Ruby & Rata Limited v Reed
[2024] NZHC 3962
•20 December 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-961
[2024] NZHC 3962
IN THE MATTER of section 313 Property Law Act 2007 UNDER
section 3 Declaratory Judgments Act 1908 and part 18 High Court Rules 2016
BETWEEN
RUBY & RATA LIMITED
Plaintiff
AND
ANTHONY PRIVETT REED and REED
TRUSTEE 2018 LIMITED (as trustees of THE EAGLE TRUST)
Defendants
Hearing: 15 October 2024 Appearances:
R O Parmenter for Plaintiff
D R Bigio KC and P G Senior for Defendants
Judgment:
20 December 2024
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 20 December 2024 at 11.00 am pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
RUBY & RATA LIMITED v REED [2024] NZHC 3962 [20 December 2024]
[1] Ruby & Rata Ltd (Ruby) and the trustees of the Eagle Trust (the Trust) are the respective owners of neighbouring rural blocks of land at Pukekohe. Ruby’s land enjoys a registered easement granting it rights of way over part of the Trust’s land. The parties have been in dispute over the easement, including other litigation in this Court. In a recent judgment, O’Gorman J held that Ruby could undertake certain work to create an additional gated entry point from the right of way onto its land and awarded it damages for interference with its rights.1
[2] Ruby has now filed this claim, seeking summary judgment for a declaration under s 3 of the Declaratory Judgments Act 1908 and s 313(1) of the Property Law Act 2007 in these terms:
…that lots resulting from a subdivision of Ruby’s land into 4 lots will be entitled to the benefits and be subject to the obligations of the [right of way] currently existing.
[3] The declaration does not relate to a specific proposed subdivision of Ruby’s land, albeit that Ruby has obtained a consent to subdivide its land into four lots. It seeks a declaration in respect to any subdivision of its land that will produce four lots. The statement of claim confirms that the detail of the subdivision Ruby ultimately may wish to undertake is “of as yet uncertain boundaries, which will require such subdivided lots to enjoy Ruby’s current rights under the [right of way]”.
[4] The Trust opposes the application. It argues summary judgment should not be granted, as upon a proper construction of the easement it does not benefit lots resulting from the subdivision of Ruby’s land, and the additional burden imposed upon the Trust’s land as a result of a four-lot subdivision goes beyond the right granted by the easement. The Trust also says no purpose would be served by granting the declaration.
[5]The issues that arise are:
(a)Does the benefit of the easement extend and attach to future subdivided lots, which requires consideration of:
1 Ruby & Rata Ltd v Reed Trustee 2018 Ltd [2023] NZHC 3462, (2023) 25 NZCPR 1.
(i)On its proper construction, does the easement only benefit Ruby’s land in its original form?
(ii)If the easement attaches to each subdivided lot, will that increase the burden on the Trust’s land to an extent that exceeds the terms of the grant?
(b)Would the making of a declaration serve any purpose?
Background
[6] The background has been conveniently set out in the Trust’s counsel’s submissions, which I have largely adopted in what follows with some additional context.
[7] The land now owned by Ruby and the Trust was originally part of a single title. On 17 December 2010, the Waikato District Council (the Council) granted the former owner subdivision consent (the subdivision consent). The property was then owned by Reube Park Ltd.
[8]On 4 November 2011:
(a)The land was subdivided into two lots.
(b)Easement 8895359.6 (the easement) was registered. The grantor is the registered proprietor of the burdened land (here, the Trust). The easement grants a right of way, among other rights, over which the grantee (here, Ruby) is entitled to use 176 metres of a 350-metre driveway, which is a partially sealed/gravel track. The formed part of the driveway is about three metres wide. The easement states:
Unless otherwise provided below, the rights and powers implied in specified classes of easements are those prescribed by the Land Transfer Regulations 2002 and/or Schedule Five of the Property Law Act 2007.
(c)Encumbrance 8895359.7 was registered over both the Trust’s and Ruby’s land in favour of the Council, prohibiting further subdivision (the encumbrance). There appears to be no dispute that the encumbrance is technically a mortgage under s 5 of the Land Transfer Act 2017, with the “secured obligation” being set out in Schedule 2. However, both Schedules 1 and 2 are presently relevant, and I set them out in full.
SCHEDULE 1
Background
The Encumbrancer applied to the Franklin District Council for a resource consent to create one conservation lot from the subdivision of a 55.5870 hectare property through the protection of 3.36 hectares of native bush and wetland and to the Waikato District Council for a change to the resource consent decision.
The Encumbrancer gives notice that Franklin District Council is a predecessor of the Encumbrancee pursuant to clause 19 of the Local Government (Auckland Boundaries) Determination 2010, made pursuant to section 3391) [sic] of the Local Government (Auckland Council) Act 2009).
The Encumbrancee granted the resource consent on the condition that the Encumbrancer enter into and register an encumbrance against the Land prohibiting the further subdivision of the land
SCHEDULE 2
Secured Obligations
No further subdivision of the Land is allowed under Rule 22.9 (Conservation Lot) of the Operative Franklin District Plan, Rule 22.11 (Environment Lot) of Plan Change 14 to the Operative Franklin District Plan; Rural Plan Change, or any similar provision(s) of any District Plan or Plan Change document.
