Kingsbeer v Okey
[2024] NZHC 2323
•20 August 2024
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE
CIV-2024-454-010
[2024] NZHC 2323
UNDER the Property Law Act 2007 IN THE MATTER OF
an easement at Cessna Place, Palmerston North
BETWEEN
PAULINE ANNE KINGSBEER and
BERNADETTE PLAW as trustees of THE PAK TRUST
ApplicantsAND
RONALD GORDON OKEY and MCKENZIE MCPHAIL CORPORATE TRUSTEES LIMITED
Respondents
Hearing: 10 July 2024 Counsel:
A S Butler KC, S Fletcher and D Qiu for Applicants J K Mahuta-Coyle for Respondents
Judgment:
20 August 2024
JUDGMENT OF GRAU J
Table of Contents
A right of way gone wrong [1]
Background facts [5]
The roadway and the parties [5]
2017: Ms Kingsbeer seeks to extinguish the easement [14]
The Court of Appeal’s orders [16]
2018: back to the High Court to implement the orders [23]
2019: back to the High Court for consent orders [28]
The consent orders are not implemented [30]
KINGSBEER v OKEY [2024] NZHC 2323 [20 August 2024]
2022: back to the High Court for amended consent orders [37]
A resolution remains incapable of being achieved [39]
The legal landscape [44]
Discussion [54]
Change in nature or extent of use: s 317(1)(a)(i) [54]
Other relevant circumstances: s 317(1)(a)(iii) [59]
Impediment to reasonable use: s 317(1)(b) [71]
No substantial injury: s 317(1)(a)(d) [77]
The discretion [85]
Compensation [90]
Injunctive relief [95]
Result and costs [98]
A right of way gone wrong
[1] This proceeding, the latest instalment in a long-running dispute, is an application under the Property Law Act 2007 (PLA) for an order extinguishing an easement over a roadway in Palmerston North.1 The roadway is on the applicants’ property and the respondents have had the benefit of the easement since 1986. The roadway has been extensively damaged and continues to deteriorate. The respondents are largely responsible for that damage, caused by heavy vehicles accessing one of the respondent’s (Mr Okey’s) and his tenant’s businesses.
[2] In 2017, the High Court found the easement was invalid and, in the alternative, extinguished it.2 Later the same year, the Court of Appeal overturned that decision, finding that an equitable easement had been in place since 1986 and no grounds for extinguishment were made out.3 The Court of Appeal, however, ordered the respondents to pay 75 per cent and the applicants 25 per cent of the costs to upgrade the roadway.4 In 2024, some six-and-a-half years later, the roadway has still not been
1 More accurately it is an equitable easement because it was never registered on the certificate of title. I also not that Cessna Place is sometimes referred to in evidence as “Cessna Road”.
2 Kingsbeer v Okey [2017] NZHC 57 [Cull J’s Decision].
3 Okey v Kingsbeer [2017] NZCA 625, (2017) 19 NZCPR 25 [Court of Appeal Decision].
4 At [81].
upgraded, nor has any proposal for upgrading even been agreed to. That state of affairs remains despite the parties twice returning to the High Court and consenting to orders under s 313 of the PLA to bring their dispute to an end,5 and despite a judicial warning that a failure by the respondents to act in accordance with the Court of Appeal’s judgment could lead to another application to extinguish the easement.6
[3] The applicants now say that enough is enough. They say they have made extensive efforts to attempt to implement the Court of Appeal’s orders, even though the upgrade of the road is not for their benefit. In contrast, the respondents have delayed, cavilled, and obstructed the applicants’ efforts, and the cost of the repairs has skyrocketed over a long period of unnecessary delay. Absent the Court’s intervention there is no prospect of any court’s orders being complied with, it is unlikely the respondents can meet their share of the cost of the necessary works, and therefore extinguishment of the easement is now the necessary and just result.
[4] The respondents dispute the contention that they have failed to respect the Court of Appeal’s 2017 orders, noting they have twice agreed to orders by consent. Those orders were required to specify the details necessary to implement the Court of Appeal’s decision. That these consent orders have not been implemented has not arisen through any act or omission of the respondents, but is due to decisions by third parties. The respondents say any prejudice caused by the ongoing delay is primarily to them, not the applicants, because the respondents must bear 75 per cent of the cost of upgrading the roadway. The respondents have categorised the present application as an endeavour to use s 317 of the PLA to punish the respondents for the delay, rather than to give remedial effect to genuine circumstances that s 317 was enacted to address.
Background facts
The roadway and the parties
[5] The roadway is a private road adjourning Cessna Place in an industrial part of Palmerston North. It is situated on property owned by the trustees of the PAK Trust,
5 In September 2019 and June 2022.
6 Kingsbeer v Okey [2018] NZHC 3309 [Cooke J’s Decision] at [11] and [14].
who are the applicants. Ms Kingsbeer, one of the PAK trustees, inherited the property from her father, Don Kingsbeer. In terms of the roadway’s functions:
(a)The roadway provides access to Ms Kingsbeer’s home, as well as to tenanted buildings on her property.
(b)The roadway provides access to the business premises of one of the respondents, Mr Okey, which was principally engaged in the construction of large precast concrete panels and necessarily entailed large trucks travelling along the roadway to collect concrete panels or deliver equipment and supplies. That business was wound down in or around 2022 due to Mr Okey’s ill health, and no business is currently being carried on there.
(c)The roadway also provides access to a large warehouse on the respondents’ property. The current tenant, Mirage Visual, operates a signage and displays business and has large trucks and other large vehicles, including council buses, using the roadway.7
[6] Ms Kingsbeer’s father, Don Kingsbeer, originally owned all the land on and around Cessna Place. In 1986, Mr Kingsbeer subdivided the existing allotments into three blocks, retaining ownership of Lot 2 and selling Lot 3 to R Okey Ltd, the predecessor in title to the respondents, Mr Okey and McKenzie McPhail Corporate Trustees Ltd (MMCTL). Mr Okey, who remains in ill-health, is represented by his litigation guardian Mr Hadwin. Mr Hadwin is the director of MMCTL and has been Mr Okey’s accountant for over 37 years.
[7] The original sale in 1986 included the grant of mutual right-of-way easements over the initial part of the formed roadway.8 In a document labelled as a deed, proposed access to the remainder of the roadway was formalised (the Deed).
7 Prior to Mirage Visual’s tenancy, the warehouse was tenanted by a commercial company known as Sorters and Packers Ltd from 2010 to 2013. Large and heavy commercial trucks of Class 3 and above were used during the Sorters and Packers Ltd tenancy also.
8 At the time the respondents began using the roadway it had an unsealed metal surface constructed by Mr Kingsbeer. It was upgraded to an asphaltic concrete surface in the mid-1990s.
Mr Kingsbeer signed the Deed but R Okey Ltd did not. Nevertheless, Mr Kingsbeer had permitted Mr Okey to use the roadway from 1986. The Deed recorded that the rights created in it should not be registered against the certificate of title for 99 Cessna Place. It also stated that Mr Kingsbeer would not sell, lease or part with possession of Lot 2 without first obtaining and granting to R Okey Ltd a registerable right of way, the cost of which would be borne by R Okey Ltd.
