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High Court of New Zealand Decisions |
Last Updated: 6 August 2019
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
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CIV 2017-404-2145
[2019] NZHC 1526 |
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BETWEEN
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KINARA TRUSTEE LTD
Plaintiff
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AND
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INFINITY ENTERPRISES NZ LTD
Defendant
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Hearing:
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23-26 October 2018, 1 November 2018
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Counsel:
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A Barker QC & J Zwi for Plaintiff
N Penman-Chambers & A Eager for Defendant
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Judgment:
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1 July 2019
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JUDGMENT OF DUFFY J
This judgment was delivered by me on 1 July 2019 at 4.45 pm pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Solicitors/Counsel:
Murdoch Price, Botany Junction, Manukau Andrew Barker QC, Auckland
Hesketh Henry, Auckland
KINARA TRUSTEE LTD v INFINITY ENTERPRISES NZ LTD [2019] NZHC 1526 [1 July 2019]
[1] The plaintiff, Kinara Trustee Ltd (“Kinara”), claims it is entitled to use an unregistered accessway that crosses land owned by the defendant, Infinity Enterprise NZ Ltd (“Infinity”). This accessway allows Kinara and persons wanting to visit its commercial property to have ingress to this property from Redoubt Road, Manukau.
[2] Kinara contends the accessway is either an equitable easement or, alternatively, that Infinity’s conduct over the past 10 years has given Kinara rights in equity that entitle Kinara to use this accessway. It is not the only means of ingress to Kinara’s property, but it is the only means of such access from Redoubt Road, which has a beneficial value for Kinara.
[3] Infinity refuses to recognise Kinara’s right to use the disputed accessway, despite Infinity having taken no steps until now to deny others, including Kinara, use of the disputed accessway. Hence this proceeding.
[4] Kinara seeks relief in the form of orders that will compel Infinity to recognise Kinara’s right to use the disputed right of way, and to take the necessary steps to enable its registration as an easement on their respective titles.
[5] The disputed accessway was in use long before either Kinara or Infinity acquired their respective blocks of land. Its informal character is likely to be the result of a legal error by solicitors responsible for preparing the original subdivision plan and the titles of the subject lots. However, this is of little comfort to either Kinara or Infinity as both must now deal with the problem the error has created for them.
[6] Kinara claims it can use the accessway because either it is an equitable easement by implied grant, which was created at the time the subject lots first passed out of common ownership, or through the law of equitable estoppel.
[7] The essential questions in issue are:
(a) whether an unregistered equitable easement, which was created at the time the subject lots first passed out of common ownership, still exists and is enforceable against Infinity as present owner of the purported
servient land, despite the earlier transfers of its ownership; and in the alternative
(b) whether Infinity’s conduct after it acquired this land, has created rights of use by Kinara, under the law of equitable estoppel, which can require Infinity to register those rights on its title.
[8] For reasons that follow I am satisfied that Kinara has no enforceable equitable easement by implied grant over Infinity’s land. However, I am satisfied that because of Infinity’s conduct after it acquired its land Kinara has acquired rights under the law of equitable estoppel, which now require Infinity to register the accessway on its title as an easement.
[9] The facts relevant to each cause of action cover different time frames, however, there is some overlap. Because it is helpful to view the facts in their chronological order, and this is how Kinara presented its case, I propose to deal with the equitable easement claim first and then the equitable estoppel claim.
Equitable easement by implied grant
[10] Kinara’s land was originally part of a larger parcel of land situated at the corner of Redoubt Road and Great South Road, which at the relevant time was owned by Hawkins Developments Ltd (“Hawkins”).
The 1986 Subdivision
[11] On 23 December 1986, Hawkins subdivided this land into 15 Lots for which certificates of title were allocated. The lots which are relevant to this proceeding were Lot 1 and Lot 4.
[12] Lot 1 lay on the corner of Great South Road and Redoubt Road, with Great South Road on its western boundary and Redoubt Road on its northern boundary. Lot 4 was adjacent to Lot 1, lying immediately to the east, and with its northern boundary facing Redoubt Road.
[13] As initially contemplated, the subdivision did not include access to Lots 1 and 4 from Redoubt Road. However, the local territorial authority at the time, (Manukau City) wanted to widen Redoubt Road. Under an agreement it reached with Hawkins a sliver of Lots 1 and 4 were transferred to Manukau City to become part of Redoubt Road.1 In return, Hawkins was permitted ingress access only to Lots 1 and 4 from Redoubt Road. This arrangement led to the approval of an amended subdivision plan, which put into effect the proposed access-way, subject to conditions:
... the Council approves SP3185B subject to provision being made for the following conditions to be complied with to the satisfaction of the Council:
Provision is to be made for the right-of-way to be duly granted and reserved.
[14] Following approval of the amended subdivision plan, on 3 July 1987 certificates of title for Lots 1 and 4 were granted to Hawkins. The title of Lot 4 recorded a proposed right-of-way to allow ingress for Lot 1 from Redoubt Road. The proposed right-of-way had its entry point on Lot 4’s boundary with Redoubt Road; it then ran across Lot 4 for a short distance, ending at Lot 4’s boundary with Lot 1. This proposed right-of-way will be referred to as PROW A.
[15] When certificates of title were issued for Lots 1 and 4 they were both owned by Hawkins.2 This meant that PROW A could not be registered as a legal easement, because the law at the time did not allow an owner of two parcels of land to grant an easement in relation to those parcels.3
2 By then Hawkins Developments Limited had changed its name to MacDow Properties Limited.
[16] On 25 November 1987, Lots 1 and 4 were transferred to Fletcher Merchants Ltd (Fletcher Merchants).4 This was the last time that both Lots would be held by the same owner.
[17] On 15 August 1989 Fletcher Merchants transferred Lot 1 to Robert Niven.5 Once Lots 1 and 4 were owned by different persons it became legally possible for PROW A to be registered as a legal easement on their titles. Because Fletcher Merchants retained Lot 4, (the intended servient land), the company could easily have included PROW A as a legal easement in the memorandum of transfer to Mr Niven, thus allowing for registration.6 However, this was not done.
[18] In February 1990 Fletcher Merchants transferred Lot 4 to Beijing Restaurant Company Ltd (Beijing Restaurant), which later changed its name to Rayland Hotel Company Limited.7 The evidence to establish this transfer is messy. No memorandum of transfer or certificate of title recording the change of ownership was produced in evidence. However, a memorandum of transfer (C118732.2) dated 26 February 1990 was produced in evidence; it records Beijing Restaurant as the registered proprietor of Lot 4 granting an easement to Telecom Auckland Limited, which proves that by then Beijing Restaurant was the registered proprietor of Lot 4.8
The 1991 Subdivision
[19] On 20 March 1990 the Manukau City approved the subdivision of Lot 1 into two parts. One part, which was to be formed from the western half of Lot 1, would become 726 Great South Road and was intended for use as a service station by BP Oil New Zealand Limited (BP Oil).9 The other part, which would lie between 726 Great South Road and Lot 4, would become 8 Lakewood Court.10
4 Infinity has admitted this pleaded fact.
5 Infinity has admitted this pleaded fact.
7 Later known as Rayland Hotel Company Ltd.
8 This easement remains registered on the current version of CTNA66B/244.
9 The legal identifier of this land was NA85B/190 Lot 1 Deposited Plan 143536
10 The legal identifier of this land was NA85B/191 Lot 2 Deposited Plan 143536. Because I shall use the postal addresses to refer to each of the new subdivided sections, for the sake of consistency, I shall also use the postal address reference of 12 Lakewood Court to refer to Lot 4.
[20] The subdivision plan included a proposed registered right-of-way over 8 Lakewood Court (ROW B) for the benefit of 726 Great South Road. ROW B joined PROW A at the boundary between 8 and 12 Lakewood Court, which shows that ROW B was created with PROW A in mind and for the purpose of enabling 726 Great South Road to enjoy ingress from Redoubt Road. There was a separate proposed registered right-of-way for the benefit of 726 Great South Road (being ROW C) which was to run through 8 Lakewood Court at the southern edge of the property and lead out onto Lakewood Court. This was to permit persons from 726 Great South Road to have access to Lakewood Court.
[21] Manukau City’s records reveal that the Council required that the “shape factor” of the “existing Redoubt Road in access vehicle crossing [was] not to be modified in any way without the specific approval of the Council and Transit NZ.”11 The “private ways A, B and C [were] to be constructed, including provision for storm water control”. Further “speed control devices” were to be provided “on the entrance strip from Redoubt Road to the service station [at 726 Great south Road] to the Council’s satisfaction”.
[22] On 25 May 1990 Mr Niven transferred Lot 1 to BP Oil. The next step, which completed the sub-division of Lot 1, was when certificates of title for the two newly sub-divided parcels of land at 726 Great South Road and 8 Lakewood Court were issued on 26 March 1991. BP Oil retained ownership of 726 Great South Road and transferred 8 Lakewood Court to Mr Niven by memorandum of transfer dated 3 July 1991.12 ROW B and ROW C were included in this memorandum, which led to their registration on the titles of 8 Lakewood Court and 726 Great South Road.13
[23] On 14 February 1992 Manukau City released the performance bond BP Oil had paid following its completion of the “road bumps in the Redoubt access road.”
11 Emphasis added.
12 Although Mr Niven is named in the memorandum of transfer he does not appear as registered proprietor on the copy of the historic title of 8 Lakewood Court that is in evidence. Instead a group of other persons are named therein as original proprietors. This may be because not all the historic certificates of title have been produced in evidence.
13 These easements were registered on 19 August 1991.
Lot 4: 12 Lakewood Court
[24] Whilst the development work on 726 Great South Road and 8 Lakewood Court was proceeding Lot 4 (12 Lakewood Court) seems to have been lying in an undeveloped state.
[25] As mentioned before, the records of Manukau City show the Council required a constructed access road with speed bumps from Redoubt Road when that necessarily meant part of this construction would be on Lot 4/12 Lakewood Court. There is nothing in Manukau City’s records to show whether Beijing Restaurant was involved in this process. The general impression to be gained from the available evidence, is that everyone was proceeding on the basis BP Oil and Mr Niven were legally entitled to act in the way that they did, which included BP Oil constructing the new access road partly on land owned by Beijing Restaurant.
[26] The possibility of ingress access from Redoubt Road continuing after the subdivision had proceeded and a service station was built on 726 Great South Road was the subject of some push back from Transit New Zealand. In a letter dated 11 December 1989 Transit New Zealand expressed disquiet about the occupants of 726 Great South Road having continued ability to access this property from Redoubt Road. However, a Manukau City Planning and Resource inter office memorandum records the Council officers were of the view that “because the vehicle crossing from the Redoubt Road carriageway is already constructed” there was no need to involve Transit New Zealand as “this part of the underlying subdivision has already been addressed in SP 3185B”, which was the original subdivision consent that the Council had approved on 8 December 1986. This evidence shows that there was already some form of constructed accessway from Redoubt Road to Lot 4 before the construction works required by the Council for the 1991 subdivision were done. It may also explain why those involved acted as if they were entitled to build the proposed access road.
[27] The evidence presented in this proceeding does not reveal any development activity on Lot 4 until 24 July 1997 when Manukau City approved building plans for the construction of a motel on this site. By then the “Redoubt access road” would
have been five years old and being used by persons wanting to access the BP Service Station on 726 Great South Road.
[28] The practical effect of the various rights of way, after the 1991 subdivision, can be stated as follows:
(a) PROW A starts on Redoubt Road, goes over the northern section of Lot 4/12 Lakewood Court, and finishes on the boundary with 8 Lakewood Court.
(b) ROW B starts where ROW A finishes, goes over the northern section of 8 Lakewood Court, and finishes on 726 Great South Road.
(c) ROW C starts at the southern section of the boundary between 726 Great South Road and 8 Lakewood Court, goes over the southern section of 8 Lakewood Court, and finishes in Lakewood Court.
(d) ROW B and ROW C are registered on the relevant certificates of title. PROW A is not.
[29] Historical copies of certificates of title relevant to Lot 4/12 Lakewood Court that were produced in evidence omit any reference to Beijing Restaurant, seemingly there is a gap in the evidence. However, there is a historical copy of Lot 4’s title in evidence that records the original proprietor as Rayland Hotel, which was Beijing Restaurant’s subsequent change of name.14 This title records subsequent transfers: first to Yuping Mi and Lan Wu on 24 May 2002; then a further transfer to Rayland Enterprises Limited (Rayland Enterprises) on 10 December 2004.
14 The historical certificate of title for Lot 4 was formerly 63B/327. It was cancelled on 3 July 1987 and a new certificate of title 66B/244 was issued. MacDow Properties Limited is recorded is recorded as the registered proprietor under 63B/327 and Rayland Hotel Company Limited is recorded as registered proprietor under NA66B/244 at the time the new title was issued. Beijing Restaurant is not recorded anywhere as registered proprietor of the land described in NA66B/244. However, a memorandum of transfer dated 26 February 1990 does refer to Beijing Restaurant as registered proprietor of the land described in certificate of title 66B/244, despite this certificate of title making no reference to Beijing Restaurant. This memorandum of transfer is registered against the title of NA66B/244. There is now no explanation for how this came about.
More recent developments
[30] On 1 August 2007, Kinara purchased 726 Great South Road. On 26 November 2007, Infinity, purchased Lot 4/12 Lakewood Court. From then until the present dispute, and without any complaint, Infinity has allowed Kinara and persons associated with it to use PROW A. Over the same period of time, Infinity has also allowed persons wanting to access 8 Lakewood Court from Redoubt Road to use PROW A.
[31] On 23 December 2014, 8 Lakewood Court was transferred to Lakewood Plaza Ltd Partnership (“Plaza”). Plaza began developing a large-scale apartment complex at 8 Lakewood Court in June 2017. As part of this development process, Plaza fenced off ROW B and dug up the driveway. Kinara objected to this action.
[32] Kinara and Plaza went to arbitration. Kinara was awarded a sum of exemplary damages and Plaza was required to reinstate ROW B.
[33] However, during arbitration it emerged that Plaza had fenced off ROW B with Infinity’s approval. This was on the basis that Infinity did not recognise PROW A. Moreover, it now appears that Infinity intends to pursue its own large-scale development project on 12 Lakewood Court. On 5 September 2018 Infinity obtained resource consent for a 170 unit hotel/apartment complex to be constructed on this site. The plans for this development record that Infinity will continue to enjoy access from Redoubt Road, but 8 Lakewood Court and 726 Great South Road will not.
The error
[34] Kinara called expert evidence from Mr Green, a former senior land registrar of LINZ in the South Auckland Land District. In this role Mr Green gained expertise in the legal aspects of the land registration system for New Zealand as well as the relevant survey and registration practices that were followed in the mid-1980s to late 1990s in New Zealand generally, and in the South Auckland Land District in particular. He has knowledge of LINZ’s procedures during this time for dealing with subdivisions, particularly in relation to easements. He also has knowledge of local authority procedures for dealing with subdivision consent during those years. Accordingly, he
is qualified to give expert opinion evidence on how the subdivisions relevant to this proceeding were managed.
[35] Mr Green has reviewed the relevant Manukau City files for the 1986 and 1991 subdivisions of the subject parcels of land. This has led him to conclude in summary that:
[36] Mr Green’s evidence shows that from the first subdivision in 1986 those involved at the time: namely, the owner of Lots 1 (as it then was) and 4 and Manukau City, intended PROW A to be a legally enforceable easement that would allow Lot 1 ingress from Redoubt Road across Lot 4’s land. Indeed, Mr Green notes this was a condition of the subdivision being approved by Manukau City. Further, he says that this intent was carried forward when it came to approval of the 1991 subdivision.
[37] Mr Green’s evidence was not challenged. I find it convincing. It informs me that common ownership of the two Lots was an initial impediment to registration of PROW A, but there was an existing process that would have enabled registration to occur automatically once one of the parcels of land was transferred to a different owner. Had the survey plan for the 1986 subdivision lodged with LINZ been accompanied by a memorandum of easements, which recorded PROW A, then once
alienation of one of the subject titles occurred PROW A would have been automatically registered against those titles by the District Land Registrar.15
[38] Because Manukau City’s consent to the subdivision required the grant of an easement to give Lot 1 ingress from Redoubt Road, it is clear the memorandum of easements process should have been followed. This is confirmed by the fact the access rights which Lots 1 and 4 enjoyed from Redoubt Road were registered on the Property Information Register of Manukau City as if they were legal easements.
[39] I am satisfied that at the time of the 1986 subdivision PROW A was intended to be a registered legal easement. This much is clear from Mr Green’s evidence and from my own reading of the records of Manukau City, which latterly referred to PROW A as if it was either a registered easement or an accessway that was “commonly owned”. Moreover, there is nothing to suggest a contrary intention. At the time of the original subdivision there was no obvious reason for Hawkins to resist creation of a legal easement. The relevant documentary evidence shows that Hawkins was agreeable to granting Manukau City a sliver of the two lots Hawkins owned in return for ingress access from Redoubt Road. The reason why registration of the PROW A did not happen at the outset is readily explained by the law as it was at that time.
