Walshe v Macrae HC Auckland CIV 2009-404-8259
[2010] NZHC 1074
•25 June 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2009-404-8259
BETWEEN ANTHONY PATRICK WALSHE Plaintiff
ANDROSS DONALD MACRAE AND LYNETTE GWENETH JOY COLLINS Defendants
Hearing: 13 May 2010
Appearances: G C Jenkin for the Plaintiff
Defendants in person
Judgment: 25 June 2010 at 3:00 p.m.
JUDGMENT OF WOODHOUSE J
This judgment was delivered by me on 25 June 2010 at 3:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Counsel / Parties:
Mr G C Jenkin, Barrister, Auckland
Mr R D MacRae and Ms LGJ CollinsInstructing Solicitors:
Mr B K Dell, Bruce Dell Law, Solicitors, Panmure, Auckland
WALSHE V MACRAE AND COLLINS HC AK CIV 2009-404-8259 25 June 2010
Introduction
[1] The plaintiff has applied for an interim injunction in respect of a right of way over his land. The right of way gives access to the defendants’ land.
[2] The right-of-way is contained in a registered memorandum of transfer creating an easement of right of way. Clause 5 is as follows:
The grants of right of way, telephone easements and energy supply easements shall be free of and appurtenant to each and every of the dominant land save that the Easement of Right of Way shall only service one dwelling on the dominant land.
The “dominant land” is the land currently owned by the defendants’.
[3] The central question on the present application is whether the right of way may be used to access more than one “dwelling” on the defendants’ land. The defendants’ land – the dominant land – was in one lot when the right of way was created. It is now in two lots. There are two buildings on one lot and one building on the other lot, all of which are habitable. The plaintiff contends that clause 5 means that the right of way cannot be used to access more than one dwelling on the dominant land, being the combined lots. The defendants contend that the right of way may be used to access one dwelling on each lot.
Interim injunction principles
[4] Because of the substantial amount of evidence filed in support of and in opposition to the application, and the wide-ranging submissions made, I will record, in outline, the main principles that apply on an application for an interim injunction.
[5] An injunction is sought as a temporary measure only. It is intended to hold the position until both parties have an opportunity to present their full cases to the Court in a trial and get a decision on the merits after the Court has been able to hear all the evidence. The evidence will include evidence following cross-examination of
witnesses where appropriate. Because this application has to be decided on affidavit evidence, on which there has been no cross-examination, it is not possible for the Court on this application to make any final determination on the merits and it would not be appropriate to try to do so.
[6] Arising from this, the first question is whether there is a “serious question to be tried” when considering the plaintiff’s claim. The claim that has to be scrutinised on this basis is the plaintiff’s contention that the right of way should not be used for the purpose of access to more than one dwelling on the dominant land.
[7] What is meant by a “serious question to be tried” has been defined in different ways. These definitions range from a need to demonstrate that the claim is not frivolous or vexatious to a need to demonstrate that the claim has a real prospect of succeeding. Because I did not receive any substantial argument on the point, I do not intend to explore what is meant by “a serious question to be tried”. And for reasons I come to, I do not consider it is necessary to do so in this case.
[8] A second inquiry concerns what is called “the balance of convenience”. What this requires, in broad terms, is weighing, as best as that can be done at this interim stage, the consequences for the plaintiff if an interim injunction is not granted and the consequences for the defendants if it is. An important question that arises in this context is whether, if the plaintiff does succeed at the trial, his claim can adequately be met by financial compensation – damages – as opposed to a permanent injunction. If damages would be an adequate remedy, and there is no issue as to the defendants’ ability to pay damages, that would often be a reason not to grant an interim injunction.
[9] There is a range of other factors to be taken into account and weighed with the main inquiries I have just referred to. One is that, if all other things are broadly equal, it may often be most appropriate to preserve the status quo, if it is reasonably possible to determine what “the status quo” is in the particular circumstances.
Background
[10] Although the main question in this case is the meaning of clause 5, I was referred to a reasonably substantial body of evidence contained in six affidavits for the plaintiff and four affidavits for the defendants. I also received written submissions from both parties totalling 104 pages. Having considered this, and the oral submissions of Mr Jenkin for the plaintiff and of Mr MacRae for himself and Ms Collins, I am of the opinion that much of the background evidence cannot assist to any great extent in deciding whether there is a serious question to be tried on the main issues. However, I recognise the importance of these matters, and to the defendants in particular. I will therefore set out in this background summary the additional matters given some emphasis for the defendants.