[8]The clauses of relevance contained in the Deed are:9
AND WHEREAS although the said Agreement for Sale and Purchase provides for legal access in favour of the Grantee as purchaser it is not intended by the parties that such legal access shall be used
…
1. THE Grantor agrees to allow the Grantee its tenants, servants, agents, invitees, licencees [sic], visitors and workmen with or without vehicles to use the existing 6 metre roadway on the land owned by the Grantor more particularly described in the Second Schedule hereto and is shown in the subdivision plan prepared by T E Roots Harper & Associates a copy of which is annexed for access to the land to be purchased by the Grantee.
2. IT is agreed between the parties that the Grantee will ensure that the said roadway is kept clear and free from obstruction at all times and that the Grantee, its tenants, servants, agents and invitees, licensees [sic], visitors and workmen will not park or allow any vehicle to park on the said 6 metre roadway at any time.
3. IT is agreed between the parties that the Grantee will pay a share of the maintenance of the said 6 metre roadway on an area basis apportioned at 56.9% of the total cost thereof. Where the need for any maintenance or repairs is directly attributed to the actions of one only of the Grantor or the Grantee or their respective tenants, servants, agents and invitees, licencees [sic], visitors and workmen then the cost of such maintenance or repairs shall be borne wholly by one of the Grantor and the Grantee as the case may be.
4. IT is agreed between the parties that the rights created herein shall not be registered against the Certificate of Title in the Land Transfer Office.
5. THE Grantor covenants that he shall not sell, lease, assign or part with possession of the land described in the Second Schedule hereto without first obtaining and granting to the Grantee a registrable Right of Way at the Grantee’s expense in accord with terms and conditions contained in paragraphs 1, 2 and 3 hereof.
9 Emphases in original.
[9] In 2007, R Okey Ltd transferred ownership of its land to Mr Okey and MMCTL.
[10] In July 2009, Mr Kingsbeer signed another document in which he agreed to grant an easement to the respondents, “in consideration of the sum of $1.00 paid to me”. It coincided with Mr Okey seeking consent to erect a warehouse, which required him to confirm to the Palmerston North City Council (the Council) that he had legal access to the roadway. The following endorsement was added to the building consent issued by the Council on 23 July 2009:
Prior to the occupation and use of the proposed warehouse a suitable right of way easement must be created over Lot 2 DP 77691 and the sealed area on Lot 2 DP 77691 covered by the easement must be upgraded to the satisfaction of the Council’s Roading Manager.
[11] The Council required (as it does now) private roads or rights of way in industrial areas to be constructed to a standard suitable for use by trucks. The warehouse was built but a code compliance certificate was never issued because the roadway was never upgraded to the satisfaction of the Council’s roading manager. As in 1986, the easement granted in 2009 was never registered against the title to the respondents’ land, making it an equitable easement.
[12] Both Mr Kingsbeer and Mr Okey signed another document on 1 August 2009, the purpose of which was said to be to reimburse Mr Kingsbeer for the rates he had paid for the shared roadway, apportioning a share of the rates to Mr Okey and directing the manner of payment, and reaffirming that the costs of services—including roadway maintenance—were to be shared equally.
[13] Mr Kingsbeer died in 2012. His land passed to Ms Kingsbeer and was transferred to the PAK Trust. The PAK Trust discovered the roadway was in need of repair. The need for repairs is the genesis of the issues in this case.
2017: Ms Kingsbeer seeks to extinguish the easement
[14] In 2013, Ms Kingsbeer commissioned a report from an engineer, Dr Martin Gribble (of the engineering consultancy GHD at the time), which found that heavy trucks had damaged the roadway over the years, and it needed extensive rehabilitation
before it would be suitable for heavy vehicle traffic. The pavement was said to be in poor condition with severe alligator cracking and rutting. Later that year, Ms Kingsbeer applied to the High Court to determine whether Mr Okey had an easement over the roadway and, if so, sought an order to extinguish the easement. In the alternative she sought orders that Mr Okey pay 100 per cent of the costs of improving the roadway to bring it up to a standard acceptable to the Council.
[15] In February 2017, the High Court held that the 2009 equitable easement was invalid under s 348(1) of the Local Government Act 1974 (LGA74).10 In the alternative, the High Court extinguished the easement under s 317 of the PLA due to Mr Okey’s change in the use of the roadway since the granting of the easement, which had caused disproportionate disadvantage to Ms Kingsbeer.11 The High Court accepted evidence that the significant damage to the roadway was caused by tenants of the respondents’ property using Class 3 vehicles. Such use was not contemplated— and therefore the change of use could not have been reasonably foreseen—in 2009 when the easement was granted.12 It followed that the maintenance costs were not foreseen either.13
The Court of Appeal’s orders
[16] In December 2017, the Court of Appeal overturned the High Court’s decision.14 The Court of Appeal found that there had been an equitable easement over the roadway on the terms of the Deed agreed in 1986.15 The LGA74 had no relevance to the case. The July 2009 agreement only modified the pre-existing easement to the extent that there was no longer a provision stipulating the easement would not be registered.16
[17] The Court of Appeal disagreed with the High Court that the easement should be extinguished because of a change in the use of the land since its creation. It considered that the activities of Mr Okey and his tenants would “certainly fall within
10 Cull J’s Decision, above n 2, at [78]. Justice Cull made no finding on the 1986 equitable easement.
11 At [93].
12 At [83].
13 At [90].
14 Court of Appeal Decision, above n 3.
15 At [30].
16 At [39]; the Court of Appeal also agreed with Cull J that, in any event, the July 2009 agreement was certainly an equitable one.
the terms of the current easement”.17 The Court said a change in the activities of the person benefitting from an easement was allowed “so long as the more intrusive use falls within plain meaning of the terms of the easement. Undoubtedly it does here”. 18
[18] The Court went on to explain that courts have traditionally taken a conservative approach towards the exercise of discretion under s 317 of the PLA and its predecessors, under which the Court may modify or extinguish an easement. It said:19
This is for good reason: applications to modify or extinguish an easement generally impact adversely on existing property interests. However, there has been a progressive broadening of the statutory power granted to the courts, and a commensurate relaxation of the approach the courts have adopted. This is especially so given an award of compensation is now available under s 317(2). But s 317 still cannot be used to free a servient tenement owner from an easement simply to improve the enjoyment of his or her property or for his or her private purposes. The courts should be hesitant to allow contractual property rights to be swept aside in the absence of strong reasons.
