B a Trustees Limited v Druskovich

[2024] NZHC 2021

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-2034

[2024] NZHC 2021

BETWEEN

B A TRUSTEES LIMITED

Plaintiff

AND

IVAN DRUSKOVICH and VESNA DRUSKOVICH

First Defendants

AND

MARIO BILEN and DRAGANA BILEN

Second Defendants

Hearing:	26 June 2024
Appearances:	A Barker KC for Plaintiff
Judgment:	23 July 2024

JUDGMENT OF O’GORMAN J

[Formal proof hearing]

This judgment was delivered by me on 23 July 2024 at 4 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

…………………………………

Solicitors/Counsel:

A Barker KC, Auckland

Rainey Collins Wright Lawyers, Auckland

B A TRUSTEES LIMITED v DRUSKOVICH [2024] NZHC 2021 [23 July 2024]

[1]    B A Trustees Ltd (B A Trustees) is the owner of land on Great North Road, Grey Lynn, Auckland (Lot 1). Lot 1 comprises a commercial building, a car parking area, and a right of way affecting two other properties. The right of way provides vehicular and pedestrian access to Lot 3 at 576 and 578 Great North Road. The property at Lot 3 is owned by the Druskoviches. It is currently leased as a dairy and  a sushi shop, with a garage located at the end of the right of way.

[2]    Between Lot 1 and Lot 3 is Lot 2 at 580 Great North Road. Lot 2 has a pharmacy on the ground floor and an apartment located above on the second floor. Lot 2 is also owned by the Druskoviches. Lot 2 has no rights under the right of way.

[3]The situation is shown in the following simplified diagram:

Great North Road

Part Lot 1	Lot 2	Part Lot 3	Part Lot 3
(Commercial Building)	(Pharmacy)	(Dairy)	(Sushi Shop)
Part Lot 1 (Right of Way)			Part Lot 3 Garage
Part Lot 1 (Carpark)

[4]    Following years of litigation between the parties contesting the use of right of way, the plaintiff now seeks orders to “bring these disputes to an end once and for all”. In particular, it seeks: an order restraining the first defendants from using the right of way; declarations as to past actions in breach; and damages.

Procedure

[5]    In advance of a case management conference scheduled for 13 February 2024, counsel for the first defendants advised that they were no longer instructed because the first defendants did not want to incur the costs of defending the proceeding any further, so it should be set down for hearing on an undefended basis.

[6]    Accordingly, counsel for the first defendants were given leave to withdraw, and this hearing took place by way of formal proof. The first defendants were present in person but did not seek to participate or make submissions. The second defendants (who were the tenants of the upstairs apartment on Lot 2 and had been accessing the apartment through the right of way) did not participate, and no orders are sought against them.

[7]    Under r 15.9(4) of the High Court Rules 2016, the plaintiff must, before or at the formal proof hearing, file affidavit evidence establishing, to a judge’s satisfaction, each cause of action relied on and, if damages are sought, providing sufficient information to enable the judge to calculate and fix the damages.

Previous Court judgments

[8]    There have already been a number of previous Court decisions about the right of way:

(a)In 2007, the Court of Appeal allowed an appeal, in part, concerning use of the right of way to provide access to Lot 2 (in particular the apartment above the chemist) for a limited time.1 The proceeding began with an application by the Druskoviches to amend the right of way to allow access to the apartment because of it otherwise being landlocked. Access was sought under s 129B of the Property Law Act 2007 (PLA). The Court of Appeal allowed pedestrian and vehicle access to Lot 2 from the right of way for a limited period of time.2 This was only to allow access to the upstairs apartment for the term of the then lease of the premises plus one year, or until 30 September 2019 (whichever was earlier). The Court of Appeal did not allow vehicular or pedestrian access for the chemist on the ground floor or deliveries to that business (it was not landlocked land for the purposes of s 129B of the PLA).3 The time limit meant that the existing leasing arrangements in place for Lot 2 were not disrupted and it provided the Druskoviches

1      B A Trustees Ltd v Druskovich [2007] NZCA 131, [2007] 3 NZLR 279.

2      At [62]–[64], [66] and [76].

3 At [67].

the opportunity to create alternative access to the apartment through the ground floor premises from Great North Road.4 Implicit in that decision was that no access to Lot 2 would be available from the right of way once the specified time period had expired.

