Bonvale Enterprises Pty Ltd v Halfpenny Investments Pty Ltd

[2005] NSWSC 219

Reported Decision: 62 NSWLR 698
(2005) NSW ConvR 56-128

New South Wales

Supreme Court

CITATION:	Bonvale Enterprises Pty Ltd v Halfpenny Investments Pty Ltd [2005] NSWSC 219 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	4 March 2005
JUDGMENT DATE :	14 March 2005
JUDGMENT OF:	Burchett AJ
DECISION:	Separate questions answered as stated in the judgment

CATCHWORDS:	Easetments - creation under s.88K of the Conveyancing Act 1919 - whether the Court has power to utilize s.88A so as to order the creation of an easement in gross in favour of a Council - easement for drainage - nature of an easement - construction s.88A and s.88K - whether liberal construction of s.88K required because it is beneficial legislation conferring a power on a Court - whether expressions such as "land that will have the benefit of the easement" have a technical legal meaning and indicate the existence of a dominant tenement.
LEGISLATION CITED:	Conveyancing Act 1919 (NSW) Real Property Act 1900 (NSW) Conveyancing (Amendment) Act 1930 Local Government Conveyancing (Amendment) Act 1964
CASES CITED:	In re Ellenborough Park [1956] Ch. 131 at 162 Rangeley v Midland Railway Company (1868) 3 Ch.App.306 at 310 Alfred F Beckett Ltd v Lyons (1967) Ch. 449 at 483 Woodland v Manly Municipal Council (2003) 127 LGERA 120 at 127 117 York Street Pty Ltd v Proprietors of Strata Plan No. 16123 (1998) 43 NSWLR 504 Billgate Pty Ltd v Woollahra Municipal Council (2004) BC 200405039 at para 16 Knight v F.P.Special Assets Limited (1992) 174 CLR 178 at 205 PMT Partners Pty Ltd (In Liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 313 Conway v The Queen (2002) 209 CLR 203 at 219 Roy Morgan Research Centre Pty Limited v Commissioner of State Revenue of the State of Victoria (2001) 207 CLR 72 at 78 Ashfield Municipal Council v Joyce [1978] AC 122 at 134 Bull v Attorney-General (NSW) (1913) 17 CLR 370 at 384 Pemsel's Case [1891] AC 531
PARTIES:	Bonvale Enterprises Pty Limited v Halfpenny Investments Pty Limited and Halfpenny Pastoral Company Pty Limited
FILE NUMBER(S):	SC 5566/2004
COUNSEL:	Mr B A Coles QC and Mr J B Conomy for the Plaintiff Mr T E F Hughes QC and Mr M Southwick for the Defendants
SOLICITORS:	Osbornes Lawyers - Plaintiff Tribe, Conway & Co - Defendants

LOWER COURT JURISDICTION:

- 15 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
EQUITY DIVISION

BURCHETT AJ

14 March 2005

BONVALE ENTERPRISES PTY LTD - (Plaintiff)

HALFPENNY INVESTMENTS PTY LTD and HALFPENNY PASTORAL COMPANY PTY LIMITED - (Defendants)

JUDGMENT

1 The plaintiff’s summons seeks an order imposing an easement, on such terms as the Court thinks appropriate, over certain land of the defendants for the benefit of the plaintiff as proprietor of land known as 153 Menangle Road, Menangle. The power of the Court to make an order of this kind, of which the plaintiff seeks to avail itself, is contained in section 88K of the Conveyancing Act 1919 (NSW).

2 While the matter was awaiting hearing, the plaintiff gave notice that it would seek an amendment to claim, in the alternative, an order pursuant to section 88K(1) imposing an easement for drainage, on such terms and conditions as the Court thinks appropriate in the circumstances, over the land of the defendants in favour of Wollondilly Shire Council, and a further order for the execution and delivery of an appropriate dealing under the Real Property Act 1900 (NSW) in favour of the Wollondilly Shire Council. If the Court were to make such an order, it would be doing so in reliance on s.88A to enhance or transform its powers under s.88K. The amendment was opposed on the ground that it would be futile, and on the further ground that the plaintiff lacked standing to seek the relief sought by the amendment. Following some debate, Campbell J made an order for the separate determination of the following questions:

1. Whether there is power for the Court to order an easement over land in favour of a public or local authority constituted by an Act under section 88K of the Conveyancing Act;
2. Whether the plaintiff has standing to seek an order under section 88K(1) of the Conveyancing Act 1919 imposing an easement over land in favour of a public or local authority constituted by an Act.

