Okey v Kingsbeer

[2024] NZHC 2426

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 2426

UNDER

the Property Law Act 2007

IN THE MATTER OF

an easement at Cessna Place, Palmerston North

BETWEEN

RONALD GORDON OKEY by his

litigation guardian Ross John Hadwin Applicant

AND

PAULINE ANNE KINGSBEER and

BERNADETTE PLAW as trustees of THE PAK TRUST

Respondents

Hearing:	27 August 2024
Counsel:	A S Butler KC and D Qiu for Applicants J K Mahuta-Coyle for Respondents
Judgment:	28 August 2024

JUDGMENT OF GRAU J

[Application for stay of execution of judgment]

Introduction

[1]                 On 20 August 2024, I granted the respondents’ application to extinguish the equitable right of way easement over a roadway at Cessna Place, Palmerston North.1 My decision has removed the ability of the applicant and his tenant, Mirage Signs Ltd (Mirage),2 to use the roadway to access the applicant’s property and the tenant’s business premises (a warehouse) respectively.

1      Kingsbeer v Okey [2024] NZHC 2323.

2      Mirage is also sometimes referred to as “Mirage Visual Ltd”, but Mirage Signs Ltd is the name of the tenant as per the current deed of lease.

OKEY v KINGSBEER [Application for stay of execution of judgment] [2024] NZHC 2426 [28 August 2024]

[2]                 The applicant filed a notice of appeal on the day my decision was released. He seeks a stay of the judgment pending determination of the appeal. The respondents oppose.

[3]                 I declined the application for a stay immediately following the hearing. My reasons now follow.

The context of the dispute about the roadway

[4]The general background is set out in my substantive decision:3

[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. 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. 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. 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. In 2024, some six- and-a-half years later, the roadway has still not been 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, 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.

[5]                 I did not accept one of the pleaded grounds for extinguishment, being a change in the nature or extent of the use of the roadway pursuant to s 317(1)(a)(i) of the Property Law Act 2007 (the PLA). But I found that the general ground for extinguishment on the basis of “any other circumstance the court considers relevant” in s 317(1)(a)(iii) had been met, given the failure of the applicants to engage with and comply with the Court of Appeal’s 2017 orders and subsequent consent orders made in  this Court to  achieve remediation of the damaged roadway.   I also  found the      s 317(1)(b) ground was made out and that extinguishment would not cause substantial

3      Kingsbeer v Okey, above n 1 (footnotes omitted).

injury either to the applicant or his tenant as per s 317(1)(d). I exercised my discretion to extinguish the easement and declined to award compensation to the applicant.

The proposed terms of the stay

[6]                 At the hearing before me, a stay was sought on more limited terms than those in the application filed on 20 August 2024. Those terms were set out in the submissions filed for the applicant as follows:

2.1.A stay of execution of the judgment from the date of this Court’s decision until the date that is four weeks (28 days) from date on which the respondent’s solicitors confirm that that its tenants’ equipment has been removed, that its encroaching side-shed has been removed, and that qualified plumbers have relocated a water toby providing water supply to the respondents land, from the applicant’s land .

2.2.The solicitor’s confirmation identified in para 2.1 above must objectively be true in respect of the facts such confirmation addresses;

2.3.That during the period of stay of execution of judgment identified in paragraph 2.1 the following conditions shall apply:

2.4.use of the right of way shall only be by Mirage Visual Limited (“Mirage”), its employees, agents and invitees, and by Daryn Southee employee of R Okey Limited but only for the purposes described in paragraph 2.6 below;

2.5.the applicant shall serve the stay order on Mirage and remind them at no time shall Mirage permit its employees, agents, or invitees to park on the right of way and all parking shall be carried out in the north end yard above the warehouse building at 99 Cessna Road;

2.6.no trucks or other heavy vehicles shall use the right of way for the purpose of accessing Mr Okey’s premises and commercial yard at the northern end of the applicant’s land. Access to Mr Okey’s premises (when using the right of way) shall solely be by Mr Southee (and any agent accompanying him) and by light vehicle only; and

2.7.A further stay of execution of the judgment of the Court, immediately following the expiry of the terms of the stay specified in paragraph 2.1, strictly on the following terms:

2.7.1.The applicant may use only that strip of land identified in exhibit “RJH-7” of the second affidavit of Ross John Hadwin served 23 August 2024 being the area marked in green in that exhibit (and as described by Mr Hadwin) and solely as a vehicular right of way for the purpose of accessing the northern part of the applicant’s land.

