Martins Bay Investments Limited v Askham
[2017] NZHC 1963
•17 August 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2017-404-308 [2017] NZHC 1963
BETWEEN MARTINS BAY INVESTMENTS
LIMITED Applicant
AND
ALAN ASKHAM AND SUSAN ASKHAM
Respondents
Hearing: 31 July 2017 Counsel:
R Parmenter for Applicant
J M Savage for RespondentsJudgment:
17 August 2017
JUDGMENT OF WHATA J
This judgment was delivered by me on 17 August 2017 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date: ………………………….
Solicitors: Winston Wang & Associates, Auckland
North Harbour Law, Auckland
MARTINS BAY INVESTMENTS LIMITED v ALAN ASKHAM AND SUSAN ASKHAM [2017] NZHC 1963 [17 August 2017]
[1] Martins Bay Investment Limited (MBIL) applies for orders extinguishing a number of rights of way in favour of the five respondents. The first respondents, Mr and Mrs Askham (the Askhams), are the only respondents who oppose the application. MBIL has all but completed a subdivision of its property, a condition of which was the creation of a road along the rights of way to be vested in the Auckland Council. The road works, including the construction of a retaining wall, have been undertaken, but the right of way at issue cannot be extinguished without either the approval of the Askhams or a Court order pursuant to s 317 of the Property Law Act
2007.
[2] The Askhams oppose the application because they contend they are substantially harmed by the road works. In particular, they say the retaining wall prevents access to the rear part of their property from the existing right of way.
Facts
[3] The salient facts are relatively discrete and essentially agreed. The Askhams purchased their 1.26 hectare section, 111 Martins Bay Road, in 2010. Over the next few years, they settled on a design for their family home and commenced with construction in November 2014. Construction was completed in December the following year and the Askhams moved into their new home in February 2016.
[4] Their house is located on the higher part of their property and enjoys wide northern views to the ocean. The right of way, subject to this proceeding, winds past the eastern boundary of their property and, at the time of purchase, provided easy egress from the rear of the Askhams’ site.
[5] Resource consent to subdivide MBIL’s property was first applied for in 2008, and granted on 29 November 2008. Pacific Heights Ltd was the applicant. This included the construction of a road along the right of way to be vested in the Council, to be named Sophia Road.
[6] The earthworks part of this consent lapsed, so a subsequent application for earthworks consent was made on 21 September 2015. No attempt was made to contact the Askhams and consent for the earthworks was granted on a limited
notification basis on 22 December 2015.1 Among other things, it provided consent for a retaining wall.
[7] MBIL’s application for fresh earthworks consent records, among other things,
the following:
It is of note that the current subdivision consent and lapsed district earthworks consent was previously approved by the neighbours who accessed the site over the current ROW (approval forms were provided). This current application is essentially a renewal of the lapsed district earthworks consent, and incorporates regional earthworks consents not previously applied for, but which does not alter anything in terms of effects on neighbours.
[8] This information was supplied by way of exhibit to the second affidavit of Mr Askham. The accuracy of this information could not be confirmed by either counsel, but I have no reason to suspect that it is inaccurate.
[9] In the result, a retaining wall in excess of 100 m in length was constructed, a large portion of which abuts the Askhams’ property. The first the Askhams knew of the wall was after construction commenced, in February 2016, two weeks before they were due to move into their new home. When Mr Askham approached the Council and the contractor to protest, he was told it was a “done deal”.
[10] The Askhams claim that the wall in fact exceeds the depth of earthworks shown on the applicant’s plan for earthworks consent, with the retaining structures as tall as 3.5 m in sections.
The properties
[11] Helpfully, Mr Parmenter produced two plans illustrating the relationship between the properties, both prior to and following the subdivision.
[12] The first plan, Plan A, shows Lots 2, 3, 4, 5, 7, 9 and 10. The Askhams’
property is located at Lot 2, while the MBIL property is located at Lot 10.
1 The Askhams’ property was not one of the properties the Council report considered should be
notified.
[13] Plan B shows the relationship of the properties after the grant of consent to the subdivision. It also shows that the former Lot 2 has been subdivided into at least three parts, with the Askhams’ property being Lot 2 DP36287.
[14] Plan A also shows the relevant easements. In focus is easement A, the purpose of which is a right of way. The blue dots on Plan B show the location of the earthworks and the retaining wall.
PLAN A
PLAN B
Legal frame
[15] Section 317 of the Property Law Act provides a discretion to modify or extinguish an easement. For present purposes, the application is based on s 317(1)(d). This states:
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—
…
(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.
