Mikitasov v Little [2013] NZHC 1340 (10 June 2013)

Last Updated: 23 July 2013

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV 2011-488-564 [2013] NZHC 1340

IN THE MATTER OF An appeal against the decision of the

District Court at Kaikohe

BETWEEN IGOR MIKITASOV Appellant

AND ALFRED NEWTON LITTLE First respondent

AND JAMES LOUIS VEZEY, MAHMOOD KHAN and KAYE THERESA VEZEY Second respondents

Hearing: 29 April 2013

Appearances: A A H Low for appellant

R C Mark for respondents

Judgment: 10 June 2013

_{JUDGMENT OF ALLAN J}

In accordance with r 11.5 I direct that the Registrar endorse this judgment with the delivery time of 11 am on Monday 10 June 2013.

Solicitors:

Short & Partners, Auckland

Henderson Reeves Connell Rishworth Whangarei

MIKITASOV v LITTLE [2013] NZHC 1340 [10 June 2013]

Introduction

[1] Mr Mikitasov is the owner of a property at Paihia in the Bay of Islands. The land was the subject of a right-of-way affording access to an adjacent beach. Over time, the accessway had become obstructed and effectively unusable by reason of unlawful encroachments installed by former owners and developers and by a Council decision not to repair a set of steps on public land.

[2] Mr Mikitasov applied to the District Court for an order extinguishing the easement. There was no opposition from holders of the dominant tenements but the first and second respondents sought compensation. The question of compensation was the subject of a detailed and comprehensive District Court judgment delivered

by Judge McElrea.1

[3] While making the order for extinguishment, the learned Judge awarded each of the two respondents compensation of $12,000. Mr Mikitasov appealed to this Court against the making of the compensation orders. On 22 May 2012, Duffy J delivered a reserved judgment in which the appeal was dismissed.2 Mr Mikitasov now seeks leave to appeal to the Court of Appeal from the earlier judgment of this Court.

Relevant legal principles

[4] An appeal may lie from a judgment of this Court, if the Court grants special leave to appeal under s 67 of the Judicature Act 1908. On such application, the applicant must demonstrate that the case raises some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of a further appeal.3

[5] It is important to note that on a second appeal the Court of Appeal is not simply engaged in the general correction of error. Its primary function is to clarify

_{the law and to determine whether it has been properly construed and applied by the}

1 Mikitasov v International Recruitment Partners Ltd DC Kaikohe CIV-2010-027-31, 22 July 2011, recalled and reissued on 15 August 2011.

2 _{Mikitasov v Little [2012] NZHC 1100.}

3 Waller v Hider [1998] 1 NZLR 412 (CA).

Court below. It follows that not every alleged error of law will be of sufficient importance, either generally or to the parties, as to justify the further pursuit of litigation which has already been twice considered and ruled upon by a court. A further relevant factor is the need to avoid the waste of scarce time and resources of the appellate courts and indeed of the parties themselves. In the end the guiding

principle must be the requirements of justice.4

The District Court judgment

[6] The factual findings in the District Court are not in dispute. The originating application was made in reliance on s 317(1)(a) and (d) of the Property Law Act

2007 (the Act). The District Court had a discretion to extinguish an easement

(wholly or in part) if satisfied that:

[a] The easement ought to be extinguished because of a relevant change in circumstances since its creation; or

...

[d] The proposed extinguishment would not substantially injure any person entitled.

[7] Under s 317(2), the Court had a further discretion, in the event an order was made, to award reasonable compensation to any person specified in the order. Judge McElrea held that there had been a change of circumstances since the creation of the easement in that the right-of-way was no longer passable and had been blocked.

[8] With respect to the application by the respondents for compensation, Judge McElrea considered that the principles outlined in Jacobsen Holdings Ltd v Drexel5 were applicable. That was a case dealing with the compulsory acquisition of land to

_{enable access to be obtained to landlocked land. In that case Cooke P said:}6

4 Snee v Snee [1999] NZCA 252; (1999) 13 PRNZ 609(CA) at [22]; Cuff v Broadlands Finance Ltd [1987] 2 NZLR 343 (CA) at 346-347.

5 _{Jacobsen Holdings Ltd v Drexel [1986] 1 NZLR 324 (CA).}

6 At 329.

Under the section the Court is not bound to award compensation, but usually it will be equitable between the parties to do so and to assess it on the footing of what a willing grantor and grantee of the easement or vendor and purchaser of the fee simple would agree in friendly negotiation.

[9] Judge McElrea considered that approach was equally applicable in cases involving the extinguishment of easements, and that an award of compensation would be the usual result:7

... because it will normally be equitable between the parties to compensate one party for something of value given up to the other. Special circumstances may arise where that result does not follow as a matter of equity (or discretion) ...

[10] It is to be noted that at [41] of his judgment, Judge McElrea recorded the agreement of counsel that the approach in Jacobson Holdings was equally applicable in easement extinguishment cases, and that it was appropriate to do so in the instant case. Ms Low was not counsel either in the District Court or the High Court. But the concession of counsel in both of the Courts below presents something of an obstacle to the appellant on the present application for leave.

The High Court decision

[11] In the High Court, Duffy J was reviewing the exercise of a discretion. It is common ground that she was therefore obliged to dismiss the appeal unless satisfied that Judge McElrea had taken into account irrelevant factors, failed to take into account relevant factors, had erred in principle or was plainly wrong.8

[12] In the High Court, counsel for the appellant submitted that;

[a] Judge McElrea was wrong to apply the approach in Jacobsen Holdings (somewhat remarkably since the same counsel had accepted the applicability of Jacobsen Holdings in the Court below);

[b] The Judge did not consider various factors identified by the applicant relevant to the question of compensation, finding instead that

_{compensation should be the usual result;}

7 _{At [32].}

8 Blackstone v Blackstone [2008] NZCA 312; May v May (1982) 1 NZFLR 165 (CA) at 169-170.

[c] The Judge had failed to have regard to other factors that might affect the Court’s approach when dealing with an application under s 317;9 and

[d] In the circumstances of the case, no compensation should have been awarded.

