Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Hare v van Brugge [2013] NSWCA 74 Hearing dates: 26 March 2013 Decision date: 16 April 2013 Before: Macfarlan JA (at [1]); Barrett JA (at [2]); Tobias AJA (at [38]) Decision: 1. Order (2) made in the Equity Division on 20 December 2011 is varied by omitting the words "including by disconnecting the supply of electricity to the Inclinator". 2. The Annexure "A" to the orders made in the Equity Division on 20 December 2011 is varied by adding to paragraph (9) thereof, immediately after the word "Defendants" where first appearing, the words "will allow all electricity required for the operation of the Inclinator to be drawn from their domestic supply connection and". 3. Appeal otherwise dismissed. 4. That the appellants pay the respondents' costs of the appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: REAL PROPERTY - easements - particular easements and rights - right of carriageway - where an electrically driven inclinator system forms part of the servient tenement - where the inclinator system is a fixture - whether the right to pass and repass created by the easement includes a right to use the inclinator - REAL PROPERTY - easements - other matters - easement affecting Torrens system land - extent to which matters outside the register may be taken into account in construing the easement terms Legislation Cited: Conveyancing Act 1919, s 88K Cases Cited: Carter v Cole [2006] EWCA (Civ) 398; [2006] All ER (D) 139 (Apr) Currumbin Investments Pty Ltd v Body Corp Mitchell Park Parkwood CTS [2012] QCA 9; [2012] 2 Qd R 511 Duncan v Louch (1845) 6 QB 904 Jones v Pritchard [1908] 1 Ch 630 Liford's Case (1614) 11 Co Rep 46b, 52a; 77 ER 1206 Pomfret v Ricroft (1669) 1 Saund 321; 85 ER 454 Sertari Pty Ltd v Nirimba Developments Pty Ltd [2007] NSWCA 324; (2008) NSW ConvR 56-200 Taylor v Whitehead (1781) 2 Dougl 745; 99 ER 475 Westfield Management Ltd v Perpetual Trustee Co Ltd [2007] HCA 45; (2007) 233 CLR 528 Zenere v Leate (1980) 1 BPR 9300 Category: Principal judgment Parties: Meryl Leslie Hare and John Hare - Appellants Richard van Brugge and Chiaki van Brugge - Respondents Representation: Mr V R W Gray - Appellants Mr R A Dick SC/Ms T L Wong - Respondents JGP Lawyers - Appellants Sparke Helmore - Respondents File Number(s): 2012/16346 Decision under appeal Before: Slattery J File Number(s): 2011/113695 Judgment 1MACFARLAN JA: I agree with Barrett JA. BARRETT JA: Background 2The parties to this appeal occupy adjoining houses at Seaforth. The appellants, Mr Hare and Mrs Hare, live in the house erected on Lot 500 in Deposited Plan 708511. Mrs Hare is the registered proprietor of that lot. The respondents, Mr van Brugge and Mrs van Brugge, occupy the house erected on Lot 501 in Deposited Plan 708511. They are together the registered proprietors of that lot. It is sufficient to refer to the properties as "Lot 500" and "Lot 501". 3The parties' dispute concerns an easement affecting part of Lot 500 and benefiting Lot 501. In proceedings in the Equity Division of the Supreme Court, Slattery J decided that the registered proprietors for the time being of Lot 501 have, by virtue of the easement, the right to use an electrically driven inclinator installed and standing within the easement site forming part of Lot 500. 4The houses are built close to the Middle Harbour shoreline, which forms the western boundary of each lot. On the east, each lot has a street frontage but the land falls away very sharply and steeply from the street in a westerly direction towards the harbour foreshore. The inclinator provides a convenient means of transit between the houses and the street frontage where a shared garage for the properties is situated. Access to and egress from the houses is otherwise possible only by means of a large number of steps, including steps forming part of a steel spiral staircase. The steps will be referred to again presently. 5For some years after they became neighbours in 1991, the parties co-operated in relation to the inclinator which was used by the occupants of both houses and their visitors. Differences arose in 2011 when the appellants said that the respondents were not to use the inclinator unless the appellants had granted permission. That led to the respondents commencing proceedings in April 2011. 6The servient tenement burdened by the easement benefiting Lot 501 is a part of Lot 500 consisting of a narrow strip of land of variable width extending from the bulk of that lot (where the house stands) along the common boundary of Lots 500 and 501 to the street frontage. The easement, omitting as irrelevant a part concerning pipes and services, is in the following terms: "Full and free right for every person who is at any time lawfully entitled to enter, pass and repass or be situated on or entitled to an estate or interest in possession in the land herein indicated as dominant tenement or any part thereof with which the right shall be capable of enjoyment, and every person authorised by him, to go, pass and repass at all times and for all purposes with or without animals or vehicles or both to and from the said dominant tenement or any such part thereof . . .". The decision at first instance 7The primary judge held that the express terms of the easement were such as to create in the registered proprietors for the time being of Lot 501 a right to use the inclinator, but only in such a way as is necessary and reasonable. His Honour also upheld the respondents' alternative argument that use of the inclinator is reasonably necessary for the effective and reasonable exercise and enjoyment of the rights expressly granted. 