Handforth v Kokomoko Farms Ltd HC Auckland CIV 2009-441-000477

[2010] NZHC 3

IN THE HIGH COURT OF NEW ZEALAND

NAPIER REGISTRY

CIV 2009-441-000477

BETWEEN  JOHN ANTHONY HANDFORTH AND

OLIVE FLORENCE HANDFORTH Appellants

ANDKOKOMOKO FARMS LIMITED Respondent

Hearing:         21 October 2009

Counsel:         A M Gallie for the Appellants

M A Courtney for the Respondent

Judgment:      21 January 2010

JUDGMENT OF WILD J

Introduction

[1]      The  primary  point  on  this  appeal  is  whether  the  District  Court  correctly determined  the  extent  of  a  right  of  way  over  the  appellants’  rural  property  at Porangahau in the Hawkes Bay.   Though dependant on a favourable answer to that primary  point,  the  appellants  also  assert  that  the  Judge  incorrectly  decided  that fences built by the appellants on the right of way were illegal, and erred in terms of the relief he granted to the respondent.

[2]      The appeal is against the judgment of Judge Rea given on 24 June 2009 in the

District Court at Waipukurau.

[3]      The grounds of appeal raise these questions:

HANDFORTH V KOKOMOKO FARMS LIMITED HC NAP CIV 2009-441-000477  21 January 2010

(1)Interpretation:   Did the Judge correctly construe the right of way, in particular in respect of the respondent’s rights to use it for its farming operations?

(2)Interference:   Was  the  Judge  correct  to  find  that  fences  and  a  sign erected by the appellants on the right of way substantially interfered with the respondent’s rights to use the right of way?

(3)Jurisdiction:   Did the Judge err in assuming jurisdiction to make an order restraining the appellants from building further structures on the right of way?

(4)Compensatory damages:  Did the Judge err in finding the respondent had   established   losses   of   $4,530   resulting   from   the   appellants’ interference with its right of way?

(5)Exemplary damages:  Was the Judge wrong in finding the respondent had met the threshold for awarding exemplary damages?

[4]      The appellants seek an order quashing all the relevant orders made by Judge

Rea, on the grounds that they are wrong.

Background

[5]      In  1990  the  respondent  purchased  a  block  of  farm  land  adjoining,  to  the south,  its  existing,  and  main,  farm  property  on  Porangahau  Road,  Waipukurau.   I will call this Kokomoko Farm.  It then subdivided off from Kokomoko Farm a small (4.9  hectares  or  12  acres)  piece  of  that  land  containing  a  farm  cottage,  with  the intention of selling it as a ‘lifestyle block’.   At the same time the respondent, then still registered proprietor of the lifestyle block, created a right of way over part of the lifestyle  block  by  executing  an  Easement  Certificate  subsequently  registered  on  3 October 1990.   By operation of s 90A Land Transfer Act 1952, the Certificate gave Kokomoko Farm, as dominant tenement holder, the following rights and powers set out in the Seventh Schedule to the Land Transfer Act 1952:

The full, free, uninterrupted, and unrestricted right, liberty, and privilege for the  grantee,  his  servants,  tenants,  agents,  workmen,  licensees,  and  invitees (in  common  with  the  grantor,  his  tenants,  and  any  other  person  lawfully entitled so to do) from time to time and at all times by day and by night to go pass and  repass,  with  or  without  horses  and  domestic animals  of  any kind and  with  or  without  carriages,  vehicles,  motor  vehicles,  machinery,  and implements of any kind, over and along the land over which the right of way

is granted or created.

[6]      The appellants are the third owners of the lifestyle block:  the transfer to them was registered on 11 April 2000.  In short, they were not privy to the circumstances

in which, or the purposes for which, the right of way was created.  The appellants do not directly challenge the Judge’s findings about that which were:

[4]      In his evidence Mr Henderson (a director of Kokomoko Farm) said that the right of way was created to provide the main access to the woolshed and cattleyards which he described as the hub of the farming operation.  He said for those reasons the easement was kept of sufficient width between the woolshed gate and the road gate so that mobs of cattle and sheep could be controlled and turned comfortably with dogs.  At the road gate there was an area for a  mob  to  assemble  before  being released  on to Porangahau  Road. He said that the survey line was taken up the hill rather than along the drive so that trucks could unload directly on to the bank near the road gate if that was necessary.

[5]      I accept the evidence that Mr Henderson has given about this.   It is obvious by the very dimensions of the right of way and the shape of it that it was  created  as  it  was  to  ensure  Mr  Henderson  could  continue  an  efficient farming operation both then and into the future.

