of the hotel buildings includes extensive landscaped gardens. Other parts of the site include paddocks used for grazing cattle. 3 In July 1985 development consent was granted by the Wingecarribee Shire Council ("the Council") to the then owner of Milton Park to construct forty-four holiday houses. The then owner decided to implement that consent in two stages. As the first stage, twenty dwellings were constructed. Some of those dwellings were single storey, some one and a half storey, some two storey. The internal living space in those houses lay in the range from 180 to 210 square metres. The land on which those twenty houses were built came to be the subject of its own strata plan, Strata Plan 32202. 4 It appears that the intention of the then owner of Milton Park was to construct the dwellings making up the second stage of the development approval in a similar style to the dwellings in the first stage. The then owner intended to construct the second stage on a lot which was some distance removed from the location of the first twenty dwellings. To that end, Deposited Plan 740232, registered on 17 March 1987, divided Milton Park into three lots. Lot 1 was the site where the first twenty dwellings were to be constructed. Lot 2 was the site where the remainder of the dwellings were to be constructed. Lot 3 was the remainder of the Milton Park land. 5 By November 1987 Strata Plan 32202 had been lodged with the Registrar General, relating to Lot 1 in DP 740232. 6 In November 1987 Deposited Plan 640513 was registered. An instrument under section 88B Conveyancing Act 1919 registered with that plan created three different easements, which I will refer to as the "First Easement", the "Second Easement" and the "Third Easement". The benefit of each of those easements was conferred on each of the lots in SP 32202, and on Lot 2 in DP 740232. Those easements were each over different parts of Lot 3 in DP 740232. 7 The layout of the lands benefited and burdened by the three easements appears from the following plan.

Subject to two exceptions mentioned later, a place is subject to one of the easements if it can be reached on this plan by going from one of the sets of words "easement for recreational purposes" to that place without crossing an unbroken line. 8 The First Easement had as its servient tenement an irregular shaped parcel of land immediately to the south of SP 32202. It conferred a right to enter and enjoy for recreational purposes the area occupied by the landscaped gardens at Milton Park. It is not in contention in these proceedings. 9 The Second Easement was granted over land lying roughly to the north, north-east and west of the strata plan site. The boundary between the Second Easement and the Third Easement was the road which runs roughly in a north-south direction in the northern part of Lot 3, and a line running from the southern end of that road to the north-eastern corner of the Strata Plan site. 10 The Second Easement is in these terms. "Full and free right for the proprietor as hereinafter defined of each of Lot 2 in DP740232 and Lots 1 to 20 (inclusive) in SP32202 and his visitors and tenants in common with all other persons having like rights, at his or their own risk, to enter upon and enjoy for recreational purposes on foot and without vehicles or animals between sunrise and sunset on each day, that part of the Lot burdened as is indicated in the abovementioned plan but subject to the following conditions, which conditions shall also constitute and be covenants and agreements by and between each proprietor of the Lots benefited and the proprietor of the Lot burdened, with the intention that the benefit and burden of such covenants and agreements shall pass with the benefit and burden of this Easement:- (a) The right hereby conferred upon each proprietor of the Lots benefited shall be shared in common with the proprietor of the Lot burdened, its servants, agents, visitors, guests and all persons authorised by it; (b) The proprietor of the Lot burdened reserves the right at any time in the future to further develop the Lot burdened by the construction or creation thereon of recreational and/or sporting facilities which facilities will be subject to the rights hereby conferred upon each proprietor of the Lots benefited but subject to such rules and regulations respecting the user and enjoyment for the purposes aforesaid as may from time to time be made by the proprietor of the Lot burdened. (c) Each proprietor of the Lots benefited shall not authorise more than 10 persons being visitors or tenants to exercise at any one time the rights hereby granted; (d) The proprietor of the Lot burdened reserves unto itself the right to increase the capacity of its existing sewage treatment, water, gas, telephone and electricity services and appurtenances thereto, to the extent that the expansion of such services may be necessary for the purposes of Lots 1 (now being the land in SP32202), 2 and 3 in DP740232 or any of them, and the improvements erected thereon from time to time. (e) The word "proprietor" where used herein shall include the registered proprietor of the Lot, his executors, administrators, successors, transferees or assigns and in the event that the Lots benefited or any of them shall be further subdivided the proprietor of each new Lot thereby created shall be a proprietor of the Lots benefited for the purpose of this Easement." The plaintiff seeks to make some changes to this easement. The defendants question whether those changes are ones the Court has power to make, but take the stance that if the power exists, they are indifferent to whether or not it is exercised. 11 The Third Easement is over land which very nearly completely surrounds Lot 2 in DP 740232. That easement is one which the plaintiff seeks to have extinguished in part. The defendants challenge both the existence of the power in the Court to make those changes, and whether the changes should be made. 12 The Third Easement is in the following terms. The italicised portions of the text are the parts which are different to the text of the Second Easement. "Full and free right for the Proprietor as hereinafter defined of each of Lot 2 in DP740232 and Lots 1 to 20 (inclusive) in SP32202 and his visitors and tenants in common with all other persons having like rights, at his or their own risk to enter upon and enjoy for recreational purposes on foot and without vehicles or animals between sunrise and sunset on each day, that part of the Lot burdened as is indicated in the abovementioned plan but excluding therefrom the Conference Centre Building, the Conference Centre Annex, the two (2) cottages and fenced in grounds thereof, the three (3) machinery/farm storage sheds, the water reservoir, the two (2) tennis courts, the swimming pool and the gymnasium building which are erected thereon and subject to the following conditions, which conditions shall also constitute and be covenants and agreements by and between each proprietor of the Lots benefited and the proprietor of the Lot burdened, with the intention that the benefit and burden of such covenants and agreements shall pass with the benefit and burden of this easement:- (a) The right hereby conferred upon each proprietor of the Lots benefited shall be shared in common with the proprietor of the Lot burdened, its servants, agents, visitors, guests and all persons authorised by it; (b) The proprietor of the Lot burdened reserves the right at any time in the future to further develop the Lot burdened by the construction or erection thereon of recreational and/or sporting facilities which facilities will be subject to the rights hereby conferred upon each proprietor of the Lots benefited but subject to such rules and regulations respecting the user and enjoyment for the purposes aforesaid as may from time to time be made by the proprietor of the Lot burdened. (c) Each proprietor of the Lots benefited shall not authorise more than 10 persons being visitors or tenants to exercise at any one time the rights hereby granted; (d) The proprietor of the Lot burdened reserves the right at any time in the future to:- (i) Construct a swimming pool whether indoor or outdoor and/or up to two (2) tennis courts together with associated facilities upon that part of the Lot burdened shown as "swimming pool and tennis court area" and upon the commencement of construction of any swimming pool or tennis court the rights hereby created shall be terminated in respect of the said swimming pool and tennis court area; (ii) Erect or construct works from time to time upon the Lot burdened for the purpose of permitting and facilitating further developments of the Lot burdened as an hotel, tourist resort, and conference centre and upon the commencement of the erection or construction of works as aforesaid, the rights hereby granted shall be terminated in respect of those parts of the Lot burdened upon which such works are or are to be erected or constructed; (e) The word "proprietor" where used herein shall include the registered proprietor of the Lot, his executors, administrators, successors, transferees or assigns and in the event that the Lots benefited or any of them shall be further subdivided the proprietor of each new Lot thereby created shall be a proprietor of the Lots benefited for the purpose of this easement." (Italics added) The part of the Lot burdened shown as "swimming pool and tennis court area" is the square area shown on the plan at para [7] above, immediately to the south of Lot 2 in DP 740232. I will refer to it as the "SPA" . I will refer to the area occupied by the Conference Centre Building, Conference Centre Annex, the two cottages and fenced in grounds thereof, the three machinery/farm storage sheds and the water reservoir as the "Existing Buildings Area" or "EBA" . The EBA is not shown on the plan at para [7] above. The SPA and the EBA are the two exceptions to the principle that a place within Milton Park is subject to an easement if it can be reached from one of the sets of words "easement for recreational purposes" in the plan at para [7] without crossing an unbroken line. 13 Since the three easements were created, there have been some changes to the boundaries of the lots within the Milton Park property. The proprietors of Strata Plan 32202 have had the boundaries of the common property owned by that strata plan extended somewhat. As well, Lot 2 in DP 740232 has been almost completely included in a larger lot, Lot 306 in DP 1040419. 14 The following diagram shows in cross-hatching, at least approximately, the areas which have been added to that owned by the proprietors of Strata Plan 32202. 15 At the time that the alteration of boundaries of land owned by the strata plan occurred, there was no extinction of the Second Easement over any of the cross-hatched areas. Thus, the cross-hatched areas remain subject to that easement. Insofar as the proprietors of individual lots in SP 32202 were the beneficiaries of the Second Easement over those cross-hatched areas, the continuance of the easement was of little practical consequence, as it gave them the right to carry out recreational activities on land which had come to be owned by the body corporate of SP 32202, and held by it as agent for the individual lot owners: section 20 Strata Schemes (Freehold Development) Act 1973. However, insofar as the proprietor of Lot 2 in DP 740232 was the beneficiary of the Second Easement, it continued to have the rights conferred by that easement over the cross-hatched area. 16 The relationship between the boundaries of the former Lot 2 in DP 740232, and Lot 306 in DP 1040419 are shown, at least approximately, in the following diagram. 17 Each of the areas shaded in single line and marked E1, E2, and E3 is an area which is inside the boundaries of Lot 306 in DP 1040419, but was formerly outside the boundaries of Lot 2 in DP 740232. The triangular area marked C1, which is cross-hatched and appears at the western end of the northern-most part of the diagram, is an area which was formerly inside Lot 2 of DP 740232, but is now outside Lot 306 in DP 1040419. 18 There are two small triangular areas, marked C2(a) and C2(b), on the northern and western boundaries of Lot 306. Each of those triangles is an area which was contained in Lot 2 of DP 740232, but is now outside Lot 306 in DP 1040419. 19 At no time have the areas marked E1, E2 and E3 been excluded from the areas which are the subject of the Third Easement. For a time the folio identifier relating to Lot 306 in DP 1040419 did not show that areas E1, E2 and E3 were burdened by the easement, but that omission has now been corrected by the Registrar General, in exercise of his administrative power under section 12 Real Property Act 1900 to correct errors and omissions in the register. 20 In the south-eastern corner of the diagram in para [16] above there is a square the eastern and western sides of which are indicated with broken lines. That square is, at least approximately, the area which was the SPA in DP 640513. Thus, the shaded portion of that square is now included in Lot 306 in DP 1040419. The unshaded portion of the square, C3, remains outside Lot 306. Amendments to the Development Approval 21 The development approval for the second stage of the development, dated 2 July 1985, described the purpose of the development as being "stage II of the Development - 44 Strata Title Villa Units and Arts & Craft Centre". 22 On 19 December 2000 the Council modified the development consent again, as follows: "Purpose of Development - Stage 2 of Development Forty Four (44) Strata Title Villa Units in accordance with amended plans prepared by John R Webb & Associates Job No 00/2486 sheets 1-12 dated June 2000"