2.7.2.At no time may the applicant, its tenants, agents or invitees, park or store vehicles or any other object on the strip of land identified in paragraph 2.7.1.

[7]                 The terms were limited further at the hearing. That is because the matters that needed to be attended to by the respondents in [2.1] above (namely, removal of the respondent’s tenant’s equipment, removal of a shed, and relocation of a toby) had already been attended to. The applicant had also proposed a further limitation, being that the applicant would consent to the terms of its use of the two-metre strip of roadway adjacent to the warehouse (described above in the proposed terms of the stay) being suspended or forfeited once the respondent and any contractors started reconstruction work.

[8]                 Some further context for the above terms is required. There is an alleyway in front of the tenanted warehouse. It is the beginning of a legal access road onto the applicant’s property from the public portion of Cessna Place. At the time of the hearing of the substantive application, the alleyway had been fenced off by the applicant and was full of debris; it was therefore impassable. Since the release of my decision the fence has been removed. As above, anything that is not the applicant’s debris has been removed. The applicant’s debris has been pushed to one side.4 This alleyway (once it is cleared and resurfaced) can provide access to the front of the tenant’s warehouse. It cannot provide access to the applicant’s property at the rear (from which he formerly ran a business) because the warehouse was built over that part of legal accessway.

[9]                 What the applicant seeks to do is to repair the alleyway so that the tenants can access the front of their warehouse. That is estimated to take four weeks, during which time the applicant seeks the use of the roadway, for him and his tenant, as they did before the easement was extinguished. Once access is gained via the alleyway, the applicant seeks the use of a two-metre strip of the roadway adjacent to the warehouse so that vehicles can access the rear of the tenanted warehouse where roller doors provide entry, and so that vehicles can access the rear portion of the applicant’s property; his former business premises.

4      Mr Mahuta-Coyle was unable to confirm, however, whether the applicant agreed that the remaining debris was his.

[10]              I observe here that the photographs I was provided at the hearing of the stay application made it clear that light commercial vehicles would (once the alleyway was upgraded) be able to access the tenanted warehouse without encroaching on the roadway at all. It is only large vehicles that would need to do so, for example buses, which are said to visit the warehouse occasionally for signwriting purposes.

The basis of the stay application

[11]              The applicant accepts his appeal would not be rendered nugatory by the lack of a stay. But he says the obvious consequence is that, in the absence of a stay and the pending appeal, he would not have any of the property rights that have been extinguished by this Court’s decision.

[12]              Ross Hadwin, the litigation guardian of the applicant, has filed evidence explaining that the immediate and urgent prejudice concerns arrangements regarding the tenants who will be faced with difficulty in accessing their business premises in the warehouse.

[13]              The tenant’s lease expired on 29 February 2024 and has now reverted to a periodic tenancy that may be terminated  on  20  working  days’ notice  to  vacate. Mr Hadwin has deposed that he considered this appropriate given the uncertainty these proceedings created in respect of access arrangements to the land and that of any tenant. He says he has spoken to the tenants; they wish to continue as tenants and the applicant wishes to support the continued tenancy.

[14]              It is said for the applicant that the proposed terms of a stay represent the bare minimum necessary to make access to the applicant’s property practically possible and use of the warehouse premises commercially possible.

