Westfield Management Ltd v Perpetual Trustee Co Ltd

Westfield Management Ltd v Perpetual Trustee Co Ltd - [2006] NSWSC 716 - NSWSC 2006 case summary — Zoe

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6454/05 Westfield Management Limited v Perpetual Trustee Co Limited JUDGMENT 1 HIS HONOUR: In the heart of the Sydney Central Business District, the block bounded by King Street in the north, Castlereagh Street in the east, Market Street in the south and Pitt Street in the west, is occupied by four main buildings, known, from north to south, as the Glasshouse (146-156A Pitt Street/131-139 King Street), Skygarden (162-166 Pitt Street/77-83A Castlereagh Street), Imperial Arcade (168-174 Pitt Street) and Centrepoint (184-190 Pitt Street). When the sites of the Glasshouse and Skygarden were redeveloped in the late 1980s, the then owner of the Glasshouse site, Jamino Pty Limited, granted to the then owner of the Skygarden site, Mastwood Pty Limited, an easement for right of way over a vehicular access ramp from King Street through the Glasshouse to the basement of Skygarden, conferring on the dominant owner "full and free right of carriageway for the transferee and every person authorised by it, to go, pass and repass at all times and for all purposes with vehicles to and from [Skygarden] or any such part thereof across [the Glasshouse]". The plaintiff Westfield Management Limited is Mastwood's successor as owner of Skygarden, and has also acquired Imperial Arcade and Centrepoint. It proposes to redevelop all three sites, and wishes to use the ramp to provide access not only to Skygarden, but also through Skygarden to Imperial Arcade and Centrepoint. Westfield contends that as registered proprietor of Skygarden it may authorise persons with vehicles to use the ramp to access Skygarden, even if such access is for the purpose of travelling on to Imperial Arcade or Centrepoint. The defendant Perpetual Trustee Company Limited, Jamino's successor as owner of the Glasshouse, disputes that contention. The issue is whether upon its proper construction the easement permits the dominant owner, now Westfield, to use and authorise others to use the ramp, for the purposes of accessing not only Skygarden, but also travelling on to Imperial Arcade and Centrepoint. Inherent in this is whether the rule in Harris v Flower (1904) 74 LJCh 127 has the effect that a right of way appurtenant to Skygarden cannot be used to access remoter properties of the dominant owner.

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Applicable principles of construction 2 The meaning of an easement is to be ascertained by reference to the language of the grant, construed in the light of the circumstances in which the grant was made. While the construction of a deed is a matter for the court, evidence is admissible of all material facts existing at the time of execution of the deed, so as to place the court in the situation of the grantor [Waterpark v Fennell (1859) 7 HLC 650, 684; see also Cannon v Villars (1878) 8 Ch D 415, 420; Jelbert v Davis [1968] 1 WLR 589; Rodwell v G R Evans & Co Pty Ltd (1977) 3 BPR 9114, 9119; affirmed [1978] 1 NSWLR 448; Proprietors Strata Plan No. 9968 v Proprietors Strata Plan No. 11173 [1979] 2 NSWLR 605, 610-611; Gallagher v Rainbow (1994) 179 CLR 624, 639-642 (McHugh J); SS & M Ceramics v Kin [1996] 2 QdR 540; Finlayson v Campbell (1997) 8 BPR 15,703; Owners Corp, Strata Plan No. 8450 v Owners Corp, Strata Plan No. 54547 [2002] NSWSC 780, [68]]. This accords with the modern approach to the construction of contracts generally [Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; Maggbury Pty Ltd v Hafele Australia Pty Ltd (2002) 210 CLR 181 [11]; Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165, 179 [40]]. The purpose of such evidence is not to prove any common intention of the parties dehors the contractual document, but to illuminate the contractual document by revealing the facts that were known to the parties and provided its context, and the purpose and object of the transaction, so as to facilitate the identification of their objective intention. For this purpose, evidence may be received of the terms and conditions of any relevant development consents, as material which would reasonably have been in the contemplation of the parties to the grant [Scott v Martin [1987] 1 WLR 841, 849-850, 852]. 3 Westfield tendered a large body of evidence relating to the circumstances when the grant was given. As I indicated during the hearing, I rejected evidence of the subjective purpose of an alderman of the City Council who was not a party to the deed; I admitted evidence of facts existing at and about the time of the grant, including the contemporaneous acts and statements of one or other of the parties to the creation of the easement; and I rejected evidence of the subjective opinions and intentions of the parties and their agents. In adopting that approach, I endeavoured to apply what was said by Dankwerts LJ, giving the judgment of a Court of Appeal constituted by himself and Willmer and Salmon LJJ, in The Shannon Limited v Venner Limited [1965] Ch 682 (at 691): He [counsel for the servient owner] relied on the general principle (which, of course, is established law) that, whether in a deed or in a will, direct evidence of the intention of a party in respect of certain words used in the document (except in the case of a will in regard to what has been called equivocation) is not admissible. The judge, however, did not accept [counsel's] application of that principle to the circumstances of the present case, and the judge was plainly right. It is one thing to allow a party to say: "By the words in the deed, I meant this meaning" (which is not admissible), and quite another thing to advance evidence that, in acquiring a particular piece of land, the purchaser had certain plans for the use of that land which may explain the form which the document took. The evidence was rightly admitted as throwing light upon the circumstances in which the document came to be executed. 4 A contemporaneous conversation or statement by or on behalf of one of the parties to the grant is capable of casting light on the circumstances in which the document came to be executed, and in particular on the facts known to that party, the purpose of that party in the transaction, and the use which that party contemplated might be made of the dominant tenement. It was for that reason that I allowed, in particular, paragraph 28 of the affidavit of Ronald Scott Frazer sworn 23 May 2006, to which I refer further below. 5 It is also settled that, when construing the grant of an easement, if there is ambiguity, the instrument will be construed against the grantor [Williams v James (1867) LR 2 CP 577, 581; White v Grand Hotel Eastbourne Limited [1913] 1 Ch 113, 116; Proprietors Strata Plan No. 9968 v Proprietors Strata Plan No. 11173 [1979] 2 NSWLR 605, 610; Gallagher v Rainbow (1994) 179 CLR 624, 640 (McHugh J)]. However, that rule is very much one of last resort [Ferella v Otvosi (2005) 64 NSWLR 101, [21]-[23] (Hamilton J)].