Those plans showed twenty four houses, some freestanding and others semi-detached. 23 On 24 October 2002 the Council modified the development application so that the purpose of the development was "Stage (2) (18 villas) of the development of forty-four (44) (Stage 1 comprises 20 completed Villas) Strata Title Villa Units in accordance with amended plans prepared by King Design". The precise plans referred to were then identified with greater particularity. 24 On 15 January 2004 the Council issued a certificate granting approval for the construction of development, described as follows: "Purpose of use/building: Nineteen (19) Dwellings, Pool House, Tennis Shelter, Tennis Court and Workshop - in accordance with plans prepared by King Design …"

The particular plans were then identified. 25 The plan to which the approval for nineteen dwellings related showed two of those dwellings erected completely within area E1, and nearly all of a third dwelling within E1. It showed the whole of one dwelling and part of another within E2, and a small part of a patio or tiled surround of a third dwelling within E2. It showed part of a dwelling within that part of E3 which was once part of the SPA, but also showed a tennis court constructed at least partly within that area. 26 Both the development consent of 24 October 2002, and the certificate approving construction dated 15 January 2004, contained a condition stating expressly that the approval granted by the Council did not consider or negate or vary any easement. 27 Recently the plaintiff has built a "demonstration home" on a part of Milton Park which is not affected by the easements. It is an example of the type of home which the plaintiff is planning to construct on Lot 306. The footprint area of the "demonstration home" is about 340 square metres. It has an upper storey, of the type formed by dormer windows piercing the roofline. The combined area of the two levels is in the order of 500 square metres. It has a three car garage, of an area of approximately 77 square metres. Thus, it is significantly larger than the dwellings in the strata plan (para [3] above). The Orders the Plaintiff Seeks 28 The orders which the plaintiff claims are ones which would have the following effect:

Extinguishing the easements which the strata lot owners have over the areas E1, E2 and E3.

Extinguishing the easements which the owner of the original Lot 2 in DP 740232 has over the areas which are now part of the common property of Strata Plan 32202, namely E1/32202, E2/32202 and E3/32202.

Adding the areas C1, C2(a) and C2(b) to the area over which the proprietors of lots in the strata plan can exercise rights in terms of the Third Easement.

Releasing the power which the owner of the former Lot 2 in DP 740232 had, under Clause (d)(i) of the Third Easement, to construct a swimming pool and/or tennis courts within the part of the SPA which is C3 (the irregular shaped lot of land immediately to the west of E3) and thereby bring to an end the Third Easement over C3.

Conferring on the proprietors from time to time of E1, E2 and E3 easements equivalent to the First Easement, the Second Easement, and the Third Easement, but with the areas to which those easements extend modified, so that the easement akin to the Second Easement runs up to the present boundary of the land owned by the strata plan, and the easement akin to the Third Easement runs up to the boundaries of Lot 306 in DP 1040419.

Deleting the restriction imposed by para (c) of the Third Easement, whereby each proprietor can authorise only 10 people to exercise the easement rights under the Third Easement at any time.

