Boyer v McCracken
[2017] NZHC 755
•20 April 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-000800 [2017] NZHC 755
BETWEEN ARTHUR JAMES BOYER AND
NICOLE RUTH KRAMER Plaintiffs
AND
CLARE MCCRACKEN Defendant
Hearing: 8, 9 and 10 August 2016, 28 and 29 November 2016 Appearances:
R Hollyman and G Schumacher for the Plaintiffs
S A Grant and S Laing for the DefendantJudgment:
20 April 2017
JUDGMENT OF HINTON J
This judgment was delivered by me on 20 April 2017 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules
……………………………………………………………………
Registrar/Deputy Registrar
Counsel:
R Hollyman, Barrister, Auckland
Gretta Schumacher, Barrister, Auckland
S A Grant, Barrister, Auckland
S Laing, Barrister, Auckland
BOYER v MCCRACKEN [2017] NZHC 755 [20 April 2017]
[1] The plaintiffs are seeking orders effectively vesting 11m2 of their adjoining neighbour’s land in them, relying on a path as a “wrongly-placed structure” under ss 321-325 (or Part 6, Subpart 2) of the Property Law Act 2007 (the Act).
[2] The defendant says this is not a case of a wrongly placed structure, but rather of a negligent purchaser. She says the application does not qualify under s 323 and, if it does, I should refuse relief.
Facts
[3] The plaintiffs purchased their property at 31 Springfield Road, Western Springs (Flat 1) in 2012. It is situated on a cross-lease. The purchase did not go unconditional until late 2012.
[4] The other property on the cross-lease, 31A Springfield Road (Flat 2), was purchased by the defendant, Ms McCracken, in March 2013.
[5] I pause to explain the nature of the cross-lease. The cross-lease gives each owner an individual half share in the fee simple estate and a leasehold estate from the other owner in respect of their flat, for 999 years. In practical terms, the rights of each half-owner of the fee simple are so modified by the lease that the 50 per cent fee simple interest is irrelevant. The lease sets out each party’s area of exclusive possession, their respective rights and limitations. The exclusive use areas can be
very different. In this case, Flat 1 has an exclusive use area of 533m2 and Flat 2,
of 251 m2.
[6] At the time each of the parties purchased, there was a fence separating the properties. The path at issue ran along the plaintiffs’ side of the fence, below the plaintiffs’ front porch to their front steps, and also down the east side of their property. The strip containing the path and its curtilage, between the porch and the
fence, was approximately 11m2.
[7] A plan is attached to this judgment as Appendix “A” showing the two
properties and the path.
[8] Flat 1 contains the original bungalow built on the site in the 1930s. The cross-lease subdivision took place in 1992, creating the two flats. Afterwards, an old cottage was moved onto Flat 2.
[9] The path was long-established, dating back well before the cross-lease subdivision. (The fence was built in the course of the subdivision.) It was accepted by the defendant in opening submissions that the path was designed to provide access to the porch on Flat 1, from the driveway.
[10] Prior to the present dispute, there had apparently been no issues raised by anyone over the boundary line since the subdivision (and the fence was constructed) in 1992.
[11] In the course of their purchase, the plaintiffs identified a problem with an unconsented deck at the rear of their property. They entered into a deed of covenant with the then-owner of Flat 2, under which they obtained consent in exchange for allocation to Flat 2 of the then-remaining 39m2 of development potential.
[12] At the time they purchased, the plaintiffs understood the fence to be the legal boundary, and so did Ms Hawes, the real estate agent who sold the property to them. The flat plan indicates that the boundary is in fact hard against the front porch of the plaintiffs’ house. It seems the plaintiffs did not look at it closely enough and apparently did not obtain legal advice in that respect. (It seems, though, that others, including the agent and vendors, also failed to notice the correct boundary line.)
[13] Ms Hawes, the same real estate agent who acted on the sale of Flat 1, acted on the sale of Flat 2 to Ms McCracken. She gave evidence that she marketed and sold both properties on the basis that the fence represented the boundary line, i.e. on the unspoken basis that the path fell within the plaintiffs’ exclusive use area.
[14] In May 2014, the plaintiffs obtained a surveyor’s report to rectify the title in accordance with the deed of covenant with the previous owner of Flat 2. At that point their surveyor identified that the boundary was hard up against the plaintiffs’ front porch, not in line with the fence.
