Squally Cove Forestry Partnership v Wagg [2013] NZCA 463; [2013] 3 NZLR 793; [2014] ANZ ConvR 14-015; (2013) 7 NZ ConvC 96-007; (2013) 14 NZCPR 679 (4 October 2013)

	Home \| Databases \| WorldLII \| Search \| Feedback Court of Appeal of New Zealand

BETWEEN

SQUALLY COVE FORESTRY

PARTNERSHIP Appellant

AND

ASHLEY JOHN WAGG

DONALD MURRAY MUIR, MURIEL CHRISTINE MUIR AND GUY ROBERT MORLEY MORTLOCK

JOHN MATTHEW ZWART, TERRESSA LEE ZWART AND FLETCHER VAUTIER MOORE TRUSTEES LIMITED

SUSAN DAWN REWCASTLE, ROSS HANNAY MCKECHNIE AND HUNTER RALFE TRUSTEES LIMITED

CLINTON JOHN MCINNES AND PHILLIPA JANE MCINNES

ROBYN SHIRLEY PRICE, BRODIE JANE PLUM AND REBECCA ANNE PLUM

NIGEL BRYANT, ELIZABETH HANNAH BRYANT AND LINDA GAIL MILLER

VIN MORRIS PARKINS, GRANT TREVOR PARKINS AND REECE DARREN PARKINS

DUANE ANDREW WHITING AND AMANDA JOANNE WHITING

BRUCE DOUGLAS HOLLYMAN AND CAROL JOY HOLLYMAN

JEREMY MICHAEL FOLEY First Respondents

SQUALLY COVE FORESTRY PARTNERSHIP v WAGG & ORS CA747/2013 [2013] NZCA 463 [4 October

Hearing:	17 and 18 July 2013
Court:	Ellen France, White and French JJ
Counsel:	L J Taylor QC and G M Richards for Appellant J M Fitchett and R D J Fitchett for First Respondents P J Radich for Second Respondent (attendance excused)
_Judgment:	_{4 October 2013 at 2.30 pm}

B The first respondents must pay the appellant costs for a standard appeal on a band B basis and usual disbursements. Second counsel is allowed.

C Costs in the High Court should be determined in accordance with this judgment. If an award of costs has been made in the High Court, we set it aside so that costs can be redetermined in accordance with this judgment.

_{D The first respondents’ liability for costs is on a joint and
several basis.}

[1] The first respondents all own properties in or near Wairangi Bay in the Marlborough Sounds. They claim their properties are landlocked. In 2010 they applied to the High Court for an order under s 327 of the Property Law Act 2007 granting them access over a private road situated on land belonging to the appellant, Squally Cove Forestry Partnership (Squally Cove).

[2] The case was heard by Mallon J. The Judge found that with one exception¹the properties were landlocked and made an order on various terms granting access to each of the landlocked respondents as sought.²

[3] Squally Cove now appeals that decision. [4] The key issues raised by the appeal are:

(a) Was the Judge correct to find that the properties were landlocked in circumstances where the first respondents had chosen not to accept access on an alternative road on terms which were reasonable or could have been made reasonable by the Court?

(b) Was the Judge right to find that the terms of the offer of alternative access were unreasonable?

¹The one exception was the Parkins property. The Parkins family already have a licence to use the private road. Mallon J found that this meant the Parkins property was not landlocked. At [36] we explain why we disagree with this finding.

[5] For the reasons that follow, we conclude that the Judge was right to find that the properties are landlocked but that the order she made cannot stand.

[6] For over 50 years, property owners in Wairangi Bay have accessed their properties by vehicle on a private road known as Bill Bryants Road. Bill Bryants Road leads to a public road called Croisilles-French Pass Road (French Pass). As noted in the High Court judgment, this was a mutually co-operative arrangement which depended on the goodwill of those owners over whose properties Bill Bryants Road passed. Except for small parts of Bill Bryants Road that are on a public paper road reserve, none of the owners have ever had legal rights of access over the road.

