Dickson v Petrie

1. [1]

   STERN JA: I gratefully adopt the summary of background matters set out by Griffiths AJA. I agree with his Honour’s judgment and with the orders proposed. My additional observations as to the key issues that arise should not be read as detracting from anything said by Griffiths AJA.

2. [2]

   For my part, the appeal resolved into essentially three issues. First, the proper construction of the easement for garden use (the Easement) in the s 88B instrument registered on 16 December 2003 (the Registered Instrument). Second, the proper approach to determining whether the rights conferred by the Easement amount to a right of joint occupation or substantially deprive the servient tenement holder of proprietorship or legal possession such that they are not capable of forming the subject matter of an easement: the second question to be asked for the purpose of the fourth condition for the validity of an easement established in In re Ellenborough Park [1956] Ch 131 at 164 (Evershed MR), which has been consistently applied in Australia, most recently in Theunissen v Barter [2025] NSWCA 50 at [140] (Kirk JA, Mitchelmore JA and Griffiths AJA agreeing). For convenience, I will refer to this condition of validity as the “ouster principle”. Third, whether the Easement is invalid as falling foul of the ouster principle.

3. [3]

   As to the first issue, construction, I agree with Griffiths AJA that the question of construction is anterior to that of “reasonable use”, as that question depends upon the proper construction of the Easement. Like Griffiths AJA, I would find that the primary judge erred in construing the Easement as conferring a right upon the appellants, as dominant tenement holders, to use the area of the Easement for general recreational purposes such as entertaining. As set out in the Registered Instrument at cl 1, the Easement undoubtedly confers upon them an exclusive right to garden (including to undertake the activities of growing grass, plants, shrubs and trees together with any work associated with establishing, maintaining and replacing such vegetation), to undertake activities of paving and landscaping and, for those purposes, to store equipment, implements and materials. However, the Easement does not in its terms go beyond that. Whilst the Easement would clearly confer an ancillary right upon the appellants to go onto the land for the purpose of exercising the rights expressly conferred, and the right to garden (as set out above) could itself be described as a right to use the area for one form of recreation, being gardening, it is a step too far to say that this includes an exclusive right to use the area of the easement for other recreational purposes.

4. [4]

   There are three textual considerations which support this conclusion.

5. [5]

   First, the Easement does not, in its terms, confer any right upon the appellants to use the land the subject of the Easement as their garden or for general recreational use. Rather, it expressly confers a right upon the appellants to undertake particular activities upon the land. It would undermine certainty to construe the Easement as conferring a plethora of recreational rights going beyond those expressly conferred or ancillary to such rights.

6. [6]

   Second, the Easement says nothing about recreational rights over the land beyond the rights described above. Had it been the intention of the parties to confer a general right of recreation upon the appellants, they could readily (and presumably would) have said so.

7. [7]

   Third, a right to recreate generally is not reasonably necessary for the exercise of the right to garden, pave and landscape (and for that purpose to store equipment etc) expressly conferred by the Easement: as to the test for the implication of ancillary rights see Zenere v Leate (1980) 1 BPR 9300 at 9305 (McLelland J), recently applied by Kirk JA (Gleeson and Mitchelmore JJA agreeing) in Owners Corporation Strata Plan 533 v Random Primer Pty Ltd [2025] NSWCA 8 at [34]; see also B Edgeworth, Butt’s Land Law (7th ed, 2017, Lawbook Co) at 9.680.

8. [8]

   The physical characteristics of the land at the time of the grant may be used for the purpose of construction: Theunissen v Barter at [93] (Kirk JA, Mitchelmore JA and Griffiths AJA agreeing). As is apparent from the photographs in evidence before the primary judge, the area of the Easement is the natural continuation of the respondent’s backyard, albeit that the area continues around the sides and the back of the shed. It would not be expected, in the absence of clear words (or indeed any words) that the parties would have intended that an exclusive right to recreate on this land would be conferred upon the appellants.

9. [9]

   Consistent with this, the respondent retained a right, subject of course to the rights conferred upon the appellants under the Easement, to use the area of the Easement for recreational purposes.

10. [10]

    Turning to consider matters particular to the shed, I agree with Griffiths AJA that the storage permitted was not limited to storage for gardening use. I also agree that the appellants were given an exclusive right to use the shed for storage, and that if they did so, the respondent would have very limited, if any, practical use of the interior of the shed. In circumstances where the appellants were given a right to replace the shed, I would not regard the respondent as having any practical right to build a second story, or additional storage space, on top of the shed. Nor would I regard the respondent’s right to use the area under the shed as one of any practical utility. Subject to the appellants’ rights under the Easement, the respondent did, however, retain a right to use the area under the awning of the shed (which was a considerable area as is clear from the plan approved by DA 854/99) including for recreational purposes and storage, and to use the external walls and roof of the shed, including, had they wished, to build a shower or for a satellite dish or solar panels.

11. [11]

    As to the proper approach to the ouster principle, the overarching issue is whether the rights conferred by the Easement are inconsistent with the beneficial ownership of the servient tenement by the servient tenement holder or, as sometimes phrased, inconsistent with the servient tenement holder’s possession and proprietorship of the servient tenement. That is consistent with the approach taken by Bryson J in Clos Farming Estates Pty Ltd v Easton [2001] NSWSC 525, upheld by this Court in Clos Farming Estates Pty Ltd v Easton [2002] NSWCA 389 at [36] and [46] (Santow JA, Mason P and Beazley JA agreeing), and with the judgments of this Court in Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321; [2015] NSWCA 74 at [63]-[64] (Bathurst CJ and Beazley P), Stolyar v Towers [2018] NSWCA 6 at [55], [70]-[71] (Gleeson JA, Simpson and White JJA agreeing) and Aussie Skips Recycling Pty Ltd v Strathfield Municipal Council (2020) 103 NSWLR 834; [2020] NSWCA 292 at [23] (Basten JA, Gleeson JA and Preston CJ of LEC agreeing) and Theunissen v Barter at [140].

12. [12]

    As the cases referred to above make clear, some interference with rights of beneficial ownership will likely be inherent in the conferral of rights under an easement. Further, an easement can validly confer rights to exclusive possession or use of the land (or part of the land) subject to the easement for a particular purpose: see, most recently, Theunissen v Barter at [140]. Ultimately, whether the nature or extent of the rights conferred are inconsistent with the right to beneficial ownership is a question of fact and degree. One factor which is relevant to (and may be decisive on) that question is the extent of the interference with the servient tenement holder’s rights over the land subject to the easement: Jea Holdings at [64]; Stolyar at [70]. Relatedly, the extent of the rights over the servient land retained by the servient tenement holder may be relevant: Harada v Registrar of Titles [1981] VR 743.

13. [13]

    As to whether the ouster principle was infringed in the present case, I agree with Griffiths AJA that it was not. The respondent retained real and substantial positive rights to use the area of land the subject of the Easement, including the area under the awning and on the roof and walls of the shed. They also retained negative rights, to restrict what the appellants were able to do in the affected area: see as to the significance of negative rights, Theunissen v Barter at [141] and [143]. The rights of both the appellants and the respondent are constrained by the principle of reasonable use: Hare v van Brugge (2013) 84 NSWLR 41; [2013] NSWCA 74 at [25]. Having regard to these matters, and also for the reasons given by Griffiths AJA, the rights conferred by the Easement were compatible with the continued beneficial ownership of the servient tenement by the respondent.

14. [14]

    BALL JA: I agree with Griffiths AJA.

15. [15]

    GRIFFITHS AJA: These proceedings relate to a judgment and orders concerning a dispute between next door neighbours regarding an easement which is registered in a s 88B instrument made under the Conveyancing Act 1919 (NSW) (s 88B Instrument). The primary judgment, by Parker J, is reported as Petrie v Dickson [2024] NSWSC 972 (PJ). Orders were subsequently made on 29 August 2024, giving effect to the primary judgment, including a declaratory order that the easement is invalid. Orders as to costs were subsequently made on 23 October 2024 and entered on 25 October 2024 (see Petrie v Dickson (No 2) [2024] NSWSC 1337).

16. [16]

    To the extent necessary, leave to appeal and leave to cross-appeal were granted during the course of the hearing. For the reasons which follow, I propose that:

Some background matters

1. [17]

   The dispute concerns Lots 1 and 2 in the same Deposited Plan (DP 1062948). The properties are located at 1 and 1A Waratah Road, Palm Beach respectively. They comprise a duplex residential building.

2. [18]

   Lot 1 is owned and occupied by Mr and Mrs Dickson (the Dicksons). The total area of Lot 1 is 412.4 m2. Lot 2 is owned by Ms Janet Petrie (Ms Petrie), who occupies the property with her husband. The total area of Lot 2 is 518.3 m2.