[15] Having identified the correct boundary, the plaintiffs immediately raised the matter with Ms McCracken. I accept her evidence that Mr Boyer told her it was a pretty minor thing. He said something similar in Court. The plaintiffs say Ms McCracken expressed surprise and said that she would not move the fence. I accept that she was surprised, but rather doubt she said anything so unequivocal. Even if she did, I would not hold her to it, given she had had no time to consider the matter.
[16] Ms McCracken’s evidence as to her state of knowledge of the boundary line at the time she purchased Flat 2 was somewhat ambiguous. She said that she knew before she purchased, that the boundary was adjacent to the plaintiffs’ front porch. She also thought though, that the fence was on the boundary. She said she had not looked around the fence to see that there was a strip of land containing the path, between the fence and the plaintiffs’ front porch.
[17] My clear view of Ms McCracken’s evidence overall is that she considered (as did the plaintiffs) that what she was buying was demarcated by the fence. This is at least to some degree her own evidence, but also, if Ms McCracken had considered that she “owned” the 11m2 strip, before being told that by the plaintiffs, she is the sort of person who would have done something about it, for example by raising the matter with the real estate agent or her lawyer. There is no suggestion that she talked to anyone about the extra strip of land. Yet, once the issue was raised by the plaintiffs, Ms McCracken involved a number of people.
[18] Ms McCracken’s knowledge is material in terms of the factors relevant to a s 323 application, but I note that it does not change the fact on which she strongly relied; that she at all points considered she was acquiring exclusive use of 251m2, and she was right about that. It just happened that the fence had cut a bit of that off in a physical, not legal sense. It also does not mean, as the plaintiffs were prone to assert, that the plaintiffs paid for the 11m2 strip. They may have thought they had, but they certainly did not. They did not buy it, and they cannot say they “paid for it”.
[19] On 19 October 2014, Ms McCracken arranged to meet the plaintiffs, having by then taken legal advice. She went to their front porch with her flatmate and she handed them a letter which stated that she wanted to move the fence to where the legal boundary was, up against the plaintiffs’ porch. What was said was disputed. The plaintiffs say they pointed out that this would mean they could not access their front door, which Ms McCracken said was not her problem. Ms McCracken says Dr Kramer immediately told her she would take the matter to the High Court. The plaintiffs say rather, that they told Ms McCracken they might have legal rights to the path. It does seem to be accepted that the plaintiffs asked Ms McCracken if she had considered compensation. There was no reference to any sum.
[20] On the evening of 19 October 2014, Dr Kramer sent a follow-up email about the discussion that had taken place. In it, she expressed the hope that they could find an equitable solution, and offered compensation in exchange for moving the legal boundary from up against their front porch to the fence line.
[21] Four days later, Ms McCracken, through her lawyers, maintained her position that she would not agree to a change in the title.
[22] Ms McCracken’s cat died in late October 2014. There was evidence from her regarding the plaintiffs’ associated behaviour. She sensibly did not advance such matters in closing.
[23] It is however true that in early November 2014, Dr Kramer called the Council about Ms McCracken’s parking, which led to Ms McCracken being visited by a parking warden. The warden told Ms McCracken that a complaint had been made, as her car was overhanging the footpath at the edge of her driveway. The next day Ms McCracken parked horizontally across the driveway entrance, blocking the entrance. Her evidence was that the parking warden instructed her to park in this manner. This led to a further altercation between her and Dr Kramer. Suffice it to say, matters became rather unpleasant between Ms McCracken and the plaintiffs. There were no more parking tickets issued, however.
[24] On 7 November 2014, Mr Boyer visited Ms McCracken in an effort to explore a possible resolution of the problem. They both agree that he asked her if she would consent to the construction of stairs down from the front porch on the western/driveway side. Ms McCracken says he proposed this as a full solution to the problem and she agreed, so she considered the matter was sorted. Mr Boyer said this was just a fall-back arrangement because Dr Kramer was scared that, if Ms McCracken suddenly moved the fence, they would not be able to get in the front door. He says he made it clear that the path was very important to them and that he was only exploring options, not giving up any rights. Ms Ross, who gave evidence in support of Ms McCracken, confirmed Mr Boyer said he was only exploring options and otherwise confirmed Mr Boyer’s evidence in this regard.
[25] Whatever the arrangement was over the “new stairs” proposal, a bit like whatever it was that Ms McCracken said to Mr Boyer in their first discussion, it was clear within a very short timeframe that whatever Mr Boyer had meant, the plaintiffs certainly did not consider the matter settled by an agreement to building of new stairs.