[7] Since the 1990s, the final 650 metres of Bill Bryants Road leading up to the public road has been owned by Squally Cove or interests associated with Squally Cove’s manager, Mr Thornley. At the hearing, for ease of reference, this 650 metre portion of Bill Bryants Road was called the “red road”, while the balance was called the “blue road”.

[8] Squally Cove no longer wishes the landowners in the area to use the red road. Instead, it wants them to use an alternative road constructed by Mr Thornley in 2009, called “the yellow road”. The yellow road cost approximately $300,000 to construct. It was formed over land owned by Squally Cove and two other entities called Wairangi Forestry Partnership and Frog Investments Ltd. Mr Thornley paid for the cost of the road personally and holds powers of attorney from all three owners in relation to rights of way over it. Mallon J found that although the first respondents do not like the yellow road, it has been built to Council standards and is suitable for

[9] In 2009 Mr Thornley offered local landowners a right of way over the yellow road on various conditions. The conditions were amended over time but they

_{included a payment}⁴_{and a restriction on use of
the yellow road for forestry purposes.}

A number of landowners in the area accepted the offer, including one of the respondents.⁵As an alternative to the legal right of way, Mr Thornley also offered a personal licence to use the yellow road on condition of payment of an annual contribution of $300 towards maintenance. One of the respondents accepted that offer.⁶

[10] Mr Thornley has installed a gate at the top of the red road where it joins French Pass and erected a sign saying that the road is closed and that all trespassers will be prosecuted. The main reason why Mr Thornley and Squally Cove do not want others using the red road is because they want exclusive use of it for the purpose of forestry and logging operations on the nearby land which they own.

[11] A third private road which featured in the evidence was Taipari Road (marked purple on the map). Four of the respondents have legal rights of way over Taipari Road.⁷However, the evidence established that Taipari Road has not been used for many years and is essentially impassable in its current state.

[12] The layout of the roads and the locations of the first respondents’ properties are shown on the two maps annexed to this judgment. As is typical in the Marlborough Sounds, the topography of the area mainly consists of steep hills covered in vegetation, with some flatter areas near the water. The sizes of the respondents’ respective properties vary, as do the uses to which they are put. Most of the respondents are not permanent residents but use their properties as holiday homes. Some have no residences on their properties. Some of the land is used for grazing stock, forestry and tourist accommodation.

[13] Before considering the issues in this case in more depth, it is necessary to record some miscellaneous procedural matters that have arisen and provide a brief

[14] Counsel for the first respondents, Mr Fitchett, seeks to make an issue of the fact that Mr Thornley is named as an appellant on the notice of appeal when Squally Cove is the sole appellant. Allied to this is a concern that there has never been appropriate separation between Mr Thornley’s interests and those of Squally Cove and the other two servient landowners of the yellow road, namely Wairangi Forestry Partnership and Frog Investments. Neither of those two entities are parties to this litigation.

[15] While Mr Thornley is not a named appellant, he does hold irrevocable powers of attorney from all three owners and represents them for the purposes of this proceeding. We are satisfied that everyone who has an interest in being heard has been heard, that the respondents have not been disadvantaged and that nothing turns on these points raised by Mr Fitchett.

[16] The second procedural point arose during the hearing when Mr Fitchett sought to argue that Mr Thornley misled the Council in 2007 as part of a master plan to contrive the present situation. This was not a finding made by Mallon J and not a matter the Judge took into account in reaching her decision. The first respondents did not file any notice to support the judgment on other grounds as required by r 33 of the Court of Appeal (Civil Rules) 2005. Accordingly, we ruled that Mr Fitchett was not able to advance that argument.

[17] The third procedural point arose after the hearing. Both counsel filed memoranda dealing with various matters. It has not proved necessary to determine whether to grant leave to admit the memoranda because even if they were admitted they would have no bearing on the outcome.

[18] Finally, we record that the second respondent, the Marlborough District Council, did not take an active part in the appeal. Counsel Mr Radich entered an appearance but was excused from any further attendance. For ease of reference, we therefore refer to the first respondents as “the respondents” for the remainder of this judgment.