The reader will see that all of the areas of land which have an E prefix are ones over which an easement will be extinguished, and all areas of land which have a C prefix are ones over which either an easement will be created, or more extensive rights conferred than presently exist. 29 The means by which the plaintiff seeks to achieve this is by the registration of a new deposited plan and 88B instrument. That new 88B instrument effects a complete release of all three easements to which Milton Park is now subject, but then creates fresh easements which differ from the present easements in ways which have the practical effect I have outlined above. One of the orders the plaintiff seeks is an order that the Registrar-General record in the Register to SP 32202 and DP 1040419 the release and creation of easements for recreational purposes in the form of that DP and 88B instrument. Activities Permitted by the Easements 30 The Second Easement and the Third Easement allow the owners of the dominant tenements to use the whole of the area of land to which each easement relates for recreational purposes. That includes the right to walk over the whole of the land, taking whatever route one chooses. As well, it includes a right to stand on any part of the land and look at such views as there might be, to picnic, to play games, to sit and read, or do any of the other activities which people carry out for recreation. That the right to carry out such activities on land, conferred on a nearby landowner, can be a valid easement has been clear since In re Ellenborough Park [1956] Ch 131. The Areas of Relevant Parcels of Land 31 Evidence has been given by two surveyors who have calculated, using a computer programme and deposited plans relating to Milton Park, the areas of those parcels of land which are relevant to this case. While there was broad agreement on these figures, there were some differences in detail. The deposited plans relating to Milton Park are not completely plans of survey - to some extent, some of them derive partly from survey, and partly from compilation using data derived from other plans. There is some discrepancy between some of the deposited plans concerning the bearing on which a particular line lies, or the length of a particular line. Where there are these discrepancies, the evidence does not enable me to say which is right. Which of the conflicting measurements was used in the calculation could affect the areas arrived at as a result of that calculation. Thus, even though the surveyors have calculated some areas expressed in hectares to the fourth decimal place, I have some doubt about whether the figures derived by either of them have that degree of accuracy. In any event that degree of accuracy is not needed for the purposes of deciding this case. I shall adopt figures in which measurements in hectares are expressed to only two decimal places, and recognise that even the figure in the second decimal place might be one, or perhaps even two, out. Sometimes an area I have adopted lies between areas calculated by the two surveyors. The differences between them are not of a size which will affect the outcome of the case. The areas I adopt are as follows:

Line Parcel of Land Area 1 Total of Easement 1, Easement 2 and Easement 3 (including EBA) 66.73 ha 2 Easement 1 1.47 ha 3 Easement 2 32.12 ha 4 Easement 3 prior to excision of EBA and SPA 33.14 ha 5 EBA 0.47 ha 6 SPA 0.64 ha 7 Easement 3 after excision of EBA but before excision of SPA 32.67 ha 8 Easement 3 after excision of areas in EBA and SPA 32.03 ha

32 On a similar basis, I adopt the following figures for the areas of land relevant to the alterations which the plaintiff proposes.

Line Parcel of Land Area 1 Total of Easement 1, Easement 2 and Easement 3, as amended 64.42 ha 2 Easement 1 1.47 ha 3 Easement 2, as amended 31.66 ha 4 Easement 3 as amended 31.29 ha 5 E1 5,312 sqm 6 E2 4,113 sqm 7 E3 9,637 sqm 8 E1 + E2 + E3 19,062 sqm 9 C1 1,026 sqm 10 C2(a) and C2(b) 135 sqm 11 C3 1,540 sqm 12 C1 + C2(a) and C2(b) + C3 2,701 sqm 13 Net area lost from Third Easement = item 8 - item 12 16,361 sqm 14 E1/32202 3,263 sqm 15 E2/32202 2,034 sqm 16 E3/32202 116 sqm 17 Total of E1/32202, E2/32202 and E3/32202 5,413 sqm

Legal Basis of Plaintiff's Application 33 The basis on which the orders are sought is section 89(1)(b) and (c) Conveyancing Act 1919. Those provisions state, so far as is presently relevant: "(1) Where land is subject to an easement … the Court may from time to time, on the application of any person interested in the land, by order modify or wholly or partly extinguish the easement … upon being satisfied - … (b) that the persons of the age of 18 years or upwards and of full capacity for the time being or from time to time entitled to the easement … have agreed to the easement … being modified or wholly or partially extinguished … [or] (c) that the proposed modification or extinguishment will not substantially injure the persons entitled to the easement …" 34 The plaintiff, as the owner of both the land which was once in Lot 2 of DP 740232, and of the land which is now in Lot 306 DP 1040419, obviously consents to all the changes insofar as they concern easements which attach to the land in Lot 2 of DP 740232. To that extent, the application is based upon section 89(1)(b). 35 The active defendants in the proceedings - six people - are the proprietors of four lots in the strata plan. The proprietors of fifteen lots in the strata plan consent to the various amendments, have signed the deposited plan which the plaintiff wishes to lodge, and have not been joined as defendants. The owner of the remaining lot in the strata plan has been joined as a defendant. She has not consented to the orders the plaintiff seeks, but has taken no active part in the proceedings. To the extent that the application seeks to affect rights which attach to any lot in the Strata Plan, the application is based on section 89(1)(c). Section 89(1)(c) - Onus 36 It is the plaintiff who bears the onus of satisfying the Court that the proposed modification or extinguishment will not substantially injure the persons entitled to the easement: Re Parimax (SA) Pty Ltd (1954) 72 WN (NSW) 386 at 287 per Myers J; Stannard v Issa [1987] 1 AC 175 at 187 per Lord Oliver of Aylmerton. This is so even though the proposition of which the Court must be satisfied is a negative one: cf Illawong Village Pty Ltd v State Bank of New South Wales [2004] NSWSC 18 at [208] and cases there cited. Construction of section 89(1)(c) - "Substantial" 37 In Re Mason and the Conveyancing Act (1960) 78 WN (NSW) 925 Jacobs J said, at 928: "It has been submitted to me that the word "substantial" is a word which introduces a comparison between the disadvantage to the subject land and the disadvantage by modification of the covenant to the land having the benefit of the covenant. I do not take this view of the meaning of the word "substantial". I consider in its context it does not mean large or considerable but it means an injury which has present substance; that is to say, not a theoretical injury but something which is real and which has a present substance."

Though those words were uttered in a case which concerned the application of section 89(1)(c) to a restrictive covenant, they also apply when section 89(1)(c) is invoked in relation to an easement. Construction of Section 89(1)(c) - "Injury" 38 In Mogensen v Portuland Developments Pty Ltd (1983) NSW ConvR 55-116 at 56,856 McLelland J (as he then was) said: "The kind of injury contemplated in the section is injury to the relevant person in relation to his ownership of (or interest in) the land benefited. The injury may be of an economic kind, eg reduction in the value of the land benefited, or of a physical kind, eg subjection to noise or traffic, or of an intangible kind, eg impairment of views, intrusion upon privacy, unsightliness, or alteration to the character or ambience of the neighbourhood. These arbitrary categories, while serving to illustrate the ambit of the concept of injury for the purposes of the section, are neither mutually exclusive nor necessarily exhaustive, and what I have described as injuries of a physical or intangible kind could well also affect the value of the land in question. However it is clear that a person may be "substantially injured" within the meaning of sec 89(1)(c) notwithstanding that the value of his land would be unaffected or even increased by the proposed modification (see Re Parimax SA Pty Ltd (1956) SR (NSW) 130 at p 133, Heaton v Loblay (1960) SR (NSW) 332 at pp 335-336, Re Cook (1964) VR 808 at p 810 and Re Robinson (1972) VR 278 at pp 283-284). It is also clear, particularly in the case of injuries of what I have called an intangible kind, that the subjective tastes, preferences or beliefs of particular individuals may, within limits of reasonableness, give rise to injury in the relevant sense to those individuals (see Re Parimax SA Pty Ltd (1956) SR (NSW) 130 at p 133, Heaton v Loblay (1960) SR (NSW) 332 at p 336, Re Chamberlain 90 WN (Pt 1) (NSW) 585 at pp 593-594, Re Callanan (1970) 2 NSWR 127 at p 133 and Re Robinson (1972) VR 278 at pp 283,285). If, however, particular persons do not after due notice assert any claim to injury to them on purely subjective grounds of this kind then it may be open to the Court to infer that there is no injury of that kind to those persons (see eg Re Wilson 49 SR (NSW) 276 at p 281), although the absence of objection does not remove from applicants for relief under the section the onus of establishing their case (see eg Re Cook (1964 VR 808 at p 812).