[40] Once Fletcher Merchants sold Lot 1 to Mr Niven it seems that no-one realised there was still a need to registrar PROW A. The time for doing this (while Fletcher Merchants still owned Lot 4) passed. After that registration could only have occurred with the co-operation of the new owner of lot 4/12 Lakewood Court. Because no one seems to have become alert to the problem, seemingly no attempt to seek such co- operation was made until July 2013 when the owners of 8 Lakewood Court (Plaza) first requested Infinity to register PROW A as an easement. Why proper process was not followed at the relevant time, and why the error was not detected earlier on and corrected then is now unknown.
15 This procedure was provided in s 309 of the local Government Act 1974.
Kinara’s claim
[41] Kinara contends that PROW A is an equitable easement which Infinity should now be compelled to register on the title of Lot 4/12 Lakewood Court. Kinara argues for an equitable easement, of the kind that was recognised in Wheeldon v Burrows.16 In this regard Kinara contends that PROW A was created as a “quasi-easement” by implied grant when Fletcher Merchants sold the dominant tenement (which was then Lot 1) to Mr Niven.17
[42] Kinara relies on the earlier legal impediment of common ownership as being the explanation for why PROW A was not registered on the titles of Lots 1 and 4. Kinara contends that the easement has survived over time and is enforceable today against Infinity. In this regard Kinara contends that all subsequent owners of Lot 4 and Lot 1 (including the two properties created from this Lot in 1991) have recognised the existence of PROW A and shared the common intention that Lot 4 is subject to PROW A.
[43] Kinara also relies on the fact Manukau City’s approval of the 1986 subdivision was conditional on the provision of an accessway from Redoubt Road to serve both Lot 1 and Lot 4.
[44] More specifically, Kinara argues that Infinity should not be able to rely on the defence of indefeasibility of title under s 182 of the Land Transfer Act 1952 (which is the applicable legislation in this proceeding) due to:
(a) Fraud at the time of registration; or
(b) Fraud after registration (supervening fraud).
16 Wheeldon v Burrows (1879) 12 Ch D 31 (CA). Under the deeds system (which is what applied in Wheeldon v Burrows) an easement by implied grant would have been recognised under the common law as a legal easement. However, under the Torrens system of land registration this type of easement can only have force as an equitable easement; see Rarere v Phildagap Ltd (2011) 14 NZCPR 133 (HC) at [30].
17 The servient tenement being Lot 4/12 Lakewood Court.
Infinity’s defence
[45] Infinity has focussed its defence on what the circumstances were when it purchased 12 Lakewood Court and afterwards. Infinity disputes PROW A is an equitable easement. It relies on indefeasibility of title and argues that neither at the time it purchased 12 Lakewood Court, nor subsequently did it know of Kinara’s alleged interest in ROW A.
Is PROW A an easement?
[46] There is common acceptance that PROW A could only ever be an equitable easement. This is because it is said to have arisen from an implied grant, which could not, without more, permit registration.18
[47] Although the Wheeldon rule developed in relation to land generally held under the deeds system, as between the original parties the rule can just as readily be applied to land registered under the Land Transfer Acts. Indefeasibility of title does not exclude claims in personam against a registered proprietor.19 The potential for claims under the Wheeldon rule to be made against LTA land was recognised in Mikitasov v Collins; Philpott v Noble Investments Ltd; and Rarere v Phildagap Ltd.20 In Australia the existence of such claims has been allowed for in principle in McGrath v Campbell and in Australian Hi-Fi Publications Pty Ltd v Gehl.21
[48] The essential requirements of the Wheeldon rule are: (a) a common owner of two or more parcels of land; (b) the existence of continuous and apparent easements or quasi-easements over one parcel which the common owner has and was at the time of the implied grant using for the benefit of the other parcel/s; (c) those easements are
18 See DW McMorland McMorland on Easements, Covenants and Licences (3rd ed, LexisNexis, Wellington, 2015) at 16.036. Before 26 August 2002 (which is the relevant time period here) a legal easement could only be created by memorandum of transfer or by easement certificate.
19 Frazer v Walker [1967] NZLR 1069 (PC); see also discussion by Elias CJ in Green Growth No 2 Ltd v Queen Elizabeth The Second National Trust [2018] NZSC 75, [2019] 1 NZLR 161 at 139.
20 Mikitasov v Collins [2008] NZCA 390, (2008) 9 NZCPR 735; Philpott v Noble Investments Ltd
[2015] NZCA 342; Rarere v Phildagap Ltd (2011) 14 NZCPR 133 (HC).
21 McGrath v Campbell [2006] NSWCA 229, (2006) 68 NSWLR 229; Australian Hi-Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618.
reasonably necessary to the dominant land; and (d) the common owner sells the dominant land while at the same time retaining ownership of the servient land.22
[49] A classic case for the application of the rule in Wheeldon would be where the owner of two adjoining blocks of land has used block A as if it were a right-of-way to gain access to block B and then later sells block B. Before 2002 it was not possible for the one owner to register a right-of-way as an easement on blocks A and B.23 Provided the essential requirements of the rule in Wheeldon were established, on the sale of block B the new owner would acquire an implied grant of a right-of-way easement to enable him or her to enjoy the same passage across block A to access block B as the original owner enjoyed. The rule has been said to reflect the underlying general principle of non-derogation from the grant; essentially the seller of the dominant tenement can be assumed to transfer all rights of use that attach to that property along with the property itself.24
[50] In the present case there is evidence to suggest that while Lots 1 and 4 were in the common ownership of Hawkins and then Fletcher Merchants, persons having an association with those companies who wanted to access Lot 1 regularly used the ingress way from Redoubt Road, which necessarily meant that they crossed Lot 4 to get to Lot 1. Further Infinity did not challenge the evidence on which Kinara relies to establish these requirements.25 Accordingly, I find the first two requirements of the Wheeldon rule are satisfied.
[51] The third requirement is that the use was reasonably necessary for Lot 1. The Court of Appeal in Mikitasov v Collins noted that the modern approach has been to adopt a liberal meaning of necessity, preferring to conceptualise it as “necessary to the reasonable enjoyment of a property” rather than a strict necessity.26 Reference was
22 See McGrath v Campbell [2006] NSWCA[2006] NSWCA 180; , (2006) 68 NSWLR 229 at [34].
23 Under the common law an easement was by definition a right in another person’s land, therefore, no person could have an easement over land which he or she owned. The position was changed in New Zealand in 2002 by the insertion of s 90A in the Land Transfer Act, which permitted the same person to be the registered proprietor of both dominant and servient tenements
24 See discussion in Australian Hi-Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618 at 623 (NSWCA).
25 See Evidence Act 2006, s 92.
26 Mikitasov v Collins [2008] NZCA 390, (2008) 9 NZCPR 735 at [27].
made to the following comments of Meagher JA in the New South Wales Court of Appeal decision of Wilcox v Richardson:27
... the appellants have proved that they had rights of a Wheeldon v Burrows kind over additional areas, that is, a quasi-easement of a “continuous and apparent” nature which was “reasonably necessary for the enjoyment of the property granted” by the sub-lease. These “additional areas” are the areas which it was proved were used in common with the proprietors of the northern shop. Mr Biscoe QC learned senior counsel for the respondents, resisted this proposition because of his Honour’s finding that these areas were not essential for the conduct of the southern shop. In my view this is to apply too stringent a test. The additional areas were “reasonably necessary” within the rule.
[52] Accordingly, in Mikitasov v Collins the Court of Appeal concluded that the rule in Wheeldon contemplates reasonably necessary, or natural, use:
[28] It can be seen from that reasoning that Meagher JA has used the standard of reasonably necessary in a practical way reflecting reasonable use to be expected in order to make reasonable use of the dominant tenement. That is why we have used a synonym of a natural use, which Mr James accepted captured the distinction that Meagher JA was seeking to make.
[29] Applying that notion of natural use or reasonable and necessary use, it does not follow that Lots 1 and 2 cannot be used as one integrated estate unless the right-of-way to Lot 2 is also for the benefit of Lot 1...
[53] From the outset the use of PROW A permitted ingress to Lot 1 from Redoubt Road. The grant of such access was made an express condition to the amended subdivision plan approved by the Council in 1987. Significantly, at the time Hawkins was prepared to give the Council a sliver of Lots 1 and 4 (for widening Redoubt Road) in return for this ingress. Clearly this ingress, which was additional to the ingress Lot 1 enjoyed from Great South Road, was seen to be valuable. Furthermore, it enhanced the natural use of Lot 1. There is no reason to think matters would have changed since then. Without ingress from Redoubt Road Lot 1 would be restricted to using Great South Road for ingress as well as egress; such reduction in access could only be to the detriment of Lot 1. Accordingly, I am satisfied that at the time Lot 1 was sold to Mr Niven PROW A was reasonably necessary for the enjoyment of this Lot.
[54] It follows that I find all the requirements of the rule in Wheeldon are satisfied. Further, when Lot 1 was transferred to Mr Niven he received all the rights that Lot had
27 Wilcox v Richardson (1997) 43 NSWLR 4 (CA) at 8B-E.
hitherto enjoyed over Lot 4, including by implied grant the right to use PROW A. Had Fletcher Merchants wanted to avoid the application of the rule in Wheeldon it could readily have done so, by express reservation in the agreement for sale and purchase of Lot 1. There is no evidence to suggest it did so.
Can an implied easement by grant be binding on successors in title of the servient land?
[55] Whether PROW A can be enforced as an equitable easement against the subsequent owners of the servient land (Lot 4) is a separate question. For this to happen Kinara would need to establish that on each successive transfer of Lot 4/12 Lakewood Court to a new registered proprietor that person took title knowing enough about the equitable easement to exclude indefeasibility.
[56] In Sutton v O’Kane Richmond J referred to existing authority and stated:28
I shall also assume in favour of Mr O’Kane that apart from the Land Transfer Act an equitable easement binds purchasers of the servient tenement who take with notice: Wellington City Corporation v Public Trustee and Gale on Easements
[57] In Philpott v Noble Investments Ltd an equitable easement impliedly created by contract was relied upon to sustain the caveat. The Court of Appeal referred to easements as having the characteristic of binding successors in title.29
[58] The above references suggest that even with land subject to the LTA, provided the obstacle indefeasibility of title presents can be overcome, once an equitable easement has been created it can bind successors in title. The difficulty in most cases will be for the party reliant upon the equitable easement to achieve this outcome, given the limited scope the LTA allows for defeating indefeasibility. For the present, as was done in Sutton v O’Kane, I have assumed that, subject to indefeasibility, an equitable easement can bind successors in title.
28 Sutton v O’Kane [1973] 2 NZLR 304 (CA) at 340.
29 Philpott v Noble Investments Ltd [2015] NZCA 342 at [31].
[59] Section 62 of the LTA created the principle of indefeasibility and s 182 of that Act provided that, except in the case of fraud, a purchaser from a registered proprietor was not affected by notice of unregistered interests. Section 182 of the LTA provided:
182 Purchaser from registered proprietor not affected by notice
Except in the case of fraud, no person contracting or dealing with or taking or proposing to take a transfer from the registered proprietor of any registered estate or interest shall be required or in any manner concerned to inquire into or ascertain the circumstances in or the consideration for which that registered owner or any previous registered owner of the estate or interest in question is or was registered, or to see to the application of the purchase money or of any part thereof, or shall be affected by notice, direct or constructive, of any trust or unregistered interest, any rule of law or equity to the contrary notwithstanding, and the knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud.
[60] Fraud under s 182 required dishonesty in the form of actual knowledge of the unregistered interest, which included wilful blindness as to its existence. To establish wilful blindness, a purchaser’s notice of the factors that go to support an unregistered interest were not sufficient; instead there needed to be proof the purchaser: (a) knew about those factors, but failed to draw the necessary inferences from them; or (b) knew enough to put an honest purchaser on enquiry but failed to make such enquiry.30 Constructive knowledge was insufficient to establish fraud under s 182.31
[61] Beijing Restaurant acquired the servient land in February 1990. For Beijing Restaurant to be bound to recognise PROW A as an equitable easement by implied grant it would have needed actual knowledge of that interest (which included wilful blindness) before it became the registered proprietor of Lot 4. Without such knowledge on registration Beijing Restaurant would have obtained an indefeasible title, which was, therefore, free of the easement. If Beijing Restaurant simply had notice of PROW A before registration that would not have been enough to bind it to recognising the easement.32
30 See Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1923] NZGazLawRp 32; [1923] NZLR 1137 (CA) at 1177 and see discussion in Elizabeth Toomey New Zealand Land Law (3rd ed, Thomson Reuters, Wellington, 2017) at 2.5.06.
31 See New Zealand Land Law at 2.5.06. Parliament has made plain the exclusion of constructive notice in Land Transfer Act 2017, s 6.
32 See Green Growth No 2 Ltd v Queen Elizabeth The Second National Trust [2018] NZSC 75; [2019] 1 NZLR 161 at [101].
Did the easement by implied grant survive the sale of the servient land (Lot 4) to Beijing restaurant?
[62] There is no evidence to show what Beijing Restaurant knew of PROW A at the time it became the registered proprietor of Lot 4. Not surprisingly, there is no direct evidence about what Beijing Restaurant may have known about PROW A at this time. Nor do the known circumstances inferentially suggest that Beijing Restaurant knew enough about PROW A to preclude the company acquiring an indefeasible title.
[63] Beijing Restaurant purchased Lot 4 before Mr Niven obtained consent to subdivide Lot 1, at which time there is unlikely to have been anything that might have alerted Beijing Restaurant to others using PROW A.33 Manukau City’s records show there was some form of carriageway crossing Lot 4 from Redoubt Road before the 1991 subdivision, and a proposed right-of-way was shown on the deposited plan for Lot 4 (DP Plan 112560). However, those items of information would simply have given Beijing Restaurant notice that some form of accessway was currently used by Lot 1 across Lot 4, which would not be enough to engage the fraud exception in s 182 of the LTA. In short, nothing here suggests actual knowledge, (including wilful blindness), on the part of Beijing Restaurant. Accordingly, there is nothing to engage the fraud exception in s 182 of the LTA.
[64] Beijing Restaurant must be regarded as having acquired Lot 4 without knowledge of the equitable easement, which means that on registration it obtained an indefeasible title that precluded the owners of Lot 1 from making any claims against it.
[65] Kinara faces further obstacles when it comes to the subsequent purchasers of Lot 4/12 Lakewood Court. The historical certificate of title for Lot 4/12 Lakewood Court shows that Rayland Hotel Company Ltd transferred the property to Yuping Mi and Lan Wu on 24 May 2002 and then to Rayland Enterprises Ltd on 10 December 2004. Infinity’s director Anuj Gupta referred in his evidence to the directors of Rayland Enterprises, being Larry Fan and Yanyan Guo-Fan, which distinguishes them from Yuping Mi and Lan Wu. There is no evidence as to what any of those purchasers
33 See [24]-[27] herein.
knew about PROW A before they took title to this property, which means there is no evidence to exclude indefeasibility. Indeed, from a practical perspective it is difficult to see how knowledge of an unregistered easement, that was sufficient to engage the fraud exception in s 182 of the LTA, could survive over the passing years and with so many changes of ownership.
[66] Kinara’s argument that the earlier purchasers of Lots 1 and 4 recognised the existence of PROW A and shared a common intention that Lot 4 be subject to PROW A does not help Kinara, because it has not addressed what those various earlier purchasers of Lot 4 knew about PROW A when they took title. Before a Court could find the equitable easement had survived the various transfers of ownership, it would need convincing evidence of the degree of knowledge each purchaser had when it took title.
[67] In short, before Infinity could ever be legally required to recognise PROW A as an equitable easement under the Wheeldon rule Kinara would first need to prove: that this easement had survived the transfer of Lot 4 from Fletcher Merchants to Beijing Restaurant; and that it had survived the subsequent transfers including the transfer to Infinity. Unless such continuity could be established, the present day legal form of PROW A will stand to be determined by the circumstances as between Kinara and Infinity, which cannot of themselves meet the requirements for when an implied easement by grant will arise.
[68] Moreover, on the first occasion that indefeasibility was obtained I consider that as a matter of law PROW A would have been extinguished. Obviously, its factual existence and use continued, but I do not accept its original legal character could survive the acquisition of an indefeasible title.
