Harnden v Collins HC Whangarei CIV 2009-488-000571
[2009] NZHC 2635
•18 December 2009
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IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV 2009-488-000571
UNDER the Property Law Act 2007 and District
Courts Act 1947
IN THE MATTER OF an Appeal from the District Court
BETWEEN MSB & EB HARNDEN AND PM TRUSTEE LIMITED
First Appellants
ANDJ M & J M LAVELL AND WHITELAW WEBER TRUSTEE SERVICES LIMITED Second Appellants
ANDI A MIKITASOV Third Appellant
ANDB J COLLINS First Respondent
ANDINTERNATIONAL RECRUITMENT PARTNERS LIMITED
Second Respondent
Hearing: 23 November 2009
Appearances: J A Browne for Appellants
R C Mark for Respondents
Judgment: 18 December 2009
RESERVED JUDGMENT OF RANDERSON J
This judgment was delivered by me on 18 December 2009
At 3 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors: Henderson Reeves Connell Rishworth, PO Box 11, Whangarei 0140
R Mark, PO Box 172, Kerikeri
HARNDEN And Ors V B J COLLINS And Anor HC WHA CIV 2009-488-000571 []
Introduction
[1] This appeal from the District Court relates to a subdivision of land at Paihia in the Bay of Islands. The land was originally subdivided in 1953 with an easement (extended in 1956) linking a number of the lots to an esplanade reserve adjoining the Veronica Channel.
[2] In 2000, the first respondent Mr Collins acquired two of the lots in the original subdivision. In 2003, Mr Collins and a company controlled by him subdivided those lots, creating five new lots now comprising Lots 1 to 5 DP 327999. The first and second appellants are the owners of some of the lots in the original subdivision while the third appellant is the owner of two lots in the new subdivision.
[3] Difficulties have arisen over the use of the easement. It is common ground that parts of it within the new subdivision are impassable for various reasons. There is a dispute as to who is responsible for this but it is unnecessary for present purposes to determine that issue. The blockages are said by the appellants to result from the subdivision and associated earthworks and retaining walls carried out by Mr Collins. They also allege that the construction of a boundary wall and decks to a house built on Lot 1 DP 327999 have blocked the easement.
[4] In the District Court, the appellants applied for the modification of the easement under s 317
Property Law Act 2007 (―PLA‖) and for further orders under s 313 PLA as to enforcement of the terms of the easement. This judgment is concerned only with s 317.
[5] The existing easement and the proposed change is depicted on the plan attached to this judgment. The part marked ―F‖ on Lot 1 DP 327999 would be extinguished and the part marked ―H‖ would follow a new line along an existing concrete driveway on Lot 3 DP 327999 to rejoin the easement at the boundary of Lot 2 DP 327999 (part ―G‖ on the plan). The plan was introduced on appeal by consent.
[6] In a decision delivered on 3 August 2009 Judge Cadenhead ruled on a preliminary point that the court did not have jurisdiction to entertain the application under s 317 PLA. The essential basis for his ruling was that the appellants‘ proposal amounted to the creation of a new easement rather than the modification of an existing one. Since s 317 permits only the modification or extinguishment of an easement, the court was found to have no jurisdiction.
[7] This appeal is brought for the sole purpose of determining whether the District Court Judge‘s
decision on the jurisdiction issue is correct in law.
[8] Mr Collins has recently been adjudicated bankrupt. I directed that notice of this appeal be given to the Official Assignee inviting him to lodge any objection within a stipulated period to the continuation of the appeal against Mr Collins. No objection has been received and, to the extent necessary, I grant leave under s
76 Insolvency Act 2006 to the appellants to continue this appeal against Mr Collins.
Grounds of Appeal
[9] In summary, the grounds of appeal advanced in the notice of appeal are:
a) The Court took an inappropriately restrictive view of its jurisdiction and wrongly viewed the application as seeking the creation of a new easement.
b)The Court failed to give adequate recognition to statutory amendments which indicated an intention to broaden the scope of the section including the introduction in s 317(2) PLA of a power to award compensation not available in earlier legislation.
c) The Court wrongly declined to accept jurisdiction at least in part on the ground that the Court had no power to modify an easement by directing a change to its course over land adjoining the original subservient land.
d) The Court took into account facts which were incorrect. [10] Ground (d) was abandoned at the hearing of the appeal.
The Judge’s Decision
[11] The hearing in the District Court proceeded on the basis of ―agreed facts‖ which were provided separately by the appellants and respondents. Although a number of facts were agreed, there is no precise correlation between the facts presented by each side. This does not present any difficulty on appeal because there is no dispute as to the facts essential for the purpose of determining the preliminary point of jurisdiction. These points are essentially the location of the existing easement, the changes proposed by the appellants, and the relationship between the dominant and servient tenements affected.