[9] In or around 2016 the Council granted a further subdivision consent to subdivide what is now Ruby’s land to create two additional lots. The consent was never implemented, although the evidence is that it was still valid when Ruby acquired the land.
[10] Ruby purchased its land in May 2021. The Trust purchased its land a few months later.
[11] On 11 November 2021 the Council granted Ruby subdivision consent to carry out a four-lot subdivision (the 2021 subdivision consent) of its land. In granting this consent, the Council purported to pass a “resolution” to vary the encumbrance (condition 17 of the 2021 subdivision consent). The variation was to the secured obligations in Schedule 2 of the encumbrance, which was to read (with added words emphasised):
No further subdivision of the Land is allowed under Rule 22.9 (Conservation Lot) of the Operative Franklin District Plan, Rule 22.11 (Environmental Lot) of Plan Change 14 to the Operative Franklin District Plan; Rural Plan Change, or any similar provision(s) of any District Plan or Plan Change document, with
the exception of subdivision resource consent Waikato District Council
reference: SUB0068/22, which is allowed, as this subdivision relies on
additional on-site indigenous vegetation planting to gain subdivision lotentitlements and does not seek to utilise any existing environmental features
on-site to gain subdivision lot entitlements.
[12] Ruby’s application for the subdivision consent was not publicly notified, nor did the Trust consent to a variation of the encumbrance.2 I understand the Trust is filing judicial review proceedings to challenge the 2021 subdivision consent on these and other bases.
[13] In May 2022 Ruby brought the claim against the Trust to which I earlier referred. It wished to carry out specific works to create another accessway off the right of way and sought a declaration that it was entitled to carry out those works. The works included removing a tree, part of a fence and forming “carriageways from the existing formed and sealed driveway to the boundary”. The Trust had issued trespass notices to prevent this. The Trust also brought a counterclaim seeking to modify the easement by changing how costs of maintaining the driveway were shared, limiting further access points and constraining ancillary services. Ruby applied for an interim injunction restraining the Trust from enforcing the trespass notices and interfering with any of the proposed works. Fitzgerald J declined the injunction application.3
2 The Trust is a party to the encumbrance as a successor in title to Reube Park Ltd, the original encumbrancer.
3 Ruby & Rata Ltd v Reed Trustee 2018 Ltd [2022] NZHC 2025, (2022) 23 NZCPR 463 at [46].
[14] Then, following a two-day trial, on 30 November 2023 O’Gorman J issued a judgment granted Ruby declarations to carry out the works.4 The judgment records the Trust’s concern that Ruby’s application was being used to seek a backdoor implementation for its future needs, including the subdivision of the land and a commercial helicopter business from Lot 4.5 Dealing with this concern, O’Gorman J said:6
[7] Ruby’s position is that it currently owns only one lot, and its case in this proceeding is based on the changes being reasonable for its present farming operations. While Ruby may wish to proceed with the consented subdivision and helicopter business in the future (and it contends those uses would fall within the scope of the present easement), those are not matters for determination in this proceeding. It has many years to decide whether to carry out those future works, they may never occur, and Ruby has not addressed those speculative issues with evidence in this proceeding, because it is irrelevant. ...
[15] That statement reflects the evidence of Kristen Russell, one of Ruby’s directors. Ms Russell has also given evidence in this proceeding and says, with reference to the 2021 subdivision consent, that it does not represent the final word on how the subdivision might look “as we are contemplating a re-organisation” but that “We want to start earthworks for the subdivision, probably next construction season”.
[16] O’Gorman J granted declarations that Ruby was entitled to carry out the works, but said a wider declaration to access its land from “the burdened part at all reasonable places” was not necessary.7 The Trust’s counter-claim was dismissed.8
[17] Two months after O’Gorman J’s judgment, on 25 January 2024 Ruby, through its counsel, wrote to the Trust’s lawyers asking whether it was still the Trust’s position that the easement would not be available to any subdivided lots. In response, the Trust said the easement only permitted use for farming and residential purposes and for its current lot only, not further lots to be created by way of subdivision. This proceeding was commenced in April 2024.
4 Ruby & Rata Ltd v Reed Trustee 2018 Ltd, above n 1.
5 The reference to the commercial helicopter business is to a consent granted by the Council on 18 August 2023 to Oceania Helicopters Pukekohe Ltd to establish and operate a rural aerial service and helicopter depot from what would be ‘Lot 4’ of Ruby’s subdivided land.
6 Ruby & Rata Ltd v Reed Trustee 2018 Ltd, above n 1.
7 At [82].
8 At [84].
Summary judgment principles
[18]The relevant rule is r 12.2 of the High Court Rules 2016 which reads as follows:
12.2 Judgment when there is no defence or when no cause of action can succeed
(1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
…
[19] The principles that apply to a plaintiff’s summary judgment application were summarised by Associate Judge Osborne in Mount Grey Downs Ltd v Pinot Properties Ltd as follows:9
(a)Commonsense, flexibility and a sense of justice are required.
