Fuge v Wimax New Zealand Limited

[2021] NZHC 2470

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-202

[2021] NZHC 2470

BETWEEN

MICHAEL FUGE JULIA FUGE

BRYCE MARLOWE TOWN CHLOE ANN FUGE and JULIA ELIZABETH FUGE

Applicants

AND

WIMAX NEW ZEALAND LIMITED

Respondent

Hearing:	19 May 2021
Counsel:	A S Ross QC and P W G Ahern for applicants K M Quinn for respondent
Judgment:	20 September 2021

JUDGMENT OF KATZ J

This judgment was delivered by me on 20 September 2021 at 4:00 pm Pursuant to Rule 11.5 High Court Rules

Solicitors:           Morris Kent, Auckland

Thompson Blackie Biddles, Auckland

Counsel:            A Ross QC, Barrister, Auckland

K M Quinn, Bankside Chambers, Auckland

FUGE v WIMAX NEW ZEALAND LTD [2021] NZHC 2470 [20 September 2021]

Introduction

[1]    Michael Fuge, Julia Fuge, Bryce Marlowe Town, Chloe Ann Fuge and Julia Elizabeth Fuge (“the applicants”) seek leave to appeal an arbitral award by  Paul Heath QC (“the Arbitrator”) dated 11 November 2020 (“the Award”). Leave to appeal is opposed by the respondent, Wimax New Zealand Limited (“Wimax”).

[2]    A number of neighbouring properties in Glendowie, Auckland, lack direct access to Riddell Road. The residents of those properties are only able to access Riddell Road by travelling over an easement facility (“the ROW Easement”) granted by various property owners over their land. There is an existing driveway established over part of the ROW Easement. The full easement is 6.2m in width, while the driveway in places is less than 3m wide.

[3]    The original easement instrument was entered into in 1964. It was superseded by an updated easement instrument in 2017 (“the 2017 Easement”) which divides the ROW Easement into four parts – areas A to D. The applicants’ claim relates to area C, specifically areas CB and CG. For those easement areas, Wimax’s property is the servient tenement and the applicants’ property is the dominant tenement.

[4]    There were historically some obstructions in areas CB and CG, but these were apparently mostly some older low-lying walls. Since about 2015, however, Wimax has built further significant structures that intrude into the ROW Easement including retaining walls, gates, entrance pillars and drains. The new structures do not obstruct the sealed driveway.

[5]    The applicants requested that Wimax remove the encroaching structures. Wimax refused. Arbitration ensued. Wimax’s expert evidence was that the cost to remove the structures would be in the region of $1,280,000.

[6]    The Arbitrator found that Wimax was only required to keep the ROW Easement clear at all times of obstructions to the use and enjoyment of the existing formed driveway. If structures built within the area of the ROW Easement did not obstruct the use of the driveway itself, they were not infringing.

[7]The applicants seek leave to appeal on the following two questions of law:

(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 (“2002 Regulations”) and the Property Law Act 2007 (“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?

The Law – Leave to Appeal

[8]    The Court must not grant leave to appeal on a question of law arising out of an arbitral award unless it considers that:1

…having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of 1 or more of the parties.

[9]    If this statutory threshold is met, the Court has a discretion as to whether to grant leave.

[10]   The Court of Appeal in Gold & Resource Developments (NZ) Ltd v Doug Hood Ltd identified the following considerations that the Court should take into account when deciding whether to grant leave:2

(a)the strength of the challenge/nature of point of law;

1      Arbitration Act 1996, sch 2 cl 5(2).

2      Gold & Resource Developments (NZ) Ltd v Doug Hood Ltd  [2000] 3 NZLR 318 (CA) at [54]. I note that the final factor of whether the dispute before the arbitrator is international or domestic has no relevance to this case.

(b)how the question arose before the arbitrator;

(c)the arbitrator’s qualifications;

(d)the importance of the dispute to the parties;

(e)the amount of money involved;

(f)the amount of delay involved in going through the courts; and

(g)whether the underlying contract provides for the arbitral award to be final and binding.