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The rule in Harris v Flower 6 In Harris v Flower (1904) 74 LJCh 127, Romer LJ (at 132) enunciated the proposition that if a right of way is granted for the enjoyment of certain land (Lot A), the grantee cannot use the way in substance for passing over that land to adjacent land of the grantee (Lot B). The principle has been formulated as one that the owner of a right of way cannot in general use the right of way for the service of tenements other than the dominant tenement [Paterson & Barr Limited v University of Otago [1925] NZLR 191, 193]. Mr Hutley SC, who with Mr Flanigan appeared for Perpetual, submits that this is a rule of the law of real property of general application, with the consequence that the grant of a right of way for the enjoyment of Skygarden (Lot A) cannot be used in substance for passing over or through Skygarden to the adjacent Imperial Arcade and Centrepoint (Lot B). Mr Walker SC, who, with Mr Richard McHugh and Mr Owens, appeared for Westfield, disputes this. 7 The basis of the rule, as advanced in the cases and by Mr Hutley, is that it is an emanation of that essential characteristic of an easement (laid down by Lord Evershed MR in Re Ellenborough Park [1956] Ch 131) that an easement must accommodate the dominant tenement. But, in my respectful opinion, that is not a satisfactory explanation for any such rule. Lord Evershed's stipulation was that an easement must accommodate the dominant tenement, but not that it must only accommodate the dominant tenement and no other. Easements have been upheld as accommodating the dominant tenement, notwithstanding that they also benefit others [Simpson v Mayor of Godmanchester [1897] AC 696 (easement to open sluices and locks in times of flood held valid, even though it benefited other lands); Re Ellenborough Park, 172 (right of way may be valid even though it is capable of benefiting any passer-by, wholly unconnected with the dominant tenement]. 8 In Harris v Flower, the dominant land was 80 Royal Hill, Greenwich ("the pink land"), which had the benefit of a right of way from Prior Street over the servient land. The dominant owner also owned adjoining land at 72 Royal Hill ("the white land"), which was at the rear of a public house that enjoyed its own access from Royal Hill. An earlier plan to construct assembly rooms on 72 Royal Hill, with access into the public house and 80 Royal Hill, was not approved, and there was no access from No 72 to No 80. Subsequently, a plan was proposed for the construction of a factory and warehouse, partly on No 72 and partly on No 80. Although the servient owner's contention that there had been a loss of the right of way by abandonment failed, on appeal it was held that a right of way appurtenant to No 80 could not be used for the purpose of approaching buildings erected partly on No 72 and partly on No 80. Romer LJ stated the "rule" (at 132): If a right of way be granted for the enjoyment of close A, the grantee, because he owns or acquires close B, cannot use the way in substance for passing over close A to close B.

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10 Vaughan-Williams LJ also addressed the issue in terms that focus attention on whether or not use of the right of way to access Lot B would be in excess of the grant. His Lordship posed the question in the following terms (at 129): The question that is raised in this case is whether the defendant is entitled to use the right of way, which admittedly is a right of way appurtenant to the pink land, for the purpose of approaching the buildings erected partly on the part of the white land which is not used for the purposes of the public house and partly upon the pink land to which the right of way is appurtenant. 11 Then, having pointed out that the use of the land as a factory would impose a far greater burden on the servient tenement, his Lordship continued (at 132, emphasis added): I think if we look at the whole history of this case, including the cutting off of all access to the white land except by this right of way, it is impossible to say that the defendant is not using this right of way for the purpose of access to land to which the right of way is not appurtenant. …. A right of way of this sort restricts the owner of the dominant tenement to the legitimate user of his right; and the court will not allow that which is in its nature a burthen on the owner of the servient tenement to be increased without his consent and beyond the terms of the grant. … The burthen imposed on the servient tenement must not be increased by allowing the owner of the dominant tenement to make a use of the way in excess of the grant. There can be no doubt in the present case that, if this building is used as a factory, a heavy and frequent traffic will arise which has not arisen before. This particular burthen could not have arisen without the user of the white land as well as of the pink. 12 The basis of the "rule" is illuminated by the established "exception" that it does not apply where, at the time of the grant, Lot A itself forms a means of access to Lot B, nor where, though Lot A is not actually used as such a means of access at the time of the grant, the parties to the grant intend that it will be so used. This was laid down by no less a master of real property law than Megarry VC in Nickerson v Barraclough [1980] Ch 325 (at 336): Let me take as an example a case where plot A consists of a footpath some three feet wide and a hundred yards long, running from land near a public highway up to plot B. If there is an express grant of a right of way to plot A over land which lies between plot A and the highway, it seems to me that the grant would, subject to any language to the contrary, be construed in the light of the nature and user of plot A at the time of the grant. Since that nature and user is as a footpath which constitutes a means of access to plot B, then I would have thought that the grant would be construed as authorising the dominant owner to use the way as a means of access to plot A for the purposes for which plot A is used, namely, as a means of access to plot B. In the result, the way can be used as a means of access to plot B via plot A, notwithstanding Harris v Flower . If plot A is not used as an actual means of access to plot B but as between the parties to the transaction it is intended to be used thus, I think that the same rule would apply. 13 The significance of plot A in Megarry VC's example being a footpath is that it makes its contemplated use as such objectively obvious, but if such use were contemplated, notwithstanding that it was not objectively obvious, the same result would follow. The true distinction between Harris v Flower and the example in Nickerson is that in the former there was no contemplation at the time of the grant that the dominant tenement would be used for the purpose of accessing the dominant owner's adjoining remoter property, whereas in the latter there was such contemplation. Nickerson therefore shows that the uses of Lot A contemplated by the parties at the time of the grant are an important consideration when construing the words of the grant, and that if such uses included transiting Lot A to access Lot B, it is not in excess of a right of way accommodating Lot A for it to be used to access Lot A for the purpose of transiting to Lot B - even if that use was not already in effect at the time of the grant. 