(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.
(c)The Court will not hesitate to decide questions of law where appropriate.
(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements in affidavits.
(e)In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.
(f)In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation – the defendant is under an obligation to lay a proper foundation for the defence in the affidavits filed in support of the Notice of Opposition.
(g)In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.
(h)The need for judicial caution in summary judgment applications has to be balanced with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the
9 Mount Grey Downs Ltd v Pinot Properties Ltd [2018] NZHC 3094 at [12].
case. Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required for the protection of the integrity of the summary judgment process.
(i)Once the Court is satisfied that there is no defence, the Court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.
(footnotes omitted)
Principles of the interpretation of easements
[20] The extent of a right of way will depend on the construction of the words used in the instrument creating it.10 Traditionally the principles of contract interpretation have been applied to the interpretation of easements.11
[21] In Austin v Rentrezi 2 Ltd, Wylie J noted that an easement falls to be construed according to the natural meaning of the words contained in the document read as whole and in light of the surrounding circumstances existing at the date when the instrument was created.12 He said that case law suggested that in construing a grant of right of way the Court should consider, amongst other things:13
(a)the physical circumstances of the burdened land at the date of the grant;
(b)the nature and description of the land or buildings compromising the benefitted land; and
(c)the purpose for which the right of way was intended.
[22] Recent cases have adopted a restrictive approach to the admissibility of extrinsic evidence to assist in the interpretation of publicly registered documents, including easements.14 In Green Growth No 2 Ltd v Queen Elizabeth the Second
10 Paterson and Barr Ltd v University of Otago [1925] NZLR 191 (SC) at 194 per Sim J; and
Barry v Fenton [1952] NZLR 990 (SC) at 991 per North J.
11 D W McMorland McMorland on Easements, Covenants and Licences (online ed, LexisNexis Wellington, 2023) at [16.037(g)].
12 Austin v Rentrezi 2 Ltd [2021] NZHC 1027, (2021) 23 NZCPR 77 at [38].
13 At [38], citing D W McMorland and others Hinde McMorland and Sim Land Law in New Zealand
(online ed, LexisNexis) at [16.037].
14 Austin v Rentrezi 2 Ltd, above n 12, at [40]–[42].
National Trust, the Supreme Court stated that generally registered documents should be construed without regard to extrinsic evidence that is particular to the original parties and is not apparent on the face of the register.15 William Young and O’Regan JJ noted:
[73] A very flexible approach to the admission of extrinsic evidence as bearing on the construction of registered documents will promote litigation and ... has the potential to undermine the policy of indefeasibility of title. On the other hand, [the adoption of] a rigid rule excluding such evidence, [will still leave] marginal cases which will have to be addressed and, in some instances, perverse outcomes, despite there being no good reason why, as between the parties to the dispute, the extrinsic evidence should be ignored.
[74]Against that background, we consider that:
(a)Generally, registered documents should be construed without regard to extrinsic evidence which is particular to the original parties and is not apparent on the face of the register.
(b)This does not limit rights to apply for rectification, a topic which we address in the next section of these reasons.
(c)We would not exclude reference to facts which a reasonable future reader of the document could be expected to be aware of and would recognise as relevant and which they have access to, such as the configuration of land, any physical features to which the document relates or refers and any material referred to in the document.
Issue 1: Does the benefit of the easement extend to future subdivided lots?
On its proper construction, does the easement only benefit Ruby’s land in its original form?
[23] There is a presumption that subdivisions take the benefit of an existing easement. In Austin v Rentrezi 2 Ltd, Wylie J held:16
[46] Where benefited land is subdivided there is a presumption that the easement attaches to the subdivided parts. Similarly, on subdivision of the burdened land, the easement continues to bind each part of the land over which the easement exists. The presumption is subject to three provisos:17
15 Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust [2018] NZSC 75, [2019] 1 NZLR 161 at [74].
16 Austin v Rentrezi 2 Ltd, above n 12.
17 D W McMorland Hinde McMorland and Sim Land Law in New Zealand, above n 13, at [16.041]; and Elizabeth Toomey (ed) New Zealand Land Law (3rd ed, Thomson Reuters, 2017) at [10.9].
(a)on its proper construction, the easement may benefit the benefited land only in its original form;
(b)the easement may not in fact accommodate some of the subdivided lots; and
(c)its attachment to each part of the subdivision must be possible without increasing the burden on the burdened land beyond the terms of the grant and the limits of the right.
[47] The leading authority for these propositions is the decision of the High Court of Australia in Gallagher v Rainbow.18 The majority, Brennan, Dawson and Toohey JJ, noted that the terms of the easements at issue in that case contained no prohibition against the transfer of a subdivided lot or the enjoyment of the easement by the purchaser of a subdivided lot. They held that the enjoyment of the easement by the registered proprietor of a subdivided lot was wholly consistent with the language of the grant. They went on to comment that whether the owners of subdivided lots are entitled to the benefit of an easement is a question of construction of the grant. They observed as follows:19
“Subject to a qualification relating to excessive user, the general principle is that stated by Jessel MR in Newcomen v Coulson.20
… Where the grant is in respect of the lands and not in respect of the person, it is severed when the lands are severed, that is, it goes with every part of the severed lands. On principle, this is clear.