[26] On 5 December 2014, Mr Boyer visited Ms McCracken and proposed a hedge along the existing fence line to address privacy concerns. He offered to make a significant contribution to the hedge.
[27] On Christmas Eve 2015, Ms McCracken sent an email to the plaintiffs saying she was considering various fencing options, including the suggested use of hedging. She said, “As advised prior, I will be developing this area in the New Year and will pick up the process of scoping details in forming this plan then”.
[28] Quite unexpectedly, on 6 January 2015, Ms McCracken sent an email advising the plaintiffs that she would be removing the fence the next day. The plaintiffs saw this email at 11.00 pm that evening and immediately replied, refusing consent to removal of the fence. Mr Boyer followed that up by knocking on Ms McCracken’s door just before 6.00 am the next morning. Ms McCracken did not answer. She said she was very frightened by the early door knocking. She asked a
friend to come over and they went together to the Police station. She spoke to the
Police regarding the removal of the fence.
[29] Dr Kramer visited Ms McCracken later that same morning (7 January 2015) and repeated that the plaintiffs did not consent to the removal of the fence. Ms McCracken told Dr Kramer she did not require consent.
[30] Just after midday on 7 January 2015, Ms McCracken and her brother demolished the fence. Ms McCracken said in doing so, she was relying on the agreement to build new stairs, which she said dated from her meeting with Mr Boyer on 7 November 2014. However, in evidence, she acknowledged that Dr Kramer had subsequently made it clear that she did not consent to removing the fence. It is fairly clear that Ms McCracken had decided her best strategy was to remove the fence. She considered she was within her rights to do this, which now does not seem to be contested.
[31] The plaintiffs engaged solicitors, and on 15 January 2015 they wrote to Ms McCracken proposing they negotiate; offering $15,000 in compensation and referring to possible legal proceedings.
[32] On 30 January 2015, Ms McCracken wrote, asserting there was an agreement to build stairs and that her actions were taken with the plaintiffs’ express consent. This was plainly disingenuous.
[33] On 10 February 2015, the plaintiffs sought a meeting and an undertaking to not carry out work pending the meeting. Ms McCracken’s reply of 2 March was firm. She was going to construct a new fence, immediately adjacent to the plaintiffs’ front porch.
[34] On 27 March 2015, the plaintiffs advised Ms McCracken that their young daughter had a tumour behind her eye and her eye had to be removed. They again sought an interim hold on construction. Ms McCracken replied by voicemail on
28 March 2015 expressing her sympathy. Through her lawyer on 7 April 2015, she declined to give an undertaking to halt work on an interim basis.
[35] The plaintiffs then sought and obtained Court orders for interim relief, preserving the position pending resolution of the substantive proceeding. Ms McCracken did not oppose the application.
[36] There were subsequent attempts to have settlement negotiations or a mediation, in which Ms McCracken did not participate.
[37] In August 2016, the plaintiffs reduced their compensation offer from $15,000 to $10,000.
Change of parties to include trustees
[38] During the hearing I granted an application that the plaintiffs, in their capacity as trustees of their family trust, The Boyer and Kramer Family Trust, be joined to the proceeding, that being the capacity in which they owned Flat 1.
Jurisdiction
[39] Counsel for Ms McCracken submits that the Court has no jurisdiction to consider the application and it should be dismissed.
[40] Section 323 of the Act provides that a Court may grant relief for a “wrongly placed structure” if the Court considers it is “just and equitable in the circumstances”.
[41] Under s 321 of the Act, ‘wrongly placed structure’ is defined as follows:
wrongly placed structure means a structure that˗˗
(a) is situated on or over the land affected, not being the land intended for the structure (whether or not the land intended adjoins the land affected); or
(b) is situated on or over the land affected but was not placed there˗˗
(i) by, on behalf of, or in the interest of a person who was, at the time, the owner of the land affected; or
(ii) under a contract made with, or by way of a gift made to, a person who was, at the time, the owner of the land affected.
(Emphasis added)
[42] It is accepted that (b) of the definition is not applicable. For there to be jurisdiction, the path must qualify under (a).
[43] There is no contest that the path (the fence, now gone, is not relied on) is a “structure” for purposes of s 323 of the Act. “Structure” is defined in s 4 of the Act as meaning for purposes of Part 6 “any building, driveway, path, retaining wall, fence, plantation or other improvement”, i.e. a path is specifically included. There is also an extended definition of “structure” in s 321, but it is not relevant to this case.