3. [19]

   The Deposited Plan which created Lots 1 and 2 was registered in September 1998 (after the duplex had been built) and is now reproduced:

4. [20]

   The then owners of Lots 1 and 2 were Mr Jeff Conen and Ms Phillipa King. Subsequently, in 1999, they (together) made a further development application which proposed the construction of a garden shed at the rear of Lot 2 and a carport on Lot 1. Development approval of DA 854/99 was granted on 28 March 2000. The DA contains the following relevant notation at A(ii):

5. [21]

   Plan No 1 dated August 1999, prepared by Jeff Conen, is as follows:

6. [22]

   The following features of this plan should be noted (about which more will be said later):

7. [23]

   This plan envisaged that the garden shed would service a wide area, including an area described as the “main site” totalling 715 m2, which presumably refers to the whole or majority of Lots 1 and 2, apart from the duplex houses and the proposed carport. The plan also indicates that it was envisaged that the garden shed would be used to service areas beyond Lots 1 and 2, being the RTA reserve (presumably on Barrenjoey Road) and reserves at Beach and Waratah Roads, which are both located to the north of Lots 1 and 2.

8. [24]

   The s 88B Instrument was not registered until 16 December 2003.

9. [25]

   The plan which accompanied the s 88B Instrument, DP 1062948, is different from the plan referred to in DA 854/99. This is reflected in the following reproduction:

10. [26]

    As the primary judge noted at PJ[30], the servient area depicted in DP 1062948 is a trapezoidal shape, in contrast with the smaller six-sided shape in the plan approved as part of the development application in March 2000. This meant that part of the servient tenement covered virtually the entirety of the floor area of the garden shed (see the survey plan at PJ[34]). The evidence leaves unclear why this occurred. It should also be noted that the shed did not appear at all on the plan in DP 1062948. The shed on the Council approved plan shows the boundary of the Easement running through the middle of the shed, which the respondent claims shows an intended joint use.

11. [27]

    In the s 88B Instrument, Pt 2 sets out the terms of three registered easements. The first is described as an “Easement for Garden Use Variable Width Firstly Referred to in the Abovementioned Plan” (Easement). The “Abovementioned Plan” is that which is reproduced at [25] above. The terms of the Easement, as recorded in the s 88B Instrument, are as follows (without alteration) (noting that the building approved by Council under DA 854/99 in cl 2(a) is a reference to the plans described at [20]-[22] above):

12. [28]

    The second easement in the s 88B Instrument is for provision of telephone services. It is not in dispute and nothing more needs to be said about it.

13. [29]

    The third easement in the s 88B Instrument is a “RESTRICTION AS TO USER” as described in DP 1062948. The terms of this easement are set out in the s 88B Instrument as follows:

14. [30]

    This restriction on user suggests that the parties to the s 88B Instrument intended that, unless both lot owners agreed, there would be no physical barrier by way of a fence to free access between Lots 1 and 2.

15. [31]

    Returning to the first easement in the s 88B Instrument, it should be noted that it relates to gardening and to the construction, maintenance and replacement of “the building approved by Council under D.A. 854/99” (see cl 2(a)). The parties both contended that the Easement comprises two separate easements, one for gardening and the other for building for the purposes of storage and domestic laundry activities. But this sits uncomfortably with the express terms of Pt 2 and the heading thereto, which refers to “Terms of Easement for Garden Use … ”. The matters that are then described in the balance of Pt 2 are clearly related and are not separate. The grants should be read together. They appear in the same instrument and are described as a single easement. The rights granted are in respect of the same land, being the land marked “X” on DP 1062948 (Area X or servient area). It is physically impossible to exercise both sets of rights simultaneously, in the sense that construction of the shed will necessarily prevent gardening in that particular area. It is natural, in these circumstances, to read the rights together.

16. [32]

    Although cl 2 is expressed in terms which indicate that the dominant owner had a choice or discretion whether or not to build a garden shed, it seems clear that there was a strong expectation that this would in fact occur, as is reflected in the approval granted in DA 854/99 to the garden shed being constructed.

17. [33]

    The area of servient land to which the Easement relates is 63.3 m2, representing 12.2% of the total area of Lot 2. The footprint of the shed, not including the awnings, is 17.7 m2. That footprint represents 28% of the servient area (not taking into account the fact that the footprint of the shed encroaches slightly onto Lot 1).

18. [34]

    The primary judge described the shed at PJ[36] as “a substantial structure”, with approximately 4.2 m long walls which appear to be constructed with rendered brick. The roof is made of terracotta tiles. Now reproduced is a photograph of the shed’s northern and eastern facing sides:

19. [35]

    At PJ[37], the primary judge found that the shed is equipped with storage shelving, laundry machines and also a tiled benchtop and basin fixture. It was used by the Dicksons as a laundry and also as a storage area for personal, household and gardening items.

20. [36]

    Following registration of the s 88B Instrument, the three easements were separately registered on the certificates of title to Lots 1 and 2 and were described respectively as “EASEMENT FOR GARDEN USE VARIABLE WIDTH APPURTENANT TO THE LAND ABOVE DESCRIBED” (being Lots 1 or 2 respectively); “EASEMENT FOR TELEPHONE SERVICES OVER EXISTING LINE OF PIPES (APPROXIMATE POSITION) APPURTENANT TO THE LAND ABOVE DESCRIBED”; and “RESTRICTION(S) ON THE USE OF THE LAND”.

21. [37]

    As noted at PJ[32], the shed was presumably built after the construction certificate for the development was issued in late 2000 or 2001. It is unclear whether the garden shed was constructed before or after the s 88B Instrument was registered in December 2003.

Primary judge’s reasons summarised

1. [38]

   At PJ[43], the primary judge said that the two questions requiring determination were:

2. [39]

   His Honour added that it was convenient to address the interpretation issues first because the validity of the Easement could only be determined in the light of the rights it actually granted. Neither party challenged that approach.

3. [40]

   The primary judge’s reasons for judgment are lengthy. This may be partly explicable by the way in which the parties conducted their cases below. The primary judge noted several times that the parties ultimately adopted positions relating to the central issues which were notably different from their respective initial positions (see, in particular, PJ[72]-[73]).

4. [41]

   After conducting an extensive analysis of many cases on easements in both Australia and England, the primary judge concluded that both aspects of the Easement (i.e. those relating to gardening and the shed) were invalid because they failed to satisfy the fourth characteristic for validity identified in In re Ellenborough Park [1956] Ch 131. The four characteristics are as follows:

5. [42]

   The primary judge’s construction of the Easement and reasons for concluding that the Easement was invalid may be summarised as follows.

6. [43]

   First, accepting the appellants’ position, the primary judge found that the dominant owners’ right to store goods in the shed extends to the storage of any goods which answer the description of “materials and equipment” (provided that they are not “dangerous goods”). This was contrary to the respondent’s contention that the right of storage was confined to storage of goods used for domestic gardening purposes (PJ[52]). His Honour considered that there is no limit on the type or quantity of goods which may be stored in the shed by the dominant owners. Therefore, it is impossible for the servient owners to identify, at any given time, any particular part of the shed which is available for them to use as storage for their own goods without interfering with the dominant owners’ rights (PJ[110]). The primary judge distinguished Wright v Macadam [1949] 2 KB 744, where the right to use the coal shed was limited to the amount of coal reasonably necessary for heating by the owner of the dominant tenement. The primary judge found that the terms of the Easement do not provide for any form of joint usage of the shed for storage purposes. Rather, the dominant owners’ rights take up the whole internal space of the shed (PJ[112]).

7. [44]

   Secondly, his Honour considered that the dominant owners’ right to use the servient area for gardening encompasses the selection, planting and removal of trees and shrubs, as well as the right to undertake paving and landscaping works (PJ[84]). The dominant owners are also entitled to the produce of the garden (PJ[85]) and to use the garden for recreational purposes (PJ[86]). The primary judge posed the relevant question as: “to what extent are these rights of the dominant owners rights which are shared, or to be exercised in common, with the servient owners” (PJ[87]). He concluded that the dominant owners’ right to use the servient area to create and maintain a garden is not a right which, of its nature, could be shared between, or be common to, both the dominant and servient owners (PJ[90]). The dominant owners’ right to maintain a garden in the servient area would extend to the right to erect a hedge or wall along the boundary of the servient area, although the dominant owners “may not, of course, completely prevent access to the servient area by the servient owners, but such access could be provided by means of a gate or door” (PJ[92]-[93]).

