Bowen v The Picadilly Arcade Body Corporate S79616
[2022] NZHC 1652
•13 July 2022
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2022-470-000027
[2022] NZHC 1652
BETWEEN ALLAN JOHN BOWEN and KAY ELAINE BOWEN
AppellantsAND
THE PICCADILLY ARCADE BODY CORPORATE S79616
Respondent
Hearing: 5 July 2022 Appearances:
N Elsmore for the Appellants
D Fraundorfer and R Rosser for the Respondent
Judgment:
13 July 2022
JUDGMENT OF GORDON J
This judgment was delivered by me on 13 July 2022 at 12 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors/Counsel:
D Fraundorfer, Holland Beckett Law, Tauranga R Rosser, Holland Beckett Law, Tauranga
P Stuart, Rejthar Stuart Law, Tauranga N Elsmore, Barrister, Tauranga
BOWEN v THE PICCADILLY ARCADE BODY CORPORATE S79616 [2022] NZHC 1652 [13 July 2022]
[1] This is an appeal against a decision of Judge Cameron in the District Court at Tauranga declining an application to extinguish an easement in the form of a right of way on land in the commercial centre of Tauranga1
[2] The appellants, Allan and Kay Bowen (the Bowens) are the owners of a commercial building which is the burdened land (the Bowens’ property).
[3] The appeal is opposed by the Piccadilly Arcade Body Corporate (Body Corporate) which administers the commercial and retail premises situated in the Piccadilly Arcade (arcade). The arcade is adjacent to the Bowens’ property and is the benefitted land (arcade land).
[4] There is a separate issue as to whether new evidence in the form of an affidavit from Mr Bowen should be adduced on appeal. Its admission is opposed by the Body Corporate which has filed affidavits in support of its opposition.
Background
[5] The Bowens’ property at 53 Devonport Road and the arcade are situated between two commercial streets in downtown Tauranga, namely Devonport Road and Grey Street. The arcade runs all the way between the two streets. The Bowens’ property does not.
[6] When the right of way was created on 18 November 1953, access was from Devonport Road with no access available from Grey Street. Attached to this judgment as Annexure A is a copy of the Certificate of Title for 53 Devonport Road showing the right of way as it then was highlighted in yellow. What is now the arcade land runs along the edge of the right of way extending beyond the rear boundary of 53 Devonport Road all the way to Grey Street, which runs parallel to Devonport Road.
[7] The right of way, when created, was 3.3 metres wide and stopped approximately 6.6 metres short of the rear boundary of the Bowens’ property. At that time, there was a concrete shed on the Bowens’ property at the end of the right of way.
1 Bowen v Piccadilly Arcade Body Corporate [2022] NZDC 1795.
[8] The arcade land is at 43 Devonport Road. The arcade was built in about 1966. It is a unit title development with 23 commercial and retail stores as the principal units. Four of the units (shops) have rear doors that open on to the right of way (benefitted units).
[9] The Bowens have owned their property since 2018. They have owned the next door property at 55 Devonport Road since 1984.
[10] In 1986, the right of way was partially extinguished. The then-owners of 53 Devonport Road were redeveloping and the then-owner of the arcade land was asked to consent to a structure being built across the Devonport Road end of the right of way. The evidence of David Bridgens, the chairman of the Body Corporate, based on the Body Corporate’s records, is that this consent was given on the understanding that the concrete shed at the end of the right of way would be demolished and a section of the Bowens’ land occupied by the shed (the strip of land) would be surrendered to the Tauranga City Council (Council) to allow a service lane from Grey Street to connect to the right of way preserving its functionality. This was a condition of the building permit issued by the Council for the 1986 redevelopment.
[11] Thus by agreement the easement was partially surrendered, allowing a portion of the land at the Devonport Road end to be utilised as part of the commercial building at 53 Devonport Road, now occupied by a Life Pharmacy. The effect of this was to block any access to the respective properties at the Devonport Road end of the right of way.
[12]This left unsurrendered a portion of the original easement. It is approximately
10.5 metres long and its width remains as the entire 3.3 metre distance between the respective buildings.
[13] The strip of land was not surrendered in terms of the condition of consent referred to above. This strip of land prevents any person from accessing the right of way from the service lane leading off Grey Street without first having to cross what is land owned by the Bowens. Mr Bridgens says he has written to and met with representatives of the Council to request that the position regarding the strip of land
be rectified. In his reply affidavit Mr Bowen says that the strip of land was included together with other land in a designation for a service lane from Grey Street to Elizabeth Street (which runs perpendicular to Grey Street) but part of the designation which he describes as the “north section” was uplifted after Environment Court hearings. It seems, on Mr Bowen’s evidence, the strip of land is not currently the subject of a designation.