[69] I acknowledge that there may be a hypothetical question as to whether transfer to a registered proprietor who obtained indefeasible title would only put the equitable easement in an unenforceable dormant state from which it might be re-awakened if the property was purchased by a future successor in title who knew enough about the easement’s history to satisfy the fraud exception in s 182. I find it hard to see how such knowledge could survive the interruption caused by an intervening purchaser
with an indefeasible title. But even if, in principle, such knowledge did survive, I think the better legal view is that once there has been a purchase with indefeasible title this will extinguish any equitable easement that might otherwise have survived. This is because an indefeasible title is one that is free from all interests and encumbrances other than those registered against the title.34 Once a purchaser acquires such title it would necessarily follow that any prior existing equitable easements that cannot qualify for recognition under one of the s 182 exceptions must necessarily be extinguished or permanently severed from the title. Such an outcome seems to me to be a logical consequence of the indefeasibility principle.
[70] This outcome fits with general law on the extinguishment of an equitable interest following a sale to a bona fide purchaser for value, which has some similarity with the indefeasibility principle. In Akers v Samba Financial Group Samba had acquired shares from an errant trustee, Mr Al-Sanea.35 The dispute was whether Samba owned the shares outright or had taken ownership subject to the beneficiary’s interest in the shares. The Supreme Court of the United Kingdom found that all Mr Al- Sanea could sell to Samba was his legal interest in the disputed shares, which notionally left the beneficial interest with the beneficiary Saad Investments Co Ltd (SICL). However, because Samba was a bona fide purchaser for value without notice of SICL’s beneficial interest the acquisition by Samba effectively extinguished SICL’s interest in the shares.
[71] Accordingly, I reject Kinara’s argument that PROW A is an equitable easement by implied grant that has continuously run with the land since the easement’s inception and is still capable of binding a subsequent owner of Lot 4/12 Lakewood Court, including Infinity. Kinara’s argument relies on the assumption that the various owners of Lot 4/12 Lakewood Court after Fletcher Merchants and before Infinity were bound by PROW A, which necessarily implies it had survived the various transfers before Infinity acquired the property. However, there is no evidence of this. Kinara also contends that those persons would at least have had “constructive notice” of PROW
A. However, constructive notice is not enough to engage the fraud exception in s 182
35 Akers v Samba Financial Group [2017] UKSC 6.
of the LTA. Unless that exception was discretely engaged on each occasion the property was transferred to a new registered proprietor the equitable easement by implied grant could not survive.
The in-between years
[72] A restaurant was built on 8 Lakewood Court. Plans lodged with Manukau City show parking spaces which include spaces closely approximate to PROW A. Between the 1991 subdivision and 2007 when Kinara and then Infinity acquired their respective properties, PROW A and ROW B were used by persons wanting to access either 8 Lakewood Court or 726 Great South Road. A Valentines Restaurant operated from 8 Lakewood Court. BP Oil operated a service station at 726 Great South Road for some years. During this time the respective registered proprietors of 726 Great South Road, 8 Lakewood Court and 12 Lakewood Court were seemingly content to permit PROW A to be used by anyone wanting to access either 726 Great South Road or 8 Lakewood Court from Redoubt Road.
[73] On 23 June 2003 the Manukau Council granted consent for additions to the Rayland Motel on Lot 4/12 Lakewood Court, which included a new swimming pool, staff room and laundry. At the time this property was owned by Yuping Mi and Lan Wu. The architect’s letter of 22 May 2003 to the Council on behalf of the Rayland Motel mentions the accessway from Redoubt Road stating:
The private access road is to be re-aligned approximately halfway past the entry point of the Slip Road. The levels for this road will be realigned to be similar to what it is now. This however does not affect the current access from Redoubt Road into the site. I have a letter (attached) from Transit New Zealand ... in support of this.
[74] The Transit New Zealand letter of 14 April 2003 gave approval for the:
proposed works on private land for changing the configuration of the access road to Rayland Motel that comes off the slip lane off Redoubt Road, between the motorway and Great South Road.
[75] This conduct on the part of the agent for Lot 4/12 Lakewood Court is consistent with Yuping Mi and Lan Wu recognising at the time that PROW A operated as an
access road that was intended to allow persons to cross Lot 4/12 Lakewood Court to gain ingress to 8 Lakewood Court and 726 Great South Road.
[76] During this time the conduct of the owners of 726 Great South Road and 12 Lakewood Court may in principle have allowed an argument for a new equitable easement through acquiescence or by equitable estoppel. McMorland On Easements, Covenants and Licences expresses some doubt, but nonetheless recognises the possibility of an equitable easement arising in this way:36
In the absence of a contract for the grant of an easement, an equitable easement, or some similar right may occasionally arise under the doctrine of equitable estoppel. When an equity arising out of acquiescence is established it is for the Court in each case to decide in what way the equity can be satisfied.
(citations omitted)
[77] However, Kinara has not sought, in the alternative, to base its case on a discrete equitable easement having arisen sometime after the 1991 subdivision, but before the acquisitions by Kinara or Infinity either through acquiescence or by equitable estoppel. Instead Kinara has based its case on the continued existence of an implied easement by grant when Fletcher Merchants sold Lot 1 to Mr Niven and on an equitable estoppel that is based upon conduct as between Kinara and Infinity. Accordingly, I do not propose to consider if conduct during the “in-between years” would support an equitable easement that Infinity may have known about before it acquired registered proprietorship of Lot 4/12 Lakewood Court.
Supervening fraud
[78] In addition to the above arguments for an equitable easement Kinara advanced alternative arguments based upon supervening fraud. As is explained in New Zealand Land Law:37
Supervening fraud occurs when a registered proprietor becomes registered with the intention to recognise an unregistered interest, but later dishonestly refuses to do so. The question arises as to whether this type of fraud is fraud within the context of the LTA 1952.
[79] The findings I have already made on the early extinguishment of the equitable easement by implied grant answer the alternative argument for supervening fraud as well. By the time Infinity acquired Lot 4/12 Lakewood Court there was no unregistered interest of the type that would engage this concept.38
Equitable estoppel
[80] The indefeasible title which Infinity acquired on registration is something that could become legally vulnerable after registration to an in personam claim in equity by Kinara (provided the relevant criteria for such a claim were established), as is explained in C N and NA Davies Ltd v Laughton:39
...indefeasibility of title does not interfere with the personal obligations of a registered proprietor, and the principle that contracts, or trusts or any personal equity can be enforced against the registered proprietor merely serves to indicate the limits of the doctrine. The Privy Council’s reference to Oh Hiam v Tham Kong ...to the Torrens system being a system of conveyancing which does not abrogate the principles of equity, is entirely appropriate. The Board emphasised that it alters the application of particular rules of equity only so far as is necessary to achieve its own special objects. The Land Transfer Act is a conveyancing enactment giving greater certainty of title but not an enactment which in any way destroys the fundamental doctrines by which Courts of equity may enforce, as against registered proprietors, the “conscientious obligations entered into by them”. The Courts retain their jurisdiction in equity.
[81] Tipping J further remarked in Regal Castings Ltd v Lightbody:40
An in personam claim against a registered proprietor looks to the state of the registered proprietor’s conscience and denies him the right to rely on the fact he has an indefeasible title if he has so conducted himself that it would be unconscionable for him to rely on the register.
[82] For the reasons which follow, I am satisfied that Infinity had notice of PROW A before and when it took title to Lot 4/12 Lakewood Court. Whilst this could not prevent Infinity acquiring an indefeasible title on registration, I see no reason why this
38 Kinara faced the further difficulty that the concept of intervening fraud has not been fully accepted. In Sutton v O’Kane [1973] 2 NZLR 304 (CA) it was accepted by Turner P, whereas the other members of the Court of Appeal panel rejected its existence.
39 CN and NA Davies Ltd v Laughton [1997] 3 NZLR 705 (CA) at 712, which was cited with approval by Tipping J in Regal Castings Ltd v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at
483. See also discussion in Green Growth No 2 Ltd v Queen Elizabeth II National Trust [2018] NZSC 75, [2019] 1 NZLR 161 at 139.
40 Regal Castings Ltd v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at 483.
knowledge should later be ignored when it comes to assessing whether Kinara can establish a claim in equitable estoppel against Infinity post registration.41 Infinity’s pre-registration notice of PROW A is something that would have been retained in the minds of its directors, post registration.42 Such knowledge would provide a platform on which any subsequently acquired knowledge regarding PROW A might rest.
[83] Accordingly, in relation to Kinara’s claim in equitable estoppel I shall examine all that Infinity knew about PROW A and how it was used by Kinara as well as Infinity’s overall conduct. Also relevant to this claim, of course, is Kinara’s knowledge and its conduct.
PROW A’s visual appearance as at 2007
[84] An onlooker in 2007 would have seen one seamless and properly constructed roadway that ran for its entirety from the slip road leading off Redoubt Road across the topmost parts of Lot 4/12 Lakewood Court and 8 Lakewood Court through to 726 Great South Road. The materials used in the construction of PROW A, ROW B and the driveway/courtyard areas of the three properties were so similar that an ordinary onlooker would have been unable to tell whether the boundary of 12 Lakewood Court went under or abutted PROW A and the same could be said for ROW B and 8 Lakewood Court. This roadway would have been clearly visible to anyone looking at 12 and 8 Lakewood Court from Redoubt Road.
Kinara’s acquisition of 726 Great South Road
[85] Prithi Singh is the sole director and shareholder of Kinara. He has lived in the general vicinity of 726 Great South Road since 1968, which makes him very familiar with the three subject properties and the access road from Redoubt Road (PROW A).
[86] Mr Singh gave evidence that before Kinara acquired 726 Great South Road he had used PROW A many times when visiting the Valentines Restaurant at 8 Lakewood
41 Kinara failed to establish its claim based on PROW A being an implied easement by grant because I found this easement had not survived the earlier transfers of Lot 4/12 Lakewood Court: see [62] onwards.
42 I know of no legal principle that would require Infinity’s pre-registration knowledge of PROW A to be quarantined from its post registration knowledge.
Court and using the BP service station on 726 Great South Road. Those experiences have led him to believe that PROW A has been in continuous use for the last 25 years. Mr Singh confirms in his evidence that development of 726 Great South Road and 8 Lakewood Court proceeded some time before the development of 12 Lakewood Court.
[87] Based first on his personal experience of using PROW A over the many years he has lived in the area, and latterly on Kinara’s ownership of 726 Great South Road Mr Singh says he was never aware of any restrictions on the use of PROW A until June 2017 when, with Infinity’s approval, the owner of 8 Lakewood Court blocked access to PROW A by erecting a fence across the accessway as part of the health and safety protections for its new building development. When Kinara challenged the owner of 8 Lakewood Court about this obstruction it learned for the first time that it was done with the approval of Infinity. Shortly thereafter it took steps against the owner of 8 Lakewood Court to reinstate access to PROW A and ROW B. Kinara also commenced this proceeding against Infinity.
[88] Mr Singh describes Kinara’s purchase of 726 Great South Road. It was brought to his attention by a real estate agent friend. Mr Singh was very familiar with the site and so was aware of its advantages, including the three points of entry. He said he did not recall spending much time considering the circumstances of the accessway over 12 Lakewood Court (PROW A). From his perspective it was there and had been there for many years. He had used it regularly to gain access to the Valentine’s Restaurant at 8 Lakewood Court and the BP service station when it was on 726 Great South Road. He says that at the time of purchase he would have assumed that 726 Great South Road had the benefit of the accessway.
[89] Kinara acquired 726 Great South Road at an auction which by its terms gave the purchaser no right of title requisition. This meant in the words of Kinara’s expert witness conveyancing solicitor Peter Nolan’s words “Because they bought, they’re lumped with the title, there’s nothing they can do about it”.
[90] At the auction Mr Singh was provided an information pack and the sale and purchase documents but he did not recall looking at them in any detail. The information pack included a land information memorandum (LIM) and other
documents, which were in evidence. These showed access to 726 Great South Road from Redoubt Road, and the LIM specifically mentioned this access in the “other property information” section of the information pack:
Vehicle access ...
Access to Lots 1 & 2 permitted only via right-of-way easements and from the two vehicle crossings on the Great South Road.
[91] Mr Singh said he would have relied mainly on his personal knowledge of the property and the fact the sale was managed by Bayley’s, whom he saw as reputable agents.
[92] Mr Singh acknowledges that he would have looked at the certificate of title for 726 Great South Road, which would have shown there was a registered right-of-way over the neighbouring property (8 Lakewood Court). He doubted he would have looked beyond that. In this regard I note that since the Land Registry system became electronic in 2002 a practice has developed of attaching a copy of the relevant deposited plan to the certificate of title. Because 726 Great South Road and 8 Lakewood Court are on the same deposited plan (DP 143536) anyone viewing a copy of the certificates of title for either 726 Great South Road or 8 Lakewood Court after 2002 would also have received a copy of Deposited Plan 143536, which shows registered easements (ROW B and ROW C) drawn on Lot 2 (8 Lakewood Court). In this way, the presence of those easements would have come to the viewer’s attention. However, Lot 4/12 Lakewood Court is on a different deposited plan (DP116472), which means it would not have been attached to the title of 726 Great South Road. Whilst the deposited plan for Lot 4 does show a proposed easement (which aligns with where PROW A is sited) drawn on part of Lot 4, the opportunity to gain this information would only arise if specific effort was made to obtain either a copy of the certificate of title for Lot 4/12 Lakewood Court, (which would have had DP 116472 attached to it), or a copy of DP 116472 itself. Further, without seeing the deposited plan for Lot 4/12 Lakewood Court, someone viewing Deposited Plan 143536 might not realise that ROW B did not end at the public part of Redoubt Road.
[93] When Kinara first acquired 726 Great South Road it treated the property as a land bank. Initially Kinara had planned to construct a hotel on the site. But the
intervention of the global financial crisis halted this plan and so the site was leased to tenants who used it as a car sales yard.43 Throughout this period customers of the car sales yard and other associates used PROW A when wanting to access this business from Redoubt Road.
[94] In April 2010 Kinara obtained resource consent to construct the present building on the site, which was a more conservative retail/commercial development involving food and retail outlets. The development was completed by 2011. Since then PROW A has been used by Kinara’s tenants and their customers to access the various tenancies located in the building.
[95] Mr Singh says 726 Great South Road was developed on the basis that the tenants and customers of their businesses would be able to enter the site from Great South Road, Redoubt Road and Lakewood Court. For traffic coming from the east or off the southern motorway the Redoubt Road accessway (PROW A and ROW B) was the primary access to the site, particularly for persons familiar with the shops and food outlets. The accessway enters 726 Great South Road at the back of the building and passes under a footbridge through to the front of the property. Tenants and their customers can enter from Redoubt Road and then park at the back of the building, by driving up a ramp to the roof top parking (which can only be accessed from this ramp). Alternatively, they can drive along the full length of the accessway to the front of the building, which faces Great South Road.
[96] Mr Singh says the development was fully tenanted not long after construction was completed, and it remains fully tenanted. The tenants are a range of businesses from commercial offices, restaurants and retail shops. He describes PROW A as being a vital part of the development of 726 Great South Road with tenants and their customers making extensive use of this accessway.
[97] Mr Singh says that Kinara has tried through its solicitors to obtain additional historical information relating to the developer MacDow Properties (formerly Hawkins), however this company was placed into liquidation in 1989 and the
Companies Office register does not have any details of the shareholders. Fletcher Merchants was placed into liquidation in 2000. Kinara’s solicitors have been able to find no details of Mr Niven. The solicitors for BP Oil (Simpson Grierson) have confirmed they hold no files. Worley Consultants, the advisors on the earlier sub- divisions, have confirmed that they hold no files.
Documentary evidence from Manukau City’s files
[98] The resource consent application that Kinara filed with Manukau City contained many references to the Redoubt Road accessway, in particular stating that no physical change was proposed to any of the vehicle crossings with specific reference made to the site having “commonly owned access via Redoubt Road”, which is something that Manukau City did not contradict.
[99] Manukau City’s planning assessment report described Kinara’s proposal in this way:
To erect and operate a restaurant and attached complex of 10 tenancies incorporating a takeaway food premises, and retailing on the site that is restricted to those retail uses permitted within the Business 4 zone. The restaurant will be a landmark building designed to address the prominent site. The ten tenancies will be designed in a linear fashion with parking located on the roof which can be accessed from the northern side [Redoubt Road side] of the building. The remainder of the parking is located to the west of the building facing Great South Road and to a lesser extent Redoubt Road. The facility will utilise the existing access arrangements for exit to Great South Road previously provided for the service station which includes access from Redoubt Road, Bakerfield Place and South Road.
(emphasis added)
[100] The Concept Design Report prepared for Kinara by GMC Architecture Ltd relevantly described the proposed building in this way:
The prominent corner site has street frontages to Great South Road and Redoubt Road...
The dominant corner with its height and bulk and the ‘convenience strip’ of single level retail tenancies stretching along and fronting Great South road
...
On-site parking is strategically placed to have minimal impact on the scheme and the overall context.