8. [45]

   Thirdly, it is also relevant to note what the primary judge said regarding the principles in Westfield Management Ltd v Perpetual Trustee Company Ltd (2007) 233 CLR 528; [2007] HCA 45 and their implications for the issue whether the Council’s development approval documents were relevant to the task of construction. His Honour noted at PJ[97] that cl 2(a) of the s 88B Instrument referred to the Council approval for the construction of the shed and, indirectly, to the approved plan. His Honour then added, however, that the Westfield Management principles had to be applied consistently with their purpose, such that (at PJ[97]):

9. [46]

   Fourthly, the primary judge did not regard the concept of “reasonable use” as limiting the exercise of the dominant owners’ rights to plant and landscape the servient area as they wish, nor did the dominant owners have an obligation to leave that field clear for the servient owner (PJ[107]). The servient owner retained the right to go into the servient area, but that is not a right of joint recreation (PJ[108]).

10. [47]

    The primary judge distinguished the circumstances in Barter v Theunissen [2024] NSWSC 326; 21 BPR 44,697 at first instance, where joint usage of the rooftop for recreation was clearly intended. In contrast here, the dominant owners, when using the garden for recreation, would have the right to exclude the servient owner from the servient area (PJ[108]).

11. [48]

    It should be emphasised that the analysis of this Court in Theunissen v Barter [2025] NSWCA 50 was not available to the primary judge. As will be developed below, that judgment is inconsistent with parts of the primary judge’s reasoning.

12. [49]

    Fifthly, the Easement in the present case is “novel” because “no-one, it seems, has previously tried to create an easement of the present type” (PJ[271]).

13. [50]

    Sixthly, the primary judge concluded that the Easement is invalid because it fails to satisfy the fourth characteristic for a valid easement identified in Ellenborough Park, which he later described as “the ouster principle” (see PJ[286]).

14. [51]

    Seventhly, after analysing Lord Scott’s judgment in Moncrieff v Jamieson [2007] 1 WLR 2620 concerning the ouster principle, the primary judge said at PJ[292] that Lord Scott’s formulation of the ouster principle is different from the formulation in the Clos Farming litigation. His Honour described the latter formulation as involving “a practical test which looks to the extent to which the owner of land may actually use it. It is not a test which fastens only on legal concepts of ownership, position or control”. The primary judge said that he was bound to apply this Court’s decision in the Clos Farming litigation. His Honour reasoned at PJ[294]-[295]:

15. [52]

    It is appropriate to interpolate at this stage that I respectfully disagree with the primary judge’s analysis of the Clos Farming litigation. By referring to the Clos Farming litigation, I am referring to Bryson J’s judgment at first instance in Clos Farming Estates Pty Ltd v Easton [2001] NSWSC 525; 10 BPR 18,845 (Clos Farming SC) and the appeal therefrom, which is reported as Clos Farming Estates Pty Ltd v Easton [2002] NSWCA 389; 11 BPR 20,605 (Clos Farming CA). I will return to the Clos Farming litigation below.

16. [53]

    Returning to the summary of the primary judge’s reasoning, it is also necessary to note what was said at PJ[312]-[315], where the primary judge addressed the significance of the relative size of the servient area and the potential question of partial validity if the Easement was regarded as having two severable elements, one relating to gardening and the other relating to the shed:

(a) The appeal in Theunissen v Barter

1. [54]

   As noted above, the primary judge engaged in a detailed consideration of caselaw relating to the construction of an easement and the related issues of validity and reasonable use. In the main, it is unnecessary to repeat that exercise. That is because many of the relevant legal principles were recently identified and applied by the Court in Theunissen. Justice Kirk gave the leading judgment, with which Mitchelmore JA and I agreed. For convenience I will refer collectively to the Court’s judgment in Theunissen.

2. [55]

   Theunissen involved the proper construction of an easement “for the purposes of recreation and enjoyment and as a balcony, terrace or garden”. The easement affected a flat rooftop terrace area on the top of the servient tenement. The rooftop area was immediately in front of the dwelling on the dominant tenement, which dwelling looked over the top of the dwelling on the servient tenement below and provided impressive views towards Middle Harbour. The central issue was whether the easement gave the dominant tenement owners an exclusive right to use the rooftop terrace for the stated purposes or whether the servient owner was entitled also to use the area for those purposes.

3. [56]

   The primary judge held that, on its proper construction, the easement did not grant the dominant owners exclusive rights. It was therefore unnecessary for the primary judge to address the servient owner’s claim that the easement would be invalid if it was construed as granting such exclusive rights.

4. [57]

   The parties in the present appeal took advantage of the opportunity to provide supplementary written submissions regarding the significance of the appeal in Theunissen.

5. [58]

   It is desirable to summarise at some length the approach and analysis in Theunissen, before addressing the parties’ submissions in the present proceeding.

6. [59]

   Before doing so, it is important to emphasise that although Theunissen contains a helpful statement of some relevant principles relating to both construction and validity, every easement needs to be construed having regard to its own terms and relevant contextual matters, including surrounding facts and circumstances. A formulaic “tick the box” approach risks leading to error.

7. [60]

   The Court in Theunissen considered that it was necessary first to construe the relevant easement before considering its validity. The principles affecting construction may be summarised as follows:

8. [61]

   After a detailed analysis of the terms, nature and character of the rights given to the dominant owner in respect of the rooftop area, as well as considering the terms of the provisos to those rights, the Court concluded that there were many factors which pointed to the exclusive character of the right given to the dominant owner to use and enjoy the area for the purposes of recreation and enjoyment and as a balcony, terrace or garden. The only factor supporting the contrary argument was what Kirk JA described as “the not insignificant point” that the right is not expressed as being exclusive, which could easily have been done. Viewed as whole, the Court concluded at [51] that a reasonable person in the position of the parties would conclude that the easement granted the dominant owner the exclusive use and enjoyment of the servient tenement for the purposes of the right. Subject to addressing the validity of the easement, that was sufficient to uphold ground 1 of the appeal.

9. [62]

   The Court proceeded, however, to address the question of whether and how the physical characteristics of the subject land were relevant to the task of construction, including the time at which those physical characteristics existed. Two physical characteristics of the tenements were relied upon by the appellants. The first was that the servient owner had no means of accessing the rooftop terrace at the time the easement was created. The second was that the rooftop looked directly into the ground floor living room of the house on the dominant tenement.

10. [63]

    Theunissen contains a detailed analysis of the relevance to the task of construction of the physical characteristics of the subject land, including whether such characteristics are limited to those which existed at the time of the grant alone or extended to physical characteristics at the time of the hearing. This involved the Court analysing Westfield Management and subsequent cases. That analysis may be summarised as follows.

11. [64]

    First, Westfield Management establishes that, when dealing with Torrens Title land, different principles of construction apply to those which are relevant to the grant of an easement at common law (or the construction of a contract). At [39] of Westfield Management, the Court described as “too widely expressed” McHugh J's statement in Gallagher v Rainbow (1994) 179 CLR 624 at 639-640; [1994] HCA 24, where his Honour had said that the principles of construction of the grant of an easement at common law are equally applicable to the grant of an easement under the Torrens System. The High Court said in Westfield Management that a third party who inspects the register under the Torrens System cannot be expected, consistently with that system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing so as to place the third party (or the Court) in the situation of the grantee.

12. [65]

    The High Court appeared to accept at [40] that it was permissible in construing an easement under the Torrens System to look “to the circumstances surrounding the execution of the instrument, including the nature of the surface over which the grant applied”. The High Court also accepted at [44] that evidence may be admissible to make sense of terms or expressions used in the register, such as surveying terms and abbreviations which appeared on the plan which formed part of the registered instrument in that case (see also Phoenix Commercial Enterprises v City of Canada Bay Council [2010] NSWCA 64 at [157]ff per Campbell JA and contrast Ippin Textiles Pty Ltd v Winau Aust Pty Ltd [2021] NSWCA 9; 386 ALR 286 at [64]ff per Leeming JA, with whom Brereton JA agreed).

13. [66]

    The Court in Theunissen emphasised that the High Court was not seeking exhaustively to list permissible materials and it appeared that the Court accepted that the “nature of the surface” could be relevant to the construction of at least “the bare grant of a right of way”, which was the view taken below by Hodgson JA in Perpetual Trustee Co Ltd v Westfield Management Ltd [2006] NSWCA 337; (2007) 12 BPR 23,793.

14. [67]

    Secondly, it is uncontroversial that the Deposited Plan is a relevant aid to construction, but it is necessary “to seek to balance the imperatives of the importance of considering context in construction whilst seeking certainty and stability of registered title” in determining what extrinsic material may also be taken into account (see at [90]).