[12] The Judge carefully set out the authorities determined under s 216G Property Law Act 1952, the statutory predecessor to s 317 of the new Act, and the respective arguments of the parties. He summarised the legal entitlements to access the esplanade reserve via the easement as follows:
i) 9 properties along Binnie Street and Panorama Avenue are legally entitled to use the easement to gain access to the esplanade reserve.
ii) Lot 1 uses the easement to travel over Lot 2 to gain access to the esplanade reserve.
iii) Lots 2 and 3 border the esplanade reserve and so have direct access from their boundaries.
iv) Lot 4 has right of way over the long driveway (part of Lot 3) and then uses the easement over
Lot 2 to gain access to the explanade reserve.
[13] The Judge considered that the relocation of the easement from Lot 1 to Lot 3 was a significant factor, observing at [42]:
The circumstances in Re Lewis ([1959] NZLR 1040) where Hutchinson ACJ held that the modification proposed in that case did not involve extinguishment and the creation of a new right, were fundamentally different from the circumstances in this case. The modification proposed in Re Lewis was moving the easement entirely within the one servient land. The obvious distinguishing feature of the present case is that the proposed modification is not confined to within one servient tenement. It requires the transfer of the burden of the easement from one servient tenement to another servient tenement and thereby significantly enlarging the area of the respondents land affected by the easement.
[14] The Judge went on to express concern at [43] that the application would effectively enlarge the
easement over the respondents‘ servient land.
[15] In the final part of the judgment, the Judge noted there were differing views in the authorities about the scope of the term ―modify‖ but did not express any final view as to whether the term should, as the appellants had submitted, be read more expansively than earlier authorities under the 1952 Act had suggested. The Judge then concluded:
[54] Upon consideration of this case I am of the view that the proposed modification is extensive over the land of the respondents. The existing burden on lot 3 was at the most 3 to 4 metres, while the extension sought would be equal to about 30 to 40 metres. I think that factor is decisive, along with the factor as to where the new easement would be situated in deciding that what is contemplated is the creation of a new easement, rather than the modification of an existing one. What is contemplated pursuant to section 317 is the modification of easement transfer 574837, but I do not think that takes place in the present proceedings.
[55] For the reasons that I have given I am of the view that I have no jurisdiction to grant the relief sought, because what is being attempted is the creation of a new easement, rather than the modification of an existing one. I accept at once the matter is one of degree, but in my opinion, here the gulf is too great.
Submissions on Appeal
[16] With one exception, counsel on each side essentially advanced the submissions which had been made in the District Court. For the appellants Mr Browne submitted that an examination of the statutory history and more recent authority supported the proposition that s 317 was intended to be broadly remedial in its purpose. While accepting that some restraint was necessary given the potential effects of impinging on private property rights over the subservient tenement, Mr Browne emphasised that the power to award
compensation under s 317(2) recognised that the impacts of any such effects could be ameliorated. Mr Browne accepted that earlier authority under the 1952 Act had taken a more restrictive view of the scope of the expression ―modify‖ but relied on more recent authority to support a broader interpretation, particularly the decision of the Elias J (as she then was) in Rental Space Ltd v March (1999) 4 NZ ConvC 192,873 and the decision of Clifford J in Organic Farming Ltd v Bryson (2007) 5 NZ ConvC 194,383.
[17] Mr Browne acknowledged that he was not aware of any case where an application had involved moving part of the easement to another property but he submitted there was no statutory impediment to such a proposal, and that this issue went to discretion rather than to jurisdiction. Mr Browne pointed out that Mr Collins was responsible for the subdivision and still owns Lot 3 over which the new section of the easement would run. He also controls the second respondent company which owns Lot 4 in the new subdivision.
[18] The respondents submitted through their counsel Mr Mark that the Judge was correct in concluding that the appellants‘ proposal went well beyond a modification of the existing easement and amounted effectively to the creation of a new easement for which jurisdiction did not exist under s 317. Mr Mark also submitted there was no jurisdiction to order the creation of a new easement over property owned by another person except under an express provision such as s 328 PLA in relation to landlocked land. It is common ground that the appellants‘ properties are not landlocked.
[19] A new point raised by Mr Mark on appeal was that an application under s 317 could only be made by a person ―bound by‖ the easement: s 316(1) PLA. Although the third appellant was bound by the easement (parts ―F‖ and ―G‖), the first and second appellants were not bound by the easement – at least in the affected parts ―E‖, ―F‖ and ―H‖. It followed in Mr Mark‘s submission that the third appellant alone was entitled to bring the application. The easement would be removed altogether from the third appellant‘s title to Lot 1
DP 327999 and relocated to Mr Collins‘ title Lot 3 DP 327999. Mr Mark submitted that s 317 PLA did not envisage the total removal of the burden of an easement from one title and its placement instead on another, particularly if that would result in an increased burden on the title to which the easement was relocated.