(b)In 2014, this Court modified the right of way covenant that had prohibited any buildings being erected with a frontage wholly to the right of way.5 The garage was in breach of that condition, but had been constructed many years earlier.6 The tenant of Lot 3 was proposing to operate part of a café from the garage at the back of Lot 3 and wished to provide access to the café via the right of way.7 Much of the case was resolved by agreement,8 with this Court ultimately determining that the garage should not be removed and instead condition 3 should be modified to allow the existing garage to remain in place.9 The terms of the right of way were also modified.10 The issues before the Court were focused on access only and did not determine whether there were any arguable ancillary rights for parking or stopping on the right of way. However, the following paragraph implies that any stopping for unloading would take place on Lot 3 itself:11

Second the right of way runs for quite a distance so that there would be an expectation that vehicles might use it, for example for deliveries as provided for in the agreed modified form. If vehicles were to be used, then it would not be unreasonable to expect that a structure might be erected for their security and in order that they might be unloaded with protection from weather conditions.

(c)In 2022, this Court issued a decision following a formal proof hearing against the tenants of the upstairs apartment on Lot 2.12 The second defendants as tenants had been accessing the apartment through the

4 At [66].

5      B A Trustees v Ma’a Ltd [2014] NZHC 935, (2014) 16 NZCPR 266 at [21].

6      At [22] and [24].

7 At [25].

8      At [14]–[16].

9      At [14] and [61(c)].

10     At [61(a)].

11     At [56] (footnote omitted).

12     B A Trustees v Druskovich [2022] NZHC 1136, (2022) NZCPR 221.

right of way, both directly and through Lot 3.13 B A Trustees sought declarations that these actions were in breach of the right of way and injunctive orders restraining their use. The Court granted those orders holding that the plain meaning of the terms of the right of way was that it could not be used to access Lot 2, either directly or indirectly.14

Legal principles

[9]    The extent of the right of way is to be determined “according to the natural meaning of the words contained in the document, read in light of the surrounding circumstances existing at the time when the easement was executed”.15

[10]   In Green Growth No 2 Ltd v Queen Elizabeth II National Trust, the Supreme Court reviewed numerous cases concerning the interpretation of registered interests in land. William Young and O’Regan JJ summarised the position as follows (Glazebrook J concurring):16

(a)             Generally, registered documents should be construed without regard to extrinsic evidence which is particular to the original parties and is not apparent on the face of the register.

(b)             This does not limit rights to apply for rectification, a topic which we address in the next section of these reasons.

(c)             We would not exclude reference to facts which a reasonable future reader of the document could be expected to be aware of and would recognise as relevant and which they have access to, such as the configuration of land, any physical features to which the document relates or refers and any material referred to in the document.

13 At [33].

14 At [25].

15 Handforth v Komoko Farms Ltd (2010) 11 NZCPR 171 (HC) at [13], citing Masters v Snell [1979] 1 NZLR 34 (HC); and Grinskis v Lahood [1971] NZLR 502 (HC).

16 Green Growth  No 2 Ltd v Queen Elizabeth  II National Trust  [2018] NZSC 75, [2019] 1 NZLR 161 at [74] per William Young and O’Regan JJ and [151] per Glazebrook J. Elias CJ recorded at [133]: “It is however unnecessary for me to resolve whether and to what extent resort to extrinsic evidence is appropriate in the case of instruments notified on a public register as I am of the view that the meaning of the covenant is clear in its terms as a whole.” Ellen France J recorded at [161] that she made “no comment on the approach to be taken to the use of extrinsic evidence in the construction of registered documents”.

[11]   Falling in the last category as relevant are the physical circumstances of the servient tenement at the date of grant, and the nature and description of the land and/or buildings (existing or intended) comprising the dominant tenement, and the purpose for which the right of way is intended to be used.17

[12]   The grant of an easement carries with it such ancillary rights as are reasonably necessary for the effective and reasonable exercise and enjoyment of the rights expressly granted.18 However, those ancillary rights are restricted to the exercise of the rights expressly granted and any use of the burdened land beyond those rights and purposes is a trespass, not being authorised by the grant.

[13]   Ancillary rights of a right of way can sometimes include a right to stop for a reasonable time for the purpose of loading and unloading, unless perhaps at the date of the grant there was sufficient space upon the benefited land for the parking of vehicles for such purposes, or other means of access to the benefited land available for the purpose.19

(a)In S S & M Ceramics Pty Ltd v Kin,20 the respondents’ shop fronted onto a street and at the rear of the block they had the benefit of an easement providing access from a side street. At the time of the grant in 1955, there was a significant amount of vacant space at the rear not covered by structures. By 1977, the structures on the dominant tenement were extended to the rear of the allotment so that the capacity to provide parking within its confines was lost. Based on reasonably implied rights at the time of the grant, the Queensland Court of Appeal held (by a majority) that the right conferred was only to “pass and repass”. It did not allow parking, stopping, or standing still on that area to load or unload.21

17     Handforth v Komoko Farms Ltd, above n 15, at [13], referencing Paterson & Barr Ltd v University of Otago [1925] NZLR 191 (Compensation Court).