[16] The Court of Appeal in Davey v Baker recently provided guidance as to the proper approach to s 317. The purpose of the modification powers under ss 316 (which provides a person bound by an easement may apply for modification or extinguishment) and 317 is to enable owners of land burdened by an easement or covenant to relieve some or all of that burden.2 The Court also observed its modification powers have widened over the years and the Property Law Act’s provisions are of a “broadly remedial” nature.3 But caution is also required in relation to modification, in part because of the adverse impact on private property interests that may follow from the making of an order.
[17] I proceed on that basis.
The issues
[18] Mr Savage posited there are three issues:
(a) whether the applicant has made a case for extinguishment;
(b)how the Court should exercise its discretion in the event that a case is made; and
(c) how the compensation provision should be approached.
[19] But the key issues are simply whether the extinguishment will substantially injure the Askhams, and if not whether the overall justice of the case favours extinguishment.4 A relevant question in the second assessment will be whether this injury can be fairly remedied by compensation. MBIL’s case for extinguishment will
also be a factor for consideration in the second assessment.
2 Davey v Baker [2016] NZCA 313, [2016] 3 NZLR 776 at [56]. See also Harnden v Collins
[2010] 2 NZLR 273 (CA) at [57].
3 At [74]. See also Rental Space v March (1999) 4 NZConvC 192,873 (HC) at 192,887,
4 See Davey v Baker, above n 1, at [75]. There, the Court of Appeal turned to consider the “overall justice” in the case.
Assessment
Does the extinguishment cause substantial injury?
[20] The Askhams submit the extinguishment of the easement will cause substantial injury to them. They say:
(a) They would lose the ability to enforce access to the right of way against MBIL and would not be able to recover the cost of remedying the impact of the retaining wall on their property especially (but not exclusively) in terms of access to the right of way.
(b)The harm includes a direct impact on the potential to develop the Askhams’ land, including for subdivision,5 and the inconvenience caused in terms of accessibility to the land for grazing purposes. I note from photographic evidence produced by the parties that the effect of the retaining wall is to require access effectively across the manicured lawn of the Askhams’ home.
(c) The cost of works to gain access through the retaining wall to Sophia Road is significant, estimated at $147,000 plus GST and disbursements.
(d)The retaining wall causes a significant adverse effect on amenity values – it is long, large and ugly.
[21] In my view, the extinguishment of the right of way will not, by itself, substantially injure the Askhams. But it will enable the road to be transferred to the Council, effectively legalising the retaining wall which physically prevents direct access, without substantial works, to the Askhams’ property from the right of way. I consider this effect to be a form of harm contemplated by s 317(1)(d). I also accept
Mr Savage’s submission that the retaining wall inhibits the ability of the Askhams to
5 This point has been contested in evidence. Mr Cutler, a planner expert, suggests because of the zoning of the Askham’s property in the Auckland Unitary Plan Operative in Part, they are unlikely to be able to subdivide in any event. Mr Askham disputes this. He points out that the zoning of the property is an issue currently before the Environment Court.
use and/or develop their site, including for subdivision purposes, because it currently prevents reasonable access to the rear of their site. While planning evidence produced by MBIL suggests that the prospect of grant of consent for subdivision is very low, it cannot be completely discounted. Subdivision of the site is currently a non-complying activity; but given the notorious the need for housing land within the broader Auckland region it is at best speculative to suggest that subdivision may
never be enabled on the site.6
[22] I also consider that the wall has a material effect on the amenity values previously enjoyed by the Askhams. It is ugly.
[23] For completeness, I consider the impact on accessibility to the site for grazing purposes, by itself, is not a substantial harm in this particular context. The purpose of the grazing is to maintain the grass, not for productive purposes. Access is still enabled, albeit across a currently manicured lawn.
Overall justice
[24] There are competing considerations. First, MBIL has a legitimate basis for seeking removal of the right of way. It simply wishes to complete a subdivision for which it has lawful consent. Second, I am also satisfied MBIL acted reasonably in seeking and obtaining earthworks consents to construct the road. But third, I consider the overall justice of the case requires MBIL to compensate the Askhams for the effect of the road works on the use and development of their property.
