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Erratt v Grills [2015] NSWSC 594 (20 May 2015)

Last Updated: 2 June 2015



Supreme Court
New South Wales

Case Name:
Erratt v Grills
Medium Neutral Citation:
Hearing Date(s):
7 and 8 May 2015
Decision Date:
20 May 2015
Jurisdiction:
Equity Division
Before:
Lindsay J
Decision:
Declarations proposed. Summons otherwise to be dismissed.
Catchwords:
REAL PROPERTY – Boundaries of land and fencing – Rural land - Give and take fence along creek - Determination under Dividing Fences Act 1991 NSW, section 14 – Contract of compromise - Characterisation of give and take fence arrangement – Legal incidents of arrangement
Legislation Cited:
Cases Cited:
Alcatel Australia Ltd v Scarcella [1998] NSWSC 483; (1998) 44 NSWLR 349
Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201
Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NSWCA 187
Erratt v Local Land Board Armidale [2008] NSWSC 959
Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd [2008] HCA 10; (2008) 234 CLR 237
Landale v Menzies [1909] HCA 48; (1909) 9 CLR 89
O’Keefe v Williams [1910] HCA 40; (1910) 11 CLR 171
Royal Insurance Company Ltd v Mylius [1926] HCA 49; (1926) 38 CLR 477
Secured Income Real Estate (Australia) Ltd v St Martin’s Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596
Service Station Association v Berg Bennett [1993] FCA 445; (1993) 45 FCR 84
Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359
Specialist Diagnostic Services Pty Ltd v Healthscope Ltd (2012) 305 ALR 569; [2012] VSCA 175
Commonwealth Bank of Australia v Barter [2014] HCA 32; 88 ALJR 814; 312 ALR 356
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Paciocco v ANZ Banking Group Ltd [2015] FCAFC 50
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40].
Tote Tasmania Pty Ltd v Garrett [2008] TASSC 86; (2008) 17 TasR 320
Vickery v Jenner (1896) 17 NSWR (Law) 438
Texts Cited:
AJ Bradbrook, CE Croft and RS Hay, Commercial Tenancy Law (LexisNexis Butterworths, Sydney, 3rd ed, 2009), paragraphs [1.3]-[1.4] and [3.1]-[3.3]
Butt, Land Law (6th ed, 2010), para [15:59].
HK Insall (ed), Collins’ Law of Fences and Pastures Protection (NSW) (Law Book Co, Sydney, 2nd ed, 1984), pages 6-7
K. Stoeckel, R Webb, L Woodward and a Hankinson, Australian Water Law (Law Book Co., Sydney, 2012)
M. McKenzie, “Water Rights in NSW” : Properly Property?” [2009] SydLawRw 17; (2009) 31 Sydney Law Review 443
Peter Young, “Some Thoughts on Fences” (1994) 2 Australian Property Law Journal 78 at 79
Category:
Principal judgment
Parties:
Plaintiff: Gillian Wren Erratt
First Defendant: Abbott John Grills
Second Defendant: Phillipa Maree Grills
Representation:
Counsel:
Plaintiff: MB Evans
First and Second Defendants: J Turnbull


Solicitors:
Plaintiff: Patterson Byfield & Bryen
First and Second Defendants: Moin & Associates
File Number(s):
2014/00186879

JUDGMENT

INTRODUCTION

  1. These proceedings represent the latest round in a long-running contest about management of the boundary between two rural properties, marked by a creek the mid-point of which defines the common boundary of the freehold title to each property, traversed by a “give and take fence” of a type which, at a high level of generality, may be taken as sufficiently described by the plurality (of Griffith CJ, Barton and O’Connor JJ) in Landale v Menzies [1909] HCA 48; (1909) 9 CLR 89.
  2. By analogy with Landale v Menzies, the plaintiff claims an entitlement to exclusive occupation and use (in the nature of a lease or, alternatively, a licence) of all land owned by the defendants in freehold title on her side of their dividing fence. On the basis of that claimed entitlement, she asserts that, by venturing on her side of the fence, albeit on land held by them in freehold title, the defendants have committed, and threaten to continue committing, the tort of trespass against her. She claims injunctive relief (to keep them on their side of the fence) and damages, including aggravated and exemplary damages.
  3. The defendants accept that the dividing fence is a “give and take fence” and that, whilst ever the arrangement underlying its existence remains operative, the plaintiff is entitled to possession of their freehold land on her side of the fence. However, they say, Landale v Menzies is but an imperfect analogy. On the facts of this case, they say, the plaintiff’s entitlement to “exclusive” possession of their land is qualified by particular (promissory) reservations, in their favour, entitling them to enter upon their land, on the plaintiff’s side of the fence, to make reasonable use of water located in the creek, at a particular point, for specific purposes defined by the arrangement (based upon an adjudication by a statutory authority, subsequently confirmed by an agreement made in compromise of proceedings) between the parties.
  4. The whole proceedings turn upon characterisation, and exposition, of the arrangement governing the parties’ dividing fence, bearing in mind that each case ultimately depends on its own facts, analysed within an established conceptual framework addressed by Landale v Menzies as the seminal case.

LANDALE v MENZIES, AND DESCRIPTION OF “A GIVE AND TAKE FENCE”

  1. Landale v Menzies is a case in which the High Court of Australia, on the facts of the particular case, accepted that:
  2. In that context, Griffith CJ described a “give and take fence” in the following terms (at 9 CLR 99-100) with emphasis added:
“The practice of adopting a ‘give-and-take fence’ between two properties separated by a watercourse is well known. Even without the express testimony of the plaintiff I should take it to be notorious that the object of such an arrangement is two-fold, (1) to obtain a more convenient location for a dividing fence, and (2) to divide the permanent water in the watercourse between the parties.
It is manifest that the intention of the parties in entering into such an agreement cannot be carried out unless the agreement has such a degree of permanency as not to be terminable by either party without reasonable notice to the other. What is reasonable notice must, as in all cases where the question of reasonableness arises, depend upon the circumstances of the particular case. What might be a sufficient notice in the case of an area of land divided by a watercourse containing permanent water at frequent intervals might be wholly insufficient in the case of a large area bounded by a channel containing a scanty supply of water at long intervals of distance.
In my opinion, therefore, it is an implied term of such an agreement that it cannot be terminated without reasonable notice. This conclusion is strongly supported by a consideration of the permanency of the mutual obligations of adjoining owners under the Fencing Acts and Rabbit Acts.
Another incident of such an agreement is that each party has the exclusive use of the land and water lying on his own side of the fence. This result necessarily follows so long as the fence actually divides the land occupied. The parties may, of course, stipulate that it shall be a term of the agreement that they shall have common access to the water, but in the absence of such a stipulation I think the right to exclusive occupation should be inferred.... “
  1. At 9 CLR 105, Barton J described a “give-and-take fence” in the following terms, with emphasis added:
“[A] creek bed, often dry for most of its length, and nearly always dry for part of it, offers no obstacle to the trespasses, or the boxing or mingling of the sheep of the respective run holders [in the Riverina District of south-western New South Wales]. Fencing becomes as necessary there as on boundaries where there is no watercourse at all. But if a fence follows the windings of the creek bed it is unduly expensive, because it is unnecessarily long. Along the original boundary between these two holdings [in the case at hand] such a fence would extend a length of over 30 miles. If placed in the creek bed, ad medium filum aquae, the first flood would sweep most of it away. These are the conditions which in all similar cases give rise to the erection by adjoining holders of what is called a ‘give and take fence’. The very name imports the thing that happens, namely, an adjustment of the direction of the fence by way of compromise. Each holder gives some country and some water, and takes – that is receives – some of each from his neighbour. Thus a less tortuous line is achieved, to the great benefit of both parties in the saving of first cost and upkeep. The occupation of each must necessarily be restricted by the fence; otherwise it would not serve its office of preventing trespass and boxing, and it would be without a raison d’être. Under the reciprocal giving and taking each must therefore have exclusive possession of the segments of his neighbour’s land cut off from that neighbour by the fence. But it is the part of each to see that the ‘give and take’ process amounts to what is called a fair deal – and that in respect not only of the land but of the water and the chances of water....”
  1. O’Connor J acted upon a similar understanding of the meaning of the expression “give-and-take fence”, which he described as “common knowledge” in Australia: 9 CLR 115 and 117-118.
  2. He also made the following observation at 9 CLR 119:
“The agreement [for a ‘give-and-take fence’ between the parties to the proceedings before the Court] must continue or be discontinued as a whole. It cannot be treated as a series of separate agreements concerning each panel of fencing. And it is difficult to imagine that, under the circumstances then existing as proved by evidence, any sane person charged with the care of the respondents’ property could have intended to put an end there and then to the whole arrangement for the ‘give and take fence’ and all the advantages it involved and revert to the boundary in medio filo’.
  1. Although the High Court, in Landale v Menzies, described a particular give and take fence as if a necessary component of the concept is the existence of a boundary divided by water, there is no logical reason for confining it so.
  2. Conceptually, its essential feature is not a need to access water, but convenience to neighbouring parties in location of a dividing fence otherwise than on their boundary line. Geography may drive convenience, but convenience is the touchstone of the concept.
  3. A purpose of sharing available water was an integral part of the object of the give and take fence agreement under consideration in Landale v Menzies, and it may enjoy a similar importance in most cases (including the present one), but it is not, conceptually, an essential feature of a give and take fence.