15. [68]

    Thirdly, the High Court’s reference in Westfield Management at [43] to the possibility of subsequent changes in physical circumstances being addressed by applications under s 89 of the Conveyancing Act 1919 (NSW) is consistent with potentially taking into account the physical circumstances as at the time of grant, with subsequent changes capable of being addressed in another way (at [66]).

16. [69]

    Fourthly, after considering more closely what Hodgson JA said in Perpetual Trustee, the Court noted at [72] that Westfield Management created some uncertainty as to whether physical circumstances of the subject land could be taken into account when construing a registered lease. In particular, the Court made the following observations directed to this aspect of Westfield Management:

17. [70]

    Fifthly, after considering various other intermediate appellate decisions and decisions at first instance, the Court identified as a core issue the need to seek a balance between the imperatives of the importance of considering context in construction while also seeking certainty and stability of registered title. A spectrum of possible responses in relation to the potential relevance of physical characteristics were identified at [90]:

18. [71]

    Sixthly, the Court concluded at [92] that intermediate appellate decisions supported the proposition that reference can legitimately be made to physical characteristics without going so far as to allow reference to any such circumstances.

19. [72]

    Seventhly, the Court then turned to address the related question whether or not the only physical circumstances which are relevant to the task of construction are circumstances which existed at the time of the grant. It was concluded at [93] that such circumstances at the time of the grant will always be relevant simply because it is inherent in the task of legal construction that the Court is seeking to determine the intention of the party or parties, objectively assessed. The Court disagreed with “the tentative suggestion” by Fryberg J in Currumbin Investments Pty Ltd v Body Corp Mitchell Park Cts [2012] 2 Qd R 511; [2012] QCA 9 at [49] that “it may be that the scope for consideration of extrinsic evidence is reduced over time”.

20. [73]

    Eighthly, after a detailed discussion which highlighted the complexity of the issue, the following conclusion was stated at [108] regarding the “as to when question” when taking account of physical characteristics:

21. [74]

    On the issue of validity, the following principles were identified by Theunissen.

22. [75]

    First, after noting that the legal test to be applied was not the subject of any significant attention from the parties in Theunissen (the same may also be said here), the key principle to be drawn from Ellenborough Park was that identified by Bryson J at first instance in Clos Farming SC at [44]. The relevant question is whether the right “is inconsistent with the proprietorship or possession of the servient owners, and … if the right conferred amounted to a joint occupation with the owners, or excluded the proprietorship or possession of the owners it would be so inconsistent”. Bryson J’s approach was upheld on appeal in Clos Farming CA, where it was noted at [46] that the rights conferred by the easement there so vastly interfered with the servient owners’ rights, if they were exercised, as to preclude them from constituting an easement.

23. [76]

    Secondly, in Moncrieff, Lord Scott considered that, in assessing validity, the relevant focus should be on the land over which the servitude or easement is enjoyed, as opposed to the totality of the surrounding land owned by the servient owner and the test is “whether the servient owner retains possession and, subject to the reasonable exercise of the right in question, control of the servient land” (Moncrieff at [59]). I will have something further to say regarding Moncrieff in due course.

24. [77]

    Thirdly, after considering previous authorities of this Court and other courts, including Registrar-General of New South Wales v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321; [2015] NSWCA 74, Stolyar v Towers [2018] NSWCA 6; 19 BPR 38,287, Laming v Jennings [2018] VSCA 335 and Aussie Skips Recycling Pty Ltd v Strathfield Municipal Council (2020) 103 NSWLR 834; [2020] NSWCA 292, the Court in Theunissen at [140] described the aggregated principles regarding validity as follows:

(b) The parties’ submissions summarised

1. [78]

   I will outline the parties’ respective submissions on the appeal and cross-appeal, as elaborated upon in oral addresses, before summarising the post-hearing supplementary submissions on the significance of the judgment on appeal in Theunissen.

2. [79]

   The notice of appeal raises the following three grounds of appeal:

3. [80]

   Grounds 1 and 3 relate to the correctness of the primary judge’s construction of the Easement. The appellants claim that the primary judge erred by construing the rights conferred on the dominant owners by the Easement “as broadly as possible” and without regard to the obligation of the dominant owners to act reasonably at all times, which underpinned his conclusion that the Easement was invalid. They claimed that the primary judge erred in finding that the Easement conferred on the dominant owners the right wholly to exclude the servient owner from the servient area, which resulted in his Honour’s conclusion that the servient owner’s rights over the servient area were merely “passive”, “sterile” and “nominal”.

4. [81]

   The appellants submitted that the respondent retains various rights, including to use the garden area as she wishes subject only to the appellants’ rights conferred by the terms of the Easement. For example, she could hang out her washing to dry, store gardening tools and equipment and use the land for other activities as long as she does not unreasonably interfere with the appellants’ rights. As to the garden shed, the appellants contended that the respondent remains free to use the shed as she wishes, again subject to the rights expressly conferred on the appellants by the Easement. The appellants acknowledged that the respondent could not unreasonably interfere with their rights to use the internal part of the shed for storage and laundry purposes, but she remains free to use the shed for other purposes or activities, such as placing solar panels on the roof or providing seating under the awnings of the shed.

5. [82]

   On the issue of validity, the appellants submitted that the primary judge erred in not acknowledging that a valid easement could subsist notwithstanding that it involved the exclusive occupation of a shed or other piece of the servient tenement, citing Aussie Skips at [23] per Basten JA. The appellants emphasised that the issue was one of degree.

6. [83]

   As to ground 2, the appellants submitted that the Easement conferred separate and distinct rights on the dominant owners in respect of the easement for gardening purposes (see cl 1 of the Easement) and a separate easement for storage and laundry purposes (see cll 2, 3 and 4 of the Easement). They submitted that the primary judge’s failure to appreciate that there were in fact two separate easements meant that his Honour failed to address the issue of severance in the event that only a part of the Easement was invalid, an issue which was raised by the parties.

7. [84]

   In oral address on the appeal, senior counsel for the appellants took issue with the primary judge’s view that the appellants had changed their case in the course of the proceedings below. Although it appeared from parts of the transcript that he had argued that the right to garden conferred an exclusive right on the dominant owners, he submitted that those statements should be read in the context of him responding to an assumption that the rights were exclusive, arising from exchanges with the primary judge. Senior counsel’s attention was drawn to various parts of the transcript below relating to the easements concerning gardening and the shed which strongly suggested that in fact he had contended that the rights were exclusive.

8. [85]

   The appellants emphasised the importance of the Court’s statement of aggregated principles in Theunissen at [140] (see at [77] above).

9. [86]

   The appellants contended that their position in the present appeal was consistent with the reasoning in Theunissen. First, applying Theunissen at [140], they contended that the Easement is valid and satisfied the fourth characteristic of validity identified in Ellenborough Park. In particular:

10. [87]

    For all these reasons, the appellants contended that the primary judge erred in concluding that the Easement failed to comply with the fourth characteristic of validity in Ellenborough Park.

11. [88]

    Secondly, the appellants emphasised that the reasoning in Theunissen confirmed that an easement can be valid even if it confers rights of exclusive or sole use of the easement area on the dominant owner. Thus, the appellants submitted that the Court should find that the appellants had the following exclusive use rights over Area X:

12. [89]

    As to the issue of the relevance to the task of construction of the plans and diagrams relating to the development consent, the appellants submitted that those documents could not be taken into account, citing Theunissen at [106].

13. [90]

    Finally, on the issue of whether leave to appeal was required and costs relating to that matter, the appellants urged the Court to apply the same approach as in Theunissen at [7]-[13]. Thus, they contended that they were never required to seek leave to appeal and did so only after the respondent persisted with the challenge to competency, even after the appellants produced valuation evidence which supported that the value of the Easement to them was significantly more than $100,000.

14. [91]

    The respondent contended that it appeared that the appellants now accepted that the concept of reasonable use limits both the construction and the exercise of their rights under the Easement, consistently with Hare v van Brugge (2013) 84 NSWLR 41; [2013] NSWCA 74 at [25]. The respondent defended the primary judge’s reasoning that the very nature of an easement for gardening and landscaping meant that the appellants could erect and maintain any type of garden and oust Ms Petrie from the physical area.

15. [92]

    Alternatively, as raised by her cross-appeal, the respondent submitted that the primary judge erred in not adopting her construction that the appellants’ use of the shed and garden curtilage was not absolute and accommodated a shared use. Instead of adopting that construction, the primary judge concluded that the rights conferred by the Easement amounted to ownership of the servient area and invalidated the Easement.

