Kellogg (Aust.) Pty Ltd v The Owners - Strata Plan 81034

[2024] NSWSC 1502

Supreme Court

New South Wales

Medium Neutral Citation:	Kellogg (Aust.) Pty Ltd v The Owners – Strata Plan 81034 [2024] NSWSC 1502
Hearing dates:	25 November 2024
Date of orders:	26 November 2024
Decision date:	26 November 2024
Jurisdiction:	Equity - Real Property List
Before:	Williams J
Decision:	See orders at [31].
Catchwords:	LAND LAW – Easements – Extinguishment of easements – Extinguishment by order of court – Where all persons entitled to the easement consent to extinguishment
Legislation Cited:	Conveyancing Act 1919 (NSW) s 89
Cases Cited:	Stephenson v Dwyer (2008) 13 BPR 25,107; [2008] NSWCA 123
Texts Cited:	N/A
Category:	Principal judgment
Parties:	Kellogg (Aust.) Pty Ltd (Plaintiff) The Owners – Strata Plan 81034 (First Defendant) The Trust Company Limited (Second Defendant) GTA Industrial Custodian Pty Limited (Third Defendant)
Representation:	Counsel: Mr E Hyde and Mr D Morris (Plaintiff) Solicitors: Owen Hodge Lawyers (Plaintiff) J S Mueller & Co (First Defendant – Submitting Appearance) Clayton Utz (Second and Third Defendants – Appearance mentioned by Plaintiff)
File Number(s):	2024/373600
Publication restriction:	N/A

JUDGMENT

1. The plaintiff, Kellogg (Aust.) Pty Ltd, applies for an order under section 89(1) of the Conveyancing Act 1919 (NSW) extinguishing an easement burdening its land in folio identifier 1/8####9, which is known as 47 Swinbourne Street, Banksmeadow, New South Wales 2019.

2. The easement in question is an easement for drainage 4.57 metres wide which was created in December 1942 by the registration of dealing D134###. By that dealing, William David Stephen and Louisa Isabel Stephen transferred to Willis Holmes part of the land in Volume 3##1 Folio 1, reserving to the transferors:

“… as appurtenant to the residue of the land comprised in Certificate of Title Volume 3##1 Folio 1 full right and liberty to use and maintain the storm water drain running along the part hereby transferred of the strip of land 15’ wide shown in the plan annexed to Transfer No. D115### for the purpose of conveying and carrying off surface and storm water Together with full and free right and liberty from time to time and at all times to inspect the condition of and to cleanse maintain and repair the said drain and for such purposes or any of them with surveyors workmen materials machinery and implements and other persons and things to enter into and upon the said part of the said strip of land and to bring and place and leave thereon and/or remove therefrom all necessary materials machinery implements and things and to remove and carry away and/or use and/or leave upon the said part of the said strip of land all or any part of the clay sand gravel stones and earth which shall be taken out of the said part of the said strip of land in connection with such cleansing maintaining and repairing.”

3. I shall refer to that easement as the Drainage Easement.

4. The image below is a marked up copy of the plan attached to registered dealing D134###, which identifies in orange the land that was transferred by the dealing (being the servient tenement), and identifies the site of the Drainage Easement with pink dashed lines. As can be seen from the image, the Drainage Easement burdens two areas of the servient tenement. I shall adopt the plaintiff’s convention of referring to the larger of those two areas as the southern part and the smaller area as the northern part of the Drainage Easement. The green markings on the image show the location of an easement granted by William David Stephen and Louisa Isabel Stephen in favour of the Council of the Municipality of Botany in April 1941, which was the subject of dealing D115### which was registered in July 1942 (the Council Easement). The site of the Drainage Easement overlaps with the site of the Council Easement. The Council Easement is not the subject of these proceedings.

5. The evidence of the plaintiff’s solicitor Mr Richard Farmer, a report prepared by land title searcher Mr Robert Williamson, and title searches, deposited plans and registered dealings tendered by the plaintiff which are very helpfully summarised in the plaintiff’s detailed written submissions, establish that following numerous subdivisions, transfers and changes to title boundaries over the years, the land comprising the residue of Volume 3##1 Folio 1 at the time of registration of dealing D134### in December 1942 (being the dominant tenement of the Drainage Easement) is now contained within the boundaries of the land comprising Strata Plan 81034 and folio identifiers 1/7####1, 2/8####9 and 109/1#### 9.