McLelland CJ in Eq (as he had then become) in substance repeated that statement of the law in Webster v Bradac (1993) 5 BPR 12,032 at 12,035. 39 Both Mogensen and Webster were cases where the application of section 89 to a restrictive covenant was in issue. There are differences between a restrictive covenant and an easement that might possibly bear upon what can count as an "injury" in relation to an easement. Restrictive covenants are commonly entered for the explicit purpose of preventing or limiting development of a particular type on land. They are entered in a context where it is recognised that development on land can have effects, of all the various types referred to by McLelland J in Mogensen, on nearby landowners. When that is the purpose and context in which the restrictive covenant is entered, it is understandable that all the types of effect that McLelland J listed are ones which are counted as an "injury".

40 With an easement, at least one of the purposes for which it is entered is so that the people in whose favour it is granted can carry out a particular type of activity on the land of the servient tenement, or (as in the case of easements for water, electricity, drainage, support, and so on) receive the benefit of a particular type of activity being carried out or of a particular type of event happening on the servient tenement. It is quite clear that interference with the very type of benefit which the grant of the easement explicitly confers on the owners of the dominant tenement is at least one of the types of thing which can be an "injury", within section 89(1)(c). However the grant of an easement over land has certain incidental effects, of preventing development of the land which is inconsistent with the occurrence of the types of activities or events which the easement expressly allows to happen on the servient tenement. There is question of whether this incidental effect of the grant of an easement, of inhibiting the development of the servient tenement, is something which can appropriately be taken into consideration in deciding whether there is an "injury", in a way which is separate from whether a proposed modification or extinguishment of an easement will interfere with the carrying out of the very type of occurrences which the easement explicitly allows to happen on the servient tenement. I give some further consideration to how that question applies on the facts of this case at paras [86] - [87] below. The Plaintiff's Case for Extinguishment and Modification 41 Firstly, the plaintiff draws attention to the fact that Clause (b) of both the Second Easement and the Third Easement confers on the plaintiff the power to construct or erect recreational and/or sporting facilities on the site of the easement. While the defendants would have the right to use those recreational or sporting facilities, the type of recreational or sporting facilities constructed could in practice cut down on the ways in which the defendants could use the land for recreational purposes. 42 In similar vein, but with greater emphasis, the plaintiff draws attention to the differences between the Second Easement and the Third Easement. In particular, under Clause (d)(i) of the Third Easement all easement rights whatever over the whole of the SPA cease as soon as any swimming pool or tennis court begins to be constructed in that area. Further, Clause (d)(ii) of the Third Easement has the effect that that easement automatically terminates, as soon as the erection or construction works begin, where the erection or construction is for the purpose of permitting and facilitating further development of the Lot burdened as an hotel, tourist resort and conference centre. That termination relates to the area upon which such erection or construction of works occurs, not to the whole of the area over which the Third Easement exists. 43 The "Lot burdened", in clause d(ii) of the Third Easement, is not restricted to the area over which the Third Easement is granted. Rather, it is the whole of Lot 3 in DP 740232. Lot 3 in DP 740232 already contains hotel, tourist resort and conference centre buildings - that is why the purpose of development in Clause (d)(ii) is referred to as "further development". 44 Thus, the plaintiff submits the people with the benefit of the Third Easement have always been at risk of losing their easement or having what they can do pursuant to it cut down, not only over those areas where the present proposal would have the easement extinguished, but, potentially, over the whole of the site of the Third Easement. Thus, the plaintiff submits, the defendants' right to use for recreational purposes, the area over which extinguishment is sought "is one of a transient nature". 45 Secondly, the plaintiff submits that if its application were granted, the defendants would still have the benefit of the Third Easement over a very large proportion of the servient tenement. In effect, the plaintiff says: when the defendants would have such a large proportion of the land over which the easement was originally granted still left to them, and the land which would be left to them is very large in area, how could it be a substantial injury to them to take away the small proportion of the servient tenement over which the plaintiff wishes to have the easement extinguished? 46 Thirdly, the plaintiff has filed evidence from a variety of people who have worked outdoors at Milton Park over the years. They give evidence of not having seen any person from the villas walking in the areas subject to the Third Easement. While the plaintiff does not submit, in light of the evidence from the defendants, that the defendants never use the areas over which extinguishment of the easement is proposed, the plaintiff submits that the use the defendants make of them is sporadic and infrequent. 47 Fourthly, the plaintiff plans to give benefits to the strata plan lot owners, in the form of: · creating easement rights which the strata plan lot owners presently do not have over the areas C1, C2(a) and (b), · releasing the plaintiff's right to terminate the easement over C3 by starting construction of a swimming pool or tennis court, and · giving up the easements Lot 2 of DP 740232 has over the three areas (E1/32202, E2/32202, and E3/32202) immediately adjacent to the strata plan site.