[7]      At the end of this judgment is a copy of the plan of the right of way drawn in

2008.  I have added labels giving some additional detail.  Depicted on the 2008 plan with dot/dash lines (coloured brown on the plan put in evidence) are the fences built

by  the  appellants  on  the  right  of  way.   It  was  the  building  of  those  fences  which precipitated  this  litigation.   Those  fences,  and  the  differences  between  the  parties which precipitated their construction, were described by the Judge thus:

[7]      Over  the  years  there  were  arguments  and  differences  of  opinion between Mr Henderson on the one hand and Mr and Mrs Handforth on the other  about  the  right  of  way.    Mr  and  Mrs  Handforth  believed  that  Mr Henderson’s  farming  operations  were  substantially  damaging  parts  of  the right  of  way  and  that  he  was  not  properly  maintaining  the  right  of  way. They also believed that the manner in which he used the right of way for the movement of stock and heavy vehicles was contrary to the terms of the right

of way.

[8]      The disagreements between  the  parties  became  increasingly  bitter and more heated.  On 21 August 2007 Mr and Mrs Handforth began building

post and rail  fences on both sides of the driveway which runs through the right of way.  When they had completed the fence it went for the full length

of   the  right   of   way  and  created   what   could  only  be   described  as   a constraining channel of about 4 metres width down the length of the right of way.  I have visited the site with Counsel and I am aware of the dimensions of the right of way from the plans shown to me and the markers at the site. The fences built by Mr and Mrs Handforth are substantial structures which in most parts of the right of way considerably constrict the usable space.

[8]      In [6] I said the appellants do not directly challenge the Judge’s findings as to the circumstances in which and purposes for which  the  right  of  way  was  created. The appellants did call evidence from Ms Angela Wilson, who was the first owner of the lifestyle block. The transfer from Kokomoko Farm to Ms Wilson was registered

on 21 February 1991, and in evidence she said she left the property in 1995.   In his submissions Mr Gallie referred to Ms Wilson’s evidence:

... insofar as it relates to the representations made by Myles Henderson to her concerning the intended limited use of the easement and also as to the actual use especially in the first six months of her occupation of the cottage ...

[9]      This  is  obviously  a  reference  to  paragraph  3  of  Ms  Wilson’s  statement  of evidence in which she stated:

3.We  purchased  the  above  property  late  in  1990  or  early  1991  and there  was  a  gentleman’s  hand  shake  between  myself,  my  husband and Myles that a right of way would only be used on occasion and we would hardly see Myles on the easement however this changed after about 6mths after the purchase of the property, and in part, this was no rush to erect fences.

[10]     I consider the gist of Ms Wilson’s evidence (both in her written statement and her oral evidence to the Court) was this:

·         The respondent’s cattleyards, sheepyards and woolshed on Kokomoko

Farm were all there before the right of way was created.

·That section of the southern boundary of the  right of way bounding with  farmland  owned  by  a  third  party  was  fenced  throughout.   The northern  boundary  (with  Kokomoko  Farm)  of  the  right  of  way  was not  fenced  until  “about  12  months  after  (Ms  Wilson)  purchased  the property”.

·When  the  northern  boundary  was  fenced,  there  was  only  one  side gate, giving access to the woolshed.   A further gate was added later, next to the cattleyards.

·The right of way was not much used by the respondent for the first six months.   It was used by trucks carting fertiliser and stock through to the  respondent’s  farm  property,  and  occasionally  for  moving  sheep. The use of the right of  way  for  moving  mobs  of  cattle  and  for unloading and loading cattle from the cattleyards began only after the northern boundary of the right of way was fenced.

·Ms Wilson used the right of way to graze her own stock and therefore the gate onto Porangahau Road was kept shut.   In commenting about this grazing of the right of way Ms Wilson stated:

...   He (Myles) didn’t charge us and that was just the way it was at the time.

(Transcript 43/26)

[11]     I have included that last quote from Ms Wilson’s evidence because it seems

to  me  to  indicate  confusion  on  her  part  about  the  status  of  the  right  of  way.   She seems not to have understood that it was her land, and that no question of Kokomoko Farm charging her to graze her stock on it could possibly have arisen.

[12]     Under   cross-examination   Mr   Henderson   substantially   agreed   with   Ms Wilson’s evidence, although he disagreed that the right of way was little used for the first six months.   He considered the level of use had been fairly constant since the respondent acquired Kokomoko Farm.   Questioned about side gates in the northern boundary fence, giving access from Kokomoko Farm into or out of the right of way, Mr Henderson explained that there were three:

a)        A wooden gate beside the cattleyards installed when the fence on the northern boundary of the right of way was built (this was against Ms Wilson’s wishes, but pursuant to legal   advice   obtained   by   Mr

Henderson  that  he  was  entitled  to  have  such  gates  onto  the  right  of way).

b)A gate into the woolshed paddock, built a little later, while Ms Wilson was  still  living  on  the  lifestyle  property,  but  by  then  married  to  Mr Yates.

c)        A metal gate directly into the cattleyards, built more recently, after the appellants purchased the lifestyle property.