14 Mr Hutley submitted that the true explanation of Nickerson was narrower: he submitted that its rationale was that use of a right of way for the purpose of accessing a remoter property was permissible, if and only if (1) it was the common intention of the parties to the grant that the right of way would benefit the remoter property, and that use of the right of way for that purpose would be solely under the control of the dominant owner, and (2) the character of the dominant land was obviously and only in the nature of an access way. 15 I do not accept that the principle is so narrow as Mr Hutley puts. First, his submission involves the idea that use be solely under the control of the dominant owner. However, it is in the nature of easements that they are under the control of the dominant owner, because they confer on the dominant owner rights that may be exercised, according to their terms, without the permission or consent of the servient owner. Once an easement is granted, it is solely under the control of the dominant tenement. The determining factor in the example in Nickerson was not the sole control of the dominant owner, but the contemplated use of the dominant land. 16 Secondly, Mr Hutley's submission gives determinative significance to the obvious physical character of the dominant land: that it is crucial to the "exception" in Nickerson that lot A be obviously and be only an access way. As to the suggested requirement that it be obviously an access way, Megarry VC's additional observation, that the "rule" would not apply if lot A were intended to be used as a means of access to the remoter property, even though it were not actually used as such at the time, shows that the "exception" does not depend on inferring intent solely from the appearance or use of the land, but on the intention of the parties, objectively ascertained. The significance of the dominant land being a footpath in Megarry VC's example is that the dominant land's use as a footpath would be obvious to the parties to the grant, so that they might be taken to have contemplated that it would be used for its obvious purpose: in such a case, the intention of the parties may be inferred from the obvious objective fact of the appearance and current use of the dominant land. But it is the intention that is crucial, and the actual appearance or current use of the land is but one way in which that intention may be ascertained. The only significance of the character of the dominant land is that, if its character is already that of an access way, it may readily be inferred that the parties intended it so to be used.

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17 As to the suggested requirement of the exception that lot A be only an access way, parcels of land may have multiple uses. The concept of "use" of land is a wide one, and land may have multiple contemporaneous uses by multiple users (such as lessor, lessee and sub-lessee), all of whom may contemporaneously be using the same land in a different way and for a different purposes [Ryde Municipal Council v Macquarie University (1978) 139 CLR 633; Re Attorney General for the Australian Capital Territory (1990) 26 FCR 82; Alamdo Holdings Pty Limited v Australia Window Furnishings (NSW) Pty Limited [2004] NSWSC 487, [21-23]]. Use of a lot for transit to a further lot is nonetheless use of the first lot. Consistently with the view that the true issue is the nature of the use of the dominant tenement contemplated at the time of the grant, then, if the parties to the grant intended that the dominant land would be used, amongst other purposes, as a means of access to remoter land, the exception in Nickerson is invoked. There is no reason why the possibility or contemplation that the dominant land would or might be used for other purposes as well as for accessing remoter land should affect this. What influences the construction of the grant is the use or uses of the dominant tenement contemplated at the time of the grant. 18 The view that the rule in Harris v Flower is but a manifestation of the more general rule that use of an easement cannot be extended beyond the scope of the grant, so as to impose a burden greater than that which the servient owner agreed to accept, and that what burden the servient owner agreed to accept depends on what uses of the dominant land were contemplated at the time of the grant, is supported by authority, both before and after it was decided. 19 As to cases which preceded Harris v Flower, in Williams v James (1867) LR 2 CP 577, the defendant had been found entitled to a right of way by prescription over the plaintiff's land to access field A. He used the way for the purposes of carting from field A some hay that had been stacked on field A, but had been grown partly there and party on his adjoining field B. The Court of Common Pleas (Bovill CJ, Willes and Montague-Smith JJ) held that the mere fact that some of the hay had not been grown on field A but on field B did not make the carrying of it over the plaintiff's land an excess in the user of the right of way. Willes J and Montague-Smith J explained that this was because the stacking of hay on field A (albeit in part harvested from the adjoining field B) was in the reasonable and ordinary use of field A as a field. In Harris v Flower, Vaughan-Williams LJ explained Williams v James [at 128-129] on the basis that the use of field A to store hay grown not on that field but on the adjacent field B was a legitimate use of field A, so that carting hay so stored over the right of way was a legitimate use of the right of way. This shows that one legitimate use of the dominant land (lot A) can be a use ancillary to the enjoyment of lot B. [Similarly, in my opinion, use of Lot A for the purposes of transiting to Lot be can be an ordinary and reasonable use of Lot A]. The judgments of Bovill CJ and Willes J in Williams v James also show that the essential question is whether the use ancillary to the remoter land casts an additional burden on the servient tenement beyond that contemplated when the easement was created (in that case, by prescription). And while Skull v Glenister 33 LJCP 185; 16 CB (NS) 81, held that the defendants were not entitled to use a right of way to access, via the dominant land, remoter land on which they were building a house - because use of the right of way to the dominant land was a mere colourable use of it for the purpose of getting to their own remoter land - there was no suggestion that such use was contemplated at the time of the grant.