Threshold issue: Could determination of the questions of law proposed by the applicants substantially affect the rights of one or both of the parties?

[11]   Wimax submitted that the determination of the two questions of law proposed by the applicants could not substantially affect the rights of the applicants, given that a suitable driveway is currently available for enjoying the right granted under the easement, being a right to pass back and forth over the servient land in order to access the applicants’ property.

[12]   The applicants, on the other hand, submitted the consequence of the Award is that the ROW Easement will be permanently impeded by Wimax’s structures, with no recourse available to the applicants, either now or in the future, in respect of those structures.

[13]   I accept the applicants’ submission that determination of the proposed questions of law could substantially affect the rights of both parties. This is reflected in the level of resources they have both been willing to commit to resolving this dispute to date.

[14]   Evidence was produced at the hearing which showed that the current driveway does not comply with the requirements of the Auckland Unitary Plan, and that due to Wimax’s structures it will not be possible to develop the driveway to bring it in line with the requirements of that Plan. The obstructions in the ROW Easement could

therefore hinder the applicants’ ability to widen the driveway in the future, impacting on the development potential of their property. Hence, if the Arbitrator has made the errors of law alleged by the applicants, they have potentially been deprived of important property rights conferred by the 2017 Easement.

[15]   Determination of the proposed questions of law also has the potential to substantially affect the rights of Wimax. The structures it has constructed on the ROW Easement are substantial and, as noted above, will be very expensive to remove.

Is it strongly arguable that the Arbitrator erred in interpreting the rights set out in the 2017 Easement, and implied by the 2002 Regulations and the PLA (Question 1)?

The 2017 Easement and the relevant statutory provisions

[16]The 2017 Easement instrument:

(a)confirms that the rights and powers implied in specified classes of easements prescribed by the 2002 Regulations and/or sch 5 of the PLA apply, unless otherwise provided in the easement instrument; and

(b)varies those rights and powers concerning repairs and maintenance (only).

[17]   The relevant provision of the 2002 Regulations is sch 4 cl 6, which provides as follows:

Schedule 4

Rights and powers implied in easements

…

6        Rights of way

(1)A right of way includes the right for the grantee in common with the grantor and other persons to whom the grantor may grant similar rights, at all times, to go over and along the easement facility.

(2)The right to go over and along the easement facility includes the right to go over and along the easement facility with or without any kind of—

(a)   vehicle, machinery, or implement; or

(b)   domestic animal or (if the servient land is rural land) farm animal.

(3)A right of way includes—

(a)   the right to establish a driveway, to repair and maintain an existing driveway, and (if necessary for any of those purposes) to alter the state of the land over which the easement is granted; and

(b)   the right to have the easement facility kept clear at all times of obstructions (whether caused by parked vehicles, deposit of materials, or unreasonable impediment) to the use and enjoyment of the driveway.

[18]   The relevant provisions of the PLA are cls 1 and 2 of sch 5, which provide as follows:

Schedule 5

Covenants implied in grants of vehicular rights of way

…

1Right to pass and re-pass

(1)The grantee and the grantor have (in common with one another) the right to go, pass, and re-pass over and along the land over which the right of way is granted.

(2)That right to go, pass, and re-pass is exercisable at all times, by day and by night, and is exercisable with or without vehicles, machinery, and equipment of any kind.

(3)In this clause, the grantee and the grantor include agents, contractors, employees, invitees, licensees, and tenants of the grantee or the grantor.

2Right 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

(b)   any necessary rights of entry onto that land, with or without machinery, plant, and equipment; and

(c)   the right to have that land at all times kept clear of obstructions, whether caused by parked vehicles, deposit of materials, or

unreasonable impediment to the use and enjoyment of the driveway; and

(d)     the right to a reasonable contribution towards the cost of establishment, maintenance, upkeep, and repair of the driveway to an appropriate standard; and

(e)    the right to recover the cost of repairing any damage to the driveway made necessary by any deliberate or negligent act of a person bound by these covenants or that person’s agents, contractors, employees, invitees, licensees, or tenants.

