Fuge v Wimax New Zealand Limited
[2022] NZHC 2922
•8 November 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-000202
[2022] NZHC 2922
BETWEEN MICHAEL and JULIA FUGE, BRYCE MARLOW TOWN, CHLOE ANNE FUGE
and JULIA ELIZABETH FUGE as trustees of the Aberdeen Four Trust Applicants/AppellantsAND
WIMAX NEW ZEALAND LIMITED
Respondent
Hearing: (On the papers) Counsel:
Adam Ross KC, Phil Ahern and Rayhan Langdana for the Applicant/Appellants
Kelly Quinn and Carter Pearce for the Respondent
Judgment:
8 November 2022
JUDGMENT OF MOORE J
[Leave to appeal]
This judgment was delivered by me on 8 November 2022 at 3:30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar Date:
FUGE & ORS v WIMAX NEW ZEALAND LIMITED [2022] NZHC 2922 [8 November 2022]
Background
[1] Michael, Julia and Chloe Fuge occupy a property owned by their family trust, named the Aberdeen Four Trust (“the Trust”). Their property shares a driveway with another property owned by Wimax New Zealand Ltd (“Wimax”) and occupied by the directors and shareholders, Brett and Averley Dennerly.
[2] The parties are embroiled in a dispute over their driveway, which they referred to the Hon Paul Heath KC for arbitration. The arbitrator found that the structures placed by Wimax on the easement area were not an unlawful infringement with the easement because they did not substantially interfere with the use of the driveway.
[3] The Trust then applied for leave to appeal on two questions of law. Katz J granted leave on the following two questions:1
(a)Question 1: Did the arbitrator err by interpreting the rights set out in the easement instrument, and implied by the Land Transfer Regulations 2002 (“the 2002 Regulations”) and the Property Law Act 2007 (“the PLA”) to mean that, in circumstances where there is an existing formed driveway, structures that otherwise encroach within the full width of a right of way will only give rise to an actionable infringement if they were to obstruct a grantee’s ability to use and enjoy that existing formed driveway?
(b)Question 2: Did the arbitrator err by failing to apply the relevant legal test, which is whether the obstructions or impediments Wimax placed or allowed to be placed on the ROW Easement were substantial, and therefore actionable?
1 Fuge v Wimax New Zealand Ltd [2021] NZHC 2470.
[4] On 20 May 2022, I answered both questions in the affirmative and allowed the Trust’s appeal.2 I found that the right conferred by the easement was to pass and re- pass over the entirety of the easement facility, not only the driveway.3 The arbitrator therefore applied the wrong legal test when determining whether Wimax’s structures constituted a substantial interference with the easement.4 I remitted the matter to the arbitrator to consider the appropriate remedy.5
[5]Both parties now seek leave to appeal my decision on different grounds:
(a)Wimax seeks leave to appeal on the basis that I erred by answering Questions 1 and 2 in the affirmative and by concluding that it was inescapable some structures substantially interfere with the easement.
(b)The Trust seeks leave to appeal on the basis that I erred as a matter of law by finding that there was a broad discretion as to remedy under s 313 of the PLA and remitting the matter to the arbitrator.
[6]The parties each oppose one another’s applications.
Legal principles – leave to appeal
[7] Leave is required to appeal against a High Court determination of an appeal against an arbitral award on a question of law.6 The primary focus is whether the question of law is worthy of consideration.7 The applicable principles are that:8
(a)the appeal must raise some question of law capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal;
2 Fuge v Wimax New Zealand Ltd [2022] NZHC 1121.
3 At [68]–[69].
4 At [77]–[78].
5 At [89].
6 Arbitration Act 1996, sch 2 cl 5(5).
7 Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd [2007] NZCA 355, [2008] 2 NZLR 591 at [33].
8 At [33] citing Cooper v Symes (2001) 15 PRNZ 166 (HC) at [12].
(b)upon a second appeal, the Court of Appeal is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below; and
(c)not every alleged error of law is of such importance either generally or to the parties as to justify further pursuit of litigation that has been twice considered and ruled upon by a Court.
Should Wimax’s application for leave to appeal be granted?
[8] Mr Quinn, for Wimax, advances five proposed grounds of appeal. These can be broadly summarised as:
(a)the Court erred by holding that the right conferred by the easement is to pass and re-pass over the entirety of the easement facility and thus answering Question 1 in the affirmative;9
(b)the Court erred by answering Question 2 in the affirmative;10 and
(c)the Court erred by finding that because there are several permanent structures which encroach into the easement area, the conclusion that those structures substantially interfere with the easement is inescapable.11
[9] Mr Quinn submitted that these grounds relate to legal issues with broad ongoing significance. He submitted that they go to the heart of the dispute between the parties. They are also seriously arguable, given that a highly respected arbitrator, who is a former judge of this Court, expressed a different view of the law at first instance. It follows, in his submission, that the threshold for leave is met.
9 This reflects the grounds at [3(a)] and [3(b)] of Wimax’s application for leave to appeal.
10 This is the ground at [3(c)] of Wimax’s application for leave to appeal.
11 This reflects the grounds at [3(d)] and [3(e)] of Wimax’s application for leave to appeal.
[10] I accept that the first two grounds expressed above are capable of serious argument. As noted by Mr Quinn, the arbitrator is a highly respected former judge of this Court. His contrary view at first instance is an indicator that Questions 1 and 2 are capable of serious argument. The questions of law are also complex.