The scope of the easement at issue
[20] It emerged during argument that a significant factor in determining the jurisdiction point may be the scope of the easement at issue. Is the application effectively confined (as the Judge thought) to parts ―F‖ and ―G‖ on the plan (representing the extension in 1956 of the original easement comprising parts ―A‖, ―B‖,
―C‖, ―D‖ and ―E‖) or is it permissible to treat the application as embracing both the original easement and its
later extension as a composite whole? On the latter basis, the application could be treated as seeking the partial extinguishment of a section of the entire easement (Part ―F‖) and the modification of that part of the entire easement which falls within Lot 3 DP 327999 (part ―E‖) which would be extended by including the new part ―H‖.
[21] The resolution of this question involves a consideration of the terms of the original and extended easements and the complex of inter-relationships between the various lots, as well as consideration of the benefits and burdens attaching to each lot. At my request, counsel have provided further information by agreement. The effect of this material may be summarised as follows:
a) The first and second appellants (along with a number of other owners of lots along Panorama Avenue) are dominant owners and entitled to use the entire easement to travel to and from the esplanade reserve. They are also servient owners to the extent that each of their properties are subject to the rights of other dominant owners to use the easement (including the second respondent as the owner of Lot 4 DP327999).
b)The third appellant (as the owner of both Lots 1 and 2 DP327999) is a servient owner in respect of parts ―F‖ and ―G‖ on DP327999 since the Panorama Avenue owners are entitled to use the easement over those parts to travel to and from the esplanade reserve. Parts ―F‖ and
―G‖ are created by a separate easement granted as part of the 2003 subdivision. The third appellant is also a dominant owner in respect of part ―F‖ Lot 1 to the extent he is entitled to use part ―G‖ on Lot 2. But the third appellant has no right to use parts ―A‖, ―B‖, ―C‖, ―D‖ or
―E‖ of the easement. He has access to Binnie Street and has no need of access via Panorama
Avenue.
c) The first respondent Mr Collins (as the owner of Lot 3 DP327999) is a servient owner in two respects. First, the Panorama Avenue owners are entitled to use part ―E‖ of the easement to travel across his property when travelling to and from the esplanade reserve. Secondly, the owner of Lot 4 DP 327999 (the second respondent company) is entitled to use the concrete driveway on Lot 3 and then part ―G‖ on Lot 2 to travel to and from the esplanade reserve. Mr Collins is not a dominant owner since, from the time of the 2003 subdivision, he is no longer entitled to use the easement.
d)The second respondent owns Lot 4 DP327999 and is a servient owner in respect of part ―D‖ since the Panorama Avenue owners are entitled to travel over its property to and from the esplanade reserve. The second respondent is also a dominant owner in two respects. First, it has the right to use the easement over parts ―A‖, ―B‖ and ―C‖ (Panorama Avenue). Secondly, it is entitled, as noted already, to use the concrete driveway on Lot 3 and part ―G‖ on Lot 2 to travel to and from the reserve.
[22] Given the inter-relationships between the rights and duties conferred or imposed by the terms of the easement, it is artificial to confine consideration of the application to parts ―F‖ and ―G‖ of the easement. The original easement, the extension in 1956, and the new easement in 2003 over parts ―F‖ and ―G‖ all form part of an integrated complex of rights and duties affecting a series of owners along the entire route. An obstacle on any part affects the access rights of the dominant owners in Panorama Avenue and would defeat the object of providing access to them to the esplanade reserve. Their interest in the outcome is critical and, at the least, they are parties entitled to be served with the application.
[23] It follows, that the nature and extent of any modification or extinguishment of the easement is to be considered in the context of the entire easement or easements as a composite whole and all the surrounding circumstances. This conclusion is, however, not necessarily conclusive of the jurisdiction issue.
The legislative history
[24] Traditionally, the courts have taken a conservative approach towards the exercise of discretion under the statutory predecessors to s 317 PLA. A conservative or cautious approach has been seen to be justified for at least three reasons. First, applications under this provision have the potential to impact adversely on existing property rights, usually by diminishing or altering the benefit of the easement to the dominant owner or owners. Interference with property rights has always been treated seriously by the courts with reference being made on occasion to the ―expropriation‖ of property. Secondly, the exercise of the power under this provision represents a statutory interference with the sanctity of the contract entered into by the dominant and servient owners or their predecessors in title. Thirdly, until s 317 PLA was enacted, there was no provision for the court to order the payment of compensation as a means of ameliorating adverse effects on the parties impacted by the grant of an order under the section.