[44] “Land affected” as used in the definition of “wrongly placed structure” is defined in s 321 as “land on which a structure is actually situated”. The plaintiffs say this would be Ms McCracken’s land, or Flat 2.
[45] “Land intended” is the “land on which the structure was intended to be situated”. The plaintiffs say their land is the land intended.
[46] In this instance, as noted, the path has been in place since well before the subdivision and was clearly intended to create access to the porch, front door and eastern boundary of Flat 1 at a time when Flat 1 was the only building on the land.
[47] Counsel for Ms McCracken submits that, given the path was intentionally constructed in its current position and on the correct land, which is land Ms McCracken now owns, her land has always been both the land intended and the land affected. Logically, therefore, the path was not “wrongly placed”.
[48] It seems to me that the definitions of “land affected” and “land intended” do not need to be so narrowly read. They can refer to the present situation, not just the position at the time the structure was placed.
[49] This is made clear by s 322(2) which specifically provides that:
The application may be made whether the wrongly placed structure was placed on or over the land affected˗˗
(a) before or after any boundary of that land or of the land intended for the structure was fixed; or
(b) before or after this Act comes into force. (Emphasis added)
[50] I also do not agree that it is a precondition to s 322(2) that the path qualifies under s 321. Section 322(2) clarifies and is to be read together with s 321.
[51] Further, as the plaintiffs submit, many wrongly placed structures will have been intentionally placed where they are, for whatever reason. Part 6, Subpart 2 is designed to provide for that situation, where appropriate.
[52] Counsel for Ms McCracken also argues that “land” as used in “land affected” and “land intended” does not include an estate or interest in land, (i.e. does not include the cross-lease interests here), but rather means a physical “piece or area of land”, which is the definition of land in s 321 of the Act. The defendant says this is a special definition for the purpose of this part of the Act and marks a clear departure from the general definition of “land” in s 4 of the Act.
[53] The defendant says that, as the plaintiffs have only a cross-lease estate and do not own the physical piece of land, s 321 does not apply.
[54] Section 4 provides:
Interpretation
In this Act, unless the context otherwise requires,˗˗ …
land includes all estates and interests, whether freehold or chattel, in real property.
[55] The definition of “land” in s 321 (i.e. “land” means any piece or area of land) itself contains the word “land”. It seems therefore to be not an alternative definition, but rather an extension of the meaning of “land” to include inter alia any piece, or area of land. So “land” still means “all estates and interests in real property” but includes a piece of land.
[56] While I agree that ss 321 and 323 are somewhat cumbersome, I consider the
overall meaning and intent is clear enough. “Land” includes a cross-lease estate.
[57] The sections cannot have any other sensible meaning. [58] I therefore consider I have jurisdiction under s 323.
[59] The subdivision having occurred after the path was there, turned the path into a wrongly placed structure. After creation of the new boundary line, the plaintiffs’ property is the land on which the structure was intended to be situated and Ms McCracken’s property is the “land affected”, or land on which the structure is actually situated.
[60] My approach to interpretation is consistent with Duncan v Taylor.1 The dispute there was over cross-leases. I note that Rodney Hansen J made an order under s 323 without any suggestion that the section may not apply as a result of the cross-lease titles or because the structure was intentionally built (by the plaintiff) on the defendant’s land. More pertinently, he said, which I endorse:2
Subject only to the restriction in s 323(3), ss 323 and 324 permit relief in any case where the Court considers it just and equitable to grant relief. There is nothing in either section which requires a restrictive interpretation of the definition of “wrongly placed structure” or of the power to grant relief. Contrary to the view taken by Judge Couch at [37] of his judgment, I consider that in omitting words of qualification, such as those in s 129 of the Property Law Act 1952, the new Act evinces a clear intention not to restrict the power to grant relief to exclude deliberate acts of encroachment.
[61] If the provisions were not interpreted in the way I have, there would be minimal, if any, use for s 322(2). Ms Grant had obviously anticipated this point and said the subsection would apply, for example, where a purchaser in a proposed subdivision took early possession and mistakenly built on land they were not acquiring. Section 322(2) would enable him to make an application for relief without waiting for the subdivision to be completed and the new boundary fixed. This construction seems both forced and very limited. I do not agree with the defendant’s argument. I have to give the relevant provisions of the Act a
common sense meaning and application.