3 It is desirable, in order more easily to understand the arguments advanced, that I should set out section 88K, then section 88(1) and (4) and finally section 88A:

(1) The Court may make an order imposing an easement over land if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement.

(2) Such an order may be made only if the Court is satisfied that:

(a) use of the land having the benefit of the easement will not be inconsistent with the public interest, and
(b) the owner of the land to be burdened by the easement and each other person having an estate or interest in that land that is evidenced by an instrument registered in the General Register of Deeds or the Register kept under the Real Property Act 1900 can be adequately compensated for any loss or other disadvantage that will arise from imposition of the easement, and
(c) all reasonable attempts have been made by the applicant for the order to obtain the easement or an easement having the same effect but have been unsuccessful.
(3) The Court is to specify in the order the nature and terms of the easement and such of the particulars referred to in section 88 (1) (a)-(d) as are appropriate and is to identify its site by reference to a plan that is, or is capable of being, registered or recorded under Division 3 of Part 23. The terms may limit the times at which the easement applies.

(4) The Court is to provide in the order for payment by the applicant to specified persons of such compensation as the Court considers appropriate, unless the Court determines that compensation is not payable because of the special circumstances of the case.
(5) The costs of the proceedings are payable by the applicant, subject to any order of the Court to the contrary.

(6) Such an easement may be:
(a) released by the owner of the land having the benefit of it, or
(b) modified by a deed made between the owner of the land having the benefit of it and the persons for the time being having the burden of it or (in the case of land under the provisions of the Real Property Act 1900 ) by a dealing in the form approved under that Act giving effect to the modification.
(7) An easement imposed under this section, a release of such an easement or any modification of such an easement by a deed or dealing takes effect:
(a) if the land burdened is under the Real Property Act 1900 , when the Registrar-General registers a dealing in the form approved under that Act setting out particulars of the easement, or of the release or modification, by making such recordings in the Register kept under that Act as the Registrar-General considers appropriate, or
(b) in any other case, when a minute of the order imposing the easement or the deed of release or modification is registered in the General Register of Deeds.
(8) An easement imposed under this section has effect (for the purposes of this Act and the Real Property Act 1900 ) as if it was contained in a deed.
(9) Nothing in this section prevents such an easement from being extinguished or modified under section 89 by the Court.

S.88 Requirements for easements and restrictions on use of land

(1) Except to the extent that this Division otherwise provides, an easement expressed to be created by an instrument coming into operation after the commencement of the Conveyancing (Amendment) Act 1930 , and a restriction arising under covenant or otherwise as to the user of any land the benefit of which is intended to be annexed to other land, contained in an instrument coming into operation after such commencement, shall not be enforceable against a person interested in the land claimed to be subject to the easement or restriction, and not being a party to its creation unless the instrument clearly indicates:
(a) the land to which the benefit of the easement or restriction is appurtenant,
(b) the land which is subject to the burden of the easement or restriction:
Provided that it shall not be necessary to indicate the sites of easements intended to be created in respect of existing tunnels, pipes, conduits, wires, or other similar objects which are underground or which are within or beneath an existing building otherwise than by indicating on a plan of the land traversed by the easement the approximate position of such easement,
(c) the persons (if any) having the right to release, vary, or modify the restriction, other than the persons having, in the absence of agreement to the contrary, the right by law to release, vary, or modify the restriction, and
(d) the persons (if any) whose consent to a release, variation, or modification of the easement or restriction is stipulated for.
……………………………...

(4) Subsection (1) does not apply to an easement without a dominant tenement acquired by or for a prescribed authority referred to in section 88A, nor to any restriction on the use of land in relation to any such easement.


S.88A Easements in gross

(1) In this section:

prescribed authority means:

(a) the Crown, or

(b) a public or local authority constituted by an Act, or

(c) a corporation prescribed by the regulations for the purposes of this section.
(1A) An easement without a dominant tenement may be created in favour of a prescribed authority, and any such easement may be assured to a prescribed authority.
(1B) However, an easement without a dominant tenement may only be created in favour of, or assured to, a corporation prescribed by the regulations for the purposes of this section if the easement is for the purpose of, or incidental to, the supply of a utility service to the public, including (but not limited to):


(a) the supply of gas, water or electricity, or
(b) the supply of drainage or sewage services.