This has been achieved by utilising the existing entry/exit from Great South Road to the parking area fronting Great South Road and the ground retail
Utilisation of the existing Redoubt Road easement onto the ramp area giving access to the upper level car has also been provided. Exiting the site is achieved by using either the Great South Road or Lakewood Court exits. shops
[101] Seventy three car parks were proposed, with 31 of those occupying the upper level car park on the building’s roof, which was accessed from a ramp on the Redoubt Road (northern) side of the building. Manukau City specified that appropriate directional arrows within the site were to indicate the direction of the flow of traffic, and a “No Exit” sign at the Redoubt Road ‘entry only’ access within the eastern boundary of the site was to be erected. The balance of the car parks were to be at ground level, largely on the Great South Road (western) side with a small number on the Redoubt Road (northern) side.
Kinara’s conveyancing evidence
[102] Kinara called Peter Nolan, a solicitor, to give expert evidence on the standard practice adopted by competent conveyancing solicitors when acting on an intended purchase of a property like 12 Lakewood Court.
[103] Mr Nolan distinguished Kinara’s purchase of 726 Great South Road from Infinity’s purchase of 12 Lakewood Court. With the former, the property was bought without the benefit of legal advice at auction, which made the acquisition unconditional and with no provision for requisitioning the title, whereas, with the latter legal advice was sought before the sale and purchase agreement was signed, which meant there was ample opportunity for a purchaser’s solicitor to make full enquiry about the property.
[104] Moreover, Mr Nolan considered that the standard practice of a competent conveyancing solicitor who was engaged to provide advice before the purchase of a property would include taking note of the proposed right of way shown on the deposited plan attached to the certificate of title of Lot 4/12 Lakewood Court, followed by further enquiries to learn more about this right of way. Those enquiries would in Mr Nolan’s opinion have included obtaining copies of the certificates of title and attached deposited plans for the adjacent properties 8 Lakewood Court and 726 Great
South Road, which would have shown the existence of ROW B joining up to PROW
A. Once this was seen Mr Nolan considered a competent conveyancing solicitor would then have advised his or her client that:
There’s also a proposed right-of-way shown on the DP, it’s not registered, but it seems to be for the benefit of the owners of Lot 2 and Lot 1 [8 Lakewood Court and 726 Great South Road] and so there’s something odd going on here, particularly if making inquiry as to what lies on the land. Is there a .... accessway, formed accessway running in through here, then we need to inquire into this and you may find that someone has rights over that proposed right-of-way.
[105] Mr Nolan opined that once a competent conveyancing solicitor realised the odd character of PROW A he or she would also have made enquiry of the Manukau City Council about the property. That enquiry would have revealed the information on the Council’s records relating to PROW A which, in his view, would have led a competent conveyancing solicitor to draw the same conclusions about PROW A as those drawn by Mr Green in his evidence.
[106] Mr Nolan also opined that in his view a competent solicitor following standard practice who acted for Infinity would have obtained a copy of the LIM report. Mr Nolan then opined as to what he would expect to see in a LIM report. However, seemingly no LIM report was obtained, none is in evidence and the conveyancing fee note for the purchase of Lot 4/12 Lakewood Court does not mention any charge for a LIM report.44 Mr Nolan had obtained a recent LIM report for Lot 4/12 Lakewood Court, but this report was not produced in evidence. He considered the version he had obtained would be much the same as a LIM report available in 2007 and he covered this in his evidence. However, I do not consider there is much to be gained from traversing what the 2007 version of the LIM report would have revealed, given that its likely no report was obtained.
[107] Infinity’s counsel sought during cross-examination of Mr Nolan to suggest that a conveyancing solicitor giving pre-purchase advice on a property might not
44 The conveyancing file could not be located and so it was not in evidence. However, Mr Gupta was able from searching his files to locate a copy of the settlement statement for Infinity’s purchase of 12 Lakewood Court. This records no cost item for a LIM report, which supports the inference none was obtained.
necessarily do due diligence and therefore not undertake the full enquiry that Mr Nolan outlined. Mr Nolan rejected those suggestions.
Infinity’s acquisition of Lot 4/12 Lakewood Court
[108] Mr Gupta, together with his father Giri Gupta (Mr Gupta Snr) and his brother Sheil Gupta, are directors of Infinity. Mr Gupta Snr is the company’s sole shareholder. Infinity was incorporated for the purpose of acquiring Lot 4/12 Lakewood Court, which at the time was an existing motel business as well as a restaurant which was leased to a tenant.
[109] Mr Gupta says that around 2007 his father was looking to purchase a motel business with a view to later developing it. At the time his father was in his 60s and the plan was that Mr Gupta would run the business and be in charge of any redevelopment. The family had spent at least two or three months looking at other properties before 12 Lakewood Court was acquired.
[110] Under cross-examination Mr Gupta acknowledged that Infinity was a company that was largely controlled by Mr Gupta’s father. However, Mr Gupta also said the purchase was a family investment to which family members had contributed, despite a sum of $740,000 which was paid towards the purchase price having come from Mr Gupta Snr’s bank account. Mr Gupta said that at the time he was 34 years old, he was involved in the acquisition of the property and since then he has been the family member involved in managing those properties. He described the family as operating as an Indian family where the adult children have a say in decision-making, but he also accepted that ultimately the children will defer to their father. He accepted that Mr Gupta senior would have had a very strong influence in the decision to acquire this property.
[111] Mr Gupta says that before Infinity signed the agreement for sale and purchase, Infinity instructed a solicitor, Aaron Kashyap, to act for it in relation to the purchase. Mr Gupta described the purchase of 12 Lakewood Court as “one of the biggest purchases ever our family has made in this country”. The other properties the family owned were mainly residential. Mr Gupta said that Infinity “did the usual due diligence one would expect when purchasing a going concern”. That is, it looked at
the accounts, to check the motel business was profitable, and reviewed the lease arrangements in respect of the restaurant on the property.
[112] When asked how important to Infinity was access from Redoubt Road Mr Gupta said at the time of the pre-purchase inspection his focus was on the books of the motel business, the restaurant lease and future potential. However, he accepted that the importance of access off Redoubt Road was one of the factors favouring the purchase of 12 Lakewood Court.
[113] Mr Gupta said he expected Mr Kashyap would have made the necessary enquires about 12 Lakewood Court. However, despite attempts to find the conveyancing file for the purchase of 12 Lakewood Court it is unavailable. Accordingly, the extent of Mr Kashyap’s enquiries can only be known inferentially.
[114] Mr Gupta accepts he knew that Mr Kashyap made a title search for 12 Lakewood Court, which would have shown PROW A as a proposed right-of-way on the copy of the deposited plan attached to the title, and with no easement being registered on the title. Mr Gupta says he cannot recall if he ever personally saw the deposited plan attached to the certificate of title or whether Infinity simply relied on the advice of Mr Kashyap in this regard.
[115] Mr Gupta also said that at the time of purchase he did not know “for certain” of the existence of a right of way because he relied on Infinity’s solicitor and the legal opinion he gave on the title stating:
A Yes
Q And by clean you mean nothing was noted on that title?
A ...no adverse items were noted on the title which affect our purchase.
That’s what I mean by it.
A That is what I would assume.
[116] However, under cross-examination Mr Gupta acknowledged that before 12 Lakewood Court was purchased he went on to the site to conduct an inspection of the property. He said he came in from Lakewood Court, but accepted he might have gone to the northern front of the property. He also accepted that from this location he would have seen an accessway running from Redoubt Road through to the Valentines Restaurant (at 8 Lakewood Court) and that throughout its entirety the accessway presented as a well-formed road.
[117] Mr Gupta said that at the time when he was inspecting the property he did not know where the boundaries were, he acknowledged he might have seen the title of the property, but he could not recall doing so. When asked when he conducted his site visit what his thoughts were on where the property’s boundaries started and ended, he said he would have noted the fences and assumed they were part of the property and noted there was an accessway. When he was asked whether he would have assumed that the accessway went over parts of 12 Lakewood Court or not, he said “at that point I wouldn’t have known”.
[118] Although pressed under cross-examination, Mr Gupta would do no more than acknowledge that while on site he might have seen the accessway, and that if he had he would have made no assumptions as to whether it was on 12 Lakewood Court’s title or not. He said that at the time of pre-purchase he was mainly looking at the building, looking at the business without giving too much consideration to “right-of- ways or accessways”. He also said if he saw an accessway he would normally look at it, but without delving into finding out who was the owner of the legal accessway. Therefore, he would not confirm one way or the other whether he knew of the existence of the right-of-way at the time of the purchase. He also acknowledged that if, at the time, he thought he had purchased a clean title he would assume he would not have to recognise any adverse interests.
[119] Mr Gupta had lived for approximately eight years in the near vicinity of 12 Lakewood Court before the purchase in 2007, as the Gupta family home was located at nearby Chieftain Rise. Under cross-examination Mr Gupta was asked about his familiarity, before purchase, with PROW A providing access from Redoubt Road. Initially he rejected any suggestion he would have any familiarity with the site stating that he never went to either the Valentines Restaurant at 8 Lakewood Court or used the BP service station at 726 Great South Road. He also initially rejected any suggestion he may have seen PROW A or the buildings on the subject properties while driving down Redoubt Road, saying that he invariably took the right-hand lane down Redoubt Road to access the motorway and from there all he could see was the rooftops of the buildings owing to the slope of the road. He said he inevitably used the right hand lane on Redoubt Road on his way to his business at the time, which was running a liquor store from 9.00 am till 11.00 pm seven days a week. However, when pressed Mr Gupta acknowledged that occasionally he would have driven down Redoubt Road towards Manurewa and that he would on occasion have used the left-hand lane to turn left into Great South Road, all of which would have allowed him a better view of the buildings and PROW A.
Infinity’s conduct since the acquisition of Lot4/12 Lakewood Court
[120] Mr Gupta admitted that between the time Infinity purchased Lot 4/12 Lakewood Court in November 2007 and when access to PROW A was blocked in June 2017 Infinity: (a) never restricted anyone using PROW A; and (b) PROW A was used by various persons who wanted to access either the Valentines Restaurant at 8 Lakewood Court or Kinara’s property at 726 Great South Road.
[121] Mr Gupta said he recalled 726 Great South Road being used as a petrol station, but he could not recall it being used in 2008 to 2009 as a car yard. He accepted he recalled the construction of the present building on 726 Great South Road, but he did not recall what use was then being made of PROW A. He also accepted that once Kinara’s building was completed PROW A was used to access the various tenancies it contained. However, he also said that he did not know how often and by whom PROW A was used to access Kinara’s building because it was not a situation which Infinity monitored, as the entrance to PROW A is also the entrance to Infinity’s own driveway
leading into 12 Lakewood Court. Patrons of the motel use the entrance to PROW A to access the motel. Further, although he was based on the property from the time Infinity purchased it, he was situated in an office upstairs at level one of the motel building.
[122] Mr Gupta disputed that Infinity has ever represented to Kinara that Infinity recognised the alleged PROW A as a legal right-of-way for Kinara’s use. He also stated that Infinity has never represented to Kinara that Infinity would not block off PROW A in accordance with its legal rights to do so at a future time.
[123] Mr Gupta outlined how Plaza had approached Infinity in July 2013 expressing concern that PROW A was simply a proposed easement that “fell off the radar and was not picked up by anyone and did not get registered”. Plaza wanted Infinity to confirm that it would agree to the error being rectified with the easement registered on the respective titles of 8 Lakewood Court and Lot 4/12 Lakewood Court. Mr Gupta describes how Mr Kashyap did not respond to 8 Lakewood Court’s overtures, which simply intensified to the point when Gurpreet Edge, one of Plaza’s directors called Mr Gupta requesting PROW A be registered as a legal right-of-way, which Mr Gupta refused to do. At the time Mr Gupta said he wanted to safeguard any future development plans for 8 Lakewood Court. Plaza continued to pursue Infinity, requesting registration of PROW A. However, Infinity was adamant that it would not do so, and it requested Mr Edge to let the matter rest and desist from making phone calls, which he did.
[124] Mr Gupta confirmed that once the new development at 8 Lakewood Court began in 2017 Infinity had consented to PROW A being fenced off, with a gate being erected on the boundary between 12 Lakewood Court and 8 Lakewood Court across PROW A.
[125] The first direct communication between Infinity and Kinara was by way of a lawyer’s letter on 7 September 2017 in which Kinara approached Infinity asserting the existence of PROW A being a legal right-of-way, which Kinara was entitled to use. Kinara also asked Infinity to immediately remove any obstruction to PROW A and
confirm its consent to registration. Infinity did not respond to that letter because shortly thereafter this proceeding was commenced.
[126] Infinity is in the process of developing 12 Lakewood Court. It proposes to construct and operate a hotel facility that contains 94 rooms and 76 serviced apartments spanning 16 levels. Resource consent for the development was granted on 5 September 2018. Mr Gupta states that Infinity’s plans do not recognise PROW A as a right-of-way in this development. Access from Redoubt Road is to be retained for use by 12 Lakewood Court only. Unlike the present buildings on Lot 4/12 Lakewood Court, which face towards Lakewood Court, the new development will face towards Redoubt Road.
[127] When I asked Mr Gupta why Infinity sought to prevent Kinara using the accessway he said it was because this use was adverse to Infinity’s development proposals. Mr Gupta said that if Kinara continued to use PROW A then Infinity’s proposed development would need to be redesigned because the New Zealand Transport Agency (NZTA) have “strong feelings about traffic flow”. Mr Gupta referred to a meeting that Infinity had with an Auckland Council traffic engineer to convince him to approve Infinity’s proposed development, which has shifted the face of the development on to Redoubt Road. Apart from Mr Gupta’s account of this meeting there is nothing else in evidence which suggests either Auckland Council or NZTA required use of PROW A to be restricted to persons accessing Lot 4/12 Lakewood Court.
[128] Mr Gupta was later questioned about a traffic management plan that had been put before Auckland Council as part of the development proposal. When taken to the various documents in evidence that represented what Infinity had filed with Auckland Council in order to get consent for its new development Mr Gupta confirmed those documents; they included an integrated transport assessment that later formed part of Auckland Council’s consent for the development. In this report the Redoubt Road access was described as a historical arrangement that currently provided access to the adjacent properties on a historical use basis, and that such access was to be retained for accessing the subject site only. The report refers to proposed vehicular access routes as “existing and are via Lakewood Court and Redoubt Road (left turn inbound
only, as per existing arrangement)”. Whilst the existing use of PROW A was acknowledged there was nothing in the report about a need to restrict this use.
[129] No-one else gave evidence on behalf of Infinity.
Assessment of the evidence
[130] I find Mr Singh to be a reliable and credible witness. His evidence is consistent with the documentary evidence and other circumstantial evidence. I can understand how his long familiarity with 726 Great South Road coupled with the seemingly uninterrupted access all persons who chose to use PROW A have enjoyed up until 2017 would have led him to believe PROW A was a right of way that the owner of 726 Great South Road would always be entitled to use. Seemingly, no-one who had association with either of the three properties earlier than 2017 ever questioned the legal status of using PROW A to access either 8 Lakewood Court or 726 Great South Road. Manukau City had required the access provided by PROW A to be a legal easement and it failed to realise this had not occurred. This was despite that Council having further opportunities, from the various resource consent applications for works on the subject properties over the passing years, to learn that the easement requirement for the 1986 subdivision was not performed.
[131] Accordingly, it is not surprising that Mr Singh failed to realise the accessway he considered important to 726 Great South Road was not a legal easement that could be readily enforced. It follows that I accept his evidence. I find that the first he learned of the true character of PROW A was in June 2017 when Kinara found the access to PROW A was blocked.
[132] Moreover, I note that under cross-examination Mr Singh said he first learned PROW A was not a legal right of way when Infinity blocked access in June 2017 and later in its closing address Infinity did not dispute this.
[133] I also accept Mr Singh’s evidence that Kinara constructed its building on 726 Great South Road in 2010 in reliance on the access PROW A gave from Redoubt Road.
Mr Singh’s evidence is confirmed by the documentary evidence from Manukau City’s files relating to the building’s approval. The positioning of the building and the construction of the roof top upper level parking with a single access ramp at its northern end are all indicative of Kinara’s belief it could always use PROW A for access from Redoubt Road.
Assessment of circumstantial evidence relating to Kinara’s building
[134] The plans of the building that were lodged with Manukau City and the site visit that was made during the hearing are sufficient to establish inferentially how awkward it would be to enter the upper level car park from anywhere other than using PROW A and the Redoubt Road accessway.
[135] The only means of entering or leaving this car park is by the ramp on the northern side. When this car park is entered from the Redoubt Road accessway a vehicle coming from that direction would have no difficulty seeing any vehicle exiting the car park from the ramp, which means the driver of the first vehicle could stop well before she found herself near to or blocking the path of the exiting vehicle.