[19] The Court found no relevant change had been demonstrated when both properties were used for industrial purposes at the time the easement was granted, and that use was within the zoning restrictions at the time (which had not changed). The only real change was the construction of a warehouse on the respondents’ land and a corresponding increase in traffic using that property. The Court considered this as only a slight change that did not warrant modification or extinguishment of the easement.20
[20] The Court also found the easement did not impede Ms Kingsbeer’s reasonable use of the roadway in a different way or to a different extent than could have been reasonably foreseen at the time of the grant.21 Nor did the Court consider that an unexpected cost of upgrading the roadway amounted to a factor falling in the ambit of s 317(1)(a).22 In any event, the Court held that even if one of the grounds of s 317
17 At [50].
18 At [50]; citing Grinskis v Lahood [1971] NZLR 502 (SC) at 508–509.
19 At [52] (footnotes omitted).
20 At [54].
21 At [55]–[56].
22 At [57].
were made out, it would have refrained from exercising its discretion to extinguish the easement, and there was no clear proposal for modification that could be considered.23
[21] In light of its conclusions, the Court then considered whether to make an order for division of the costs of any required work for a right of way pursuant to ss 313(1)(e) and 314 of the PLA. Ms Kingsbeer was entitled to carry out work required to make the roadway useable.24 The Court did not consider that the apportionment of maintenance costs in the 1986 and August 2009 agreements was determinative where the work required went beyond mere “maintenance” and there had been a change in patterns of use of the roadway since the warehouse was constructed.25
[22] The Court accepted the expert evidence demonstrated that Mr Okey and his tenant’s use of the right of way was largely responsible for the damage.26 This meant any presumption of equal division of costs under s 314 was displaced and a holistic view of the use of the roadway was required to establish the reasonable contributions of each party.27 The Court determined that Mr Okey would bear 75 per cent of the cost of upgrading the roadway “to the standard required for use by trucks to the satisfaction of the Council”, and Ms Kingsbeer would contribute the remaining 25 per cent.28 The Court also declined to register the easement against Mr Okey’s certificate of title.29
2018: back to the High Court to implement the orders
[23] After the Court of Appeal’s decision, in early 2018, Ms Kingsbeer approached local contractors for quotes on the cost to repair and upgrade the roadway to Council standards. She obtained a quote from the construction firm Higgins for $271,108.31. She sent it to Mr Okey in March 2018 asking him to confirm acceptance or propose an alternative. Mr Okey sought clarification of the sum, queried if the Council had
23 At [58]; however, the Court of Appeal said that “Modification of the terms of the easement to limit the appellants’ [Mr Okey’s] use or to require them to shoulder the financial costs would have sufficed to ameliorate any harm to the respondents while limiting the impact on the appellants”.
24 At [61].
25 At [63]–[64].
26 At [69].
27 At [71].
28 At [78] and [81].
29 At [79].
approved the upgrade, but otherwise did not respond. Trucks continued to use the roadway.
[24] In April 2018, Ms Kingsbeer filed an interlocutory application to the High Court for orders requiring Mr Okey to pay 75 per cent of the Higgins quote. In August 2018, a week before the hearing was to take place, Mr Okey sent Ms Kingsbeer a quote from a different contractor and sought to adjourn the hearing.
[25] The hearing eventually took place in December 2018. Justice Cooke declined to grant the orders Ms Kingsbeer sought on the basis that the High Court was functus officio; the Court of Appeal decision had finally determined the proceedings, and the High Court had no jurisdiction to supplement the orders that Court had made.30 However, his Honour recorded that the parties had agreed to instruct a project manager to oversee the works, and if no project manager could be agreed by February 2019, one would be appointed by Engineering New Zealand (ENZ).31
[26]Importantly, Cooke J recorded that:32
If it was established that the respondents [Mr Okey and the MMCTL] were not acting in accordance with the Court of Appeal judgment, then it seems to me that the applicants could make a further application under ss 313 or 317 of the Property Law Act for the Court to exercise its jurisdiction to modify or extinguish the easement. The Court of Appeal noted that the courts have traditionally taken a conservative approach towards the exercise of discretion under s 317. But the Court could order that any increased costs caused by delay be borne by the respondents, or even order that the easement be extinguished altogether, if satisfied that the respondents were not cooperating to implement the outcome of the Court of Appeal judgment. The same would be true if it were alleged that the applicants were not acting consistently with the judgment. Dismissing the present interlocutory application is without prejudice to the ability to bring such an application.
[27] His Honour also held that if either party departed from the process for the appointment of a project manager (and subsequent appointments of contractors) set out in the decision, this could form the basis for a fresh proceeding that there should be an alteration to the conditions associated with the easement under s 313, “or even
30 Cooke J’s Decision, above n 6, at [8].
31 At [12].
32 At [11] (footnotes omitted).
that it be extinguished under s 317”.33 He rejected the argument that upgrading of the road was at the respondents’ option when it was clear the Court of Appeal contemplated the road would be upgraded as was necessary to meet local authority requirements.34
2019: back to the High Court for consent orders
[28] Ms Kingsbeer and Mr Okey’s solicitors then attempted to agree on consent orders to implement Cooke J’s suggestions. On 5 February 2019, Ms Kingsbeer’s solicitor (Ms Strachan) wrote to Mr Okey’s solicitor and nominated a project manager. Ms Strachan reminded Mr Okey’s solicitor that Cooke J had directed a project manager be appointed by February 2019. There was no response. Ms Strachan followed up on 11 March 2019 noting that, as per Cooke J’s suggestions, ENZ should now appoint the project manager. After some discussion, Mr Okey’s solicitors agreed on 30 April 2019.
[29] Consent orders were eventually agreed and issued by Cooke J on 3 September 2019 (the September 2019 Orders). Relevantly, the September 2019 Orders recorded that the full width of Cessna Place was to be upgraded to the Council standard for trucks without delay, and that the parties were to instruct a project manager appointed by ENZ.35
The consent orders are not implemented
[30] Further difficulties arose. The parties could not agree on a suitable project manager and a further engineering consultancy withdrew its offer. ENZ then declined to select a project manager. On 30 October 2019, Ms Kingsbeer’s then barrister emailed Mr Okey’s barrister, Mr Mahuta-Coyle, explaining that Ms Kingsbeer was unable to find a single project manager to propose. Instead, an amendment to the September 2019 Orders was suggested to require quotes from three engineering consultancies. A month later, Mr Mahuta-Coyle suggested a different person who had previously provided evidence for Mr Okey in the 2018 proceedings before Cooke J.
33 At [14].
34 At [16].
35 Mr Okey had also commenced proceedings against Ms Kingsbeer about the costs of repairing or upgrading watermains. Those proceedings were settled as part of the September 2019 Orders.
Ms Kingsbeer did not agree. It was her view that he was not independent,36 and he had also taken up employment in another region.
[31] On 6 December 2019, the parties agreed in principle to approach the consultancies Calibre, GHD, and MWH (later acquired by Stantec). On 10 December 2019, Ms Strachan sent Mr Okey’s solicitors draft letters to send to these firms. She followed up twice, on 18 December, and again on 23 January 2020. Mr Okey’s solicitor responded on 24 January 2020 that the three consultancies were “not ideal” but should be approached, and that the lowest tender “would not necessarily be accepted”. The letters were eventually sent out on 20 February 2020.
[32] On 4 March 2020, Calibre made a tentative offer, noting some uncertainties about the scope and standard of work required. Stantec had indicated it could not do the work. COVID-19 intervened. Then, on 2 September 2020, GHD offered to do the work for $385,876.25 (excluding GST). On 14 September 2020, Ms Strachan wrote to Mr Okey’s solicitor advising that Mr Okey could choose between the GHD and Calibre offers. Ms Strachan followed up via email on 28 October 2020 after receiving no response. On 5 November 2020, Mr Okey’s solicitor advised that Mr Okey agreed Calibre could be engaged for a preliminary assessment.
[33]On 26 February 2021, Calibre withdrew its offer.
[34] Two days later Ms Strachan emailed Mr Okey’s solicitor seeking confirmation that they could go ahead with GHD. Mr Okey did not agree. He said he had sound reasons, but he did not provide them.