[11] I further accept that the proposed questions of law relate to a legal principle of general significance. In Katz J’s words:12
“[57] … The 2002 Regulations were in place for more than 16 years before they were replaced by the 2018 Regulations. During those 16 years there will have been a large number of subdivisions in Auckland (and New Zealand), with the associated creation of numerous right of way easements. In addition, there will be a number of older right of way easements that were updated and registered in a new form between 2002 and 2018 (such as the easement at issue in this case).
[58] The 2002 Regulations therefore have broad ongoing application. The Court’s clarification of their scope has the potential to provide guidance to a significant number of property owners, as well as lawyers, conveyancing practitioners, valuers and others in the industry who are advising prospective purchasers, owners, and/or developers.”
[12] It is evident that the issues are of significance to the parties. They have invested considerable time and resources into the dispute thus far. Since it is accepted that Wimax’s structures intrude into the easement area, the formulation of the legal test may well be determinative of the outcome.
[13] I therefore consider that the first two grounds expressed above are worthy of consideration.
[14] I do not consider that leave should be granted on the third ground expressed above. The impugned part of the reasoning is repeated below:13
“[77] … It is undisputed that there are several permanent structures which encroach into the area of the ROW Easement. When viewed from this perspective, the conclusion that those structures substantially interfere with the easement is inescapable.
…
12 Fuge v Wimax New Zealand Ltd [2021] NZHC 2470.
13 Fuge v Wimax New Zealand Ltd [2022] NZHC 1121
[79] Answering both questions in the affirmative leads to the conclusion that the arbitrator erred in law. The finding that the structures are a substantial interference with the easement necessarily leads to the question of remedy.”
[15] This was expressed in general terms. The particular structures which interfere with the easement are not identified. That is because the appeal was focused only on the determination of Questions 1 and 2. Applying the law as stated by this Court and identifying the particular structures which constitute a substantial interference with the easement is a matter for the arbitrator. This is a necessary precursor to the question of remedy, which was remitted to the arbitrator.
[16] It does not follow that in the context of this case, where it was undisputed that there were several permanent structures placed on the easement area, that this Court erred by stating that it was “inescapable” that some structures would substantially interfere with the easement. That statement forms part of the explanation why the arbitrator must have applied the wrong legal test. Moreover, it is the application of the legal test stated by this Court to the facts as the arbitrator found them – not a purely factual finding.
[17] The proposed ground is not a point of law of sufficient importance to justify further consideration. Unlike the previous two grounds, this is not a legal issue with broad ongoing application. Nor does it require clarification.
[18] I therefore consider that Wimax should be granted leave to appeal on the first two grounds identified above.14
Should the Trust’s application for leave to appeal be granted?
[19] Mr Ross KC seeks leave to appeal on the basis that I erred as a matter of law by finding that there was a broad discretion as to remedy under s 313 of the PLA and remitting the matter to the arbitrator.15
14 These are expressed as grounds [3(a)-(c)] in Wimax’s notice of application for leave to appeal dated 17 June 2022.
15 Mr Ross originally sought leave to appeal on a second ground relating to the arbitrator’s costs. This was withdrawn after the parties resolved this issue on application to the arbitrator.
[20] Mr Ross submitted that s 313 does not confer the broad discretion suggested by the Court. He argued that the discretion must be limited, so as to protect the integrity of registered land rights. It follows, in his submission, that the remedy in this case was obvious and should have been awarded by this Court.
[21] This is a matter which the Court of Appeal will confront if the Trust is successful in defending Wimax’s appeal. The Court will then be required to dispose of the proceeding. It might remit the matter to the arbitrator in light of its interpretation of the law, as this Court did. If Mr Ross is correct in his ground of appeal, it may remit the question of remedy to this Court. Little cost or delay would be associated with either outcome on appeal, as the Court of Appeal need not consider the substance of the dispute as to remedy.
[22] Alternatively, the Court of Appeal may determine the appropriate remedy and make orders accordingly. This approach will also result in limited additional cost and delay, as the matter will be before the Court and must be determined at some point regardless. The prospect of finality supports this issue being argued.
[23] I therefore consider that the Trust should be granted leave to appeal on this ground.
Result
[24] Wimax’s application for leave to appeal on the grounds identified at [8](a) and [8](b) is granted.
[25] The Trust’s application for leave to appeal on the ground identified at [19] is granted.
Costs
[26] Both parties succeeded in their applications for leave to appeal. Each party’s success was symbiotic with the other. My preliminary view is therefore that costs should lie where they fall. Should the parties be unable to resolve any costs issues between themselves, leave is reserved to file memoranda.
[27]I direct that any memorandum on behalf of either party is to be filed and served
no later than 5:00 pm on Friday, 9 December 2022.
Moore J
Barristers/Solicitors: Mr Ross KC, Auckland Mr Ahern, Auckland Mr Langdana, Auckland Mr Quinn, Auckland Mr Pearce, Auckland
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