[14] Attached to this judgment as Annexure B is a digital title plan for the Bowens’ property, which demonstrates the position as referred to above:
(a)Devonport Road is at the top of the page and Grey Street (not shown on the title) is at the bottom of the page;
(b)The Bowens’ property is the area marked both ‘2’ and ;
(c)The right of way as it presently exists is the area marked highlighted in blue;
and
(d)The area highlighted in green is the part of the right of way partially extinguished in 1986. It is now part of the Life Pharmacy premises;
(e)The area highlighted in yellow is the strip of land (owned by the Bowens). There is no physical impediment preventing a person or vehicle crossing the strip of land to access the right of way; and
(f)The area highlighted in pink is the service lane which runs from Grey Street.
[15] From the late 1980s until late 2020/early 2021 the occupants of the arcade were allowed to cross the strip of land with the consent of the previous owners of the Bowens’ property and initially, the Bowens did not object to the practice. The right of way was used to bring vehicles for deliveries to and from the rear doors of the benefitted units, with their staff coming and going from the stores along the right of way.
[16] From around late 2020/early 2021 the Bowens have insisted that the arcade occupants are not able to cross the strip of land.
The easement – wording
[17] I set out below the wording of the easement as it appears in the Memorandum of Transfer followed by the wording in a form which refers to the present owners of the land. The original wording is as follows:
… the Transferor doth hereby transfer and grant unto the Transferee its successors and assigns and its servants, agents, workmen and visitors and all persons having in common with the Transferor and all other persons lawfully using the same business with it or them a free perpetual right of way ingress, egress and regress on horseback or on foot and with or without implements and vehicles of every description loaded or unloaded by night as well as by day in over and upon the land marked right of way on the said Deposited Plan No. S.2030 and thereon coloured yellow for the purpose of giving access to and from the first above described land and any part thereof and to and from the Public Road on the said Deposited Plan No. S.2030. [Emphasis added]
[18]The key wording as the easement applies to the parties is:
The Transferor [ie the former owners of the Bowens’ property] to grant the Transferee [ie the present owners of the arcade] and their successors in title and their servants, agents, workmen and visitors … a free perpetual right of way ingress, egress and regress on horseback or on foot and with or without implements and vehicles of every description loaded or unloaded by night as well as by day in over and upon the land marked right of way on [the title for 53 Devonport Road] for the purpose of giving access to and from [the arcade land and any part thereof] and to and from Devonport Road [emphasis added].
District Court
[19] The position of the Bowens in the District Court was that the nature and extent of the use made of the right of way had changed since the partial surrender of the original easement. It was submitted that the original right of way was for access from Devonport Road only and that it never extended through to Grey Street. It was submitted that now there was no access from Devonport Road the easement had effectively been made redundant.
[20] For the Body Corporate the evidence was that the benefitted unit holders still use the right of way. Mr Bridgens said he believed that by opening their rear doors this provides ventilation when required. Mr Bridgens also said that the right of way
also needed to be accessible for maintenance to the water pipes and air-conditioning units on the outside wall of the arcade. Additionally Mr Bridgens’ evidence was that the only practicable way that maintenance workers could access the roof of the arcade when required is by using the right of way to unload workers and tools.
[21] In particular, in terms of their legal case, it was submitted for the Bowens that s 317(1)(a), (b) and (d) of the Property Law Act 2007 (the Act) applied and that:
(a)In terms of s 317(1)(a) the easement ought to be extinguished because a change in its use (as a result of it not being able to be used for deliveries without vehicles crossing the strip of land) meant it was redundant;
(b)In terms of s 317(1)(b) the right of way continuing to exist would be an unreasonable impediment to any future development plans that the Bowens had for their land because the right of way was redundant; and
(c)In terms of s 317(1)(d) the Body Corporate and other persons entitled to use the right of way would not be substantially injured by its extinguishment. The case again under this limb was that because the right of way is landlocked and incapable of use for goods delivery it is now redundant.
[22]After setting out the case for both parties the Judge held:
[12] It is not clear why the entire easement was not surrendered in 1989 [sic]. I am not prepared to speculate on that. What is known, though, is that the Bowens bought their property in 2018 with the full knowledge that this easement was registered against the title to their property. They took no issue with persons associated with Piccadilly Arcade accessing that right-of-way until about March/April 2021. They are now acting within their legal rights to prevent persons crossing the strip of land owned by them and immediately adjacent to the easement land. However, that still allows the various tenants of the Piccadilly Arcade to open the rear doors for ventilation and to allow maintenance workers to access that area from the interior units, for example to gain entry onto the roof. The fact that inwards goods can be delivered to the various tenants through the main entrances does not render its use by maintenance workers and tenants any less valid.
[13] While I agree that the nature and extent of the use of the easement land has changed (predominantly now excluding the use of rear doors for delivery
of goods), I am not satisfied under s 317(1) of the Property Law Act 2007 that the easement ought to be extinguished and decline the application accordingly.