[35] Ms Kingsbeer spoke to Calibre who explained they had withdrawn their offer because Ms Kingsbeer and Mr Okey did not agree about how much of the roadway required work. Mr Okey’s solicitor was advised. He disputed that Mr Okey had caused Calibre to withdraw, said GHD did not have the expertise to do the required work, but did not propose any alternative. On 14 April 2021, GHD then advised a price increase of $45,750 to $431,626.25 (excluding GST). Ms Strachan forwarded
36 He had affirmed an affidavit in the 2018 proceedings in support of Mr Okey in which he had suggested the Higgins quote was too high.
this to Mr Okey’s solicitor, warning that the costs would continue to increase until they could fix a contract price and get the work underway.
[36] On 29 April 2021, Mr Okey’s solicitors emailed Ms Strachan a report by a retired engineer, Mr Peter Coulston. The report did not refer to the September 2019 Orders. It was written on the basis that Mr Okey would make all decisions about any further work and would pay for all of the work. Mr Coulston was not registered with ENZ and did not have any professional indemnity insurance. It was proposed that Mr Okey would indemnify Mr Clouston. Ms Kingsbeer did not agree to Mr Coulston being instructed.
2022: back to the High Court for amended consent orders
[37] The parties had reached an impasse. On 1 November 2021, Ms Kingsbeer applied to the High Court for amended consent orders. Justice Cooke declined to set down a hearing, at Mr Okey’s request, to decide on the standards required to upgrade the driveway and the suitability of Mr Clouston.37 On 20 December 2021, Mr Okey agreed to appoint Mr Doidge of GHD to undertake the work, but only on the basis that the September 2019 Orders were varied such that six metres of the roadway had to be repaired, not the full width as had earlier been agreed and made the subject of the September 2019 Orders.
[38] Ms Kingsbeer filed her response on 3 March 2022. Mr Okey never filed a reply. Eventually, a resolution was negotiated. Mr Okey discontinued his application and the changes Ms Kingsbeer sought were made to the September 2019 Orders (the June 2022 Amended Orders). Justice Cooke stated the Court’s expectation that it would no longer need to be involved and the parties would comply with the orders.38 The changes clarified that the full width of the roadway would be upgraded, and Mr Doidge was appointed to carry out the works in line with the Court of Appeal’s orders. That same day, Mr Mahuta-Coyle and Ms Kingsbeer’s counsel agreed there was nothing further preventing GHD from beginning work on the roadway.
37 Kingsbeer v Okey HC Palmerston North CIV-2013-454-458, 6 December 2021 (Minute of Cooke J).
38 Okey v Kingsbeer HC Palmerston North CIV-2013-454-458, 17 June 2022 (Minute of Cooke J).
A resolution remains incapable of being achieved
[39] Ms Kingsbeer’s counsel provided Mr Doidge with a copy of the June 2022 Amended Orders. Mr Doidge responded that GHD would revise the proposals. This did not occur. Instead, on 19 October 2022, GHD wrote and declined to do the work due to resourcing and workload commitments. No other reasons were given.
[40] Ms Kingsbeer and Mr Okey then attempted to find a resolution. On 21 November 2022, Ms Kingsbeer contacted Higgins again. Eventually, on 28 March 2023, Higgins sent a non-binding total estimate of approximately $1.1 million (excluding GST) (the Higgins Estimate) to bring the roadway up to the condition it was in prior to Mr Okey and his tenants driving trucks over it (not the higher standard ordered by the Court of Appeal “for use by trucks to the satisfaction of the Council”). Ms Kingsbeer had hoped that that a cheaper set of works might provide a basis for compromise. But she was shocked by the estimate, which now meant her share was almost the entire cost of what it would have taken to repair the roadway in 2018.
[41] Ms Kingsbeer’s solicitor then asked Higgins for a second estimate, this time for the price of fully upgrading the roadway in accordance with the Court of Appeal’s orders. Higgins’ response was that they could not do so until a “design phase” was completed. As a result, Ms Strachan set Mr Okey’s solicitor a letter on 24 April 2023 proposing a settlement based on the Higgins Estimate. The letter noted the offer was open until 14 May 2023, at which time Ms Kingsbeer would likely return to court if Mr Okey did not respond.
[42] Two days before the settlement offer expired, Mr Okey’s solicitor advised Ms Kingsbeer’s solicitor that he was retiring. On 19 May 2023, Ms Strachan advised that Ms Kingsbeer’s offer had closed but that Ms Kingsbeer would, however, consider any counteroffer. On 14 June 2023, Mr Okey’s new solicitor, Mr Rowe, emailed Ms Strachan. Mr Rowe said it had taken him some time to understand the dispute, but his initial impression was that “continuing with the upgrade works as previously contemplated is no longer warranted” on the basis that circumstances appeared to have changed (including the manner in which any work should be funded).
[43] Further correspondence followed, including in June 2023, when Ms Strachan provided Mr Rowe with an updated estimate from Higgins (dated 25 May 2023). This estimate included $99,489.89 (excluding GST) for the design phase of the works, an increase of almost $10,000. Mr Rowe’s response was that Mr Okey had stopped using heavy trucks on the roadway 12 months earlier and he did not think such use would be resumed, rendering the proposed works unnecessary. Soon after, Mr Rowe reiterated this position and proposed discussions to determine the extent and cost distribution of necessary works. In July 2023, Ms Strachan advised that proceedings would be filed unless Mr Okey could put forward a formal settlement offer. Mr Rowe sent correspondence updating Ms Strachan on his progress in trying to put together an offer of settlement. No progress followed, nor any substantive response to the April 2023 proposed settlement, although there was a suggestion that Mr Okey’s tenant should pay some of the costs to repair the roadway. In February 2024, these proceedings were commenced.
The legal landscape
[44] The Court has a discretion to modify or extinguish easements wholly or in part under s 317 of the PLA where certain conditions are met. Section 317 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; or
(e)in the case of a covenant, the covenant is contrary to public policy or to any enactment or rule of law; or
(f)in the case of a covenant, for any other reason it is just and equitable to modify or extinguish the covenant, wholly or partly.
(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.
[45] The owner of the burdened land (here, the applicants) has the onus of showing that reasons exist for the orders sought and that the order is accordingly appropriate.39
[46] The leading authority on the modification or extinguishment of easements pursuant to s 317 is Synlait Milk Ltd v New Zealand Industrial Park Ltd (Synlait).40 From that case, six principles emerge:
(a)The Court is to apply a two-step approach. First, the Court should determine whether one or more of the grounds in s 317(1) are made out. If so, the Court should then determine whether to exercise its discretion to extinguish or modify the easement. Some of the considerations at the second step are also relevant to the first step.41
39 New Zealand Industrial Park Ltd v Stonehill Trustee [2019] NZCA 147, (2019) 20 NZCPR 119 at [72].
40 Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657 [Synlait].
41 At [67].
(b)The exercise of the discretion requires consideration of all relevant factors, including the power to award compensation, and no one factor should be disqualifying.42
(c)Over time the legislature has gradually increased the Court’s power to modify or extinguish an easement.43
(d)A degree of caution is required but the power to modify should not be applied so restrictively that s 317 does not have the remedial effect intended.44
(e)The statutory wording of s 317 is clear and should not be overlaid with requirements that cases be exceptional, or that contractual or property rights supersede the discretion.45
(f)Contractual and property rights cannot be ignored but must be considered in the factual context before the court, rather than as “generic fetters” on the court’s discretion. Each application should be considered on its own merits.46 The Court must balance policy considerations about the importance of property rights and the sanctity of contract against efficient use of land resources and, in some cases, issues of fairness.47
[47] Generally speaking, a finding of fact that one or more of the statutory grounds in s 317 exists is “likely, of itself and without more, to provide a good reason or reasons” for extinguishing or modifying the relevant easement.48
[48] The Supreme Court in Synlait expressly rejected the Court of Appeal’s articulation in Okey v Kingsbeer of the “conservative approach” to be taken towards
42 At [90].
43 At [76]–[77].
44 At [77].
45 At [84]–[85].
46 At [88].
47 At [89]; citing with approval Cooke J’s observations in Pollard v Williams [2019] NZHC 2029, (2019) NZCPR 371 at [18].