[25] The statutory history shows that there has been a progressive broadening of the scope of the section as well as a relaxation of the approach the courts have adopted to the exercise of discretion. When first enacted, the relevant provision was s 127 of the Property Law Act 1952. Section 127 relevantly provided:
127 Power for Court to modify or extinguish easements and restrictive stipulations –
(1) Where land is subject to an easement or to a restriction arising under covenant or otherwise as to the user thereof, the Court may from time to time, on the application of any person interested in the land, by order modify or wholly or partially extinguish the easement or restriction upon being satisfied –
(a) That by reason of any change in the use of any land to which the easement or the benefit of the restriction is annexed, or in the character of the neighbourhood or other circumstances of the case which the Court may deem material, the easement or restriction ought to be deemed obsolete, or that the continued existence thereof would impede the reasonable user
of the land subject to the easement or restriction without securing practical benefit to the persons entitled to the easement or to the benefit of the restriction, or would, unless modified, so impede any such user; or
(b) That the persons of full age and capacity for the time being or from time to time entitled to the easement or to the benefit of the restriction, whether in respect of estates in fee simple or any lesser estates or interests in the land to which the easement or the benefit of the restriction is annexed, have agreed to the easement or restriction being modified or wholly or partially extinguished, or by their acts or omissions may reasonably be considered to have abandoned the easement wholly or in part; or
(c) That the proposed modification or extinguishment will not substantially injure the persons entitled to the benefit of the restriction.
(2) Where any proceedings by action or otherwise are instituted to enforce an easement or restriction, or to enforce any rights arising out of a breach of any restriction, any person against whom the proceedings are instituted may in those proceedings apply to the Court for an order under this section.
(3) The Court may on the application of any person interested make an order declaring whether or not in any particular case any land is affected by an easement or restriction and the nature and extent thereof, and whether the same is enforceable, and, if so, by whom.... (emphasis added)
[26] The Property Law Amendment Act 1986 repealed s 127 and replaced it with s 126G which relevantly provided:
126G Power for Court to modify or extinguish easements and covenants
(1) Where land is subject to an easement or a positive covenant or a restrictive covenant, a Court may from time to time, on the application of the occupier of the land, by order, modify or wholly or partially extinguish the easement or covenant upon being satisfied—
(a) That, by reason of any change since the creation of the easement or covenant—
(i) In the nature or extent of the user of the land to which the benefit of the easement or covenant is annexed or of the user of the land subject to the easement or covenant; or
(ii) In the character of the neighbourhood; or
(iii) In any other circumstances of the case that the Court considers relevant,—
the easement or covenant ought to be modified or wholly or partially extinguished; or
(b) That the continued existence of the easement or covenant in its present form would impede the reasonable user of the land subject to the easement or covenant in a different manner or to a different extent from that which could have been reasonably foreseen by the original parties at the time of the creation of the easement or covenant; or
(c) That every occupier of full age and capacity of the land to which the benefit of the easement or covenant is annexed has agreed to the easement or covenant being modified or wholly or partially extinguished, or by his or her acts or omissions may reasonably be considered to have abandoned or waived the easement or covenant wholly or in part; or
(d) That the proposed modification or extinguishment will not substantially injure the persons entitled to the benefit of the easement or covenant.
[27] In Manuka Enterprises Ltd v Eden Studios Ltd [1995] 3 NZLR 230 Thorp J discussed the effect of the 1986 amendment at 233:
The present form of s 126G(1) was enacted by the Property Law Amendment Act 1986 and displays a legislative intention to broaden the basis upon which the Court's jurisdiction may be exercised, both by deleting the former provision for modification or extinguishment if "the easement or restriction ought to be deemed obsolete" and by other broadening of the language of its different provisions.
Those changes necessarily limit the value of decisions on the old provision, and there has only been quite limited judicial interpretation of the present provisions.
[28] Section 317 PLA came into force on 1 January 2008, some 14 years after the report of the Law
Commission A New Property Law Act (NZLC R29, 1994). As the report noted at [99]:
There are relatively few changes in substance, but the sections have been rewritten in more modern style and are placed in what is thought to be a more logical order ...
[29] Neither the Law Commission‘s report nor the Property Law Bill as introduced in 2006 recommended or contained a power to award compensation. The addition of a power to award compensation was recommended by the Select Committee which reported to the House on 25 June 2007. The Select Committee‘s report stated at 5-6:
We recommend that clause 312 be amended to allow the court to award compensation when ordering the modification or extinguishment of an easement. Such an order is, in essence, an expropriation of a private property right, and an award of compensation is appropriate in some circumstances. We consider there is a need to grant the court the ability to award compensation where appropriate.