Issue 1:  Interpretation

Appellants’ submissions

[13]     The extent of the right of way granted by the Easement Certificate is to be determined  “according  to  the  natural  meaning  of  the  words  contained  in  the document, read in light of the surrounding circumstances existing at the time when the easement was executed”:  Masters v Snell [1979] 1 NZLR 34; Grinskis v Lahood [1971] NZLR 502. Relevant to the interpretation task are the physical circumstances of the servient tenement at the date of grant, and the nature and description of the land and/or buildings (existing or intended) comprising the dominant tenement, and the purpose for which the right of way is intended to be used: Paterson & Barr Ltd v University of Otago [1925] NZLR 191.

[14]     Although  the  “right  to  pass  and  repass”  includes  a  right  to  stop  for  a reasonable  time  for  the  purpose  of  loading  and  unloading,  that  right  is  essentially ancillary  and  restricted  to  what  is  reasonably  necessary  for  the  effective  and reasonable  exercise  and  enjoyment  of  the  rights  expressly  granted: Bulstrode  v Lambert [1953] 2 All ER 728.

[15]     A grant of a right of way would normally be construed as conferring a right

to use the right of way for the purposes for which it would ordinarily be used at the time of the grant:  Great Western Railway Co v Talbot [1902] 2 Ch 759 (CA).

[16]     Where a right of way is granted in general terms giving full rights of use, and where no limitation arises from the circumstances surrounding the grant, the right of way may be used for the purposes for which the dominant tenement is used:  Flavellv Lange [1937] NZLR 444. But in all cases the rights of use attach securely to the use of a driveway facility, i.e. Sketchley v Berger  (1893)  69  LT  754;  Clifford  v Hoare (1874) 9 Ch 415 and Keefe v Amor [1965] 1 QB 344.

[17]     Although the right of way here was created under s 90A Land Transfer Act and is thus in the terms set out in the Seventh Schedule to that Act, the provisions of

s  126B  Property  Law  Act  1952  and  Schedule  9  (since  repealed)  also  apply. Schedule 9 provided:

Rights implied in easements of vehicular right of way

1.The  right  of  the  grantee,  the  grantee’s  servants,  tenants,  agents, workmen, licensees, and invitees (in common with the grantor, the grantor’s tenants, and any other person lawfully entitled) at all times by day and by night to go, pass, and repass, with or without vehicles, machinery,  and  implements  of  any  kind,  over  and  along  the  land over which the easement is granted.

(Clause  2  then  sets  out  the  rights  of  the  dominant  tenement  holder,  in  terms  of establishing   a   driveway,   having   it   kept   clear   of   obstructions,   contribution   to establishment and repair costs etc.)

[18]     Fundamentally, the right is a right to “go, pass and repass over and along the land”  in  the  easement  and  in  particular  “the  driveway”.   This  is  articulated  by the common  law  which  holds  that  the  right  is  one  to  use  the  servient  tenement  as  a means  of  access  to  or  egress  from  the  dominant  tenement  for  purposes  connected with the enjoyment of the dominant tenement according to its nature.   This “would seem  to  exclude  the  use  of  the  easement  for  the  purposes  of  i.e.  unloading  and loading of cattle trucks, grazing of stock, turning of vehicles, parking, or any use not incidental to the use of the driveway facility”.

[19]     The gates in the fence on the northern boundary of the right of way are not lawful points of access and egress.   They are not shown on the original plan of the right of way; they were constructed when the northern boundary of the right of way was fenced, or subsequently.

[20]     Similarly, the cattleyards and the loading race serving them are not shown on the original plan and the race is also not a lawful point of access or egress from the right of way. The right created by the Easement Certificate does not include a right

to park and turn trucks for the purpose of loading and offloading stock.

[21]     At the time the right of way was granted there  existed  a  metalled  track approximately four metres wide leading from Porangahau Road to the cottage. Only this track was useable for vehicular passage. This fact, combined with the wording

of the right of way, suggests “that a construction of the easement limiting the grant

of   right   to   the   driveway   facility   (as   opposed   to   the   total   area)   should   be unproblematic”.

[22]     The  fact  that  the  easement  was  created  by  the  respondent  in  the  course  of subdividing off the lifestyle block, and was over land providing driveway access to the cottage on the lifestyle block, coupled with the fact the northern boundary of the right of way was not fenced for some 12 months, reinforces the point that the right of way should be limited to the metalled driveway.

[23]     A construction of the right of way limiting it to the metalled driveway would “be completely in accordance with the rules of  construction based on the common law principles” (set out in [13] to [16]).

[24]         In the circumstances, the respondent’s use of the whole easement area (before the   appellant   built   fences   along   the   driveway)   constitutes   a   claim   for   joint occupation,  by  excluding  the  appellant  from  large  portions  of  the  easement  land while the respondent carries out farming operations on it.  Those operations may also constitute an actionable nuisance.