48 At [168]; citing Re University of Westminster [1998] 3 All ER 1014 (CA) at 1024.
the exercise of the s 317 discretion (as set out at [18] above).49 In particular, the Supreme Court did not consider it correct to say that s 317 cannot be used to free the owner of a burdened land from an easement (or covenant) simply to improve the enjoyment of their property for their private purposes. There was nothing in s 317 to that effect and all applicants to vary an easement or covenant will no doubt be seeking to improve the enjoyment of their property.50 The Supreme Court agreed with the sentiment expressed in a decision of the Victorian Supreme Court that the generally conservative approach taken by the Australian courts to the equivalent provision in state legislation was the result of judges being guided by the words of other Judges, not by the words of the legislation, and some judicially imposed restrictions were without justification given the language of the section.51
[49] Following Synlait, the principles governing applications under s 317 were also considered by the Court of Appeal in Reynolds (as trustees of the F & J Reynolds Trust) v Parklands Properties Ltd (Reynolds).52 Although the Court in Reynolds was divided, it agreed on the proper approach to applications under s 317. In summarising that approach, Venning J stated:53
I take from the above comments [from Synlait discussed above] that the Supreme Court intended that lower courts were to take a less restrictive approach to applications under s 317 than had been taken in the past. …
[50] The majority also considered the approach to applications under s 317(1)(a) generally. They agreed with Venning J’s conclusion in that case that, factually, there had been a significant change in the relevant neighbourhood for the purposes of s 317(1)(a)(ii). But they emphasised that:54
As the Supreme Court explained in Synlait Milk Ltd v New Zealand Industrial Park Ltd, s 317(1)(a) deals with changes that satisfy the court that the covenant ought to be modified or extinguished. The focus is not on the fact of change, but on the impact of the change on the benefit or burden flowing from the covenant or, as in this case, the easement.
49 At [79] and [86]; Court of Appeal Decision, above n 3, at [52].
50 At [86].
51 At [87]; citing Stanhill Pty Ltd v Jackson [2005] VSC 169; (2005) 12 VR 224 at [25]–[26], [41]
and [51].
52 Reynolds (as Trustees of F & J Reynolds Trust) v Parklands Properties Ltd [2021] NZCA 394, (2021) 22 NZCPR 516.
53 At [33] (footnotes omitted).
54 At [142] (footnotes omitted, emphasis in original).
[51] In that case, the majority therefore disagreed with Venning J that it was a change in neighbourhood of a kind that meant the easement in that case ought to be extinguished, “in circumstances where those easements were created relatively recently, by Parklands itself, at a time when the change in the character of the neighbourhood was both foreseeable and foreseen”.55 The majority then observed:56
That leads into an important, and closely related, point. As the Supreme Court said in Synlait Milk Ltd v New Zealand Industrial Park Ltd, contractual rights may well be significant where the original parties to a covenant are still the parties at the time of the s 317 application.
[52]The majority summarised this aspect of its judgment by stating:57
The more distant the creation of a covenant or easement in terms of time and parties, and the less foreseeable the change in circumstances that has occurred since the covenant or easement was created, the easier it will be to make out a case for the extinguishment of that covenant or easement under s 317(1)(a) in light of that change.
[53] Accordingly, whilst this Court is to a certain extent bound by the decision of Court of Appeal in Okey v Kingsbeer, I am ultimately guided by the Supreme Court’s articulation of the law in Synlait. Most significantly, the Court of Appeal’s previous “conservative approach” has been superseded by a less restrictive one, and, once the statutory conditions in s 317 are made out, this Court may modify or extinguish the equitable easement present in this case even if it is “simply to improve the enjoyment” of the applicants’ property. It is also the case that the significance of contractual rights may diminish, or even dissipate with the effluxion of time, particularly in the case of an easement created long ago where unforeseeable changes in circumstances have occurred.
Discussion
Change in nature or extent of use: s 317(1)(a)(i)
[54] The applicants’ essential argument in regard to s 317(1)(a)(i) is that the further damage to the roadway, the delays to date, and the failure to comply with the Court of Appeal’s orders and the later agreed orders of this Court are all changes to the “nature
55 At [147] (footnotes omitted).
56 At [148] (footnotes omitted).
57 At [149].
or extent of the use being made” of the roadway that justify cancellation. The applicants accept as “arguable” that the analysis should be from 1986, when the equitable easement was created, but say the benefits and burdens are even more disproportionate when assessed from that earlier date.
[55] The applicants also accept “at a superficial level” that the roadway is still being used (and damaged) by heavy trucks, and the Court of Appeal considered this was insufficient to justify extinguishment. But the applicants point out that finding was made in the context of the Court’s expectation and orders that the roadway would be repaired and upgraded. Now, in 2024, the entire roadway needs to be replaced, redesigned, and engineered. The work required can no longer be described as maintenance. The substantial change in the cost of these works, and the absence of any proportionate benefit to the applicants, is plainly a change in the nature of the burdens and benefits created by the easement. This is especially the case where there is no corresponding contribution to the costs of repair. The imbalance of benefit to burden is now starkly different to the situation confronted by the Court of Appeal.
[56] Section 317(1)(a)(i) is concerned with a change in the use of either the benefited or burdened land. The change is most likely to be relevant if it has altered the benefit or disadvantage resulting from the continuance of the easement.58 I agree with the respondent that the starting point for the comparison required by s 317(1)(a)(i) is the time of the easement’s creation in 1986. That is what the approach taken in Synlait suggests, as does the plain wording of s 317(1)(a).
[57] In 2017, the Court of Appeal did not consider any relevant change had been demonstrated beyond an increase in traffic to the warehouse constructed in 2009. It is now 2024, the warehouse remains (as does its traffic), but the traffic to Mr Okey’s business premises has ceased. Although the roadway has become substantially more damaged since 2017—because it has not been repaired despite the Court of Appeal’s orders—those circumstances do not, in my view, fit within the very clear language of s 317(1)(a)(i). The provision requires a change to the nature and extent of the use being made of the benefited land, the burdened land, or both. That use has been, and
58 Manuka Enterprises Ltd v Eden Studios Ltd [1995] 3 NZLR 230 (HC) at 233.
remains, use by heavy vehicles driving on the roadway to Mr Okey’s business, then also later to the tenant’s business at the warehouse on the respondents’ land, and now, since Mr Okey’s business was wound up in 2022, only to the tenanted warehouse. The short point is that the use of the roadway has not changed since the easement was created, nor since the Court of Appeal’s 2017 decision.