DISTINGUISHING FEATURES OF THE CURRENT PROCEEDINGS

  1. The current proceedings might be thought to be distinguishable from Landale v Menzies on several bases. First, the current proceedings involve a give and take fence erected, not simply by agreement between the parties, but (albeit with an element of consent from time to time) pursuant to a contested determination under section 14 of the Dividing Fences Act 1991 NSW. Secondly, the fence under consideration in these proceedings includes a gate near a pond on the plaintiff’s side of the fence to which the parties on the other side (the defendants) make a disputed claim to access via, and by virtue of, the gate. Thirdly, the properties the subject of what is essentially a neighbourhood dispute are of a much smaller dimension than those considered by the High Court, and are located in a different region of New South Wales (Armidale). Fourthly, although both properties under consideration in these proceedings comprise rural land, their respective owners use them for different purposes: the plaintiff runs mainly cattle; the defendants breed and keep (polo) horses.
  2. [At a risk of oversimplification, but perhaps edging towards an understanding of social conflict, I note that the plaintiff (a widow) apparently runs and lives on a working farm, aided by a manager; the first defendant manages a commercial, retail business in town. The property of the defendants (a husband and wife) appears not to be their principal source of income, but their home and a base for largely recreational pursuits. Until such time as the defendants forced the issue via an application to the Local Land Board for a dividing fence, the plaintiff appears to have enjoyed, in fact, greater control of the creek than the defendants insisted was her right. Whether there has been a clash of cultural perspectives, informing different expectations about the use of land and water, was not explored on either side of the record at the hearing of the proceedings.]
  3. Counsel have not suggested that anything of significance turns on the last two of the four points mentioned, but significance may attach to the first two.
  4. A cautionary reminder of the necessity to review each case on its own facts is found in the judgment of Barton J in Landale v Menzies at 9 CLR 106. There his Honour wrote of the facts of that case:
“... if either of [the landowners who originally erected the fence under consideration] had resorted to the provisions of the Dividing Fences Act 1829 (now by consolidation of the Act of 1902), then in the absence of agreement the owner claiming cooperation or contribution would have had first to show a completion of his own half of the fence of the existing boundary, and would then have been entitled to erect the remaining half at the expense of his neighbour, but only on the same boundary line. In that case the fence would have followed the course of the creek – indeed the bed of it – and not a ‘give and take line’.”
  1. It is not necessary to explore at length differences between the legislative context in which Landale v Menzies was decided and the current legislative context. It is enough to notice that under the Dividing Fences Act 1991 NSW as in force in 2007:
  2. In these respects, the Dividing Fences Act 1991 has a broader, and more flexible, operation than had the Dividing Fences Act 1902 NSW or its predecessors.
  3. The judgment of the High Court in Landale v Menzies may have been, to a commensurate extent, driven by a greater need for reliance upon the common law of contract than a contemporary analysis might need to be.
  4. In Landale v Menzies the Court made findings of fact about what adjoining landowners had agreed, and characterised the fence the subject of their agreement as a “give and take fence”. In the current proceedings, a statutory authority, exercising a statutory power, made an order that a “give and take fence” be erected, and determined the line upon which it was to be erected pursuant to that order, leaving this Court to determine ongoing disputes about the legal incidents of the fence.
  5. Debate about those legal incidents focuses, in large measure, on the existence of a gate in, and forming part of, the fence erected pursuant to the statutory determination. By virtue of paragraph (a) of the definition of “fence” in section 3 of the Dividing Fences Act 1991 (as in force in 2007, and as still in force), the determination that there be a dividing fence can include provision for “any gate... necessary for the operation of the fence”.

THE DIVIDING FENCES ACT 1991 NSW, SECTION 14

  1. The primary determination under section 14 of the Dividing Fences Act 1991, consequent upon which the fence presently under consideration was erected, was made on 13 February 2007.
  2. At that time, so far as is material, section 14 was in the following terms (with emphasis added):
“14 Orders as to fencing work
(1) A Local Court or local Land Board may... make an order determining any one or more of the following:
(a) the boundary or line on which the fencing work is to be carried out, whether or not that boundary or line is on the common boundary of the adjoining lands,
(b) the fencing work to be carried out (including the kind of dividing fence involved),
(c) the manner in which contributions for the fencing work are to be apportioned or re-apportioned,
(d) which portion of the dividing fence is to be constructed or repaired by either owner,
(e) the time within which the fencing work is to be carried out,
(f) the amount of any compensation (in the form of an annual payment to either of the adjoining owners) in consideration of loss of occupation of any land,
(g) that, in the circumstances, no dividing fence is required in respect of all or part of the boundary of the adjoining lands...
(2) The occupation of land on either side of a dividing fence, as a result of an order determining that fencing work is to be carried out otherwise than on the common boundary of the adjoining lands, is not taken to be adverse possession as against the owner or to affect the title to or possession of the land, except for the purposes of this Act.”
  1. So far as material, section 3 of the Dividing Fences Act, at that time, contained the following, amongst other, definitions (with emphasis added):
“’adjoining owners’ means the owners of land on either side of a common boundary.
‘dividing fence’ means a fence separating the land of adjoining owners, whether on the common boundary of adjoining lands or on a line other than the common boundary.
‘fence’ means a structure, ditch or embankment, or a hedge or similar vegetative barrier, enclosing or bounding land, whether or not continuous or extending along the whole of the boundary separating the land of adjoining owners, and includes:
(a) any gate, cattlegrid or apparatus necessary for the operation of the fence, and
(b) any natural or artificial watercourse which separates the land of adjoining owners, and
(c) any foundation or support necessary for the support and maintenance of the fence,
but does not include a retaining wall or a wall which is part of a house, garage or other building.
‘fencing work’ means:
(a) the design, construction, replacement, repair or maintenance of the whole or part of a dividing fence, and
(b) the surveying or preparation of land along or on either side of the common boundary of adjoining lands for such a purpose,
and includes:
(c) the planting, replanting and maintenance of a hedge or similar vegetative barrier, and
(d) the cleaning, deepening, enlargement or alteration of a ditch, embankment or watercourse that serves as a dividing fence.”
  1. Section 19(2) of the Dividing Fences Act, in 2007, provided for an appeal, on a point of law, from orders of the Land Board to the Supreme Court. Subject to that right of appeal, section 19(1) provided that “[any] order made by a ... Local Land Board under [the] Act is final.”
  2. Determinations affecting the parties to these proceedings were made by the Local Land Board for the Land District of Armidale.
  3. No party appealed from the Land Board’s determinations.
  4. Since the Board’s determinations, the text of both section 3 and section 14 of the Dividing Fences Act has been amended, although not significantly. The principal change is that jurisdiction under section 14 is now exercised by the Local Court or NCAT, the NSW Civil and Administrative Tribunal.
  5. The Local Land Board determination of 13 February 2007 was made on the application of the present defendants. The respondent to their application (the “adjoining owner”) was the present plaintiff.