[30] During the second reading of the Bill, the Honourable Chris Carter MP said:
The powers of the court are extended to include a power to make an order for compensation when modifying or extinguishing an easement or covenant. An example might be where an owner wants to redevelop land by building several houses on it, but the owner is prevented from doing this by a covenant in the original transfer of the land that restricts further building on the site. Although the owner could apply to the court to modify or extinguish the covenant, other people who benefit from the covenant may have their property rights adversely affected. Compensation may be appropriate in such circumstances.
[31] Section 317 relevantly provides:
317 Court may modify or extinguish easement or covenant
(1) On an application made and served in accordance with section 316 for an order under this section, a court may, by order, modify or extinguish (wholly or in part) the easement or covenant to which the application relates (the easement or covenant) if satisfied that—
(a) the easement or covenant ought to be modified or extinguished (wholly or in part) because of a change since its creation in all or any of the following:
(i) the nature or extent of the use being made of the benefited land, the burdened land, or both:
(ii) the character of the neighbourhood:
(iii) any other circumstance the court considers relevant; or
(b) the continuation in force of the easement or covenant in its existing form would impede the reasonable use of the burdened land in a different way, or to a different extent, from that which could reasonably have been foreseen by the original parties to the easement or covenant at the time of its creation; or
(c) every person entitled who is of full age and capacity—
(i) has agreed that the easement or covenant should be modified or extinguished (wholly or in part); or
(ii) may reasonably be considered, by his or her or its acts or omissions, to have abandoned, or waived the right to, the easement or covenant, wholly or in part; or
(d) the proposed modification or extinguishment will not substantially injure any person entitled. (2) An order under this section modifying or extinguishing the easement or covenant may require any
person who made an application for the order to pay to any person specified in the order
reasonable compensation as determined by the court.
[32] Section 317 PLA and its statutory predecessors have all provided that an application to modify or extinguish an easement may only be made by a person who is bound by or subject to the easement i.e. a person who carries the burden of the easement. In the PLA, an application under s 317 must be made and served in accordance with s 316:
316 Application for order under section 317
(1) A person bound by an easement, a positive covenant, or a restrictive covenant (including a covenant expressed or implied in an easement) may make an application to a court for an order under section 317 modifying or extinguishing that easement or covenant.
(2) That application may be made in a proceeding brought by that person for the purpose, or in a proceeding brought by any person in relation to, or in relation to land burdened by, that easement or covenant.
(3) That application must be served on the territorial authority in accordance with the relevant rules of court, unless the court directs otherwise on an application for the purpose, and must be served on any other persons, and in any manner, the court directs on an application for the purpose. (emphasis added)
[33] The expressions ―person bound‖ and ―person entitled‖ are defined in s 4 PLA:
person bound means, in relation to an easement, a positive covenant, or a restrictive covenant burdening land, an owner or occupier of the land against whom the easement or covenant is enforceable
person entitled means, in relation to an easement, a positive covenant, or a restrictive covenant benefiting land, an owner or occupier of the land who is entitled to enforce the easement or covenant
[34] It follows that any order for compensation made under s 317(2) is made against the person bound by the easement who seeks modification or extinguishment of the easement. Ordinarily, one would expect any such compensation to be paid to the person or persons entitled to the benefit of the easement. This is a significant improvement to the exercise of jurisdiction under the section since it enables the court in an appropriate case to order compensation as a means of eliminating or diminishing any adverse effects of an order made under the section.
The scope of the power to “modify”
[35] The early decisions took a conservative view about the scope of the power to modify under the statutory predecessors to s 317 PLA. In Richardson v Manawatu Tyre Rebuilders Ltd [1955] NZLR 541 at
542-543, Turner J doubted whether an easement could be modified so as to enlarge it under the former s 127
Property Law Act 1952 and, in Child v Dynes [1985] 2 NZLR 554 at 557-558, Barker J held that the term
―modify‖ did not enable a restrictive covenant to enlarged.
[36] More recent authorities under the former s 126G have taken a less restrictive approach to the scope of modification permitted. In relation to the modification of a condition in an easement, Elias J (as she then was) said in Rental Space Ltd v March (1999) 4 NZ ConvC 192,873 at 192,887:
I do not accept that the word "modify" in s 126G(1) is to be restrictively interpreted. The discretion conferred upon the Court in what is a broadly remedial provision is a wide one. It will, however, be a highly material circumstance in the exercise of the power conferred by s 126G that extinguishment or modification of a restrictive covenant will have the effect of increasing the burden upon the land entitled to the benefit of the covenant by enlarging the burden to which it is subject. It would only be in unusual circumstances or where the increase in burden is insubstantial that it would be right to grant such modification or extinguishment of a restrictive covenant. But indeed, s 126G says as much by establishing, as conditions for the exercise of the Court's power, the criteria in s 126G(1)(a)-(d).