6. The image below depicts the plaintiff’s land in blue, and each of the other parcels of land referred to immediately above in red.

7. The evidence to which I have referred above also establishes that the northern part of the Drainage Easement is now contained wholly within folio identifier 2/8####9. That is to say, the northern part of the Drainage Easement no longer burdens the plaintiff’s land.

8. On 9 October 2024, the plaintiff commenced these proceedings seeking:

“(1)   A declaration, having regard to all the facts and circumstances, that the easement for drainage 4.57 metres wide created by registered dealing D134### is unenforceable.

(2) An order, under section 89(1) of the Conveyancing Act 1919 (NSW), extinguishing the easement for drainage 4.57 metres wide created by registered dealing D134### to the extent that it burdens the land described in folio identifier 1/8####9.”

9. The hearing of the proceedings was expedited because the plaintiff has entered into a contract for the sale of the land to TLY Australia Pty Ltd (TLY), completion of which is conditional on the Drainage Easement being removed from the title to the land. Completion is due to occur on 4 December 2024.

10. Section 89(1) of the Conveyancing Act provides:

“(1)    Where land is subject to an easement or a profit à prendre or to a restriction or an obligation arising under covenant or otherwise as to the user thereof, the Court may from time to time, on the application of any person interested in the land, by order modify or wholly or partially extinguish the easement, profit à prendre, restriction or obligation upon being satisfied—

(a)    that by reason of change in the user of any land having the benefit of the easement, profit à prendre, restriction or obligation, or in the character of the neighbourhood or other circumstances of the case which the Court may deem material, the easement, profit à prendre, restriction or obligation ought to be deemed obsolete, or that the continued existence thereof would impede the reasonable user of the land subject to the easement, profit à prendre, restriction or obligation without securing practical benefit to the persons entitled to the easement or profit à prendre or to the benefit of the restriction or obligation, or would, unless modified, so impede such user, or

(b)    that the persons of the age of eighteen years or upwards and of full capacity for the time being or from time to time entitled to the easement or profit à prendre or to the benefit of the restriction, whether in respect of estates in fee simple or any lesser estates or interests in the land to which the easement, the profit à prendre or the benefit of the restriction is annexed, have agreed to the easement, profit à prendre, restriction or obligation being modified or wholly or partially extinguished, or by their acts or omissions may reasonably be considered to have abandoned the easement or profit à prendre wholly or in part or waived the benefit of the restriction wholly or in part,

(b1)    in the case of an obligation—

(i)    that the prescribed authority entitled to the benefit of the obligation has agreed to the obligation’s being modified or wholly or partially extinguished or by its acts or omissions may reasonably be considered to have waived the benefit of the obligation wholly or in part, or

(ii)    that the obligation has become unreasonably expensive or unreasonably onerous to perform when compared with the benefit of its performance to the authority, or

(c)    that the proposed modification or extinguishment will not substantially injure the persons entitled to the easement or profit à prendre, or to the benefit of the restriction or obligation.”

11. Section 89(1A) provides:

“For the purposes of subsection (1)(b), an easement may be treated as abandoned if the Court is satisfied that the easement has not been used for at least 20 years before the application under subsection (1) is made.”

12. Section 89(4) provides:

“Notice of any application made under this section shall, if the Court so directs, be given to the council of the area (within the meaning of the Local Government Act 1993) in which the land is situated, and to such other persons and in such manner, whether by advertisement or otherwise, as may be prescribed by rules of Court or as the Court may order.”

13. No such directions have been made in these proceedings.

14. As described in detail below, each registered proprietor of the parcels of land that now form part of the dominant tenement, and each other person entitled or arguably entitled to the Drainage Easement, has been notified of these proceedings. Each of those persons communicated to the plaintiff prior to the hearing of the proceedings on 25 November 2024 their agreement to the extinguishment of the Drainage Easement. There was no appearance on behalf of those persons at the hearing, save that the plaintiff mentioned the appearance of those persons who had been joined as the second and third defendants. The first defendant had filed a submitting appearance. The plaintiff’s application pressed at the final hearing was narrowed to an application for an order under s 89(1)(b) of the Conveyancing Act extinguishing the Drainage Easement insofar as it burdens the plaintiff’s land. The plaintiff did not rely on s 89(1)(a), (b1) or (c) as alternative grounds for the order, and did not press its application for declaratory relief.