THE PARTIES, THEIR PROPERTIES AND THE CREEK

  1. The plaintiff is the registered proprietor, and occupier, of a property known as “Araluen East” (Lot 6 in Deposited Plan 717734), comprising 132.4 ha.
  2. The defendants are the registered proprietors, and occupiers, of the property known as “Richetta” (Lots 3 and 4 in Deposited Plan 565793), comprising in total 6.719 ha.
  3. The parties’ respective properties are divided by a creek known as “Tilbuster Ponds”, which runs in a north-south direction. The plaintiff’s land lies to the east of the creek, the defendants’ to the west.
  4. On 29 June 2007 the parties settled an earlier round of proceedings in this Court (the first Supreme Court proceedings, numbered 3192 of 2006) on terms that included (in paragraphs 1 and 2) an agreement that the common boundary between their two properties is “the middle line of the creek”.
  5. The current proceedings (the parties’ third excursion to the Supreme Court) were conducted on the basis that the parties continue to be bound by that agreement. That was confirmed, during the hearing of the proceedings, by a formal notation by the Court in the following terms:
“NOTE that these proceedings have been conducted on the basis that it is agreed between the parties that the legal boundary between their respective properties (in the case of the plaintiff, being Lot 6 in Deposited Plan 717734; and, in the case of the defendants, being Lots 3 and 4 in Deposited Plan 565793) is a line running along the middle of the course of the creek known as ‘Tilbuster Ponds’”.
  1. The creek does not run continuously or in an even flow. Along the parties’ common boundary, it more often than not comprises three ponds divided by dry patches. For convenience, in the current proceedings, those ponds have been described respectively as the northern pond, the middle pond and the southern pond.

LOCATION OF THE PARTIES’ GIVE AND TAKE FENCE

  1. The give and take fence erected in consequence of the Land Board’s determination crosses the creek in two places, with the result that (as depicted in Exhibit D2):
  2. A photographic equivalent of Exhibit D2 is reproduced in the judgment of Harrison AsJ in Erratt v Local Land Board Armidale [2008] NSWSC 959 at [15]. Her Honour determined the parties’ second set of Supreme Court proceedings, numbered 2008/30019. The portion of the creek described by her, at [16], as having “a flat bottomed ‘U’ shape (also known as the middle portion)” has been described in the current proceedings as “the Middle Pond”. The northpoint lies at the top of the photograph. The creek is shown on the right hand side of the photo. The straight zig-zag line crossing the creek in two places is the line of the “give and take fence”, now constructed.

THE GRAVAMEN OF DISPUTATION ABOUT THE FENCE

  1. The central point of aggravation between the parties in the current proceedings is that the defendants (over the plaintiff’s objection) claim, and purport to exercise, an entitlement to access the southern pond: (a) as a source of water pumped, for domestic purposes, to their homestead; and (b) to exercise horses in water, for veterinary purposes. They access the southern pond via the gate in the fence.
  2. The defendants contend that they need access to the southern pond because, they say, only it contains water fit for drinking, and only it has a depth that allows horses to be exercised in water.
  3. Their contention that they are constrained by environmental laws from cleaning out, and deepening, the middle pond was not explored during the hearing. If there are, as well there might be, regulatory constraints on maintenance or development of the creek, those constraints were not identified with precision in evidence or submissions.
  4. The defendants are not without dams on their property – they have two – but, they say, they are dependent upon the southern pond for drinking water and exercise of their horses.
  5. The plaintiff contends that, conformably with Landale v Menzies, she is entitled to exclusive occupation of the land (including land held by the defendants in freehold title), and water, on her side of the fence, as they are entitled, she accepts, to exclusive occupation of the land (including that held by her in freehold title), and water, on their side of the fence.
  6. In a nutshell:
  7. An illustration of the defendants’ perspective of the content, and limits, of the entitlements they claim can be found in evidence of the first defendant that, when he takes horses down to the southern pond for exercise in water, he routinely tethers them to the western bank of the pond so as to ensure that they cannot cross the notional middle line of the pond onto land held by the plaintiff in freehold title.
  8. Neither side of the record descends to such precision in debates about “entitlements” to the use of water. They go no further than to claim an unexplored statutory right, under the Water Management Act 2000 NSW, to take water from the creek for domestic consumption and stock: cf, M. McKenzie, “Water Rights in NSW : Properly Property?” [2009] SydLawRw 17; (2009) 31 Sydney Law Review 443; K. Stoeckel, R Webb, L Woodward and A Hankinson, Australian Water Law (Law Book Co., Sydney, 2012).
  9. The parties’ chosen battleground is the law of property, not the law of water.
  10. As earlier noted, in my view an element of “water” is not essential, in the abstract, to definition of the concept of a give and take fence, critical ‘ though it may be to an understanding of the concept’s practical operation.

THE LIFE OF THE PARTIES’ GIVE AND TAKE FENCE

  1. During the hearing of the current proceedings, at a time when the outcome hung in the balance so that each side was compelled to plan for the worst as well as hoping for the best, I invited the parties to reach, and to record formally, an agreement about the duration of the life of their give and take fence.
  2. The result was a formal notation made by the Court in the following terms:
NOTE that it is agreed between the parties that:
(a) the fence erected pursuant to determinations of the Local Land Board for the Land District of Armidale (being a determination dated 13 February 2007 and consequential determinations to give effect to that determination), being the fence erected along the pink line depicted in the aerial photograph reproduced as annexure “A” to the affidavit of the first defendant sworn 1 May 2015, is a “give and take fence” traversing the creek known as “Tilbuster Ponds”.
(b) the terms of the arrangement pursuant to which that fence stands erected on their respective properties include a term that the arrangement is determinable upon reasonable notice, being (absent any agreement between the parties) a period of not less than six months’ notice.
  1. This agreement is consistent with that found, on the facts, in Landale v Menzies: 9 CLR 99-100, 112-113 and 117-119. Although grounded in the facts of the case, the guiding principle (applied by substantially the same Court in Cribb v Korn [1911] HCA 9; (1911) 12 CLR 205 at 210 and 215) is that where a right of occupancy (a tenancy or licence at will) is of indefinite duration it may, generally, be determined on reasonable notice.
  2. The word “arrangement” was deliberately used in that notation in deference to the parties’ recognition (and, in particular, to the defendants’ insistence) that, unlike the factual setting in Landale v Menzies, the give and take fence presently under consideration has its ultimate foundation, not in an agreement made between the parties, but in a statutory determination.
  3. The parties agreed that their “arrangement” is determinable, and that it is determinable on reasonable notice, but they differed in their prescription of a minimum period of notice. The plaintiff maintained that 12 months is necessary. The defendants insisted that no more than six months is necessary. Their formal agreement is thus expressed in terms of “reasonable notice... not less than six months...”.
  4. In articulating submissions about whether the Court should refer to “six months” or “12 months”, the parties appeared to be on common ground in considering that a major factor in assessing “reasonable notice”, would be perceived, practical delays in the parties securing a fresh determination under the Dividing Fences Act 1991, section 14, as presently in force.
  5. Subject to the parties’ agreement on a minimum period of six months’ notice, the question of what is “reasonable” in a particular setting must be assessed at the time notice is given: Landale v Menzies [1909] HCA 48; (1909) 9 CLR 89 at 102-103, 111, 112-113 and 118-120.
  6. As Landale v Menzies demonstrates: (a) if less than reasonable notice of an intention to terminate the parties’ arrangement were to be given, it would be ineffective; (b) if an effective notice were to be given, the arrangement would continue in operation until expiration of that notice; and (c) upon expiration of notice effectively given, the parties’ respective entitlements to occupy land in the vicinity of their common boundary will revert to rights determined by reference to their legal boundary, the notional line running along the middle of the course of the creek “Tilbuster Ponds”.