[136] I doubt that two-way traffic could readily and easily access the upper level carpark if vehicles were only entering from Great South Road or Lakewood Court. This is because vehicles entering from those directions are not likely to have a sufficiently clear line of sight for an incoming driver to be able to ascertain if another vehicle is in the process of leaving the upper level carpark. Consequently, an ingoing driver may not realise he is about to encounter the exiting vehicle until the two vehicles were close to each other. They may then need to manoeuvre around each other. Plainly such manoeuvring would not be part of any car park design.
[137] I am satisfied that the upper level car park needs ingress from Redoubt Road if it is to function properly. Whilst there are other car parks around the building its approval would have been premised on all the car parks provided being fully functional. Also, because the building sits on the corner of Great South Road and Redoubt Road, neither of which permit on street parking, the building occupiers and visitors’ ability to use on street parking as an alternative is restricted. Thus, the building needs its set number of car parks.
Mr Nolan’s evidence
[138] I am persuaded by Mr Nolan’s evidence about the standard practice of competent conveyancing solicitors when engaged to provide advice before the purchase of a property. When a prospective purchaser of a property is cautious enough and so goes to the trouble to obtain legal advice before signing up to buy the property I would expect his or her solicitor to make full enquiries to see if there were any problems with the property’s legal character. I also accept that given the obvious presence of the proposed right of way on the deposited plan relating to Lot 4/12 Lakewood Court a solicitor following standard practice would make further enquiries to see if anything connecting with the proposed right of way was shown on the neighbouring Lot, particularly when enquiries of the client or a site visit would have revealed a well-formed accessway crossing beyond Lot 4/12 Lakewood Court and onto the neighbouring properties.
[139] I accept Mr Nolan’s opinion that a solicitor making pre-purchase enquiries would obtain the certificate of title for the adjacent Lot, which in this case would have revealed the 1991 subdivision changes, including two new certificates of title and a new deposited plan, both of which referred to ROW B. Now that electronic copies of certificates of title are readily accessed and are accompanied by copies of the deposited plans associated with those titles it would have been an easy task to do. I also accept Mr Nolan’s evidence that this information would have generated enquiries of the client about the actual layout of Lot 4/12 Lakewood Court and the adjoining Lots. Once the client reported there was a constructed accessway in place which ran off the slip road from Redoubt Road along the front of Lot 4/12 Lakewood Court and then along the front of the two adjoining Lots I would expect a solicitor to make further enquiries, including either seeking a LIM report or making other enquiries relevant to Manukau City’s file.
[140] Infinity’s counsel sought during cross-examination of Mr Nolan to suggest that a conveyancing solicitor giving pre-purchase advice on a property might not necessarily do due diligence to the extent disclosed by Mr Nolan, and therefore this solicitor would not undertake the full enquiry that Mr Nolan outlined. Mr Nolan rejected those suggestions and I agree with him. Once a property has been purchased
a solicitor may confine his or her services to simple conveyancing tasks such as transfer of the title and registering mortgages because by then the time for due diligence may have passed; in such circumstances a solicitor’s ability to rectify or manage any problems with a property’s title may be no more than damage control. However, if a solicitor is engaged before purchase it is for the very purpose of ascertaining if there are any problems or difficulties with the legal character of a property. The point of doing this is damage avoidance; the client wants to avoid unpleasant surprises by finding out what is to be known about a property’s title before the commitment to purchase is made. In that context I consider there was enough about the character of the title to Lot 4/12 Lakewood Court from the attached deposited plan, which showed the proposed right-of-way, to prompt the type of further enquiries that Mr Nolan spoke about.
Mr Green’s evidence
[141] I have already noted that Mr Green’s evidence was unchallenged and that I am persuaded by it. Its relevance to the equitable estoppel claim is by way of background and because Kinara relies upon this evidence to argue unconscionability on the ground that Infinity’s property only enjoys ingress access from Redoubt Road because of the exchange between Hawkins and Manukau City, which saw the original Lot 1 (which included what is now 726 Great South Road) and Lot 4 each lose a sliver of land in return for such access.
Mr Gupta’s evidence
[142] In 2007 Lot 4/12 Lakewood Court was one of the biggest property acquisitions that Infinity had contemplated. It was a commercial property, whereas the bulk of Infinity’s property investments then were residential. Infinity was sufficiently cautious that it engaged Mr Kashyap to provide it with legal advice before it was legally committed to the purchase. This suggests from Infinity’s perspective that it would have wanted Mr Kashyap to undertake a careful assessment of the property’s legal character and to identify any potential problems before Infinity was legally bound to purchase it. From Mr Kashyap’s perspective he was engaged to carry out the pre-purchase investigation of one of the biggest property investments for his client so far. All of which suggests that Infinity would have wanted Mr Kashyap to conduct the
type of enquiries outlined by Mr Nolan, and Mr Kashyap would have wanted to do likewise.
[143] Accordingly, I consider it is more probable than not that Mr Kashyap did undertake the type of enquiries that Mr Nolan has outlined, and that those enquiries informed Mr Kashyap there was an unregistered accessway running across Lot 4/12 Lakewood Court. I also consider that those enquiries led Mr Kashyap to conclude the accessway was not enforceable against Infinity because it was not a legal easement that was registered on the title of Lot 4/12 Lakewood Court. These conclusions are consistent with the evidence.
[144] First, they are consistent with Mr Gupta’s evidence that he believed Infinity had obtained a clear title with no adverse interests on it.
[145] Secondly, the deposited plan attached to the certificate of title of Lot 4/12 Lakewood Court shows the proposed right of way. Given the circumstances of Mr Kashyap’s instructions I consider he would have taken the step of asking his clients whether there was an accessway in use in the area where the proposed right of way was shown on the deposited plan. The relevant photographs of the site taken between 2006 and 2009 show no change in the appearance of PROW A and ROW B. The visual appearance of PROW A and ROW B show one seamless well-constructed and well- established roadway running off Redoubt Road and along the northern front of Lot 4/12 Lakewood Court, 8 Lakewood Court and 726 Great South Road. This is what Mr Gupta would have seen when he made his pre-purchase visit to the site. I would expect Mr Gupta to relay this information to Mr Kashyap, particularly once Mr Kashyap queried if there was a right of way in use.
[146] Thirdly, once Mr Kashyap knew of the physical circumstances on site, he would have realised there was an established right of way in use across Lot 4/12 Lakewood Court. This would have been enough to trigger Mr Kashyap obtaining copies of the titles and deposited plan of 8 Lakewood Court and 726 Great South Road. He may also have made enquiries of Manukau City, although he seemingly did not take the step of formally ordering a LIM report.
[147] Once Mr Kashyap became seized of the above information, he would have been confronted with evidence of: (a) a proposed right of way (PROW A) shown on the deposited plan for Lot 4/12 Lakewood Court; (b) a registered easement (ROW B) running across the deposited plan for 8 Lakewood Court; and (c) the three properties having access from Redoubt Road via the physical configuration of PROW A and ROW B as one seamless accessway, which appeared to be well-established. This would have been enough to alert Mr Kashyap to the probability that the owners of the neighbouring land had an expectation of this use continuing.
[148] Mr Gupta’s evidence in the exchange set out at [115] suggests that prior to purchase Infinity understood the title to Lot 4/12 Lakewood Court was clear, it had no adverse interests registered against it and that Mr Kashyap has advised Infinity it was “ok” to proceed with the purchase.
[149] The above circumstances inferentially suggest that Mr Kashyap’s efforts would have led him to conclude that the owners/occupiers of the two neighbouring properties were using an unregistered right of way across Lot 4/12 Lakewood Court. However, because the title of that property was clear, the owners of 8 Lakewood Court and 726 Great South Road had no enforceable rights regarding PROW A. In such circumstances I find it is more probable than not that Mr Kashyap advised Infinity at the time of purchase that, whatever use was being made of PROW A, it was not a legal easement and, so, it was unenforceable against Infinity. I cannot accept that Mr Kashyap would have known all that I am satisfied he knew, and yet take no steps to advise Infinity there was an unregistered right of way in use, and what this might mean legally. Matters such as the legal effect of an unregistered right of way on the title of Lot 4/12 Lakewood Court were the very reason Mr Kashyap was instructed to conduct a pre-purchase inspection.
[150] Accordingly, I do not accept Mr Gupta’s evidence, given in cross-examination, that at the time of purchase he did not know about the existence of the “right of way”. This is not plausible. I consider he must have known then about its existence.
[151] After the purchase of Lot 4/12 Lakewood Court and before 2010 Mr Gupta must have had some idea of what was happening on 726 Great South Road. It is not
plausible that he would never in the years between 2007 and 2009 have seen the car sales yard operating from that property, or the traffic along PROW A, which this business must have generated. I can accept he may not have differentiated between traffic going to 8 Lakewood Court and traffic going to 726 Great South Road, but that is immaterial as I am satisfied the businesses at both properties must have attracted substantial traffic from Redoubt Road.
[152] Mr Gupta has admitted he knew of the construction of Kinara’s building in 2010. It is difficult to see how he could not have been aware given the scope of the construction works. I do not accept his evidence that he did not see builders and other building industry associated persons using PROW A to access the construction site. I am satisfied that simply by Mr Gupta being present on Lot 4/12 Lakewood Court in 2010 he would have seen PROW A being used as part of the building process.
[153] The construction and presence of the ramp and upper level parking running along the length of the eastern side of the building, which is easily accessed from the Redoubt Road ingress and PROW A, would have alerted Infinity to Kinara’s reliance at that time on its ability to continue to use PROW A. Kinara was hardly likely to go to the trouble of locating the ramp and upper level parking area where it is if Kinara was not going to rely on continuing to use PROW A for access. In this regard I find that visually the layout of the upper car park shows it could not readily be accessed from Great South Road and Lakewood Court.
[154] Accordingly, the above circumstances and the limited admissions Mr Gupta has made about thinking a clear title meant there were no adverse interests are sufficient to lead me to find inferentially that it is more probable than not that before the purchase he and Infinity knew:
(a) PROW A was being used as a right of way by the neighbouring landowners and persons associated with or visiting them; and
(b) this use was not something that could be legally enforced against Infinity.
[155] Secondly, after the purchase and through Mr Gupta being on site at Lot 4/12 Lakewood Court to manage Infinity’s business he would have realised that persons regularly used PROW A to access Kinara’s property from Redoubt Road, and from the time when Kinara was building its commercial building that Kinara had structured this building and its carpark in a way that depended upon access being available from Redoubt Road. I am satisfied that as a director of Infinity, Mr Gupta’s knowledge of these matters can be attributed to Infinity.
[156] Infinity does not dispute that once it purchased Lot 4/12 Lakewood Court it never said anything to Kinara about PROW A not being a registered easement. Infinity provided no explanation for why it waited until 2017 to inform Kinara about the legal status of PROW A and the intention to restrict its use by others.
[157] Infinity submitted in closing that it was only when Kinara’s solicitor wrote to Infinity about PROW A in September 2017 that Infinity learned Kinara believed it had a legal right to use PROW A. I reject this submission. Mr Gupta never addressed this topic in his evidence. Nor do I think the circumstances inferentially support this conclusion. Infinity’s knowledge both at the time of purchase in November 2007 and afterwards could only have informed it that Kinara believed it was legally entitled to use PROW A. It is difficult to see how Infinity could conclude otherwise. In this regard, Kinara’s conduct at all times has been consistent with it believing it was legally entitled to use PROW A.
Infinity’s failure to call certain evidence
[158] The conclusions I have already reached (as set out above) are reinforced by the inferences I draw from the fact Infinity chose not to call evidence from either Mr Kashyap or Infinity’s other directors, particularly Mr Gupta Snr.45 It was within the power of Infinity to call evidence from those persons. No explanation was offered in evidence by Infinity as to why they could not give evidence.
[159] Infinity’s decision to call only Mr Gupta to give evidence is of concern. In this regard Kinara relied on a well-established principle of evidence that in some circumstances the failure of a party to call a witness may allow an inference that the missing evidence would not have helped that party’s case. The existence of the principle was accepted in Ithaca (Custodians) Ltd v Perry Corporation where the Court of Appeal stated as follows:46
- [153] ... There is no rule. Rather, there is a principle of the law of evidence authorising (but not mandating) a particular form of reasoning. The absence of evidence, including the failure of a party to call a witness, in some circumstances may allow an inference that the missing evidence would not have helped a party’s case. In the case of a missing witness such an inference may arise only when:
(a) the party would be expected to call the witness (and this can be so only when it is within the power of that party to produce the witness);
(b) the evidence of that witness would explain or elucidate a particular matter that is required to be explained or elucidated (including where a defendant has a tactical burden to produce evidence to counter that adduced by the other party); and
(c) the absence of the witness is unexplained.
[154] Where an explanation or elucidation is required to be given, an inference that the evidence would not have helped a party’s case is inevitably an inference that the evidence would have harmed it. The result of such an inference, however, is not to prove the opposite party’s case but to strengthen the weight of evidence of the opposite party or reduce the weight of evidence of the party who failed to call the witness.
[160] Infinity argued that application of the Ithaca principle was discretionary, and it should not be applied here. In this regard Infinity relied upon Robt. Jones Holdings Ltd v McCullagh where the Court of Appeal referred to the principle from Ithaca and outlined factors relevant to the principle’s exercise: (a) a Judge “may” draw adverse inferences from a party’s failure to call a witness where there is no credible explanation for the failure; (b) it is for the Judge to determine what weight to attach to the failure to call; and (c) the principle may not be applicable when it is equally open to the other party to call the omitted evidence.47
46 Ithaca (Custodians) Ltd v Perry Corporation [2003] NZCA 358; [2004] 1 NZLR 731 (CA) at [153], [154], and [206].
47 Robt. Jones Holdings Ltd v McCullagh [2018] NZCA 358 at [68]- [69].
[161] Infinity argued that when the factors outlined in Robt. Jones Holdings Ltd were applied to the present case the following emerged. First, there was no cross- examination of Mr Gupta as to why Infinity had not called Mr Gupta Snr or Mr Kashyap as witnesses. Nor was the issue “heralded” in Kinara’s opening address. Accordingly, Infinity submits it is open to the Court to find there “may” be credible explanations for the failure to call those persons as witnesses, in which case no adverse inference should be drawn against Infinity. I reject these arguments.
[162] In Robt. Jones Holdings Ltd the Court of Appeal found there was a credible explanation from the respondents, who were the liquidators of a company in liquidation, as to why they had not called evidence from certain directors of the failed company: namely, because they were uncooperative; and the trial Judge had found there was evidence of them sanitising the company’s records. In such circumstances the Court of Appeal considered the omission to call the directors was explained and any adverse consequence resulting from the absence of their evidence could have been cured by the appellant calling them. The position here is quite different. There is nothing to suggest that either Mr Gupta Snr or Mr Kashyap would have been uncooperative witnesses for Infinity. Indeed, given their respective associations with the company the reverse is more probably the case.
[163] Accordingly, I consider that it was for Infinity to provide a credible explanation for why it chose not to call those persons as its witnesses. In such circumstances I also consider there can be no basis for expecting Kinara to cross-examine Mr Gupta on this topic. Kinara was under a duty to cross-examine Mr Gupta on the areas where Kinara’s evidence contradicted Infinity’s evidence, but that is as far as its duties under s 92 of the Evidence Act 2006 went. There are no common law duties that would require Kinara to cross-examine an opposing party’s witness about something which was not addressed by the opposing party in its evidence in chief, in particular, there is nothing in Robt. Jones Ltd to suggest such duties.
[164] Nor can Kinara reasonably be expected to have called evidence from Mr Gupta Snr and Mr Kashyap. A director of a defendant company and a solicitor who has acted for that defendant are hardly likely to be co-operative witnesses for the plaintiff. Kinara has no documented account of what those persons relevantly thought or had
said and so Kinara was in no position to have either Mr Gupta Snr or Mr Kashyap declared hostile witnesses. Accordingly, if Kinara had compelled them to give evidence Kinara is likely to have found itself having to lead evidence in chief from uncooperative witnesses. Further, because they could not be declared hostile, Kinara would have found itself bound by their evidence.48 The character of the potential witnesses here is quite different from those in Robt. Jones Ltd. I consider it would be unrealistic to expect Kinara to have called Mr Gupta Snr and Mr Kashyap for the purpose of obtaining evidence from them on Infinity’s knowledge of PROW A before and after registration, and its importance for Kinara.
[165] Infinity argued in the alternative that credible explanations for why Mr Gupta Snr and Mr Kashyap were not called as witnesses are readily discernible from the available evidence. Also, Infinity contends the evidence from Mr Gupta Snr and Mr Kashyap would not have changed the primary facts. However, I consider the available evidence does not explain why those persons did not give evidence. Indeed, for the reasons given below, I consider their absence as witnesses readily suggests this was because their evidence would have been unhelpful to Infinity.
