The Court's power to create an Easement - and the requirement not to be "foolish, irrational or unreasonable" in the process

A 2018 decision by the Supreme Court of New South Wales reinforces the fact that if there is an obvious encroachment on your property over a number of years, it cannot later be denied that an existing use exists.

The matter of Rawson v Studholme [2018] NSWSC 1764 dealt with a right of way that ran along the rear of the defendant’s property at Middle Cove. The purpose of the right of way (in the form of a laneway) was to enable a number of property owners (the plaintiffs) to access their properties from the street.  However, when it was created in 1947, the laneway was noted on the records as being only 6 feet (1.83m) wide. However, since 1954, the land used for the laneway has been 9 feet (2.7m) wide, encroaching onto the defendant’s land by 3 feet.

In May 2017, 19 years after purchasing the property, the defendant gave written notice to her neighbours that a fence would be built across the laneway, which would block vehicular access along the laneway.  She otherwise invited the neighbours to “purchase” the other 3 feet, which was clearly required so that vehicles could pass along the laneway.

The 9 plaintiffs promptly obtained an injunction and commenced proceedings for an easement pursuant to section 88K of the Conveyancing Act 1919 (NSW).

Section 88K requires the claimant to demonstrate that:

• The easement was reasonably necessary for the effective use or development of the plaintiffs’ land;
• The use of the laneway by the plaintiffs was consistent with the public interest;
• The defendant could be adequately compensated for any loss or other disadvantage that would arise from imposition of the easement; and
• All reasonable attempts had been made by the plaintiffs to obtain the easement, but they had been unsuccessful.

The defendant’s response was to not contest the easement, only its terms, the compensation payable and the issue of costs.  The only expert evidence she relied upon was from a valuer (as to compensation) and an engineer (as to terms).

Attempts to reach an agreement

Between May 2017 and October 2018, the plaintiffs made 4 separate proposals to the defendant, in an attempt to reach agreement regarding the easement.  The Court noted:

“In retrospect, [the offers] were more than reasonable; indeed, they were generous.”

The offers included a rather generous compensation amount of $300,000 (July 2017), but in October 2018, once the valuers agreed that the freehold value of the land to be burdened by the easement was $76,500 and its market value as $38,250, the plaintiffs offered $76,500 plus costs.

Issues with the defendant’s evidence

The Court did not consider the evidence given by the 79 year old defendant to be credible – “she frequently denied the obvious and asserted the improbable”.  She denied any suggestion that she had “knowingly acquiesced” (that is, accepted something reluctantly but without protest) in the long history of the use of the laneway.

The Court noted the various improvements to the surface of the laneway over the years, paid for by some of the plaintiffs.  In 2001, as part of renovation works, the defendant received survey reports clearly identifying the encroaching land.  She denied knowing anything about this, stating that she had “nothing to do with [that] renovation” which was being arranged by her son, although she did concede that her son had shown her the plans at some point.

In 2002, in response to an objection to the defendant’s proposed renovations, the defendant’s architect noted:

“[The defendant] appreciates that the neighbours do use her property to access their rear yards and in the spirit of good neighbourliness does not wish to put a stop to it or inconvenience anyone.”

What should the terms of the easement be?

The Court rejected the defendant’s attempts to incorporate obligations on the plaintiffs regarding maintenance of her home, and dealing with pre-existing damage to her property allegedly caused by the use of the laneway.

In determining an appropriate amount of compensation, the Court stated:

“I was troubled at times by the defendant’s apparent motive.  She did not even engage her own valuer until March 2018.  I thought she was horse-trading; gilding the lily; seeking to take advantage of the situation to maximise the benefit to her, rather than behaving reasonably and fairly.”

The Court concluded that the defendant should receive at least the amount for the agreed market value of the small parcel of her land that would become subject to a formal easement, awarding her $45,000.

What about the costs of the proceedings?

In considering the issue of the costs of the proceedings, the Court noted that it needed to consider whether the defendant had “engaged in unreasonable conduct, such as making the proceedings more expensive.”  It noted the statutory obligation under section 56 of the Civil Procedure Act 2005 to “assist the Court to further the overriding purpose” to “facilitate the just quick and cheap resolution of the real issues in the proceedings”.

As a result of the defendant’s actions, the proceedings required:

• A 5 day hearing;
• The preparation of evidence on multiple issues;
• The unnecessary retention of experts; and
• “unnecessary stress, anxiety and discomfort to ordinary people”.

Taking into account the defendant’s “unreasonable behaviour, her entrenched resistance to reasonable resolution and her maintenance of issues without reasonable cause”, the Court proposed that a significant proportion of the plaintiffs’ costs be paid by the defendant.

The Court was also critical of the defendant’s solicitors – “I do not know in this case who was calling the tune”.  The Court concluded:

“If a client is foolish, irrational or unreasonable, the solicitor or barrister, as the case may be, has a duty, where possible, and within reason, to correct the client’s behaviour; to disabuse him or her of their misapprehensions and false expectations; to ensure that the case is limited to the real issues in dispute; and to act consistently with the ‘overriding purpose’ of civil litigation in this Court.  What the legal practitioner must not do is simply give the client her head, take her money and roll on – knowing that the ordinary rule in these cases is that the applicant for an order pays the costs.”

These comments, of course, would apply not only to easement disputes, but to any litigation.

The Court was to re-list the proceedings on 30 January 2019 for final orders however it appears that the parties may have reach a final agreement without the intervention of the Court.