[25]     An easement must not amount to a claim for joint occupation.   In Prospect County  Council  v  Cross  (1990) 21 NSWLR 601 at 607-608, Bryson J cited with approval these parts of the judgment of McLelland J in Zenere v Leate (1980) 1 BPR 9300, 9,304:

It is necessary to examine the respective rights of the dominant owner and the servient owner arising from  the  grant  of  ...  [a  right  of  way]. The

dominant  owner  has  only  such  rights  as  are  to  be  found  expressly  or  by necessary implication in the terms of the grant.   The servient owner has all the rights of an owner except those which are inconsistent with the exercise by the dominant owner of the rights expressly or by necessary implication conferred on him by the terms of the grant.

...

And (at 9,305):

...  a  term  is  to  be  implied  to  the  effect  that  the  dominant  owner  has  such ancillary rights as are reasonably necessary to the effective and reasonable exercise and enjoyment of the rights expressly granted:   Jones v Pritchard [1908] 1 Ch 630. Provided that such right be exercised in a manner which

(a)  is  consistent  with  the  reasonable  use  and  enjoyment  by  the  servient owner  of  the  right  of  way  site  as  the  sole  means  of  access  between [residence]  and  a  public  road,  and  (b)  does  not  interfere  with  the  use  and enjoyment  of  [residence]  by  the  servient  owner  to  a  greater  extent  than  is reasonably necessary.

[26]     In Shoesmith v Byerley (1873) 28 LT 553 the Court observed at 554 that the parties had rights which were “reciprocal and neither of which ... is paramount over the other, to use the roadway for their several trades. Each must be bound to use their rights so as to injure the other as little as possible ...”. Contrary to this, the respondent had (until the appellants fenced it off) been using the easement area as a farming work place – as a convenient extension of its own farm property, but without considering the reciprocal enjoyment of the appellants as servient owners.

Respondent’s submissions

[27]     As  I  substantially  accept  these  and  reflect  them  in  my  decision,  I  will  not separately  summarise  them. I  will  refer  specifically  to  some  of  the  submissions made by Mr Courtney.

Decision

[28]     The respondent substantially accepted  the  appellants’  summary  (in  [13]  to

[16]) of the correct approach to the interpretation of the right of way granted by the Easement Certificate.   So do I.   However, I consider three misconceptions mar the appellants’ application here of those principles.

[29]     The first misconception is the appellants’ reliance on s 126B and Schedule 9

Property Law Act 1952.  The appellants’ argument (set out in in [17] to [21] above)

has these essential steps:

a)        The easement granted here includes a vehicular right of way.

b)Therefore s 126B and Schedule Nine apply, and the respondent was entitled to form a driveway.

c)        The right of way is thus to be interpreted as restricted to the driveway and to a right to pass and repass along the driveway, and only along the driveway.

[30]     I do not accept those steps as correct, either factually or legally.   First, they

do not reflect the breadth of the terms of the right of way (which I have set out in

[5]).   In particular, they do not reflect the right to use the right of way for moving farm livestock i.e. the right “to ... pass and repass with ... domestic animals of any kind ...”.  nor do they reflect that the right of way is over all the land over which the easement was granted, not just a driveway width strip of the land.  In [37] I refer in more detail to the decision of the English Court of Appeal in Keefe v Amor [1964] 2 All ER 517. In that case, at 519, the Court said:

...   First and foremost, the right of way was expressed to be over the strip whose  whole  twenty foot  width  was  coloured  brown.   Now  it  would  have been perfectly simple to define it more narrowly if that had been intended:

or  of  course to  define it  as  a footway;  or  as  to  and from the then  existing gateway.  ...

That comment exactly applies here, and is also fatal to the last step in the appellants’

argument.

[31]     Secondly, Mr Courtney drew attention  to  s  297(5)  Property  Law  Act  2007

which provides:

(5)The   provisions   of   this   section   are   in   addition   to,   and   not   in derogation of, the provisions of –

(a)      section 90D of the Land Transfer Act 1952; and

(b)      section 27(3) of the Housing Act 1955.

That provision is identical in its effect to s 126B(5) Property Law Act 1952, which was in force when the right of way was created.  The provision renders the third step

in the appellants’ argument legally untenable, because its effect is the antithesis of that step.

[32]     Thirdly, the appellants’ argument cannot be reconciled with Mr Henderson’s evidence  –  accepted by  the  Judge  –  as to the circumstances in which, and  the purposes for which, the right of way was created. Indeed, the steps in the appellants’ argument are directly contrary to the thrust of Mr Henderson’s evidence. If, as the appellants contend, the right of way is properly interpreted as  creating only ‘driveway’  width  access  from  the  gate  off  Porangahau  Road  through  to  the  gate leading onto Kokomoko Farm from the eastern end of the right of way, then what is the explanation for the shape and size of the right of way?  The appellants’ argument becomes even more untenable when it is borne in mind that a metalled farm track already existed when the right of way was created.  If the right of way was restricted to  use  of  that  metalled  farm  track,  then  the  boundaries  of  the  right  of  way would have  followed  the  lines  of  the  fences  built  by  the  appellants,  and  not  the  legal boundaries of the right of way as they are shown in the plan of the Easement.