The Arbitrator’s interpretation of the 2017 Easement and the rights and powers implied by the 2002 Regulations and the PLA

[19]The Arbitrator found that:

[37]      Clause 6(3)(a) is one of the provisions that refer to a “driveway” rather than a “right of way”. Clause 6(3)(a) confers a right to establish a driveway, repair and maintain an existing driveway and, where necessary for any of those purposes, to alter the state of the land over which the right of way is established. I interpret the chapeau to clause 6(3) to mean that a “driveway” may be created over the whole of the stipulated area, or part of it. By contrast, clause 6(3)(b) requires that the “easement facility” be “kept clear at all times of obstructions … to the use and enjoyment of the driveway”.

[38]      Clause 6(3)(a) and (b) must be read together. In my view, the reference to “easement facility” in clause 6(3)(b) is intended to equate to the stipulated area in an easement facility, thereby capturing the whole width of the right of way created by (in this case) the 2017 Easement: namely, the width of 6.2 metres. It follows that the term “driveway” is used to denote an actual (and usually formed) area over which vehicles pass and re-pass, whether that is the same as or less than that comprised in an easement instrument. For present purposes, the “right of way” comprises 6.2 metres but the “driveway” is the smaller area that is actually available for vehicles to use.

[39]      Applying the relevant implied terms [in the 2002 Regulations and the PLA], the 2017 Easement affirms:

(a)The existence of a right of way of 6.2 metres;

(b)The right to repair and maintain the existing driveway;

(c)The ability to alter the existing driveway, if necessary for its repair or maintenance;

(d)That the whole width of the right of way is to be kept clear, to ensure that there are no “obstructions… to the use and enjoyment of the driveway”

[40]      Put another way, any structures that encroach within the full width of the right of way will only give rise to an actionable infringement if they were to obstruct a grantee’s ability to use and enjoy the formed driveway. To prove

an actionable infringement, a nexus must be established between an obstruction to the right of way and an inability to use the driveway.

…

[43] Read in the context of the clause 6(3) definition of “right of way” in Schedule 4 to the Regulations, clause 1(1) of Schedule 5 to the Act provides the general right to pass and repass over the land on which the right of way has been granted, while clause 2(a) and (c) of Schedule 5 to the Act maintains the need for a nexus between the need to keep the right of way clear of obstructions and an unreasonable impediment to the use and enjoyment of the driveway itself.

(emphasis original and footnotes omitted)

Wimax’s submissions in support of the Arbitrator’s interpretation

[20]   Wimax supported the Arbitrator’s interpretation and submitted that it is not strongly arguable that it is in error.

[21]   Wimax submitted that under the 2017 Easement, the applicants acquired the right to pass and re-pass over the burdened land for the purposes of accessing the applicants’ own land. However, this right is not unlimited, as noted in the Award:

(a)Wimax retains the right to use its land in any manner not inconsistent with the applicants’ exercise of their right to pass and re-pass.3

(b)The applicants’ use and enjoyment of the burdened land is limited to such use and enjoyment as is reasonable.4

(c)The applicants have no right to go over every square inch of the burdened land, only so much as is reasonable for the purpose of accessing their own land.5

3      Pettey v Parsons [1914] 2 Ch 653 (CA) at 667 per Pickford LJ; Zenere v Leate (1980) 1 BPR 9300 (NSWSC) at 9304; and D W McMorland McMorland on Easements, Covenants and Licenses (4th ed, LexisNexis, Wellington, 2019) at [16.087].

4      Clifford v Hoare (1874) LR 9 CP 362 at 370 per Lord Coleridge CJ, at 371 per Brett J, at 372 per Denman J; Breslin  v  Lyons  [2013]  NZCA  161,  (2013)  14  NZCPR  144  at  [29]-[30];  and  D W McMorland McMorland on Easements, Covenants and Licenses (4th ed, LexisNexis, Wellington, 2019) at [16.087].