8After those conclusions had been announced, the primary judge appointed a further hearing to receive submissions on the form of the orders that should be made to give effect to them. In the event, declaratory and injunctive relief was granted against the appellants. The declaration was to the effect that the easement confers on the respondents, their employees, agents, contractors and invitees the right to reasonable use of the inclinator. By the injunction, the appellants are restrained from impeding, obstructing or otherwise preventing the reasonable use of the inclinator by the respondents, their employees, agents, contractors and invitees "including by discontinuing the supply of electricity to the inclinator". 9The judge also ordered that the parties use, maintain, repair, improve and resolve disputes about the inclinator in accordance with a set of provisions set out in an annexure to the orders and headed "Regime for Co-operative Use of Inclinator". I shall refer to these provisions as the "Regime". 10The matter of the electricity needed to drive the inclinator was dealt with by his Honour at two points. It was referred to in the injunction, as already noted. In addition, the Regime prescribed a system for providing electricity to the inclinator involving continued connection of it to the appellants' domestic supply but with separate metering of the electricity consumed by the inclinator and an equal sharing of the cost of that electricity. 11Certain other relief had been sought in the respondents' summons (including an order under s 88K of the Conveyancing Act 1919 creating a new easement) but it was ordered at an early stage that the claims that the judge determined should be decided separately from and in advance of the other claims. Issues on appeal 12The appellants, one of whom (Mrs Hare) is the owner of Lot 500 and therefore of the servient tenement forming part of it, appeal on numerous grounds. There are challenges to certain factual findings of the judge. Beyond that, Mr V R W Gray, counsel for the appellants, contended (and Mr R A Dick SC and Ms T L Wong for the respondents accepted) that the issues on appeal are reflected by two propositions advanced by him, as follows: (a) the terms of the grant do not entitle the respondents as grantees in exercise of the rights granted by the easement to use the inclinator; and (b) the action of the appellants in discontinuing the supply of electricity to the inclinator did not constitute an actionable interference with the rights of the respondents as grantees under the easement. Matters of context 13Some matters of context should be recorded at this stage. The appellants became the registered proprietors of Lot 501 in December 1991. Mr Hare's interest was later transferred to Mrs Hare and she became the sole registered proprietor in September 1999. The respondents became the registered proprietors of Lot 500 in September 1990. The easement, together with certain other easements, was created in January 1985 upon registration of Deposited Plan 708511. The inclinator was installed in 1979 and was thereafter used by the then owners and occupiers of both houses without any easement having been created. Thus, the inclinator existed when the easement was created; and the present parties' interests in relevant land arose after both the construction of the inclinator and the subsequent creation of the easement. 14The inclinator is in the nature of a railway system consisting of a carriage (or cage) that runs on a fixed rail. The rail is, for a substantial part of its length, above the ground and supported by pylons embedded in the soil. At other places, the rail is fixed to concrete mountings embedded in the soil. The carriage is attached to the rail in such a way that it cannot be detached at either end and cannot be lifted off without being dismantled. The proceedings were conducted below and in this Court on the footing that the inclinator structure as a whole, including its rail, pylons, footings, carriage and electrical installation, constitutes a fixture forming part of Lot 500. In that sense, it is correct to say that Mrs Hare, the first appellant, "owns" the inclinator. It is part of the land of which she is the registered proprietor. The Court's ability to consider physical features of the land 15A fundamental question concerns the extent to which it is permissible to have regard to the physical features of relevant land in construing the terms of an easement. Mr Gray submitted that, in light of the decision of the High Court in Westfield Management Ltd v Perpetual Trustee Co Ltd [2007] HCA 45; (2007) 233 CLR 528, there is very little scope to do so. 16In that case (at [37] to [40]), Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ drew attention to the restrictions inherent in the Torrens system when it comes to construing registered instruments creating easements. The general rule is that material outside the register may not be used. But, as this Court confirmed in Sertari Pty Ltd v Nirimba Developments Pty Ltd [2007] NSWCA 324; (2008) NSW ConvR 56-200, the High Court recognised that that general rule does not rule out reliance on evidence of the physical characteristics of the land concerned. Handley AJA said, with the concurrence of McColl and Tobias JJA, at [15]: "[T]he decision in Westfield Management Ltd v Perpetual Trustee Co Ltd [2007] HCA 45 has since confirmed that extrinsic material apart from the physical characteristics of the tenements, is not relevant to the construction of instruments registered under the Real Property Act 1900: paras [5], [37]-[41] [Emphasis added]". 17This formulation refers to both dominant and servient tenements. There was no submission on the present appeal that Sertari Pty Ltd v Nirimba Developments Pty Ltd should not be followed. 