Cornes v Village Residential Limited
[2021] NZCA 216
•31 May 2021 at 10.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA526/2020 [2021] NZCA 216 |
| BETWEEN | DAVID IAN CORNES AND REI KAHUI JONES |
| AND | VILLAGE RESIDENTIAL LIMITED |
| Hearing: | 16 March 2021 |
Court: | Clifford, Brewer and Dunningham JJ |
Counsel: | D J O’Connor and J C Heaphy for Appellant |
Judgment: | 31 May 2021 at 10.30 am |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BThe appellants must pay the respondents costs for a standard appeal on a band A basis and usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Dunningham J)
Introduction
The appellants, Mr Cornes and Ms Jones, own a property at 24 Lucknow Road in Havelock North. It comprises a large back section of over 1500 square metres including a strip of land extending to Lucknow Road which contains their driveway. Its legal description is Lot 2 Deposited Plan 8107 (Lot 2).
In mid-2018 the respondent, Village Residential Ltd (VRL), agreed to purchase the property at 26 Lucknow Road which sits in front of the appellants’ property. VRL’s property comprises a large section of just over 2000 square metres and its legal description is Lot 1 Deposited Plan 8107 (Lot 1). Although Lot 1 has frontage onto Lucknow Road it, too, uses the appellants’ driveway for access pursuant to a right of way easement registered against the title when the lots were created.
The driveway which serves both properties was once partially or fully sealed but now consists of a combination of disintegrating seal and loose metal. It has a storm water sump located approximately halfway down it which was installed around 10 years ago. The sump is described by VRL’s advisors as inadequate to manage stormwater on the shared driveway which slopes downhill towards Lucknow Road.
Subdivision of Lot 1 is a controlled activity under the Hastings District Plan and on 8 July 2019 the Hastings District Council (the Council) granted subdivision consent to VRL on various conditions. VRL is now in the process of subdividing Lot 1 into five lots, two of which will have access directly from Lucknow Road, while the other three will have access via the existing right of way.
The resource consent for subdivision of Lot 1 is conditional on the driveway being upgraded and a new drainage sump being installed within it to provide better stormwater management and reduce potential runoff. The approved plans show the driveway will be constructed of reinforced concrete with a new kerb and channel, and there will be a drainage sump installed at the lower end of the driveway close to the road. There will also be a drainage sump installed at the head of the driveway, but within VRL’s land, to collect stormwater that would otherwise flow down the driveway.
The appellants do not want the driveway upgraded as proposed. They are content to have it maintained, but not upgraded as is required to complete the approved subdivision. The affidavit evidence indicates the appellants are concerned the development of Lot 1 will erode the privacy and amenity values they currently enjoy. They are opposed to the development proceeding.
The application to the High Court
In the face of the appellants’ strong objection to work occurring on the driveway, VRL applied for orders under s 313 of the Property Law Act 2007 (PLA) confirming it was entitled to carry out the construction on the driveway.[1]
[1]Mr Cornes is alleged to have stood in the hole dug for the new driveway drainage sump to prevent work proceeding and to have parked the appellants’ car across the driveway to prevent VRL’s contractor from accessing the site.
Section 313 of the PLA empowers the Court to make orders, on any condition it thinks fit, concerning:
(a)the existence of an easement;
(b)the enforceability of an easement;
(c)the question of whether any work is required to be done under the terms of the easement, and the nature and extent of such work;
(d)who should bear the cost of any required work;
(e)the entry onto any land for the purpose of doing any required work and the use of vehicles or machinery on that land for the purpose of carrying out that work; and
(f)any other matters arising in relation to a question or dispute concerning the existence or effect of an easement.
The right of way easement
There is no dispute that Lot 1 enjoys a right of way easement over the appellants’ land created by memorandum of transfer dated 30 May 1951 and recorded on the titles as a right of way created by Transfer 98046. It covers the full width of the 5.2 metre wide strip of land that gives the appellants access to Lucknow Road.