They also considered Australian authority, as well as authority from the Supreme Court of Rhode Island.21 They referred to academic comment on the latter case to the effect that easements that are appurtenant to land are considered apportionable for two major reasons: first because subdivision is so common that it is assumed that the parties are considering it as part of normal real estate development, and secondly, because the benefits to the benefited land generally outweigh the burden to the burdened land. They recorded as follows:22
“This statement tends to explain rather than to offer a principle. The principle is that an easement is no mere personal right; it is attached to the dominant land for the benefit of that land. To the extent that any part of the dominant land may benefit from the easement, the easement will be enforceable for the benefit of that part unless the easement, on its proper construction, benefits the dominant land only in its original form.”
18 Gallagher v Rainbow [1994] HCA 24, (1994) 179 CLR 624.
19 At 515.
20 Newcomen v Coulson (1877) Ch D 133 at 141.
21 Crawford Reality Co v Ostrow [1959] 150 A 2d 5.
22 Gallagher v Rainbow, above n 18, at 516.
[24] Ruby says the presumption that an easement benefits subdivided lots applies here, as:23
(a)there is nothing in the easement certificate to limit this right;
(b)there are no facts that a reasonable reader could be expected to be aware of or would recognise as being relevant that limit the use to which the lots could be put; and
(c)there is nothing precluding the subdivision of either Ruby’s land or the Trust’s land.
[25] Recognising that the Trust relies on Schedules 1 and 2 of the encumbrance (see para [8(c)] above), Ruby says those provisions do not constitute a blanket prohibition on future subdivision of its land. It contends a reasonable reader cannot be permitted to read the words in Schedule 1 that the encumbrance “prohibit[ed] the further subdivision of the land” while ignoring the content of the secured obligations in Schedule 2, which show that a general prohibition on subdivision is not intended.
[26] Ruby also relies upon the expert evidence of Nicholas Hall, a survey technician and project manager, and Jonathan Cutler, a planning consultant, who have made affidavits. Mr Hall identifies that the purpose of his evidence is to explain to the Court that the encumbrance is not a prohibition on future subdivision of Ruby’s land. His evidence, with which Mr Cutler agrees, is that:
(a)the Council has granted three prior consents to the subdivision of Ruby’s land in 2011, 2016 and 2021;
(b)the encumbrance pre-dates the subdivision rules that applied to the 2016 and 2021 subdivision consents, both of which approved the creation of additional lots;
23 Austin v Rentrezi 2 Ltd, above n 12.
(c)the provisions under which the subdivisions were approved are different from the provisions referred to in Schedule 2 of the encumbrance;
(d)the encumbrance does not purport to prohibit further subdivision under different provisions of the District Plan than those stated in Schedule 2;
(e)the encumbrance prohibited further subdivision only under provisions that sought to protect and preserve existing bush and wetland features that meet a qualifying standard;
(f)the 2016 and 2021 subdivisions are based on a transferable rural lot right and ecological (stream) corridors subdivision and therefore do not fall within the terms of the prohibition;
(g)the fact the Council had granted three subdivision consents shows that the prohibition on subdivision was not a general one;
(h)the Council required, as a condition of the 2021 subdivision consent, a variation to the encumbrance “clarifying” Schedule 2 which supports the contention the encumbrance was a focused prohibition on re-use of the provisions that sought to protect and preserve existing bush and wetland features; and
(i)further “proof” for this position is to be found in the planner’s report which accompanied the 2016 subdivision consent.
[27] Carrying on a theme in the evidence of Mr Hall and Mr Cutler, Ruby’s counsel says that the “proof of the pudding is in the eating” and the Council’s approval of three proposed subdivisions of Ruby’s land despite the encumbrance shows it cannot be that, on its proper construction, the easement is limited to benefit Ruby’s land only in its original form. Ruby is also critical that the Trust has not called its own resource management expert or surveyor to answer Mr Hall’s and Mr Cutler’s evidence.
[28] The Trust says, as appears to be accepted by Ruby, that the encumbrance is relevant to interpreting the purpose, effect and limitations of the easement, and that the most straightforward interpretation is that the easement does not extend beyond Ruby’s land in its original form when one considers the “clear intention signalled by the timing, language and purpose of the [encumbrance]”.
[29] Alternatively, the Trust argues that if the prohibition on subdivision is not a general one then the 2021 subdivision consent obtained by Ruby is in fact prohibited by the encumbrance.