[37] Similarly, in Organic Farming Ltd v Bryson (2007) 5 NZ ConvC 194,383 Clifford J rejected the more restrictive view held in some Australian cases, stating at [57] to [61]:
[57] I think a substantive argument can be made in support of my view, on the basis that an easement is essentially the creation of rights in favour of a dominant tenement over a servient tenement, and that the part of the servient tenement which is specifically subject to those rights is equally a term of the easement, as are the substantive rights in favour of the dominant tenement created by the easement. Taking that approach, a shift of location within the servient tenement can be regarded as a modification of the easement, just as will be either an adjustment to boundaries of the easement or some alteration to the rights created by the easement. I do not, therefore, consider that it is necessary to adopt the extinguishment/creation dichotomy proposed by Holland J in Manly Properties Pty Ltd and apparently adopted by Gzell J in Loclot.
[58] More generally, and as directly relevant to this appeal, I do not accept Mr Mason‘s submission that ‗modify‘ should be restrictively defined as meaning ―lessened or extinguished‖. This would
render redundant the power to ‗modify‘, as s 126G(1) already contemplates as an alternative to
‗modification‘ that the Court may ‗wholly or partly extinguish‘ an easement.
[59] Further, I think the approach taken by Hutchison ACJ in Re Lewis, and followed by Judge Kelly, reflects –as regards this proposal- the appropriate meaning of the term ‗modify‘. For example, Webster’s New International Dictionary (1938), cited in Wellington District Law Society v Cummins [1998] 3 NZLR 363 at 366 (HC), includes the following among its definitions of ‗modify‘:
4. To change somewhat the form or qualities of; to alter somewhat; as, to modify the terms of a contract.
[60] To similar effect is the Court of Appeal‘s decision in Welsh v Cooney [1993] 1 ERNZ 407, which concerned ‗modify‘ as that term appears in s 8(1)(b) of the Illegal Contracts Act 1970. The court stated at 410 that the term ‗modify‘ ―can mean moderate or limit or confine; but it can also simply mean vary or change in part‖.
[61] This understanding, applied in the present context, recognises that to alter certain perimeters of an easement is to ‗modify‘ it. In my view, where, as here, a good deal of the land subject to the easement is to remain constant, the Court has a power under s 126G(1)(d) to alter the easement. The important proviso to the exercise of this power is that the proposed alteration(s) must not unduly prejudice the interests of the dominant tenement (and their owners).
[38] The Shorter Oxford English Dictionary (3rd ed) indicates that the term ―modify‖ may have more than
one meaning:
Modify to limit, moderate. To limit, restrain; to assuage.
...
4. To make partial changes in; to alter without radical transformation.
[39] Given the ―broadly remedial purpose‖ of the statutory power at issue as Elias J found in Rental Space Ltd, I am satisfied that the exercise of jurisdiction under s 317 PLA would be unduly restricted if the power to modify did not include the power to enlarge the easement. For example, it might become necessary to widen the right-of-way on the property of a servient owner in order to provide for a range of owners using a common driveway. That could be for the benefit of all parties and it would be unfortunate if s 317 were read so restrictively as to prevent a beneficial change of this sort.
[40] It also needs to be remembered that the older cases were concerned with the modification of restrictive covenants. In Richardson, Turner J chose to treat a covenant in the easement given by the servient owner as a restrictive covenant. The servient owner had covenanted to use the right-of-way only so long as a dwelling house was erected on his property. The relief sought was treated as being by way of enlargement because the plaintiff sought to continue use of the right-of-way after the house had ceased to be used as a dwellinghouse. This would have the effect of postponing the time when the plaintiff was obliged to stop using the right-of-way.
[41] And, in Child v Dynes the restrictive covenant related to the height to which buildings could be constructed on the land of the servient owner. Due to an error in the covenant, it covered only trees and other vegetation on the servient land and did not include buildings. The plaintiffs, as the owners of adjoining land entitled to the benefit of the restrictive covenant, sought unsuccessfully to have the restrictive covenant modified so that the height of buildings on the servient land was also restricted. Barker J held that the plaintiffs, as the owners of the dominant land, were not entitled to apply to have the restriction modified and, in any event, there was no power under s 127 of the Property Law Act 1952 to grant their application to amend the terms of the restrictive covenant by making it more burdensome on the servient tenement.
[42] Neither of these cases is authority for the proposition that there is no jurisdiction to entertain an application by a servient owner to modify an easement which would have the effect of increasing the burden on the servient land. The impact on the servient land would of course be very material but considerations of that type go to the exercise of discretion and not to jurisdiction.