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20 As to cases decided after Harris v Flower, in Paterson & Barr v University of Otago, a right of way was expressed to accommodate a warehouse to be built on Lot 6, solely for the purpose of taking goods to and from the warehouse, but it became apparent that when constructed the warehouse was to be built on the adjoining Lot 5 as well as on Lot 6. Sim J, after referring to Harris v Flower, said: It seems to me, however, that, even if the grant could not be construed in the circumstances as extending to the whole warehouse, the claimant would have been entitled, at any rate, to use the right of way for the purpose of conveying goods to the part of the warehouse standing on section 6. In connection with this question reference may be made to the case of Williams v James . In that case there was a right of way in connection with a particular field. The way was used for the purpose of carting from the field some hay which had been grown partly there and partly on land adjoining. This was held not to constitute necessarily an excess of user of the right of way. The matter is not clear, … 21 In Alvis v Harrison (1991) 62 P&CR 10, 15-16, the House of Lords explained the rule in Harris v Flower in terms that the dominant owners "may not, in short, increase the scope of the right of access". In Gallagher v Rainbow (1994) 179 CLR 624, McHugh J (in a dissenting judgment, but the dissent does not affect this point) said (at 640 - 641) that Harris v Flower illustrated the rule that the use or purpose of an easement could not be altered beyond that contemplated at the time of the grant: Accordingly, no alteration can be made in the use or purpose of the easement that goes beyond that contemplated by the parties at the time of the grant. So, in Harris v Flower, Romer LJ said: If a right of way be granted for the enjoyment of Close A, the grantee, because he owns or acquires Close B, cannot use the way in substance for passing over Close A to Close B. In Bracewell v Appleby, [1975] Ch 408 at 418 Graham J applied this dictum of Romer LJ and held that the owner of a dominant tenement was not entitled to use a right of way for the purpose of gaining access to a house that he subsequently built on adjoining land. In Jelbert v Davis, the defendant who owned agricultural land had a right of way to that land over land owned by the plaintiff. Subsequently the defendant converted his land to a caravan park which had more than 200 camping sites. The plaintiff objected to the use of the right of way by caravans and cars that were using the park. The English Court of Appeal held that use of the right of way for such a large number of camping sites was impermissible, as it could not have been within the contemplation of the parties upon the original grant of the easements. The underlying principle was stated by Lord Denning MR as follows: … the true proposition is that no one of those entitled to the right of way must use it to an extent which is beyond anything which was contemplated at the time of the grant. 22 In Shean Pty Ltd v Owners of Corinne Court [[2001] WASCA 311, [46]], the Western Australian Court of Appeal held that the rule in Harris v Flower was not infringed where the conduct complained of was "within the plain meaning of the terms of the deed of easement". And in Strata Plan No 8450 [2002] NSWSC 780, Bergin J held that the rule in Harris v Flower was not applicable in circumstances where the intention of the parties at the time of the grant, as appeared from the surrounding circumstances, was that the dominant land would be consolidated with remoter land, and would then enjoy the benefits of the right of way for the purpose of accessing the remoter land. Her Honour, before referring to the absence of conduct "in excess of the grant" [77], said (at [76]): In other words, in contrast to the position in Harris v Flower , I am satisfied from the words of the grant, read in the context of the Plan and the surrounding circumstances, that it was intended that Mr and Mrs Miles were entitled to use the way for passing over Lot A to Lot 2. 23 The explanation of Harris v Flower by the Court of Appeal of England and Wales in Peacock v Custins [2001] 2 All ER 827 confirms that the true question is whether the proposed use of the right of way to access a remoter property is within the scope of the grant, having regard to the identity and purposes of the dominant tenement, and that the burden on the servient owner is not to be increased without its consent. Schiemann LJ said (at [24]-[25], emphasis added): 24. The right to use a right of way is determined by the terms of the grant, specifying the dominant tenement for the purposes of which the right is created. Trespass is whatever is not permitted by the grant. The right is not to use the way for the purposes of benefiting any property provided that the total user does not exceed some notional maximum user which the beneficiary might have been entitled to make for the purposes of the dominant tenement. If that were the test, the beneficiary might in some circumstances use the way entirely for purposes other than those of the dominant tenement. The right is to use the way for the purposes of the dominant tenement only. The grant, when made, had a notional value which would be identified by reference to those purposes and their likely impact. Use for other purposes would be likely to carry its own notional commercial value. … The court is not concerned with any comparison between the amount of use made or to be made, of the servient tenement and the amount of use made or that might lawfully be made within the scope of the grant. It is concerned with declaring the scope of the grant, having regard to its purposes and the identity of the dominant tenement. The authorities indicate that the burden on owner of the servient tenement is not to be increased without his consent. But burden in this context does not refer to the number of journeys or the weight of the vehicles. Any use of the way is, in contemplation of law, a burden, and one must ask whether the grantor agreed to the grantee making use of the way for that purpose. 24 In my opinion, therefore, the true basis of the so-called rule in Harris v Flower is no more than that use of an easement cannot be extended, beyond the scope of the grant, to impose a burden greater than that which the servient owner agreed to accept. What burden the servient owner agreed to accept depends, at least ordinarily, upon the contemplated use or uses of the dominant land at the time of the grant, because it was to accommodate the dominant land, in the light of its anticipated uses, that the easement was created. It is not in excess of the grant to use a right of way to access the dominant tenement for those purposes that were contemplated at the time of the grant. Whether the servient owner agreed to accept use of the right of way for the purpose of access not only to the dominant land, but also to transit the dominant land to gain access to the remoter properties, depends on whether at the time of the grant, it was contemplated that the dominant land would be used as a means of access to the remoter property - whether or not it was then actually so used. So in Williams v James, use of the right of way from Lot A to cart hay harvested from lot B was permissible, because the legitimate use of lot A included storage of hay harvested from lot B. In Megarry VC's example in Nickerson, use of the right of way to Lot A to gain access from lot A to Lot B was permissible, because at the time of the grant it was obvious that Lot A would be used for that purpose, or alternatively it was intended that it be used for that purpose. And in SP8450, use of the right of way to lot A to gain access from lot A to Lot B was permissible, because at the time of the grant it was intended that it be used for that purpose.