Approach on appeal
[23] The appeal is brought as of right.2 It is an appeal by way of re-hearing.3 This Court must reach its own view of the merits without deferring to the assessment of the District Court Judge.4 The Bowens bear the onus of satisfying this Court that its assessment of the merits should differ from that of the District Court. It is only if this Court considers that the appealed decision is wrong that the Court is justified in interfering with the decision.5
Grounds of appeal
[24] The Bowens appeal the Judge’s decision on the grounds that it is erroneous in fact and law as follows:
(a)The Judge has created a new easement in breach of the provisions of the Act;
(b)The Judge failed to follow the principles set out in Synlait Milk Ltd v NZ Industrial Park Ltd in determining the correct approach to extinguish an easement;6
(c)The Judge was incorrect in fact and law to find that the easement has not changed in its use;
(d)There was no evidence to support the conclusion that the easement is used by the parties to open doors and to access it for maintenance;
(e)The Judge failed to consider the burden upon the servient land in allowing the easement to remain;
2 District Court Act 2016, s 124.
3 High Court Rules 2016, r 20.18.
4 Austin, Nichols & Co Inc v Stichting Loadstar [2007] NZSC 103, [2008] 2 NZLR 141 at [4]–[5].
5 At [4].
6 Synlait Milk Ltd v NZ Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657.
(f)Extinguishing the easement would not substantially injure any person; and
(g)The Judge was wrong in law by allowing the variation of the easement when no application was before the District Court pursuant to s 316 of the Act.
Relevant statutory provisions
[25] The application to extinguish the easement was made in reliance on ss 316 and 317 of the Act. Those sections relevantly provide as follows:
316Application for order under section 317
(1)A person bound by an easement, a positive covenant, or a restrictive covenant (including a covenant expressed or implied in an easement) may make an application to a court for an order under section 317 modifying or extinguishing that easement or covenant.
(2)That application may be made in a proceeding brought by that person for the purpose, or in a proceeding brought by any person in relation to, or in relation to land burdened by, that easement or covenant.
…
317Court may modify or extinguish easement or covenant
(1)On an application (made and served in accordance with section 316) for an order under this section, a court may, by order, modify or extinguish (wholly or in part) the easement or covenant to which the application relates (the easement or covenant) if satisfied that—
(a) the easement or covenant ought to be modified or extinguished (wholly or in part) because of a change since its creation in all or any of the following:
(i)the nature or extent of the use being made of the benefited land, the burdened land, or both:
(ii)the character of the neighbourhood:
(iii)any other circumstance the court considers relevant; or
(b) the continuation in force of the easement or covenant in its existing form would impede the reasonable use of the burdened land in a different way, or to a different extent, from that which could reasonably have been foreseen by the original parties to the easement or covenant at the time of its creation; or
(c) …7
(d) the proposed modification or extinguishment will not substantially injure any person entitled; or
(e) …
(f) …8
(2)An order under this section modifying or extinguishing the easement or covenant may require any person who made an application for the order to pay to any person specified in the order reasonable compensation as determined by the court.
Case law
[26] The application of s 317 was considered by the Supreme Court in Synlait Milk Ltd v New Zealand Industrial Park Ltd. The Supreme Court referred to the two-stage approach required when a court is determining an application under s 317:9
[90] To conclude on this point, s 317 requires a two-stage approach. The court’s first task is to determine whether one or more of the grounds in s 317(1) is made out. If so, the second task is to determine whether the discretion to extinguish or modify the easement or covenant at issue should be exercised (and, if so, to determine whether compensation should be payable). The exercise of the discretion to modify or extinguish the easement or covenant requires consideration of all relevant factors (including the power to award compensation). We do not see any intent that any one factor should be disqualifying.
The case for each party
[27] The overarching submission by counsel for the Bowens, Mr Elsmore, is that the use of the right of way has fundamentally changed in that it can no longer be used for access to and from Devonport Road for deliveries. The right of way is thus redundant and the Judge should have made an order extinguishing the easement.
[28] In response, again in an overarching submission, Mr Fraundorfer for the Body Corporate says this approach disregards the two-stage approach in Synlait. It disregards the requirement for the Court to also find that, because of the consequences
7 Section 317(1)(c) relates to modification or extinguishment by consent or waiver and is not relevant to this appeal.
8 Section 317(1)(e) and (f) apply only to covenants, not easements.
9 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6. Although the case related to the extinguishment of a covenant rather than an easement the same principles apply to an easement in terms of the approach to s 317.
of the change of use it should extinguish the easement. That is the second stage that is required. That is what the Judge did.
Approach to grounds of appeal
[29] The way in which the grounds of appeal are framed does not make for an easy analysis following the two-stage approach required. Further, neither the notice of appeal nor the written submissions expressly states which of the grounds in s 317 is/are relied on. The tenor of the submissions is that the Bowens rely, as they did in the District Court, on s 317(1)(a), (b) and (d) as set out in [22] above.