THE CONTENT OF THE PARTIES’ “GIVE AND TAKE FENCE” ARRANGEMENT

The Primary Evidence

  1. Whether (as the plaintiff contends) or not (as the defendants contend) the defendants commit the tort of trespass against the plaintiff: (a) when they enter upon the plaintiff’s side of the give and take dividing fence to exercise horses in the southern pond; or (b) in location of their pump and associated piping on the western side of the southern pond, depends upon the content (ie, the terms and character) of the “arrangement” that governs the fence.
  2. Leaving aside controversy that attends the effect of an order made by Harrison AsJ in the judgment, published on 18 September 2008 and reported as Erratt v Local Land Board Armidale [2008] NSWSC 959 at [41]- [43], the parties are agreed that the terms of the arrangement are to be found in, or inferred from, the following instruments:
  3. Although the parties are at odds as to whether the judgment of Harrison AsJ has any (and, if so, what) operative effect on the outcome of the present proceedings, it is, for several reasons, of central significance to the cases presented on either side of the proceedings.
  4. First, her Honour’s judgment was predicated upon: (a) the parties’ express agreement that their common boundary runs along the middle line of the creek, Tilbuster Ponds; (b) the parties’ acceptance that the determination of the Land Board dated 13 February 2007 was valid and binding on them; and (c) with the benefit of full adversarial debate, her Honour’s active consideration of the legal effect of the Board’s determination dated 13 February 2007 (including Order 10), the Court’s interlocutory orders of 7 December 2006, and the Terms of Settlement made the subject of orders by the Court on 29 June 2007, and the determination made by the Chairman of the Board on-site in April 2008.
  5. Secondly, upon consideration of those matters in that setting: (a) her Honour noted, in [13], that, by paragraph 3 of the Terms of Settlement, the parties had agreed to comply with the Board’s Order 10; (b) her Honour expressly found, also at [13], that order 10 (a) contemplated that a gate would be provided in the fence to be erected pursuant to the Board’s Order; (c) her Honour, at [14], expressly characterised the fence to be erected pursuant to the Board’s Order as a “ give and take fence” as described by Barton J in Landale v Menzies [1909] HCA 48; (1909) 9 CLR 89 at 105.
  6. Thirdly, having heard evidence adduced on both sides of the record about what was said and done at the on-site meeting of April 2008, her Honour, at [31]-[34], expressly found that the Chairman of the Land Board had specifically pegged out the location of the gate sought by the defendants, and allowed by the Board, in the fence that the Board had determined was to be constructed.
  7. Fifthly, by reference to section 7 of the Dividing Fences Act, her Honour expressly found, at [40], that the plaintiff, on the one hand, and the defendants, on the other, were each obliged to pay one half of the cost of construction of the fence to be erected.
  8. Sixthly, her Honour, at [41]-[43], expressly declined the plaintiff’s application for declaratory relief (and, incidentally, consequential injunctive relief) to the effect that the plaintiff has an entitlement to exclusive occupation and use of all land, and parts of the creek Tilbuster Ponds, which lie on the eastern side of the dividing fence line.
  9. Seventhly, her Honour grounded her refusal of the plaintiff’s application for such relief on express findings, at [43], that the defendants are entitled: (a) to pump water from the southern pond, to the homestead on their property, for their family to use for domestic purposes; and (b) to exercise horses, under the first defendant’s care and supervision, in the southern pond for veterinary purposes.
  10. Eighthly, in determining, at [45]-[46], that the parties should pay their own costs of the proceedings before her, her Honour specifically recognised as fundamental to her decision to dismiss the plaintiff’s summons: (a) her finding that a gate was to be inserted in the dividing fence; and (b) her rejection of the plaintiff’s claimed entitlement to all the water in the southern pond.
  11. Ninthly, a consideration of her Honour’s reasons for judgment as a whole, and in the procedural context in which they were published, demonstrates that the issues she determined about the parties’ competing entitlements with respect to the dividing fence, then to be constructed, were, in substance, the same as the core issues presented for determination in the current proceedings.
  12. Finally, for completeness, it should be noted that, during the course of the proceedings that culminated in the judgment of Harrison AsJ, the parties agreed (in short minutes dated 2 September 2008) to obtain quotations for the erection of a fence on the line identified by the Chairman of the Land Board, thereby evidencing their acquiescence in his determination.

Payment for the Fence Construction

  1. As is manifest on the face of Harrison AsJ’s judgment, the fence was not constructed until after the proceedings before her Honour were concluded.
  2. As it happened, shortly after completion of the fence the defendants paid the contractor selected by the Chairman of the Land Board to erect the fence and demanded of the plaintiff that she pay her half share of the cost of the fence (namely, $3,540.50).
  3. Not until the hearing of the current proceedings, some six years later, did she agree to pay that sum.
  4. Her agreement came, during the course of the hearing, when I enquired of counsel whether it would be open to the Court to decline to grant her equitable relief enforcing the fence line if she had not met her obligation to pay her share of the cost of the fence.
  5. At that point, the plaintiff put aside earlier quibbles about workmanship attending the fence’s construction, and provided a formal undertaking to the Court that she would, within a specified time, pay to the defendants the sum of $3,540.50 together with interest calculated at the rate ordinarily allowed under section 100 of the Civil Procedure Act 2005 NSW (by way of an award of pre-judgment interest) from 14 May 2009 up to the date of payment of the principal sum.