16. [93]

    The respondent emphasised that the application of the principles identified in Theunissen at [140] raises matters of fact and degree. Accordingly, they urged caution in viewing the outcome in any particular case as dictating the result in another case. They submitted that there were “very significant differences” between the rooftop easement in Theunissen and the gardening and storage easements here.

17. [94]

    Acknowledging that the proper construction of easements should be undertaken before considering any issue of validity, the respondent submitted that the appellants had yet again changed their position regarding the issue of exclusivity of rights. They contended that although the appellants had initially argued that the rights concerning gardening and the use of the shed were not exclusive, they now submit that they have sole or exclusive rights in respect of both the gardening activities in Area X and the use of the inside of the shed for storage and laundry purposes. They contended that this was inconsistent with oral submissions made by the appellants’ senior counsel during oral address in the appeal.

18. [95]

    The respondent contended that the factors which underpinned the Court’s conclusion in Theunissen that the easement there granted the dominant owners exclusive use of the rooftop for the stated purposes are not present here. They pointed to the following matters:

19. [96]

    On the issue of invalidity, the respondent submitted that this issue does not arise if her preferred construction of the Easement was accepted. If, however, the Court accepted the appellants’ latest position regarding the exclusivity of the rights granted by the Easement, the respondent contended that the Easement is invalid in failing to meet the fourth characteristic of validity in Ellenborough Park. This was because, insofar as gardening is concerned, the dominant owners would enjoy exclusive possession for all purposes and be entitled to exclude the respondent from the area. In substance, on the appellants’ construction, the respondent was left only with “sterile and nominal” ownership.

20. [97]

    The respondent’s right to use the airspace over Area X would be meaningless if the appellants planted tall trees and she had no right to airspace below the Easement area (in contrast with the position in Theunissen). The respondent added that if the shed were removed by the appellants there would be no structure on which she could erect solar panels or a satellite dish, nor would she have any right under cl 1 of the s 88B Instrument to enter or access any part of Area X if that was incompatible with the garden created by the appellants.

21. [98]

    For all these reasons, the respondent submitted that the degree of restriction on her rights, on the appellants’ construction, is extreme. Moreover, she submitted that if the appellants’ rights to garden and store things in the shed are exclusive, the concept of “reasonable use” does not operate to preserve the validity of the Easement. That is because, on the appellants’ construction, the appellants’ rights under the Easement are not informed by the concept of “reasonable use”.

22. [99]

    Finally, on the issue of leave to appeal and costs, the respondent made the following submissions:

(a) Leave to appeal and cross-appeal

1. [100]

   The respondent filed a notice of objection to competency dated 10 October 2024, contending that leave to appeal was required under s 101(2)(r) of the Supreme Court Act 1970 (NSW) because the value of the right at issue did not amount to $100,000 or more. In response, the appellants filed an affidavit dated 29 October 2024 by Lupco Ristevski, their instructing solicitor, who disputed the respondent’s position. Mr Ristevski annexed to his affidavit a valuation report dated 29 October 2024 by Paul Dale, valuer, who opined that the market value of the Easement to the Dicksons was significantly more than $100,000.

2. [101]

   At the outset of the hearing, the Court indicated that it considered that the appeal raised a clear issue of principle and that, if required, leave to appeal would be granted. The parties were given an opportunity to make submissions on the proper order for costs relating to the competency objection. I will return below to address that matter.

3. [102]

   The appellants did not oppose the respondent’s application for leave to cross-appeal. Leave was granted in order that all relevant issues may be determined in the proceeding.

(b) Construction of the Easement

1. [103]

   Applying the principles in Theunissen to the particular facts and circumstances here, I respectfully agree with the primary judge that, properly construed, both parts of the Easement confer certain exclusive or sole rights on the dominant owners for the stated purposes. I respectfully disagree, however, that this means that either part of the Easement is invalid. In particular, I consider that the nature and extent of the servient owner’s retained rights in respect of Area X affected by both parts of the Easement are such that it is not open to conclude that the exclusive or sole rights of the dominant owners are inconsistent with her proprietorship or possession of the affected area.

2. [104]

   I shall now address each of those matters in turn.

3. [105]

   It is convenient first to consider that part of the Easement relating to gardening, paving and landscaping and storage of related equipment and materials in Area X (see cll 1 and 5(a) of the Easement). This approach is not intended to derogate from what was said at [31] above regarding the interrelationship between this part of the Easement and the part relating to the garden shed. The two parts are plainly related.

4. [106]

   The first point to note is that, as was the case in Theunissen, the terms of this part of the Easement do not explicitly use the language of exclusivity.

5. [107]

   But that is not determinative. Other considerations, including textual and contextual considerations, may point to the rights being exclusive for particular purposes, as was the case in Theunissen. Each case necessarily depends on its own particular facts and circumstances, and issues of degree will normally arise, but I consider that the following matters support the primary judge’s view.

6. [108]

   Clause 1 permits the dominant owners to use all or any part of the subject area on Lot 2 for planting and cultivating trees and other vegetation, for paving and landscaping and for storage of related equipment and materials consistent with the carrying out of gardening and/or paving or landscaping activities. There is no obligation on the dominant owners to use all or any part of the land for these purposes, but the important point is that they have the right to do so. Their rights should be understood to confer upon them the right to use to the maximum extent permitted each and every part of the subject area, should they wish, for the purpose of the activities described in cl 1(a), (b) and (c).

7. [109]

   The proper construction of cl 1 should proceed on an assumption that the dominant owners may exercise their rights to the fullest extent. I respectfully agree with the primary judge’s view that the concept of “reasonable use” does not operate to limit the exercise of the dominant owners’ exclusive rights under cl 1 (see PJ[107]). Any concept of “reasonable use” only arises once the terms of the easement have been properly construed. I reject the appellants’ contention that “reasonable use” informs the task of construction.

8. [110]

   As Barrett JA stated in Hare at [25], the concept of reasonable use is that neither the servient owner nor the dominant owner may exercise his or her rights in a way that interferes unreasonably with the enjoyment of the other’s rights. That concept does not affect the nature or scope of the rights each has, but rather is a qualification on their exercise. Barrett JA said:

9. [111]

   This passage emphasises that, in the case of both the dominant and servient owners, the nature and scope of the rights they enjoy are determined by the correct construction of the easement. The rights of the servient owner are those of the owner of the burdened fee simple together with any other rights which are bestowed by the easement. Of course, as a practical matter, a right that carries with it an obligation to exercise the right reasonably is not the same as the same right without that obligation. In that sense, it is said that the scope of the two rights is different. But that does not mean that the requirement to act reasonably is relevant to the identification of rights of both the dominant and servient owner, which is arrived at by a correct construction of the easement. Rather, it merely means that those rights, whatever they are, are qualified by the obligation of reasonable use.

10. [112]

    The obligation to act reasonably may, however, be relevant to the validity of the easement because the rights left to the servient owner are to be understood in the context where, whatever rights the dominant owner has, those rights must be exercised reasonably.

11. [113]

    I respectfully disagree, however, with the primary judge’s finding at PJ[108] that the dominant owners could exclude the servient owner. There is nothing in the terms of the Easement which precludes the servient owner from exercising her retained right of access to her own land, not for the purposes of gardening, paving and landscaping or storage of related equipment and materials, but for other purposes, such as recreation, bird watching, picnicking, monitoring the dominant owners’ use of the land and enjoying aesthetically the dominant owners’ legitimate use of the area for the stated purposes. Accordingly, ground 3 of the notice of appeal should be upheld.

12. [114]

    The nature and character of the uses to which the subject area may be put by the dominant owners, when viewed in conjunction with the possibility that the entirety of the area may be given over to those uses, strongly points to the rights of the dominant owners being exclusive for the particular purposes specified. Take, for example, the use of the area for gardening, as permitted by cl 1(a). “Gardening” is defined very broadly therein, in a non-exhaustive way, but so as to make plain that it encompasses a wide range of vegetation, including the growing of grass, plants, shrubs and trees. It also extends to establishing, maintaining and replacing any such vegetation. This right is not limited to any particular type of gardening but could include flower gardening, vegetable gardening, native gardening or, as the primary judge pointed out, establishing a water or rock garden. The right of the dominant owners is limited to the activities identified in the s 88B Instrument. The rights do not extend generally to the use of the garden, although they may include uses which are reasonably incidental to the three stated activities.

13. [115]

    I respectfully agree with the primary judge at PJ[85] that, if the dominant owners were to establish a vegetable garden (or, indeed, a flower garden), the dominant owners would be entitled to the produce of the vegetable or flower garden (neither party challenges this finding). There is no suggestion in cl 1 that the servient owner retains a right to also use the land for any of the purposes specified in that provision, or to share in any horticultural produce resulting from the dominant owners’ gardening.