5      Clifford v Hoare (1874) LR 9 CP 362 at 372 per Denman J; F C Strick and Co Ltd v City Offices Co Ltd (1906) 22 TLR 667 (Ch) at 669; Pettey v Parsons [1914] 2 Ch 653 (CA) at 663 per Lord Cozens-Hardy MR, at 665 per Swinfen Eady LJ; Emmons  Developments  (NZ)  Ltd  v  RFD Investments Ltd HC Christchurch, CP42/01, 4 July 2001 at [43]; Keam v Theilman-Le Cornec Trust (2005) 7 NZCPR 26 (HC) at [102]; and D W McMorland McMorland on Easements, Covenants and Licenses (4th ed, LexisNexis, Wellington, 2019) at [16.050].

(d)The applicants are not entitled to pave every inch of the burdened land, only so much as is necessary to exercise their right to pass and re-pass.6

The applicants’ interpretation of the 2017 Easement and the implied rights and powers

[22]   The applicants submitted that the Arbitrator incorrectly limited the rights of the grantees, and (consequently) the obligations of the grantors, to an area substantially smaller than the area of the ROW Easement itself (namely the formed driveway). While the right does enable access to property along the existing driveway, that is not the only right of the applicants, and protecting an existing access by such a driveway is not the only obligation contained in the 2017 Easement.

[23]   In particular, the applicants submitted, the PLA reinforces that the fundamental purpose of a right of way easement is to facilitate the grantee’s right to move over the entire easement that has been granted (as opposed only to a driveway). Clause 1(1) of sch 5 of the PLA provides:

The grantee and the grantor have (in common with one another) the right to go, pass, and re-pass over and along the land over which the right of way is granted.

(emphasis added)

[24]   In addition, cl 6 of sch 4 to the 2002 Regulations sets out various rights of the parties as follows:

(1)A right of way includes the right for the grantee in common with the grantor and other persons to whom the grantor may grant similar rights, at all times, to go over and along the easement facility.

(2)The right to go over and along the easement facility includes the right to go over and along the easement facility with or without any kind of—

(a)vehicle, machinery, or implement; or

(b)domestic animal or (if the servient land is rural land) farm animal.

6      Butler v Muddle (1995) 6 BPR 13,984, (1996) ANZ ConvR 147 (NSWSC) at 13,986.

(3)A right of way includes—

(a)the right to establish a driveway, to repair and maintain an existing driveway, and (if necessary for any of those purposes) to alter the state of the land over which the easement is granted; and

(b)the right to have the easement facility kept clear at all times of obstructions (whether caused by parked vehicles, deposit of materials, or unreasonable impediment) to the use and enjoyment of the driveway.

(applicants’ emphasis)

[25]   “Easement facility,” in the case of a right of way, is defined to mean all of the land described as the stipulated area (here this is the area on the plan annexed to the 2017 Easement).7

[26]   The applicants noted that cl 1(1) of sch 5 to the PLA also provides that a right of way confers on the grantee and grantor the right to go, pass, and re-pass over and along the land over which the right of way is granted. Clause 1(2) states that the:

… right to go, pass, and re-pass is exercisable at all times, by day and by night, and is exercisable with or without vehicles, machinery, and equipment of any kind.

[27]   Clause 2 of sch 5 of the PLA, the applicants submitted, describes rights that are included within the various rights, being the right to establish and maintain a driveway. Clause 2 provides that “owners and occupiers of the land for the benefit of which, and the land over which, the right of way is granted” have numerous rights, including under cl 2(c) the “right to have that land at all times kept clear of obstructions, whether caused by parked vehicles, deposit of materials, or unreasonable impediment to the use and enjoyment of the driveway”.

[28]   The applicants submitted that, on the Arbitrator’s reasoning, the placement of structures on the right of way easement to which the 2002 Regulations and PLA apply will only be actionable if they create an unreasonable impediment to the use and enjoyment of any existing driveway, regardless of the extent to which the driveway occupies the easement area, or the suitability of that driveway.  This is said to be an

7      Land Transfer Regulations 2002, sch 4 cl 1 definition of “easement facility” and “stipulated area”.

erroneous interpretation and application of the 2017 Easement, the 2002 Regulations and the PLA.