[11] The land is on Waiheke Island. Until late 1998, the dominant land did not have legal access from any public road. It does have a coastal boundary and is accessible from the sea. The defendants bought the dominant land in 1980. In about
1981 the defendants erected a building described as “the bach”. This was used as their permanent residence from 1981 to 1987. In 1986 the defendants built a larger house, called “Wild Bay Villa”. This became their home. In Mr MacRae’s words: “The original bach and associated buildings became a secondary dwelling, used as work studios as well as alternative accommodation”.
[12] In 1984 the servient land, with some adjoining land, was bought by Ms Lesley Smith. Ms Smith’s land, like that of the defendants and other pieces of land in the vicinity, had no legal access to a road. In 1993 Ms Smith purchased an adjoining piece of land which allowed access to a newly formed public road. In
1996 Ms Smith commenced planning for a subdivision and including in it appropriate access to various lots from the public road. It appears that in or about December 1996 the defendants requested right of way access from Ms Smith over part of Ms Smith’s land. This in the end resulted in creation of the right of way in question. However, in light of Mr MacRae’s submissions, in particular, and some from Mr Jenkin, some detail relating to intervening negotiations, and some correspondence following creation of the right of way, will be noted.
[13] Negotiations between Ms Smith and the defendants included correspondence between Ms Smith’s solicitors and the defendants’ solicitors in December 1997 as to terms upon which a right of way might be granted. Mr MacRae attached importance to this correspondence. There were four letters in sequence. The second, from the defendants’ solicitors dated 19 December 1997, includes the following:
The terms of the easement documents are to be acceptable to our clients. Messrs [sic] MacRae and Collins will not be unreasonable in agreeing the terms of the easement. However, they will not accept any restrictions on the use of their land and in particular any limitation of the rights of the easement to one dwelling only.
The defendants also offered to contribute “no more than $30,000 to the cost of the driveway”. The amount of the contribution had been a point of contention.
[14] On 19 December 1997 Ms Smith’s solicitors responded, accepting the offer of $30,000 on seven conditions. Condition 2 was as follows:
2. That the access way is to serve one dwelling on the MacRae property.
[15] The defendants’ solicitors responded the same day. On behalf of the defendants they accepted the conditions that had been proposed, on the terms proposed, except that in relation to condition 2, they said:
Any further dwelling units within the MacRae property will require further negotiations regarding contributions to the access way.
[16] Negotiations continued. There is a letter dated 29 May 1998 from the defendants’ solicitors to Ms Smith’s solicitors. Mr MacRae also gave some emphasis to the terms of this letter. It is reasonably short and I will therefore set it out in full:
SMITH – MACRAE AND COLLINS
Further to earlier correspondence our clients have asked that we specifically notify you that they are at present preparing plans for submission to the Auckland City Council for a new dwelling to be built near the boundary with lot 5. The intention is that this dwelling will be served by the easement.
Please ensure that any purchasers of your clients are made aware this is the case.
Our clients are keen to resolve all outstanding issues as promptly as possible and we look forward to an early response to our letter of earlier today.
[17] A written agreement to grant a right of way was made between Ms Smith and the defendants on 25 August 1998. There are the following provisions noted by the parties, with some changes to names and descriptions for the purposes of clarity:
1.2In consideration of [the defendants] agreeing to the terms and conditions set out in this agreement [Ms Smith] has agreed to create rights of way over those portions of [the servient land] … on the terms and conditions set out below (“Right of Way”) in favour of [the dominant land] for which [Ms Smith] has obtained Auckland City Council consent.
2.1[The defendants] shall pay the sum of $30,000 inclusive GST as their contribution towards the formation of the Right of Way to the north western corner of the boundary of [the servient land], such sum to be paid as follows:
…
4.2[The defendants] further acknowledge that the Right of Way is to service 1 dwelling only on [the dominant land]. [The defendants] further acknowledge that in the event that they wish to erect further dwellings on the [dominant land] they will need to enter into negotiations with the then registered proprietor of the Right of Way.
5.1[The defendants] shall enter into and execute a memorandum of transfer creating Easements substantially in the form attached as Schedule 2 (“the Easement Transfer”) …
6.1[The defendants] agree that in the event that they sell [the dominant land] prior to completion of [Ms Smith’s] subdivision of [the servient land and adjoining land] and the deposit of the subdivisional plan thereto [the defendants] will at their cost procure execution of an agreement in the same form as this agreement from any such transferee or disposee of [the dominant land] and shall provide such further agreement to [Ms Smith] on settlement of any such sale.