[43] The inclusion of the power to award compensation in s 317 is a clear statutory indication that Parliament intended the courts to have the ability in an appropriate case to grant an application to modify even if it has the effect of causing some degree of detriment to other parties affected by the application.
[44] In summary, s 317 is intended to be a remedial provision as were its predecessors. Although a degree of caution is appropriate for the reasons discussed at [24] above, the power to modify should not be so restrictively applied that the section ceases to have the remedial effect intended. In particular, the power to modify an easement may be utilised to enlarge or extend the burden of the easement on the servient land. There is something to be said for the Shorter Oxford English Dictionary meaning that to ―modify‖, includes making partial changes or alterations ―without radical transformation‖. This is another way of expressing Clifford J‘s conclusion that a modification may be permitted in a case where ―a good deal‖ of the land subject to the easement still remains.
[45] Whether the change sought goes beyond the legitimate scope of a modification and amounts instead to a radical transformation or the creation of a new easement is a matter of fact and degree as the judge in the present case himself observed at [55] of his decision. The scope of the change sought is not to be considered simply by, for example, comparing the dimensions and alignment of the unmodified easement with those of the modified easement proposed by the applicant. The scope of the modification which may be appropriate will vary with the circumstances of the case.
[46] The provisions of s 317 make it clear that the section is intended to have application where circumstances have changed since the easement was originally created. The nature of any such changes and
the effects on the lands of the dominant and servient owners are to be considered along with other relevant circumstances. These may include how the changes have occurred and, in a case such as the present, whether one or other of the affected owners is responsible for the change. For example, if it is established that the respondents are responsible for making it impossible for the dominant owners to use the easement then the court might be willing to view sympathetically a greater modification to an easement than might otherwise be permitted.
[47] Examples of cases where the courts have allowed modifications to an easement include Re Lewis [1959] NZLR 1040 where it was held that a change in the location of a right-of-way from the centre of the applicants‘ land to the side of the same piece of land constituted a modification. In that case Hutchinson ACJ rejected the argument that the application involved the extinguishment of one easement and the creation of another. He said at 1041:
Mr Pope suggested that what is proposed could be divided into two parts, the extinguishment of a present right and the creation of a new right. I do not agree that it should be so divided up. It should be treated all as one, and, as one, it is, in my view, a ―modification‖. That the word ―modification‖ should be used in quite a liberal sense, I think would appear from the relevant section of the Acts Interpretation Act 1924 – s 5(j) – but such an interpretation is indicated, too, by the fact that an easement may be wholly or partially extinguished by an order made under the section.
[48] Similarly, in Organic Farming, Clifford J upheld a decision of the District Court modifying the boundaries of an easement (which varied in width from 5.6 metres to 8.49 metres) to a uniform width of 6 metres.
[49] In [57] of his judgment cited at [37] above Clifford J referred to two Australian decisions. In Manly Properties Pty Ltd v Castrisos & Ors [1973] 2 NSWLR 420, Holland J distinguished Re Lewis and held that the proposed substitution of a new easement for an existing one was not a modification of the latter for the purposes of s 89 of the Conveyancing Act 1919 (NSW). In the circumstances however, Holland J indicated the court‘s view that the existing easement could be extinguished if it were replaced by another easement, the applicant being in a position to do so as the owner of two adjoining lots. The approach of Holland J was also adopted by Gzell J in Loclot Pty Ltd v Pullen (2003) 56 NSWLR 592. I agree with the observations of Clifford J in Organic Farming that it is not necessary or appropriate to adopt the ―extinguishment/creation dichotomy‖ proposed in the Australian cases.
[50] Mr Mark drew the court‘s attention to a recent decision of Young CJ in the Equity Division of the New South Wales Supreme Court: Tanlane Pty Ltd v Moorebank Recyclers Pty Ltd [2008] NSWSC 1341. In that case, it was held that the relocation of an easement ―so that it traverses a completely different track‖ is outside the power conferred by s 89 of the Conveyancing Act 1919 (NSW).
[51] For the reasons already given, I prefer the direction of the New Zealand cases which indicate a more flexible approach. It should be noted that there is no provision for compensation in the equivalent section in New South Wales. In my view, the proper approach is to assess the proposal and to determine as a matter of fact and degree in all the circumstances of the case whether the proposed change may properly be described as a modification. Any such modification may entail a partial or total extinguishment of the easement.
Is there jurisdiction under s 317 to extinguish or modify an easement by altering or extending the easement over land not owned by the applicant?