[30] The Trust notes that the rights granted by the easement, such as the right to pass and re-pass and to establish and maintain the driveway, may be exercised by a grantee but do not extend to a third party purchaser of a subdivided lot of the grantee’s land. The easement provides that the “servient tenement(s) set out in Schedule A grants to the Grantee ... the easement(s) ... set out in Schedule A ...”. Schedule A is a table and identifies that the purpose, nature and extent of the easement includes a “Right of Way”. Schedule A then identifies the area making up the easement on the Deposited Plan, and the burdened and benefitted lands. The rights and powers implied relating to the easements are those contained in the Land Transfer Regulations 2002 and/or sch 5 of the Property Law Act.
[31] The Trust then says that the encumbrance is relevant to understanding the purpose, effect and limitations of the easement. Counsel relies on Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust, and the view expressed there that registered documents may be construed by “reference to facts which a reasonable future reader of the document could be expected to be aware of and would recognise as relevant and which they have access to”.24 The Trust’s case is that the encumbrance is relevant as forming part of the register, was registered at the same time as the easement, the encumbrance is easily accessible, and any reasonable reader would see the encumbrance on the title and comprehend its binding effect.
24 Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust, above n 15, at [74].
[32] The Trust submits that while a reasonable reader of the encumbrance might be expected to understand the explicitly referenced rules in Schedule 2 and seek them out, it is less clear they would readily grasp the implications of the words “or any similar provision(s) of any District Plan or Plan Change document” without specialist knowledge. The Trust says the complexity of such an exercise has been underscored by Ruby’s reliance on expert evidence to interpret the encumbrance, supporting its preferable interpretation that the easement does not extend to Ruby’s land beyond its original (unsubdivided) form.
[33] The Trust submits that Mr Hall and Mr Cutler’s evidence is inadmissible as they seek to interpret the encumbrance, which is a legal question for the Court to determine. In addition, the Trust says their conclusions are wrong because they fail to recognise that the encumbrance anticipated that the rules referred to in Schedule 2 would evolve over time (as they have done), and that the 2021 subdivision consent is prohibited, being both a Transferrable Rural Lot Right Subdivision and Environmental Lots Subdivision which are, in terms of Schedule 2, “any similar provision(s) of any District Plan”. The Trust also says Ruby’s experts have failed to identify what categories of subdivision fall within that description.
Discussion
[34] There is nothing in the easement certificate which limits the rights granted under it in any relevant way. The terms implied by sch 5 of the Property Law Act and sch 4 of the Land Transfer Regulations are broad and extend to the parties’ agents, contractors, employees, invitees, licensees and tenants. The right to “go, pass and re- pass” over the right of way “is exercisable at all times, by day and by night, and is exercisable with or without vehicles, machinery and equipment of any kind”. Counsel did not refer me to anything in the easement certificate or in the implied terms that suggested that the right of way could not be used for any reasonable purposes to which Ruby wished to put its land.
[35] The exception to that is, of course, the express limitation on subdivision contained in the encumbrance. In that respect I am unable to accept the Trust’s submission that, properly construed, the encumbrance demonstrates an intention that
the easement not extend to Ruby’s land beyond its original form. Such an interpretation would be to ignore Schedule 2 of the encumbrance. If the intention had been that Ruby’s land could not be subdivided under any circumstances Schedule 2 would have been unnecessary. Schedule 2 acts to qualify the more general prohibition on subdivision in Schedule 1 by defining, by reference to specific planning rules, categories of subdivision that are not permitted.
[36] The Trust argues that an interpretation that all subdivisions are prohibited is preferable as being the “straightforward interpretation”. It says even if the reasonable reader might be expected to understand the specific rules referenced, that expectation would not extend to the implications of any similar provision or rule change. To my mind, the words “or any similar provision(s) of any District Plan or Plan Change document” are likely recognition that the specific rules referred to in Schedule 2 would evolve or be replaced over time. That certainly makes the interpretation of the clause challenging in practice. However, the Trust’s approach does not give effect to the natural meaning of the words contained in the encumbrance read as whole. Rather, it ignores Schedule 2 entirely and defeats what I consider was the clear intention to limit the prohibition on subdivision to certain categories of subdivision only.
[37] It should not be taken from this that I have accepted the evidence of Mr Hall and Mr Cutler, albeit that I do agree with their conclusion that the encumbrance is not a general prohibition on subdivision of Ruby’s land. There is clearly some force in the Trust’s submission challenging the admissibility of parts of their evidence, but it is not necessary to address that point.
If the easement attaches to each subdivided lot, will that increase the burden on the Trust’s land to an extent that exceeds the terms of the easement?
[38] The third proviso recognised in Austin v Rentrezi 2 Ltd relates to whether the subdivision is possible without increasing the burden on the burdened land beyond the terms of the grant and the limits of the right.25 Wylie J discussed the case where a right of way is a general right with no restrictions upon its use other than those the law
25 Austin v Rentrezi 2 Ltd, above n 12.
requires.26 He cited Denning MR in Jelbert v Davis, where the Master of the Rolls said:27
In my opinion, a grant in these terms does not authorise an unlimited use of the way. Although the right is granted “at all times and for all purposes”, nevertheless it is not a sole right. It is a right “in common with all other persons having the like right”. It must not be used so as to interfere unreasonably with the use by those other persons, that is with their use of it as they do now or as they may lawfully do in the future. The only way in which the rights of all can be reconciled is by holding that none of them must use the way excessively.