[25] To elaborate, subdivision consent was obtained with the approval of all affected landowners, including the prior owners of the Askhams’ property. A condition of consent was that easement A (together with the other easements) had to be converted into a road and vested in the Council, Sophia Road. Earthworks consent was also obtained to enable the road to be constructed but lapsed in November 2013. MBIL found itself in the invidious position of holding a
subdivision consent but unable to complete that subdivision without completing the
6 See my judgment in Albany North Landowners v Auckland Council [2017] NZHC 138.
earthworks. MBIL then set about consulting with the parties that it thought were most directly affected by the creation of Sophia Road and the associated earthworks.
[26] Unfortunately, it did not consult with the Askhams, but there is nothing before me to suggest this was in bad faith or with the intention of avoiding notification to the Askhams. Rather, Mr Askham’s complaint in his second affidavit is that the Terra Nova Planning report considered the effect on their property would be less than minor, and did not recommend notification. The Council accepted this recommendation, and proceeded on the basis the Askhams did not need to be notified. In doing so, it also noted the benefits the construction of a public road servicing adjoining properties would bring. The subdivision is now near completion and, in fact, titles can be issued on the transfer of Sophia Road to the Council.
[27] For completeness I reject the submission made by Mr Savage that the extinguishment is not necessary because the applicant could seek a change of condition enabling retention of the right of way adjoining the Askhams’ property. While that may be literally true, it is speculative to suggest the Council would approve a condition that did not require the vesting of the road. Furthermore, the Askhams did not take steps to stop the earthworks when they first became aware of them, either by way of challenging the grant of consent or seeking an injunction based on anticipated infringement of their access to the right of way. With the works now complete, I do not consider it remains available to the Askhams to contend that the extinguishment is not reasonably necessary.
How much compensation?
[28] As noted, the right to develop a property, including for subdivision purposes, is conditional on obtaining relevant planning consent. The significance of this is that the harm done by the retaining wall and any extinguishment of the easement has an inchoate or conditional quality, reflecting the inchoate nature of the right to development. Furthermore, the vesting of Sophia Road in the Council and the presence of the retaining wall are not a complete bar to development of the Askhams’ property. In short, as evidence produced by the Askhams shows, access to the property may still be achieved via appropriate works.
[29] Accordingly, the starting point is that the compensation or the form of compensation must remedy the harm caused by the retaining wall in terms of accessibility to their site, including for future subdivision purposes.
[30] At the hearing I indicated to the parties my tentative view that a case for extinguishment had been made out, but that compensation was necessary. I invited the parties to discuss what form that compensation might take.
[31] Helpfully, on 15 August 2017 they filed a joint memorandum recording agreement on the form of compensation. As such, I proceed on the basis of their consent position.7 In summary, the parties have agreed to the following:
(a) Satisfaction of the conditions on MBIL’s resource consent, including extinguishment of relevant easements and the vesting of Sophia Road in the Council.
(b)Payment to the Askhams a sum of $80,000.00 by MBIL within ten working days of this judgment.
(c) Letting will lie where they fall.
(d)Reserving MBIL leave to revert to the Court in the case of difficulty in implementing orders (a) to (c).
[32] I am satisfied orders to this effect represent an appropriate resolution of the issues before me.
Orders
[33] The application for extinguishment is granted, in the terms set out at (a) – (c)
of Appendix A.
7 Set out in full at Appendix A to this judgment.
[34] I order the applicant to pay a sum of $80,000.00 to the first respondents within ten working days of the date of this judgment as reasonable compensation for extinguishment pursuant to s 317(2) of the Property Law Act.
[35] I order that costs lie where they fall.
[36] Leave is reserved for the applicant to revert to this Court if difficulties arise in implementing the orders at [32]-[34].
APPENDIX A
a. Extinguishing easements “A”, “B”, “C” and “D” on DP320528 (North Auckland Land Registry), conditional upon the depositing of LT500624 and the vesting of the road thereon in Auckland Council; and
b.Extinguishing easement “E” on DP320528 (North Auckland Land Registry), conditional upon the depositing of LT500624 effecting the creation of easements “B” and “C” under LT500624 and the vesting of the road thereon in Auckland Council; and
c. Extinguishing easement “H” on DP320528 (North Auckland Land Registry), conditional upon the depositing of LT500624 effecting the creation of easement “H” under LT500624 and the vesting of the road thereon in Auckland Council; and
d.Ordering compensation in the sum of $80,000.00 to be paid to the respondents within 10 working days of the date of the judgment; and
e. That costs lie where they fall; and
f. Reserving to the applicant the right to revert to the Court in case of difficulties in implementing orders (a) to (c).
2
1