Those benefits should, it says, be taken into account in reaching the conclusion that the plaintiff's proposal would cause the defendants no substantial injury. Jurisdictional Issues 48 The defendants raise three questions about whether the Court has power under section 89 to order the registration of the precise instrument which the plaintiff seeks to have registered. That instrument would have the practical effect I have set out in para [28] above, but achieve it by an instrument which effects a complete release of all existing easements, and then creates fresh easements which are similar to the ones released but have slightly different terms and relate to areas reduced in some respects and increased in others. 49 The first question is whether ordering the registration of an instrument which proceeds in this way, is within the power at all. 50 I shall assume for the purpose of considering this question that the Court has power under section 89 to order the particular extinguishments listed in sub paras 1 and 2 of para [28] above, on condition that the plaintiff execute documents which made grants and releases of the type set out in sub paras 3, 4, 5 and 6 of para [28] above. If orders were to be made and documents were to be executed and registered, making those changes in express terms, it would be extremely complicated for anyone searching the title to work out what the true position was concerning the easements. It would be necessary for the searcher to start from the original creation of the easements in 1987, and then work out how they were changed by various extinguishments and alterations in relation to numerous scattered parcels of land. It would be a much simpler and cleaner conveyancing technique to obliterate all the easements, and start again. If that were to happen, someone searching the title could ascertain the position concerning the easements by reading and understanding a single deposited plan and associated 88B instrument. 51 In my view, the power which section 89 confers on the Court is one which relates to the substance of the changes the Court makes to the easement, not the form by which those changes are made. I do not accept that Parliament intended the Court to require a change to an easement to be made by a complicated and confusing conveyancing technique, if something in substance the same could be achieved by a simpler and more comprehensible conveyance technique. If it is in substance open to the Court to make orders which have the effect which I have set out in para [28] it is within power to order that that effect be achieved by a document which extinguishes all existing easements and then creates fresh easements. 52 The starting point of the second jurisdictional argument is that, concerning easements which are rights of way, it has been held that a relocation of the site of the easement, so that it traverses a completely different track, is outside the power: Manly Properties Pty Ltd v Castrisos & Others [1973] 2 NSWLR 420; Durack v De Winton (1998) 9 BPR 16,403 at 16,431-16,434 per Einstein J; Loclot Pty Ltd v Pullen (2003) 56 NSWLR 592 at [6] per Gzell J; cf In Re Lewis [1959] NZLR 1040. The argument is that, while the easements involved in the present case are not rights of way, the plaintiff's proposal involves the creation of recreational easements over C1 and C2 in exchange for the recreational easements over E1, E2 and E3, and that that is, in substance, a relocation of the easement of a type which is beyond power. 53 The third jurisdictional argument is that the power of the Court under section 89 does not extend so far as to require the benefit of an easement to be conferred on the proprietors from time to time of E1, E2 and E3. 54 I shall not decide the second and third of these jurisdictional arguments because, even if they were not right, the plaintiff has not satisfied me that the amendments it seeks would cause no substantial injury to the defendants. I decided the first jurisdictional argument because in my experience it is common for alteration of easements effected by agreement to proceed by extinguishing the old and creating new ones, and I did not want it to be thought I had any doubt about whether such a convenient and sensible conveyancing technique was available to the Court under section 89. Percentage of Land Subject to Easement Affected 55 To understand the submission that not very much of the land subject to the easements would be affected by the plaintiff's proposal, it is helpful to perform calculations on a number of bases. Those calculations, using figures derived from Tables 1 and 2 in paras [31] and [32] above, yield the following results.

Table 3 Total E1, E2 and E3 as percentage of present area of Third Easement after excision of EBA, but before excision of SPA 5.83% Total E1, E2 and E3 as percentage of total area over which any recreational easements exist, after excision of EBA, but before excision of SPA 2.88% Net area lost from Third Easement (item 13 Table 2) as percentage of Third Easement after excision of EBA, but before excision of SPA 5.01% Net area lost from Third Easement as percentage of total easements, after excision of EBA, but before excision of SPA 2.47%

56 This table shows the percentages of the present area of the Third Easement (and of the total easements) after excision of the Excluded Buildings Area, but prior to excision of SPA which are affected by the plaintiff's proposal. Those percentages are relevant because it is the area of the Third Easement (and of the total easements) after excision of the EBA, but prior to excision of the SPA that the defendants presently have rights over. 57 Thus, the percentages in Table 3 do not state how much of the easements would be ultimately lost as a consequence of the Court order if the Court were to make the orders the plaintiff seeks and a swimming pool or tennis court were to be built in the SPA. If a pool or court were to be built there, and the orders which the Plaintiff asks the Court to make were to be made, part of E3 (namely, the SPA minus C3) would thenceforth be unavailable to the defendants because of the condition of defeasibility of the easement having occurred, rather than because of the court order. 58 The following table shows approximately how much of the easements would be lost by force of the Court order if that possibility came about.

Table 4 Total E1, E2, and the part of E3 not in either SPA or C3, as percentage of present area of Third Easement after excision of EBA and that part of SPA not in C3 4.41% Total E1, E2 and the part of E3 not in either SPA or C3, as percentage of total area over which any recreational easements exist, after excision of EBA and that part of SPA not in C3 2.16% Net area lost from Third Easement, minus the part of E3 not in SPA, as percentage of present area of Third Easement after excision of EBA and that part of SPA not in C3 3.57% Net area lost from Third Easement, minus the part of E3 not in SPA, as percentage of all easements after excision of EBA and that part of SPA not in C3 1.75%

The derivation of the figures in Table 3 and Table 4 is set out in the Appendix to this judgment, at para [96] ff. 59 In looking at the significance of the areas which the plaintiff proposes the defendants should lose access to, in comparison with their present rights, it seems to me that greater weight should be given to the present reality of the area over which the defendants can exercise rights, rather than the area over which they might come to exercise rights in the future if a contingency arose. Thus, it seems to me that the figures for percentage reduction of the easements, looking at that reduction as a percentage of the present area of the Third Easement (or of all easements) after excision of the EBA, but prior to excision of SPA, should be given greater weight in assessing whether the plaintiff's proposal will cause no substantial injury to the defendants. 60 I still give some, though lesser, weight to the figures in Table 4. This is because

(a) while there is a plan involving construction of a tennis court in the SPA, for which the Plaintiff has council approval as part of the development of Lot 306, I cannot proceed on the basis that it is a certainty that that plan will go ahead, particularly when that plan assumes that building of houses can occur in E1, E2 and E3, which is the matter in issue in this case, and