7.1[Ms Smith] agrees that in the event that she sells [the servient land and adjoining land] prior to the completion of the subdivision of [the servient land and adjoining land] and the deposit of the subdivisional plan thereto, [Ms Smith] will at her cost procure execution of an agreement in the same form as this agreement from any such transferee or disposee of [the servient and adjoining land] and shall provide such further agreement to [the defendants] on settlement of any such sale.
[18] The memorandum of transfer referred to in clause 5.1 is a standard form memorandum of transfer under the Land Transfer Act 1952 for creation of an
easement. The form annexed to the agreement includes the names of the parties and consideration of $30,000. The annexure schedule includes the following:
3.The grants of rights of way shall be free of and appurtenant to each and every part of the dominant land save that the Easement of Right of Way shall only service one dwelling on the dominant land.
3.1No power is implied for the transferor to terminate the right of way for breach of any provision in this transfer by the transferee or for any other cause, it being the intention of the parties that the grant of right of way will continue forever unless surrendered.
[19] On 1 January 1999 the plaintiff entered into an agreement with Ms Smith to purchase the servient land from her. The right of way had not been registered against title to the servient land at that date, but Mr Walshe was aware that a right of way was to be granted.
[20] On 15 January 1999 the defendants brought a building onto their land. This was an existing villa which had been removed from another property. It was re- erected on a part of the dominant land. This is known as “Windmill House”.
[21] The formal memorandum of transfer creating the easement was signed on 18
February 1999. It is signed by Ms Smith, as the transferor and by the defendants as transferees. I will set out all of the clauses referred to by the parties and given some emphasis in their submissions.
RIGHT OF WAY
2.The rights of way in respect of the easement areas shall be on those terms as set out in clause 1 of the 7th Schedule to the Land Transfer Act 1952 and those terms set out in the 9th Schedule to the Property Law Act 1952 subject to the following amendments:
(a)The following words shall be added to clause 2(c) of the 9th Schedule of the Property Law Act 1952 after the word “standard”.
“such reasonable contribution shall be assessed on the basis of appropriate use to which the right of way is put by the respective occupiers and their servants agents contractors permitted occupants residents and invitees”.
GENERAL COVENANTS
5.The grants of right of way, telephone easements and energy supply easements shall be free of and appurtenant to each and every part of
the dominant land save that the Easement of Right of Way shall only service one dwelling on the dominant land.
5.1No power is implied for the transferor to terminate the right of way, telephone easement or energy supply easement for breach of any provision in this transfer by the transferee or for any other cause, it being the intention of the parties that the grant of the easements will continue forever unless surrendered.
[22] The right of way was registered on the titles to the dominant land and the servient land on 16 March 1999. Title to the servient land was registered in the plaintiff’s name on 21 March 1999.
[23] On 19 August 2000 the defendants wrote to the plaintiff. Part of the letter is as follows:
Dear Tony
Regarding our conversation by telephone our Right of Way through your property, etc, what we would like to do, is as follows:
1. Change the access agreement to accommodate up to 3 dwellings.
One would be the present guest house up beside your section, plus the existing house down below, and possibly eventually another also
down by the sea.
2. Create a maximum of 3 lots …
3. Obtain Council’s consent for a change of use of the existing guest house to a private home.
…
If you are happy to give your written agreement to this, we can then present this proposal to Council …
We greatly appreciate your co-operation, and assure you of ours in return. Yours sincerely
‘Ross MacRae
Lyn Collins’
[24] The defendants wrote again to the plaintiff on 1 October 2000. The letter includes the following:
As discussed, following is a copy of the Easement Agreement, which we would like to amend (by removal of the restriction to “one dwelling” in para.
5). We have briefly consulted with Alison Wallis of Hesketh Henry, Solicitors, but would prefer to negotiate directly with you, to avoid
unnecessary cost or complication. If Council agrees to us re-designating the existing guest house into a “dwelling” and allowing the existing bach and sheds on the sea-front to be an official dwelling, we will need your consent to amend the Easement accordingly.
We note para 2(a) refers to “reasonable contribution” towards maintenance, etc based on usage. We feel that residential uses would create far less use and wear-and-tear than the existing commercial uses. …
I enclose a copy of the original agreement para 4.2 with Leslie Smith, which was inserted to protect our future interests, as time ran out to finalise this matter, with the impending sale of your section. …
[25] The plaintiff, who has lived in England since 1991, got his lawyer to respond. This was done in a letter of 7 November 2000. The letter is marked “without prejudice”. It was produced because Mr MacRae, at paragraph 89 of his first affidavit, responding to an earlier affidavit of Mr Walshe said that Mr Walshe’s reference to “offers and counter-offers made, letters sent and received in August
2000 or thereabouts appear to be figments of the plaintiff’s imagination”. It is inappropriate and unnecessary to refer to the detail of the letter of 7 November 2000 from the plaintiff’s solicitor save to record that what was proposed in the defendants’ letter of 19 August 2000 was not accepted.