[19] The right of a landlocked owner or occupier to apply to the court for relief is conferred by s 327 of the Property Law Act.

[20] It is well established that in considering such an application the court adopts a three stage approach:

(a) First, it must determine whether the land is in fact landlocked as defined by s 326.

(b) Secondly, having determined that the land is landlocked, the court must decide whether to grant relief by making an order for reasonable access under s 328. The power conferred by s 328 is discretionary. In exercising its discretion, the court must have regard to certain criteria, which are set out in s 329.

(c) Thirdly, having decided to make an order for reasonable access, the court must consider whether to make the order subject to conditions. A non-exhaustive list of possible conditions is contained in s 330.

[21] We now turn to one of the main issues in this case, namely whether the Judge

[22] Under s 326, a piece of land is landlocked if there is no reasonable access to

... physical access for persons or services of a nature and quality that is reasonably necessary to enable the owner or occupier of the land to use and enjoy the land for any purpose for which it may be used in accordance with any right, permission, authority, consent, approval, or dispensation enjoyed or granted under the Resource Management Act 1991.

[23] In her judgment, Mallon J said she had distilled the following principles from the authorities that have considered the definition of landlocked:⁸

(a) Whether there is reasonable access to land is a question concerned with whether there is practical physical access in fact, rather than whether there is legal access.

(b) It is a question of present fact, concerned with whether reasonable access now exists, not whether (for example) “it is possible to provide access by upgrading existing tracks on the applicant’s own land”.

(c) Access “at the whim of an adjoining owner” or dependent on the “courtesy and goodwill” of the adjoining owner is not reasonable access.

(d) What is reasonably necessary to use and enjoy the land “in accordance with any right ... [or] consent under the Resource Management Act” is concerned with existing uses, not potential uses for which a land owner could apply for consent.

(e) Reasonable access is not necessarily the same as the best access that could be achieved. Other access may be convenient and reasonable but that does not mean that the access the land presently has is unreasonable.

(f) Whether there is reasonable access is a value judgment that the Court has to make on the basis of the evidence. Factors such as the characteristics of the locality (residential, commercial or mixed), the topography of the area and contemporary transportation requirements are relevant.

(g) The circumstances as they existed at the time the land was acquired may be relevant evidence as indicating what the purchaser regarded as reasonable at that time.

(h) Reasonable access does not invariably mean vehicular access, but nowadays the situations in which non-vehicular access will be regarded as reasonable are likely to be few because of the great dependence people now have on motor vehicles.

(i) The legislation is remedial. There is no presumption in favour of non-interference with another title.

[24] On appeal, Mr Taylor QC for Squally Cove accepts that the Judge’s statement of legal principles is correct. However, he takes issue with the Judge’s application of those principles to the facts. In particular, he submits the Judge was wrong to find that the respondents’ properties are landlocked when, in his submission, they have

_{reasonable physical access by obtaining a right of way over the yellow
road on the}

terms offered or by obtaining a personal licence to use the yellow road. Mr Taylor argues that reasonable access is available to the respondents and therefore they are not landlocked. He further argues (at least in his written submissions) that those respondents with legal rights of way over Taipari Road are not landlocked. Nor are those respondents with usable sea access. Mr Taylor emphasises that the power to grant relief under the Act should only be exercised to the minimum extent necessary to provide reasonable access to landlocked owners.

[25] The Judge found that the terms offered by Mr Thornley were not reasonable. She also held that even if the terms had been reasonable, the respondents’ properties would still have been landlocked within the meaning of the statutory definition. Mr Taylor contends this was a wrong approach. He says the terms were reasonable or, if they were not reasonable, they could and should have been made reasonable by the Judge.