1 Duncan v Taylor (2011) 12 NZCPR 235(HC).
2 At [26].
[62] As part of the jurisdiction argument, Ms Grant submitted that other legal avenues, (for example, the Contractual Mistakes Act 1977) either were available to the plaintiffs, or were the appropriate avenues for the plaintiffs to explore to seek relief (and if not available, that should be an end to the plaintiffs’ case). I do not need to consider those arguments. The application is under s 323 and I find there is jurisdiction under that section. I do not need to consider claims that might have been made, but have not been.
The application of s 323
[63] The next question is whether it is just and equitable to grant relief as provided for in s 323.
[64] Section 324(1) provides that:
In determining an application, under section 322, for relief under s 323, the
court may have regard to˗˗
(a) the reasons why the wrongly placed structure was placed on or over the land affected; and
(b) the conduct of the parties; and
(c) the extent to which any person has been unjustifiably enriched at the expense of the person seeking relief because the owner of the land affected has become the owner of the wrongly placed structure.
[65] Section 324(2) provides that:
Subsection (1) does not prevent the court from granting relief merely because the person seeking relief knew of the true boundaries or ownership of the land affected at the time that the structure was placed there, or at the time when that person became the owner of, or acquired an estate or interest in, the land affected, the land intended, or the structure.
[66] Mr Hollyman, counsel for the plaintiffs, submitted that none of the three factors that are specifically listed in s 324(1)(a)-(c), is directly applicable here.
[67] I agree and so did Ms Grant, that it is not appropriate to talk in terms of
Ms McCracken being “unjustifiably enriched”.
[68] I also do not consider there is any conduct here that is relevant to exercise of the jurisdiction, as compared to conduct that might be relevant to costs. Ms Grant said the plaintiffs acted in a hostile and intimidatory manner once Ms McCracken refused to sell. Without making any conclusive finding in this regard, my impression is that both parties have to some degree exacerbated the situation. I expect they both behaved in ways that to some extent they regret.
[69] The defendant argued that the plaintiffs need to prove why the subdivision placed the boundary against the plaintiffs’ porch and that this is a key factor. Clearly, this may be a relevant factor, as provided for in s 324(1)(a), but there is no requirement for the plaintiffs to positively prove the basis for the boundary line. There was no evidence of any sensible reason for the path to have been included in Flat 2. It seems to have been a mistake. If it was not, then it was very odd. Even if the boundary and therefore the path were deliberately placed, this would not be
conclusive, given the provision of s 324(2) and the observations in Duncan v Taylor.3
[70] In addition, the defendant submits it is very relevant that, even inclusive of the strip, she has exclusive use of a much smaller area of land than the plaintiffs. She was very focused on the “half share” showing on the title. This consideration permeated the defendant’s evidence. The point is misconceived. It stems from confusion around the nature of the cross-lease, which I explained earlier.
[71] However, I do consider that the fact that the defendant’s exclusive area is very small is relevant, given it will be intrinsically more limited by further reduction in size. I can understand, given she has a small back yard and wants to develop it, that she wants to develop it to its full potential. For an owner of a small yard, what might otherwise be a small strip, can be meaningful.
[72] The plaintiffs contend, and I agree, that other relevant factors in determining whether to grant relief under s 323, include the parties’ knowledge at time of purchase; use of the structure (and acquiescence); sensible enjoyment; indefeasibility of title and alternative available solutions. These are not listed in any particular
priority.
3 Duncan v Taylor, above n 1.
[73] I have already found that both parties believed the fence was their boundary. This is clearly material, but not as significant as the plaintiffs submitted. It does not change the fact that Ms McCracken believed (quite correctly) that she was purchasing exclusive use of 251m2 of land.
[74] The plaintiffs have had use of the structure (the path) and until they raised the issue of the boundary, there was no objection to that from Ms McCracken. This was a short period of time, however.
[75] ‘Sensible enjoyment’ and ‘available solutions’ are intertwined, as are many of these points. The path obviously goes with Flat 1. It provides access to the front door and down the eastern side of that property.
[76] As was canvassed at length in evidence, access to the front door could be achieved by new steps coming directly from the drive, instead of using the path along the front of the porch and going up steps on the other side of it. Both parties provided quotes for the stairs and the builders gave evidence. They were not agreed, nor was either clear, as to the extent of work, whether a building consent would be required, or cost.