18By resorting to evidence of physical characteristics of the tenements, a court does not have regard to matters which, like the intentions of the original grantor and grantee, are unavailable to third parties inspecting the register. The physical features are there for all to see, at least as they stand today. Different considerations may apply if it is suggested that some material change in physical circumstances has occurred since the creation of the easement (see the observation of Fryberg J, with whom Margaret McMurdo P and Fraser JA agreed, in Currumbin Investments Pty Ltd v Body Corp Mitchell Park Parkwood CTS [2012] QCA 9; [2012] 2 Qd R 511 at [49]). There is no such suggestion in this instance. Physical features in this case 19The appellants' challenges to findings of fact concern particular physical features. On that, it is sufficient to say that, as is uncontroversial, both Lot 500 and Lot 501 fall away very sharply and very steeply from the street towards the shoreline, with obstacles of various kinds impeding a clear passage; also - and significantly - that, according to uncontested evidence of a former owner of Lot 500, the only practicable method by which the owners of Lot 501 could exercise the rights they derived from the easement when it was created in 1985 was by travelling on the inclinator since, had they sought to access the easement site from the street in any other way, it would have been necessary for them to negotiate a cliff that provided nowhere for a ladder to rest and no possibility of constructing steps; and there were a number of boulders and steep inclines which made it difficult to negotiate much of the easement site on foot. The evidence shows that those features of the land continue today. 20This is not to say that the owners of Lot 501 had no access to their property from the street (or vice versa) except by means of the easement over part of Lot 500 and the inclinator installed there. There were, as already stated, steps from the street. These, however, were within Lot 501 itself, except for minor intrusions into Lot 500 at a few points. Both properties enjoyed access and egress by means of these steps since the benefit of a right of footway over a strip of land forming part of Lot 501 (being a strip on which the steps were substantially constructed) was appurtenant to Lot 500. That easement, along with the easement within which the inclinator lies, was created upon the registration of Deposited Plan 708511. 21As regards the rights derived from the grant of the easement with which these proceedings are concerned, however, it is beside the point to rely on the fact that the owners of Lot 501 can access their property from the street by means of the steps essentially on their own land and without any need to resort to the easement over part of Lot 500. The creation of that easement caused the registered proprietors of Lot 501 to acquire and enjoy rights in respect of the easement site within Lot 500. The task of the Court is to determine what those rights are; and that must be done by construing the terms of the instrument in light of the evidence concerning physical features to which I have referred. 22Probably the most significant feature of the land at the time of the creation of the easement (and one that prevails also today) is that the inclinator, including its rails, pylons, footings, carriage and electrical installation are, as the parties accept, part of the easement site. The easement, when created and as it exists today, affects the particular piece of land consisting of the subsoil, the surface, the inclinator, any other fixtures and the airspace above. It is to the land so understood that the rights conferred by the grant of easement extend. The rights conferred by the easement 23Those rights are defined by the words in the relevant part of Deposited Plan 708511 set out at [7] above, specifically, "to go, pass and repass at all times and for all purposes with or without animals or vehicles or both to and from the said dominant tenement [Lot 501] or any such part thereof". The rights extend to and burden the whole of the easement site within Lot 500 marked in the plan "right of way and easement for services variable width". The rights are exercisable, for the accommodation of Lot 501, upon and over the whole of the land so marked including the parts of the land consisting of fixtures; and the registered proprietors of that servient tenement cannot dictate that the rights be exercised only in respect of some part of it. 24I mention this last point because of a submission by counsel for the appellants to the effect that the right arising from the easement is a right to reasonable use and that, if there are two ways in which the right might be exercised, it is the duty of the persons entitled to the benefit of the easement to adopt the less intrusive way or the way less calculated to conflict with use by the owners of the servient tenement. It was suggested, for example, that the respondents might be confined to walking along the servient tenement (or travelling with such vehicles, if any, and such animals as could negotiate the terrain) or suspending a cable car able to travel above the inclinator; and that for them to use the inclinator would transgress the boundary of reasonable use. 25It may readily be accepted that a concept of reasonable use applies. But it applies to both parties. Each of them - the servient owner and the dominant owner - must exercise a degree of restraint in relation to an easement site. Neither may exercise his or her rights (the rights arising from the easement, in the case of the dominant owner, and the rights incidental to ownership of the burdened fee simple, in the case of the servient owner) in a way that interferes unreasonably with the enjoyment of the other's rights. The necessary restraint does not, however, require one party to desist altogether from exercising some part of the totality of the party's rights so as to leave the field entirely clear for the other party. For example, if a right of footway exists over land traversed by a shallow stream and the owner of the servient tenement (or a predecessor) has constructed a bridge, the person entitled to the benefit of the easement may walk across the bridge; and this is so even though it is physically possible to wade through the shallow water. 