[26] In our view, the statutory definition of “landlocked” requires the court to look at the existing state of affairs, not what it might be if offers (reasonable or otherwise) of alternative access were to be accepted. That does not mean the existence of an offer of alternative access and the reasonableness of that offer are irrelevant. Quite the contrary. They may be of critical importance. But the correct analysis is that they are matters properly reserved for the second stage of the inquiry (the exercise of the s 328 discretion as to whether to grant relief), not the first stage, which focuses

(a) The use of the present tense in the statutory definition of landlocked. (b) The existence of s 329(c), which requires the court in the exercise of

its discretion under s 328 to “have regard to ... the conduct of the parties, including any attempts they have made to negotiate

reasonable access to the landlocked land” (emphasis added). If Parliament intended the existence of negotiations to determine whether the land was landlocked in the first place, then it is difficult to see why negotiations would feature in s 329.

(c) Determining whether the land is landlocked by reference to the existing state of affairs makes for a more coherent and workable statutory scheme.

(d) Previous authorities, such as Murray v BC Group, Jacobsen Holdings Ltd v Drexel, Benham v Cameron, Cleveland v Roberts and Cooke v Ramsay, support the focus being on the existing state of affairs.¹⁰

Contrary to a submission made by Mr Taylor, we do not agree that those cases are distinguishable because they were concerned with existing physical access, rather than the existing legal position. The definition of landlocked as interpreted by the courts has a legal component as well as a physical component, in the sense that access dependent on the courtesy and goodwill of an adjoining neighbour

reason in principle to differentiate between the physical and legal components of the definition.

[28] We accordingly agree with Mallon J that even if Mr Thornley’s offer of alternative access was on reasonable terms, that did not preclude her from finding the respondents’ land was landlocked. The offer was only relevant to the question of relief.

_{therefore do have existing rights over the yellow road. Mallon J found
that the}

¹¹Benham v Cameron, above n 10, at 193,021; White v Bevan [1985] NZHC 6; (1985) 2 NZCPR 270 (HC) at 280; Reikorangi Forest Ltd v Charman HC Wellington CIV-2004-485-1255, 15 October 2007 at [47]– [48].

licence arrangement entered into by the Hollyman family lacked certainty and appeared to be terminable at will. That did not amount to reasonable access and therefore the property was still landlocked. We agree with that finding. As for the Rewcastles/Goulds, Mallon J found that although they had obtained a legal right of way over the yellow road, the terms of that right of way were unreasonable and accordingly the property was still landlocked. We agree the Rewcastle/Gould property is landlocked notwithstanding the existence of a legal right of way over the yellow road but, as we shall explain later, we have come to that conclusion for a different reason than that relied upon by the Judge.

[30] The fact that the focus is on the existing state of affairs must also mean that because Taipari Road is currently physically unusable, those respondents with legal rights of way over the road are able to contend that their properties are landlocked notwithstanding their legal rights.¹²That is so even if the existing state of Taipari Road is due to their own neglect. Regardless of whose fault it is, the fact remains that Taipari Road does not currently provide reasonable access. Fault may of course be a relevant factor when it comes to deciding whether to grant relief.

[31] A further argument raised by Mr Taylor is that some of the respondents have usable sea access and are therefore not landlocked. Mr Taylor refers us to evidence that when four of the respondents sought consent to subdivide their respective properties, they represented to the consent authority that the properties had reasonable access via the sea.¹³Mr Taylor submits that these respondents are trying to have it both ways. Having made the representation and thus obtained consent without incurring the cost of providing vehicular access, they now seek to resile

¹³The four respondents are the Goulds, the McInneses, the Bryants/Millers and Ms Wagg.

[32] As decisions such as Kingfish Lodge (1993) Ltd v Archer show, sea access may be held to provide reasonable access.¹⁴Each case, however, is fact specific. In this case, where there has been de facto vehicular access for many years, we agree with the Judge that sea access alone is not reasonable access.

Respondents requiring the use of the blue road to access the red and yellow roads

[33] As already mentioned, use of the blue road is dependent on the goodwill of the relevant landowners. It appears that attempts have been or are being made to formalise the current arrangement, but there are no existing legal rights of way. The respondents therefore do not have reasonable access to the blue road.