[30] I will address the grounds of appeal in a different order from the order in the notice of appeal in order to better enable a Synlait analysis.
Grounds (a) and (g): the creation of a new easement/variation of the easement
[31] It is convenient to deal with grounds (a) and (g) together. Mr Elsmore did not advance separate submissions in relation to ground (g).
[32] Mr Elsmore submits that in his decision the Judge ignored the grant of the easement and focused upon uses of the right of way that are not contemplated by the terms of the easement: the opening of doors for ventilation, allowing maintenance workers to access the right of way from the interior of the units in the arcade to allow entry on to the roof of the arcade and for access to the air-conditioning units and water pipes on the wall of the arcade along the side of the right of way for service and repair.
[33] Mr Elsmore submits that in the circumstances where the Judge accepted that there was a change in use of the right of way, the Judge’s acceptance of new uses is not a modification of the easement but the creation of a new easement. He submits that ingress and egress to and from Devonport Road was the purpose of the right of way when it was granted and the fact that the easement can no longer be accessed at its Devonport Road end means that the right of way is no longer capable of use and must be extinguished.
[34] Mr Fraundorfer submits that the submissions for the Bowens misconstrue the Judge’s consideration of “all relevant factors” as the Judge having somehow created a new easement or modified the right of way. He submits the Judge did no such thing. Rather, what the Judge did was to apply the second stage of the two-stage Synlait test and look at all of the material before the Court bearing on the question of whether extinguishment was right and proper. Mr Fraundorfer submits that as part of his assessment the Judge noted other uses being made of the right of way which are of benefit to the Body Corporate and its unit owners and occupants and the prejudice that would result from the loss of those benefits if the right of way was extinguished. He submits that the fact-finding exercise did not involve the creation or recognition of new rights. Nothing in s 317 nor in Synlait obliged the Judge to consider only whether the right of way is still capable of its original use.
[35] In any event the Body Corporate’s position is that access for maintenance and ventilation from the benefitted units is within the scope of the original grant.
Discussion
[36] A close reading of the wording of the grant does not support the interpretation placed on it by Mr Elsmore. In other words, I do not accept his submission that the fact that the easement can no longer be accessed from its Devonport Road end means that the right of way is no longer capable of the (only) use anticipated. I say that because of the use of the word “and” in the original grant which I have italicised in
[17] and [18] above. My reading of the easement is that the occupiers of the benefitted units have a right of egress and regress upon the right of way from their units for the purpose of access from the arcade land. And as well, they have a right, including ingress, to and from Devonport Road. In other words, the access to and from the arcade on to the right of way is not solely for the purpose of access to and from Devonport Road.
[37] In conclusion on appeal grounds (a) and (g) the Judge did not create a new easement or vary the existing easement.
[38] I will consider the various uses of the right of way later in the judgment when addressing the second stage of the two-stage Synlait test.
Ground (c): the Judge was incorrect in fact and law to find that the easement had not changed in its use
[39] Mr Elsmore submits that the Judge erred in finding that the use of the right of way had changed but not sufficiently so for the easement to be extinguished. Mr Elsmore says this is a case where the change in use is so fundamental that the right of way as granted can no longer be used. Mr Elsmore again comes back to his overarching submission that the fact that no party can access the right of way as a way into and out of Devonport Road is a matter that the Court should have given more weight in determining whether or not to grant the application.
[40] Mr Fraundorfer submits that the Judge did find that “the nature and extent of the use of the easement land has changed”.10 He rejects the proposition that the Judge ought to have treated this fact of change as the “fundamental” fact because that would be contrary to governing authority. It also ignores the plain wording of s 317(1). The word “ought” requires a broader assessment than simply finding that there has been a change in fact.11
Discussion
[41] I approach this ground of appeal in terms of its wording. The Judge did find that the nature and extent of the use of the right of way had changed. I repeat the relevant paragraph, which is set out at [22] above:
[13] While I agree that the nature and extent of the use of the easement land has changed (predominantly now excluding the use of rear doors for delivery of goods), I am not satisfied under s 317(1) of the Property Law Act 2007 that the easement ought to be extinguished and decline the application accordingly.
[42] There was no error by the Judge in his finding on “use”. I will address the issue of whether the easement thus “ought” to have been extinguished later in this judgment.
10 At [12]. Set out in [22] above.
11 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [138].
Ground (d): there was no evidence to support the conclusion that the easement is used by the benefitted units to open doors and to access the easement for maintenance
[43] Mr Elsmore refers to the affidavit of Mr Bridgens in which he said: “I believe the owners of [principal units 1-4] sometimes open up their doors for ventilation or could make use of them during a fire as an emergency if the main egress to the arcade was unsafe”. (Emphasis added). He says this is not sufficient factual evidence.