[13] Duffy J accepted that the analogy drawn in the District Court between the approach in Jacobsen Holdings (a landlocked land case), and cases of easement extinguishment, was “well made”. She further held that the Judge was correct to consider both the detriment suffered by owners of the dominant tenement on the one hand and benefits obtained upon extinguishment by the owner of the servient tenement, on the other. She concluded that Judge McElrea’s reasoning could not be faulted, and that the appellant had failed to make out any basis for interference with the exercise of his discretion.

[14] During the course of oral argument on the present application for leave, the case for the appellant was further refined. In essence, Ms Low says that leave to appeal ought to be granted in respect of two separate matters:

[a] Duffy J’s acceptance that Jacobsen Holdings provides by analogy an appropriate guide to the assessment of compensation in easement extinguishment cases; and

[b] Her finding that Judge McElrea made no relevant error in exercising his discretion to award compensation to the respondents in the face of an argument that the respondents had suffered no loss.

Discussion

[15] Ms Low submits that the first question must always be whether there is a loss that requires compensation. If there is, then s 317 requires that such compensation

_{be reasonable. She claims that Judge McElrea neglected to ask himself whether}

9 See Cambray North Island Ltd v Minister for Land Information [2011] NZHC 901; (2011) 12 NZCPR 721 (HC) at [15]

and [25].

there was any loss at all, and that Duffy J simply endorsed the Judge’s approach

without further analysis.

[16] I do not accept that Judge McElrea neglected to ask himself whether or not there had been any relevant loss. He said:10

Compensation, by its very nature, requires an assessment of loss. That loss cannot be assumed; it must be proved by bringing forward evidence.

[17] This passage appears in a short section of Judge McElrea’s judgment in which he dealt with the question of whether an award could be made in respect of respondents who had not opposed the application at all (finding that they had no claim), but for present purposes, the relevance of the passage is that Judge McElrea was plainly alive to the need to consider whether the respondents had established the existence of a loss, as distinct from the quantum of it.

[18] There is no discernible error in his approach, or in Duffy J’s approval of it. It

would not be right to grant leave on a point which lacks substance.

[19] The real thrust of Ms Low’s argument, it seems to me, is that Duffy J was wrong to endorse Judge McElrea’s reliance on the approach in Jacobsen Holdings, which tends to assume that in most cases of compulsory acquisition of land to enable access to landlocked land, there will be an entitlement to compensation.

[20] Ms Low’s argument is that the position is different in easement

extinguishment cases. She submits:

While it is accepted that the principles in Jacobsen Holdings apply sensibly in the context of compensation in respect of landlocked land, that is because in such cases land is compulsorily acquired from one party and transferred to, or accessed by, another. In this sense, a loss or diminishment in value is likely to arise to an affected party. Where an easement is modified or extinguished under s 317 this will not always be the case.

[21] In my opinion, the distinction that Ms Low seeks to draw between cases of landlocked land on the one hand and the extinguishment or modification of easements on the other, is invalid. In each case, the party claiming to have suffered a

detriment is subject to the compulsory acquisition of his or her land, or alternatively, to the diminution of his or her rights in respect of that land.

[22] Keane J plainly considered the principles in Jacobsen Holdings to be applicable in a case involving an application for an order modifying an easement under s 317.11

[23] I accept, as Ms Low argues, that there may well be cases in which no loss has been suffered at all, or where compensation otherwise payable is diminished.12 But I consider the approach adopted by Judge McElrea and approved by Duffy J to be correct. It is in line with the views expressed in Walshe v MacRae and in Cambray. Judge McElrea expressly noted that there may be cases in which no compensation is payable.13

[24] Ms Low submits that the case is of significant importance because if special leave is granted, the Court of Appeal would be considering for the first time the proper approach to the assessment of compensation under s 317, and in particular the extent, if any, to which Jacobsen Holdings ought to be applied in s 317 cases.

[25] In my view, a judgment of the Court of Appeal on the topic would be of limited value. That is because there is no suggestion in the cases in this Court of any difference in approach. I consider the applicability of Jacobsen Holdings to be relatively well settled. The issue is of interest only to the parties, and is of no wider public concern given the consistent approach in this Court.

[26] There is also the question of the amount at stake. Judge McElrea awarded a total of $24,000 in compensation. While in an appropriate case the fact that only a limited sum is at stake will not preclude the grant of leave, it is a factor suggesting leave should be refused in this case.

[27] The assessment of compensation is essentially a discretionary exercise. Understandably, apart from the issues to which I have referred, Ms Low does not

11 _{See Walshe v MacRae [2012] NZHC 296 at [82]- [92].}

12 See for example, Cambray North Island Ltd v Minister of Land Information, above n 10, at [25].

suggest that leave ought to be granted in respect of any other aspect of quantum determination.

Result

[28] I have carefully considered Ms Low’s detailed and determined argument, but have concluded that there is no basis upon which it would be proper to grant special leave to appeal in this case.

[29] The application is accordingly dismissed.

[30] The respondents are entitled to one set of costs, calculated on a Band 2B basis, together with reasonable disbursements to be fixed by the Registrar if necessary.

C J Allan J