[26] In November 2005 there was some further correspondence between the plaintiff and the defendants, initiated by the defendants. In an e-mail dated 1
November 2005 the defendants said, amongst other things:
We have progressed the plan discussed with you a few years ago. We intend to separate the top and bottom areas of our land, changing the use of the current guest house on the hill-top to a dwelling. We have decided to keep it to just two lots, of around 3 hectares each, with no real additional effects on the neighbourhood, which we hope will be readily approved by Council; rather than a major subdivision/development.
We would like to get on with finalising the formal arrangement over the easement through your property, to allow for two dwellings, and hope we can agree on an arrangement which suits us both. We are hoping to submit a subdivision plan before Christmas.
[27] The defendants asked the plaintiff where they could send “the necessary proposals and documentation”. The plaintiff responded with an address to which mail might be sent. The defendants responded the same day and said:
Many thanks for your response. We will take the lead from Council as to any need for neighbour’s consent and any other requirements regarding any improvements to the access, etc, and will keep you informed. We will post any relevant documentation to you, as advised. Our telephone number is … Have you any further thoughts about selling your section?
[28] Mr Walshe said that he heard nothing further until 21 January 2009 when he received an e-mail from the defendants which includes the following:
The final consents and issuing of new titles for the subdivision of our property in 2 titles as previously mentioned, are now complete, without any requirement for neighbour’s consents, and the easement now serves both properties as advised. Your co-operation with registering Vector’s formal interest in the access may be sought soon …
These matters are simply formalities and will only enhance the services and value of your property …
[29] This led to inquiries by or on behalf of the plaintiff as to precisely what had occurred. The plaintiff’s solicitors found that a consent to subdivision of the defendants’ land into two lots had been issued by Auckland City Council under the Resource Management Act 1991 on 14 November 2008. The result of this consent was subdivision of the dominant land into lots 1 and 2. “Windmill House”, the building moved onto the land, together with the bach, the building constructed by the defendants in the 1980s, are both on lot 1. “Wild Bay Villa”, built by the defendants in 1986 is on lot 2.
[30] Windmill House is described in the subdivision consent as a “visitor facility”. Mr MacRae attached importance to a condition in the subdivision consent relating to this building. So far as relevant it provides:
Visitor Facility:
That the existing visitor facility building … existing on the Land at the time
Consent was granted … shall:
1.be used as a visitor facility for short term accommodation only rented on a daily tariff basis.
2.not be used for any other residential use, including, but not limited to, the use of the building as an independent dwelling or for additional residential and habitable purposes …
The words “dwelling” and “visitor facility” are defined for the purposes of the resource consent.
[31] On completion of the defendants’ subdivision new certificates of title were issued for lots 1 and 2. The right of way (and other easements over the plaintiff’s land) are recorded on both titles.
[32] Lots 1 and 2 of the defendants’ land are on the market. They have been on the market for some time. In addition, Wild Bay Villa, Windmill House, and a self- contained part of Windmill House called Windmill Studio, are advertised as available for rent. All buildings are described, in effect, as having vehicular access from the road. Wild Bay Villa is also described as having access from the sea. A map included in the advertising shows road access to Windmill House and to Wild Bay Villa using the right of way over the plaintiff’s land.
Discussion
[33] The first inquiry is whether there is a serious question to be tried on the plaintiff’s claim. What that means in this case is whether it is seriously arguable, as the plaintiff contends, that the right of way cannot be used to service more than one dwelling on the defendants’ land, with the defendants’ land being lots 1 and 2. I emphasise that I am not required to make a final determination as to the meaning of the words. Approaching the matter in this way I am satisfied that the plaintiff’s contention is seriously arguable.
[34] To explain why I have come to this conclusion I will briefly outline why the meaning contended for by the plaintiff may be considered to be seriously arguable. It is inappropriate to go into detail because that will be a matter for the trial, if the parties are not able to settle their differences. I will also explain why I am satisfied that the arguments put forward by Mr MacRae for himself and Ms Collins do not, at this stage of the proceeding, persuade me that the plaintiff does not have a serious question to be tried.
[35] The provision that has to be considered first is clause 5 of the registered memorandum of transfer creating the easement. The registered document must be the starting point because this is what binds the plaintiff’s land and this is what provides the benefit to the defendants’ land. It goes beyond direct agreements between individuals, such as the August 1998 agreement between the defendants and Ms Smith, or any other agreements or understandings between individuals not resulting in documents registered against the titles.