[44] Mr Elsmore also says the Judge did not refer to Mr Bowen’s evidence in reply regarding the use of the right of way by those in principal units 1-4.
[45] In response Mr Fraundorfer says there was evidence not only from Mr Bridgens but also from unit owners. Further, the evidence of Mr Bridgens referring to his “belief” is properly read as “to the best of my knowledge”.
Discussion
[46]Mr Bridgens states in his affidavit that:
[19] The right of way also provides access to the roof of the Piccadilly Arcade for maintenance and other works, and drainage pipes and air- conditioning units extend out the back of the wall. These need to be accessed for maintenance. The drain pipes were recently installed to the Bowens’ satisfaction as a solution to the discharge of rainwater onto their land, which they had complained to the Body Corporate about.
…
[40] The right of way is of course also accessible from each of principal units 1-4. I believe the owners of these units sometimes open the rear doors for ventilation, or could make use of them during a fire as an emergency exit if the main egress through the Arcade was unsafe.
[41] Also, as is visible in the photographs I have marked “G”, there are water pipes and air-conditioning units extending from the wall of the Arcade. These need to be accessible for maintenance. If the Bowens insist that our maintenance contractors are unable to cross the strip of land to access these pipes, walking through the units from the main right of way in the centre of the Arcade to the rear wall is the only way to do this. The right of way is also the only practicable way of maintenance workers accessing the roof of the Arcade when required, using the right of way to unload workers and tools as part of doing so.
[47] In his affidavit in reply Mr Bowen said that Unit 3 cannot use its rear door as it is completely blocked. He also says the doors to Units 3 and 4 are 640 mm above ground level and the door to Unit 2 is 350 mm above ground level. He says use of those doors by a tenant (for whatever purpose) could give rise to health and safety issues.
[48] I consider there is sufficient evidence from Mr Bridgens, notwithstanding Mr Bowen’s affidavit in reply, to find that the right of way is used for the various purposes identified by the Judge. I accept that the use of the word “believe” can be read in the way in which Mr Fraundorfer submits, namely “to the best of my knowledge”.
[49] I will address the further evidence of Mr Bowen in reply regarding the use of the right of way in the context of Ground (f), whether the removal of the easement will substantially injure any party.
Ground (e): failure by District Court Judge to consider the burden upon the servient (burdened) land in allowing the easement to remain
[50] This ground relates to s 317(b) of the Act but was not developed in Mr Elsmore’s submissions.
[51] Mr Fraundorfer submits that even if the Judge had decided that the easement was not being used as a right of way the Judge would have needed to consider the Bowens’ proposed use of their property under s 317(b) and how the continued existence of the right of way is said to “impede the reasonable use” of the Bowens’ property. Mr Bowen’s evidence was simply that if the easement remains it would be an unreasonable impediment to any future development plans.
Discussion
[52]The extent of Mr Bowen’s evidence on this issue is that:
[19] We purchased the property with a possible long-term view to redevelop the current commercial use, in conjunction with the existing tenant, to bring it in line with the modernisation and commercial upgrade of Tauranga’s CBD.
If the easement remains it would be an unreasonable impediment to any future development plans.
[53] The onus is on an applicant to satisfy the Court that the easement should be extinguished.12
[54] The Supreme Court made it clear in Synlait that the fact that the owner of the burdened property purchased the property with knowledge of the easement (covenants in that case) does not make s 317(1)(b) inapplicable. The Supreme Court noted that given any prudent purchaser of land will have searched the title, it can be expected that an applicant under s 317 will have known (or ought to have known) of the covenant when buying the land. If that is a disabling factor it will be a disabling factor in virtually every case.13
[55] Further, the Supreme Court also considered it is incorrect to say s 317 cannot be used to free the owner of burdened land from an easement (or covenant) simply to improve the enjoyment of his or her property for his or her private purposes.14
[56] Even accepting the above principles, the best the Bowens can say is that their purchase of 53 Devonport Road was made with a “possible” long-term view to redevelop the property. Further, there is no evidence from the Bowens as to how the continued existence of the easement would be an unreasonable impediment to any future development plans. Mr Bowen simply makes that statement of opinion without an evidential foundation for doing so. In addition, there was no evidence as to how the use of the land in a future development would be a use in a different way or to a different extent from that which could reasonably have been foreseen by the original parties to the easement at the time of its creation as is required under s 317(1)(b).
[57] I, therefore, consider that there is an insufficient evidential foundation to satisfy s 317(1)(b).
12 Manuka Enterprises Ltd v Eden Studios Ltd [1995] 3 NZLR 230 (HC) at 233; Re Barfilon Investment Ltd [2019] NZHC 780 at [23]; and New Zealand Industrial Park Ltd v Stonehill Trustee Ltd [2019] NZCA 147 at [72].