The terms of the right of way easement include the following provision:
2. THE [Transferor] reserves unto himself his executors administrators and assigns a full and free right and liberty for him or them and his or their servants visitors tenants and licensees and all persons having bona fide and lawful business with him or them in common with all other persons having the like right at all times hereafter by day or night with or without horses carts or other vehicles of any description for all purposes connected with the use and enjoyment of Lot 1 on Deposited Plan Number 8107 for whatever purpose the said land may be lawfully used and enjoyed to pass and repass along that part of Lot 2 on Deposited Plan 8107 being thereon coloured yellow for the purpose of giving access to the said Lot 1 or any part or parts thereof and to and from the public road delineated on the said plan and thereon named at Lucknow Street. TO THE INTENT that such easement of right-of-way hereby created shall be forever appurtenant to the said Lot 1.
In summary, the easement permits the owner of Lot 1 to have access over the marked right of way on Lot 2, including vehicular access, “for whatever purpose [Lot 1] may be lawfully used”.
Clause 3(c) of the transfer records the transferor and transferee (and their successors in title) are to share equally “… the cost of maintenance and repair of the said right-of-way and of any gate and gate posts erected at the entrance of the said right-of-way”.
No other provision in the transfer appears relevant to the dispute which is the subject of this appeal.
The parties accept the easement is also subject to statutory implied covenants. Specifically, s 297 of the PLA provides that every vehicular right of way contains the implied covenants in sch 5 of the PLA, including:[2]
2 Right to establish and maintain driveway
The owners and occupiers of the land for the benefit of which, and the land over which, the right of way is granted have the following rights against one another:
(a)the right to establish a driveway on the land over which the right of way is granted, and to make necessary repairs to any existing driveway on it, and to carry out any necessary maintenance or upkeep, altering if necessary the state of that land; and
…
[2]Property Law Act 2007, sch 5 cl 2.
At issue is whether expressly or by implication, the terms of the easement allow VRL to upgrade the driveway as the conditions of subdivision consent require.
The High Court decision
Doogue J heard VRL’s application on 12 August 2020 and issued her decision on 14 August 2020.[3] After setting out the facts which led VRL to make the application, the Judge summarised the respective positions of the parties.[4]
[3]Village Residential Ltd v Cornes [2020] NZHC 2064, (2020) 21 NZCPR 282.
[4]At [17]–[22].
VRL submitted that Mr Cornes and Ms Jones had an improper motive in opposing the proposed works of to the driveway, saying they were doing this merely to slow or impede the progress of the subdivision. VRL maintained it had the implied right under sch 5, cl 2(a) of the PLA to make necessary repairs to the driveway and to carry out necessary maintenance or upkeep, including altering the state of the land if necessary. This right was sufficient to allow it to carry out the proposed upgrades.
Mr Cornes and Ms Jones, however, submitted the terms of the easement and the implied rights under the PLA only permitted repairs and maintenance of the driveway, and not the right to upgrade it or to install a drainage sump as proposed by VRL.
The Judge accepted that provisions in the Land Transfer Regulations 2018 (initially relied on by VRL and which expressly permitted the replacement of the easement facility), did not apply because the section of the Land Transfer Act 2017 under which the Regulations were made did not have retrospective effect.[5]
[5]At [23]–[26].
However, the Judge found the implied covenants in cl 2 of sch 5 of the PLA gave VRL the right to construct the Council approved works, and in doing so, to alter the land. Doogue J noted the existing driveway surface was deficient and needed stabilizing and permanent surfacing.[6] She accepted that this work should be constructed in accordance with current Council requirements and that it was reasonable to allow VRL to meet these requirements in order to use its land in a lawful way by subdividing it.[7]
[6]At [34].
[7]At [36].
Doogue J also noted the existing provision for water drainage off the driveway was inadequate,[8] and the proposed works for draining surface water off the driveway (being the kerb and channel and the new sump) were integral to supporting the new sealed driveway surface.[9] Accordingly, she confirmed VRL’s entitlement to carry out the proposed upgrade of the driveway as recorded in the conditions of subdivision consent and made orders to facilitate that.[10] Those orders included formalising the offer made by VRL to meet all the implementation costs.