15. The Owners – Strata Plan No. 81034 is the registered proprietor of the land in folio identifier CP/SP81034 and the first defendant in these proceedings. The plaintiff tendered a letter addressed to the plaintiff’s solicitors and signed under seal by the Owners – Strata Plan No. 81034 consenting to the order sought by the plaintiff extinguishing the Drainage Easement to the extent that it burdens the plaintiff’s land.

16. The Trust Company Limited (Trust Company) is the registered proprietor of the land in folio identifier 2/8####9 and the second defendant in these proceedings.

17. The plaintiff tendered a letter from Trust Company’s solicitors, Clayton Utz, dated 22 November 2024 stating that Trust Company consents to the order sought by the plaintiff extinguishing the Drainage Easement to the extent that it burdens the plaintiff’s land.

18. Trust Company’s land is subject to a lease in favour of ANJ Container Services & Bond Stores Pty Ltd (ANJ), being registered lease AJ8####5. On 11 October 2024, a licensed process server engaged on behalf of the plaintiff served on ANJ notice of these proceedings, together with a copy of the summons and Mr Farmer’s first affidavit. The notice identified the orders sought by the plaintiff, and stated that any person having an objection to those orders may lodge notice in writing stating the grounds of objection at the office of the plaintiff’s solicitors by 7 November 2024, and may attend the hearing of the proceedings if they wish the Court to consider their objections. The plaintiff’s solicitors were not notified of any objection on behalf of ANJ. The plaintiff has tendered a letter from ANJ addressed to the Registrar-General dated 16 October 2024 consenting to the registration of a transfer by Trust Company in favour of the plaintiff releasing the Drainage Easement insofar as it benefits Trust Company’s land and burdens the plaintiff’s land. That letter was provided to the plaintiff by Trust Company’s solicitors, Clayton Utz. I accept the submissions made by counsel for the plaintiff that ANJ’s consent to the release of the easement constitutes, in substance, consent to the extinguishment of the easement.

19. Trust Company’s land is also subject to a lease in favour of Mondiale VGL Pty Ltd (Mondiale), being registered lease AQ8####3. On 10 October 2024, the plaintiff’s solicitors served on Mondiale notice of these proceedings, together with a copy of the summons and Mr Farmer’s first affidavit. The notice identified the orders sought by the plaintiff, and stated that any person having an objection to those orders may lodge notice in writing stating the grounds of objection at the office of the plaintiff’s solicitors by 7 November 2024, and may attend the hearing of the proceedings if they wish the Court to consider their objections. The plaintiff’s solicitors were not notified of any objection on behalf of Mondiale. The plaintiff has tendered a letter from Mondiale addressed to the Registrar-General dated 17 October 2024 consenting to the registration of a transfer by Trust Company in favour of the plaintiff releasing the Drainage Easement insofar as it benefits Trust Company’s land and burdens the plaintiff’s land. Mondiale provided that letter to the plaintiff’s solicitors. I accept the submissions made by counsel for the plaintiff that Mondiale’s consent to the release of the easement constitutes, in substance, consent to the extinguishment of the easement.

20. GTA Industrial Custodian Pty Ltd (GTA) is the registered proprietor of the land in folio identifier 1/7####1 and the third defendant in these proceedings. The plaintiff tendered a letter from GTA’s solicitors, Clayton Utz, dated 22 November 2024 stating that GTA consents to the order sought by the plaintiff extinguishing the Drainage Easement to the extent that it burdens the plaintiff’s land.

21. GTA’s land is subject to two registered leases to the Alpha Distribution Ministerial Holding Corporation (ADMHC), being registered leases AD9####0 and AE1####0. Each of those registered leases is the subject of a mortgage in favour of ANZ Fiduciary Services Pty Ltd (ANZ Fiduciary), being registered mortgage AK9####2. Each of the registered leases in favour of ADMHC is the subject of a sub-lease to a group of entities comprising what is known as the Ausgrid Asset Partnership (registered lease AK9####1), which is in turn the subject of a sub-sub-lease to a group of entities comprising what is known as the Ausgrid Operator Partnership (registered lease AK9####2).