18     DW McMorland and others Hinde McMorland and Sim Land Law in New Zealand (online ed, LexisNexis) at [16.038].

19     At [16.038]; and Lyons v Breslin (2010) NZCPR 262 (HC) at [55]–[64].

20     S & M Ceramics Pty Ltd v Kin [1996] 2 Qd R 540, [1996] ANZ ConvR 141 (CA).

21     At 548.

(b)In Trewin v Felton,22 the Trewins owned a property being used as a gift shop on Lot 1, with the benefit of a carriageway easement over the neighbouring land (Lot 2) to the back yard of their property. When the right of way was created, there was no garage on Lot 1, and there was no gift shop business conducted from it. The right of way was created to enable vehicles to enter onto the rear of Lot 1, but vehicles could park in the street, or could park on the rear of Lot 1.23 The New South Wales Supreme Court held that the Trewins were not entitled to use the carriageway to have vehicles parked, for loading or unloading or for any other purpose.24 The last five metres of the easement continued to serve a practical purpose, and its loss would be a substantial injury to the dominant owners, in that it facilitated manoeuvring vehicles with trailers.25

Application to facts

Use for Lot 2 purposes

[14]   The plaintiff seeks declarations confirming that the use of the right of way to access Lot 2, either directly from the right of way itself, or indirectly through Lot 3, is in breach of the terms of the right of way and constitutes a trespass and/or nuisance. It also seeks an injunction preventing any such further use.

[15]   The plaintiff has substantiated this Lot 2 use with affidavit evidence, which includes photographs and video footage screenshots. Use of the right of way for those Lot 2 purposes has also been admitted by the Druskoviches in their statement of defence.

[16]   I find that the plaintiff is entitled to the declarations sought in respect of the Lot 2 use, and an injunction reflecting those entitlements. Such orders are entirely consistent with 2022 High Court decision,26 and the Court of Appeal’s determination

22     Trewin v Felton [2007] NSWSC 851, (2007) 13 BPR 24, 579.

23 At [53].

24     At [54], [99] and [103].

25 At [100].

26 See [8](c) above.

of these issues in 2007, given that the temporary exception granted by the Court of Appeal has now long expired.27 Those issues of the scope of the right of way have already been determined in a binding way between the parties, and it is disappointing that further court orders are now required.

Ancillary rights — no stopping or parking

[17]   The earlier decisions between these parties did not deal directly with the issue of whether the right of way easement for Lot 1 purposes includes an ancillary right to stop for a reasonable time for the purpose of loading and unloading.

[18]   The right of way easement itself does not refer to any such right. Accordingly, the issue is one of interpretation — whether such a right is necessarily implied for the effective and reasonable exercise and enjoyment of the rights expressly granted.

[19]   At the time of the original grant of the right of way in this case, there were no buildings on Lot 3. A building partially located on Lot 1 limited the right of way access to and from Lot 3 to pedestrian access until 1958 when it was removed. From 1968, the land of Lot 3 contiguous to the right of way was free of buildings. So once vehicles could use the right of way, there was no need for any implied right to park and unload on it, because this could occur on Lot 3 itself.

[20]   Even today, there remains space for the parking and unloading of vehicles on Lot 3. There is a garage that can be used, as well as a parking area at the back of the dairy. Alternatively, parking is available on Great North Road to which Lot 3 has direct access. Accordingly, it is not “necessary” that the right of way is used for parking, even transiently. The present facts are analogous to the cases discussed above.28 I find that no such right was implied at the time of the grant, nor is it reasonable to interpret the easement as including such an ancillary right. Keeping the easement area clear serves an important practical purpose for the dominant land of facilitating the manoeuvring of vehicles in and out of Lot 1.

27 See [8](a) above.

28 See [13] above.

[21]   Contrary to the terms of the easement, the plaintiff has substantiated that the first defendants, their agents or tenants, have regularly parked vehicles on the right of way, including for loading and unloading. Their affidavit evidence includes photographs and video footage screenshots of this activity. The plaintiff is entitled to the declarations sought concerning these breaches, and to constrain breaching conduct of this nature continuing.

Damages

[22]The plaintiff seeks:

(a)an award of general damages of $25,000 to reflect the loss of amenity in its use and enjoyment of its property, together with the stress and inconvenience these ongoing interferences have caused;29 and

(b)exemplary damages of $25,000 for the deliberate and outrageous actions of Mr Druskovich over the years acting in breach of the terms of the right of way,30 after the Court of Appeal had clearly determined the scope of those rights.