This appeal
[8]At [30].
[9]At [35].
[10]At [46].
The issues on appeal are limited. They are whether, as the appellants say, the Judge erred:
(a)by finding that VRL had the right to “upgrade” the driveway when both the express and implied rights for such an easement only allow for repair, maintenance and upkeep of the driveway, not its upgrade; and
(b)by effectively recognising “drainage rights” to VRL under the implied rights for a right of way easement under the PLA.
We discuss each ground accordingly.
The driveway upgrade
Submissions
Mr O’Connor, counsel for the appellants, submitted that the Judge was wrong to find the easement permitted the upgrade of the driveway. In his submission there are no implied rights under either the terms of the easement, or under the PLA, to “upgrade” the driveway. The terms “repair”, “maintenance” and “upkeep”, used in these documents, can only permit the driveway to be returned to its original formed state. They did not permit the driveway to be developed beyond the condition in which it was originally established. Thus, if a driveway was originally gravelled, the owner of the benefited land could never insist on it being developed further by, for example, sealing the driveway or installing kerbing, unless the owner of the burdened land consented.[11]
[11]We use the modern terms of benefited land (formerly the dominant tenement) and burdened land (formerly the servient tenement), even when referring to older cases where the former terms would have been used.
Mr Kerr for VRL, however, submits the Judge made no error in finding the rights implied into the right of way easement are sufficiently broad to cover the driveway upgrade. These rights include to establish a driveway, to carry out necessary repairs, maintenance and upkeep, and to alter the state of the land.
Analysis
The issue on appeal is whether the rights granted to the benefited land, Lot 1, expressly or by implication, include the right to undertake the works proposed. That begins with considering the terms of the right of way easement itself and the purpose for which it was granted. As was said in Body Corporate 34118 v District Court at Auckland:[12]
[18] In New Zealand the interpretation of easements and covenants affecting land has been undertaken by the same objective, purposive approach taken for other commercial contracts of identifying the parties’ intentions by discerning “the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract”. Care is required in concluding that the natural and ordinary meaning of the words read in the relevant context would produce a commercially absurd result, especially in formal documents, …
[12]Body Corporate 34118 v District Court at Auckland [2015] NZCA 393, (2015) 16 NZCPR 667 (footnotes omitted).
Applying that approach to the present case, the terms of the right of way easement are clear. The owner of Lot 1, VRL, may use the identified right of way on Lot 2 for access, including vehicular access, for any lawful purpose for which VRL’s land can be used.
The references to maintenance and repair of the right of way in the transfer itself is only included to ensure both the benefited and burdened land bear the costs of such work equally. Nothing in the terms of the easement prohibit the construction of a driveway by the benefited land owner, if that is required to enable the use of the right of way for a purpose Lot 2 could lawfully be put.
The provisions of sch 5 of the PLA do not change that conclusion. They spell out, in more detail, the rights to establish and maintain a driveway. They do not, in our view, limit the ability of the owners and occupants of the benefited land, to upgrade any driveway formed across the right of way if that is required to lawfully use the benefited land at any point in time.
Schedule 5 allows the owners of both the benefited and burdened land to:
(a)establish a driveway on the land over which the right of way is granted;
(b)make necessary repairs to any existing driveway; and
(c)carry out any necessary maintenance or upkeep of the driveway.
The owners are also expressly permitted to alter, if necessary, the state of the land over which the right of way is granted. The party who undertakes such works is then entitled to a reasonable contribution towards the cost of such works under cl 2(d). Clause 3 of sch 5 envisages that cl 2(a) is not exhaustive, noting that when a person has undertaken work “in accordance with the right conferred by Clause 2(a), or with an order of the Court”,[13] then they must restore the land as far as possible to its former condition (except for the existence of the driveway). Nothing in sch 5 is incompatible with, or precludes, the owner of the dominant land upgrading the driveway to exercise the access rights which were granted in the original transfer. Indeed, both parties have the right to “establish a driveway” on the land. There is nothing to suggest that is not an ongoing right to create a driveway that is suitable for either party’s use at the time subject to a decision as to how the costs of that work should be borne.