[29]   The key error the Arbitrator made, the applicants submitted, was relying on cl 6(3) of the 2002 Regulations as if that sub-clause prescribed the only rights and obligations of the parties. To the contrary, a right of way easement confers a wide bundle of rights and obligations on the parties. Clause 6(3) comprises only a portion of those rights.

[30]   Specifically, cl 6(3) of sch 4 of the 2002 Regulations is preceded by the cl 6(1) and (2) rights. Clause 6(3) specifically sets out a right that is included within the bundle of rights. It provides at sub-cl 6(3)(a) the inclusion of a right to establish a driveway, and at sub-cl 6(3)(b), that a right of way “includes” the right to have the easement facility kept clear of obstructions to the use and enjoyment of the driveway. Clause 6(3) does not provide that a right of way “only” or “exclusively” confers the right to have the easement facility kept clear of obstructions that affect the use of the driveway.

[31]   The applicants further submitted that the Arbitrator’s conclusion is inconsistent with cl 10 of sch 4. Clause 10:

(a)provides that all easements referred to in sch 4 of the 2002 Regulations include “the right to use any easement facility already situated on the stipulated area… for the purpose of the easement granted”;8

(b)establishes the right to “lay, install, and construct an easement facility reasonably required by the grantee” if no “suitable” easement facility already exists;9 and

(c)provides that the grantor must “not do” nor “allow to be done on the servient land anything that may interfere with or restrict the rights of any other party or interfere with the efficient operation of the easement facility”.10

8      Land Transfer Regulations 2002, sch 4 cl 10(1)(a).

9      Schedule 4 cl 10(1)(b).

10     Schedule 4 cl 10(2).

[32]   The applicants submitted that the Arbitrator’s conclusion restricts the applicants from using the existing ROW Easement for the purpose granted, and would impede the applicants’ ability to exercise their rights under cl 10(1)(b) to modify the easement facility to make it “suitable” (for example, by widening or developing the existing driveway within the ROW Easement).

[33]   On the applicants’ interpretation, if a party has a right to go along all of the easement facility, any significant encroachment on the facility will interfere with those rights. Equally, if a grantee has a right to establish a driveway, or in this case, widen or develop the driveway in the event that the current driveway is not suitable, building on the easement interferes with or restricts those rights.

[34]   The Arbitrator’s conclusion is also said to be inconsistent with the terms of the 2017 Easement itself, which separately recognises rights and obligations in relation to the easement facility, and the formed driveway. The 2017 Easement states at cl 3 that:

In addition to the rights and obligations implied by Schedule 4 [of the 2002 Regulations] and Schedule 5 [of the PLA], the Residents shall keep and maintain the Right of Way in good order and shall prevent it from becoming a danger or nuisance and at all times shall keep it in a reasonable condition. The Residents shall promptly repair any potholes or large cracks in the Driveway. Where part of the Driveway is being resealed for any reason, the resealing must extend at least 3 metres either side of the affected area of the Driveway.

(emphasis added by the applicants)

[35]   Clause 2(k)(vii) of the 2017 Easement defines “Driveway” as “the formed driveway over the Easement Areas A to C”. Clause 2(k)(i) defines “Easement Areas” as “Easement Area A, Easement Area B, and Easement Area C”. The 2017 Easement therefore defines “Driveway” as a sub-part of the ROW Easement. Generally, overarching rights and responsibilities attach to the ROW Easement (or “Easement Areas”, as defined), including those rights implied by the 2002 Regulations and the PLA. Specific rights and responsibilities attach to the Driveway that makes up part of the ROW Easement, and solely relate to repair obligations.

Harvey v Hurley

[36]   In the arbitration, the applicants relied on the Court of Appeal decision of Harvey v Hurley, which they say is binding Court of Appeal authority in their favour.11 The applicants submit that the Arbitrator wrongly distinguished Harvey v Hurley.