[33]     The second misconception is that the side gates and loading race referred to

in [19] and [20] are not lawful points of access to or egress from the right of way. The basis for this submission by the appellants is that those gates are not shown on the original plan of the right of way, and were only constructed subsequently, when the northern boundary of the right of way was fenced, or later still.

[34]     Four  points  defeat  the  appellant’s  submission  about  these  side  gates  and loading race.   First, it is contrary to the terms of the easement, in particular that the right of way is:

... over and along the land over which the right of way is granted or created.

This essentially reiterates the point I made in [30].

[35]         Secondly,  no  gates  or  other  access/egress  points  are  shown  on  the  original plan of the right of way.  At the end of this judgment there is also a copy of the first page  of  Certificate  of  Title  HBM4/1055  to  the  lifestyle  block.   This  contains  two plans, the left hand one showing the lifestyle block with the right of way crossing it, the right hand one being an enlarged plan of the right of way.  Hopefully, these plans are just large enough to demonstrate that no gates are shown on the plans.  That fact lends no support to the appellants’ submission that the right of way is a right only to pass between the two gates, the one out onto Porangahau Road and the other onto Kokomoko Farm at the eastern end of the right of way.

[36]     Thirdly, although it was obviously intended from the outset to fence the right

of way, the northern boundary with Kokomoko Farm was not fenced at the time the right of way was created.  The side gates and loading race are thus consistent with the ability, at the time the right of way was created, to pass freely between the right

of way and Kokomoko Farm at any point along the boundary between the two.

[37]     Fourthly, case law is against the appellants on this point.  Mr Courtney relied particularly on the decision of the English Court of appeal in Keefe v Amor referred

to in [16]. That case involved the extent of a right of way from a roadway to a pair

of  houses.   The  right  of  way was  over  a  strip  of  land  20  ft  wide  and  130  ft  long. When  the  right  of  way  was  granted,  there  was  only  a  footpath  leading  from  the houses  out  onto  the  roadway  through  a  gateway  4  ft  6  inches  wide. The  Court upheld the house owners’ contention that they were entitled to use the whole of the 20  ft  wide  strip,  and  to  widen  the  gateway  to  give  them  vehicular  access  to  the houses.   Critical to the Court’s decision was the wording of the transfer granting a right of way “over the land shown and coloured brown on the plan hereto annexed” i.e.  the  20  ft  wide  strip. To  the  extent  that  Keefe  v  Amor is  authority  that  the dominant  tenement  holder’s  rights  depend  on  the  terms  of  the  grant,  and  not  on existing gateways (let alone the width of those gateways), the case is helpful to the

respondent here.

[38]     More cogent authority,  demonstrating the  error  of the  appellants’ view that the side gates and loading race are not lawful points of access to or egress from the

right of way, is Sketchley v Berger, one of the cases referred to in [16] above.   At

755 Stirling J said this:

...   If the plaintiff’s mode of access to the piece of land at the back of the cottages  were  limited  to  the  gate  which  has  ever  since  the  date  of  the conveyance been used by him, he could not have had much to complain of; but I do not think his mode of access is so limited.  The right of way granted is not to the gate, but to the piece of land.  The plan shows a frontage of the land in question to the extent of ten feet to the way or passage coloured blue, and  in  my  opinion  he  is  entitled  to  pass  from  his  own  land  to  the  way  at whatever point of this frontage is most convenient to himself.

[39] The third misconception in the appellants’ argument is that using the right of way to load or unload livestock, and parking and manoeuvring livestock trucks and trailers in order to do this, is not within the terms of the right of way. I am unable to reconcile this submission with the appellants’ concession recorded in [14]. Quite apart from that, the case law is squarely against the appellants. In Grinskis  v Lahood, referred to in [13] above, Haslam J had to consider the extent of a right of way  off  The  Terrace  in  Wellington,  shared  by  three  residential  properties  and  a motel.  Two of the residents objected to motel guests stopping their cars on the right of way at the entrance of the motel to unload, before parking in the motel parking area at the rear of the motel building.  At 509-510 Haslam J said this:

I deem it unnecessary to go beyond Jelbert’s (Jelbert v Davis [1968] 1 WLR

589;  [1968]  1  All  ER  1182)  case  in  concluding  that  this  grant  enables reasonable enjoyment of the way by motel guests and their visitors arriving in their motor vehicles so long as such user is only for the purpose of access to Lot 1.  (Smith v Smith (1985) 14 NZLR 4). If I be correct in so deciding, use arising from a grant to pass and repass includes a right to stop and halt in order to load and unload, provided that no obstruction of other persons entitled is thereby caused (Bullstrode v Lambert [1953] 1 WLR 1664; [1953] 2 All ER 728; McIlraith v Grady [1968] 1 QB 3 All ER 625).

