Dhindsa Investment Limited v Robertson

[2021] NZHC 2424

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2021-404-1519

[2021] NZHC 2424

UNDER

Sections 316 and 317 of the Property Law Act 2007 and Parts 7 and 19 of the High Court Rules 2016

IN THE MATTER OF

An application for an order that an easement be extinguished under s 317 of the Property Law Act 2007

BETWEEN

DHINDSA INVESTMENTS LIMITED

Applicant

AND

CLARK ANDREW ROBERTSON

First Respondent

DON NIRMAL CHATHURANGA RATNASEKARAGE

Second Respondent

HABIB BOROUN and KHATEREH BAVARSAD

Third Respondents

Hearing:

15 September 2021 (Via VMR)

Appearances:

P Twist for the Applicant

No appearance for the Respondents

Judgment:

15 September 2021

JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 15 September 2021 at 4:00 pm pursuant to Rule 11.5

of the High Court Rules Registrar/Deputy Registrar

DHINDSA INVESTMENTS LIMITED V ROBERTSON & ORS [2021] NZHC 2424 [15 September 2021]

[1]                 The applicant, Dhindsa Investments Ltd, owns a property at 24 Arimu Road, Papakura. The property is subject to a stormwater easement. The applicant applies, under s 317 of the Property Law Act 2007 (the PLA), for an order that the stormwater easement be extinguished.

Background

[2]                 The stormwater easement was created in 2000. At that time the easement benefited two large parcels of land adjoining, or near to, the property. The benefited land was then a military base. Since then the benefited land has been subdivided into more than 600 residential lots. The records of title to each of those lots apparently record that they enjoy the benefit of the easement over the applicant’s property.

[3]                 New stormwater infrastructure has been built to service the new residential lots. The position is explained in an email from a senior subdivision adviser at Auckland Council. He says that the part of the applicant’s property that is subject to the stormwater easement:

… once contained a stormwater drain serving the former military base to the east of Lot 51 [the applicant’s property]. This area has now been developed for housing and is served by a separate public drainage system. The drain through Lot 51 is no longer in use and it has been abandoned.

[4]                 This position has been confirmed in an affidavit by Kimberley O’Neill, who is the Head of Property and Commercial Business, Community Facilities at Auckland Council. Ms O’Neill states that Auckland Council does not need the stormwater easement over the applicant’s property to manage its stormwater network. Accordingly, Ms O’Neill deposes that Auckland Council does not oppose the application that the easement be extinguished.

[5]                 Consistently with the Council’s position, the applicant has produced evidence that a stormwater drain that follows the path of the easement on the applicant’s property is broken and appears to have been unused for some years.

[6]                 In these circumstances, the applicant says the stormwater easement is redundant and should be extinguished. The applicant seeks extinguishment because

the continued presence of the easement prevents the applicant from completing a subdivision of its land. This is causing economic prejudice to the applicant.

Applicable law

[7]                 Section 317 of the PLA provides that a court may extinguish (or modify) an easement if satisfied that (relevantly):

(a)the easement ought to be extinguished because of a change since its creation in:1

(i)the nature or extent of the use being made of the benefited land, the burdened land, or both; or

(ii)the character of the neighbourhood; or

(b)the proposed extinguishment would not substantially injure any person entitled to enforce the easement.2

[8]                 Consideration of an application under s 317 involves two stages. The Court’s first task is to determine whether one (or more) of the grounds for extinguishment is made out. If a ground is made out, the second task is to determine whether to exercise the discretion to extinguish the easement.3

[9]                 If an order is made extinguishing an easement, the Court may, by s 317(2), require the applicant to pay reasonable compensation to any person.

Service of application

[10]              Section 316(3) of the PLA provides that an application under s 317 must be served on the territorial authority (unless the court directs otherwise) and must be served on any other persons the court directs.

1      Property Law Act 2007, s 317(1)(a)(i) and (ii).

2      Property Law Act 2007, s 317(1)(d) and s 2 (definition of “person entitled”).

3      Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657 at [67].

[11]              The applicant initially brought its application without notice. On 11 August 2021 I held a telephone conference with Mr Twist, counsel for the applicant, to determine what service directions should be made.