14. [116]

    Having regard to the terms of cl 1, it is a matter for the dominant owners to decide whether, for example, they would use the entirety of the subject area for paving and landscaping and not reserve any area for a garden or storage of equipment. This serves to reinforce the exclusive nature of the rights conferred by that provision, at least insofar as those particular activities are concerned. If, for example, the dominant owners decided to pave and landscape the entire area, it is difficult to see how the servient owner could retain any personal right to carry out any gardening in that area.

15. [117]

    In my respectful view, the primary judge was correct to distinguish the nature of the dominant owners’ rights in the present case to plant and maintain a garden (and, indeed, undertake possibly extensive paving and landscaping works) with the position in Ellenborough Park. In that case, the right of the dominant owners was to enjoy a garden built and maintained by the servient owners, who were entitled to the produce of the garden. As the primary judge said at PJ[91], cl 1(a) is not limited to the maintenance of an existing garden, nor does it limit the type of garden which may be created and maintained by the dominant owners. Those matters are entirely for the dominant owners to decide. As his Honour said, there could be “an ornamental flower garden, but they are free to choose a bush garden, a water garden or a rock garden instead”, not to mention other possibilities such as a vegetable garden. The facts and circumstances here are far removed from those in Ellenborough Park.

16. [118]

    There is a further textual consideration which provides some limited support for the view that the use for “gardening” part of the Easement involves exclusive rights by the dominant owners for the stated purposes. The use of Area X for gardening includes the express right in cl 1(a) to store equipment, implements and materials connected with the carrying out of gardening, paving and landscaping activities. This right exists independently of the right of the dominant owners to build a garden shed as approved by the Council, as referred to in cl 2. If in fact such a building is constructed (as was plainly anticipated having regard to the terms of DA 854/99), it can also be used for storage purposes, which includes not only gardening-related materials and equipment, but also other items as long as they are not dangerous goods. The more limited right to store gardening-related items on Area X conferred by cl 1(c) irrespective of whether a garden shed has been built is not confined to any particular quantity of such items other than that which is necessarily implicit in the requirement that the items be “consistent with the carrying out of the activities” of gardening, paving and landscaping.

17. [119]

    Finally, I consider that cl 5(a) also provides some support for this construction of cl 1. It is notable that the dominant owners are obliged by that provision to keep the site of the Easement in a neat and tidy condition. This obligation is not limited to that area of the site where a building has been erected. It extends to the entirety of the Easement site. The obligation attaches to the exercise of the dominant owners’ rights relating to gardening, paving and landscaping, and storage of related equipment and materials. The imposition of that obligation on the dominant owners (and not the servient owner) is consistent with the rights being exercised by the dominant owners as exclusive to them. There is an implication that the servient owner is not entitled to exercise shared rights in relation to those matters for which the dominant owners ultimately bear explicit responsibility and obligations. The dominant owners, not the servient owner, bear responsibility for maintaining the site in a neat and tidy condition in exercising their rights.

18. [120]

    I also respectfully agree with the primary judge’s conclusion and analysis that the dominant owners’ rights in relation to the building, including the associated rights to use the building for the purposes of storage and/or domestic laundry activities, are exclusive in relation to those particular purposes. As the primary judge correctly pointed out, this part of the Easement imposes no limit on the type or quantity of goods which may be stored in the shed by the dominant owners, save for the exclusion of any dangerous goods which do not comprise fuels and chemicals normally used for domestic gardening purposes.

19. [121]

    Again, strictly speaking the dominant owners are not obliged by cl 2 to construct and maintain the building approved under DA 854/99, or to replace any such building. Their rights are discretionary, as are the associated rights in cl 2(c) to install, maintain and replace water and electricity supply from the dominant owners’ lot to any such building. But as has been emphasised, the owners plainly contemplated that the garden shed would be built. In any event, the task of construction is properly approached on the basis that the dominant owners are entitled to exercise their stated rights to the fullest extent should they choose to do so.

20. [122]

    Moreover, the fact that this discretionary right to provide water and electricity to any such building must originate from the dominant owners’ lot (and not the servient owner’s lot), coupled with the related obligations imposed upon the dominant owners (and not the servient owner) by cll 3, 4 and 5(b) and (c) all support a construction that the dominant owners’ rights are exclusive for the stated purposes.

21. [123]

    The fact that explicit obligations are imposed upon the dominant owners alone in terms of maintaining any erected building in a neat and tidy condition as well as having to bear the cost of all items associated with construction, maintenance and servicing any such building (including in respect of any use for domestic laundry activities) is also consistent with a construction that does not recognise any kind of joint use of the shed for storage or domestic laundry purposes.

22. [124]

    The primary judge explained at PJ[111] why the right to use the coal shed in Macadam was distinguishable. I respectfully agree with that reasoning. There is another aspect of Macadam which might be noted. In the leading English text by Kevin Gray and Susan Francis Gray, Elements of Land Law (5th ed, 2008, Oxford University Press) at 623 fn 1, the learned authors make the following comments on Macadam:

23. [125]

    Although there are no joint or shared rights in relation to the construction, maintenance and possible replacement of the shed for the stated purposes, that does not mean that the servient owner has no rights in relation to the shed. If the dominant owners exercise their right to construct and use the shed for the stated purposes, the servient owner retains the right to access the shed in order to monitor the dominant owners’ use of it with a view to ensuring compliance with the terms of the grant. If the shed is constructed, I also accept the appellants’ contention that the roof could be used by the servient owner to install devices such as solar panels, a television antenna or a weather vane. I also accept that the servient owner is entitled to place things such as garden furniture or a barbeque in the vicinity of the shed, including under its awnings. If the dominant owners elect not to build the garden shed, the servient owner’s right of access as described at [113] above will extend to the entirety of Area X.

24. [126]

    I reject the respondent’s submission that the dominant owners are entitled to demolish completely any building they construct in accordance with cl 2(a), thereby depriving the servient owner of the right to install and use devices on the rooftop. The Easement does not involve a right of demolition without any replacement. The dominant owners have a right under cl 2(b) to replace in whole or in part any building erected by them in accordance with cl 2(a).

25. [127]

    For the following reasons, I also reject the respondent’s attempt to distinguish Theunissen on the question of construction (see at [95] above):

26. [128]

    Finally, although I consider that DP 1062948, the 88B Instrument and the plans referred to in cl 2(a) therein are relevant extrinsic aids to construction (see at [64]-[65] above), they do not particularly assist the task of construction here, not the least because of the inconsistencies between the latter materials and DP 1062948 (where the shed is not depicted), and the shed as actually constructed.

(c) Validity of the Easement

1. [129]

   Many of the relevant issues of principle regarding validity, as identified in Theunissen, are summarised at [75]-[77] above (see also [112] above). It is appropriate to make an additional observation. Where a court is called upon to construe and determine the validity of an easement which is registered under the Torrens Title Scheme, the court should strive, within appropriate limits, to uphold the validity of the registered instrument, consistently with the central significance of the fact of registration under that Scheme.

2. [130]

   The purpose of the system of registration under such a Scheme is to provide certainty regarding the ownership and the nature of proprietary rights in real property so that members of the public can conduct their affairs and, in particular, dealings with property on the confident basis that the ownership and the rights and obligations attaching to the property are accurately described in the register. Accordingly, a court should be reluctant to conclude that the rights and obligations attaching to a parcel of land are not accurately described in the register. Moreover, in the case of ambiguity, a court should prefer a construction that preserves the validity of the instrument.

3. [131]

   It is now well settled that merely because the rights conferred by an easement are exclusive does not necessarily mean that the easement fails the fourth characteristic in Ellenborough Park. As Basten JA observed in Jea Holdings at [151], Gray and Gray have noted that the effect of Moncrieff was to “rationalise the case law in a manner notably more sympathetic to easements which involve substantial exclusion of the servient owner from his land” and statements in what his Honour described as “more extreme cases of exclusion”, such as Clos Farming, are not inconsistent with that approach. Accordingly, rights involving extensive and exclusive occupation of land may still constitute a valid easement provided that they are compatible with the continued beneficial ownership of the servient proprietor, as is illustrated by the outcome in Copeland v Greenhalf [1952] Ch 488.

4. [132]

   The critical issue, as identified in the Clos Farming litigation, is whether the rights so conferred amount to a joint occupation with the servient owner, or exclude the proprietorship or possession of the servient owner. This is tied to a policy which limits the kind of interests in land, including easements, which the law permits to be created, as noted by Bryson J at first instance in Clos Farming SC at [44], referring to what Lord Brougham LC said in Keppell v Bailey (1834) 2 M&K 517 at 536; 39 ER 1042 at 1049.