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The surrounding circumstances 25 Although ultimately it is a question of construing the language of the grant in the light of the surrounding circumstances, the meaning of language is influenced by its context, and it is useful first to examine the surrounding circumstances, which provide the context for the words of the grant. While the terms of the grant are central to the inquiry, the circumstances at the time of the grant are relevant when one considers the meaning of those terms [cf Kyren Pty Ltd v Cinema Place Pty Ltd [2006] SASC 93]. I turn therefore to the surrounding circumstances at the time of the grant. The following summary is largely adopted from the written submissions of counsel for Westfield, which are supported by the evidentiary references contained in those submissions, and which are not disputed by Perpetual. 26 In 1971, the Council of the City of Sydney had adopted its "Development Control and Floor Space Ratio Code", Policy 8 of which referred to the creation of "an integrated city-wide pedestrian movement system". The code provided for a series of floor space bonus elements, of which one - bonus element number 7, "Elective Pedestrian Circulation Improvements" - provided for the award of bonus floor space to encourage developers to undertake the provision of elements of the pedestrian network which could not be referenced directly to or identified with specific sites. In September 1974, the Council issued its "City of Sydney Pedestrian Network - Action Plan No. 6", which explained that the pedestrian network was planned "as a system of walkways threading through buildings, under and over roads, linking together malls, plazas, parks, minor street closures. Its aim is to provide for the people of Sydney traffic free, convenient, and pleasant ways to walk through the city". The action plan recommended the creation of the Pitt Street Mall as the spine of the proposed pedestrian network, and stated "One of the most significant tools for implementing the system is through the floor space ratio control code. A development is granted a floor space bonus in excess of the floor space ratio if it provides those public facilities which offset the undesirable effects of greater intensity of development on the existing transportation systems, pedestrian movement, street congestion and the environment". In 1983, the Council approved a plan to close Pitt Street between King and Market Streets to traffic, and on 4 July 1983 granted consent on its own application to create the Pitt Street Mall. 27 In November 1984, the then owner of the Glasshouse site lodged a development application. A second development application, prepared by the same architects who had prepared the first, Donald Crone & Associates, was lodged in February 1985. On 27 May 1985, the Council approved the first development application for the Glasshouse site, imposing a condition "That provision shall be made, to the satisfaction of the City Planner, for the connection of the basement service parking levels with the Imperial Arcade and Centrepoint". The second development application was granted on 24 February 1986, and the same condition became condition 19 in the second development consent. 28 The architectural plans for the Glasshouse development were amended to comply with condition 19. The vehicle ramp from King Street was enlarged to two lanes, and designed to accommodate delivery vehicles, service vehicles and cars travelling back and forth from King Street to the loading docks, car park and service areas of the Glasshouse, Centrepoint, Imperial Arcade and any new development between the Glasshouse and Imperial Arcade. On 11 November 1985, Donald Crone & Associates explained this to the Council: Vehicular access and egress ramps from King Street have been designed to accommodate maximum head room of 3.6 metres with sufficient width to accommodate large vehicles to goods loading area at level 2 and to provide possible vehicular connection to adjoining properties along the southern boundary. 29 The terms of condition 19, and that letter, make clear that Perpetual's predecessor as servient owner of the Glasshouse site contemplated that the Skygarden site, to which the ramp led, might be used in the future for, amongst other purposes, serving as a means of access to the remoter properties.

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30 By late 1986, it seemed to the developers of the Glasshouse that they might exceed the permissible floor space ratio. On 14 October 1986, New World Oil & Developments Pty Limited (along with Jamino, a member of the Carringbush Group of Companies which was developing the Glasshouse site) acquired 3535sqm of transferable floor space for use on Carringbush Group projects, including if necessary the Glasshouse site. On 12 December 1986, Donald Crone & Associates wrote to the Council, acknowledging a shortfall in the floor space ratio of the Glasshouse development, and stating an intention to use 0.85 FSR of transferable floor space to make up the shortfall, but reserving the right in the future to seek bonus floor space from the Council in lieu of the transferable floor space being purchased. On 4 June 1987, the Council notified Donald Crone & Associates that the development consent for the Glasshouse had been modified, by providing for execution of a deed between the owners of the site and the owners of the transferable areas for the transfer of 2601 sqm of bonus floor space to the site, to achieve a FSR of 12.5:1, failing which the FSR would be reduced to 11.5:1. On 18 June 1987, the developer informed Council that 2601 sqm of transferable floor space had been allocated to the Glasshouse. 31 Construction of the Pitt Street pedestrian mall commenced in early 1987. Vehicular access to the Imperial Arcade and Centrepoint remained via ramps from Pitt Street, and while delivery vehicles were restricted to before 10.00 am, other vehicles visiting Imperial Arcade and Centrepoint continued to use the mall throughout the day. 32 In February 1987, the then owner of the Skygarden site lodged a development application. Their architects were also Donald Crone & Associates. The initial plans for Skygarden, which Council approved on 18 June 1987, provided for vehicular access via Castlereagh Street, and did not provide for use of the Glasshouse ramp, nor involve any link through to Imperial Arcade or Centrepoint.