[58] Because there is no real change in the use of the relevant land the fact that the increasingly damaged roadway has negatively impacted on the applicants since the Court of Appeal’s orders in 2017 (because it has not and is never likely to be repaired or upgraded if the easement remains) is, in my view, not enough to make out this ground of the application. Put another way, if there is no change in use, there can be no focus on the impact of the change in use on the benefit or burden flowing from the easement, which is what the Court of Appeal held was required to be successful under s 317(1)(a)(i) (and which the Supreme Court in Synlait approved).59
Other relevant circumstances: s 317(1)(a)(iii)
[59] In Synlait, the Supreme Court referred to the Court of Appeal’s description of s 317(1)(a)(iii) as a “catch-all provision, allowing for consideration of foreshadowed changes that are almost certain to come about”, and agreed that it was a provision of wide scope.60 But, in the case before it, the Supreme Court commented that this ground did not add anything to the matters they had already taken into consideration in their assessment of the ground for extinguishment in s 317(1)(a)(ii) (a ground which is not at issue in this case).
[60] Both parties in the present case suggest that the use of s 317(1)(a)(iii) ground in the present case would be unprecedented. Commentary suggests that it has proved difficult to succeed on applications based on this ground, which may be because the specific changes in the preceding subparagraphs seem to cover much of the field.61
59 Court of Appeal Decision, above n 3, at [53], cited with approval in Synlait, above n 40, at [138].
60 Synlait, above n 40, at [158].
61 Elizabeth Toomey (ed) New Zealand Land Law (3rd ed, Thomson Reuters, Wellington, 2017) at [10.20.02(1)(c)].
[61] As I have found, however, subs (1)(a)(i) does not cover the circumstances in this case and subs (1)(a)(ii) is inapplicable.
[62] The applicants say the respondents’ refusal to repair and upgrade the roadway and attempts to renegotiate the orders (both from the Court of Appeal and this Court) are relevant changes in circumstances. Neither the parties nor the Court of Appeal could foresee the increasing damage and the intransigence since 2017. The respondents are receiving the same benefit they always have without having to pay for the damage they have caused. The applicants reiterate that there is a total imbalance of benefit to burden, which is very different to the situation the Court of Appeal was faced with in 2017, or indeed for the original parties in 1986.
[63] The respondents say that, at best, what has occurred since the creation of the easement has been a change in the nature of the parties’ obligations in relation to the maintenance, repair, or rebuild of the roadway as a result of the Court of Appeal’s orders. Although it cannot be disputed that the respondents agreed to consent orders consistent with the Court of Appeal’s orders, any failures to realise the orders have been caused by third parties and it has been open to the applicants to seek amended orders at any time. The obvious remedy is a fresh s 313 application to amend an existing consent order.
[64] I disagree. Rather, I agree with the applicants that the relevant change in this case is the failure of the respondents to engage with and comply with the Court of Appeal’s orders and the subsequent consent orders of this Court.
[65] The evidence of Ms Kingsbeer sets out her tortuous path since 2017 in attempting to get the roadway upgraded. Her evidence was for the most part unchallenged. It is clear to me that the respondents (in reality, Mr Okey) were from the outset unwilling to reach any agreement with Ms Kingsbeer to take steps to upgrade the roadway pursuant to the cost sharing orders the Court of Appeal imposed.
[66] I note and reject Mr Hadwin’s evidence that it was Ms Kingsbeer who rejected experts proposed by Mr Okey, he said for usually spurious reasons. I do not consider it spurious to fail to agree to a person to undertake the work who is both unqualified
and unavailable. What is instead apparent is that Mr Okey was unwilling to agree to anything unless he was in control of the process, and he continued to attempt to reduce the scope of the work. Apart from Mr Okey suggesting one or two unsuitable candidates, it was Ms Kingsbeer who finally obtained GHD’s appointment, and she approached Higgins after GHD withdrew.
[67] Mr Okey’s attitude has also had the most unfortunate consequence that the cost of the work has skyrocketed. The correspondence makes it abundantly clear that Ms Kingsbeer was constantly attempting to reach a resolution as the price continued to increase, and Mr Okey’s intransigence made that a futile endeavour. I can only infer that Mr Okey, who continued to have the use of the roadway without having to expend any costs, was content for that situation to continue. Indeed, it continued until his business ceased. It has continued since that time with his solicitor stating that the works “as previously contemplated” were no longer warranted because Mr Okey had stopped using heavy trucks. It follows I disagree that Mr Okey, who was required to bear 75 per cent of the costs, had no incentive to delay. Rather he had every incentive, as the result has been his (and then his tenant’s) continued use at zero cost to Mr Okey. Mr Okey more recently suggesting, through his solicitor, that his tenants might share in the costs reinforces my view that Mr Okey has never intended to comply with the Courts’ orders.
[68] I also reject the submission that the various issues and delays were solely caused by third parties. While it is true that quotes were given then withdrawn, the irresistible inference is that those engineering firms did not want to get drawn into this long running and seemingly intractable neighbours’ dispute. I note here Mr Hadwin deposed that, since these proceedings were commenced, he attempted to re-engage with GHD to persuade them to undertake the work. However, his updating affidavit recorded that GHD did not now wish to be considered. There is now only one firm left: Higgins. It is my understanding that Higgins is a long-standing national firm. Mr Hadwin’s evidence does not engage with Higgins as a prospective firm to do the work. But it may reasonably be assumed that opposition remains to Higgins, given the inclusion in Mr Hadwin’s affidavit of Mr Okey’s suggestion (in the course of the 2018 High Court litigation) that Higgins and Ms Kingsbeer had worked together to “amplify” Higgins’ first quote from earlier the same year. I have seen no evidential
foundation, however, to support such a suggestion. It also appears a most unlikely proposition, given that it would result in an increase in costs for Ms Kingsbeer too.
[69] Because of the respondents’ “dragging the chain”, the damage to the roadway has worsened. And the costs to upgrade, or even just to repair, have ballooned. It is also, in my view, almost inevitable now that the Court of Appeal’s orders, and the subsequent consent orders of this Court will never be capable of implementation. Mr Okey is in poor health. His business has ceased trading. He has no incentive to comply. The latest suggestion has been that his tenants might share the costs. Some money is said to be set aside for the work but it is very far short of what is needed for the respondents’ 75 per cent contribution. And in the meantime, the damage continues and increases, and even the original 1986 Deed that created the easement is being breached by Mr Okey’s tenant parking trucks on the roadway.
[70] I consider that the unique circumstances of this case, which are not covered by the preceding subparagraphs of s 317(1)(a), are relevant changes that may appropriately fall under s 317(1)(1)(iii). Indeed, this very situation was specifically foreseen by Cooke J in 2018. But it was not in 1986 or in 2017, however. The changes are such that they satisfy the Court the easement ought to be extinguished. I agree with the submission for the applicants that the imbalance of benefit to burden is now very different.
Impediment to reasonable use: s 317(1)(b)
[71] The focus under this head is whether the nature or extent of the impediment created by an easement has changed and whether this impedes the reasonable use of the burdened land. It is not about whether the nature or extent of the reasonable use of the land has changed.62
[72] The respondents submit that the entire basis on which the easement was granted in the first place was to facilitate access to the premises on the benefitted land purchased by R Okey Ltd. Ms Kingsbeer has not offered any evidence that she or her
62 Synlait, above n 40, at [161].
tenants intend to make reasonable use of the burdened land in any different way or extent to its current use or which was foreseen or could have been foreseen.