[36] A person considering buying the plaintiff’s land or either of the lots owned by the defendants, is bound by the registered document and is entitled and required to assess the meaning by reference to the words contained in that document. The other side of this coin is that a third party considering buying the plaintiff’s or the defendants’ land would not normally be bound by an agreement that may have been made, for example, between Ms Smith and the defendants.
[37] The words in clause 5 that need to be considered first are: “the Easement of Right of Way shall only service one dwelling on the dominant land”. A straight forward interpretation of this expression is consistent with the plaintiff’s argument. A different way of expressing what, on the face of it, is recorded here, would be to say that the right of way shall not service more than one dwelling on the dominant land. What needs to be found, at this stage of the proceeding, is a seriously arguable natural meaning, and this is a seriously arguable natural meaning; the way in which an objective reader would interpret what is recorded. There were submissions as to the effect of the adverb “only”, and other fine points of interpretation, but it is unnecessary at this stage to go into issues of that nature.
[38] In addition to the meaning that I have just outlined, I also accept the submission of Mr Jenkin, for the plaintiff, that it is arguable on a serious basis that the relevant words in clause 5 mean that the right of way shall only be used for the purpose of servicing a single dwelling, and shall not be used for any other purpose. It is unnecessary to consider that aspect any further because the conclusion in the preceding paragraph is sufficient, subject to consideration of the remaining issues and submissions.
[39] The next point is that clause 5 refers to “the dominant land”. There would not appear to be any argument as to what this means; in practical terms it means both lot 1 and 2 owned by the defendants. On that basis the plaintiff has a seriously arguable case to the effect that, although there is more than one building on all of the defendants’ land, and these are or may be dwellings, the right of way can be used to get access to only one of these buildings.
[40] The part of clause 5 I have considered to this point needs to be read in its full context. The right of way (and the other easements) are “free of and appurtenant to each and every part of” the defendants’ land. This part of the clause is required to be given full effect, but that does not bear on the meaning of the words of limitation in a way sufficient to displace the arguable meaning I have already referred to. I am also satisfied that there is nothing in the remaining provisions of the registered memorandum of transfer sufficient to displace the conclusion that the plaintiff has a seriously arguable case as to the limitation on the use of the right of way. And this wider context includes the seventh schedule to the Land Transfer Act 1952 and the ninth schedule to the Property Law Act 1952, both of which are referred to in clause
2 of the memorandum of transfer.
[41] Mr MacRae submitted, in essence, that if the plaintiff’s argument is correct, this will have the effect of nullifying clause 5.1. Mr MacRae referred to the provision in clause 5 that the right of way “shall be free of and appurtenant to each and every part of the dominant land” and the provision in clause 5.1 that “the grant of the easements will continue forever unless surrendered”. As I understood Mr MacRae’s submissions (and I have to an extent combined separate points) it was that the effect of the plaintiff’s argument and the order sought would be to cancel the right of way in respect of part of the land. For example, if there could be access over the right of way only to a dwelling on lot 1, access over the right of way to lot 2 would be gone. I do not agree that that is necessarily the consequence if, as may be arguable, the limitation sought by the plaintiff applies only to use of the right of way to service a dwelling, and use of the right of way for other purposes would remain. In any event, if an interim injunction is granted it will not finally determine the position. Also the defendants’ legitimate concerns relate more to the form of the order than to the meaning of the central provision in clause 5.
[42] A further question arises as to the meaning of the word “dwelling”. Mr MacRae submitted, in effect, that this means a place of permanent residence; a building used as a home. In particular, in relation to the facts of this case, the word dwelling does not include Windmill House because this is a “visitor facility”. There is the definition of “dwelling” in the condition attached to the subdivision consent as follows:
“dwelling” means a building, a cluster of buildings, a room or a group of rooms, used, designed or intended to be used exclusively by one or more persons as a single independent and separate housekeeping unit and includes homestay accommodation where lodging is provided or intended to be provided within the dwelling for reward or payment for not more than five guests.
[43] In contrast, the subdivision consent condition defines “visitor facility” as meaning, amongst other things, “any premises in which transient accommodation or lodging is provided or intended to be provided for reward or payment”.
[44] It is open to question whether these definitions can have any significant bearing on the meaning of the expression “dwelling” used in the memorandum of transfer. It is a different document, designed for a purpose quite different from the purpose of the subdivision consent, it is a document arising from an agreement entered into between private parties as opposed to one required under a statute, the Resource Management Act, and it was made eight years before the statutory consent was granted.