The Parties’ Litigation

  1. Interpretation of the instruments that mark parameters of the parties’ arrangement requires familiarity with the proceedings that have engaged the parties’ intention.
  2. The First Supreme Court Proceedings. The proceedings numbered 3192 of 2006 in the Equity Division of this Court were first in time. Those proceedings were commenced, by the present plaintiff against the present defendants, by a summons filed on 9 June 2006.
  3. The final relief sought in the summons included, principally, a claim for a declaration that the common boundary between the parties’ properties was located on the western side of the creek “Tilbuster Ponds” . Interlocutory relief was sought regarding fences, but the core relief sought in the proceedings focused on identification of the boundary. Confirmation of that may be found in the defendants’ cross summons filed on 7 December 2006. It sought a declaration that the common boundary between the parties’ properties was the eastern boundary of the creek.
  4. By the time the proceedings were settled on 29 June 2007 (on terms that included an agreement that the common boundary line was a middle of the creek): (a) the central focus of the parties’ attention had shifted towards the practicalities of establishment of a settled dividing fence; and (b) proceedings before the Land Board had culminated in the Board’s determination dated 13th February 2007.
  5. Along the way to settlement of the proceedings, on 23 June 2006, the Court (constituted by Campbell J) made interlocutory orders, without publication of formal reasons, to the following effect:
(1) Order that, until further order, the defendants be restrained from dismantling, moving or in any way interfering with the existence of any fence erected by the plaintiff on the western side of the creek.
(2) Order that, until further order, the defendants be restrained from directing any other person to dismantle, move or interfere with the existence of any fence erected by the plaintiff on the western side of the creek.
(3) Order that, until further order, the defendants be restrained from dismantling, moving or in any way interfering with any of the fence line dividing the plaintiff’s property and the defendants’ property.
  1. Those interlocutory orders were supplemented by a further interlocutory regime the subject of “consent orders” made by a Registrar on 7 December 2006, the terms of which were subsequently paraphrased in paragraph 3 of the Land Board’s determination dated 13 February 2007.
  2. The “orders” signed by the respective solicitors of the parties on 7 December 2006 set out the following regime “by consent” (with emphasis added):
(1) The plaintiff agrees to allow the defendants to erect a fence along the top side of the western bank of Tilbuster Ponds.
(2) The defendants are permitted to install a gate in the existing fence and the new fence, to be erected pursuant to order 1 above.
(3) The existing fence is to remain in place until the proceedings are finalised.
(4) The existing fence, and the fence running along the defendants’ northern boundary, are to be rebuilt in such a way that they become lamb proof.
(5) The defendants are not to drive any vehicles through the new fence onto the bed of Tilbuster Ponds.
(6) The defendants and their children and the defendants’ parents are the only persons permitted to use the creek (Tilbuster Ponds) for general purposes.
(7) The defendants are allowed to continue using Tilbuster Ponds to water and exercise horses.
(8) The gate installed in the new fence is to be locked at all times when not in use.
(9) If the defendants need to move the pump, due to lack of water in existing hole, the defendants are to notify [the plaintiff’s manager] and [the manager] is to provide assistance to move the pump.
(10) The defendants are not permitted after the erection of the new fence, to gain access to the plaintiff’s property through the existing gate in the northern boundary of the defendants’ property.
  1. It is important to appreciate that neither “the existing fence” nor “the new fence to be erected” referred to in these “orders” corresponds to the “give and take fence” subsequently erected in 2009 pursuant to determinations of the Land Board. That said, the Board appears to have embraced essential features of the parties’ interlocutory regime in its determination of 13 February 2007.
  2. The Supreme Court proceedings were settled on 29 June 2007 by a formal notation and order made by Hamilton J giving effect to Terms of Settlement signed by the parties in the following terms (with emphasis added):
“The parties agree to settle this matter on the following basis:
1. The parties agree that the western boundary of the portions of the plaintiff’s property comprised within original Crown Grant Vol 438 Fol167 and Crown Grant Vol 4047 Fol 95 and now included in part Folio Identifier 6/717734 is the middle line of the creek known as Tilbuster Ponds.
2. The parties agree that the eastern boundary of the portions of the defendants’ property comprised within the original Crown Grant Vol 1616 Fol 33 and now included in Folio Identifier 3/565793 and Folio Identifier 4/565793 is the middle line of the creek known as Tilbuster Ponds.
3. The parties are to comply with the orders in paragraph 10 of the determination by the Armidale Land Board dated 13 February 2007.
4. The existing fence located adjacent to the western bank of Tilbuster Ponds is to remain in situ until 24 August 2007 or, in the event that the Land Board must make a ruling pursuant to order 10(e) of its determination dated 13 February 2007, eight weeks from the date of that ruling or until the new fence is erected, whichever is the earlier.
5. The proceedings are dismissed.
6. Each party is to play it its [sic] own costs of the proceedings.”
  1. The Land Board Proceedings. The Local Land Board’s reasons for decision dated 13 February 2007 recite that, although some informality attended commencement of proceedings before the Board, both sides invited the Board to determine a request made by the applicants before the Board (the present defendants) of the respondent before the Board (the present plaintiff) that she “fence her side of Tilbuster Ponds Creek” .
  2. In its reasons the Board noted that the parties had not reached agreement about the proposed fencing work, but were currently engaged in the Supreme Court proceedings (numbered 2006/03192) in which interlocutory orders had been made on 23 June 2006 and 7 December 2006.
  3. The context in which the Board proceeded to make “Order 10” on 13 February 2007 appears (with emphasis added) in the following paragraphs of its reasons for decision:
“[4] After hearing evidence... the Board formed the view that it could not make a determination as to the boundary, but could however use its powers under the Dividing Fences Act to order the construction of a give and take fence. The give and take fence would until further order of the Supreme Court, represent a notional boundary but the boundary will be subject to the various conditions set out by the Supreme Court on 7 December 2006. That is the right to use the creek for general purposes, to water and exercise horses, and to pump from that section of the creek that will provide a source of water. As the horses have the right to be watered at the creek, the use of the pump will be for domestic uses....
[6] ... The Board was... mindful of the fact that if the bed of the creek was dry in the section of the creek allotted to the applicants’, the Orders of the Supreme Court would permit the applicants’ to use that section of the creek where the horses are exercised and to provide them with water....
[8] The Board found that the parties required a give and take fence for the interim period until the Supreme Court handed down its decision. The give and take fence could remain in its location after the Supreme Court decision is made and access to other parts of the creek can be gained by the installation of gates....”
  1. Paragraph 10 of the Board’s reasons for decision is in the following terms (under the heading “Order”), with emphasis added:
“10.
(a) The Board makes an Order that the give and take fence be erected on the site depicted on the aerial photograph marked Exhibit 3, except that the fence is to be located on high bank of the adjoining owner’s [that is, the plaintiff’s] property, and not as depicted on the aerial photograph. The fence is to be centred on the boundary between lots three and four in DP 565793 and to enable the applicants [that is, the defendants] to use 50% of the creek frontage to lots 3 and 4. The Board takes the view that the fence should be angled across the creek to reduce the damage to the fence during flood events. The fence should also be angled at the northern end to provide practical access to the creek for the horses. A gate is to be provided in the fence for the applicants’ to gain access to other sections of the creek as provided by the Orders of the Supreme Court.
(b) The fence is to consist of at least one barb wire, hinge joint and such other plain wires necessary to make it stock proof.
(c) Where the fence crosses the water, the fence will consist of drop chains that are electrified.
(d) Both parties are to obtain fresh written quotes, within one month of this Order, from independent reputable fencing contractors for the construction of the fence.
(e) If the parties are unable to agree within a further 7 days as to which quotation should be accepted then each party may within a further 7 days, send their preferred quotation to the Registrar, with a request that the Chairman make the selection. The Chairman in making that selection will not make any independent enquiries in relation to the bona fides or licensed status of the proposed fencing contractor.
(f) The party whose quotation is accepted/selected, is to arrange for and enter the contract with a fencing contractor, for the fencing work to be carried out, and to advise the other party of the day on which the fencing work will be carried out.
(g) When the quotation has either been accepted by both parties or determined by the Chairman, the parties are then required to contribute equally to the amount stated in this quote for the work specified in paragraph (a). Both parties are to pay their contribution for the cost of the fencing work to the fencing contractor on the day of completion of that fencing work.
(h) Subject to the availability of the fencing contractor, the fencing work is to be completed within two months of the acceptance of the quotation.
(i) There is no order as to costs.”
  1. Problems experienced in implementation of this determination of the Board were not explored in the current proceedings, beyond noting institution of the fresh Supreme Court proceedings (numbered 30019 of 2008) that culminated in the judgment of Harrison AsJ of 18 September 2008.
  2. The Second Supreme Court Proceedings. Those proceedings were commenced by a summons, filed on 29 January 2008, in which the present plaintiff sought administrative law relief against the Land Board (as the first defendant named in the summons), ultimately not pursued, and relief, more generally, against the current defendants (named as the second and third defendants in the summons).
  3. For present purposes, it is sufficient to note that the relief claimed in the summons included, in addition to claims for injunctive relief about fences, claims for the following relief (with emphasis added):
“10. A declaration that the plaintiff has exclusive occupation and use of all land and parts of the creek known as Tilbuster Ponds which lie on the eastern side of the dividing fence that is to be erected by the plaintiff at the location determined by the first defendant in its determination dated 13 February 2007.
11. An order that the second and third defendant’s [sic] are not to interfere with the plaintiff’s exclusive occupation and use of the land and parts of the creek known as Tilbuster Ponds which lie on the eastern side of the dividing fence that is to be erected by the plaintiff at the location determined by the first defendant in its Determination dated 14 February 2007.”
  1. Harrison AsJ dealt with the plaintiff’s application for this relief in paragraphs [41]-[43] of her reasons for judgment published at [2008] NSWSC 959. With editorial adjustments, it is convenient to set out those paragraphs here, together with the substance of paragraphs [45] and [46], with emphasis added:
“[41] ... [the plaintiff] seeks a declaration that [she] has exclusive occupation and use of all land and parts of the creek known as Tilbuster Ponds, which lie on the eastern side of the dividing fence. [The defendants], in the application before the Land Board, stated that this section of the creek had steep banks and could not be used. Further, this was the shallowest section of the creek and had been dry for significant periods of time since they purchased the property. The Board inspected the banks and took the view that there was a section where the horses could access the creek for water. The Board was also mindful of the fact that if the bed of the creek was dry in the section of the creek allotted to [the defendants], the orders of the Supreme Court would permit [the defendants] to use that section of the creek where the horses are exercised and provide them with water. As the fence is a give and take one it is not always placed on the common boundary. According to s14(2) of [the Dividing Fences Act], the ownership of the land does not change. It remains as set out in the survey.
[42] Lastly [the plaintiff] seeks an order that [the defendants] are not to interfere with [her] exclusive use and occupation of the land and parts of the creek known as Tilbuster Ponds which lie on the eastern side of the dividing fence that is to be erected by the plaintiff at the location determined by [the Land Board] Determination dated 13 February 2007. Both parties agree that the creek can dry up in parts. [The plaintiff’s] evidence is that there are large waterholes lying within the U shape (that is the part of the creek that falls on the [defendants’] side of the fence). [The first defendant] disagrees. He says that the water that flows in the U [that is, the middle pond] is only about 2 feet deep. Both [the plaintiff and the defendants] agree that there are large waterholes at the southern end [that is, the southern pond]. On the issue of access to water, [the first defendant] says that the give and take fences must take into account the realities that he and his family face by living in the country and having access to water.
[43] [The first defendant] pumps the water from the creek to his house for the family to use for domestic purposes. There is a pipe which runs from the pump about 300 metres up to the house. The pump is connected to the main water supply for the house. He says that the creek boundary between the two properties sometimes ‘fouls up’ and this means that water cannot be pumped from certain parts of the creek for domestic purposes. For these reasons [the defendants] say they need to have access to the southern end of the creek [that is, the southern pond] to ensure that in circumstances were [sic] the middle of the creek [that is, the middle pond] fouls up they have another location from which to pump water from a deep waterhole. [The first defendant] says that by having access to the southern section of the creek he will be able to move his pump to the position which offer his family the best supply of good water. Other than rainwater tanks and the creek they have no other water supply. [The first defendant] is a horse breeder and polocrosse player and he often has horses which require veterinary care because of injuries to their legs. He says that the water at the southern section of his boundary is much deeper than any other section of the creek along his boundary and it is ideal for exercising his horses in the water for veterinary purposes. I accept that for [the defendants] to have access to appropriate domestic water supply and to be able to properly exercise their six to eight horses they must continue to have access to the southern water hole of the creek. In those circumstances I decline to make this order. I have already declined to make any of the earlier orders sought by [the plaintiff]. The summons filed 29 February 2008 is dismissed.
Costs ...
[45] In the end, this matter proceeded to hearing for four reasons [:] firstly, [the plaintiff] maintained that the Supreme Court orders [made in the earlier Supreme Court proceedings numbered 2006/03192] meant that there was no gate to be inserted in the dividing fence; secondly, [the plaintiff] wanted access to all the water in the southern end of Tilbuster Ponds [that is, the southern pond]; and thirdly, prior to 18 April 2008, [the defendants] held the incorrect view that the earlier orders did not cover the southern and northern portions of the boundary but only the U portion [that is, the middle pond] and lastly [the defendants] had lodged further applications to the Land Board. Both parties had misconceptions that could have been resolved if they had been diligent about obtaining a copy of the diagram (Ex3) attached to the Land Board’s decision and if this did not make the fence line clear, they could have approached the Chairman and requested him to peg out the fence line at an earlier time. The plaintiff’s summons may have prompted the Chairman to peg out the fence line but after 18 April 2008, there was no utility in the plaintiff pursuing the other orders. She did so without any success.
[46] Costs are discretionary. It is my view that the appropriate order for costs in these circumstances is that each party pay their own costs.”