The law

[15]              A judgment takes effect when it is given.5 However, steps may not be taken on a judgment before it is sealed without leave of a judge.6 Where a judgment has

5      High Court Rules 2016 (HCR), r 11.12.

6      HCR, r 11.13.

been sealed, enforcement of a judgment can be stayed in accordance with r 17.29 of the High Court Rules 2016 (the HCR):

17.29   Stay of enforcement

A liable party may apply to the court for a stay of enforcement or other relief against the judgment upon the ground that a substantial miscarriage of justice would be likely to result if the judgment were enforced, and the court may give relief on just terms.

[16]              Similarly, the High Court and the Court of Appeal also share a jurisdiction to stay the execution of a decision pending determination of an application of leave to appeal or an appeal under r 12 of the Court of Appeal (Civil) Rules 2005 (the CA Rules). The relevant part of this rule reads:

(3)Pending the determination of an application for leave to appeal or an appeal, the court appealed from or the Court may, on an interlocutory application,—

(a)order a stay of the proceeding in which the decision was given or a stay of the execution of the decision; or

(b)grant any interim relief.

(4)An order or a grant under subclause (3) may—

(a)relate to execution of the whole or part of the decision or to a particular form of execution:

(b)be subject to any conditions that the court appealed from or the Court thinks fit, including conditions relating to security for costs.

(5)If the court appealed from refuses to make an order under subclause (3), the Court may, on an interlocutory application, make an order under that subclause.

(6)If the court appealed from makes an order under subclause (3), the Court may, on an interlocutory application, vary or rescind that order.

[17]              The law applying to an application under r 17.29 is set out in the decision of Peters J in Mike Pero Mortgages Ltd v Pero:7

(a)The onus is on an applicant [for the stay] to persuade the Court to exercise its discretion.

7      Mike Pero Mortgages Ltd v Pero [2018] NZHC 528 at [11] (footnotes omitted).

(b)A “substantial” miscarriage of justice must be involved. “Substantial” means something more than “minor or insubstantial”. In the usual course of things, and subject to the circumstances of the particular case, it is not a substantial miscarriage of justice for a party that has had the use of another’s money to be required to repay that money or for a creditor to be able to take whatever steps it sees fit to pursue recovery.

(c)A substantial miscarriage of justice must be “likely to result”, that is there must be a real and substantial risk of a miscarriage of justice if the judgment were enforced.

(d)The Court must seek to recognise and reconcile the conflicting interests of both parties in such manner as will best serve the overall interests of justice. A balancing exercise is involved.

(e)A miscarriage of justice is unlikely to result where a party is required to pay to another an amount that is owing to it and the paying party is free to pursue its claim against the other party in the usual way.

(f)Other factors which may be relevant include: the apparent strength or weakness of the claim; the ability of the applicant for the stay to meet the judgment being enforced; and the potential bankruptcy or liquidation of a party seeking to pursue an apparently strong claim. Delay in making the application to stay may also be relevant.

[18]              It is possible that r 17.29 does not apply in the circumstances of this case because it concerns staying enforcement or relief under pt 17 of the HCR. The HCR defines an “enforcement process” in r 17.3(1) as one of the following:

(a)an attachment order:

(b)a charging order:

(c)a sale order:

(d)a possession order:

(e)an arrest order:

(ea) a committal warrant, or an order imposing a fine or community work, made in accordance with subpart 4 of Part 2 of the Contempt of Court Act 2019:

(f)a sequestration order.

Where a respondent to a stay application is wanting to enforce its rights under the decision, in this case to extinguish the easement and remove access by the party who previously had the benefit of it, it is arguable that r 17.29 is not engaged.8

8      See the discussion in Concrete Structures (NZ) Ltd v NMHB Ltd [2019] NZHC 268 at [11].

[19]              In any event, a stay of execution under r 12 of the CA Rules is available. The principles applying to a stay application under r 12 are summarised in Keung v GBR Investments Ltd (Keung):9

The stay application is brought under r 12(3) of the Court of Appeal (Civil) Rules 2005. In determining whether or not to grant a stay, the Court must weigh the factors “in the balance” between the successful litigant’s rights to the fruits of a judgment and “the need to preserve the position in case the appeal is successful”. Factors to be taken into account in this balancing exercise include:

(a)whether the appeal may be rendered nugatory by the lack of a stay;

(b)the bona fides of the applicant as to the prosecution of the appeal;

(c)whether the successful party will be injuriously affected by the stay;

(d)the effect on third parties;

(e)the novelty and importance of questions involved;

(f)the public interest in the proceeding; and

(g)the overall balance of convenience.