[40]     Subsequently, in Masters v Snell, also referred to in [13]  above, Chilwell J dealt with a dispute concerning another urban right of way.  At 42, after noting that two cars could pass on the right of way, and that there was ample room to park on it, Chilwell J said this:

...   Parking appears to be a reasonable incidental use of a right of way: Bullstrode v Lambert [1953] 2 All ER 728; [1953] 1 WLR 1064, McIlraith v Grady [1968] 1 QB 468; [1967] 3 All ER 625. Each case must depend upon

its own facts concerning what is reasonable in the circumstances.

I note Chilwell J was apparently not referred to Grinskis v Lahood.

[41]     I agree with Judge Rea, who held (in [21]-[22] of his decision) that the right

of way here permits the respondent or  its contractors to unload and  load  livestock trucks and trailers on the right of way, turning vehicles for that purpose, and parking the trailer unit during the unloading process.  Obstruction to the right of way must, of course, be kept to a reasonable minimum, recognising that it is also the driveway to the appellants’ home.

[42]     To summarise, I reject the appellant’s primary  argument,  that  the  Judge misinterpreted the extent of the right of way granted by the Easement Certificate.   I uphold, as correct, the wide interpretation the Judge gave the easement.

[43]     Before  leaving issue  1,  I observe  that  Mr  Courtney may well  be  correct  in submitting  that  the  appellants  have  not,  unfortunately,  grasped  that  this  is  a  rural right  of  way  specifically  designed  and  created  to  provide  continued  access  to  the respondent  for  livestock,  trucks  and  farm  vehicles  to  and  from  Kokomoko  Farm’s cattleyards, sheepyards, woolshed, fertiliser store and hayshed i.e. access to and from the  main  hub  of  Kokomoko  Farm’s  operations. Mr  Courtney  contended  that  the appellants “seem to think they have a ‘town’ block surrounded by countryside”.

Issue 2:  Interference

[44]     In [24] of his decision, the Judge noted that the parties accepted the plaintiff (i.e. respondent to this appeal) could not succeed unless it established that there had been  a  substantial  interference  by  the  appellants  to  its  rights  under  the  easement. Given that acceptance, the Judge saw no need to refer to the substantial amount of authority  to  which  he  was  referred. Nor  do  I;  it  suffices  to  mention  McKellar  v Guthrie  [1920] NZLR 729 at 731. The point is that the Courts have never entertained complaints of insignificant or trivial interference with a right of way.

[45]     Turning to the facts, the Judge dealt with this aspect of the case as follows:

[24]     ...   While I realise that the pleadings include a complaint about the excavation and removal of base course and  the  erection  of  signs  it  is  the

fence that any objective observer would focus on as substantially restricting and effectively totally changing the nature of the easement that was created.

[25]        Apart  from  narrowing  that  part  of  the  right  of  way  that  can  be utilised by the Plaintiff to a channel of about 4 metres wide for most of the length of the right of way the construction of the fence on one side prevents the Plaintiff from having access to the cattleyards, the loading race and the loading bank.  Any suggestion that the fences do not amount to a substantial interference because some farming operations can still continue completely misses  the  point.   By constructing the fences Mr  and Mrs  Handforth  have created  a  substantial  interference  to  the  Plaintiff’s  rights  in  relation  to  the easement and they will be required to remedy the situation they have created by removing the fences and any other signs or structures they have erected in the right of way.

[46]     At  the  outset  of  his  submissions  for  the  appellants  on  this issue,  Mr  Gallie accepted that:

...  the  Appellants’  position  rests  to  a  significant  extent  upon  the  Court accepting that the Respondent’s use of the right of way is a right of access and  egress  to  and  from  the  Eastern  and  Western  points  shown  on  the easement  plan  and  along  the  useable  route  (the  driveway)  as  currently delineated by the fences constructed by the Appellants, as opposed to a use of  the  whole  area  and  for  the  purpose  of  loading  and  unloading  stock, turning  of  vehicles,  parking  and  grazing  and  movement  of  mobs  of  sheep and cattle.

[47]     That   submission   responsibly   accepts   that   the   answer   to   issue   1   is determinative  also  of  issue  2.   As  I have  found  squarely against  the  appellants  on issue 1, they fail also on this issue.  I am in no doubt at all that the Judge was correct to hold that:

[24]     ...  by  whatever  yardstick  is  used  the  construction  of  these  fences represented a very substantial interference to the Plaintiff’s use of the right of way.  ...

[48]     The appellants admit that the fences they have built prevent the respondent using the loading bank, the loading race and two of the gateways from Kokomoko Farm onto the right of way. They do not accept that the fences restrict the movement

of vehicles and stock.  While that may be true of vehicles travelling the full length of the right of way along the metalled track, it is obviously not true of trucks that would otherwise have unloaded stock on the loading bank, or loaded or unloaded stock at the  loading  race.   Trucks  can  no  longer  get  to  those  points.   The  Judge  squarely rejected  that  the  fences  did  not  substantially  interfere  with  the  movement  of livestock, particularly mobs of bulls.