(b) even if the plan went ahead, there would still be some time delay before construction actually began. 61 I do not find calculations concerning the "net area lost" from the Third Easement particularly helpful. The land over which the Third Easement exists is undulating, and different parts of it (including the E and C areas) have different characteristics, so far as elevation, views, and accessibility from the strata lots are concerned. Those differences are obscured in a calculation of the net area lost. As well, as discussed below, the defendants do not regard the C areas as equivalent in beauty or attractiveness to at least some parts of the E areas. 62 The plaintiff's surveyor did some calculations which treated the areas surrounding the strata plan over which easements would be extinguished, (ie, E1/32202, E2/32202 and E3/32202) as though they were areas similar in type to C1, C2 and C3, over which easements were to be created. He treated all these areas as ones where the plaintiff's proposal was beneficial to the defendants, subtracted the total of the "beneficial" areas from the total of the E1, E2 and E3, and thus derived a net area concerning which the defendants would receive a detriment. That approach is unsound, as the owners of the Lots in the strata plan already have the right to use the areas over which easements now exist around the strata plan by virtue of them being common property of the strata plan. Further, the witnesses for the active defendants give evidence, which I accept, that they do not regard the extinguishment of easements E1/32203, E2/32203 and E3/32203, insofar as the benefit of them was conferred on the proprietors for the time being of Lot 2 in DP 740232, as something which they regard as being of value. 63 On whatever of the bases set out in Table 3 and Table 4 above one might measure the percentage of land subject to the easements which is affected by the plaintiff's proposal, the percentage is comparatively small, but not insignificant. If one considers the absolute size of the areas over which it is proposed the Third Easement be extinguished, it is, in round terms, 1.91 ha, which equates to 4.72 acres in imperial measurement. In absolute terms, that cannot be said to be insignificant in size. 64 However, neither the percentage of land which is subject to the easements and is proposed to be extinguished, nor the absolute size of the area of land over which it is proposed the easements will be extinguished determines whether the Court should extinguish the easement. There is power under section 89 to extinguish an easement, no matter how large an area of land it might be over, if extinguishment will not substantially injure the persons entitled to the easement. It is only to the extent that the size of the area over which extinguishment is proposed is relevant to whether the extinguishment would cause an injury to the persons entitled to the easement, or whether any such injury is substantial, that it should be taken into account. The Defendants' Case on Injury 65 The active defendants have filed evidence which identifies various types of injury they say they would suffer if the plaintiff's proposal was to go ahead. All of the active defendants gave evidence that they use the recreational easements. As well, there was evidence from Mr Thompson, whose wife owns one of the strata title units. He is someone upon whom a right to use the easement has been conferred by the terms of its grant, as a visitor at his wife's unit. While the value which he places upon the easements cannot be taken into account in a direct fashion, his use of the easements can be taken into account indirectly, as showing that Mrs Thompson actually makes use of the right which the easement confers upon her to allow her visitors to engage in the activities permitted by the easement. 66 The evidence of the defendants and Mr Thompson proceeded by reference to various of the codenames for particular relevant areas which I have used earlier in this judgment. The precise boundaries of those areas had been clearly marked out on the ground only within the week or so prior to the hearing - that is, after all the defendants' witnesses had sworn their affidavits. Thus, their identification of particular areas, such as E1, or C1, on the ground, could only have been approximate, at the time they swore their affidavit. However, they have all had access to plans which show the proposed development and what parts of it fall into the E and C areas. The degree of approximation which is involved in their identification of areas is not such as to prevent me from relying on their evidence. Actual Use of the E Areas for Walking and Viewing 67 All the active defendants and Mr Thompson gave evidence that they walk across and enjoy area E1, and wish to continue to do so. By the time I attended an inspection at Milton Park in the course of the hearing, the various areas had been clearly marked on the ground. E1 is in an elevated position by comparison with the rest of the land subject to the easements, and from it one can see, in one direction, to the very far distance. In other directions the view includes the fall and rise of the gentle valley which is part of the site of the easements. One of the defendants, Mr Knight, describes the view from E1 as "particularly beautiful". That opinion is one which is comfortably within the range of reasonable opinions. 68 Mr Thompson, and all the active defendants except Mr Watts, also gave evidence that they walk in and enjoy areas E2 and E3, and wish to continue to do so. Various of the defendants give evidence of finding E2 and E3 attractive to walk in. Various of them also give evidence of enjoying views from E2. Inspection of the property confirmed that while E2 is not as elevated as E1, good views of the distance can still be had from it. It has been suggested - and I am not sure whether there is a basis for this in the evidence - that there may be a condition relating to development at Milton Park which will require the planting of some trees in the direction of that view. Even if there is such a condition, inevitably the trees will take time to grow, and it is not established that even when grown they would completely obscure that view. 69 Typical of the evidence of several defendants is the evidence of Mrs Thompson, who expressly says: "I regard areas E2 and E3 as valuable and I enjoy the amenity of walking over them. I also enjoy the views of the surrounding areas from E2. I wish to continue to use those areas." 70 Mrs Knight gives evidence as follows: "I enjoy living at Milton Park and do so on a regular weekend and weekly basis. I have since the time of the purchase of our cottage walked through and across much of the area covered by the recreational easements. I enjoy this walking midweek often on my own and on weekends with my husband. In walking on these areas I feel able to escape the constant noise of motor vehicles and intrusive development which pervades our daily lives in the city even in beautiful Bayview. The tranquil environment at Milton Park is so peaceful and so special to me. In fact it is almost impossible for me to speak of this country side without becoming emotional in the same way that I am affected by my reading of the great literary works such as Wordsworth, Keats and Shelley or when I view the art of Constable and Turner or think of the pastoral symphony of Beethoven. The area E1 is the area around which I most enjoy walking. I have also walked over the areas E2 and E3 and wish to continue to use those areas. I do not wish to substitute those areas for the C1 area." 71 The defendants give evidence of their frequency of use of the areas the subject of the plaintiff's application as follows. This table takes account of any departures from evidence in chief which occurred in cross-examination.

Mr Knight Visits his cottage every third or fourth weekend and wishes to make it his permanent home. Walks "regularly" across the easement area usually in early mornings before breakfast and at sunset. Mrs Knight Lives at Milton Park on a regular weekend and in-the course-of-the-week basis, though her main home is in Sydney. Walks on the easement area midweek on her own, and on weekends with her husband. No specific evidence of the frequency with which she uses the E areas. Mrs Thompson Uses E1 "from time to time". Uses E2 and E3, but no precise evidence of how frequently. Uses cottage mainly at weekends (which are sometimes 3-day weekends), a couple of times per month, and habitually walks with her husband late in the day. Intends to move with her husband to Milton Park permanently in 2005, and expects to use the easements more then. Mr Thompson Uses E1 "from time to time", sometimes with his wife and sometimes by himself. Has used E2 and E3, but no precise evidence of how frequently. Mr McMorron Moved in 18 or 20 months ago. Used E1 2 or 3 times in 2004, and has "often" seen the views from E1. Frequently walks over E3. "Have used" E2, but no precise indication of how frequently. Has been "active in the enjoyment of the recreational easements, mostly for early morning walking and light jogging during the summer months or when we have guests at our cottage." Mrs McMorron Spends four days per week at Milton Park, two of those days being weekends. She and her husband are contemplating retirement there full-time. Sometimes walks on the easements alone, sometimes with her husband or visitors, generally in the late afternoon or early evening. No specific evidence of with what frequency she uses the E areas. Mr Watts Is at Milton Park mostly at weekends. His wife lives there full time. Their daughter (who attends school as a weekly boarder) is there most weekends. Has used E1 "from time to time", both with his family and unaccompanied. Has used E2 and E3 "from time to time".

While there is some imprecision in the evidence of the active defendants about their frequency of use of any E areas, I am satisfied that they make use of each of those areas, and that their use is not so sporadic or infrequent that it is of no substance. Particularly is this so in light of their evidence, mentioned earlier, that they value and enjoy using those areas. 72 While I accept the evidence of the plaintiff's witnesses who worked outdoors at Milton Park that they have not seen any of the defendants using the parts of the Third Easement which will be affected by the plaintiff's proposal, it does not contradict the evidence of the various defendants that they did in fact use the easements. Some of the walking which the plaintiffs do on the easements is at weekends and in the early morning or early evening, when these witnesses of the plaintiff would not ordinarily be at work. It was not suggested to any of the defendants in cross-examination that their evidence about using the easements was incorrect, or that they were being dishonest or insincere in expressing the opinions they expressed about the value which they attached to using the parts of the easement site which the plaintiff wishes to have extinguished. Significance of Irregular Means of Access to E Areas? 73 Some of those defendants have in the past walked to area E3 by walking along the roughly circular road which lies to the west and south of Lot 2 in DP 740232, which they call the "ring road". They have no right, pursuant to the easements, to walk along that road except perhaps in the portion of it which runs immediately west from the western boundary of Lot 2 in DP 740232. The portion of the ring road which runs along the south western boundary of Lot 2 in DP 740232, then south, then west, is part of Lot 2 in DP 740232, and hence is not land over which the Third Easement has been granted. However, there is no physical obstacle to anyone entering upon the ring road, no sign to say that occupants of the strata title units (or anyone else) cannot go there, and so far they have never been prevented from doing so. Thus, their use of the ring road so far has been pursuant to an implied licence. 74 As well, some of the other defendants have obtained access to E1 by using the ring road and cutting through Lot 2 in DP 740232. Further, Mr Knight has, in the past, got to the E1 area by walking through a particular gate. It emerges that this gate is in fact within Lot 306, and is in the area which was formerly part of Lot 2 in DP 740232. Thus, Mr Knight does not have a right under the easements to walk there. His having done so up to now is the result of an honest mistake, arising because the precise boundaries of the various lots the subject of the easements were not pegged out in a way which was readily visible, and no-one has told him he cannot take the route he has taken. 75 Even if the plaintiff were to insist on the defendants obtaining access to the areas over which the Third Easement exists, E1 can be reached by a comparatively level walk across the paddock from the strata title site, on land which is completely subject to easements, and E2 and E3 can then be reached by going around the northern, then the eastern side of Lot 2 in DP 740232. While that is a more indirect route than some of the defendants have been using to date, I am not satisfied that using that indirect route would deter them from visiting E2 and E3 altogether, nor that if walking across the paddocks was the only way for the defendants to get to E1 that would deter them from visiting E1 altogether, or reduce their usage to such an insignificant amount that it could be treated as not of substance. After all, the activity they are engaging in is walking for recreation's sake, not walking as a means of getting to a destination by the shortest route possible. Substitutability of Areas?