ANALYSIS

The Parties’ Submissions Summarised

  1. The plaintiff’s case relies heavily on characterisation of the parties’ current dividing fence (prospectively, by the Land Board; and by Harrison AsJ) as a “give and take fence”, and attribution to that fence of precisely the same character attributed to the agreement underlying Landale v Menzies.
  2. The plaintiff subordinates to that character: (a) the gate in the fence; and (b) Harrison AsJ’s dismissal of her application for a declaration of an entitlement to exclusive occupation of all land and the whole of the creek on her side of the fence.
  3. She discounts the possibility (noticed by the High Court in Landale v Menzies at 9 CLR 100 and 110) that a give and take fence might involve common, as distinct from exclusive, access to water.
  4. The defendants contend that: (a) Landale v Menzies is distinguishable, factually, because that case speaks only to a fence governed by a contract at common law, not a fence erected pursuant to a statutory determination; (b) in making provision for a gate to be constructed in the fence both the Land Board and, ultimately, the parties contemplated that the defendants would have access to the southern pond, on their own side of the legal boundary line, for drinking water and exercise of the first defendant’s horses; (c) Harrison AsJ’s dismissal of the plaintiff’s application for a declaration of an entitlement to exclusive occupation carries the consequence that the plaintiff is estopped from asserting the same entitlement in these proceedings; and (d) if the plaintiff’s claim is not barred by estoppel, her attempt to re-litigate a question earlier decided against her constitutes an abuse of the processes of the Court.
  5. The plaintiff responds to the defendants’ reliance on estoppel and abuse of process principles by contending that: (a) no res judicata or issue estoppel can arise from Harrison AsJ judgment because her Honour’s decision to dismiss the claim for a declaration was interlocutory, rather than final, and based upon an exercise of discretion rather than a determination of legal rights; (b) her Honour’s dismissal of the application for declaratory relief cannot be taken as overriding her characterisation of the fence as a “give and take fence”, the character of which must be determined by reference to Landale v Menzies; and (c) the fact that the fence was erected only after her Honour’s orders were made is a change in circumstances which denies any operative effect to such, if any, form of res judicata, issue estoppel or abuse of process that might otherwise impede her claims for relief in the current proceedings.

Principles Governing Finality of Judgments

  1. There is no need to delve deeply into the law relating to res judicata or issue estoppel (classically discussed in Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 at 531-533) or that governing abuses of process of the type associated with Reichel v Magrath (1889) 14 App Cas 665 (conveniently explained in Haines v Australian Broadcasting Commission [1995] NSWSC 136; (1995) 43 NSWLR 404 at 414), one or both of which (in my opinion) stand in the plaintiff’s way.
  2. Nor is it necessary to enter upon detailed debate about whether dismissal of a summons seeking declaratory relief is capable of that degree of finality to ground a finding of res judicata or issue estoppel. For the record, I note that, contending for an answer to that question in the negative, the plaintiff relies upon Coles v Wood [1981] 1 NSWLR 723 at 724 and 725, recently followed in Insurance Australia Limited t/as NRMA Insurance v Iuli [2014] ACTCA 50 [10]-[12] and [16]. However, where, as here, dismissal of an application for a declaration is grounded upon a considered determination of competing claims of right rather than merely an exercise of discretion, the order for dismissal may constitute a “final” judgment rather than merely an “interlocutory” one: Hudson Pty Ltd v Legal & General Life of Australia Ltd (1985) 1 NSWLR 701.
  3. Contrary to the plaintiff’s submissions, nothing of substance turns upon the fact that the parties’ give and take fence was only constructed after Harrison AsJ dismissed the plaintiff’s summons. Her Honour determined the case before her based upon competing claims of right. She did not dismiss the plaintiff’s claim for declaratory and injunctive relief merely on discretionary grounds. The fact that, after publication of her judgment, the fence earlier in contemplation was in fact constructed provides no occasion to reopen controversy about settled entitlements.
  4. The principles governing finality of judgments, to which the defendants appeal, all point in the same direction as my independent assessment of the material. To my mind, the defendants are correct in their invocation of those principles but, agreeing as I do with Harrison AsJ, I do not refrain from saying so.