[45] The Oxford English Dictionary defines “dwelling” as “a place of residence; a dwelling-place, habitation, house”. Collins English Dictionary and Thesaurus (1993) defines “dwelling” as “a place of residence”. These definitions, in considerable measure, focus on the general nature of the use of the building – residence – without qualification as to whether “residence” is short or long term and whether people in residence are paying or not paying. On this basis I consider it is seriously arguable for the plaintiff that all three buildings on the dominant land, Windmill House, Wild Bay Villa, and the bach, are “dwellings”. They are certainly capable of being used as dwellings. In fact, it could possibly be argued that there are four “dwellings”, if the self-contained unit in Windmill House is taken into account.
[46] It is also arguable that the words of limitation in clause 5 of the memorandum of transfer mean that the right of way cannot be used for the purposes of access to a visitor facility. As with all of these issues, it is not necessary to decide that question and it is not appropriate to do so. But in my view it is certainly arguable that it was not intended that the servient land – the plaintiff’s land – should be subject on the right of way to the amount of traffic likely to be generated by a visitor facility as defined in the subdivision consent. The definition of “visitor facility” is much the same as the definition of a hotel.
[47] I will now consider the further submissions of Mr MacRae to assess whether, notwithstanding the preliminary view already expressed, there is sufficient to indicate that the plaintiff’s claim does not give rise to a serious question to be tried.
[48] Mr MacRae referred to the letter from his and Ms Collins’ solicitors of 19
December 1997, referred to at [15] above. Mr MacRae submitted that the response of the solicitors to condition 2 means that there is no restriction on the number of dwellings that may be serviced by the right of way provided there are adjustments, in the plaintiff’s favour, for contributions to the cost of maintaining the right of way. If the matter rested with the correspondence in December 1997 this point would require further consideration. However, interpretation of the meaning of this letter, forming part of the negotiations, could not prevail over the meaning of the relevant clause in the registered memorandum of transfer. In any event, it is open to question whether the statement in the letter from the defendant’s solicitor has any significant effect. One way of looking at it is it is simply a statement of the obvious without any binding effect on the parties. That is to say, there was a statement that if there was agreement for “any further dwelling units within the MacRae property”, then there would also have to be negotiations about changed contributions.
[49] Mr MacRae made broadly similar submissions relating to the acknowledgement from the defendants in clause 4.2 of the 25 August 1998 agreement (recorded at [17] above) and provisions in the registered instrument relating to contributions. These matters do not alter my primary conclusion.
[50] In addition to the reference to the December 1997 letter, Mr MacRae referred to other matters, including correspondence, that preceded execution of the formal memorandum of transfer on 18 February 1999. If this dispute goes to trial it may be necessary to consider background facts to assist in interpreting the relevant words in the memorandum of transfer. There are, however, limits to that sort of inquiry. One has already been touched on in a slightly different way. That is that the primary focus must be the document finally executed by the parties. This is what binds the parties to this case and this is what will bind subsequent purchasers of the dominant land or the servient land. Agreements that may have been made at earlier dates may not be very relevant. They may be irrelevant. That will be a matter for the Judge at the trial. I do not have to assess those matters at this point. Beyond that, and perhaps more particularly, letters from or on behalf of one party, simply indicating what that party might be wanting to achieve by way of negotiation, are unlikely to have much relevance. What is important is what was actually agreed, not what someone was trying to achieve.
[51] Mr MacRae referred to assurances he said had been given to him and to Ms Collins by Ms Smith. There does not appear to be evidence of assurances from Ms Smith which might have a bearing on the questions I have to decide. In other respects Mr MacRae appeared to be referring to notice that had been given to Ms Smith of the intentions of the defendants in relation to further buildings to be brought onto the site, and things of that nature. Advice of these intentions was given at various times, but notice of an intention does not of itself give rise to any legal right. In any event, and again in relation to the present application, submissions in this regard do not alter my primary conclusion that the plaintiff has a seriously arguable case as to the limitation of use of the right of way to one dwelling.
[52] Mr MacRae referred to clause 4.2 in the agreement of 25 August 1998. He submitted that clause 4.2 does not adequately reflect what he described as the “agreement” arising from the December 1997 correspondence. The short answer to that submission, for present purposes, is that Mr MacRae and Ms Collins signed the agreement. They were represented by solicitors at the time.
[53] Mr MacRae submitted that clause 5 in the memorandum of transfer is ambiguous and the ambiguity should be construed against the grantor of the right of way and, therefore, against the plaintiff. The basis for the submission was that the memorandum of transfer had been drafted by Ms Smith’s solicitors. I am not persuaded that, if there is ambiguity, it should necessarily be construed against the grantor of the right of way. That would be to construe the ambiguity in favour of the party getting a benefit against the party conferring the benefit. In any event, I am not persuaded that there is any sufficient ambiguity for the contra proferentum rule to be engaged on this interim injunction application.