[37]   The right of way easement at issue in Harvey v Hurley comprised a long strip of land that was used for vehicle access to the respondent’s property (called “the narrow strip”) and a rhomboid shaped piece of land to the right at the end of the strip, which was originally intended as a turning area.12 This was referred to as “the pan” as the two pieces of land together had the appearance of a hockey stick or long-handled frying pan.13 The appellants had constructed a swimming pool, decking, and a fence that significantly encroached into the “pan” area.14

[38]   The Court of Appeal agreed with Cartwright J’s observation in the High Court that the easement document could not be “narrowly read,” and endorsed her Honour’s comments that:15

The right is “uninterrupted and unrestricted… to go pass and repass… through over and along [the right-of-way].” The right is not restricted to a narrow passage of access and egress. It is conferred over all of the land and would therefore include a right to walk over any portion of the land and to turn a vehicle on it.

[39]The Arbitrator distinguished Harvey v Hurley on the following basis:

[54] To summarise, in Harvey v Hurley, no issue arose about an obstruction being placed on part of the right of way which did not comprise a “driveway”. Rather, the obstruction in that case was inimical to the right to “go pass and repass’’ under the easement. As a result, the owner of the dominant tenement in Harvey v Hurley was entitled to use the obstructed part of the right of way, which had previously been used as part of a driveway.

(footnote omitted)

11     Harvey v Hurley (2000) 9 NZCPR 427 (CA). The Court of Appeal affirmed the High Court’s decision in Hurley v Harvey HC Auckland HC 170/98, 20 May 1999.

12     Harvey v Hurley (2000) 9 NZCPR 427 (CA) at [5].

13 At [5].

14 At [1].

15 At [19].

[40]   It appears that the Arbitrator’s understanding that the obstructed part of the right of way had previously been used as part of the driveway may have been in error. In the High Court, Cartwright J summarised the relevant factual background as follows:16

As originally conceived, the complete right-of-way created by Transfer A153410 was intended to allow access to the [respondents’] property from Beach Road and in the part of it which was contiguous with the northern boundary of the [appellant’s] land, would enable vehicles to turn around when leaving the property and exiting back to Beach Road. That portion of the right-of-way, however, has not been used in that manner and remains unsealed. But the [respondents], although having no present intention to do so, may wish to redevelop their property in the future to a higher density level and would then wish to use the right-of-way fully.

(emphasis added)

[41]   Hence, in Harvey v Hurley the grantee did not require the obstructed land to access its property. Cartwright J’s reasoning (and in turn that of the Court of Appeal) appears to have been based, at least in part, on the possibility that the respondents might one day wish to turn the unsealed portion of the right of way into something that would enable them “to use the right-of-way fully” – in other words, to develop the currently unused portion of the right of way to provide for a turning area.

[42]   In both Harvey v Hurley and the present case it appears that the structures in issue encroach upon areas that were not currently used for the driveway (and had never been so used) but could have been developed in the future for wider access or turning purposes, if they were obstruction free. I accordingly accept that it is arguable that the Arbitrator erred in distinguishing Harvey v Hurley from the present case.

[43]   Harvey v Hurley was cited, and relied upon,  by  the  Court  of Appeal  in Guo v Bourke.17 (This case was apparently not referred to at the arbitral hearing). Guo v Bourke case concerned an existing driveway which did not occupy all of the easement area.18 The obstructions in issue were electronic steel gates and a wall that were within the area of the easement but did not interfere with the use of the existing

16     At [10] the Court of Appeal reproduces this summary of the factual background.

17     Guo v Bourke [2017] NZCA 609.

18 At [6].

driveway.19 The Court of Appeal upheld the High Court’s orders that all impediments that were placed by the appellant on the right of way easement had to be removed.20

Is it strongly arguable that the Arbitrator erred in his interpretation of the 2017 Easement?

[44]   In my view it is possible that the Arbitrator’s interpretation of the rights set out in the 2017 Easement and implied by the 2002 Regulations and the PLA 2017 was unduly narrow. The applicants’ alternative interpretation is strongly arguable.