[13]Property Law Act, sch 5 cl 3(1) (emphasis added).
In addition to our reading of the terms of the transfer and of the statutory implied covenants, we consider that VRL’s proposed works are also supported by the common law, which confers ancillary rights to the terms of the easement. As is stated in Hinde, McMorland and Sim:[14]
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. However, those ancillary rights are restricted to the exercise of the rights expressly granted and any user of the burdened land beyond those rights and purposes is a trespass, not being authorised by the grant.
[14]D W McMorland and others Hinde McMorland and Sim Land Law in New Zealand (online ed, LexisNexis) at [16.038] (footnotes omitted).
In Gregory v E K Trust, Katz J recently observed that ancillary rights were analogous to implied terms in contract law which are always subject to the terms of the contract (the grant).[15] While in that case the issue was whether the installation of a gate was reasonably necessary for the effective and reasonable exercise of a right of access across land, she made the following observation:
[32] Ancillary rights will generally include a right for the dominant owner to alter the surface of the land so as to better facilitate access to the property owned by the servient owner, for example, by putting down gravel, sealing a right of way, or cutting steps into a steep slope.
(Footnote omitted.)
[15]Gregory v E K Trust Ltd [2015] NZHC 1785, (2015) 16 NZCPR 519 at [29].
The appellants submitted that the rights conferred did not permit development beyond the land’s original condition at the time the grant was made. However, while the physical circumstances of the burdened land at the time of the grant are relevant for the purposes of interpreting the grant,[16] the position at least at English common law appears to be that the benefited land owner can undertake such improvements as are necessary to serve the purposes for which the grant was made. Here the grant was made to provide access, including vehicular access, to Lot 1 for any lawful purpose.
[16]Paterson and Barr Ltd v University of Otago [1925] NZLR 191 (Compensation Court), cited in Handforth v Kokomoko Farms Ltd (2010) 11 NZCPR 171 at [13].
Two English cases are illustrative of this point. In Newcomen v Coulson, a right of way existed over a cart track.[17] It was originally used for agricultural purposes, including horse and foot travel, carts and carriages, and movement of animals to the tenants’ and farmers’ respective allotments. The terms of the grant, however, did not limit it to agricultural purposes. A hundred years after the grant was made, the owner of the benefited land wanted to lay down a metalled road to service 26 homes built on one of the allotments.
[17]Newcomen v Coulson (1877) 5 ChD 133 (CA) at 143.
The English Court of Appeal held the agricultural purposes did not limit the benefited land owner’s rights which, they found, did extend to putting down a metalled road. Lord Jessel MR explained the rationale for that conclusion as follows:
Now it was conceded to be the principle of law that the grantee of a right of way has a right to enter upon the land of the grantor over which the way extends for the purpose of making the grant effective, that is, to enable him to exercise the right granted to him. That includes not only keeping the road in repair but the right of making a road. If you grant to me over a field a right of carriage-way to my house, I may enter upon your field and make over it a carriage-way sufficient to support the ordinary traffic of a carriage-way, otherwise the grant is of no use to me, because my carriage would sink up to the naves of the wheels in a week or two of wet weather. It cannot be contended that the word “repair” in such a case is limited to making good the defects in the original soil by subsidence or washing away, it must include the right of making the road such that it can be used for the purpose for which it is granted.
Continuing that theme, even significant modifications to the burdened land by the owner of the dominant land have been allowed, even after a considerable period of time, to facilitate the use of the easement for purposes not anticipated at the time of the grant. For example, in Dand v Kingscote, the owner of land on which there were coalmines had a right of way to and from the mines across burdened land.[18] More than 200 years after the original grant, the benefited land owner wanted to construct a railway to transport the coal from the pits across the burdened land. The Court of Exchequer held such modifications came within the grant. Parke B, delivering the Court’s judgment, said the purpose of the easement was to enable the coal mine owner to transport their coal. There was nothing expressly limiting how that purpose was to be fulfilled, and so “the owner is not confined to such description of way as in use at the time of the grant”.[19] Because the railway was convenient for the purpose of the mine, it was allowed by the easement.