[54] Mr MacRae advanced an argument to the essential effect that the plaintiff is estopped from denying that the defendants are entitled to use the right of way for the purposes of access to two dwellings. The factual foundation for the estoppel argument arose, Mr MacRae submitted, from the dealings with Ms Smith and the correspondence between Ms Smith’s solicitors and the defendants’ solicitors, and some other background facts. I have already discussed aspects of this in relation to the question of assurances from Ms Smith and the effect of correspondence between the parties. None of that assists the defendants. In addition, Mr MacRae acknowledged, in the course of his oral submissions to me, that there is no evidence that the plaintiff had notice of anything of relevance before he took title to the land.
[55] In the context of the estoppel submissions I did invite Mr MacRae to consider the question as to whether there had been any delay by the plaintiff in making the present application which might bear on the Court’s discretion. Mr MacRae did not point to any consideration sufficient to justify declining an interim order on this basis. Mr MacRae did refer to provisions of the Limitation Act, but these have no relevant application.
[56] Towards the end of his oral submissions Mr MacRae put to me what he said was the essence, or at least a significant aspect of, the submissions he was making. The factual foundation to this is that Mr MacRae and Ms Collins are now the owners of two separate lots pursuant to a subdivision lawfully made and with at least one building on each lot capable of being used as a “dwelling”. It was assumed that the defendants will in due course sell both lots. Mr MacRae submitted that the owner of
the first lot sold would be entitled to use the right of way for access to the dwelling on that lot pursuant to the express words of the clause 5 in the memorandum of transfer without regard to any background circumstances. The owner of the second lot sold would be entitled to use the right of way for the purposes of access to the dwelling on that other lot because of what I would describe, in terms of the submission, as “the prior agreements”. The prior agreements, as referred to in the submission, are not only the written and signed agreement of 25 August 1998, but “agreements” arising from correspondence and dealings. I am bound to say that it was not at all clear to me as to how the purchasers of the second lot could avail themselves of agreements to which they are not parties, let alone seek to take advantage of dealings which had nothing to do with them.
[57] I have not covered every point made for the defendants, but I believe I have captured the main points. Mr MacRae’s survey of earlier correspondence, and a survey which was also undertaken to an extent by Mr Jenkin on behalf of the plaintiff, in fact highlights the need for caution in relation to disputed questions of fact when dealing with an interlocutory application. The first letter of 19 December
1997, from the defendants’ solicitors, expressly states that the defendants would “not accept any restrictions on the use of their land and in particular any limitation of the rights of the easement to one dwelling only”. This important question, in consequence, was at the forefront of the defendants’ minds. They nevertheless signed an agreement, and then a formal registerable memorandum of transfer, which on the face of it records the opposite. In other words, it is reasonably arguable that the defendants went into this with their eyes wide open.
[58] I again emphasise that I am not reaching that conclusion, but it is clearly arguable, and there are further examples. There is the letter of 29 May 1998 which is recorded at [16]. This contains notice from the defendants’ solicitors to Ms Smith’s solicitors, of the defendants’ intentions to put a further dwelling on the land. This notice may have some bearing on the final issues, although that is open to argument. On the other hand the knowledge of the defendants effectively represented by this letter can be assessed in the same way as the 19 December 1997 letter just referred to. In spite of a desire to have access to two dwellings, the defendants, it may clearly be argued, agreed with full knowledge and understanding, to limit it to one only.
[59] There is also the correspondence with the plaintiff after he bought the land. There may be questions of a legal nature as to whether this correspondence is relevant to interpretation of the memorandum of transfer because the memorandum of transfer preceded the correspondence. Subject to that, the letters from the defendants might reasonably be interpreted as indicating that they understood that the right of way could be used for access to one dwelling only. I refer to statements in the letters recorded at [23] and, in particular, at [24]. Those are the letters in August and October 2000. There is the further letter in November 2005 recorded at [26]. Even if these letters are not relevant to interpretation of clause 5 they assist in indicating what the defendants considered to be the status quo; that is, access for one dwelling only.
[60] For all of these reasons I am fully satisfied that there is a serious question to be tried on the plaintiff’s argument as to the meaning of the right of way.
[61] As to the balance of convenience, I did not receive any extensive submissions from Mr MacRae. There was his submission, earlier referred to, that an injunction in favour of the plaintiff would have the effect of terminating the right of way in relation to one of the lots. This will not be the effect of an interim injunction.