26In the same way in the present case, Mrs Hare, as the servient owner, has no legitimate ground of expectation that Mr van Brugge and Mrs van Brugge, as the dominant owners, should use only the part of the servient tenement consisting of the surface of the soil or unoccupied airspace and desist from use of the part of the land consisting of the inclinator structure. All that obligations of reasonable use compel is that there should not be use inconsistent with the reasonable needs of the other party also to use the servient tenement. Conclusion on the central issue 27The discussion to this point allows a conclusion to be stated on proposition (a) at [13] above. Because the inclinator (including its carriage) is a fixture forming part of the servient tenement, the right to pass and repass created by the easement and exercisable in respect of that servient tenement allows passing and repassing over the inclinator structure and by means of the inclinator carriage. The primary judge was right so to conclude. The inclinator and its carriage are, in the particular context, like a road, a bridge or a flight of steps. They are a man-made enhancement that forms part of the land and has changed its nature in a way that facilitates or makes more convenient the form of use that the easement permits. Repairs and maintenance 28In Carter v Cole [2006] EWCA (Civ) 398; [2006] All ER (D) 139 (Apr) (at [8]), Longmore LJ stated a number of principles which he described as having been "settled for some centuries" and "not controversial". He gave ancient authority for each of them. One of these principles, applicable where a paved way has already been constructed on the site of an easement which is a right of way, is that the servient owner is under no obligation to maintain or repair the improvements: Pomfret v Ricroft (1669) 1 Saund 321; 85 ER 454; Taylor v Whitehead (1781) 2 Dougl 745; 99 ER 475; Jones v Pritchard [1908] 1 Ch 630. Second and similarly, the dominant owner has no obligation to maintain or repair the improvements: Duncan v Louch (1845) 6 QB 904. Third, the servient owner (who owns the land on which the improvements are situated) can maintain and repair the improvements, if he or she chooses. Fourth, the dominant owner (who has an obvious interest in keeping the improvements in good order) is entitled to maintain and repair but, if that right is exercised, the dominant owner must bear the cost: Taylor v Whitehead (above). The dominant owner has a right to enter the servient owner's land for this purpose but only to do necessary work in a reasonable manner. Longmore LJ gave as authority for this last proposition Liford's Case (1614) 11 Co Rep 46b, 52a; 77 ER 1206 and Jones v Pritchard (above). 29The dominant owner's right to repair and maintain improvements at his or her own expense is one of the ancillary rights that an easement confers. That right extends to the provision of any service that is reasonably necessary to make the easement usable. In relation to such a right and the manner of its exercise, McLelland J said in Zenere v Leate (1980) 1 BPR 9300 (at 9305): "Such ancillary rights include the right to carry out such work on the right of way site as may from time to time be reasonably necessary to create or maintain reasonable vehicular access along the right of way site and onto No 85, provided that such right be exercised in a manner which (a) is consistent with the reasonable use and enjoyment by the servient owner of the right of way site as the sole means of access between No 87 and a public road, and (b) does not interfere with the use and enjoyment of No 87 by the servient owner to a greater extent than is reasonably necessary ..." 30In the circumstances of this case where Mr van Brugge and Mrs van Brugge, as the dominant owners, have, in relation to the easement site (including the part of it consisting of fixtures), the right to pass and repass created by the grant, their ancillary rights include the right to keep the fixtures in working order at their own expense. Mrs Hare, as the proprietor of the easement site (including its fixtures), has a corresponding right to keep the fixtures in working order at her expense. Each, therefore, is at liberty to maintain and repair the inclinator. Neither has that right to the exclusion of the other; nor is the right of one in some way superior to the right of the other. Also, however, neither party has any obligation in this respect. Each is quite free to allow the inclinator to be inoperative and to fall into disrepair and decay. Supply of electricity 31That leads me to the matter of the supply of electricity and to proposition (b) at [13] above. I have referred to the fact that the appellants were restrained from interfering with the respondents' use of the inclinator "including by disconnecting the supply of electricity to the inclinator" (see [9] above). The aspect of the injunction reflected by the quoted words is challenged by the appellants and is, in my view, not supportable. As I have said, neither party has a right to have the other maintain or repair the inclinator. Each