[18]Dand v Kingscote (1840) 6 M & W 174 (Exch).
[19]At 198.
This case illustrates that the owner of benefited land is not bound to maintain the right of way’s condition at the time of the grant. The rights conferred by an easement can respond to evolving circumstances so that they are sufficient to enable the lawful use of the benefited land at any given time.
In our view, given the subdivision of Lot 1 is lawful, as it received a subdivision consent, the upgrading of the access way required by the Council as a condition of subdivision consent, ought to be permitted. It is required to enable access, including vehicular access, to the subdivided lots of the benefited land. Any other reading would fetter VRL’s ability to exercise the access rights which have been granted.
This ground of appeal therefore fails.
The drainage argument
The second point raised by the appellants is that the Judge erred by effectively granting VRL a drainage easement. This is because she has permitted surface water to be drained along the driveway and collected in a drainage sump within the driveway as part and parcel of the proposed works. Mr O’Connor points out a drainage easement is a different class of easement from a right of way easement and the Judge had no power to make such a grant when determining the scope of work authorised by the right of way easement.
Mr O’Connor also says that although a drainage easement was granted as part of the 1951 transfer, it cannot permit works to facilitate stormwater drainage within the right of way itself. That easement related to a tile drain which, runs from VRL’s property across the appellants’ driveway to a neighbouring property, and not down the appellants’ driveway to Lucknow Road. In conclusion, VRL has no right to drain water on the appellants’ land, and the Judge was wrong to conclude that drainage was “part and parcel of the driveway”.
In reply, VRL submits that the appellants are wrong to contend the Judge granted it drainage rights. While the driveway upgrade included measures for draining water off the driveway to the road, those measures were integral to the design and construction of the driveway itself. They did not require the grant of rights to convey or drain water and the Judge did not do so. Accordingly, the respondent argues the appeal should be dismissed.
Before discussing these submissions, it is necessary to describe the works proposed. VRL plans to install a sump within its land above the point where the upper three lots of its subdivision would enter the right of way. This is to capture stormwater before it enters the driveway on the right of way. VRL’s surveyor confirms there will be no additional stormwater directed onto the shared driveway as a consequence of this work. In fact, the combination of kerb and channel and a sump at the bottom of the new driveway is intended to reduce the runoff which presently occurs on the appellants’ land.
We do not consider permitting these works constitutes the grant of a drainage easement. A drainage easement allows water from one property to be drained, usually via a pipe or channel, over another property. It is not required for management of natural water flows within a property, as is proposed here, nor to authorise receipt of water which is received by “natural servitude”, that is, to receive water that naturally drains from one property to another by virtue of the topography of the land.
Nothing in the works proposed requires Lot 2 to receive drainage water from Lot 1 that it did not already receive in high rainfall events, and thus no drainage easement is required, or has been granted.
The installation of the drainage sump on VRL’s land is of no concern to the appellants and they cannot object to it. The installation of the drainage sump at the bottom of the driveway is, as Doogue J accepted, a key component of the sealing of the right of way and is intended to improve stormwater management and reduce runoff nuisance. Accordingly, we agree it was appropriate to authorise all the works required to construct a driveway to the requisite Council standard, including as to management of water runoff from the drive.
This ground of appeal also fails.
The only other point raised by the appellants during submissions and in affidavit evidence, albeit not a formal ground of appeal, was that they would be unfairly burdened with 50 percent of the costs of maintaining the more expensive drive when they are only one of four property owners who will be using it when the subdivision is complete.
We agree that seems inequitable. If the parties cannot agree to a modification of the terms of the easement, it is a matter they would need to resolve through the Courts.
Result
The appeal is dismissed.
The appellants must pay the respondents costs for a standard appeal on a band A basis together and usual disbursements.
Solicitors:
Heaphy & Co, Hastings for Appellants
S J Scannell & Co, Hastings for Respondent
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