That list does not include the apparent strength of the appeal but that has been treated as an additional factor.

[20]              The considerations under both rr 12 and 17.29 are similar. But r 17.29 appears to impose a higher test than that in r 12 because of the “substantial miscarriage of justice” threshold.10 Unlike r 12 of the CA Rules, an appeal is not a prerequisite for relief under r 17.29 of the HCR however, which emphasises that r 17.29 is concerned with the risk of substantial injustice arising from the enforcement of the judgment and not from the judgment itself. The current stay application relied on both r 12 of the CA Rules and r 17.29 of the HCR, but only r 12 was argued at the hearing and I proceed to determine the application on that basis.

9      Keung v GBR Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [11] (footnotes omitted).

10     Torbay Holdings Ltd v Napier [2016] NZHC 536 at [21].

Discussion

[21]              Following the test set out above by the Court of Appeal in Keung, I assess the factors as follows.

(a)Whether the appeal may be rendered nugatory by the lack of a stay

[22]              The applicant responsibly accepts the appeal will not be rendered nugatory if a stay is not granted. Following a successful appeal, the easement would be reinstated. The applicant would regain use of the roadway. This is a factor that counts against a stay when the starting point is that a successful party would be entitled to the fruits of a judgment in their favour.11

(b)The bona fides of the applicant as to the prosecution of the appeal

[23]              I agree with the respondent that this factor is neutral. There have been very limited steps in the Court of Appeal to test the fides of the appeal; for example, no security for costs have been paid yet and are not due until 17 September 2024. However, I would also accept the applicant did not delay in filing a notice of appeal and is serious about the appeal, given the judgment appealed against concerns the extinguishment of his property right.

(c)Whether the successful party will be injuriously affected by the stay

[24]              I accept the respondents’ submission in relation to this factor. A stay would enable the applicant and his tenant to continue to use the roadway, potentially for up to a year or more,12 and continue to degrade it by driving over the area that is the most damaged.

[25]              I also accept the submission for the respondent that I should take into account the past history of this dispute as an indicator of future behaviour. I found that the applicant was responsible for the failure to implement the Court of Appeal’s orders requiring him to contribute 75 per cent of the costs of rehabilitating the damaged

11     Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust [2017] NZCA 377 at [10].

12     That was the estimate Mr Butler KC proffered as to the likely time for an appeal to be heard (likely by the Permanent Court) and to deliver a decision.

roadway. I have little confidence in the workability of the proposed terms of the stay. For example, if the alleyway is not remediated in four weeks, then use of the easement will undoubtedly continue as it did before extinguishment unless Ms Kingsbeer makes efforts to vary or revoke any stay granted. There is accordingly no incentive for the applicant to comply, in exactly the same way as there was no incentive for him to comply with three sets of Court orders, that has now resulted in extinguishment of the easement.  If  there  is   non-compliance  with   the  proposed  terms  of  the  stay,  Ms Kingsbeer will face the cost of solicitor’s correspondence, which would be followed by a return to the Court for more orders. Use of the roadway, particularly by heavy vehicles, will continue to degrade it. Ms Kingsbeer’s ability to achieve compliance with the use of only a two-meter strip of the easement appears unlikely.

(d)The effect on third parties

[26]              This is the principal factor relied on in the application for a stay. The tenant, Mirage, will no longer be able to use the roadway to access its warehouse. However, as above, it is apparent that, once the alleyway is upgraded, a light commercial vehicle will be well able to navigate access to and into the warehouse without using the roadway. It is only a large vehicle, such as a bus, that would be so inhibited.