[49]     In summary, having failed on issue 1, the appellants fail also on this issue.

Issue 3:  Jurisdiction

[50]     The first two orders made by the Judge in [47] of his decision were these:

(i)An  order  requiring  the  Defendants  at  their  own  cost  to  remove  all fences, gates and signs they have put in the right of way.  There will be no orders in relation to plantings and landscaping.  The Plaintiff is entitled  to  full  use  of  the  right  of  way  in  terms  of  the  Easement Certificate   irrespective   of   any   plantings   or   landscaping   the Defendants may have undertaken within the area of the right of way. This order must be fully complied with by the Defendants within six weeks of the date of delivery of this Judgment.

(ii)      An  order  restraining  the  Defendants  from  causing  any  structures, fences  or  obstructions  to  be  built  or  placed  within  the  area  of  the right of way once the existing fences and signs have been removed.

[51]     This issue challenges order (ii), on the ground that the appellants are entitled

to the use and enjoyment of the right of way land, subject only to the respondent’s rights under the Easement Certificate. Mr Gallie submitted that the District Court’s jurisdiction was limited to prohibiting the erection of structures that would amount to a substantial interference with the respondent’s rights. It did not have jurisdiction to restrain “all and any structures regardless of whether that threshold is met”.

[52]     I accept that submission.   I think the Judge intended that his order (ii) be to that effect.  Accordingly, I intend allowing this appeal to the extent of amending the Judge’s order (ii) so that it reads:

(ii)      An  order  restraining  the  defendants  from  causing  any  structures, fences  or  obstructions  which  would substantially interfere  with the plaintiff’s rights under the Easement Certificate to be built or placed within the area of the right of way once the existing fences and signs have been removed.

Issue 4:  Compensatory damages

[53]     The nub of Mr Gallie’s submission was that the respondent had not proved,

to the requisite standard, that it had sustained the $4,530 damages the Judge awarded

it.  In particular, Mr Gallie submitted that Mr Henderson:

7.2... was somewhat vague when questioned as to how these costs were arrived at (ref:   transcript p28, 29, 30).   No documentary evidence was  produced  to  support  this  claim,  which  seemed  to  bear  no resemblance  to  the  actual  costs  incurred  when  measured  on  an hourly basis.

[54]     It is clear from pp 28-30 of the transcript that the focus of Mr Gallie’s cross- examination was a challenge to the figure of $27 per hour used by Mr Henderson in

his evidence about loss.  This is reflected particularly in these exchanges between Mr

Gallie and Mr Henderson:

Q.Yeah, we’re not disputing that there’s extra time involved.   What I have  a  problem  with  is  how  you’ve  reached  the  figure  of  $27  an hour, pay yourself for that.

A.       Because  that  is  what  I  would  have  to  pay  and  what  I  do  pay  an experienced  stock  person. Whether  they’re  doing  that  particular work  or  whether  they’re  doing  work  because  I  have  to  spend  my time doing it is, um – either way, there’s extra work.

...

Q.Mr  Henderson,  throughout  your  claim  for  damages  as  set  out  in paragraph 51 of your evidence, you’ve referred to a figure of $27 per hour as the rate.  Am I to understand it from your earlier comments that this is a hypothetical figure?  It doesn’t necessarily represent the actual costs incurred due to those matters?

A.       That is the rate that I would pay for somebody to do that work.

Q.I’ll just stop you there, pause there.  Did you pay someone to do that work at that rate on all the occasions that you have indicated?

A.On  occasions  I  have  paid  people  to  do  that  work  and  on  other occasions I’ve done it myself.

[55]     The Judge then intervened, putting two  questions to Mr Henderson.   In  his decision,  the  Judge  referred  to  his  own  questions  and  to  Mr  Gallie’s  cross- examination in these terms:

[27]     I asked Mr Henderson how he came up with a figure as to what he thought his losses were as a result of the delays or inconvenience caused by the fences.  He said:

“I calculated or estimated I recorded that the extra time it took me to find an alternative  loading  facility  and  I  allowed  that  extra  time  at  which  I considered to be a market rate.  I know some stock handlers charge $30.00 an hour but some charge $25.00 so I said $27.00 an hour.”

[28]     Mr Gallie closely cross examined Mr Henderson on the accuracy of his figures.  It was put to Mr Henderson that the hours claimed would not all

be paid at $27.00 per hour.  Mr Henderson said that on occasions he had paid people to do the work and on other occasions he had done it  himself.   He

considered he was able to charge his own labour at $27.00 per hour as well because the fences caused him a loss of productive time on the farm.