[52] Each of the appellants are servient owners in relation to those parts of the easement affecting their properties. The first and second appellants have a direct dominant/servient relationship with the second respondent (Lot 4) but it must be accepted there is no such relationship between any of the appellants and Mr Collins. His Lot 3 is subject to the rights of the first and second appellants to the use of part ―E‖ but he does not have any reciprocal rights over their land or receive any benefit from the easement. Access to Lot
3 is by way of Binnie Street, bypassing Panorama Avenue and the properties of the appellants altogether. The third appellant has neither dominant nor servient status in relation to Lot 3.
[53] The question arises whether a servient owner in respect of a part or parts of the easement may seek to modify an easement by altering its course or extending it over land owned by someone else.
[54] In the absence of authority, this issue must be determined as a matter of interpretation of the relevant provisions of the PLA in the light of the statutory purpose. As earlier observed, the ability to apply to extinguish or modify an easement has always been limited to a servient owner bound by the easement. The power to grant relief under s 317 is focussed on changes to the easement on the burdened land either by extinguishing it or modifying it.
[55] The grounds upon which the application may be made are directed towards changes of circumstances since the creation of the easement relating to the use being made of the land having the benefit of the easement, the land burdened or both; the character of the neighbourhood; or any other relevant circumstances: s 317(1)(a). Alternatively, under s 317(1)(b) the applicant may rely on adverse effects on the reasonable use of the burdened land not reasonably foreseen when the easement was created. The last two grounds focus on the rights of the persons entitled to the benefit of the easement. Where they agree or may be considered to have abandoned or waived the right to the easement (wholly or partly), relief may be granted: s 317(1)(c). Under s 317(1)(d), the court may grant relief where the modification or extinguishment would not substantially injure the person entitled.
[56] As earlier noted, an order for compensation under s 317(2) is made against the applicant as the servient owner. The intention of this provision as indicated by the Parliamentary materials is ordinarily to compensate the persons entitled to the benefit of the easement where the effect of a modification or extinguishment is to diminish the value of the benefit of the easement.
[57] In very broad terms, the power of the court under s 317 is directed towards relieving the burden of the easement on the applicant‘s land. Where the circumstances have changed since the easement was created or where the parties are in agreement or where the change sought does not cause substantial injury to the parties entitled to the benefit of the easement, relief may be granted in the discretion of the court. Any order made may be subject to an order for reasonable compensation against the applicant, ordinarily in favour of the party or parties entitled to the benefit of the easement to ameliorate any adverse effects upon them through the grant of the order.
[58] While the first and second appellants are servient owners in respect of those parts of the easement to which their land is subject, they do not seek any modification or extinguishment of the easement on their land. Rather, they seek relief in respect of parts of the easement on the land of Mr Collins. I am not satisfied s 317 was intended to permit an application in such circumstances. The first and second appellants‘ interest in this application is not as servient owners but as dominant owners entitled to the benefit of the easement. They are entitled to be served with the application as a party interested under s 316(3) and to support the application if they see fit (along with any other owners who are entitled to the benefit of the easement), but they are not entitled to bring the application.
[59] The third appellant is in a different position. His land (Lot 1) is subject to the burden of part of the easement and he seeks extinguishment of that part of it which is on his land. The court clearly has jurisdiction to that extent. But there is no jurisdiction for the court to consider an application by him to modify the easement on Mr Collins‘ land (Lot 3). The third appellant is not a servient owner of that land. Indeed, the third appellant has no connection with Lot 3 whether as a servient or dominant owner.
[60] It is possible that the court could make an order for extinguishment of the easement on Lot 1 subject to the realignment of the easement in area ―H‖ on Lot 3 (or in some other manner) but that would require Mr Collins‘ agreement which is not forthcoming at this juncture.
Conclusion
[61] For the reasons given, the court has no jurisdiction to entertain the application under s 317 Property
Law Act 2007, except to the extent of the third appellant‘s application to extinguish the easement on Lot 1
DP 327999.
[62] I reach this conclusion with some reluctance. If the appellant‘s contentions are correct and Mr Collins has caused the blocking of the easement in consequence of the subdivision he undertook, in the knowledge of the rights existing under the easement, those having the benefit of the easements are prima facie entitled to a remedy. The appellants still have a remedy available under s 313 and an application under that section or an action for injunctive relief or damages would appear to be the proper course. Faced with such an action, Mr Collins (or the Official Assignee of his bankrupt estate) would have the right to apply under s 317 Property Law Act to modify or extinguish the easement on his land (Lot 3 DP327999).
Result
[63] The appeal is allowed but only to the extent that the third appellant may proceed with his application to extinguish the easement on Lot 1 DP327999.
[64] Since the respondents have substantially succeeded, they are entitled to costs against the first and second respondents on a 2B basis plus disbursements as fixed by the Registrar.
A P Randerson J Chief High Court Judge
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