(2) In an instrument which:

(a) takes effect on or after 15 June 1964 (the commencement of the Local Government and Conveyancing (Amendment) Act 1964 ),
(b) purports to create a right-of-way or drainage easement without a dominant tenement, and
(c) purports to create or assure such a right-of-way or drainage easement in favour of or to a prescribed authority,
the expressions “right of carriage way”, “right of footway”, “easement to drain water” and “easement to drain sewage” have the same effect as if there had been inserted in lieu thereof respectively the words contained in Schedule 4A.
(2A) In an instrument which takes effect after the commencement of Schedule 1 [5] to the Property Legislation Amendment (Easements) Act 1995 and purports to create or assure an easement without a dominant tenement of the following kind in favour of or to a prescribed authority, the following expressions have effect as if the words attributed in Schedule 4A to those expressions were inserted instead:

easement for repairs

easement for drainage of sewage

easement for drainage of water

easement for electricity purposes

easement for services

easement for water supply

right of access

(2B) The meaning given to an expression by this section and Schedule 4A may be varied (whether by way of addition, exception, qualification or omission), and is taken to have always been capable of being so varied, by the instrument in which the expression is used.

(2C) In Schedule 4A:

(a) a body includes any person for the time being authorised by the body, and
(b) a lot includes any other distinct piece or parcel of land (such as an island, a portion of a Parish or a Section).
(2D) The power conferred by this section is taken always to have existed. However, the power conferred by this section on a corporation prescribed by the regulations for the purposes of this section confers that power on and from the date the corporation is first so prescribed if the regulations so provide.
(2E) The restriction imposed by subsection (1B) on the power conferred by this section does not apply to an easement created or assured before the commencement of that subsection.
(3) This section applies and shall be deemed always to have applied to land under the provisions of the Real Property Act 1900 .

4 Any consideration of the first question must start with a general proposition which, in Gale On Easements, 17 ed (2002), at 7-8, is placed at the forefront of the learned author’s discussion of the essential characteristics of an easement, that an easement involves both a dominant and a servient tenement. That celebrated work has itself been described authoritatively as “the starting-point of the modern law [of easements]”: In reEllenboroughPark [1956] Ch. 131 at 162, per Evershed MR (as Lord Evershed MR then was). Gale refers to the statement of Lord Cairns LJ in Rangeley v Midland Railway Company (1868) 3 Ch.App. 306 at 310, 311:

“There can be no easement properly so called unless there be both a servient and a dominant tenement. … There can be no such thing according to our law, or according to the civil law, as what I may term an easement in gross. An easement must be connected with a dominant tenement.”

But that statement requires immediate qualification in reference to section 88A, which has since 1930 provided for the creation of easements in gross in favour of the Crown or a limited class of other authorities. An easement in gross is an easement without a dominant tenement. In terms of section 88A, rather than being for the benefit of identified land (the dominant tenement), it has been “created in favour of a prescribed authority”, without reference to any particular land of the authority to be served or accommodated by it. Of course, an easement under section 88A still has a tie to land, but the tie is to the servient tenement, not to a dominant tenement.

5 Various expressions have been used in the books to refer to the connection between an easement under the general law and the dominant tenement. Lord Cairns in Rangeley used the expression “connected with a dominant tenement”; Winn LJ in Alfred F Beckett Ltd v Lyons [1967] Ch. 449 at 483, quoted in Gale at 8, used the expression “annexed to land”; Lord Evershed MR in Ellenborough Park at 175 referred to “the requirement of connexion with the dominant tenements to which it is appurtenant” and “the necessary ‘nexus’ between the subject-matter enjoyed and the premises to which the enjoyment is expressed to belong”; Gale at 10, summarising an illustrative case, referred to “the dominant tenement for the benefit of which the right of way was given”. Section 88(1) of the Conveyancing Act, quoted above, makes use of the expression “the land to which the benefit of the easement… is appurtenant”.

6 Senior Counsel for the plaintiff acknowledged that he had been unable to find any authority dealing with the scope of section 88K, or the earlier provisions to somewhat similar effect in Queensland, which assisted him upon the question whether it enabled the Court to make an order bringing into existence an easement in gross of the kind contemplated by section 88A. To the contrary, indeed, there are authorities which appear to assume section 88K is concerned with easements in the ordinary sense. For example, in Woodland v Manly Municipal Council (2003) 127 LGERA 120 at 127, Hamilton J said a succession of cases had established the view that “it was the dominant land that was referred to in s.88K(2)(a)”. One of those cases was 117 York Street Pty Ltd v Proprietors of Strata Plan No. 16123 (1998) 43 NSWLR 504, where Hodgson CJ in Eq. (as he then was) referred (at 513) to “the dominant land”. But in no case cited to me was any question raised of the possible application of section 88A. In the absence of authority actually directed to the particular point, counsel for the plaintiff relied on the proposition that remedial legislation (such as section 88K, and cf. Billgate Pty Ltd v Woollahra Municipal Council (2004) BC 200405039 at para 16) should be interpreted liberally, and he referred to the treatment of this topic in chapter 9 of Pearce and Geddes, Statutory Interpretation in Australia, 5 ed. (2001). In that chapter at 228, the learned authors cite the observation of Isaacs J in Bull v Attorney-General(NSW) (1913) 17 CLR 370 at 384:

“In the first place, this is a remedial Act, and therefore, if any ambiguity existed, like all such Acts should be construed beneficially… This means, of course, not that the true signification of the provision should be strained or exceeded, but that it should be construed so as to give the fullest relief which the fair meaning of its language will allow.”

To counsel’s proposition might be added a reference to the judgment of Gaudron J in Knight v F. P. Special Assets Limited (1992) 174 CLR 178 at 205, where her Honour, referring to a power “conferred on a court”, said:
“The necessity for the power to be exercised judicially tends in favour of the most liberal construction.”

That dictum was taken up in the joint judgment of Brennan CJ, Gaudron and McHugh JJ in PMT Partners Pty Ltd (In Liq) vAustralian National Parks and Wildlife Service (1995) 184 CLR 301 at 313:

“Its remedial nature [their honours had in mind a provision of a statute conferring a relieving power on a court] and the consideration that a provision conferring a power to be exercised judicially should be construed as liberally as its terms and context permit tend in favour [of a particular wide construction].”

These observations were cited with approval in the joint judgment of Gaudron A-CJ, McHugh, Hayne and Callinan JJ in Conway v The Queen (2002) 209 CLR 203 at 219, and in Roy Morgan Research Centre Pty Limited v Commissioner of State Revenue of the State of Victoria (2001) 207 CLR 72 at 78 Gaudron, Gummow, Hayne and Callinan JJ, in their joint judgment, said:

“Section 17(2) [of the Supreme Court Act 1986 (Vict.)] is a provision which confers jurisdiction upon a court and it is, on that account alone, to be given no narrow construction. Rather, it is to be construed with all the amplitude that the ordinary meaning of its words admits.”

7 Counsel contended that a liberal construction of the legislation would enable the Court to exercise the jurisdiction conferred by section 88K in such a way as to order the creation of an easement in gross pursuant to the provisions of section 88A. The expression “an easement” in section 88K(1), although it would normally refer to a form of legal right involving a dominant tenement, is nevertheless apt to include an easement in gross of the kind described in section 88A. Counsel recognised that the reference in section 88K(2) to a necessity for the Court to be satisfied that “use of the land having the benefit of the easement will not be inconsistent with the public interest”, and the description of the order to be made under section 88K in subsection (1) as “an order imposing an easement over land if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement”, which might be read as referring to a dominant tenement, did pose problems for his contentions. However, he pointed out that neither of these references to land having “the benefit of the easement” actually specifies that this means land to which the easement is appurtenant. He suggested that the reference to land having the benefit of the easement was not a use of technical language.

8 This argument seems to me somewhat difficult. As Gale’s use of the expression “the dominant tenement for the benefit of which the right of way was given” demonstrates, the statutory expressions “other land that will have the benefit of the easement” and “the land having the benefit of the easement” are expressions used in this area of the law to refer to a dominant tenement. Lord Evershed MR in Ellenborough Park at 172, for instance, said “an easement must be appurtenant to an estate for the benefit of that estate and its owner”. If they are not used in that sense, the problem must be confronted of determining just what their meaning is. And if they extend to embrace, in the case of a drainage easement in gross, all land the drainage of which may in the future be expected to be undertaken by the use of the easement, there will be practical problems in the identification of the area of inquiry to be undertaken by the Court pursuant to subsection (1) and subsection (2)(a) of section 88K and whether parties other than the applicant should be represented. Had the legislature intended wider enquiries than those related to an identified dominant tenement, it would be reasonable to expect some quite specific provisions dealing with this problem in section 88K. Perhaps more fundamentally, the Court would be required by the section to consider, in a case involving s.88A, not the effective use of other land to have the benefit of the easement, but whether the performance of the prescribed authority’s functions made the creation of the easement necessary and, in a case within s.88A(1B), whether the prescribed authority’s purpose was within that subsection.