[166] Infinity invites the Court to conclude that Mr Gupta Snr may be elderly, in poor health and/or have language difficulties; all of which is speculative as there is no evidence to support such inferences. Infinity contends the answers to these questions should have been sought through Kinara cross-examining Mr Gupta, however I have already rejected this argument.49 Infinity also contended that it was Mr Gupta who dealt with the queries from 8 Lakewood Court in 2013, however his involvement then can throw no light on Mr Gupta Snr’s involvement with the purchase of Lot 4/12 Lakewood Court in 2007.
[167] Dealing first with Mr Kashyap I consider it would have been easy for Infinity to call Mr Kashyap to give evidence in response to Mr Nolan’s evidence. Infinity contends that the conveyancing file for the purchase of Lot 4/12 Lakewood Court cannot be found and Mr Kashyap cannot be expected to recall a conveyancing
48 See Evidence Act 2006, s 35(4); also the absence of other direct evidence would have made it difficult for Kinara to point to other evidence that was inconsistent with that given by Mr Kashyap and Mr Gupta Snr.
49 See [163] herein.
transaction that occurred more than 10 years ago. However, it is Mr Gupta who says the conveyancing file for the purchase of Lot 4/12 Lakewood Court cannot be found. Mr Kashyap was the best person to give this evidence. It is hearsay from Mr Gupta. Even if Mr Kashyap had no conveyancing file he could have said whether he remember some of the details of the purchase. It was one of the biggest purchases for the Gupta family (Infinity was incorporated to purchase the property) and it is clear from Mr Kashyap’s involvement in 2013 that he has maintained ongoing contact with Infinity. Even if Mr Kashyap could recall no details of the purchase he could have answered Mr Nolan’s evidence by describing the standard practice followed by Mr Kashyap for a pre-purchase property assessment.
[168] Either Mr Kashyap’s standard practice for a pre-purchase assessment fitted with Mr Nolan’s and so Mr Kashyap was likely to have identified the problems surrounding PROW A (which is as I have found) or Mr Kashyap could have described a different form of standard practice. If he had insisted his standard practice would not have led to him identifying potential problems with PROW A, he could then have been cross-examined about the circumstances of his engagement including the fact it was pre-purchase, it was one of Infinity’s biggest purchases and his clients obviously wanted to know if there were any fishhooks in the purchase from a legal perspective. He could then explain why, despite the circumstances, he would not have followed the type of practice outlined by Mr Nolan.
[169] Mr Kashyap may have recalled which director of Infinity he worked closely with when it came to him providing pre-purchase advice on Lot 4/12 Lakewood Court. Whilst the communications he had with Infinity for the purpose of giving and receiving legal advice would have been privileged, the fact of which director he communicated with would not have been privileged.
[170] Mr Kashyap was the best person to say when he first learned of PROW A. In July 2013 the solicitors for 8 Lakewood Court first wrote to him asking for PROW A to be registered as an easement. That was only five years before trial. Mr Kashyap should have been able to say in evidence whether on receipt of that letter the existence of an unregistered right of way came as a surprise to him, or not. The tone of this letter from the solicitors acting for the owner of 8 Lakewood Court and the communications
from the owner’s directors suggest this fact came as a surprise for those persons, which is consistent with a general use of PROW A to access 8 Lakewood Court, as well as with that property being the servient tenement of ROW B. There are few communications of the exchange between Infinity and the owners of 8 Lakewood Court or their respective solicitors regarding PROW A in evidence. In particular, there is no evidence Mr Kashyap communicated with 8 Lakewood Court’s solicitors despite their first communication being directed to him. This means there is no documentary evidence that might inferentially reveal Mr Kashyap’s reaction to the request coming from the owner of 8 Lakewood Court, and particularly whether it was a surprise to him or Infinity. Accordingly, his oral evidence may have thrown some light on this subject.
[171] Moreover, Infinity argues that when the 2013 enquiry from 8 Lakewood Court was made to Mr Kashyap “it does not appear that he made any detailed enquiry into the issue at this stage”. However, there is nothing in evidence to support that inference. The absence of Mr Kashyap as a witness means that Kinara had no opportunity to explore with Mr Kashyap what enquires he made and when.
[172] Accordingly, I am satisfied that Mr Kashyap could have given evidence regarding when he first discovered: (a) there was a proposed easement recorded on the deposited plan; and (b) this right of way was in current use. Given Mr Gupta has said in evidence that he was advised the title was clear and there were no adverse interests Mr Kashyap could have confirmed this was the advice given, and when it was given. Since Mr Gupta has disclosed the advice in his evidence there would have been no question of legal privilege attaching to the advice, which can be taken as waived through disclosure in Mr Gupta’s evidence.
[173] Mr Gupta is the only director of Infinity to give evidence. He said he concentrated on the books of the motel business. So, it seems his enquires were focussed on the business side of the purchase. This leaves open the question of which of the directors focussed on the legal issues relating to the purchase, such as instructing and receiving advice from Mr Kashyap.
[174] In 2007 Mr Gupta Snr was both director and the sole shareholder of Infinity, he influenced the decision to acquire Lot 4/12 Lakewood Court and funds of $740,000 used to purchase the property came from his bank account. Regarding the latter point there is only Mr Gupta’s evidence that the $740,000 represented pooled funds and not funds attributable to Mr Gupta Snr only. Given his age at the time (sixties) and the importance of the acquisition for Infinity, it is difficult to see why Mr Gupta Snr would not have played an important role in the purchase of this property. Further, if Mr Gupta Snr was the director to whom Mr Kashyap reported, then I would expect Mr Gupta Snr to have learned what Mr Kashyap thought about the property’s title, including the proposed right of way shown on the deposited plan. Given Infinity operates as one of a group of companies in which the Gupta family hold their interests it is hard to see why Mr Gupta Snr would not also have become aware, post purchase, of the use made of PROW A by the owners of the neighbouring properties and persons visiting them. Accordingly, had Mr Gupta Snr been called as a witness he could at the very least have confirmed the extent of his involvement in the purchase of the property as well as his knowledge of the use of PROW A after the purchase.
[175] At the least if Mr Gupta Snr had been called to give evidence he could have confirmed the impression which Mr Gupta has sought to give in his evidence that he is the person who was largely responsible for the purchase of Lot 4/12 Lakewood Court, as well as confirming Mr Gupta Snr’s own lack of involvement both before and after the purchase. As matters stand Mr Gupta has sought to divorce himself from knowing much at the time about the legal character of the purchase by saying his focus was on the accounts of the motel business operating from Lot 4/12 Lakewood Court. However, clearly Infinity had engaged Mr Kashyap to carry out due diligence before purchase of the property. In such circumstances I consider that at least one of the directors must have been focussing on what Mr Kashyap’s enquiries were revealing.
[176] Mr Gupta Snr could have given direct evidence that either confirmed Mr Gupta was largely responsible for the purchase, or if that was not so Mr Gupta Snr could have outlined his involvement. He may even have thrown light on Sheil Gupta’s involvement in the purchase.
[177] For the above reasons, I find that here the absence of evidence from Mr Gupta Snr and Mr Kashyap does support the inference that their evidence would not have been helpful to Infinity. This finding serves to reinforce the findings, where relevant, that I have already made against Infinity.
Law of equitable estoppel
[178] There is now a single unified doctrine of equitable estoppel in New Zealand.50 Its essential elements are well settled; they were articulated in Wilson Parking New Zealand Ltd v Fanshawe:51
(a) A belief or expectation held by Party A which has been created by words or conduct by Party B.
(b) To the extent an express representation is relied upon, it is clearly and unequivocally stated.
(c) Party A reasonably relied to its detriment on the representation.
(d) It would be unconscionable for Party B to depart from the belief or expectation.
[179] There is no dispute that here there was no communication between Kinara and Infinity until 2017. So, the only conduct of Infinity on which Kinara can rely to establish the first element is Infinity’s acquiescence for 10 years through its complete silence or omission to assert its legal rights regarding PROW A. Accordingly, the essential elements articulated in Wilson Parking can be formulated here as follows:
(a) Has Infinity’s conduct, through its silence or omission to assert its legal rights regarding PROW A, created a belief or expectation in Kinara that can support an equitable estoppel;
51 Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZLR 567 at
[44] cited with approval in Pollard v Pollard [2016] NZCA 186, (2016) 23 PRNZ 229 at [33].
(b) Has Kinara reasonably relied on Infinity’s conduct to its detriment; and
(c) Would it be unconscionable now for Infinity to depart from the belief or expectation engendered by this conduct.
[180] Wilson Parking involved express representations. The reasoning in the judgment does not touch on when acquiescence can amount to an implied representation. It is, therefore, necessary to look beyond Wilson Parking to see if the first element of equitable estoppel can be satisfied here.
[181] The principles underlying estoppel by acquiescence have a long history. Their early formulation is expressed in Fry J’s five probanda in Willmott v Barber:52
(a) The plaintiff must be mistaken as to his legal rights;
(b) The plaintiff must have expended some money or done some act (not necessarily on the defendant’s land) on the faith of the mistaken belief;
(c) The defendant, the possessor of the legal right, must know of the existence of his own right, which is inconsistent with the right claimed by the plaintiff;
(d) The defendant, the possessor of the legal right, must know of the plaintiff’s mistaken belief of his rights; and
(e) The defendant, the possessor of the legal right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or indirectly or by abstaining from asserting his legal right.
[182] The law of estoppel by acquiescence has evolved since Willmott v Barber, and in a way that allows for a more flexible approach than Fry J’s five probanda would require. As Lord Scott in Blue Haven Enterprises Ltd v Tully has remarked,
52 Willmott v Barber (1880) 15 Ch D 96.
“subsequent case-law has reduced the rigidity of Fry J’s apparent insistence that each of the five probanda be established to the letter”.53 He went on to remark:54
Fry J’s five probanda remain a highly convenient and authoritative yardstick for identifying the presence, or absence of unconscionable behaviour on the part of [A] sufficient to require an equitable remedy, but they are not necessarily determinative.
[183] In Blue Haven Enterprises Ltd Lord Scott also spoke approvingly of Oliver J’s statements in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd, another case relied upon by Kinara. In this regard Lord Scott described, with approval, Oliver J as having concentrated on unconscionable behaviour on the part of the defendant rather than the five probanda in Willmott v Barber.55
[184] Throughout its evolution one factor which has troubled estoppel by acquiescence is how to characterise the defendant’s silence or omission to act. One approach has been to view a defendant’s silence as supporting an implied assurance to the plaintiff that his present conduct is acceptable and so he may do or continue to do the acts upon which his estoppel claim rests. In Thorner v Major Lord Walker said:56
... if all proprietary estoppel cases (including cases of acquiescence or standing-by) are to be analysed in terms of assurance, reliance and detriment, then the landowner’s conduct in standing by in silence serves as an element of assurance
[185] However, the authors of Spencer Bower Reliance Based Estoppel acknowledge that this approach has recently been academically criticised as an unnecessary and confusing fiction.57 Here the authors refer to the situation where the defendant has failed to assert his legal rights in circumstances where the plaintiff was not thinking about the defendant and even may not have known of the defendant’s existence. In such circumstances the authors say the notion that through his silent conduct the defendant has communicated an assurance or represented such is unsatisfactory
53 Blue Haven Enterprises Ltd v Tully [2006] UKPC 17 at [22].
54 At [23].
55 At [23].
56 Thorner v Major [2009] UKHL 18; [2009] 1 WLR 776 at [55].
[186] The second approach is to view the defendant’s acquiescence from a different perspective altogether by having regard to the particular circumstances and deciding if in those circumstances the defendant is under a duty to speak out.58 The “foundational genesis” for this approach has been said to be the dissenting judgment of Lord Wilberforce in Moorgate Mercantile Co Ltd v Twitchings where Lord Wilberforce relevantly stated:59
...a man who owns property ...is not estopped from asserting his title by mere inaction or silence, because inaction or silence...is colourless: it cannot influence a person to act to his detriment unless it acquires a positive content such that that person is entitled to rely on it. In order that silence or inaction may acquire a positive content it is usually said that there must be a duty to speak or to act in a particular way, owed to the person prejudiced....
[187] As to when a duty to speak out might arise Lord Wilberforce said:
What I think we are looking for here is an answer to the question whether, having regard to the situation in which the relevant transaction occurred, as known to both parties, a reasonable man in the position of the “acquirer” of the property would expect the “owner” acting honestly and responsibly, if he claimed nay title in the property, to take steps to make that claim known to, and discoverable by the “acquirer” and whether in the face of an omission to do so, the “acquirer” could reasonably assume that no such title was claimed.
[188] This reasoning has been cited with approval and applied in a line of English cases the latest of which is Ted Baker PLC v Axa Insurance UK PLC where Sir Christopher Clarke, with whom the other Judges agreed, stated:60
...
The authorities show that whether an estoppel arises is not wholly dependent on whether the person sought to be estopped has made some representation express or implied. It may arise if, in the light of the circumstances known to the parties, a reasonable person in the position of the person seeking to set up the estoppel (here TB) would expect the other party (here the insurers) acting honestly and responsibly to take steps to make his position plain. Such an estoppel is a form of estoppel by acquiescence arising out of a failure to speak when under a duty to do so.
58 See generally Ben McFarlane The Law of Proprietary Estoppel (Oxford University Press, Oxford, 2014) at 20.
59 Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890 at 903 and see Luke Tattersall “Silence is deadly: Estoppel by acquiescence” [2018] 134 LQR 203 at 205.
60 Ted Baker PLC v Axa Insurance UK PLC [2017] EWCA Civ 4097; see also The Lutetian [1982] 2 Llyod’s Rep 140 at 157; Indian Endurance [1997] UKHL 40; [1998] AC 878 at 913; ING Bank NV v Ros Roca SA [2011] EWCA Civ 252.
[189] He had previously stated:61
The reference to ‘acting honestly’ did not ... mean that the party against whom the estoppel was asserted had to be guilty of actual dishonesty in the sense of acting fraudulently. ... absent a relationship of good faith or partnership or something akin to a joint enterprise the courts would not impose a duty to speak in the absence of impropriety of some description by the person alleged to be estopped. That impropriety might, however, come from the act of staying silent itself, as where a reasonable person would expect the person who is alleged to be estopped, acting honestly and responsibly, to bring the true facts to the attention of the other party known to him to be under a mistake as to their respective rights and obligations.
[190] The application of this reasoning in Ted Baker PLC led to the Court of Appeal of England and Wales finding that Ted Baker’s failure to provide certain accounting documents was not a breach of a condition precedent under its insurance contract with Axa, and therefore Axa could not reject the claim on that basis. This was because the Court of Appeal found that Ted Baker’s failure to provide those documents had not occurred in a vacuum. Ted Baker had been advised by Axa that its request for the information had been “parked” and that Axa’s loss adjuster, Mr Coonan, would take further instructions from Axa and then revert to Ted Baker. But Mr Coonan never reverted to Ted Baker and there were no suggestions from Axa in its subsequent communications with Ted Baker that there was information outstanding. The first Ted Baker knew of this was when Axa raised the matter in the legal proceedings. The Court of Appeal found that in the circumstances Axa was estopped from asserting a breach of the condition precedent in the insurance contract requirement as its silence (through its omission to revert back to Ted baker) amounted to estoppel by acquiescence.
[191] A helpful article in the Law Quarterly Review synthesises the effect of Ted Baker PLC in this way:62
The Court of Appeal has clarified, and in doing so has extended, the scope of estoppel by acquiescence quite significantly, evidence of which can be seen clearly from the fact that:
(i) unlike most forms of estoppel which require a clear and unequivocal representation, no representation is needed for estoppel by acquiescence (at [82]);
61 At [75].
62 Luke Tattersall “Silence is deadly: Estoppel by acquiescence” [2018] 134 LQR 203 at 208.
(ii) no dishonesty or bad faith is required to found the estoppel argument (at[74]-[75]);
(iii) whilst “impropriety” is needed in the absence of a relationship of upmost good faith, silence itself can be the basis for finding that impropriety exists (at [74]);
(iv) estoppel by acquiescence is not limited to contracts and relationships of good faith, not is it limited to the insurance context of insurer and insured. The doctrine can be applied to a wide range of commercial contracts (Ted Baker at [88]-[89]; ING Bank NV at [94]-[95]);
(v) all that needs to be shown is that: the party alleging estoppel must demonstrate that a reasonable person in their position would expect the opposing party acting honestly and responsibly to make the true position known (at [72] and [76]).
[192] Kinara has sought to satisfy the essential elements of equitable estoppel that were identified in Wilson Parking as well as each of Fry J’s five probanda. However, because Wilson Parking did not deal specifically with estoppel arising from acquiescence and in light of the modern formulation of this form of estoppel I propose to consider Kinara’s claim both in terms of the elements identified in Wilson Parking and the five probanda from Willmott v Barber (because Kinara choses to rely on those and they are still capable of founding an estoppel by acquiescence). I also consider the formulation discussed in Ted Baker PLC to be relevant to the first element in Wilson Parking, namely, whether there is a representation sufficient to create an equity.