[23]   In Austin v Rentrezi 2 Ltd,31 the Court found that there had been trespass and nuisance during a construction process.32 The Court awarded $20,000 in general damages for trespass and nuisance that was relatively substantial and beyond what the Austins could reasonably have been expected to tolerate.33 The Court declined to award exemplary damages given that the respondents had tried to honour the Austins’ rights, albeit unsuccessfully.34

29 Relying on Semple v Wilson [2018] NZHC 992, [2018] NZAR 1025 at [179]; Austin v Rentrezi 2 Ltd [2021] NZHC 1027, (2021) 23 NZCPR 77 at [103]; and Ruby & Rata Ltd v Reed Trustee 2018 Ltd [2023] NZHC 3462 at [86].

30 Relying on Bevan Marten “Exemplary Damages” in Peter Blanchard (ed) Civil Remedies in New Zealand (2nd ed, Thomson Reuters, Wellington, 2011) at 521; Couch v Attorney-General (No 2) [2010] NZSC 27, [2010] 3 NZLR 149 at [68] per Blanchard J, [150]–[151] and [178] per Tipping J, [246] per McGrath J, [259] per Wilson J.

31 Austin v Rentrezi 2 Ltd, above n 29, at [103].

32 At [97].

33     At [100]–[103].

34 At [104].

[24]   In Handforth v Kokomoko Farms Ltd, exemplary damages of $3,500 were awarded because the Handforths chose not to follow legal advice and (if necessary) enforce their rights through legal proceedings. Instead, they acted unilaterally to erect obstructions that they knew would be very detrimental to the plaintiff.35

[25]   In Ruby & Rata Ltd v Reed Trustee 2018 Ltd, I awarded $15,000 by way of general damages to address an extended period of many years during which access rights had been denied, to the detriment of a farming business. I declined exemplary damages on the basis that the defendants were legally represented and appeared to genuinely believe in the position they advanced in the proceeding.

[26]   Mr McClure (a director of B A Trustees) in his affidavit of 21 June 2024 explained the importance of the right of way to the use and enjoyment of Lot 1. The right of way facilitates parking, exiting the property safely, rubbish storage and collection, and loading or unloading product into the building. The evidence of the first defendants’ use of the right of way includes blocking the driveway, entirely preventing the ability of Lot 1 occupants utilising the right of way for those purposes. Further, Mr McClure and his wife Ms Erceg (also a director of B A Trustees) detailed aggression experienced from Mr Druskovich on multiple occasions. The practical and emotional impact of the first defendants’ disregard for the Court orders is clear.

[27]   In light of the affidavit evidence, I consider that the practical impact of the breaches was less significant than in Ruby & Rata Ltd and Austin. I also exercise caution to avoid double-counting with exemplary damages for the deliberate nature of Mr Druskovich’s breaching conduct. Taking these matters into account, I award general damages of $7,500 and exemplary damages of $10,000. The exemplary damages are justified because Mr Druskovich’s conduct was in flagrant disregard of the previous Court determinations of the disputed issues.

[28]   I also accept (subject to confirmation of reasonableness) that the plaintiff is entitled to solicitor and client costs up until 5 October 2023 (when admissions were made in an amended statement of defence), with costs thereafter to be assessed on a 2B basis.

35     Handforth v Komoko Farms Ltd, above n 15, at [60]–[62].

Result

[29]I make the following orders:

(a)A declaration that:

(i)the first defendants have used the right of way as access to   Lot 2, and in particular, as access to the apartment;

(ii)the first defendants have used the right of way as access to Lot 2 by using it to access Lot 3 and then accessing Lot 2 from Lot 3; and

(iii)the first defendant’s use of Lot 1 in this manner has been in breach of the terms of the right of way and constitutes a nuisance and a trespass on the plaintiff’s land.

(b)An order restraining the first defendants, or any agents or persons acting on behalf of or under the authority of the first defendants (including lessees of Lot 2), from using Lot 1 to provide access to Lot 2, whether by way of direct access from Lot 1 or by using Lot 1 to provide access to Lot 3, and in turn using Lot 3 to access Lot 2.

(c)A declaration that:

(i)the first defendants, their agents or tenants, have parked vehicles on the right of way; and

(ii)the first defendant’s use of Lot 1 in this manner has been in breach of the terms of the right of way and constitutes a nuisance and a trespass on the plaintiff’s land.

(d)An order restraining the first defendants, or any agents or persons acting on behalf of or under the authority of the first defendants (including

lessees of Lot 2), from parking or stopping any vehicle on, or otherwise obstructing in any way, the right of way.

(e)I award $7,500 by way of general damages to the plaintiff against the first defendants.

(f)I award $10,000 by way of exemplary damages to the plaintiff against the first defendants.

(g)I award costs to the plaintiff against the first defendants on the basis described in [28] above. The plaintiff may file a memorandum within 15 working days to substantiate the amount, which I will determine on the papers by issuing a minute.

O’Gorman J