...
... the true proposition is that no one of those entitled to the right of way must use it to an extent which is beyond anything which was contemplated at the time of the grant. ...
[39]The facts of Jelbert v Davis were outlined by Wylie J:
[58] Both counsel referred to Jelbert v Davis. In this case, a right of way had been granted over a driveway “at all times and for all purposes … in common with all other persons having the like right”. The benefited land was originally used for agricultural purposes only but the owner obtained planning permission to use the land as a caravan site catering for up to 200 caravans. It was argued that these caravans should be able to use the right of way. The Court of Appeal held that the terms of the grant permitted the use of the easement for vehicular traffic of a different kind than that contemplated at the time of the grant. It held that caravans could use the right of way, but the use proposed — up to 200 caravans — was excessive and would interfere with the rights of other persons entitled to use the right of way or cause a legal nuisance outside the terms of the grant given the circumstances at the time when it was made.
[40] The Trust’s evidence that a subdivision of Ruby’s land into four lots will (or may) result in an excessive increase in the burden on its land is brief. The evidence is given by one of the trustees, Mr Reed, who says if the subdivision goes ahead:
(a)The right of way will be used more than it currently is or ever has been. Four dwellings from Ruby’s land would be serviced by the right of way, which was previously a driveway for farming purposes and also to access one house.
26 Austin v Rentrezi 2 Ltd, above n 12, at [57]–[58], citing D W McMorland Hinde McMorland and Sim Land Law in New Zealand, above n 13, at [16.046].
27 Jelbert v Davis [1968] 1 WLR 589 (CA) at 595, [1968] All ER 1182 at1185.
(b)The right of way already requires major repairs because the seal and substrate are breaking up and will become dangerous with increased traffic.
(c)A third party has obtained consent to develop a commercial helicopter pad and hanger and commercial helicopter business on Ruby’s land, which could increase driveway traffic even more.
(d)While Ms Russell made a maintenance proposal for the right of way that is not acceptable as it would mean the Trust would be responsible for 53.57 per cent of all such costs.
[41]In relation to the issue of maintenance costs, Mr Reed says:
... Aside from the fact that the subdivision may not be able to go ahead, I am unable to provide a detailed response to the proposed division of maintenance obligations without knowing the actual extent and type of driveway usage by the owners of each new subdivided lot.
[42] Ruby’s first response to the Trust’s concern of excessive use is that it is a “fiction”. It says what additional burden will be created by a subdivision of its land can never be established until the subdivision takes place and the new dwellings start producing traffic flow. Mr Parmenter, for Ruby, argues that the best that “we can do is prophesy” and, in any event, if it ultimately turns out that there is excessive use of the right of way the Trust would be able to seek injunctive relief.
[43] Ruby also submits that the Trusts’ concerns about increased traffic flow and the requirement for extra maintenance (and costs associated with that) are not valid objections. It argues that extra traffic is an unavoidable by-product of a permitted subdivision and all that the Court can be concerned about is “whether the increase in traffic is an excessive user of the [right of way]”. Ruby submits it is not, because:
(a)the land is rural and can be expected to accommodate vehicles, including stock trucks;
(b)implied obligations as to establishing and maintaining right of ways already exist and protect parties’ rights to contribution or compensation; and
(c)that the right of way is presently damaged is irrelevant as that is not an effect of the subdivision.
[44] Ruby has also filed evidence of a traffic engineer, Graeme Norman, who says, based on the assumption of there being six anticipated ground traffic movements from the proposed helicopter development and the subdivision of Ruby’s land into four lots, he would expect:
(a)Each lot would generate an average of 8.5 trips per day and 1.1 trips in the peak hour.
(b)Assuming the proposed helicopter business is in addition to a residential dwelling on Lot 4, the total vehicle movements from Ruby’s land is likely to be 40 movements a day or five to six movements in the peak hour.
[45] Ruby submits such low numbers of traffic movements cannot amount to excessive use. In addition, Ruby relies upon findings of O’Gorman J in the earlier litigation between these parties to support a submission that there are no issues about safety and, inferentially, any gross inconvenience. In considering Ruby’s requirement to increase entry points from the right of way to its land, O’Gorman J said:28
[65] ... In terms of the safety of a vehicle meeting another coming in the opposite direction, [the expert] accepted that there was visibility along the
130.1 metres between the road entrance and point Z, so one scenario was that a truck driver would look up and down to see if anyone else was coming. He accepted various scenarios of common-sense preventative action that could be taken to address an oncoming vehicle issue (one driver waiting at one of the ends, and/or one driver backing up if necessary).
[46] Ruby’s submission that the Court should regard the Trust’s objection as a fiction highlights what the Trust says is a disingenuous and unhelpful approach to
28 Ruby & Rata Ltd v Reed Trustee 2018 Ltd, above n 1.
Ruby’s future development plans. It notes that while Ruby was apparently unsure at the hearing before O’Gorman J when, or if, it might wish to subdivide its land, it confirmed very quickly after the judgment was released its intention to do so to create four lots but with boundaries “as yet uncertain”. To similar effect, Ms Russell indicates that Ruby is “contemplating a re-organisation”, which might see the proposed Lot 4 as one large lot and having three other smaller lots. However, one can assume there are other possible configurations being contemplated.