Consideration of Merits

  1. Based on the evidence adduced in the present proceedings, and the parties’ submissions, I am satisfied, independently, of the essential correctness of Harrison AsJ’s interpretation of the Land Board’s determination of 13 February 2007 and consequential developments, including an agreement made by the parties on 29 June 2007 in order to settle the first Supreme Court proceedings and to give effect to the Board’s primary determination.
  2. When the Chairman of the Land Board attended the properties on-site in April 2008, and then and there pegged out the site of the fence and the gate incorporated in the fence, he acted consistently with, and gave practical expression to, the first and last sentences of Order 10(a) made by the Board in its determination of 13 February 2007.
  3. The last sentence of Order 10(a), in particular, embraced essential features of the parties’ interlocutory regime (agreed in orders 1 and 7-9) of the “consent orders” made on 7 December 2006 in the first Supreme Court proceedings, but Order 10(a) was not dependent upon the continued operation of that regime for its own effective operation. In any event, the parties agreed, by paragraph 3 of the Terms of Settlement given effect (in the same Supreme Court proceedings) on 29 June 2007, to comply with the Board’s Order 10.
  4. If and to the extent that the efficacy of the parties’ “give and take fence” may (contrary to my opinion) depend upon the existence of an agreement between adjoining landowners, such an agreement exists in this case by reason of the parties’ deliberate, consensual submission to the determinations of the Land Board: first of all, in order 10(a) made on 13 February 2007; and, ultimately, in the Chairman’s consequential determination of April 2008, without any appeal under section 19 of the Dividing Fences Act or any administrative law challenge on an application for judicial review. Even in the current proceedings, the plaintiff accepted the validity, and binding effect, of the Board’s determinations, confining her case to submissions about the proper construction, and legal effect, of Order 10(a).
  5. The claims for relief made by the plaintiff in the current proceedings (in character, not unlike the claims for relief made in paragraphs 10-11 of the summons she filed in the second Supreme Court proceedings) must fail, on the merits.
  6. The plaintiff is not entitled to an injunction restraining the defendants, generally, from entering upon that area, to which they retain freehold title, on the eastern side of the give and take fence in the vicinity of the southern pond. Nor is she entitled to an injunction requiring them to remove their pump from the vicinity of the southern pond, or to cease pumping water from that pond.
  7. Neither is she entitled to damages for trespass arising from the defendants’ entry upon that part of their freehold title on the eastern side of the fence for the purpose of pumping water from the pond or exercising horses. There is no evidence of excessive (unreasonable) user of the rights implicitly reserved (and promised) to the defendants: (a) to pump water from the second pond to their homestead for domestic purposes; and (b) to exercise horses, under the personal supervision and care of the first defendant, for veterinary purposes, in the southern pond.

Consequential Questions

  1. A Summary of the Parties’ Rights and Obligations. Although the plaintiff must fail in her application for injunctive relief and damages in these proceedings, her pursuit of such remedies has not been unproductive in working out the respective rights and obligations of the parties. The disputation into which the parties early fell, and from which they have yet to extract themselves, is a product, in part, of the absence of a convenient summary of those rights and obligations.
  2. During the course of the proceedings:
  3. Lease or Licence? Upon consideration of a “give and take fence” arrangement, a question naturally arises as to the nature of the limited right each property owner has in that part of his or her neighbour’s land which is on his or her side of the fence. In Landale v Menzies the High Court, having found reciprocal rights to exclusive use and occupation of the neighbour’s land, favoured characterisation of those rights as a tenancy rather than as a licence: 9 CLR 100-101, 111 and 117-118. That characterisation carried with it an entitlement in “the lessee” to sue in trespass: Georgeski v Owners Corporation SP49833 [2004] NSWSC 1096; (2004) 62 NSWLR 534 at [91]- [109], citing, inter-alia, Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209 at 222 and Western Australia v Ward [2002] HCA 28; (2002) 213 CLR 1 at [504].
  4. Although each case must be decided on its own facts, and in light of facts about the parties’ intention or particular law governing their relationship, general acceptance attends the proposition that, prima facie, a give and take fence carries with it rights of tenancy rather than a mere licence: e.g., Peter Butt, Land Law (Law Book Co, Sydney, 6th ed, 2010), paragraphs [2.57] and [15.10]; Peter Young, “Some Thoughts on Fences” (1994) 2 Australian Property Law Journal 78 at 79; HK Insall (ed), Collins’ Law of Fences and Pastures Protection (NSW) (Law Book Co, Sydney, 2nd ed, 1984), pages 6-7.
  5. There is no evidence of a contrary agreement between the parties. Accordingly, I find that the reciprocal rights which each party to these proceedings has in relation to his or her neighbour’s land by virtue of its location on his or her side of the give and take fence are rights of tenancy, not those of a licensee: cf, AJ Bradbrook, CE Croft and RS Hay, Commercial Tenancy Law (LexisNexis Butterworths, Sydney, 3rd ed, 2009), paragraphs [1.3]-[1.4] and [3.1]-[3.3].
  6. This finding is not inconsistent with reservation to the defendants (or a contractual promise made to them by the plaintiff) of limited rights, as “lessors”, to enter upon their land (on the plaintiff’s side of the fence) for defined purposes referable to the southern pond: Western Australia v Ward [2002] HCA 28; (2002) 213 CLR 1 at [507]- [512] and cases there cited. The fact that the defendants’ rights of access to the southern pond are limited provides confirmation that, subject to those rights, the plaintiff’s entitlement to the land on her side of the fence is an entitlement to exclusive possession, even against the defendants as holders of freehold title to land.
  7. Incidents (Implied Terms) of the Parties’ Give and Take Fence Arrangement. The parties’ give and take fence arrangement has its legal foundations in three distinct, but complementary jurisprudential concepts:
  8. The ultimate legal foundation of the parties’ fence (the Board’s Order) was subsumed in the parties’ contract to comply with the Order. Accordingly, it is unnecessary to consider all the incidents of such an order unattended by an inter partes agreement. There is no reason on the facts of this case, however, to expect that those incidents would have a character or operation different from those attending the parties’ contract, incorporating a tenancy.
  9. The relationship between the parties is such that, in both contract and property law, subject to any agreement to the contrary, the law implies terms designed to regulate the parties’ dealings.
  10. In contract, those implied terms have historically included (as discussed in Service Station Association v Berg Bennett [1993] FCA 445; (1993) 45 FCR 84 at 92-94):
  11. Traditionally, in the realm of landlord and tenant much the same territory has been covered by implied terms to the same effect as a landlord’s covenants (a) for quiet enjoyment; and (b) not to derogate from the grant of a lease to the tenant, subject to rights reserved (and promises made by the lessee) in favour of the lessor: Butt, Land Law (6th ed, 2010), para [15:59].
  12. These terms implied in a lease are, essentially, manifestations of a broader principle encapsulated in the terms implied in a contract: O’Keefe v Williams [1910] HCA 40; (1910) 11 CLR 171 at 191, 197-198, 200 and 210-211. As between themselves, the positive and negative formulations of the terms are, in substance, reflections of the same principle.
  13. That principle is that, in all contracts (including leases), the law presumes that it is the intention of the parties to give efficacy to their agreement, not to frustrate it: O’Keefe v Williams [1910] HCA 40; (1910) 11 CLR 171 at 197 and 199.
  14. In Australian law as it has developed since Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 268F (without a definitive statement by the High Court of Australia, as Commonwealth Bank of Australia v Barter [2014] HCA 32; 88 ALJR 814; 312 ALR 356 at [42] and [107 and Paciocco v ANZ Banking Group Ltd [2015] FCAFC 50 at [287], confirm) an additional term implied by law in a commercial contract, including a lease or licence, may be (and, in my opinion, in the current context is) a term that each party will exercise powers conferred on him or her by their contract in good faith, reasonably and not capriciously or for some extraneous purpose: Alcatel Australia Ltd v Scarcella [1998] NSWSC 483; (1998) 44 NSWLR 349 at 369B; Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NSWCA 187; [2001] 69 NSWLR 558 at [144]- [189]; Paciocco v ANZ Banking Group Ltd at [288]-[292].
  15. Whether such a term is implied in all, or only some, contracts (whether characterised as “commercial” contracts or otherwise) matters not in the current proceedings: cf, Tote Tasmania Pty Ltd v Garrett [2008] TASSC 86; (2008) 17 TasR 320 at [16]; Specialist Diagnostic Services Pty Ltd v Healthscope Ltd (2012) 305 ALR 569; [2012] VSCA 175 at [86]- [93]. Each contract must be considered, literally, on its own terms. Where (unlike the current case) parties have engaged in a detailed exposition of their respective rights and obligations in a formal document, there may be less call, or scope, for a generic implied term of any description.
  16. In any event, the objective theory of contract, which holds sway in Australian law, requires, inter alia, that the intention of contracting parties be determined by reference to “the purpose and object” of their transaction: Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at [35]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]. The purposive character of the law comes into play here in a way that requires close attention to both the substance and form of each agreement and, a contractual purpose having been identified, a robust but fair approach to enforcement of the contract.
  17. An illustration of implied terms of the character presently under consideration, in operation, in the context of a dividing fence, is Vickery v Jenner (1896) 17 NSWR (Law) 438 at 441-442. There a majority of the Full Court of this Court implied a term in a fencing agreement to the effect that a party would not wilfully, or by any wanton or malicious act, destroy or impair the fence as a boundary fence, having regard to the circumstances existing at the time repairs were effected to the fence. That term was justified on the basis that the parties must be assumed to have promised to do that which was part of their bargain, or which could be fairly implied as part of the good faith which was necessary to make the bargain effectual.
  18. A key ingredient in the law’s justification of terms implied, by law, in contract and tenancy law is an appreciation that an implied term is necessary to ensure that a party secures the benefit of his, her or its contract or, as the case may be, lease. Increasingly (as illustrated by Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd [2008] HCA 10; (2008) 234 CLR 237) leases, historically perched between the law of contract and the law of property, have been assimilated within contract law.
  19. Accordingly, the law invites inquiry as to the purpose of the parties’ arrangement the subject of the current proceedings.
  20. In the context of the current proceedings, that purpose can be taken from Landale v Menzies at 9 CLR 99-100 and 105 in the observations of Griffith CJ and Barton J respectively. The object of the parties’ arrangement is and at all material times has been: (a) to obtain a more convenient location for a dividing fence than can be had along the middle line of the creek which defines the boundaries between the parties’ properties; and (b) to divide the permanent water in the creek between the parties by an arrangement that amounts to a fair deal.
  21. It is not necessary, in this judgment, to consider a full range of circumstances that could be described as a breach of one or more of the implied terms governing the parties’ performance, or enforcement, of their arrangement. For completeness, however, it must be recorded that such terms are grounded in the common law. They are not grounded in an exercise of equitable jurisdiction or upon a characterisation of the parties as standing in a fiduciary relationship. The parties are not fiduciaries. They are entitled to consult, and prefer their own interests, unhindered by a duty to subjugate their own interests to those of their neighbour.
  22. The parties are, however, obliged not only to respect the integrity of their dividing fence but also to respect their neighbour’s entitlement to access to the southern pond, in the case of the defendants for the limited purposes of: (a) pumping a reasonable amount of water to their homestead for domestic purposes; and (b) for exercising horses, under the personal supervision and care of the first defendant, for veterinary purposes.