[45]   It is also possible that the Arbitrator erred in distinguishing Harvey v Hurley, a binding Court of Appeal authority which (on the applicants’ interpretation) is in their favour.

[46]   Overall, taking the various matters outlined above into account, I am satisfied that it is strongly arguable that the Arbitrator erred in interpreting the rights set out in the 2017 Easement, and implied by the 2002 Regulations and the PLA.

Is it strongly arguable that the Arbitrator erred in applying the “substantial interference” test (Question 2)?

The test for actionable interference

[47]   Any wrongful interference with a right of way constitutes a nuisance. However:21

… not every obstruction of the way amounts to an unlawful interference. No action will lie unless there is a substantial interference with the easement granted; and before the grantee can justifiably complain of an obstruction it must be clear that the obstruction is prejudicial to the grantee. Whether any particular obstruction amounts to an unlawful interference with a right of way depends upon the nature of the right of way and of the place, and upon the particular circumstances of the case.

(footnotes omitted)

19     At [7]-[10].

20 At [63].

21     D W McMorland and others Hinde, McMorland and Sim Land Law in New Zealand

(online looseleaf ed, LexisNexis) at [16.050].

[48]   This “substantial interference with the easement granted” test has been established in New Zealand since McKellar v Guthrie, and frequently restated since.22 For example, in Emmons Developments (NZ) Ltd v RFD Investments Ltd, William Young J stated:23

… the rights of the grantee lie in nuisance and an action in nuisance will only lie if the alleged obstruction involves a substantial interference with the easement granted.

The alleged error of law

[49]   It necessarily followed from the Arbitrator’s interpretation of the rights set out in the 2017 Easement (and implied by the 2002 Regulations and the PLA) that his focus was on whether Wimax’s structures substantially interfered  with  the use of  the driveway that runs along the ROW Easement. He held that:

[40]     … To prove an actionable infringement, a nexus must be established

between an obstruction to the right of way and an inability to use the driveway. (emphasis added)

[50]   Wimax submitted that the Arbitrator’s approach was correct and, further, that this is actually a question of fact, under the guise of a question of law.

[51]   The applicants, on the other hand, submitted that this is an error of law, as the Arbitrator approached matters from the perspective of whether a structure on an easement breaches the rights of a grantee to use an existing driveway. The applicants submitted that the correct test for ascertaining whether structures on a right of way easement give rise to rights to relief is to assess whether these are obstructions on the easement facility (i.e. the whole stipulated area), and then whether the obstructions or impediments are substantial, and therefore actionable.

22     McKellar   v   Guthrie   [1920] NZLR 729 (SC) at 731. See also Iakopo v Rutherford

[2012] NZHC 1557 at [15].

23     Emmons Developments (NZ) Ltd v RFD Investments Ltd HC Christchurch CP42/01, 4 July 2001 at [43].

Is it strongly arguably that the Arbitrator erred in relation to this issue?

[52]   In my view the issue raised is a question of law. Ultimately, however, the outcome of any appeal is unlikely to turn on whether it is a question of law or a question of fact. If the applicants succeed on their first question of law, it necessarily follows that it must also be strongly arguable that the Arbitrator misapplied the “substantial interference” test by focussing on whether the structures substantially interfered with the driveway, rather than the entirety of the ROW Easement.

[53]   If the Arbitrator’s interpretation of the rights included in the ROW Easement is incorrect, the “substantial interference” issue will need to be considered afresh, with reference to the correct interpretation of the ROW Easement. It therefore follows that this issue is also strongly arguable.

Strength of challenge and importance of legal principle

[54]   For the reasons outlined above, I have found that it is strongly arguably that the Arbitrator made the errors of law alleged.

[55]   I also accept the applicants’ submission that the legal principle at stake is a significant one. The Award was decided under the 2002 Regulations. Those regulations have since been replaced by the Land Transfer Regulations 2018 (“2018 Regulations”). Schedule 5 of the 2018 Regulations deals with the rights and powers implied in easements. Clause 6(3) of sch 5 provides:

A right of way includes the right to have the easement facility kept clear at all times of obstructions (whether caused by parked vehicles, deposit of minerals, or unreasonable impediment) to the use and enjoyment of the easement facility.