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41 Following the creation of the easement, the then owner of the Glasshouse applied to the Council for a grant of bonus floor space under Element 7. In a letter dated 27 May 1988, the owner of the Glasshouse explained to the Council that the ramp would allow access to Skygarden, and in turn to Imperial Arcade and Centrepoint: As explained at our meeting the revised development application submitted by Mastwood Pty Limited was a result of this company advising that company access to the basement of their development was able to be secured over our property. This in turn will allow access to Imperial Arcade and Centrepoint basements at some future dates thus ensuring all vehicular traffic being removed from Pitt Street mall. … In consideration of our efforts we requested an additional floor space bonus for the creation of the right of carriageway and now seek an early decision from Council. 42 On 8 August 1988, the owner of the Glasshouse wrote to the owners of each of Imperial Arcade and Centrepoint, as follows (emphasis added): A condition of the development consent for the 135 King Street project was the construction of an access corridor to allow goods deliveries to be made via King Street to all properties north of Centrepoint. The location of the right of carriageway created is the carpark entry ramp running on the southeast access along the eastern boundary of the 135 King Street development. Clearance and width are designed and constructed to accept all goods deliveries to all properties requested by the Council. The adjoining owner Mastwood Pty Ltd (Haysons/Merlin Group) have now established right of carriage over 135 King Street. The access facility will be available to AMP and the head lessee of the Imperial Arcade when construction of Skygarden and 135 King Street projects are completed in the latter half of 1989. This will obviously be subject to agreement between these two owners regarding security, maintenance and other appropriate matters. The buildings which Council desired to see use the carriageway are the following: All owners are being notified concurrently. 1. 135 King Street - Jamino Pty Ltd 2. Skygarden - Mastwood Pty Ltd (Merlin/Hayson Group) 3. Imperial Arcade - AMP Society (head lessee/Stockland Property Trust) 4. Centrepoint - AMP Society. 43 Although, in its reference to "agreement between these two owners", this letter is at first sight obscure, the better view is that that was a reference to Mastwood and AMP. The second paragraph set out above refers to two owners - Mastwood and AMP. AMP was the owner of both Imperial Arcade and Centrepoint (Stockland was the head lessee of Imperial Arcade). So understood, the reference to "agreement between these two owners" - Mastwood and AMP - makes sense. In a letter from Jamino, one would not expect Jamino to refer to itself in the third person as one of "these two owners". 44 On 11 November 1988, Jamino submitted a report to the Council, which stated that the creation of the easement had detrimentally affected the value of the Glasshouse by up to $3 million. On 13 December 1988, the Council awarded the then owner of the Glasshouse a floor space bonus of 1.05:1 and deleted the condition which had required the transfer of 2601 sqm of transferable floor space. 45 Thus Jamino obtained a significant reward - in the form of bonus floor space ratio - for the creation of the easement, on the basis that it would in due course facilitate access to Imperial Arcade and Centrepoint. Although Skygarden also obtained an FSR bonus, it was allowed on account of the provision of a pedestrian "through-site-link" and the retention of historic facades on Pitt Street, and not on account of the underground vehicular link. Skygarden obtained the further benefit, as a result of having vehicular access from King Street through the Glasshouse, that whereas its original development application provided for no off-street parking, it instead was able to incorporate 35 onsite car parking spaces, and a reduction in the contribution which it was required to make to Council's parking station trust fund. 46 Although the application for and grant of bonus FSR took place after creation of the easement, I admitted evidence of them because they occurred shortly after the creation of the easement, and a number of witnesses deposed that when they created the easement they had in mind the acquisition of that benefit. The circumstance that, immediately after the easement was created, those steps were actually taken, renders it more probable that the purpose of gaining the bonus FSR motivated the transaction. 47 Accordingly, the surrounding circumstances show that the parties to the transaction contemplated that, in due course, Skygarden would be used, inter alia, as a means of access to the remoter properties Imperial Arcade and Centrepoint. 48 Mr Hutley argues that there is nothing (except, perhaps, the conversation between Mr Denoon of Jamino and his manager Mr Frazer, referred to below) to suggest that the parties contemplated that the dominant owner alone would be in a position to permit or forbid use of the driveway for the purpose of accessing Imperial Arcade and Centrepoint. But I think that submission is misdirected: the question is not whether the parties contemplated that the dominant owner alone would have that right, but what user of the dominant tenement the parties contemplated, and in particular whether they contemplated that the dominant land would serve as a means of access to the remoter properties. Here, they contemplated that the dominant land would be used, though not necessarily immediately, inter alia, as a means of access to the remoter properties, and thus the right of way accommodate that use of the dominant land. As it is not in excess of the grant to use a right of way to access the dominant tenement for those purposes which were contemplated at the time of the grant, it is not necessary to resolve whether the parties contemplated that the dominant owner alone would be in a position to decide whether or not the ramp could be used to access the remoter properties. It is the dominant owner who, within the limits of the grant, determines who may use an easement and for what purpose. 49 If it were necessary to address Mr Hutley's submission further, then there is evidence that the parties did contemplate that the dominant owner alone would enjoy that right, and that the servient owner would not be entitled to object to use of the right of way for the purpose of travelling on from Skygarden to the remoter properties. First, it cannot be reasonably supposed that the grantor of the easement would have contemplated that the Council might give it bonus FSR under Element 7, while the grantor remained in a position to veto use of the driveway for the purpose of accessing the Imperial Arcade and Centrepoint in the future. Nor is there anything to suggest that the grantor intended to reserve to itself the right to insist on further consideration - from the owners of Imperial Arcade and Centrepoint - for the grant of an easement appurtenant to those properties; indeed, the letters of 8 August 1988, referred to above, suggest quite the contrary. 