is at liberty to allow it to deteriorate and be inoperative; and each is also at liberty to maintain and repair it. In the same way, each party has the right to supply electricity as that party desires (or to withhold it) without regard for the wishes or needs of the other. It follows that the respondents have no entitlement to insist that the appellants supply the electricity necessary to keep the inclinator working or to cause it to operate at any given time; and that the respondents are entitled to supply the electricity required for their reasonable use. 32I have not so far mentioned the orders the appellants ask this Court to make. The outcome they propose is that the orders made at first instance be set aside (that is, the declaration, the injunction and the order putting in place the Regime plus the costs order) and that the Court should instead: (a) declare that the appellants' refusal to provide electricity to the inclinator to allow the respondents to use it does not constitute a real and substantial interference with the rights granted by the easement; (b) declare that the rights granted by the easement do not entitle the respondents to use the inclinator; and (c) remit the proceedings to the Equity Division so that the remaining claims may be determined. 33In view of the conclusions I have stated on the principal issue concerning the respondents' right to use the inclinator, the appellants have not established any entitlement to have the declaration made by the primary judge set aside or to have the matter remitted to the Equity Division. Nor, except in one respect, have they shown an entitlement to have the injunction discharged or set aside. The qualification with respect to the injunction concerns the part of it that deals with electricity supply. The appellants have a theoretical entitlement to be freed from the injunctive restraint to the extent that it requires them not to disconnect the electricity supply and thereby imposes a positive obligation to maintain the connection to a supply arranged and paid for by them. 34But that theoretical entitlement gives rise to a question about how the parties will co-exist into the future and what, if anything, should be done about the order imposing the Regime. In that respect, it is pertinent to quote two passages from the second judgment of the primary judge, as follows (at [5] and [14]): "5. Both parties wanted to put in place a regime to govern their mutual use and upkeep of the inclinator, a regime that would be workable and unlikely to generate avoidable further disputes. Nevertheless both parties wanted their remaining differences to be resolved by reference as closely as possible to their respective common law rights. These orders moulding final relief are made bearing this in mind." "14. There was debate as to whether the parties wished to have their mostly agreed "Regime for the Co-Operative use of Inclinator", Annexure "A" to the Orders ("the Regime") made into a formal amendment to the registered form of Easement B as recorded in the register, or whether the Regime would merely become binding between the parties. All agreed that they wished the Regime merely to be binding between the parties, so that it would not necessarily burden future owners of these parcels of land, who may, have better relations. Accordingly the Regime has been crafted as a set of permanent orders binding the parties but only the parties, and given effect through order 3. There are some other minor resolutions of differences between the parties, the resolution of which is given effect in these orders." 35As these passages show (and counsel on both sides accepted), the parties reached a large measure of agreement on means of co-existence once the principal question of the respondents' right to use the inclinator had been decided by the primary judge. Part of their agreement was that electricity for the inclinator should continue to be drawn from the appellants' domestic connection but should be measured by a separate meter and paid for by the parties in equal shares. There is no reason why that accommodation should not continue in force, although under a slightly revised methodology which sees the compulsion upon the appellants regarding continuity of supply (that is, that they are to allow power for the inclinator to continue to be drawn from their domestic connection) removed from the injunction and included in the Regime by way of addition to the provisions about separate metering and equal sharing of the cost of electricity. Disposition 36Leaving to one side the question of the costs of the appeal, the orders I propose are: 1. Order (2) made in the Equity Division on 20 December 2011 is varied by omitting the words "including by disconnecting the supply of electricity to the Inclinator". 2. The Annexure "A" to the orders made in the Equity Division on 20 December 2011 is varied by adding to paragraph (9) thereof, immediately after the word "Defendants" where first appearing, the words "will allow all electricity required for the operation of the Inclinator to be drawn from their domestic supply connection and". 3. Appeal otherwise dismissed. 37As to costs, the position, as I view it, is that the respondents have been almost wholly successful and that the minor matter on which the appellants have succeeded (on the basis of what I have termed a theoretical entitlement to relief) has not altered the result in any aspect of substance. Accordingly, I propose the following further order: 4. That the appellants pay the respondents' costs of the appeal. 38TOBIAS AJA: I agree with the orders proposed by Barrett JA for the reasons he has expressed. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 April 2013