22. Each of the leases in favour of ADMHC relate to a small area of GTA’s land on which an electricity sub-station is located. The plaintiff tendered an extract from the sub-lease in favour of the Ausgrid Asset Partnership which provides in clause 2.3(c) that the Ausgrid Asset Partnership (as sub-lessee) is entitled to exercise any of the rights of ADMHC in relation to ADMHC’s head lease in respect of GTA’s land. Prior to the commencement of these proceedings, GTA’s solicitors provided to the plaintiff’s solicitors a letter dated 5 June 2024 from Sparke Helmore, the solicitors for the Ausgrid Asset Partnership and the Ausgrid Operator Partnership. Sparke Helmore’s letter referred to and enclosed a copy of an earlier letter to the Registrar-General dated 13 September 2017 in which Sparke Helmore set out the Ausgrid Asset Partnership’s position that it is entitled by reason of clause 2.3(c) of the head lease to grant or refuse consent to the registration of dealings affecting land in respect of which ADMHC is a registered lessee and Ausgrid Asset Partnership is a registered sub-lessee. The letter to the plaintiff’s solicitors dated 5 June 2024 stated that Sparke Helmore, acting for the Ausgrid Asset Partnership and the Ausgrid Operator Partnership, was instructed to consent to a registration of transfer releasing he Drainage Easement. I accept the plaintiff’s submissions that this evidence establishes that ADMHC, as the head lessee of a lease of parts of GTA’s land which has the benefit of the Drainage Easement, is a person with an entitlement to the easement commensurate with the entitlement of GTA, that the Ausgrid Asset Partnership as sub-lessee has an entitlement to the easement commensurate with the entitlement of ADMHC, that the Ausgrid Operator Partnership as sub-sub-lessee has an entitlement to the easement commensurate with the entitlement of the Ausgrid Asset Partnership, and that, as between ADMHC and the Ausgrid Asset Partnership, it is the Ausgrid Asset Partnership that is entitled under clause 2.3(c) of the head lease to exercise the right to consent or decline to consent to the extinguishment of the Drainage Easement. Sparke Helmore’s letter of 5 June 2024 evidences the consent of the Ausgrid Asset Partnership and, to the extent that it may be necessary, the consent of the Ausgrid Operator Partnership, to the release of the Drainage Easement. I accept the submissions made by counsel for the plaintiff that consent to the release of the easement constitutes, in substance, consent to the extinguishment of the easement.

23. As I have already mentioned, ANZ Fiduciary is the registered mortgagee of the leasehold interests of ADMHC under registered leases AD9####0 and AE1####0. ANZ Fiduciary has not been notified of these proceedings. The plaintiff tendered a copy of registered mortgage AK9####2, the terms of which require ADMHC as mortgagor to obtain the mortgagee’s consent for certain dealings with the mortgaged leasehold interest. Those dealings do not extend to consenting to, or permitting the Ausgrid Asset Partnership to consent to, the extinguishment of an easement burdening the head lessor’s freehold title to the land. There is no evidence suggesting that the extinguishment of the Drainage Easement would impact in any way on the electricity substations located on those parts of GTA’s land that are the subject of ADMHC’s registered leases AD9####0 and AE1####0 which are in turn the subject of the sub-lease and sub-sub-lease to the Ausgrid Asset Partnership and the Ausgrid Operator Partnership (respectively). The Ausgrid Asset Partnership’s consent to the extinguishment of the Drainage Easement supports an inference to the contrary.

24. I accept the submission made by counsel for the plaintiff that, for the reasons explained by Mason P in obiter dicta in Stephenson v Dwyer (2008) 13 BPR 25,107; [2008] NSWCA 123 at [26]-[37], ANZ Fiduciary is not a person who is “entitled to the easement” within the meaning of s 89(1)(b) of the Conveyancing Act. I respectfully agree with and adopt his Honour’s reasons, noting that the other members of the Court of Appeal did not find it necessary to express any view about that question in that case. I also accept the submission made by counsel for the plaintiff that, for the reasons explained immediately above, the interests of ANZ Fiduciary are not directly or indirectly affected by the order sought by the plaintiff extinguishing the Drainage Easement. Accordingly, procedural fairness does not require that ANZ Fiduciary be joined to the proceedings or afforded an opportunity to be heard in relation to the plaintiff’s application.