[12]              In summary, Mr Twist submitted that the application should be made without notice because:

(a)It would cause undue delay and prejudice to the applicant to have to go to the expense of serving over 600 owners of benefited lots.

(b)The applicant’s affidavits established that none of the owners of the benefited lots would suffer any prejudice as a result of the easement being extinguished.

(c)An attempt had already been made by the applicant to obtain a surrender of the easement from the owner of what was then (at the time of the attempt) the sole adjoining benefited lot, without success.

(d)There was no requirement or incentive on the owners of the benefited lots to co-operate and provide consent to the surrender of the easement.

(e)It was therefore in the interests of justice that the originating application be determined without notice.

[13]              Having read the affidavits in support, I accepted that the applicant had a strong substantive case for extinguishment of the easement. I also accepted that it would be impractical and unduly time-consuming and expensive to serve the owners (and mortgagees) of all benefited lots, and that (subject to one exception) to do so would be most unlikely to serve any practical purpose (the evidence having satisfied me that it was most unlikely that any owners of benefited lots would oppose the application).

[14]              The exception was in respect of three benefited lots that still adjoin the applicant’s property. My view was that there was a slight possibility those owners might still perceive there to be utility in the easement. I therefore directed, in a minute

dated 11 August 2021, that the owners of those three benefited lots (who are now the respondents) be served with the application.

[15]              I did not require the application to be served on Auckland Council, given that it was already aware of the application and did not oppose it.

Position of respondents

[16]              The applicant has since filed an affidavit of service. The first and third respondents were served with the application on 16 August 2021. The second respondent was served on 17 August 2021. The documents served included notice of this hearing.

[17]              No notice of opposition has been filed. Mr Twist also advised me that neither he nor his instructing solicitor had been contacted by any of the respondents.

[18]              I note that the respondents were served shortly before Auckland entered a COVID-19 Alert Level 4 lockdown. The region remains under that lockdown. Nonetheless, I am satisfied that the respondents have had ample opportunity to raise, formally or otherwise, opposition to the application.

Is a ground for extinguishment made out?

[19]              The applicant filed substantial affidavits in support of its application. In addition, there was, as noted, an affidavit from Ms O’Neill confirming Auckland Council did not oppose the application.

[20]              Those affidavits evidenced the position that I have summarised in the background section of this judgment. In my view it is plain from that background that at least two of the grounds for extinguishment of the easement have been made out.

[21]              First, there has been a change in the extent of the use being made of the burdened land, in that no use is now being made of the stormwater easement. Likewise, there has been a change in the nature of the use being made of the benefited land, in that the use of that land no longer requires the use of the stormwater easement.

These changes reflect a change in the character of the neighbourhood: the development of the neighbouring land into residential lots has resulted in the installation of a new public stormwater system. Because of these changes I am of the view that the easement is now redundant, and for that reason ought to be extinguished.

[22]              Secondly, and for the same reasons, I am satisfied that extinguishment of the stormwater easement will not injure (substantially or at all) any person entitled to enforce the easement.

Should I exercise my discretion to extinguish the easement?

[23]              I am easily persuaded that I should exercise my discretion to extinguish the easement. The easement is redundant, so extinguishment will not cause any injury to any owner of the benefited land. None of the respondents opposed the application (which is not surprising in the circumstances). The continued presence of the easement is, on the other hand, causing prejudice to the applicant.

[24]              Because extinguishment of the easement will not cause any injury to any owner of the benefited land, I am satisfied that it is not appropriate to require the applicant to pay compensation to any owner of benefited land under s 317(2) of the PLA.

Result

[25]I make these orders:

(a)The stormwater easement over the parts marked K & J on Deposited Plan 207920 specified in Easement Certificate D473993.2 (“the easement”) in respect of the land comprised and described in Identifier NA136B/670 (Lot 51 Deposited Plan 207920) (“the burdened land”) is extinguished.

(b)The Registrar-General of Land shall enter on the records of title for the burdened land and any land benefited by the easement all amendments or entries necessary to give effect to order (a) above in respect of the easement.

(c)No compensation shall be payable by the applicant to any person for the extinguishment of the easement.

(d)Leave is reserved to apply should there be any administrative or technical difficulties in perfecting this matter.

[26]There is no order as to costs.

Campbell J