Kinara’s case
[193] From the perspective of the essential elements of Wilson Parking, and as regards the first element Kinara contends that it has always believed it has a right to use PROW A and that its belief was encouraged by Infinity. In this regard Kinara argues that Mr Gupta acknowledged in evidence that Infinity was aware people used PROW A to access 8 Lakewood Court and 726 Great South Road. Kinara says the evidence clearly shows that PROW A was an important means of access for all three properties that abutted Redoubt Road.
[194] Kinara also says that despite Infinity’s knowledge of the use others made of PROW A it did nothing for 10 years to prevent them from doing so. It erected no signs, no fences, no barriers. It did not protest to Kinara that it did not want its tenants and their customers using PROW A as an access point.
[195] Further, Kinara says that after the use of PROW A was directly raised by the owner of 8 Lakewood Court in 2013 and a legal easement sought by that owner Infinity did nothing to prevent any continued use of PROW A by anyone, despite its express refusal to grant an easement. Kinara submits that such action and/or inaction on the part of Infinity is sufficient to amount to a representation by conduct that it was agreeable to PROW A being used by all persons, including Kinara.
[196] Kinara submits that the extent of the use of PROW A and the steps taken by the owners of both 8 Lakewood Court and 726 Great South Road in reliance on that use made it incumbent on Infinity to protest such use, but it did not do so. Accordingly, Kinara submits that here Infinity’s silence and inaction amounts to a clear and unequivocal representation; there can be no ambiguity because this was not a situation where there were veiled protests or actions on the part of Infinity that were uncertain. Accordingly, its actions are consistent with only one thing, the right for its neighbours to use PROW A.
[197] Regarding reliance, Kinara argues that the evidence shows it designed and constructed a substantial commercial property based on access being available from PROW A. This is the building pictured in Annex 1 to this judgment. That the building has been designed around the access is apparent from the plans and from the site inspection that was undertaken. Further, Kinara has leased premises in its commercial building to its tenants on the basis they would have access using PROW A from Redoubt Road.
[198] Kinara counters Infinity’s arguments that there is no detriment here because there is no loss to any of Kinara’s tenants, nor is there any detriment to Kinara because it already has access to its commercial property from Great South Road and Lakewood Court. Kinara contends that Infinity’s arguments mischaracterise the substance of the detriment claimed because here the detriment is in the construction of a commercial building that has been designed and constructed around a particular right of access. There is also the detriment to the tenants of the premises in that commercial building expecting their rights to continue. Accordingly, Kinara argues it has altered its position in reliance on the expectation created by Infinity.
[199] Regarding unconscionability, Kinara submits it would be unconscionable for Infinity to resile from the expectations it has created. First, Infinity clearly purchased with some knowledge of the existence of PROW A, which subsequently grew once Infinity occupied its property. Kinara accepts that such knowledge on its own is not enough to establish an in personam claim in equity, nevertheless, Kinara says it is a fact clearly relevant to whether there was unconscionable conduct because it minimises the detriment to Infinity if it is held to its expectation. This knowledge grew after the purchase by Infinity. Thus, Kinara simply seeks to hold Infinity to recognising an interest it has always known about.
[200] Secondly, Kinara says there is significant detriment here if the right of way is not recognised. Kinara will then be left with a building that would have an unusual and impractical design if access was to be limited to Great South Road and Lakewood Court. Given the building was designed on the assumption access would also be provided by PROW A, Kinara submits that it is reasonable to assume the design would have been something different if it had no such access.
[201] Thirdly, Kinara argues that there is an underlying issue regarding the basis of Infinity’s continued access to its property from Redoubt Road. Such access was originally granted as part of an arrangement whereby the two original lots (Lot 1 and Lot 4) gave Manukau City a sliver of land in return. Now Infinity has retained its right of access but ignores Kinara’s right of access. Kinara argues this position is unconscionable. Further, Kinara submits the position becomes more extreme when the current development proposed by Infinity is considered. This development has relied on “historic use” to maintain its access from Redoubt Road, yet it has not disclosed the basis of that use or even recognised the fact that Infinity has only enjoyed the historic access on the basis that access was provided to the neighbouring property as well. The position is exacerbated by the fact the use proposed by Infinity is likely to prevent any of the other properties from gaining their own direct access from Redoubt Road. The result is that Infinity has used the historical joint access arrangements that were originally granted by Manukau City to justify Infinity taking over all access rights from Redoubt Road.
[202] Regarding application of the five probanda from Willmott v Barber Kinara contends it believed it had a right to use PROW A. It submits that as well as the evidence of Mr Singh to this effect, there is no other objective explanation for its actions. Secondly, Kinara has acted on its reliance on the existence of PROW A. Again, the clearest example being the design and construction of its commercial building. Thirdly, the evidence shows Infinity knew that Kinara had no legal right to use PROW A due to its lack of registration. Fourthly, Kinara submits that Infinity must have known about Kinara’s mistaken belief because how else could anyone explain the construction of the commercial building and the extended use of the right- of-way. Fifthly, Infinity has encouraged Kinara’s expenditure of money in constructing the commercial building by abstaining from asserting its legal rights. Accordingly, Kinara argues that it has established a clear case of equitable estoppel in relation to the requirements of Wilson Parking as well as a clear case of proprietary estoppel in relation to the five probanda from Willmott v Barber.
Infinity’s case
[203] Infinity contends that Kinara cannot establish any of the essential elements of equitable estoppel, as stated in Wilson Parking. Infinity argues that because Kinara purchased 726 Great South Road before Infinity purchased Lot 4/12 Lakewood Court as a simple matter of timing Kinara cannot be said to have relied on any representation by Infinity, whether express or by way of acquiescence, regarding PROW A at the time Kinara purchased its property. At this time Kinara could only rely on representations made by the former owners of 12 Lakewood Court, if any, and of which there is no evidence.
[204] Infinity submits that, given Kinara purchased its property first, Kinara’s only argument can be that it later acquired rights against Infinity because Infinity’s inaction encouraged Kinara’s mistaken belief that it had the right to use PROW A. Infinity contends that this argument cannot succeed because it did not know of Kinara’s mistaken belief and could not have done so, given Kinara only discovered the mistake in 2017: “so Infinity surely can’t have known Kinara was acting under a mistaken belief.”
[205] Infinity maintains it has made no representation at any point that Kinara has the rights over PROW A which it asserts. Infinity contends that Kinara purchased 726 Great South Road based upon Mr Singh’s mistaken view PROW A was a legal right of way. Whilst this error is unfortunate for Kinara it is not the consequence of any unconscionable conduct on the part of Infinity.
[206] Infinity also argues there is no evidence of detrimental reliance. It argues that Mr Singh’s broad assertion that PROW A is a vital part of Kinara’s development of 726 Great South Road is not made out on the facts. In this regard Infinity points to Mr Singh’s evidence that Kinara’s development remains fully tenanted and Kinara is no longer seeking damages, in this regard it provided no proof of loss. Further, 726 Great South Road has ingress and egress access from both Lakewood Court and Great South Road. Having to turn a corner and drive a few metres further does not appear to have deterred customers/clients from frequenting the businesses operating from 726 Great South Road.
[207] Infinity also relies on what it argues are competing equities and it raises other issues to shield itself from any relief this Court might grant. These matters are best dealt with in the context of whether Kinara should be granted relief or not.
Analysis
[208] Kinara undoubtedly believes it has the right to use PROW A.63 This much is clear from Mr Singh’s evidence and inferentially from Kinara’s conduct. Kinara is clearly mistaken about its legal rights in this regard.64
[209] I do not accept that Infinity is fully responsible for Kinara’s mistaken belief. Mr Singh’s evidence shows that he had those mistaken beliefs long before Kinara purchased 726 Great South Road, which was approximately three months before Infinity purchased its property. However, since then and for nearly 10 years thereafter Infinity has stayed silent and taken no steps to stop Kinara and those wanting to visit Kinara’s property from using PROW A. To this extent, therefore, Infinity’s silence
63 Part of the first element of Wilson Parking.
64 The first of the five probanda.
and inaction have affirmed and compounded Kinara’s mistaken belief in its right to use PROW A. So much so that in 2010 (three years after purchase) Kinara proceeded to build a commercial building on its land that was designed in a way that relies upon ingress from Redoubt Road. This is particularly apparent from the positioning of the upper level carpark, which runs along the eastern side of the building’s length and sits on the roof of the building. The layout of this building is set out in Annex 1. This car park is easily entered from the Redoubt Road ingress. Absent such ingress drivers must follow an awkward and inconspicuous route to reach this carpark. Accordingly, it is most unlikely that Kinara would have adopted the present configuration of its building if it knew it could not use PROW A and the Redoubt Road accessway. No direct evidence to this effect was given however Kinara submits and I accept that inferentially this is what the circumstances reveal.65
[210] I also consider that loss of the use of PROW A and the Redoubt Road accessway would be a major impediment to using the upper level car park effectively. Those who used it regularly may, through familiarity with the site, learn how to be overcome the challenges to accessing it from the opposite direction, but I doubt that others would. Use of 31 of the 73 car parks would become circumscribed.66
[211] The factual findings that I have made establish that Infinity has always known PROW A is unregistered and that, unless Infinity was agreeable, Kinara could not enforce rights of use against Infinity without taking court action against it.67
[212] I have already found that persons, including Kinara, its tenants and others associated with those persons, either directly or indirectly, regularly used PROW A to access 726 Great South Road from Redoubt Road. Secondly, that the design and construction of Kinara’s building, particularly the upper level car park was premised on PROW A continuing to provide ingress access from Redoubt Road. Thirdly, that Infinity knew all this. The inferences I draw from those facts lead me to believe it is more probable than not that Infinity would have known that Kinara mistakenly believed it was entitled to use PROW A in this way. It is hard to see how Infinity’s
65 This satisfies the second probanda.
66 This also satisfies the second probanda.
67 This satisfies the third probanda.
directors, particularly Mr Gupta, could have thought otherwise in such circumstances.68
[213] Accordingly, I reject Infinity’s argument that if Kinara did not know it was mistaken about its right to use PROW A until 2017 how could Infinity have known about this any earlier. 69 One party’s knowledge was not dependent on the others. I have found inferentially that the circumstances relevant to Infinity were sufficient to make it more probable than not that it knew from 2010 at the latest (when construction of Kinara’s building began) that Kinara was relying on the use of PROW A when it had no right to do so.70 Those circumstances were not known to Kinara, (it did not have the benefit of Mr Kashyap’s advice) and so it could not have drawn the conclusions that Infinity would have drawn.
[214] Throughout the 10 years Infinity has owned Lot 4/12 Lakewood Court it has abstained from asserting its right as legal owner of that property to stop persons from using PROW A. This is undisputed.71 Moreover, once Infinity knew the owner of 8 Lakewood Court was mistaken about the its right to use PROW A Infinity took no steps then to inform Kinara that it also had not legal right of access. It is hard to see why Infinity would not have informed Kinara at the same time.
[215] Accordingly, Kinara has established it satisfies all five of Fry J’s probanda, which in accordance with Willmott v Barber is sufficient of itself to establish a claim in proprietary estoppel. This outcome also satisfies the essential elements outlined in Wilson Parking. The findings on first, second and fifth probanda: namely, Kinara’s mistaken belief in its right to use PROW A, its conduct in reliance on this mistaken belief and the silence of Infinity, which has served to encourage Kinara in its mistaken belief are enough in combination to establish the first element of Wilson Parking. This being a case involving acquiescence the second element of Wilson Parking is not relevant. However, I accept Kinara’s submission that here the silence and inaction from Infinity was clear and unequivocal. The findings on the second, third, fourth and fifth probanda support the finding that Kinara has relied to its detriment on Infinity’s
68 This satisfies the fourth probanda.
69 See [204] herein.
70 See [142]-[157] herein.
71 This satisfies the fifth probanda
representation in the form of its silence, which satisfies the third element of Wilson Parking. The findings in relation to all five probanda support the conclusion that it would be unconscionable for Infinity now to depart from the expectation that its acquiescence has created for Kinara. Those findings strongly support holding Infinity to the expectation its conduct has created.
[216] I also accept Kinara’s argument that Infinity’s unconscionability is exacerbated by its reliance on its historical use of the access from Redoubt Road, (which necessarily includes PROW A), in order to retain this right, while at the same time excluding Kinara, and its neighbour for that matter, from continuing to have such access. Particularly when Infinity’s historical use of this ingress has seemingly relieved it of the need to obtain a fresh approval for its proposed hotel/apartment complex to enjoy ingress to its property from Redoubt Road.
[217] Moreover, I note that in its opening address Infinity did not address unconscionability. In its closing submissions Infinity declared it had not acted unconscionably but it advanced no reasons to support that statement. It then submitted it had not acted dishonestly because it had not known of any adverse claims on its titles. Infinity also submitted it has never dishonestly represented otherwise to Kinara. However, this is beside the point. There is no suggestion Infinity has specifically made dishonest representations to Kinara. It is Infinity’s silence and inaction that has led to it being viewed as making implied representations to the effect Kinara could continue to use PROW A. Although I consider this is an unsatisfactory way of viewing matters and the better approach is to view Infinity as being under a duty to speak out and disabuse Kinara of its mistaken belief in the right to use PROW A. The bigger problem for Infinity here is that I have found it more probable than not that Infinity knew of Kinara’s use of and reliance on PROW A. This factual finding undermines the basis for Infinity’s disavowal of knowledge of Kinara’s mistaken belief.
[218] When Infinity’s conduct is examined from the perspective of whether it had a duty to speak out I consider that it did. The same circumstances as are set out above (Infinity’s silence and inaction, its knowledge of the true legal position, its knowledge of how Kinara was using PROW A and Kinara’s reliance on continued use of PROW
A) all satisfy the essential elements of Lord Wilberforce’s dictum in Moorgate
Mercantile Co Ltd. Namely, that a reasonable person in the shoes of Kinara would expect the owner of Lot 4/12 Lakewood Court (here Infinity) acting honestly and reasonably, if it claimed any title in the property crossed by PROW A, to take steps to make its claim to this property known to and discoverable by Kinara. I also consider that in the face of Infinity’s omission to do so Kinara could reasonably assume that Infinity claimed no such title. Those elements were upheld and applied unaltered in Ted Baker PLC. The circumstances of this case fit neatly within the relevant statements from Ted Baker PLC and the synthesis of that judgment as outlined in the Law Quarterly Review.72
[219] I consider the critical time when Infinity should have spoken out was in the period between the purchase of Lot 4/12 Lakewood Court and (at the very latest) when Kinara’s building development on 726 Great South Road would have become apparent to a reasonable observer. During this time had Infinity denied Kinara use of PROW A Kinara would then have been well placed to decide if it should proceed with its development and, if so, whether to change the design and configuration of the building and its car parks.
[220] Infinity submitted that it could not have reasonably foreseen Kinara would assert a legal right of access from Redoubt Road in circumstances where: (a) Infinity had no idea who was using PROW A; (b)Mr Singh and Mr Gupta had never communicated before 2017; (c) Others use of PROW A was “probably not impacting on Infinity’s business at the time of purchase”; and (d) Infinity may just have been neighbourly. However, I have already found that the circumstances relevant to Kinara’s use of PROW A were sufficient to inferentially inform Infinity of Kinara’s reliance on using PROW A. The other factors on which Infinity relies carry no weight; the last two are purely speculative.
[221] Kinara is solely responsible for purchasing 726 Great South Road under a mistaken belief it had a legal right of way from Redoubt Road, this happened approximately three months before Infinity purchased its property. But once Infinity purchased its property if, during the critical time frame, Infinity had questioned
72 Luke Tattersall “Silence is deadly: Estoppel by acquiescence” [2018] 134 LQR 203.
Kinara’s use of PROW A Kinara would then have been well placed to rectify a mistake for which it was then entirely responsible. Infinity’s silence and inaction meant that Kinara lost this opportunity.
[222] Kinara would have been best placed to rectify its mistake if Infinity had spoken out when Kinara was simply land banking 726 Great South Road, which were the early years between November 2007 and 2009. Once construction work at 726 Great South Road began in 2010 it may have been more difficult for Kinara to alter its planned building development but even then, if Kinara had learned it could no longer access its site from Redoubt Road it could have carried out a cost benefit analysis to see whether the costs of adjusting its development to reflect this change were worthwhile or not. Infinity’s continued silence and inaction denied Kinara this opportunity and left it committed to constructing a building that was planned on access being available from Redoubt Road.
[223] Once the building was fully constructed (in 2011) the die was cast for Kinara. From then on there was little it could have done to rectify its mistake even if Infinity had then chosen to speak out. In this regard I note that Kinara has not provided counter factual evidence to show what, if any, alternative remedial actions it could have taken after the building was completed. However, the length of time between the building’s completion and September 2017 (which is the first time Infinity made its position known to Kinara) is substantial, and it has only served to affirm Kinara’s mistaken belief and engender its continued expectation that it can use PROW A to access its property from Redoubt Road.