[35] First, several of the respondents need to use the blue road in order to access the yellow road.¹⁵The Rewcastles/Goulds are in that category. As already discussed, the Rewcastles/Goulds have accepted Mr Thornley’s offer and accordingly have existing legal rights over the yellow road. However, without reasonable access to the blue road, the property remains landlocked regardless of access, reasonable or otherwise, over the yellow road.

[36] The lack of reasonable access to the blue road also has major implications as regards use of the red road. None of the respondents are able to access the red road without using the blue road.¹⁶It follows that:

(a) The Judge was wrong to find the Parkins property was not landlocked because it had a legal right of way over the red road. Without

¹⁵But not all respondents. Mr Foley, the Hollymans, the Parkinses, the Whitings, the McInneses, the Bryants/Millers and the Prices/Plums are able to access the yellow road without the blue road, some of them directly and some of them in combination with a foreshore road.

¹⁶Theoretically, the McInnes family could access the red road from their property without using the blue road, but the terrain of the McInnes property is such that the only practical and hence reasonable access to the red road is via the blue road.

[37] We return to consider the legal ramifications of this when discussing the terms of the order made by the Judge. At this juncture, it is sufficient to note that for the reasons discussed above, we find that the respondents’ properties are all landlocked within the meaning of the Act. We also agree with Mallon J that the reasonableness of the offer of alternative access on the yellow road to those who have not accepted it is an issue for the discretionary stage of the analysis.

[38] As already mentioned, Mallon J found that although the yellow road is not the respondents’ preferred choice, it is suitable for vehicular access. As also already mentioned, the offer was to either receive a licence to use the yellow road and pay a share of maintenance or take a legal right of way on certain terms. Those terms included a payment to Mr Thornley and a number of express restrictions and conditions attaching to the right of way.

[39] Mallon J found that the licence option was reasonable providing the costs of maintenance were reasonably incurred and equitably allocated and there was no real prospect that access would be terminated.¹⁷

[40] As for the proposed terms attaching to the right of way, the Judge found that all the terms were reasonable with one exception.¹⁸The exception was a term prohibiting use of the yellow road for forestry or commercial activities subject to paying a royalty and obtaining the prior written consent of Mr Thornley, such consent not to be unreasonably withheld and any dispute to be resolved by arbitration. The reasonable consent and arbitration qualifications were amendments made by Squally Cove during the course of the High Court hearing. The amendments were designed to meet the respondents’ concerns that the terms as

¹⁸At [86]–[92]. Mr Fitchett argues that the Judge also found other terms were unreasonable.

Squally Cove also agreed that “commercial activities” for the purpose of the

[41] Squally Cove’s justification for the term was based on safety and maintenance issues. There is significant forestry in the area and a history of marine farming. In those circumstances, Squally Cove considered it was important to restrict vehicle movement and prevent heavy use of the road, especially by logging trucks. Mr Thornley stressed that it was not his intention to make any profit from the yellow road.

[42] The Judge, however, found that it was unreasonable to require consent and payment terms for forestry and commercial uses because Mr Thornley/Squally Cove had used Bill Bryants Road for forestry and commercial purposes for 20 years without paying any royalties and because similar restrictions were not found in other rights of way that have been granted in Wairangi Bay, such as over Taipari Road.

[43] On appeal, Mr Taylor argues that this finding was not justified on the evidence. We agree. There was unchallenged evidence that such restrictions are common terms of rights of way and while there was evidence that Mr Thornley/Squally Cove had used Bill Bryants Road for commercial purposes in the past, it was not extensive use and not primarily for purposes that would normally attract a royalty payment. In our view, the past use of Bill Bryants Road was not a sufficient basis for concluding that the proposed restriction on commercial and forestry activities, with its reasonable consent and arbitration safeguards, was unreasonable. Significantly, some of the respondents themselves accepted in evidence that the term was reasonable, while those who objected did so mainly because of concerns that, viewed objectively, are alleviated by the amendments made during the course of the hearing in the High Court.