5. [133]

   As noted above, the primary judge considered that the facts in the Clos Farming litigation were the closest to the present facts and circumstances (see PJ[294]). In particular, his Honour found that the servient owner here can enjoy the servient area “but only in a passive way, and only by keeping out of the way of the dominant owners”, such that, in practice, the servient owner is “deprived of any control over how that area may be used or developed”. His Honour concluded that this ownership was “effectively sterile and nominal”.

6. [134]

   In Clos Farming CA, Santow JA said (at [45]) that, in considering the fourth characteristic in Ellenborough Park, it was necessary to assess the degree to which the rights conferred by the purported easement interfere with the servient owner’s exclusive possession of the land. His Honour added at [46] that the fact that the rights claimed by the dominant tenement only touch part of the land does not necessarily preclude a finding that the rights asserted by the dominant tenement so vastly interfere with the rights of the servient tenement as to preclude them from constituting an easement.

7. [135]

   Bryson J’s decision at first instance has been viewed as influential, not the least because his judgment was upheld on appeal. It is important to note some critical facts in the litigation. The proceedings related to land which was subdivided into 80 residential lots and 8 other lots. Lot 86 was retained by the subdivider. As Bryson J explained at [1], the Deposited Plan and related s 88B instrument “form an elaborate scheme of easements and restrictions directed towards creating and continuing an estate owned by many different proprietors but farmed for viticulture and crop farming under the control of whoever should be the registered proprietor of lot 86…”. Lot 86 was being used for the storage of farm machinery and was not a residential lot. The registered proprietors of Lot 27 were the defendants in the proceeding. Lot 27 comprised two parts, part A being 1542 m2, which was a residential part. Part B comprised 1.537 ha and was described as “the farming lot”.

8. [136]

   The Deposited Plan included a purported “easement for vineyard” which was expressed to benefit Lot 86 and to burden, among others, Lot 27. The fourteenth restriction referred to in that plan was as follows:

9. [137]

   The restrictions on the rights of the servient tenement in the Clos Farming litigation were notably more extreme than the facts and circumstances here. The restrictions also affected a notably larger area of the servient tenement than is the case here. The plaintiff claimed that its right as an owner of a lot in a subdivision to plant and cultivate grape vines on the defendants’ land constituted an “easement for vineyard” and entitled the plaintiff to plant and cultivate grape vines on the servient land, to harvest the grapes, to sell or otherwise dispose of them and to otherwise retain any profits from the enterprise. Bryson J held that the right did not constitute an easement because the alleged right of the dominant owner left the servient owners with a sterile or nominal ownership only. It was regarded as particularly significant that the servient owner had no control over the production of profits and use of the servient land.

10. [138]

    It is desirable to note the analysis of the Clos Farming litigation in Jea Holdings. Bathurst CJ and Beazley P emphasised at [45] that the covenant in the Clos Farming litigation affected almost 85% of the servient tenement. They noted that although Santow JA considered that to be a relevant matter, the “essentially determinant” matter in Clos Farming CA was the extent to which the right of owners to use the servient tenement was restricted. The covenant in Clos Farming CA effectively precluded the servient owners “from engaging in any real farming or agricultural type activities attendant on its possession”. The covenant operated in the context of further restrictions on the residual rights of the servient owners so as to subordinate those residual rights to “the over-arching rights of Clos Farming”. Santow JA stated at [46] that the covenant, viewed in the context of the further restrictions which applied to the servient owners’ rights in relation to the entire lot, meant that those rights “are so attenuated as no longer to meet the description of exclusive possession”.

11. [139]

    Bathurst CJ and Beazley P drew an inference from Santow JA’s reference in Clos Farming CA to Copeland and its application in Australia in Harada v Registrar of Titles [1981] VR 743 that “the extent of a restriction on the use of the servient tenement may mean that no easement is created” (see Jea Holdings at [63]).

12. [140]

    Their Honours then added at [64]:

13. [141]

    It is also appropriate to say something more regarding this Court’s decision in Stolyar. This was an appeal from Darke J’s judgment in Towers v Stolyar [2017] NSWSC 526; 18 BPR 36,963. Darke J helpfully identified the following principles established in Jea Holdings (at [49]):

14. [142]

    Darke J concluded that a right of vehicle parking and garaging constituted a valid and enforceable easement in circumstances where his Honour found that the degree of interference with either the area actually affected by the easement or the whole of the servient land did not deprive the servient owner of her rights of proprietorship or possession of either the easement area or the whole of the land to such a degree as to render the easement invalid. The easement was recorded in the Deposited Plan and in a registered instrument under s 88B of the Conveyancing Act 1999 (NSW).

15. [143]

    Gleeson JA gave the leading judgment in Stolyar (Simpson and White JJA agreeing). His Honour noted at [49] that, in Jea Holdings, Bathurst CJ and Beazley P accepted that Clos Farming CA did not stand only for the proposition that the owner of the servient tenement must have reasonable use of the servient tenement in its entirety. His Honour further noted that, in the joint judgment in Jea Holdings, it was accepted that that was a relevant consideration which may be decisive in a particular case, but that “it is also relevant to consider the extent of the interference with the rights of ownership on that part of the servient tenement actually affected by the easement”.

16. [144]

    Thus, Stolyar authoritatively establishes that, in applying the fourth characteristic of validity in Ellenborough Park, it is relevant to consider the extent of the interference with the rights of the servient owner not only in respect of the area the subject of the alleged easement, but also the servient tenement in its entirety.

17. [145]

    Gleeson JA also explained the reference in Jea Holdings at [64] to Moncrieff, where it was held that a right to park is, in principle, capable of amounting to a valid easement. Lord Scott did not agree with the test formulated in London & Blenheim Estates Ltd v Ladbroke Retail Parks Ltd [1992] 1 WLR 1278 and in Batchelor v Marlow [2003] 1 WLR 764, which posited whether the servient owner is left with any reasonable use of their land. Instead, Lord Scott described the test as one which asks whether the servient owner retains possession and, subject to the reasonable exercise of the right in question, control of the servient land.

18. [146]

    In Stolyar, Gleeson JA said at [55] that neither party suggested that the approach in Jea Holdings should not be applied. His Honour also noted at [56] that it was common ground that the appellant bore the onus of establishing the invalidity of the easement.

19. [147]

    The appeal in Stolyar was dismissed for reasons set out at [70]-[73]:

20. [148]

    The issue whether or not the rights conferred on the dominant owners exclude the servient owner’s proprietorship or possession is necessarily one of evaluation and degree but, for the following reasons, I respectfully disagree with the proposition that the servient owner’s ownership of the servient area is effectively sterile and nominal.

21. [149]

    First, although the rights conferred on the dominant owners by the Easement are exclusive in relation to the stated purposes, that is not the same as saying that they effectively grant exclusive possession for all purposes. As emphasised above, the rights relate to the purposes or activities specified in Pt 2 of the Easement.

22. [150]

    Secondly, the servient owner retains considerable positive rights in respect of the servient area. She is entitled to access the area for the purpose of recreation and to access the garden shed for the purpose inter alia of ensuring that the dominant owners’ use of the shed is in accordance with the terms of the Easement. The servient owner is also entitled to place garden furniture or a barbeque in any part of Area X which is not taken up by the dominant owners’ garden or by the building, including under the awning. There is also an entitlement to erect devices on the roof of any shed, such as a television antenna, solar cells and a satellite dish. The servient owner is also entitled to traverse the subject area for the purpose of obtaining access to Barrenjoey Road.

23. [151]

    Thirdly, the servient owner also enjoys significant negative rights. They include the right to enter upon the subject area for the purpose of ascertaining whether the area is being used by the dominant owners only for permitted purposes. For what it is worth, there was evidence that Ms Petrie, and her husband, exercised such negative rights, resulting in the Dicksons ceasing to use the subject area for an outdoor shower and ceasing to store non-garden related chattels, such as surfboards, towels and wetsuits in the area.

24. [152]

    Fourthly, in assessing whether the dominant owners’ exclusive rights substantially deprive the servient owner of proprietorship or legal possession of the affected area so as to be inconsistent with ownership of that area, it is relevant to note that Area X is relatively small. It represents 12.2% of the total area of Lot 2. It is located at the end of the back garden to Lot 2. Moreover, the footprint of the shed (excluding the awnings) represents approximately 28% of Area X. I accept the appellants’ submission that neither part of the Easement has any effect on the possession, control or reasonable use of the balance of the servient tenement beyond the 63.3 m2 servient area. The existence of the Easement does not have a major impact on the servient owner’s enjoyment of the servient land (the house and garden) or the servient owner’s ability to deal with the servient land.