[56]     On the basis of the evidence he heard, the Judge was entitled to accept the

$27 per hour figure.  Although it was challenged by Mr Gallie, no contrary evidence was put forward by the appellants.  It may well be that Mr Henderson was obliged to estimate the respondent’s losses, in the absence of an ability precisely to assess them. But the legal position is stated in McGregor on Damages 18th  edition 2009 at para 8-002 in these terms:

... where it is clear that some substantial loss has been incurred, the fact that

an assessment is difficult because of the nature of the damage is no reason for  awarding  no  damages  or  merely  nominal  damages.  As  Vaughan Williams L.J. put it in Chaplin v Hicks [1911] 2 KB 786 CA (at 792), the leading case on the issue of certainty: “The fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages.” Indeed if absolute certainty were required as to the precise amount of loss that the claimant had suffered, no damages would be recovered at all in the great number of cases. ...

[57]     I hold against the appellants on this fourth issue.

Issue 5:  Exemplary damages

[58]     Mr Gallie’s submission to me for the appellants was virtually identical to that put to Judge Rea.  In other words, Mr Gallie did not advance to me any argument as

to why Judge Rea was wrong to award exemplary damages.  Rather, he reiterated to me the argument rejected by the Judge.

[59]     Mr Gallie did not contend the  Judge  erred  in  legal  principle,  or  that  the

$3,500 he awarded was an immoderate award.

[60]     The core of the Judge’s decision on this issue is in these two paragraphs:

[41]     It is clear from the evidence that the Handforths did take some legal advice about the disputes between them and Mr  Henderson  and  how  they could be resolved but Mr Handforth accepts that he and his wife constructed

the  fences  without  obtaining  any  advice  as  to  whether  they  were  lawfully entitled to do so.

[42]     Mr and Mrs Handforth were upset and frustrated with what they saw

as a breach of their rights.  They were entitled to obtain legal advice and if necessary  commence the appropriate proceedings  against  the  Plaintiff  to

obtain any remedy they were entitled to.  They chose not to take that course

but  to  act  unilaterally  and  to erect fences that they knew  would  be  very detrimental to the Plaintiff. The only conclusion that I can come to on the

evidence is that both Mr and Mrs Handforth intended to inflict damage on

the  Plaintiff.   By  doing  so  I  consider  that  the  Defendants  have  displayed outrageous conduct and have shown a conscious disregard for the Plaintiff’s rights.  I believe the only inference that can be drawn is that they intended to frustrate  the  Plaintiff’s  farming  operation  as  much  as  they  could  and  to inflict  as  much  damage  on  it  as  they  could. I  consider  this  to  be  a sufficiently serious and exceptional case that requires an award of exemplary damages against both Defendants as punishment for their conduct.

[61]     I cannot fault the Judge’s reasoning in those paragraphs.  Indeed, it is difficult

to conceive of any Judge viewing the appellants’ actions in building the fences as not warranting  an  award  of  exemplary  damages,  to  mark  the  Court’s  disapproval  of deliberate,  outrageous  conduct  that  substantially  interfered  with  the  respondent’s rights, and inflicted damage on the respondent.

[62]     I reject the appellants’ argument on issue 5, just as the Judge did.

Result

[63]     The  appellants’  appeal  is  dismissed,  save  that,  accepting their  argument  on issue 3, I quash the Judge’s order (ii), and substitute the following order:

(ii)      An  order  restraining  the  defendants  from  causing  any  structures, fences  or  obstructions  which  would substantially interfere  with the plaintiff’s rights under the Easement Certificate to be built or placed within the area of the right of way once the existing fences and signs have been removed.

Costs

[64]     As requested by Mr  Courtney, I reserve  costs. Any  memorandum  for  the respondent seeking increased  costs  pursuant  to  r  14.6  is  to  be  filed  and  served  by 5 February, and any memorandum for the appellants in response by 19 February.

[65]     In the hope that it may assist the parties I offer two comments about costs. First, I noted Mr Courtney as mentioning that the respondent’s costs “will be several thousand dollars” i.e. well in excess of those calculated on the 2B basis agreed by the parties   in   their   counsel’s   joint   memorandum   of   30   July   2009   for   the   case management conference on this appeal.   Mr Courtney will appreciate that that fact alone will not justify increased costs.  The respondent will need to bring itself within r 14.6, if it can.  Secondly, my tentative view is that the appellants’ small success on issue 3 should not alter the incidence of costs much, if at all.   I anticipate that the Judge would have been prepared to correct his order (ii), had the appellants invited him  to  do  so. I  anticipate  also  that  the  respondent,  if  asked,  would  likely  have consented to the order being corrected.

Delivery of this judgment

[66]     When I reserved judgment following the hearing on 21 October, I indicated that I hoped to give a judgment within a fortnight.  I regret not achieving that, but it was a busy end of year.

Solicitors:

McKay Mackie, Waipawa for the Appellants

Davidson Armstrong & Campbell, Waipukurau for the Respondent