76 Various of the active defendants have given evidence that they do not regard the area C1 as being as attractive as the area E1. They also give evidence that the release of the areas around the strata plan is something which they do not regard as being of any particular use to them. Conclusion re Actual Use and Enjoyment of E Areas 77 I accept the various facts concerning which I have recounted the evidence of the active defendants, and accept that the active defendants hold the various opinions which I have set out or summarised. 78 For the active defendants to lose the right to engage in recreation over an area of more than 1.9 ha when they actually use and enjoy that right is, in my view, to lose a right which has present substance. Even for them to lose the right to carry out recreational activities over more than 1.6 ha (the net loss if one adds back C1, C2 and C3), which they actually use and enjoy is to lose a right of present substance. However, as mentioned earlier, when the C areas have objectively different characteristics to the E areas, and when the defendants, within the scope of reasonableness, do not regard them as interchangeable, the "net loss" calculations are not the appropriate ones to have regard to. Effects of Rights Being Defeasible 79 Even though the rights are defeasible, in the circumstance that land subject to the easement was required for further development of the hotel complex, there are no immediate plans to develop E1, E2 and E3 for that purpose. Rather, the present plan is to develop them for a completely different purpose, namely for dwelling houses which will be sold. Even bearing in mind that the easement rights might some day, to some extent, come to an end, they are still something of present substance so far as the defendants are concerned. To bring them to an end when the condition for their defeasance has not occurred is to deprive the defendants of a right of present substance. 80 The reasoning so far is sufficient to result in the plaintiff's application being rejected. There were, however, some other matters which were relied upon by some of the defendants as additional reasons for opposing the plaintiff's application. The Slippery Slope 81 Some defendants gave evidence that they feared that, if the present application were granted, it would be the beginning of a slippery slope, where their easements were progressively reduced by a series of applications to the Court. I do not regard that fear as one which goes to the question of whether the proposed modification or extinguishment will not substantially injure the persons entitled to the easement. One decides that question by reference to the consequences of the particular modification or extinguishment which is proposed, not other possible modifications or extinguishments which might be applied for in the future. Easements as Protectors of the Land 82 Another theme in the evidence was that some of the defendants regarded the existence of the easements as important in their decision to purchase, and that they purchased in the understanding, based on legal advice, that the easements would assist to preserve or protect the land which was subject to them. That evidence can appropriately be taken into account as providing some extra reason for accepting the defendants' evidence that, now, they place value upon walking over and looking out from the land over which the easements are proposed to be extinguished. 83 However, the use which the defendants seek to make of that evidence, is not so confined. Some defendants say, in effect, that they are disappointed that the original plan for development of Lot 2 in DP 740202 with comparatively modest townhouses, like their own, has been abandoned, and replaced with a proposal for developing the new Lot 306 with much larger houses. Some defendants have described the proposed new development as "hugely imposing on the landscape", or an "urban scar". None of the E areas can be seen from the defendants' lots in the strata plan, though one or other of the E lots would be visible from large parts of the land over which the Second Easement and Third Easement exist. Mr McMorron, in cross-examination, expressed some concern about being able to see development on E1 from his own lot, but I am not satisfied that he is right in his concern. I come to that decision largely as a matter of treating the defendants as bearing a persuasive onus to show that it was so, and not having discharged that persuasive onus, particularly when the defendants presented no evidence in chief on that topic. Some defendants complain that the view towards, in particular, the E1 area from other areas of the land over which the Second Easement and the Third Easement exist would be impaired if houses were to be constructed on E1. I accept that that is an opinion within the range of reasonably possible ones. 84 There are two different ways in which the defendants seek to use this impairment of view. The first is that having the E areas free from housing, so that they can be looked at from other parts of the land, is, it is suggested, part of the rights which are conferred by the easement for recreational purposes over the E areas. Hence, if the view towards the E areas from other parts of the Second and Third Easement sites is marred, that is a substantial injury, within section 89. 85 I do not think this is so. An easement to use land for recreational purposes involves the recreational activity taking place on the land which is subject to the easement. Casting ones gaze at a particular area of land, from outside it, is not carrying out a recreational activity on that piece of land. 86 The second way in which the defendants seek to derive advantage from the impairment of view is connected with the spoiling or sterilizing effect that continuance of the easement over the E areas has. When some of the defendants say that the existence of the easements over the E land protects it, I take that to mean that, for so long as the easement is in existence, the plaintiff cannot carry out any activity on the land which is inconsistent with the easement rights. Whenever land is subject to an easement which permits the carrying out of an activity that requires the surface of the land to be kept free of obstructions if that activity is to be carried out, such as a right of way, or an easement to use for recreational purposes, the practical effect of the easement is similar to that of a restrictive covenant which prevents building on the land in any way which would prevent or significantly impede the permitted activity. In the present case, it is a necessary consequence of the easement existing that the plaintiff cannot develop the land by constructing houses for sale (unless somehow, in a way not presently planned, it would be possible for such construction to be for the purpose of development of Lot 2 in DP 720232 as an hotel, tourist resort and conference centre). In that way, the very existence of the easement has the effect of preventing that type of development on the land to which it is subject. 87 As McLelland J said in Mogensen v Portuland Developments Pty Ltd (1983) NSW ConvR 55-116 at 56,856: "The kind of injury contemplated in the section is injury to the relevant person in relation to his ownership of (or interest in) the land benefited. " (emphasis added)