25. GTA’s land is also subject to a registered lease to Owens Transport Pty Ltd (Owens), being registered lease AJ9####2. On 15 October 2024, the plaintiff’s solicitors served on Owens notice of these proceedings, together with a copy of the summons and Mr Farmer’s first affidavit. The notice identified the orders sought by the plaintiff, and stated that any person having an objection to those orders may lodge notice in writing stating the grounds of objection at the office of the plaintiff’s solicitors by 7 November 2024, and may attend the hearing of the proceedings if they wish the Court to consider their objections. The plaintiff’s solicitors were not notified of any objection on behalf of Owens. The plaintiff has tendered a letter from Owens addressed to the Registrar-General consenting to the registration of a transfer by GTA in favour of the plaintiff releasing the Drainage Easement insofar as it benefits GTA’s land and burdens the plaintiff’s land. That letter was provided to the plaintiff by GTA’s solicitors, Clayton Utz. I accept that Owens’ consent to the release of the easement constitutes, in substance, consent to the extinguishment of the Drainage Easement.

13. GTA’s land is also subject to a registered lease to the plaintiff, which is in turn the subject of an unregistered sub-lease in favour of Pan Express Transport Pty Ltd (Pan Express), which commenced on 11 November 2024. The sub-lease has a term of just under two years, expiring on 1 November 2026, with no option to renew. The plaintiff tendered a letter dated 25 November 2024 from Pan Express to the Registrar-General consenting to the registration of a transfer by GTA in favour of the plaintiff releasing the Drainage Easement insofar as it benefits GTA’s land and burdens the plaintiff’s land. I accept that Pan Express’ consent to the release of the easement constitutes, in substance, consent to the extinguishment of the Drainage Easement.

14. Olefines Pty Ltd (Olefines) is the registered proprietor of the land in folio identifier 109/1#### 9. Olefines is presently the subject of a Deed of Company Arrangement. On 10 October 2024, the plaintiff’s solicitors served on the Deed Administrators notice of these proceedings, together with a copy of the summons and Mr Farmer’s first affidavit. Again, the notice identified the orders sought by the plaintiff, and stated that any person having an objection to those orders may lodge notice in writing stating the grounds of objection at the office of the plaintiff’s solicitors by 7 November 2024, and may attend the hearing of the proceedings if they wish the Court to consider their objections. On 11 October 2024, the solicitors for the Deed Administrators, Corrs Chambers Westgarth, wrote to the plaintiff’s solicitors stating that the Deed Administrators consent to the extinguishment of the Drainage Easement.

15. Olefines’ land is subject to a registered mortgage in favour of Laop Lendco Pty Ltd (Lendco), being registered mortgage AT9####7. For abundant caution in case Lendco’s interest as registered mortgagee of the land might be affected by the proposed extinguishment of the Drainage Easement, the plaintiff’s solicitors served Lendco on 17 October 2024 with notice of these proceedings, together with a copy of the summons and Mr Farmer’s first affidavit. The notice contained the same information as notices to other dominant tenement registered proprietors and lessees to which I have referred above. On 7 November 2024, Lendco wrote to the solicitors for the plaintiff and the solicitors for the Deed Administrators of Olefines advising that Lendco consents to an order extinguishing the Drainage Easement insofar as it burdens the plaintiff’s land.

16. For all of the reasons explained at [14]-[28] above, I am satisfied that each person entitled to the benefit of the Drainage Easement has agreed to its extinguishment insofar as it burdens the plaintiff’s land.

17. The plaintiff does not seek any order in respect of costs.

18. The orders of the Court are:

1. Order pursuant to section 89(1) of the Conveyancing Act 1919 (NSW) that the easement for drainage 4.57 metres wide created by registered dealing D134### is extinguished to the extent that it burdens the land described in folio identifier 1/8####9.

2. No order as to costs.

32. I record my gratitude for the very detailed and helpful written submissions provided by Mr Hyde and Mr Morris of counsel for the plaintiff in advance of the hearing, and for their assistance throughout the hearing, which facilitated the Court hearing and determining this expedited matter efficiently.

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Decision last updated: 27 November 2024