[77] If the “new steps” solution were applied, it would still be possible for the plaintiffs to access the strip down the eastern side of their property, either by going up the new front steps, across the porch and down the old steps, or accessing that side from the back of the house.
[78] However, new stairs would not resolve all of the access problems. At present there are only two steps and a gentle gradient to reach them. The new steps would involve about 10 rises starting from near the drive. This is relevant for wheelchair or disabled access.
[79] There is also access at the rear of Flat 1, but the evidence was that was unsuitable and that the front door is the usual means of entry.
[80] Also, it is clear that both parties wish to have a boundary fence (or possibly hedge) between the two properties. So, along with construction of new steps, there would be a fence hard up against the front porch of Flat 1. The fence would need to be integrated with the plaintiffs’ front porch; it would need to open at the front to enable workmen to work behind it when required. There would probably be a need for further screening. Ms McCracken said she would meet the cost of the fence, but all of these matters would need to be agreed in some way. I agree with Mr Hollyman that, while Ms McCracken produced various iterations of such a fence, it would be more difficult in practice than it was presented, to put into place. Agreeing the design of the structure would be difficult and it would require greater future interaction than an ordinary fence. Also, in my view, such a fence, hard up against the plaintiffs’ porch, would materially affect the appearance and value of the plaintiffs’ property. I also seriously question whether it would be wise for Ms McCracken to have a fence immediately against the plaintiffs’ porch, having viewed the two properties. In any event, the evidence is that the loss in value to her property from a re-alignment would be modest.
[81] I consider the matter is fairly finely balanced. In the end, I have come down in favour of exercising jurisdiction, primarily on the basis that there is material detriment to the plaintiffs’ property if I do not grant relief, and relatively low detriment to Ms McCracken’s, if I do grant relief. I am also influenced by the parties’ joint view that the fence constituted the boundary. I consider that to not grant relief in those circumstances would be unjust and somewhat senseless.
[82] My view of the other factors will be obvious from the above discussion. I have weighed each in the mix.
[83] I also make my decision on the express basis that in these circumstances, I consider Ms McCracken should be well-compensated and that the ancillary orders she seeks should be granted. Generally in these cases it is glaringly obvious that a boundary needs to be re-aligned because the consequences of not doing so are very material. Here, it seems to be feasible to resolve the issue of the path by adding steps to the driveway side of the porch. The problems are that the house loses family-friendly access; the likely non-aesthetic effect of a fence jammed up against
the porch and the uncertain in quantum, but obviously real reduction in value to the
plaintiffs’ property.
Appropriate orders
[84] The plaintiffs submit that the equivalent of vesting the strip of land in them is the appropriate form of order. I agree. They raised the alternative of an easement. That seems an unnecessary complication. Cross-leases are already complicated enough. Ms Grant submitted that if I was making an order, vesting was Ms McCracken’s preferred option. An easement would not be a fair solution from the defendant’s point of view.
[85] There was extensive evidence and argument on the subject of the quantum of compensation.
[86] Mr Hollyman initially submitted that all I had to do was put Ms McCracken in the position she would have been in if she retained the path, which meant covering the value of her small strip of land, which the plaintiffs’ valuer assessed at about
$30,000.
[87] Mr Hollyman also submitted that I should apply a willing buyer/willing seller test.
[88] I agree that I should apply a willing buyer/willing seller test, as difficult as that is in this context. I agree also with the plaintiffs’ later submission that the increase in saleability (or value) of the land gaining the property and the corresponding diminution to the “selling land” are both material. Mr Hollyman also acknowledged that where the land results in an increase in value to the acquirer, it is appropriate to consider that the buyer might pay more than bare land value.
[89] I accept that Ms McCracken intends to develop her rear yard and, given it is small, her extra strip of land would make a material difference to her. The evidence in the end is that there is no current or foreseeable risk of Ms McCracken’s future development potential being affected by the reduction in her exclusive use land.
[90] Ms McCracken’s valuer said the value of the strip in terms of diminution in value of her land is $85,000. The plaintiffs say it is $10,000-$50,000. I prefer Mr Dean’s evidence for the reasons he set out and adopt a figure of $35,000.