That statement is one which applies when section 89(1)(c) is invoked to extinguish or modify an easement, even though it was originally made in connection with the application of section 89(1)(c) to a restrictive covenant. 88 To the extent that extinguishment of the easements in the E areas would prevent the defendants from walking from their strata title units to the E areas and enjoying the surroundings and the views, once they were there, that is a relevant type of injury to the defendants in connection with their ownership of, or interest in, the land benefited. If they could see the E areas from their own lots, it might possibly be (it is not necessary to decide) that development on the E areas which the lot owner disliked the look of, could be an injury which can be taken into account for the purpose of deciding whether to extinguish or modify an easement under section 89(1)(c). If the development on those areas generated other interference with the lot benefited, like noise or extra traffic that might also (again, it is not necessary to decide) be within what counts as an injury for the purpose of section 89(1)(c), as applied to an easement. On the facts of this case, before the power of existence of the easement to prevent housing development which a defendant did not like looking at could be taken into account as a factor separate to the defendant actually carrying out recreational activities on the E areas, it would be necessary to decide that the fact that the lot benefited had an easement appurtenant to it, from the site of which one could see the E lands, was a sufficient connection with a defendant's ownership of, or interest in, the land benefited. As it is not necessary to decide that matter to conclude the case, I shall express no view on it. Traffic Effects 89 Mr Watts also expressed concern that if extinguishment of the easement rights occurred in the way sought by the plaintiff that would result in "increased traffic and people to the area and thus lead to a diminishment in the value of the amenity my Recreational Easement rights operate to protect". This evidence does not make clear whether his concern is that this would have a direct effect upon his strata title lot, or be merely a change in the characteristics of the general neighbourhood. When the concern is expressed so imprecisely, I would not give it weight, even if it were legitimate to take it into account for the purposes of section 89(1)(c). Whether the Proposed Changes Would Affect the Monetary Value of the Defendants' Lots 90 Two of the defendants (Mr Watts and Mr Knight) gave evidence of being concerned that the modification of their rights sought by the plaintiff might affect the monetary value of their own property. Mr Watts expressed his concern in terms of the value being reduced, Mr Knight in terms of the saleability of his property being affected. Those opinions had no basis other than the deponents' general knowledge of affairs, but there was no challenge as to whether they genuinely held those opinions. 91 The plaintiff called evidence from a valuer, Mr Carpenter. He expressed the opinion that if the plaintiff's proposal were to proceed the value of the lots in the strata plan would not be diminished by the easements which currently exist on Lot 306 being extinguished, and the value of the lots in the strata plan would be enhanced by the easements over the common property of the strata plan being extinguished. The reasons he gave for that opinion were: "(i) The registration of the proposed plan will continue to allow the owners of the lots in SP 32202 the benefit of recreational easements over the vast majority of the land currently affected by the proposed changes. (ii) The extinguishments of the recreational easements over SP 32202 would have a positive effect upon any proposed purchaser of such a strata lot." 92 Mr Carpenter expects to be appointed as the agent for sale of the villas which the plaintiff wishes to construct on Lot 306. The opinion he expressed was not one formed after actually valuing the easements of the strata plan owners. In cross-examination, he was unable to identify the areas where extinguishment would occur, if the plaintiff's proposal went ahead. The so-called "reasons" for his opinion are little more than the conclusion itself, stated in other words, and hence are not persuasive reasons. I am not persuaded to accept his opinion. 93 Neither, however, am I prepared to treat the opinions about value expressed by Mr Watts and Mr Knight as being anything more than their genuinely held opinions. In the result, the plaintiff has not affirmatively proved that the carrying through of its proposal would have no effect on the monetary value of the easements of the strata title owners, but neither have the defendants proved that the carrying through of that proposal would, objectively, have any deleterious effect on monetary value. Thus, the plaintiff has failed to discharge its onus of proving that the carrying through of its proposal will not substantially injure the persons entitled to the easement, so far as the monetary value of their properties is concerned. This provides an additional reason to dismiss the plaintiff's application. Removing the "Ten Persons" Limit on the Third Easement 94 No defendant gave evidence taking specific objection to the aspect of the plaintiff's proposal which involved the removal of the restriction whereby each proprietor of the lots benefited cannot authorise more than ten visitors or tenants to exercise at any one time, the easement rights. There was evidence, in very general terms, from some of the defendants (eg the evidence from Mrs Knight quoted at para [70] above that the peacefulness of the area over which the easements existed was important to them. However, there was also evidence to the effect that some of the defendants were not disturbed by coming across other people in the course of their walks. 95 The fact that the text of the plaintiff's proposal removed this restriction on more than ten people does not seem to have impinged on the attention of either plaintiff or defendants until the time for addresses in this case. Given that I have decided, on other grounds, that the plaintiff's application should fail, it is not necessary for me to decide whether the plaintiff has failed to discharge its onus of proof concerning that aspect of the order it seeks, or whether I should infer, from the absence of objection on that score, that removal of the "ten people" restriction does not cause any injury. Further, when I am not confident that the effect of removal of "ten people" restriction is a matter the parties came to court intending to litigate, it is preferable to express no conclusion on it. Orders

2. Plaintiff to pay costs of defendants. ********** APPENDIX 96 In these calculations, "T2 L8" means Table 2 line 8, &c. 97 Some of these calculations assume that the SPA is exactly the same as the square area at the south-east corner of the diagram in para [16] above. While the evidence allows one to conclude that they are approximately the same, it does not allow one to conclude they are exactly the same. To the extent, there will be an added degree of approximation in the figures in Table 3 and Table 4. Calculations for Table 3 (para [55] above)

Calc No. Total E1, E2, and E3, as percentage of present area of Third Easement after excision of EBA but before excision of SPA = T2 L8---------- (T1 L4 - T1 L5) x 10,000

1 = 19,062 = 5.83% (33.14 - 0.47 x 10,000

= 19,062 32.67 x 10,000 Total E1, E2 E3, as percentage of total area over which any recreational easements exist, after excision of EBA but before excision of SPA

= T2 L8 (T1 L1- T1 L5) x 10,000 2 = 2.88% = 19,062 (66.73 - 0.47) x 10,000

= 19.062 66.26 x 10,000 Net area lost from Third Easement, as percentage of present area of Third Easement after excision of EBA but before excision of SPA

3 = T2 L 13 =5.01% 32.67 x 10,000 (derived as in calc. 1 above) = 16,361 32.67 x 10,000 Net area lost from Third Easement, as percentage of all easements after excision of EBA but before excision of SPA 4 =2.47% = 16,361 (derived as in calc 3 above) 66.26 x 10,000 (derived as in calc 2 above)

Calc No. Total E1, E2, and the part of E3 not in either SPA or C3, as percentage of present area of Third Easement after excision of EBA and that part of SPA not in C3

= T2 L 5 + T2 L6 + (T2 L 7 - (T1 L6 - T2 L 11)) [T1 L4 - T1 L5 - (T1 L6 - T2 L 11 as hectares)] x 10,000

= 5312 + 4113 + (9637 - (6400 - 1540)) 5 [33.14 - 0.47 - (0.64 - 0. 154)] x 10,000 = 4.41%

= 5312 + 4113 + 4777 [33.14 - 0.47 - 0.486] x 1000

= 14202 32.184 x 10,000

Total E1, E2 and the part of E3 not in SPA, as percentage of total area over which any recreational easements exist, after excision of EBA and that part of SPA not in C3

= 14202 (derived as in calc 5 above) [T1 L1 - T1 L5 - (T1 L6 -T2 L11 as hectares)] x 10,000

6 = 14,202 [66.73 - 0.47 - (0.64 - 0.154)] x 10,000

= 14,202 65.774 x 10,000

= 2.16% Net area lost from Third Easement, minus the part of E3 not in SPA, as percentage of present area of Third Easement after excision of EBA and that part of SPA not in C3

= T2 L 13 - (T1 L6 as sq m -T2 L 11) 32.184 x 10,000 (derived as in calc 5 above) 7 = 3.57% = 16,361 - (6400 - 1540) 32.184 x 10,000

= 11,501 32.184 x 10,000 Net area lost from Third Easement, minus the part of E3 not in SPA, as percentage of all easements after excision of EBA and that part of SPA not in C3 8 = 1.75% = 11,501 (derived as in calc 7 above) 65.774 x 10,000 (derived as in calc 6 above)

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