(emphasis added)

[56]   This makes it explicit that a grantee’s rights extend to having the easement facility (rather than any driveway within that facility) kept clear from impediments inconsistent with the easement facility’s use. The applicants submitted that there is nothing in the legislative history to suggest that the change in wording at the end of sub-cl (3) from “use and enjoyment of the driveway” to “use and enjoyment of the easement facility” was meant to introduce a substantive change in the law. Rather, the

amendment is for the purposes of clarity. Whether or not that is correct, it seems clear that the interpretation that found favour with the Arbitrator can no longer be advanced, under the current version of the Regulations.

[57]   Nevertheless, the issue is not simply an historic one. 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.

The qualifications of the arbitrator and how the question of law arose before him

[59]   The questions of law raised proposed by the applicants lay at the very heart of the dispute submitted to arbitration. They were addressed in both written and oral submissions. The applicants were represented at the hearing by senior counsel, Mr Ross QC. Further, the Arbitrator is extremely highly qualified and experienced in the determination of complex legal issues, being a former High Court Judge.

The importance of the dispute to the parties, the amount of money involved, and the delay involved in going through the courts

[60]The dispute is of considerable significance to the parties, as outlined at [12] to

[15] above. The outcome of the dispute also has the potential to significantly impact the other homeowners who share the ROW Easement.

[61]             As for delay, granting leave to appeal will obviously delay a final resolution of the dispute.

“Final and binding” language in the arbitration agreement

[62]The arbitration agreement stated that the Award would be ‘‘final and binding”.

Conclusion: Should leave to appeal be granted?

[63]             The fact that the Arbitrator is highly qualified and experienced, being a former High Court Judge, weighs against granting leave to appeal. A further factor weighing against a grant of leave is the delay associated with pursuing an appeal. As resolution of the dispute is not time critical for either party, however, the issue of delay carries relatively little weight.

[64]             Another factor weighing against a grant of leave is the interests of finality, given that the arbitration agreement stated that the Award would be ‘‘final and binding”. However, as Fitzgerald J observed in Stevely-Cole v Dilworth Trust Board:24

… Even if words such as “final and binding” are included in an arbitration agreement, a party disappointed with the outcome of an arbitration will always be able to seek leave to appeal on a question of law (unless the parties have expressly contracted out of such appeals). This factor carries much less weight, in my view, than the strength of the challenge and those factors discussed… above.

[65]             I endorse those observations and note that in this case the parties did not seek to contract out of their right to seek leave to appeal the Award on questions of law.

[66]             The various other Doug Hood factors weigh in favour of granting leave to appeal. The proposed questions of law are strongly arguable, for the reasons set out above. I see this as a key factor. It weighs heavily in favour of granting leave to appeal. The importance of the dispute to the parties is a further factor that weighs in favour of granting leave to appeal.

[67]             The issues raised are not solely of interest to the parties but have potentially broad application. The Court’s clarification of the correct interpretation of the 2002 Regulations would promote certainty and provide guidance to a significant number of property owners, lawyers, conveyancing practitioners, valuers and others in the

24     Stevely-Cole v Dilworth Trust Board [2020] NZHC 2843 at [70(d)].

industry who are advising prospective purchasers, owners, and/or developers about right of way easements.

[68]             Weighing all these factors in the balance, it is my view that leave to appeal should be granted.

Result

[69]             The applicants are granted leave to appeal the Award in respect of the two questions of law set out in the applicants’ originating application dated 9 February 2021.

[70]             The parties are encouraged to endeavour to resolve any costs issues between counsel. If that is not possible, leave is reserved to file costs memoranda. Any memorandum on behalf of the applicants is to be filed by 11 October 2021. Any memorandum on behalf of Wimax is to be filed by 25 October 2021.

Katz J