[47] The Trust submits, and I agree, that there is nothing unusual about the Court examining the effects of activities before they occur. The submission that this is mere prophesising or a fiction is glib. As Mr Bigio KC submits, it is central to the Resource Management Act 1991 that the effects of proposed activities are assessed, almost invariably with the assistance of expert evidence, before they occur.
[48] Here, to make the declaration sought I would need to be satisfied that a four- lot subdivision of Ruby’s land will not result in an additional burden on the right of way that goes beyond anything which was contemplated at the time of the grant.29 That is a matter of fact that does not readily lend itself to determination on a summary judgment application where the parties have not had discovery, the evidence before the Court is limited, and witnesses are not subject to cross-examination. I note that in refusing Ruby’s application for an interim injunction in the earlier proceeding between these parties Fitzgerald J made a similar point, stating:30
[46] Where the application for an interim injunction fails, in my view, is in terms of the balance of convenience and the overall interests of justice. Ultimately, ... what is or is not reasonable in the context of disputed works associated with a right of way is an intensely factual question which ought to be the subject of a hearing and evidence in the ordinary way. While I have some sympathy with Ruby’s position (at least when measured against its property in its current form, and putting aside the subdivision), it is not appropriate to shoehorn the Court’s substantive endorsement of works under a disputed right of way into an interim injunction application hearing, particularly given there is very limited evidence before the Court on the present application.
[49] Ruby has responded to the Trust’s concern about traffic movements and maintenance of the right of way. However, to a large extent its responses are beside
29 Jelbert v Davis, above n 27, at 1185.
30 Ruby & Reed Ltd v Reed Trustee 2018 Ltd, above n 3.
the point when the Court has no detail of the subdivision Ruby actually intends to undertake and cannot therefore assess the effects that subdivision (as opposed to a hypothetical subdivision) will have on the right of way. There is no evidence as to what the boundary configurations will be, how lots will be accessed, the uses to which the lots may be put, or even confirmation that the helicopter operation will proceed.
[50] The Trust also notes that even when planning permission has been obtained and residential use permitted under an easement, the proposed use may still be excessive. The Trust relies on Bee v Thompson, where the English Court of Appeal upheld the trial judge’s decision that:31
... it seems to me that on the evidence I saw and heard there would likely to [sic] be endless trouble over cars coming and going over and across the narrow track and entrance way. The odd car, van, tractor or agricultural vehicle is one thing: daily cars (up to nine permitted by the planning permission quite apart from visitors and other callers), visitors and regular postal, rubbish, oil and sewage [services] seems to me to be quite different to that contemplated at the time.
[51] Given Ruby’s unwillingness to provide detail of the subdivision it will undertake beyond that it will create four lots, I cannot be satisfied that a subdivision into four lots, regardless of the use to which the land can be put or the boundary configurations or methods of access to the lots that are adopted, will not result in excessive use of the right of way beyond anything contemplated at the time of the grant. The evidence before me is quite insufficient for that purpose. I consider that is fatal to the application for summary judgment.
Issue 2: Would the making of a declaration serve any purpose?
[52] On an application under the Declaratory Judgments Act 1908, the range of factors which come into play in deciding whether a declaration should be made are wide. This makes it “very difficult in principle to obtain such a declaration on summary judgment”.32
31 Bee v Thompson [2009] EWCA Civ 1212, [2010] 2 WLR 1355 at [17].
32 Maryville Courts Trust Board v Earthquake Commission [2013] NZHC 1575 at [12], citing Wright v Chief Executive of The Ministry of Fisheries HC Auckland CP662-IM, 4 April 2001 per Hammond J at [38].
[53] A Court is unlikely to grant a declaration if doing so would be premature or serve no practical purpose.33 Instead, a declaration should be “fact-specific, efficacious and capable of practical application”.34 There needs to be a real issue in dispute so that the grant of a declaration will have real practical consequences. The Court will normally not issue a declaration in cases “where there is a hypothetical question or a prediction of future events”,35 nor will the Court answer purely abstract questions in anticipation of an actual controversy36 or where a controversy has passed.37
[54] In Willson v Accident Compensation Corporation, the Court reviewed the extent to which a prospective declaration might be made.38 The High Court held:39
The course of this litigation demonstrates that there are a number of potential barriers to declaratory relief. First, the Court will not grant a declaration in answer to a hypothetical question, in the absence of a dispute as to current or future rights ... The Court may grant relief as to rights arising in conjunction with an anticipated future act or event ... but such a future act or event must be in actual contemplation at the time the declaration is sought ... Secondly, the applicant seeking the declaration must claim a right under the statute in question or be “in any other manner interested in the construction ... thereof”. The applicant must have at least a “substantial interest” in the construction of the statute ...