[62] Mr MacRae also submitted that there would be adverse financial consequences for him and Ms Collins. However, he acknowledged that there is no evidence to this effect apart from a statement at paragraph 63 of his affidavit of 23
March 2010. The statement in this paragraph, which I will not record in this judgment, does not provide any substantial evidence of financial consequences sufficient to justify refusing an interim injunction. I would also note, in case it will assist in the future conduct of the proceeding, that it is important that any affidavit simply records statements of fact, and that matters of opinion, and argumentative statements, should not be included in an affidavit.
[63] In relation to financial consequences there is, as required, an undertaking as to damages from the plaintiff. No material issues were raised in relation to that undertaking. There was also no argument sufficient to persuade me that damages would be an adequate remedy for the plaintiff.
[64] One matter I consider to be of some importance when weighing, in a broad way, the balance of convenience, is possibly adverse consequences for third parties. Most often when the interests of third parties are brought into account on an application for an interim injunction, the concern being assessed is possible adverse consequences if an interim injunction is granted. In this case I consider that what needs to be assessed is possible adverse consequences for third parties if an interim injunction is not granted. At present the right of way is registered as, in effect, being available to purchasers from the defendants of both lot1 and lot 2. If one lot is sold, the purchasers of that lot may very well consider that they are entitled to use the right of way to get to their dwelling together with the defendants using the right of way to get to their dwelling on the other lot. That might be dealt with on an interim basis by preventing the defendants from using the right of way, but it gives rise to a material complication which should be avoided. The problem is compounded if the defendants sell both lots. There will be a real risk of unsuspecting purchasers of each lot finding that neither has access because it is not possible to determine which of them is entitled to the sole use of the right of way. What I refer to proceeds on the premise that the right of way restriction means what the plaintiff contends it means, but that is the basis upon which I am bound to proceed at this stage of my assessment.
[65] The order sought by the plaintiff does not seek to restrain the present use of the right of way while both lots 1 and 2 are owned by the defendants. That is a responsible approach to the application because there are reasonable arguments in favour of the plaintiff for immediate restrictions irrespective of ownership of the dominant land. The order that is sought is designed to place what is seen as the minimum amount of restriction on the defendants consistent with the plaintiff’s interim entitlement. Importantly, the plaintiff does not seek to prevent the defendants from selling one lot. This in turn reduces the risk of adverse financial consequences for the defendants, assuming they can find a buyer. The essential restriction sought, in the event of the sale of one lot, is that the remaining lot cannot then be sold, pending any final determination of the Court, except on terms which will mean that in the interim the right of way is not appurtenant to that lot. Limiting the interim injunction in this way is a further consideration favouring the grant of it.
Result
[66] The plaintiff is entitled to an interim injunction on the terms sought, as recorded in the amended draft orders for interim injunction filed on 17 February
2010, save that that part of the order labelled (a) is to be deleted.
[67] Leave is reserved to the parties to apply for variation of the interim injunction order, including an application by the plaintiff to apply for a more restrictive order if circumstances require such an application.
[68] The plaintiff is entitled to costs on a 2B basis.
Further steps in the proceeding and concluding comments
[69] It is important that the claim is progressed as expeditiously as reasonably possible. For that purpose there will be need for appropriate timetabling directions and related case management. The proceeding is accordingly adjourned to a case management conference on the next available date, to be advised to the parties.
[70] I would urge the parties to now engage in negotiations to see whether these issues can be settled. I was assured by Mr Jenkin on behalf of the plaintiff that the plaintiff is willing to discuss the possibility of settling the dispute, but of course without being committed to any particular outcome. Similarly Mr MacRae assured me that he and Ms Collins are willing to consider the possibility of settlement without being committed to any particular outcome.
[71] In relation to the possibility of negotiations I note that the memorandum of transfer not only records a commitment on the parties to the transfer to negotiate in good faith if there is a dispute, but also a submission to arbitration. The clause is as follows:
DISPUTES
6.If any disputes arises between the transferor and the transferee concerning the rights created by this transfer the parties shall enter into negotiations in good faith to resolve their dispute. If the dispute
is not resolved within one month of the date on which the parties begin their negotiations the parties shall submit to the arbitration of an independent arbitrator appointed jointly by the parties, and if one cannot be agreed upon within 14 days, to an independent arbitrator appointed by the President for the time being of the Auckland District Law Society. Such arbitration will be determined in accordance with the Arbitration Act 1996 and its amendments and any enactment passed in substitution. The parties’ execution of this transfer shall be deemed as submission to Arbitration.
Peter Woodhouse J
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