13 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [164].
14 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [86] citing Okey v Kingsbeer [2017] NZCA 625, (19 NZCPR) at [52].
Ground (f): removal of the easement will not substantially injure any party
[58] This ground relates to s 317(1)(d) of the Act. Mr Elsmore submits the only effect the removal will have is the benefitted units in the arcade may not be able to open the rear doors of their units. He says that is not a substantial injury to any party, especially when they all have air-conditioning units.
[59] Mr Fraundorfer refers to the test in s 317(1)(d) pursuant to which the Judge was required to decide if the extinguishment would “substantially injure any person entitled”. He submits that in this context “substantial” means something more than “theoretical or fanciful”15 but less than “large or considerable”.16 To satisfy the Court it could act under s 317(1)(d) the Bowens need to demonstrate that interference with the Body Corporate’s property rights would not cause injustice.17
[60] As well as the economic and practical value of the right of way relied on by the Body Corporate, Mr Fraundorfer refers to the continued existence of the right of way having the “incidental benefit” of impeding the Bowens’ possible redevelopment of their land.18 Mr Fraundorfer submits the Bowens’ application appears to be a “want” rather than a “need” while the Body Corporate has real benefits to protect for itself and its members.
Discussion
[61]The Supreme Court in Synlait referred to the test in s 317(1)(d) as follows:19
[103] The inquiry under s 317(1)(d) focuses on whether the extinguishment or modification of the covenant will “substantially injure” the owner or owners of the benefited land. The court must be satisfied that it will not do so. …
[104] Section 317(1)(d) contemplates that the benefited owner may be injured by removal of the covenant so long as that injury is not substantial. It was common ground that for the injury to be “substantial”, it must be “real, considerable, significant, as against insignificant, unreal or trifling”. Australian cases express this in slightly different language, but the substance
15 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [104].
16 At [104] adopting Re Mason and the Conveyancing Act [1962] NUSWR 762 (SC) at 928.
17 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [105].
18 Body Corporate 193056 v Paihia Property Holdings Corporate Trustee Ltd [2021] NZCA 411 at
[52]adopting Tujilo Pty Ltd v Watts [2005] [NSWSC] 209, (2005) 12 BPR 23, 257.
19 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6 (footnotes omitted).
is the same: the injury must be real and have present substance, rather than merely being theoretical or fanciful.
[105] The injury may be of an economic kind (for example, a reduction in the value of the benefited land), physical kind (for example, being subjected to noise or traffic), or intangible kind (such as impairment of a view, intrusion upon privacy, unsightliness or an alteration to the character or ambience of the neighbourhood).
[106] Assessment of substantial injury requires the court to compare the position of the owner of the benefited land with the covenant in place with the position if the covenant is modified or extinguished. …
[62] As well as the evidence of Mr Bridgens already referred to, there are affidavits from owners of two of the benefitted units in the arcade. Mr Stone, the owner of principal unit 2, says if he ever needed to re-tenant the property, the existence of the rear access way would remain a clear selling point to potential tenants. Mr Gardiner, the owner of principal unit 4 (untenanted at the time the affidavit was sworn), says when he was showing prospective tenants through the unit, they were very interested in having the rear door available for inwards goods and for additional access. He says as a real estate agent that did not surprise him. He says the rear access door is definitely a selling point in marketing the unit to prospective tenants.
[63] In his reply affidavit Mr Bowen notes that there was no affidavit in opposition from principal units 1 and 2 (presently untenanted) in the arcade. He also makes the point that the rear doors cannot be used for deliveries of inwards goods because there is no right of access across the strip of land.
[64] For completeness I mention that Mr Elsmore made a submission that access to the arcade roof could be gained from other points along the perimeter of the arcade but there was no evidence that this was possible. I accordingly put that to one side.
[65] There is also Mr Fraundorfer’s submission that the continued existence of the right of way has the incidental benefit to the owners of the benefitted units of impeding the Bowens’ possible redevelopment of their land. In Body Corporate 193056 v Paihia Property Holdings Corporate Trustee Ltd, the Court of Appeal disagreed with the Judge at first instance that the likely development of the burdened land that would be enabled by the relocation of a driveway easement was a matter beyond the Court’s
purview on an application to modify an easement.20 The Court of Appeal referred with approval to a judgment of the Supreme Court of New South Wales in Tujilo Pty Ltd v Watts21 in the context of a provision which is in materially the same terms as s 317(1)(d) of the Act. The Court of Appeal referred to that decision in that case as follows:22
Campbell J noted that the grant of an easement over land permits a particular type of activity on the burdened land but the grant of such an easement has incidental benefits of preventing development of the land in a manner inconsistent with the activities the easement expressly allows. The Judge considered such benefits could appropriately be taken into consideration when deciding whether there was substantial injury to the grantee by a proposed modification or extinguishment of an easement so long as there was a sufficient connection between the injury and the grantee’s ownership or interest in the benefitted land.