DISPOSITIVE ORDERS

  1. Upon consideration of what orders should be made in disposition of the proceedings, I am mindful of: first, an imperative (grounded in section 63 of the Supreme Court Act 1970 NSW) to endeavour, so far as possible, to determine all matters in controversy between the parties so as to effect a complete and final determination of those matters and to avoid all multiplicity of legal proceedings; and, secondly, a duty (grounded in section 90(1) of the Civil Procedure Act 2005 NSW and rule 36.1 of the Uniform Civil Procedure Rules 2005 NSW) to give such judgment, or to make such orders, as the nature of the case requires, whether or not a claim for relief extending to that judgment or those orders is made in originating process.
  2. Subject to allowing the parties an opportunity to be heard as to the form of any, and all, orders to be made, I propose to dispose of the proceedings by making orders (and a reservation of liberty to apply) to the following effect:
  3. I am not presently minded to grant any injunctive or other relief consequential upon these declarations. As presently advised, I do not regard such relief as necessary to determine all questions in controversy between the parties. Having regard to the parties’ ongoing relationship as neighbours, I am disinclined to burden their personal dealings with a risk of contempt proceedings unless a necessity for injunctive relief becomes patent.
  4. A declaration of right implicitly carries with it a reservation of liberty to apply for consequential relief, if necessary: Royal Insurance Company Ltd v Mylius [1926] HCA 49; (1926) 38 CLR 477 at 497. I propose to make that entitlement to apply express. It will enable ancillary orders to be made, if necessary, to implement and give effect to (ie, “to work out”) the principal relief granted: Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201 at [50]- [51], [56], [58], [64] and [69]-[70]. It is not an invitation to fresh litigation.
  5. One topic which the Land Board appears not to have expressly determined, and upon which the parties appear as yet to have made no express agreement, is apportionment of the burden of the ongoing cost of maintenance of their fence. If there is no agreement about this, it is a topic to which a return can be made in working out the Court’s orders.
  6. During the course of the hearing there was a feint suggestion on the part of the plaintiff that her claim in trespass extended to a claim against the first defendant for damages for trespass to her person. That claim, if made, was not pressed in submissions. In any event, I am satisfied that it lacks the requisite foundation in fact.

COSTS

  1. I will allow the parties an opportunity to be heard on the question of costs. For their assistance, I record that my preliminary view is that the appropriate order is an order that the plaintiff pay one half of the defendants’ costs of the proceedings.
  2. Costs are within the discretion of the Court: Civil Procedure Act 2005 NSW, section 98. The general rule, subject to orders of the Court in the particular case, is that costs follow the event: Uniform Civil Procedure Rules 2005 NSW, rule 42.1.
  3. The defendants have been substantially successful in opposing the relief claimed by the plaintiff, in the terms claimed. However, they cannot be said to have been wholly successful in the proceedings because, in conduct of the proceedings, each side of the record has been obliged to confront points of uncertainty about the nature of their “give and take fence”, and to have those points settled by agreement or judicial determination.

CONCLUSION

  1. Whether the current judgment will allow, encourage or compel the parties to establish a working relationship remains to be seen. Standing apart from the fray, a cause for concern is that, in debating whether a fixed time could be agreed for the length of notice to determine the arrangement for their give and take fence, each party had a primary focus on how long it would take them, upon receipt of notice, to obtain a fresh determination (from the Local Court or NCAT) about the location of a dividing fence. Both sides have become trapped by a culture of litigation, each thinking the worst of the other and, one fears, failing to consult enlightened self-interest.
  2. With any luck, they might find (counter intuitively) that public recognition of a defined mechanism, of their own making, for determination of their give and take fence arrangement might serve as a constant reminder to everybody of a need for reasonable accommodation (live and let live, not merely give and take) in management of their boundary, lest they all be consumed by the risks and attendant costs of ongoing litigation.
  3. As it is, the costs of the litigation to date could long ago have dwarfed the costs of alternative, practical solutions to each side’s perceived problems. There is no guarantee that another dividing fence application would produce a radically different outcome. The present regime is not patently unfair.
  4. The status quo, known but irritating, may exert on freedom of choice a gravitational pull not shared by an alternative world, unknown in all but risk and ruinous expense. The devil you know may be better than the one you don’t.

ADDENDUM (29 May 2015)

  1. Final orders were made, to give effect to these reasons for judgment, on 29 May 2015.
  2. Those orders were in substantially the same terms as contemplated in paragraphs [129] and [134], together with a declaration in the following terms:
  3. DECLARE that, whilstever the arrangement for a give and take fence along the fence line subsists, the plaintiff (of the one part) and the defendants (of the other part) are obliged to bear, equally, the reasonable costs of any ongoing maintenance of the give and take fence.

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Amendments

02 June 2015 - Addendum (29 May 2015)

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