[27]              I have been provided with no admissible evidence whatsoever about what the consequences will be to the tenant if no stay is granted. The only evidence I have is hearsay evidence via Mr Hadwin that Mirage wishes to continue its tenancy. That is not evidence of any injury that may be caused to Mirage. I also note here that, before the hearing of the application to extinguish the easement, Mr Hadwin had deposed that he intended to provide the Court with information about the effect of extinguishment of the easement on the tenant. He did not do so then. He has not done so now either. While I would accept the general proposition that it is disruptive to a business to have to move, the evidence is simply that Mirage wishes to remain. If the result of the decision to extinguish the easement had been to extinguish the ability of Mirage to continue its operation, I would have expected affidavit evidence to that effect. That there is none suggests instead that Mirage is able to continue to operate its business. That the applicant is willing to suspend (or forfeit) use of the two-metre strip if the

respondents start work to repair the driveway also suggests that Mirage will not be prevented from continuing its operation.

[28]              In addition, it was open to the applicant to put a plan in place in the event that the application to extinguish the easement was successful. It has not done so, beyond the tenancy not being renewed and reverting to a periodic tenancy. And the result of that is that the tenants are able to relocate without a significant notice period.

(e)The novelty and importance of questions involved

[29]              I accept that the Court of Appeal may consider this a novel case in terms of the Court’s use of s 317(1)(a)(iii) as a ground for extinguishment of the easement. Aside from that, however, I do not consider the appeal presents any questions of importance or novelty. The Supreme Court has settled the law in Synlait and the Court of Appeal has applied the new “less restrictive” approach subsequently, as I set out in my decision.

(f)The public interest in the proceeding

[30]              In my view there can be little public interest in these proceedings which are essentially a dispute between two neighbours about repairing a shared roadway.

(g)The overall balance of convenience

[31]              I do not agree with the applicant that the balance of convenience lies in granting the stay. Mr Okey and Mr Hadwin have been on notice, at least since February 2024 when Ms Kingsbeer filed her application in the High Court to extinguish the easement, that there was a risk to the continued access to the roadway. Alternative arrangements with the tenants (as well as enquires to seek alternative access to Mr Okey’s business premises at the rear of his property) could have already happened, or at least a contingency plan put in place. I agree with Mr Butler KC’s submission that Mr Okey is “not entitled to a stay to save him from the consequences of his lack of foresight”.

[32]              As noted in Keung, the strength of the prospective appeal is also relevant. That is not an easy matter to determine. As above, the Court of Appeal may want to examine

the Court’s use of s 317(1)(a)(iii) in these circumstances, but the Supreme Court has also reasonably recently pronounced on the broad application of s 317 of the PLA.

[33]              Mr Mahuta-Coyle raises the point that the easement could have been modified, rather than extinguished. However, the Court of Appeal in Okey v Kingsbeer made it clear that there is no requirement for the Court to consider modification (over extinguishment) where there was no clear proposal for modification provided by the parties.13 Ms Kingsbeer never sought modification and so it is unsurprising she did not make any proposal for such. But nor did Mr Okey. By the same token, Mr Mahuta- Coyle suggested there was no reason for Mr Okey to make any arrangements for alternative access to his property or to the tenant’s property as that would have assisted Ms Kingsbeer’s claim for extinguishment. That was a choice by him that has led to the current consequences for him. I agree that it is not in the interests of justice for the Court to relieve him of those consequences, with the likelihood of associated costs being put onto Ms Kingsbeer.

Result

[34]The application for a stay pending appeal is declined.

[35]              The parties have agreed that costs should follow the event on a 2B basis with allowance for second counsel. Orders for costs are made accordingly.

Grau J

Solicitors:
Fitzherbert Rowe Lawyers, Palmerston North

cc:        A S Butler KC, Wellington

J K Mahuta-Coyle, Wellington

13     Okey v Kingsbeer [2017] NZCA 625, (2017) 19 NZCPR 25 at [58].