[66] In the present case any redevelopment of the Bowens’ property to the boundary of the arcade land would prevent any use at all being made of the rear doors to the four benefitted units in the arcade.
[67] Even taking into account Mr Bowen’s evidence in reply I am satisfied that the uses referred to by Mr Bridgens are not “insignificant, unreal or trifling”. Without the access for the delivery of inwards goods the injury is not as substantial as it might otherwise have been but it is nevertheless real, considerable and significant.
[68] The onus is on the Bowens to show that the proposed extinguishment will not cause any injury in terms of s 317(1)(d).23 The Bowens have not discharged that onus.
Ground (b): alleged failure to apply Synlait
[69] Mr Elsmore submits that the Judge failed to consider all relevant factors and that has meant that he failed to apply Synlait appropriately. Mr Elsmore says the relevant factor that should have been brought into consideration was the nature and grant of the easement in particular. He repeats his submission that the easement was
20 Body Corporate 193056 v Paihia Property Holdings Corporate Trustee Ltd, above n 18, at [51].
21 Tujilo Pty Ltd v Watts, above n 18.
22 Body Corporate 193056 v Paihia Property Holdings Corporate Trustee Ltd, above n 18, at [52] (footnotes omitted).
23 Body Corporate 193056 v Paihia Property Holdings Corporate Trustee Ltd, above n 18, at [53]; and Chand v Auckland Council [2021] NZCA 282, (2021) 22 NZCPR 326 at [51].
granted as a right of way to allow access from Devonport Road for the delivery of goods. That is no longer available and it is that lack of access that should have been the driving point.
[70] Mr Fraundorfer submits that while the Judge did not mention Synlait by name, it is clear the Judge applied the test from that judgment. He submits that the substance of the case for the Bowens in the District Court, namely that in terms of s 317(1)(a), the right of way is “redundant” as it is inaccessible, was clearly and fairly recorded in the decision. Recognising this the Judge focused primarily (but not exclusively) on the evidence as to the use of the right of way. He says the Judge did accept that the use of the right of way had changed. He then considered whether this meant the right of way “ought” to be extinguished, treating it as a relevant factor as Synlait requires.24 After considering “all relevant factors”, including the Bowens’ knowledge of the existence of the right of way at the time of the purchase, the years of inaction by the Bowens, the Bowens’ lack of redevelopment plans and the ongoing use of the right of way from the arcade land this led the Judge to conclude he did not consider he should or ought to make an order as sought.
Discussion
[71] I have found that the Bowens have not made out the grounds in s 317(1)(b) or (d). That leaves s 317(1)(a) in respect of which the Supreme Court in Synlait said:25
We acknowledge, however, that if the court finds one or more of the grounds in s 317(1)(a) is engaged, it will have found that (using the words of s 317(1)(a)) “the easement or covenant ought to be modified or extinguished (wholly or in part)”, which may bring into play at the first stage some of the considerations that are also relevant at the second stage.
[72] Mr Elsmore refers to the nature and extent of the use of the right of way having changed, impliedly referring to s 317(1)(a)(i). That provision refers to a change in the nature or extent of the use being made of the benefitted land and the burdened land or both rather than the easement itself. There is no change in the nature or extent of the use of either the benefitted land or the burdened land in the sense that they remain as commercial properties. However, there is a change of use in the sense that the
24 Bowen v Piccadilly Arcade Body Corporate, above n 1, at [5]–[7] and [12].
25 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [67] (footnotes omitted).
benefitted land has changed from a single occupier to a Body Corporate with multiple owners of units. Additionally, the easement only serves four of those owners and not the whole of the arcade land. I accept s 317(1)(a)(i) is established.
[73] Section 317(1)(a)(iii), any other circumstances the court considers relevant, is also established. The Judge found that there had been a change in the nature and extent of the use of the easement, “predominantly now excluding the use of rear doors for delivery of goods”. The respondent does not take issue with that finding.
[74] In Synlait, the Supreme Court said, in relation to s 317(1)(a) that the focus is not on the fact of change but on the impact of the change on the benefit or burden flowing from the covenant (or in this case the easement).26
[75]In the present case:
(a)There is no evidence of any burden to date on the Bowens’ property as a consequence of the partial extinguishment of the easement;
(b)In terms of future development I have found that the Bowens have not established that the continuation of the right of way in its existing form would impede the reasonable use of their land in terms of s 317(1)(b); and
(c)Nor have the Bowens established that the proposed extinguishment will not substantially injure the owners of the benefitted units in the arcade in terms of s 317(1)(d). Those units use the right of way for purposes other than ingress and egress from and to Devonport Road.
[76] In those circumstances, although the use of the right of way has changed, the Judge was correct in deciding that he was not satisfied that the easement ought to be extinguished.