9 Reference was also made in the argument to subsection (3) which directs attention to section 88(1) paras. (a) to (d). On the one hand, it is pointed out that para. (a) plainly contemplates an easement under the general law. On the other hand, paras. (c) and (d) refer to provisions which may or may not exist in the case of any particular easement. When, in that situation, section 88K(3) requires a specification of “such of the particulars referred to in section 88(1)(a)-(d) as are appropriate”, I do not think that particular provision points with clarity either in favour of or against the plaintiff’s construction of section 88K. The contemplated possible inappropriateness might be due to the Court’s order referring to an easement in gross (which would fit the plaintiff’s contention), or it might be due to the contemplated order of the Court not involving any persons such as are referred to in section 88(1)(c) or (d) (which would fit the defendants’ contention). Perhaps a little more weight, as a consideration tending against the plaintiff’s argument, may be given to the contrast between section 88K(3), imposing a requirement that the Court specify such of the particulars in section 88(1) as may be appropriate, and section 88(4) which provides that subsection (1) “does not apply to an easement without a dominant tenement acquired by or for a prescribed authority referred to in section 88A”.

10 In seeking to ascertain whether the expressions “easement” and “land having the benefit of the easement” have their technical legal meaning in section 88K, the Court may be guided by the statement of Lord Wilberforce in Ashfield Municipal Council v Joyce [1978] AC 122 at 134, citing Lord Macnaghten in Pemsel’s Case [1891] AC 531:

“[I]n construing Acts of Parliament, it is a general rule… that words must be taken in their legal sense unless a contrary intention appears.”

11 It is fundamental to section 88A that it contemplates an easement in gross “in favour of” or “to” a prescribed authority, as is made clear by subsections (1A) and (1B). In contrast to this, section 88K is grounded on a reasonable necessity related to “Iand that will have the benefit of the easement” (emphasis added). This distinction, of course, reflects the fundamentally divergent nature of an easement in gross as compared with a true easement. But the adherence of section 88K to the essential nature of a true easement raises a conceptual barrier, which is reflected in various provisions discussed in these reasons, against its application to an easement in gross under section 88A.

12 An appreciation of the quite disparate theoretical underpinnings of the two sections also throws light on the expression debated at the hearing “land that will have the benefit of the easement” and the expression “land having the benefit of the easement” in section 88K. As section 88A is not concerned with any relation of benefit between an easement in gross and any land at all, but only a relation of burden, these expressions, which are fundamental to section 88K, even if they do not have the technical meaning which in this context is naturally appropriate, but some looser meaning, have no work to do under section 88A. Interpreted as land to which an easement in the normal sense is annexed, of course, they are reflected in section 88(1)(a) which is itself picked up by section 88K(3), so that those provisions are part of a consistent statutory scheme. Since the Court must, unless it is not “appropriate” to do so, specify “the land to which the benefit of the easement… is appurtenant” pursuant to section 88K(3) and section 88(1)(a), section 88K(1) and Section 88K(2)(a) seem most naturally to contemplate that their expressions “land that will have the benefit of the easement” and “land having the benefit of the easement” refer to land to which the benefit is appurtenant.

13 That the reference in section 88K(1) and (2)(a) is to a dominant tenement is confirmed by subsection (6), giving a power to release an easement imposed by order under section 88K to “the owner of the land having the benefit of it”. There will be no such person in the case of an easement in gross under section 88A. By contrast, the easement in gross under section 88A, the imposition of which is sought by the plaintiff pursuant to the amendment, would be an easement for drainage of water described in Part 7 of schedule 4A where reference is made, not to the owner of land having the benefit of the easement, but to the “body having the benefit of this easement” which, by the easement, would be allowed to “drain water from any natural source”. The difficulty of fitting subsection (6) of section 88K within the view of the section put forward by the plaintiff seems to me to be insuperable. In that subsection, the legislature plainly contemplates the possibility of a release of the easement by the owner of the dominant tenement and refers to that person as “the owner of the land having the benefit of it”, using the very phrase the meaning of which, as it is used earlier in the section, was debated by counsel. I do not think that, in section 88K, the meaning of these words changes suddenly at subsection (6). And if the legislature contemplated that section 88K might be utilised to impose an easement in gross for the benefit of the council in an application such as the present, it is really not to be imagined that subsection (6)(a) would have been left in its present form; provision would have been made for the prescribed authority in question (that is the council) to have the power of release.

14 It follows that the first question must be answered adversely to the plaintiff, that is to say, in the negative. It is unnecessary to answer the second question.

17/03/2005 - Spelling error in citation - Paragraph(s)