[44] We have considered whether a distinction should be drawn between those respondents who have existing consents to use their land for forestry and commercial activities (bearing in mind the statutory definition of “landlocked” with its reference

_{to consents) and those respondents who do not.}¹⁹_{However, because of the}

requirement that Mr Thornley may not withhold his consent unreasonably, we consider the offer is one that provides reasonable access to the former group as well as the latter.²⁰

[45] Had the Judge found that the offer of alternative access over the yellow road was reasonable, it is likely she would have exercised her discretion differently and declined to make any order in favour of the respondents.

[46] The order made by the Judge granted a right of way over the red road to serve no more than 30 users, which were to be allocated to the respondents “and to any other users which the parties to this litigation may agree to include”.²¹

[47] It is common ground that “30 users” was intended to be the maximum possible number of users.²²That is to say, it was never intended that other users included by the parties could take the total number beyond 30.

[49] The first is that it appears to confer a right on the respondents to grant rights of way over Squally Cove’s property. We agree with Mr Taylor that such an order represents an unreasonable interference in the rights of landowners and goes beyond the remedial powers of the court under s 328.

[50] The second and more fundamental problem is that in our view there was no jurisdiction to grant a right of way over the red road. Section 328 states that the court may make an order granting reasonable access to landlocked land. However, because of the situation with the blue road, the order made by Mallon J does not in

_{fact grant reasonable access to the respondents’ land. Without
reasonable access to}

²⁰For completeness in this discussion of the reasonableness of the Thornley offer, we record that our finding relies on Mr Thornley honouring his agreement to withdraw a previous restriction on using a foreshore road.

²²Mr Taylor was initially concerned that the wording of the order was ambiguous and may not accurately reflect the intention, but Mr Fitchett confirmed that all parties understand that 30 is the maximum number possible.

the blue road, the conferring of a legal right of way over the red road does not unlock the properties and give the respondents reasonable access.

[51] It might have been possible to make the order conditional on each respondent obtaining reasonable access to the blue road, but the Judge did not do that. It follows that she did not have jurisdiction to make the order she did and for that reason alone the order cannot stand.

[52] Such a defect is capable of being cured on appeal by amending the order or making a conditional order ourselves. That was the course of action urged on us by Mr Fitchett.

[53] However, given our finding that the available offer of alternative access on the yellow road is on reasonable terms, we are not prepared to grant the respondents any relief. In the circumstances, we consider the only appropriate course of action is to simply quash the order made by the High Court.

[54] Because of the view we have taken, it is not necessary for us to reach any concluded view on a further ground of appeal, namely that in imposing legal access over Squally Cove’s land against its will the Judge was wrong to refuse to award any compensation to Squally Cove. Suffice it to say, we consider it highly arguable that compensation was payable and that the Judge’s conclusion to the contrary was not supported by the evidence.

[56] As regards costs, counsel have agreed that costs should follow the event and that because of the number of parties and the volume of material they should be calculated on a higher basis than band A. We agree that is appropriate and accordingly order that the first respondents pay the appellant costs for a standard appeal on a band B basis and usual disbursements. We also certify for second counsel. Mr Fitchett submitted that if costs were to be awarded against the

respondents then each should only be liable for one eleventh of the total because there were 11 separate claims. However, the key issues were common issues and we see no reason why liability should not be joint and several.²³We so order.

[57] In the High Court, Mallon J does not appear to have made any formal award of costs but she indicated a provisional view that Squally Cove should pay the respondents costs on a band 2C basis. Costs in the High Court should now be determined in accordance with this judgment. If an award of costs has been made in the High Court, we set it aside so that costs can be determined in accordance with this judgment.

Note: As recorded by Mallon J, the depiction of the roads is not entirely accurate at the left hand end of the yellow road and the beginning portion of the purple road, but the map nevertheless suffices to show their general position. Further, what is shown as Wairangi Forestry is part of Squally Cove Forestry, and Wairangi Forestry is in fact to the left of what is shown.

Court of Appeal of New Zealand

Squally Cove Forestry Partnership v Wagg [2013] NZCA 463; [2013] 3 NZLR 793; [2014] ANZ ConvR 14-015; (2013) 7 NZ ConvC 96-007; (2013) 14 NZCPR 679 (4 October 2013)