26 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [138].
Application to admit new evidence on appeal
[77] The Bowens seek leave to file an affidavit from Mr Bowen which refers to an inwards goods area for the arcade off a service lane which runs from Grey Street on the opposite side of the arcade to the right of way.
[78] Mr Bowen says that the existence of this inward goods area was brought to his attention on the day of the hearing in the District Court. He says he was not able to file an affidavit on the issue.
[79] The formal application seeking leave to adduce further evidence repeats that the existence of the inwards goods area came to the attention of the parties during the course of the hearing in the District Court. However, in the course of submissions Mr Elsmore advised this Court that the existence of the inwards goods area was brought to his attention the night before the hearing. He says although there was no affidavit evidence there was reference to the area in the hearing.
[80] Mr Elsmore submits that the existence of this inwards goods area should have been referred to by the Body Corporate in its evidence as it is the Body Corporate’s building. He submits that the fact that there is in existence a designated delivery bay completes the picture for the Court when determining whether the right of way should be extinguished.
[81] The application is opposed by the Body Corporate. Mr Fraundorfer submits the Bowens could have with reasonable diligence presented their new evidence in the District Court. The evidence is therefore not fresh.27 Mr Fraundorfer points to the fact that the inwards goods area is accessible from a Council service lane – a public road – extending from a driveway on Grey Street, a few dozen metres at most from the separate service lane leading to the right of way. The Bowens have owned land in the area for decades.
27 Erceg v Balenia Ltd [2009] NZCA 48, [2009] NZCCLR 32 at [15].
[82] Mr Fraundorfer resists the submission that the Body Corporate had any obligation to bring the contents of the new evidence to the Court’s attention. The Bowens as the applicants in the District Court bore the onus of proof.
[83] Further, Mr Fraundorfer says the proposed evidence is not cogent. As the affidavit evidence tendered in opposition to the application to adduce fresh evidence states, the experience of the Body Corporate and the tenants of the benefitted units is that the inwards goods area is not a practical alternative as a delivery entrance. It is on the far side of the arcade from the benefitted units, it is difficult for trucks to access while being convenient for only trucks to use, and the layout of the areas it leads to means using it as a goods entrance is cumbersome. Using the inwards goods area is no better than simply loading and unloading from the footpath in Devonport Road. Further the inwards goods area does not provide a number of the benefits the right of way offers the occupants of the benefitted units or the arcade as a whole. It does not:
(a)Allow for access to the pipes and air-conditioning units extending from the wall of the arcade adjacent to the right of way;
(b)Provide additional ventilation and light for the benefitted units;
(c)Provide an alternative emergency exit from the benefitted units; and
(d)Provide the incidental benefits of the existence of the right of way in terms of restraining development of 53 Devonport Road.
[84] As a consequence Mr Fraundorfer submits there is no reasonable likelihood that the proposed new evidence taken together with the other evidence before the District Court would have made a difference to the outcome of the Judge’s decision- making process.
[85] Under r 20.16 of the High Court Rules 2016, leave to adduce further evidence on appeal may be granted if there are “special reasons”. The Court can receive further
evidence if it considers that the interests of justice require it to do so.28 Generally the further evidence must be fresh, credible and cogent. Evidence will not be regarded as fresh if it could, with reasonable diligence, have been produced at trial. Although the absence of freshness is not an absolute disqualification. When the further evidence is not fresh, it will not generally be admitted unless the circumstances are exceptional and the grounds compelling. The further evidence will also need to pass the tests of credibility and cogency.
[86] The evidence is not fresh. The Bowens could have with reasonable diligence presented the proposed new evidence in the District Court. The onus was on them. The evidence is not cogent. It could possess cogency if the Judge’s refusal to grant the application to extinguish the easement had been based materially or significantly on a concern not to deprive the benefitted unit owners of a sole goods entrance. But given the Judge’s recognition that the Bowens have now prevented the use of the right of way for that use, because of the need of the unit owners to cross the strip of land, that is not the case.
[87]The application to adduce further evidence on appeal is refused.
Result
[88]The appeal is refused.
Costs
[89] I did not hear from the parties on costs. Costs are therefore reserved. The Body Corporate as the successful party is prima facie entitled to costs. If the parties are able to agree costs a joint memorandum should be filed within 20 working days of the date of this judgment. If costs cannot be agreed then the Body Corporate is to file and serve its memorandum within five working days of the date for the joint memorandum. The Bowens are to file and serve their memorandum within five working days of the date of service of the Body Corporate’s memorandum.
28 B v A [2020] NZHC 580 where the Court summarised the relevant principles including the further principles referred to in the rest of [86].
[90] Costs memoranda should not exceed five pages, excluding attachments. I will determine costs on the papers.
Gordon J
Annexure A
Annexure B
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