[55] The Trust argues that the granting of a declaration will serve no purpose because the encumbrance prevents Ruby from completing a subdivision in accordance with the 2021 subdivision consent. Counsel for the Trust presented submissions as to why the 2021 subdivision consent was prohibited under Schedule 2 of the encumbrance because that consent was for both a Transferrable Rural Lot Right Subdivision and Environmental Lots Subdivision which are “any similar provision(s) of any District Plan”. The Trust also made submissions as to why the Council had no
33 Sir Harry Woolf and Itzhak Zamir The Declaratory Judgment (3rd ed, Sweet & Maxwell, London, 2002) at 156, as cited in Taylor v District Court at North Shore HC Auckland CIV-2009-404-2350, 24 March 2010 per White J at [23]; and Turner v Pickering [1976] 1 NZLR 129 (SC) at 141–142.
34 Department of Internal Affairs v Whitehouse Tavern Trust Board [2015] NZCA 398, [2015] NZAR 1708 at [80].
35 Hartley v Attorney-General [2019] NZHC 1727 at [53], citing Omaha Beach Residents’ Society (Inc) v Townsend Brooker Ltd [2010] NZCA 413, [2011] NZRMA 1.
36 New Zealand Insurance Co Ltd v Prudential Insurance Co Ltd [1976] 1 NZLR 84 (CA) at 85.
37 Turner v Pickering, above n 33, at 141–142.
38 Willson v Accident Compensation Corporation [2007] NZAR 453 (HC).
39 At [56(b)].
power to vary the encumbrance by condition 17 of the 2021 subdivision consent without the Trust’s consent.
[56] Insofar as Ruby’s application is based on a hypothetical four-lot subdivision, the Trust argues there is no guarantee any such subdivision consent will ever be obtained or what Ruby’s intentions in respect to it will be, and that the Court “will not answer purely abstract questions in anticipation of an actual controversy”.40
[57] Ruby says it is not seeking a declaration in respect to the 2021 subdivision consent and there is no need for the Court to address the specific challenges to that consent.
[58] Ruby then argues there is nothing abstract or hypothetical in the issue “whether four lots from a subdivision accrue the benefit of the [right of way]?” It says it is for the Trust to show “how any variation of a [four]-lot subdivision could make a difference” and submits “there will always be [four] lots in a rural subdivision and there is nothing else of significance”.
[59] Insofar as the Trust says the encumbrance prohibits certain kinds of subdivision and condition 17 of the 2021 subdivision consent was unlawful, Ruby’s counsel suggests there are potential solutions for that but, in any event, the Trust does not have a power of veto over the consent process.
Discussion
[60] I do not need to consider the Trust’s objections to the 2021 subdivision consent in circumstances where Ruby is not advancing its application for a declaration in reliance upon it.
[61] I do not accept Ruby’s submission that there is nothing abstract or hypothetical in the issue “whether four lots from a subdivision accrue the benefit of the [right of way]?” because, to my mind, that question can only ever be answered by reference to a particular subdivision and an assessment of its effects on the right of way.
40 New Zealand Insurance Co v Prudential Insurance Co, above n 36, at 85 per McCarthy P.
[62] I consider Ruby is incorrect when it submits that it is for the Trust to show “how any variation of a [four]-lot subdivision could make any difference” and that “there will always be [four] lots in a rural subdivision and there is nothing else of significance”. There is no doubt a four-lot subdivision will have effects on the right of way through increased use. Ruby assumes (and asks the Court to accept) that a further subdivision consent will be obtained and that there are no circumstances under which any four-lot subdivision could increase the burden on the right of way beyond the terms and limits of the grant. There is simply insufficient evidence to establish that is the case.
[63] In addition, Ruby has not provided an adequate explanation for why it has not put before the Court a detailed proposal for the subdivision of its land into four lots. Contrary to the understanding O’Gorman J took from the evidence before her, there now appears to be some urgency about undertaking the subdivision, with Ms Russell stating that Ruby will start earthworks “probably next construction season”. It is reasonable to infer that Ruby’s plans are therefore well advanced.
Summary
[64] Ruby has failed to establish that the lots resulting from a four-lot subdivision of its land “will be entitled to the benefits and subject to the obligations of the [easement]”. It follows that it has not established that the Trust has no arguable defence to its claim for a declaration.
Result
[65]The application for summary judgment is dismissed.
[66] It is usual in these circumstances that costs are reserved.41 However, the Trust has indicated an intention to seek costs. In those circumstances, I reserve costs and any application for costs may be made by memorandum no later than 31 January 2025, with any reply to be filed and served no later than 14 February 2025. Memoranda shall be no longer than six pages. I shall determine costs on the papers. It should not
41 NZI Bank Ltd v Philpott [1990] 2 NZLR 403; (1990) 3 PRNZ 695 (CA).
be thought, however, that in making these directions I am expressing a view that it is appropriate to award costs or, indeed, encouraging submissions on costs.
O G Paulsen Associate Judge
Solicitors:
Graham & Co, Auckland Langford Law, Wellington
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