Available relief
[224] Kinara has established that it fulfils the requirements for the law of equitable estoppel to grant it relief. The relief sought is in the form of orders requiring Infinity to execute an authority and instruction form to register an easement instrument against the title of Lot 4/12 Lakewood Court. This relief is premised on the Court finding the estoppel established by Kinara gives it a proprietary interest in Lot 4/12 Lakewood Court, which Infinity is bound to recognise.
[225] As part of its defence Infinity raised issues that it contends are a bar to Kinara being granted relief. Also, relevant are affirmative defences which Infinity has raised. I propose to deal with those matters in the context of whether to grant Kinara the relief it seeks.
Relevant law
[226] In Wilson Parking the Court of Appeal sets out the approach to granting remedies in equitable estoppel cases. After undertaking a detailed analysis of the relevant case law in New Zealand and overseas the Court of Appeal concluded that there is a wide variation of approach to the grant of appropriate remedies in cases of equitable estoppel; and no definitive or exhaustive statement of the principles is available as each case is very much influenced by its facts.73 Nevertheless, certain principles were identified.
[227] The Court of Appeal identified three main elements relevant to relief, all of which also feature in the establishment of equitable estoppel. Namely, the quality and nature of the assurances which give rise to the claimant’s expectation; the extent and nature of the claimant’s detrimental reliance on those assurances; and the need for the claimant to show that it would be unconscionable for the promisor to depart from the assurances given.74
[228] Accordingly, a clear and explicit assurance is more likely to lead to a Court granting expectation-based relief. The greater the degree and consequences of detrimental reliance by the claimant, the more likely it is that expectation-based relief will be granted. Unconscionability is the final key consideration. It has been described as “the element which both attracts the jurisdiction of a court of equity and shapes the remedy”.75
[229] In assessing the appropriate remedy all the relevant circumstances are to be considered. The aim is to satisfy the equity that has arisen in the claimant’s favour.
73 Above n 51, at [113].
74 Above n 51.
75 Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 419.
The emphasis is on a broad consideration of the relief necessary to achieve a just and proportionate outcome.
[230] Where a claimant’s expectation is seriously disproportionate to the detriment suffered the Court will be unlikely to grant expectation-based relief because to do so overcompensates the claimant and is unjust to the defendant. In such cases the Court considers whether there may be a means of satisfying the equity in another way. However, this does not entail arithmetical comparison of the extent of any reliance- based losses with the value to the claimant of the expectation. Rather what is required is a broad assessment of all the relevant circumstances is to be made including losses or other detriment which cannot be quantified or measured in monetary terms. In keeping with the flexible approach to equitable remedies there is no presumptive or prima facie approach favouring reliance or expectation-based relief. As the Court of Appeal stated: “subject to proportionality between the expectation and the detriment suffered it will often be just to make an order to fulfil the expectation”.76
[231] In Wilson Parking the argument that reliance-based relief should be the preferred starting point was specifically rejected. Three reasons were advanced to support this argument. The first was that reliance-based relief would be more consistent with the need to show detrimental reliance and with the ability of a representor to avoid an estoppel by giving sufficient notice to avoid the detriment. Second, the enforcement of a non-contractual promise would threaten to “blow away” the doctrine of consideration. Third, a claimant might receive an unjustified windfall if the value of the expectation exceeded the value of the detrimental reliance.
[232] The Court of Appeal answered each of the arguments as follows:77
As to the first, if any detriment were avoided by the giving of notice, an estoppel would not be established. And the modern approach to equitable relief places emphasis on satisfying the equity arising rather than addressing detriment construed in a narrow sense. In respect of the second, the courts have shown no reluctance to enforce non-contractual promises provided the essential elements of equitable estoppel are properly established. The distinction between contractual and equitable remedies is well understood. Third, concerns about unjustified windfalls are addressed by the need for proportionality as we have discussed.
76 Above n 51, at [119].
77 At [122].
[233] The Court of Appeal concluded:78
In the end the Courts must be free to fashion a just outcome guided by the general principles discussed, flexibly applied to the particular circumstances of the case.
[234] The factors which have led to Kinara establishing its claim in equitable estoppel also support the granting of expectation-based relief. Here the silence and inaction by Infinity was clear, unequivocal and prolonged and it was done knowingly. Kinara’s reliance in response to the use of PROW A was significant. This is not just a case where Kinara has made use of a right of way and may now lose this benefit. Kinara has significantly altered its position by erecting a commercial building on its land which has been designed and built with use of PROW A in mind. Without such use the building is not suited to the site. Thus, there has been significant reliance on a state of affairs that Infinity has knowingly allowed to develop. To now, some 10 years later, require Kinara to abstain from use of PROW A would be unconscionable given how this end-point has been reached. To permit Kinara to continue as it has done in the past would in the circumstances be a just and proportionate outcome.
[235] Accordingly, I reject Infinity’s submission that it, like other land owners, was under no legal duty to fence off its land or to stop persons from crossing its land. Whilst there was no positive duty on it to fence its land off from others its conduct made it vulnerable to the law of equitable estoppel. Here, Kinara has done much more than regularly cross unfenced land belonging to Infinity.
[236] Significantly, there is little evidence to reveal any competing equity on the part of Infinity. In its current statement of defence Infinity pleaded that it is:
21(b) in the process of obtaining building consent and resource consent for a 170 unit hotel/apartment development at Lot 4/12 Lakewood Court. The plans for this development do not recognise the alleged Lot4 right of way and the development will be compromised if it is required to register the alleged Lot 4 right of way. A significant amount of money has been spent in respect of this development to date.
[237] In its closing submissions Infinity asserted that it has spent a large amount of money planning its development of Lot 4/12 Lakewood Court. It has taken two years
78 Above n 51 at [123].
to obtain a resource consent and has expended significant funds in doing so. Infinity relies upon Mr Gupta’s evidence to the Court that if relief were granted Infinity would need to redesign its development.
[238] However, I find it telling that Infinity never adduced evidence to support its pleading at paragraph 21(b) of its amended statement of claim. Accordingly, there is no evidence from Infinity to show how much money Infinity has spent or what impact it might have on Infinity’s development plans if it had to register an easement in Kinara’s favour.
[239] The most that Mr Gupta said in his evidence in chief was that Infinity intends to construct and operate a hotel facility with 94 rooms and 76 serviced apartments spanning 16 levels. It obtained resource consent on 5 September 2018. Those plans do not recognise PROW A. The Redoubt Road accessway is to be retained for Infinity’s use only. It will not continue to provide access to the adjacent properties. Mr Gupta said that Infinity had spent a great deal of money advancing its proposal. No further details were given.
[240] Then in answer to a question from the Court Mr Gupta explained that Infinity’s planned development faces on to Redoubt Road; the existing motel is sited towards Lakewood Court. Mr Gupta said that if Kinara obtained PROW A as a right of way Infinity would have to re-design its development. He referred to NZTA having strong feelings about traffic flow and that the Auckland Council was apprehensive given Infinity’s planned development and the new development at 8 Lakewood Court that this would affect traffic flows. Mr Gupta said there was a meeting with the Council’s traffic engineer where Infinity had to convince him to allow it to continue to use the ingress.
[241] The evidence that Mr Gupta has given is overly general and light on detail. In my view it is insufficient to establish a competing equity that would show the imposition of PROW A as a legal easement would impose a disproportionate burden on Infinity relative to the equity favouring Kinara being granted this easement. In this regard if Infinity was going to suffer considerable prejudice it was open to Infinity
to present counter factual evidence that clearly established the nature of the prejudice and its cost for Infinity.
[242] More specifically there is no evidence to suggest Infinity’s plans to develop its property would be precluded by the grant of an easement to Kinara. If this were to be the case I would have expected to see direct evidence from Auckland Council to that effect. Insofar as the development’s plans might require some alteration the cost of doing so has not been provided in evidence, when an estimate could have been provided.
[243] The bleak picture Mr Gupta painted in his evidence is not supported by other evidence. Whilst relevant evidence is sparse I note that the May 2016 Integrated Transport Assessment, which Infinity’s traffic and engineering experts prepared for Auckland City stated in relation to vehicle access:
As discussed previously the proposed vehicular access routes to the site are existing and are via Lakewood Court and Redoubt Road (left turn inbound only, as per the existing arrangement).
[244] There is no evidence (documentary or oral) from Auckland Council or any expert associated with Infinity’s proposed development that suggests Auckland Council required Infinity to close off 726 Great South Road having ingress from Redoubt Road. Earlier, when the owner of Lakewood Court was exploring how it might have access from Redoubt Road (once it had learned it had no legal access) an email from Auckland Council’s Southern Resource Consents Unit stated:
I confirm that there has never been any ROW easement granted over No 12 Lakewood Court in favour of No 8 Lakewood Court nor 726 Great South Road (the former BP site).
On this basis the proposed apartment development at No 8 Lakewood Court would need to obtain rights of way over the existing access driveway or develop its own vehicle access from Redoubt Road.
The former would require grant of easement over Area A on DP116472 by the owners of no 12 Lakewood Court.
The latter would require Council consent and possible NZTA consent to construction of an additional vehicle access to the site from Redoubt Road.
[245] Regarding the first option, (obtaining an easement), there is nothing in the email communication (or elsewhere in the evidence) to suggest Auckland Council would have any involvement and therefore seek to prevent an easement being granted.
[246] Moreover, as Kinara submitted Infinity has advanced its development plans in the knowledge since September 2017 that Kinara was claiming a right to use PROW
A. Costs incurred by Infinity after September 2017 were incurred in the knowledge Kinara was seeking legal recognition of its use of PROW A.
[247] Wilson Parking makes it clear that the focus is on “a broad consideration of the relief necessary to achieve a just and proportionate outcome”.79 Here there is sufficient evidence to establish Kinara’s case for the relief it seeks. On the other hand, there is sparse poor-quality evidence regarding the impact on Infinity if Kinara is granted a legal easement. There is no explanation for why Infinity has not provided good quality evidence to show how disadvantaged it would be if Kinara is granted a legal easement. If such evidence existed, I would have expected to see it. In principle, it is hard to see why Infinity could not provide reliable and credible evidence from independent sources to make the case against granting Kinara relief. Its omission to do so suggests that such evidence was not available to it.80
[248] Infinity has relied on its existing rights to access its property from Redoubt Road to support it retaining such access for its proposed hotel/apartment complex. This is in circumstances where those rights stem from what were intended to be joint rights of access for the original Lot 1 and Lot 4/12 Lakewood Court, which were reaffirmed by Manukau City when the original Lot 1 was subdivided into 726 Great South Road and 8 Lakewood Court.81 Thus, Infinity would deny 726 Great South Road the continued use of PROW A while at the same time relying on the historic use of this accessway to keep it for Infinity’s own use. For Infinity to act in this way is, as Kinara submits, unconscionable.
79 Above n 51, at [117].
80 Above n 45, at [153]-[154].
81 See [19]-[26] herein.
[249] Further, I accept Kinara’s submission that the impact of granting expectation- based relief on Infinity is reasonably discrete because it has not built anything yet. At most it will have the cost of redesigning its development, and this will be in circumstances where Infinity continued to incur costs for such work after 2017, which is when Kinara first made known its claim.
[250] On the evidence that is available to me I am satisfied that to grant Kinara the relief it seeks (in short to require Infinity to recognise PROW A as a legal easement that Kinara is entitled to use) would not be a disproportionate response to satisfying the equity that has arisen in Kinara’s favour.
Infinity’s affirmative defences
[251] Infinity pleaded two affirmative defences: laches; and indefeasibility of title. Neither have been made out.
[252] Infinity sought to argue that from 2007 until 2017 Kinara has delayed seeking relief. I reject that argument. It hinges on the proposition that Kinara has known since 2007 that PROW A was unregistered and unenforceable. I have rejected this proposition. I have found that Kinara did not learn it had no right to use PROW A until 2017, when it found the accessway blocked by the owner of 8 Lakewood Court with Infinity’s approval. Once Kinara saw this it acted promptly to engage legal advice and commence this proceeding.
[253] Regarding indefeasibility of title that cannot protect Infinity once it became the registered owner of Lot 4/12 Lakewood Court and acted as it has done for the 10 years following.82
[254] During closing addresses Infinity raised three further obstacles to Kinara being granted relief. They were that the owner of 8 Lakewood Court and Infinity’s mortgagee should have been joined as parties or served with notice of this proceeding; and that Auckland Council’s consent is required if PROW A is to be registered as an easement.
82 See legal discussion at [80]-[81] herein.
[255] The owner of 8 Lakewood Court has known since 2013 that PROW A is not a legal easement it could rely on. I see no reason why it needed to be joined in this proceeding. Kinara’s use of PROW A will not affect this 8 Lakewood Court. Whilst Kinara also needs to cross 8 Lakewood Court to reach 726 Great South Road, Kinara does so by reliance on ROW B, which is a registered legal easement. This easement is a separate issue.
[256] As to joinder or service of the proceeding on Infinity’s mortgagee, s 90E of the LTA provides that any easement created under ss 90, 90A or 90B or varied under 90C requires consent by any mortgagee of the land that is to become the servient tenement. Kinara accepts that if PROW A were to become a legal easement its registration would require the consent of the mortgagee. Further, Kinara accepts that in principle it appears that s 90E would preclude the Court from directly ordering registration of an easement if there was no consent from the mortgagee.
[257] Accordingly, Kinara accepts that in principle there is an issue as to whether the mortgagee should have been joined to this proceeding. However, Kinara submits this was unnecessary. Here, Kinara relies on the nature of the mortgagee’s interest, which is a registered security over Infinity’s land. Kinara submits it is not challenging the mortgagee’s interest in the property in this proceeding, instead its challenge is confined to Infinity’s interest in the land. Accordingly, Kinara argues the mortgagee has no involvement in issues relating to the dealings between Infinity and Kinara, and whether PROW A is an unregistered interest that is capable of enforcement against Infinity. Kinara contends that it is not seeking an order against the mortgagee, but rather it seeks an order from this Court requiring Infinity to obtain the consent of its mortgagee to the registration of PROW A. Kinara submits this is the correct approach for the Court to grant relief in the situation.
[258] Kinara addressed what the Court can require a mortgagee to do by way of relief in the situation of LTA fraud. However, this is not a case of LTA fraud as my findings on the first cause of action make clear.
[259] Kinara submits that a problem will only arise should Infinity’s mortgagee refuse to consent. The key point is that issues regarding what might happen if the
mortgagee should refuse to consent are matters for the future. They have nothing to do with whether equity would require Infinity to recognise PROW A.
[260] I accept the argument that the mortgagee’s stance is something to be addressed in the future. It cannot impact on the Court’s findings on the equitable estoppel claim. As Kinara submits, findings by this Court that Kinara has rights in equity to use PROW A are proprietary rights that could support registration of a caveat that in turn provides notice of Kinara’s equitable rights to the world at large, including any prospective purchaser of Lot 4/12 Lakewood Court.
[261] Regarding the need for Auckland Council’s consent if PROW A is to be registered as an easement, that cannot undermine Kinara’s claim in equitable estoppel to establish its right to use the easement. Such use could be protected by registration of a caveat. Moreover, when Auckland Council was dealing with Plaza’s enquiries it never suggested the Council might be resistant to a registered easement.83
[262] Accordingly, I find that none of the obstacles that Infinity has raised to bar Kinara from relief can succeed.
Damage for interference with right of way
[263] Kinara’s amended statement of claim pleaded a third cause of action for damage for interference with PROW A. However, this cause of action was not advanced at trial. Accordingly, it is dismissed.
Result
[264] Kinara has failed to establish its first cause of action based on it holding an equitable easement by implied grant against Infinity’s land. Accordingly, that cause of action is dismissed and judgment is entered in favour of Infinity.
[265] Kinara has established its second cause of action based upon equitable estoppel. Accordingly, judgment on this cause of action is entered in favour of Kinara.
83 See [245] herein.
[266] Kinara is entitled to the following relief on the second cause of action as follows:
(a) A declaration that Kinara is entitled to cross Infinity’s land at Lot 4/12 Lakewood Court using the accessway defined herein as PROW A
(b) An order directing Infinity to take all necessary steps to have PROW A recorded as a legal easement against the certificate of title of Lot 4/12 Lakewood Court
(c) An order directing Infinity to take all reasonable and necessary steps to obtain the consent of its mortgagee
(d) Leave is reserved to the parties to return to Court on any issue arising from and in relation to the relief granted
[267] Kinara did not proceed with its third cause of action. Accordingly, it is dismissed and judgment is entered for Infinity on this cause of action.
[268] The parties have leave to file memoranda on costs.
Duffy J
ANNEX 1
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