25. [153]

    These geographical considerations are relevant in determining the validity of an easement because the rationale for the characteristics of validity in Ellenborough Park is “to prevent the proliferation of undesirable long-term burdens which inhibit the marketability of land” (see Gray and Gray at [5.1.49]). Although those learned authors also note at [5.1.64] that Moncrieff contains a rationalisation of the case law which is more sympathetic to easements which involve substantial exclusion of the servient owner from his or her land, one element in assessing the extent of any such exclusion will be the extent of interference with the servient owner’s rights of ownership actually affected by the subject easement, as well as on the servient tenement as a whole. Necessarily, therefore, physical or geographical dimensions are relevant.

26. [154]

    For all these reasons, I respectfully disagree with the primary judge’s conclusion that both parts of the Easement are invalid having regard to the fourth characteristic in Ellenborough Park. Ground 1 of the notice of appeal should be upheld.

27. [155]

    In these circumstances, it is unnecessary to address difficult questions of severance in the event that it was found that one but not the other part of the Easement was invalid. It is unnecessary, therefore, to determine ground 2 of the notice of appeal.

(d) Cross-appeal

1. [156]

   The cross-appeal should be dismissed for the reasons given above.

(e) Relief

1. [157]

   The appellants urged the Court to make declarations as to the parties’ respective rights, so as to minimise any future disputation. I consider that, although it is appropriate to grant declaratory relief concerning the proper construction and validity of the Easement, this is not an appropriate case to grant the relief sought by the appellants. It is impossible to anticipate in advance the wide range of issues which might potentially arise concerning the parties’ obligation to act reasonably in the exercise of their respective rights. Any such relief would relate to hypothetical circumstances which are better approached on a case by case basis if and when the circumstances arise.

2. [158]

   Naturally, there is nothing stopping the parties from having sensible discussions, informed by common sense and mutual respect, regarding their respective expectations as to the reasonable use of their rights. If the parties are unable to come to a sensible agreement on such matters, they might consider engaging an independent mediator to guide the exercise. Absent such a common sense approach, the parties are at risk of becoming embroiled in yet further time-consuming, stressful and expensive litigation.

3. [159]

   That leaves the issue of which of the orders made by the primary judge on 29 August 2024 or 23 October 2024 should be set aside.

4. [160]

   Orders 1, 2 and 3 dated 29 August 2024 should be set aside having regard to this Court’s finding that the primary judge erred in concluding that the Easement is invalid. In lieu thereof, the Court should make the following order:

5. [161]

   The orders dated 23 October 2024 both relate to costs. Ms Petrie was ordered to pay the Dicksons’ costs of their application seeking indemnity costs. The Dicksons were ordered to pay Ms Petrie’s costs of the proceedings on an ordinary basis.

6. [162]

   Both those orders should be set aside and substituted by an order that the parties each bear their own costs of the proceedings below. In proposing that order, I have taken into account the conduct of the parties in the trial below, noting in particular the primary judge’s observation that both changed their initial positions in the course of the trial, which is supported by the transcript of the trial.

(f) Costs of the appeal (including costs of the objection to competency) and costs of the cross-appeal

1. [163]

   The appellants have succeeded with two of their three grounds of appeal. The cross-appeal has failed. There was considerable overlap in the parties’ respective submissions concerning the appeal and cross-appeal. Adopting a broad-brush approach, more time and resources were devoted to the appeal than to the cross-appeal. But I do not consider that this justifies an unqualified order for costs in favour of the appellants. I accept the respondent’s submission that the appellants changed their position on the issue of exclusivity of rights, as is reflected in their submissions pre and post the appeal in Theunissen. The appellants initially argued that their rights under both parts of the Easement were not exclusive, while acknowledging that the exercise of their rights might in practice shut out the respondent periodically.

2. [164]

   In their written submissions on the appeal, the appellants contended that both they and the respondent were “entitled to use and enjoy the garden, even at the same time”, and that it was “difficult to conceive that the respondent may not be able to place some things in the shed herself”. That position is inconsistent with the appellants’ supplementary submissions post Theunissen (see at [88(b)] above). Senior counsel for the appellants also made an oral submission in the appeal that if the appellants left the garden area in Area X unattended, the respondent could “go in and garden”. This is also inconsistent with the appellants’ supplementary submissions post Theunissen, where they maintained that they had sole or exclusive rights under both parts of the Easement.

3. [165]

   The appellants’ preparedness, at times, to embrace the notion of shared rights to use Area X for gardening etc and jointly to use the garden shed for storage is consistent with many of the grounds raised in the cross-appeal, which grounds have failed. They should not have all their costs of the cross-appeal.

4. [166]

   Having regard to all these matters, I consider that the respondent should pay 50% of the appellants’ costs of the appeal and of the cross-appeal in their capacity as cross-respondents.

5. [167]

   Different issues are raised by the costs of the respondent’s unsuccessful notice of objection to competency.

6. [168]

   The appellants urged the Court to apply the same approach as in the Court’s recent decision in Random Primer. That case also involved a dispute concerning an easement. The respondent filed a notice of motion objecting to the competency of the appeal from orders made by Williams J. It contended that leave to appeal was required by operation of s 101(2)(r) of the Supreme Court Act 1970 (NSW). Kirk JA (Gleeson and Mitchelmore JJA agreeing) noted at [22] that the respondent’s counsel and solicitors held different views as to whether the appeal raised (directly or indirectly) a claim, demand or question amounting to the value of $100,000 or more.

7. [169]

   The Court held at [23] that, while it considered that the respondent’s solicitor was probably correct in believing that leave to appeal was not required, it was unnecessary to resolve the issue. That was because the case raised issues of principle which were reasonably arguable.

8. [170]

   On the question of costs of the respondent’s competency motion, the Court acknowledged at [24] that a party is entitled to raise an argument that leave to appeal is required and should not be discouraged unduly from doing so. However, the Court concluded that this was a case where “leave to appeal was always likely to be granted and the competency objection was in any event filed out of time”. Accordingly, the respondent was ordered to bear the appellant’s costs of the competency motion.

9. [171]

   A notice of objection to competency was also unsuccessfully raised by the respondent in Theunissen. The appellants filed a 46 page valuation report with their notice of appeal, which valued the relevant easement in the amount of $525,000. After the respondent’s solicitor criticised this valuation, a supplementary report was obtained from the same valuer, who arrived at a valuation in the amount of at least $370,000. Despite this supplementary material, the respondent pressed its objection to competency. To protect their position, the appellants filed a summons seeking leave to appeal.

10. [172]

    The Court concluded at [13] that it was clear from both the valuation evidence and a basic understanding of the practical realities of the case, including the location of the relevant dwellings in one of Sydney’s most expensive suburbs, that the appeal would change the wealth of the appellants by more than $100,000. The objection to competency was dismissed, with costs.

11. [173]

    Naturally, each case depends on its own particular facts and circumstances. But, for the following reasons, I consider that the reasoning in Random Primer and Theunissen does not apply here.

12. [174]

    As the respondent emphasised, it is important to have regard to the chronology of relevant events relating to the filing of the objection to competency, which may be summarised as follows:

13. [175]

    In the light of this chronology of events, the respondent contended that this case is significantly different from those in Random Primer and Theunissen. It was only after the notice of objection to competency was filed that the appellants filed the summons seeking leave to appeal on 20 October 2024, together with the valuation evidence. Thus, the respondent contended that she acted properly in filing the objection to competency at a time when the appellants had not adduced any evidence on value and the appellants had already been directed to file a summons seeking leave to appeal. The respondent emphasised that it was obliged to raise competency on or before 11 October 2024 if the question was open to be raised. This was the case here having regard to the early stage of the appeal proceedings and the absence of any valuation evidence.

14. [176]

    I consider that there is considerable force in the respondent’s position. The competency objection should be dismissed, with no order as to costs.

Conclusion

1. [177]

   For these reasons, I propose the following orders:

   1. (1)

      The appeal be allowed in part.

   2. (2)

      The cross-appeal be dismissed.

   3. (3)

      Orders 1, 2 and 3 dated 29 August 2024 be set aside and in lieu thereof:

   4. (4)

      The orders dated 23 October 2024 be set aside and in lieu thereof there be no order as to the costs of the proceedings below.

   5. (5)

      Order the respondent to pay 50% of the appellants’ costs of the appeal and the cross-appellant to pay 50% of the cross-respondents’ costs of the cross-appeal.

   6. (6)

      The notice of objection to competency filed 10 October 2024 be dismissed, with no order as to costs.