50 Secondly, there is the evidence of Mr Frazer, who was General Manager of the Carringbush Group, the developers of the Glasshouse. It was his idea that it might be possible to obtain bonus FSR if the Council could be satisfied that everything that could be done was done to enable vehicles to travel via the vehicle ramp to Imperial Arcade and Centrepoint. He proposed to the Managing Director of Carringbush, Mr Denoon, that the developers of Skygarden should be offered an easement over the ramp. In the course of his conversation with Mr Denoon, he said: We have no say over what happens on the Skygarden site but if we do everything we can do to comply with Council's condition, then it might award some bonus floor space. … It is a matter for the owner of Skygarden to agree whether or not it continues the link to Imperial Arcade. When Imperial Arcade and Centrepoint are redeveloped they can use the Glasshouse vehicle ramp to access and leave those properties provided the owner of the Skygarden site agrees. 51 Mr Frazer assisted in the drafting of the letter of 8 August 1988, and this conversation reinforces the construction of that letter which, for reasons already explained, I prefer. Thirdly, there is the evidence of Mr Morrow, who was a Development Manager for Merlin, the developer of Skygarden. Mr Frazer told him that the ramp had been designed and built to accommodate vehicles travelling to and from Imperial Arcade and Centrepoint. Fourthly¸ the letter from Jamino to the owners of Imperial Arcade and Centrepoint of 8 August 1988 also supports the view that it was contemplated that, in order to use the ramp for access to the remoter properties, their owners required only the agreement of the owner of Skygarden (and not the consent of the owner of the Glasshouse). 52 However, this conclusion, and the evidence on which it depends, is not necessary to my decision, because in my opinion it is the use of the dominant tenement contemplated at the time of the grant, and not the legal control of the right of way, which informs what use of the right of way the servient owner is to be taken to have accepted: once the contemplated uses of the dominant land are identified, it follows necessarily that it is the dominant owner who will have legal control of who may or may not use the right of way to access the dominant land for any of those purposes, within the limits of the grant. The language of the grant 53 Against those background circumstances, the words of the grant may now be considered. 54 For Westfield, Mr Walker emphasises the phrase "every person authorised". While on the one hand this is a commonplace in grants of easements, it does reinforce the point that, once created, use of an easement, within its terms, is the prerogative of the dominant owner, free from any requirement to obtain the consent of the servient owner. In this case it has the unexceptional consequence that the owner of Skygarden can determine who can use the driveway to access Skygarden, for whatever purposes are within the terms of the easement. If access to Skygarden for the purpose of travelling on to Imperial Arcade and Centrepoint is within the easement, then who may use the easement for that purpose is within the control of the dominant owner, the owner of Skygarden. 55 Secondly, Mr Walker points to the words "for all purposes". In Harris v Flower, the grant did not include the words "for all purposes", although Cozens-Hardy LJ (at 133) nonetheless treated the easement as "a right of way for all purposes - that is, for all purposes with reference to the dominant tenement". In Gallagher v Rainbow, the grant included the words "for all purposes ordinarily incidental to or connected with domestic use and enjoyment of the dominant tenement"; and in Peacock v Custins, the easement was "for all purposes in connection with the use and enjoyment of the property hereby conveyed". In Strata Plan No. 8450, the grant included only the words "for all purposes", without limiting words of the type used in the other cases just mentioned; and Bergin J (at [61]-[63]) plainly considered that that suggested a more expansive right of way than in those other cases. Similarly, in the present case, the words are not followed by any words of limitation. Moreover, a grant of a right of way "for all purposes" is a general grant, which is not limited to the uses contemplated when the grant was made [White v Grand Hotel Eastbourne; South Eastern Railway Co v Cooper [1924] 1 Ch 211, British Railway Board v Glass [1965] Ch 538, 558]. A fortiori it must extend to the possible purposes contemplated, though not yet implemented, by the parties at the time of the grant; and the surrounding circumstances show that in this case one of those purposes was to travel on from Skygarden to Imperial Arcade and Centrepoint. 56 For Perpetual, Mr Hutley draws attention to the words "to and from", and the absence of "through" or "across", suggesting that the grant contemplates user for the purpose of going to and from Skygarden and not elsewhere. While those words point somewhat that way, their force is reduced by the circumstances, first, that even if accessing Imperial Arcade or Centrepoint, a user of the right of way would nonetheless go first to Skygarden; secondly, that in Nickerson, Megarry VC spoke of a right of way "to" (not "through" or "across") plot A; and, thirdly, that in Strata Plan No. 8450, the easement in issue was, pursuant to Conveyancing Act 1919 (NSW), s 181A(1) and Sch 8 Pt 1, "to go, pass and repass at all times and for all purposes with or without animals or vehicles or both to and from the said dominant tenement or any such party thereof" - substantially identical to the grant in this case - yet was found to authorise use for the purpose of transiting to the remoter land. 57 Secondly, Mr Hutley points to clause 3 (which provides that the cost of routine maintenance and repair to the site of the carriageway should be borne equally by the grantor and the grantee); clause 4 (which provides that, other than for damage caused by one or other of them, costs of repairing damage shall be borne equally between them); clause 7 (which provides for grantor and grantee separately to insure the structure of the carriageway and associated fixtures and fittings for damage arising from their respective use); clause 8 (which provides for both at their own cost separately to maintain public risk insurance for loss and damage arising out of their respective use of the carriageway); clause 10 (which provides that in the event of redevelopment of the buildings, the grantee shall surrender the right of carriageway provided that the grantor will contemporaneously provide an alternative right of carriageway by the shortest practical route and on the same terms from the street alignment to that part of the site of the carriageway immediately adjoining Skygarden); and clause 11 (a dispute resolution clause in respect of disputes between grantor and grantee). Mr Hutley submits that these provisions reflect a fair and reasonable distribution of costs and responsibilities between grantor and grantee, consistent with an approximate equal apportionment of responsibility for the easement between them, but (he submits) inconsistent with any contemplation that the grantee would use the easement not only for the benefit of Skygarden but also to permit access to remoter lots. In short, he asks, why would the grantor agree to bear half of the cost of maintenance and repairs if the grantee were to use the easement not only for its own benefit but also for Imperial Arcade and Centrepoint? 58 To this, Mr Walker responds that no inference as to the extent of permissible user should be drawn from the mere fact that costs of maintaining the driveway are to be shared equally by the parties; Skygarden might have been constructed such that its use of the driveway would be very much greater than use by the Glasshouse; or Skygarden might never have been built, in which case the Glasshouse might have made much more use of the driveway than Skygarden. 