[91] The original evidence of Mr Dean, the plaintiffs’ valuer, was that, without the path, the plaintiffs’ property would “reduce” in value by $75,000-$150,000 (or a midpoint of $112,500). This roughly accorded with the defendant’s valuer’s evidence. Mr Dean amended his evidence to take into account the available option of building new stairs. His final evidence was that the plaintiffs’ property would “diminish” in saleability with new stairs and a fence against the front porch, by about $40,000. The plaintiffs said the cost of the stairs was unknown, but estimated at about $35,000. I do not accept that the resulting diminution in value would be only $40,000, or a total of $75,000 including the stairs. As I have said, the plaintiffs’ own original evidence was of a $75,000-$150,000 difference to them. I gained the impression from the plaintiffs that they considered the total value to them of the strip was materially more than $75,000. Dr Kramer referred to the path as being “very important to us” and to the new stairs as a complicated and unacceptable solution for a home for a young family. The plaintiffs would not have proceeded with this application if $75,000 were all that was at stake. Further, I would not have granted it, so the question of value is a Catch 22 for the plaintiffs. I note here that the value of the plaintiffs’ property is said to be $1.3m-$1.4m, even without the strip, so a “loss” of $75,000 would not represent a high proportion of total value.
[92] These are very difficult matters to assess. In my view, even with the new stairs, the diminution in value would be close to $80,000, bringing the total value of the strip to the plaintiffs to about $115,000, inclusive of the cost of new stairs.
[93] I also take into account that the plaintiffs have now had the use of the strip for four to five years without paying for it and furthermore, Ms McCracken’s rates will have been assessed on the basis of her being the “owner” of the strip.
[94] I have already said, this is a finely-balanced case and my decision to grant relief is made along with my view as to compensation. I fix the sum of $85,000 as
appropriate compensation, being in my view a sum that is very generous to
Ms McCracken. Payment is to be made within three months of this order. [95] I make the following orders:
(a) An order adjusting the restrictive covenant boundary so that the path, up to the line of the former fence, becomes part of the restrictive covenant area of the plaintiffs’ property.
(b)Fixing the compensation the plaintiffs are to pay to Ms McCracken in the sum of $85,000, to be paid by 20 July 2017.
(c) The plaintiffs are also to pay all costs of survey, related expenses and legal conveyancing expenses.
[96] The defendant seeks ancillary orders amending the leases, to which the plaintiffs indicated they were amenable. I intend to make those orders, but ask the parties to confirm the following form, particularly what is meant by Area B:
(a) The owner of Flat 2 is to have the right at the cost of the owner of Flat 2 to increase the footprint of Flat 2 by 39m2 without the consent of the owner of Flat 1, provided that the height of the house does not exceed its current maximum height, and the walls of the house as extended are not closer than 1m to the new restrictive covenant boundary on the southern side of the existing path, and otherwise comply with then current local authority restrictions and requirements.
(b)The owner of Flat 1 will cooperate fully with registration of a new flats plan to reflect any changes effected to Flat 2, and will sign any documents and do any other acts required to effect this change.
(c) The owner of Flat 2 is to have the right to erect a fence, wall or hedge, or any combination of their choosing, to a height of 2.5m, and to maintain, replace and alter that fence, wall or hedge, including by
entering Area B for this purpose at reasonable times on 24 hours’
notice.
(d)The owner of Area B is to use the path area with consideration to the owner of Flat 2 and as much as reasonably possible, to minimise noise in this area or other interference with the enjoyment and privacy of the owner of Flat 2.
(e) The owner of Area B is not to be permitted to erect stairs or any other means of entry to the porch on Flat 1 other than the path perpendicular to the porch.
[97] There was a cross-claim which I was advised was resolved by the plaintiffs agreeing to the location of the restrictive covenant boundary by reference to the Envivo survey. I do not understand that any order is required in that regard.
Costs
[98] The question of costs is complicated. I realise Ms McCracken refused to enter into settlement negotiations. However, the plaintiffs were very far away from an appealing offer or an offer in the correct ball park. For that matter, they were getting further away from an appropriate amount, rather than closer, with their second offer.
[99] Mr Hollyman advises that a late Calderbank offer has been made. Both parties seek to make submissions on costs.
[100] I direct that the plaintiffs file any memorandum seeking costs within two weeks, to not exceed five pages.
[101] The defendant can file any memorandum seeking costs and/or opposing the
plaintiffs’ application, within a further two weeks, again to not exceed five pages.
Other matters
[102] Leave is reserved should I have overlooked or misstated some point in terms of the form of orders made.
----------------------------------------------- Hinton J
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