[73] The respondents’ submission does not hold water. While I have found that the use of the burdened land has not changed, and it appears Ms Kingsbeer wants to make the same use of her land—that is, by using the roadway to access her property (and to provide access for her tenants)—she is impeded in doing so when she cannot achieve implementation of court orders to get the roadway fixed, let alone upgraded to be suitable for truck use, and she cannot obtain compliance with the terms of the easement when trucks visiting the respondent’s tenant’s premises continue to park on the roadway. That was not foreseeable in 1986 nor in 2017 when the Court of Appeal rejected this ground for extinguishment. The Court of Appeal found that, at the time the easement was granted over an industrial property with industrial buildings, it would easily have been envisaged that delivery of goods to the buildings would be by trucks. The Council required a roadway in an industrial zone to be suitable for use by trucks—both in 1986 and 2017—but it seems Cessna Place never was.63 The situation since 2017 is that, despite orders being made apportioning costs of upgrade, the trucks have continued to use the roadway but the ordered (and agreed) upgrade has not happened and will likely never happen now.
[74] I am therefore of the view that continuation in force of the easement would impede the reasonable use of the applicants’ burdened land in a different way or to a different extent from that which could reasonably have been foreseen when the easement came into existence in 1986. Although the easement restricts the use of the burdened land in the same way it always has, the impediment on the use of that land is greater now. The Court of Appeal’s rejection of a change in the impact on the use of the burdened land was premised on its view that the applicants’ argument was primarily based on an unexpected cost of upgrading the roadway. That is not the case now, however. Since the Court of Appeal’s decision in 2017 it has been the case that an upgrade must happen, with apportionment of costs, but that has proved impossible. Continuation of the easement will only lead to continuation of the impasse and further damage. The respondents’ use of the roadway might now be thought not to be
63 Court of Appeal Decision, above n 3, at [55].
reasonable use of it when heavy trucks continue to cause further deterioration and ever-increasing costs. And Ms Kingsbeer’s unchallenged evidence is that she cannot do anything with her roadway as long as it is not being repaired or upgraded, it has negatively impacted her business and its lack of visual appeal affects the amenity of her property and reduces her rental returns.
[75] The creation of the easement is now distant in time and only one of the parties to it remains. The significance of the original contractual rights is now reduced. Although the whole point of the easement for Mr Okey was to facilitate access to his premises when he purchased the land, that was long ago, and it came with obligations (both for maintenance and repair) which he has not fulfilled, then later court orders which he has stonewalled. The current situation could not reasonably have been foreseen at the time the easement was created. Ms Kingsbeer is now faced with an impossible situation where continuation of the easement means the damage will continue and increase, and it is having a negative impact on her use of the land. I consider that to amount to an impediment to the reasonable use of her land. Seeking to improve the enjoyment of her property is no longer an inappropriate basis for extinguishment.
[76]Accordingly, I am satisfied that the ground in s 317(1)(b) is made out.
No substantial injury: s 317(1)(a)(d)
[77] The enquiry under s 317(1)(d) focuses on whether the extinguishment or modification will “substantially injure” the owners of the benefited land. The Court must be satisfied that it will not do so. “Real, considerable, significant injury” is required, as opposed to injury that is “insignificant, unreal or trifling”.64 Injury may be economic, for example a reduction in the value of the benefitted land.65
[78] Under this head, the applicants stress that the respondents had the power and ability to put forward evidence of harm, but they have not done so. Although the applicants accept they bear the legal onus of proving no substantial harm will be
64 Synlait, above n 40, at [104].
65 At [105].
caused, as in any case, a respondent to a s 317 application has an evidential burden to lead evidence to support the outcome they seek, particularly where such evidence is within their power and control.
[79] The respondents also point to the onus of proof, but they stress it is for the applicant to prove the easement should be extinguished, not for the benefitted owner to demonstrate the need for the easement to continue. The respondents point to specific and substantial injuries that they say would follow from extinguishment:
(a)The basis upon which the property was purchased by Mr Okey in the first place will be undermined.
(b)The loss of practical, physical access to the respondents’ premises by vehicle.
(c)Interruption and interference with the lawful business operations of the tenant and any associated damage to the respondent if the tenants allege a breach of their rights under their lease. The respondents relied on the easement in constructing and then tenanting the warehouse, to which vehicular access is impossible without the roadway. Extinguishment of the easement would require the cancellation of the existing tenancy and demolition of the warehouse before vehicular access could be re- established throughout the respondents’ property.
(d)There will be obvious and significant diminution in the value of the respondents’ property. Mr Hadwin deposes that the property presently has a rateable value of $2.78 million and says its diminution in value is common sense, because it will become landlocked. Ms Kingsbeer’s submission that the land might not be technically landlocked (because an access strip remains) overlooks the parties’ express agreement at the time of the land acquisition in 1986 that such access was not to be used.
[80] It cannot be doubted that extinguishment of the easement would inevitably affect the respondents’ land. Access to the business at the rear of the property would be hindered. So too, the tenant’s access to the warehouse it leases.
[81] Presently, however, there is no business operating at the rear of the property where Mr Okey formerly ran his business. It would seem most unlikely, given Mr Okey’s poor health, that he would resume his business operation. There was no evidence either of any plans for sale (or lease) of the land.
[82] The trucks that drive to the tenanted warehouse would no longer be able to use the roadway. However, there was evidence they are able to park at the front of the warehouse. That may well be an inconvenience (although there was no evidence on that point), but it does not appear to amount to a real, or considerable or significant injury. I also note again here that there was (uncontested) evidence that the trucks visiting the warehouse are parking on the roadway, which is contrary to the terms of the easement as set out in the Deed (and contributing to the damage to the roadway). Ms Kingsbeer has attempted, to no avail, to get this practice to cease. It cannot amount to a significant injury to a party to be required to stop doing something they should not be doing. Nor did Mr Hadwin provide any evidence about any effects on the tenants, despite deposing that he was in the process of contacting that business and would provide an update as to the use and volume of large vehicles. And a complaint about injury to the tenants appears at odds with the last round of correspondence before the proceedings, in which it was suggested through Mr Okey’s solicitor that the tenants might bear a share of the costs involved in upgrading the roadway.
[83] It is also said that the property will diminish in value. That may well be so, even likely. But again, no evidence was provided. While it is for the applicant to prove no substantial injury, a lack of evidence from the respondent means the issue needs to be determined on the basis of the evidence that is before the Court. Mr Hadwin said he did not have time to obtain expert evidence on the point. I do not accept that explanation. Nor can I be satisfied the value would “plummet” given:
(a)The respondents’ land is not landlocked. Despite Mr Hadwin saying it is, the submissions for the respondents accept it is not, although they
say that is only on a “technical” basis. On Ms Kingsbeer’s evidence, Mr Okey still has a legal access to the public road, notwithstanding that he built the warehouse over it. She also notes he previously negotiated temporary access for him and his tenant in 2017 after the High Court had extinguished the easement (and before the Court of Appeal reinstated it) and she does not recall any interruption to his business. There is no evidence that alternative access was (or would be) complex or costly.