59 The only dominant land was to be Skygarden - the right of way is not appurtenant to Imperial Arcade, nor Centrepoint, and permits only access to Skygarden, even if for the purpose of transiting Skygarden to Imperial Arcade. The only parties to the grant were the respective owners of the Glasshouse and Skygarden. Thus at the time of the grant, they were the only parties between whom responsibilities could be shared, equally or otherwise. Clauses 7 and 8, which make each party responsible for insurance in respect of loss and damage caused by their respective use, make Skygarden responsible for insurance in respect of loss caused by its use, which would apparently include use by those authorised by it to transit to Imperial Arcade and Centrepoint. Clause 9 gives the Glasshouse the benefit of an indemnity from Skygarden in respect of liability arising from Skygarden's use of the access way, which again would apparently include use by those authorised by Skygarden to transit to Imperial Arcade and Centrepoint. 60 Clauses 1 and 2, in contrast to those emphasised by Mr Hutley, make the Glasshouse, to the exclusion of Skygarden, responsible for the construction of the site of the access ramp, and its maintenance in good repair - in contradistinction to the ordinary position, that the construction and maintenance of a right of carriageway is the responsibility of the dominant owner, unless the grant otherwise provides. If this grant had followed the ordinary practice, or made no provision, then the owner of Skygarden would alone have been responsible for construction and maintenance of the ramp. However, in this case the ramp also formed the access to the basement of the Glasshouse, and Council had required, as a condition of its grant of development approval to Jamino, that provision be made for the connection of the basement service parking levels with the Imperial Arcade and Centrepoint. And as the original proposal of the developer of Skygarden was for vehicular access from Castlereagh Street, the Glasshouse would have been the sole user of the ramp, and would have had to bear the cost of construction, repair and maintenance itself. Perpetual's predecessor saw commercial advantage in persuading Skygarden to use the King Street driveway rather than the proposed access from Castlereagh Street, and secured in return for its offer of such access a contribution of 50% to the cost of maintenance and repairs, as well as setting the conditions for obtaining bonus FSR. 61 In those circumstances, I do not think that any inference can be drawn from the conditions referred to by Mr Hutley as to what use of the right of way the parties intended to permit. Different conditions point in different directions, and all are the product of commercial negotiation and compromise. In that context, the circumstance that the servient owner accepted a contribution to maintenance and repairs of only 50% does not tell in favour of the view that the grant was not intended to permit access to Skygarden for the purpose of transiting through it to the remoter properties. Conclusion 62 The true basis of the so-called rule in Harris v Flower is that use of an easement cannot be extended, beyond the scope of the grant, to impose a burden greater than that which the servient owner agreed to accept. What burden the servient owner agreed to accept depends, at least ordinarily, upon the contemplated use or uses of the dominant land at the time of the grant. It is not in excess of the grant to use a right of way to access the dominant tenement for those purposes that were contemplated at the time of the grant. Whether the servient owner agreed to accept use of the right of way for the purpose of access not only to the dominant tenement, but also to transit the dominant tenement (Lot A) to gain access to remoter properties of the dominant owner (Lot B), depends on whether, at the time of the grant, it was contemplated that Lot A would be used as a means of access to Lot B. 63 In the algebraic terminology originally adopted in Harris v Flower and maintained in Nickerson, Skygarden is lot A, and Imperial Arcade and Centrepoint constitute lot B. The right of way was granted for the enjoyment of Skygarden (lot A). While without more that might not allow use of the right of way in substance for accessing Skygarden only to transit it to Imperial Arcade and Centrepoint (lot B), it will do so if the parties to the grant contemplated that Skygarden would be used as a means of access to Imperial Arcade and/or Centrepoint.

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64 The surrounding circumstances show that the parties did contemplate that Skygarden would be used for that purpose. The commercial context for the creation of the easement was that Jamino, the developer of the Glasshouse, had been required to provide for interconnection of its ramp with Imperial Arcade and Centrepoint, and wanted bonus floor space. It was to secure that bonus floor space that it persuaded Mastwood, the developer of Skygarden, to obtain access from King Street via the ramp, rather than from Castlereagh Street as Mastwood originally planned. Both parties to the grant envisaged that, in the future, Skygarden would be used for, amongst other purposes, a means of vehicular access to the remoter properties, thus freeing Pitt Street of vehicular traffic. It was on that basis that Skygarden constructed part of the wall adjoining Imperial Arcade of concrete blocks, so as to facilitate construction of access in the future. And it was only on that basis that Jamino could claim the bonus FSR, which would not have been available if the Council had thought or been told that Jamino was reserving the right to object in the future to user of the driveway for the purpose of accessing the remoter properties. As counsel for Westfield submit, the construction for which Perpetual contends, reserving to Perpetual a veto over use of the ramp for that purpose, would be quite inconsistent with the purpose of its predecessor in title in granting the easement. This case is within Nickerson v Barraclough (see also Strata Plan No. 8450), and not within Harris v Flower. 65 Subject to any submissions which counsel may wish to make as to their form, in respect of which any application should be notified to my associate within 48 hours, I will make the following orders, which depart in form, but not I think in substance, from those proposed in the Amended Summons:

Declare that on the proper construction of the right of way referred to in Deposited Plan 641047 burdening the land now comprised in Folio Identifier 152/792149 (situate at and known as "The Glasshouse", 146-156A Pitt Street and 131-139 King Street, Sydney), and benefiting the land now comprised in Folio Identifier 10/775619 (situate at and known as "Skygarden", 77-83A Castlereagh Street and 162-166A Pitt Street), persons with vehicles authorised by the registered proprietor of Skygarden may use the right of way for the purpose of entering on to Skygarden and proceeding from it to the driveways, parking spaces and/or loading docks to be built on the land comprised in Folio Identifier B/107798 (situate at and known as "Imperial Arcade", 168-174 Pitt Street) and/or the land comprised in Folio Identifiers 1/736678 and 1/1029020 (situate at and known as "Centrepoint", 184-190 Pitt Street) substantially in accordance with the plans number SC/DA 301 to SC/DA 305 contained in the development application of the plaintiff Westfield Management Limited lodged with the City of Sydney Council on 7 December 2005, where the buildings upon 168-174 Pitt Street and 184-190 Pitt Street to be serviced by such driveways, parking spaces and loading docks are when constructed substantially the buildings described in the plans and specifications contained in that development application.

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