(b)There is currently a liability to pay 75 per cent of the costs of repairing the roadway which—on the most recent estimate (from the only firm left) of around $1.1 million—amounts to $825,000. And that is only to repair the roadway for use by lighter vehicles, not to upgrade it to the standard contemplated by the Court of Appeal in 2017, which is also required for the warehouse on the respondents’ land to obtain a code of compliance. Common sense would suggest that the liability to meet the cost of compliance with the various orders of this Court and the Court of Appeal would of itself reduce the value of the benefitted land, as would the non-compliant warehouse, and as too would the long and unhappy history of the roadway. All of which, almost inevitably, would likely make the respondents’ land an undesirable proposition. There is no evidence that extinguishing the easement at this stage would significantly compound this position.
(c)Even if the easement was not extinguished, and repairs and/or an upgrade were carried out, that would inevitably render the roadway unusable for a significant period. Alternative access nevertheless would be required.
[84] Accordingly, I am unable to find that extinguishment of the easement would cause substantial injury.
The discretion
[85] I have found that the grounds in ss 317(1)(a)(iii), (1)(b), and (1)(d) are made out. I must now consider whether to exercise the Court’s discretion to extinguish the easements. The Supreme Court in Synlait noted with approval an observation that a finding of fact that one or more of the statutory grounds in s 317 exists is likely, of itself and without more, to provide a good reason for making an order.66 The Court said that appears to reflect the approach to cases under s 317 and indeed, as counsel had pointed out, there were no cases in New Zealand where the Court, having found that one or more grounds was made out, had exercised its discretion to refuse to extinguish the easement (or covenant).67
[86] I consider the finding of three grounds for extinguishment of itself provides a good reason for making an order. In addition, I note again the change in the legal landscape since the Court of Appeal’s decision in this case. There is now no impediment to Ms Kingsbeer’s ability to use s 317 to free her from the easement in order to improve her enjoyment of her property. That must be the case in the circumstances here where, despite court orders, the respondents have continued to use the burdened land for their benefit, and to the detriment of the applicants, and without any realistic possibility of agreement between the parties to enable upgrade (or even repair) to the roadway in line with those court orders if the easement remains in place. Speculative loss to the respondents is not enough to tip the balance.
[87] It is also relevant to the exercise of the discretion that previous court orders in this case have been incapable of implementation. As above, I have found that was due to the attitude of the respondents (or at least Mr Okey). Although in a different context, it has been said that:68
Effective administration of justice under our constitution requires that the orders of the courts are obeyed unless properly challenged or set aside. Public confidence in the administration of the law, also necessary for its effective administration, requires that there is a strong expectation that those who ignore court orders are quickly brought to account.
66 Synlait, above n 40, at [168].
67 At [168].
68 Siemer v Solicitor-General [2010] NZSC 54, [2010] 3 NZLR 767 at [26].
[88] In the circumstances of the present case, this statement has particular resonance.
[89] I am satisfied there is no reason to decline to exercise the jurisdiction to extinguish the easement.
Compensation
[90] In the event that I extinguish the easement, the respondents submit that they should be awarded reasonable compensation under s 317(2), which would require further evidence on what amount of compensation is reasonable.
[91] The applicants accept payment of compensation is often a means to ameliorate injury (short of substantial injury) under s 317 but point out there is no evidence before the Court to sustain a compensatory award and there are also substantial countervailing reasons not to award any compensation. It has been unreasonable for the respondents to have continued to use the roadway without any contribution to repairing or upgrading it. The use, since the Court of Appeal’s decision, has further damaged the roadway, going far beyond ordinary wear and tear. The damage and the delay have increased the costs of repair and upgrade, as the various quotes over the years have demonstrated. It is the applicants who have suffered loss, given the uncontroverted evidence of Dr Gribble, and that must counterbalance any asserted (and unquantified) loss to the respondents. Extinguishment of the easement will leave the roadway in its current state; damaged and in need of repair, completely at the applicants’ cost.
[92] I do not consider this a case to award compensation. As above, I have found no substantial injury will be caused to the respondents if the easement is extinguished. There will inevitably be inconvenience. There may be a reduction in the value of the respondents’ land. There may be some costs involved in obtaining alternative access. But all of that is speculative. The respondents provided no evidence. What is not speculative is that the applicants will need to repair the roadway.
[93] I observe that in Synlait the Supreme Court’s conclusion that no substantial harm had been done meant there was no basis for an award of compensation. And the
Court declined to refer the matter back to the High Court to address compensation when no evidence had been put before the High Court to support an award.69
[94] I adopt that approach. Given the history of this dispute, the last thing it needs is to be prolonged for the respondents to seek to provide an evidential basis for compensation that ought to have been provided earlier.
Injunctive relief
[95] The applicants’ originating application for this proceeding included a request for an injunction as a supplementary remedy to prohibit the respondents and all persons associated with them from using the roadway until it has been repaired and upgraded. The respondents opposed that course, given the tenants would be affected and have had no opportunity to be heard.
[96] Mr Butler KC did not strenuously pursue this point in oral submissions beyond saying that the only way to incentivise the respondents is an injunction to prevent further damage.
[97] I decline to grant an injunction. I have ordered extinguishment of the easement. Trucks visiting the warehouse will no longer be able to travel on the roadway to access it, but they will be able to park in front of it. I can understand Ms Kingsbeer’s concerns given her long dispute with Mr Okey. But his business is no longer operating and, as I have noted, he is in declining health and I would not expect any issues to arise between him and Ms Kingsbeer. The tenants of the warehouse should be expected to act lawfully; if not, Ms Kingsbeer will have other legal avenues available to her.
Result and costs
[98]The application to extinguish the easement is granted.
[99] The general principle that costs in civil litigation follow the event does not apply in proceedings brought under s 317 of the PLA where the unsuccessful party
69 Synlait, above n 40, at [181]–[182].
opposed extinguishment or modification. In Synlait, the Supreme Court endorsed the following observation in Katz J’s High Court costs decision in North Holdings Development Ltd v WGB Investments Ltd:70
… a party who opposes extinguishment or modification of a covenant starts from the position of being “in the right”. In opposing the application they are seeking to protect their existing legal rights. For that reason the normal rule that costs follow the event does not apply. A respondent who unsuccessfully opposes an application to extinguish or modify a covenant should generally not have to pay the applicant’s costs, unless he or she has acted unreasonably.
[100] In Synlait, the Supreme Court considered that the respondent had not acted unreasonably in opposing the application because it was not a “clear-cut case” and it was reasonable to seek to maintain the covenants. Therefore, no award of costs should have been made against them in the High Court, despite that their opposition did not succeed. But no costs award should have been made in their favour either.71
[101] The question for this Court on costs is therefore whether the respondents acted reasonably in opposing the application to extinguish the easement over the roadway at Cessna Place. This is not a simple question to answer in the circumstances of this case. I note the High Court has very recently observed that to act reasonably a party must act in good faith and pursue genuine legal arguments.72
[102]Given the above, the parties should attempt to agree costs. Otherwise:
(a)the respondents may file a costs memorandum (no longer than five pages in length) within 15 working days of this judgment; and
(b)the applicants may file a costs memorandum (no longer than five pages in length) in response within a further five working days.
70 Synlait, above n 40, at [202]; North Holdings Development Ltd v WGB Investments Ltd [2014] NZHC 1175 at [11].
71 At [205]–[207].
72 Sidwell Developments Ltd Partnership v Top Dream Development Ltd [2024] NZHC 1928 at [22].
[103]I will then determine costs on the papers.
Grau J
Solicitors:
Fitzherbert Rowe Lawyers, Palmerston North
cc: A S Butler KC, Wellington
J K Mahuta-Coyle, Wellington
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