The Owners – Strata Plan 85044 v Murrell; Murrell v The Owners – Strata Plan 85044 (No 2)

On 1 October 2020, I gave reasons for judgment in which I upheld claims by the plaintiff in proceeding 2019/201673 that the defendants had trespassed into Airspace owned by the plaintiff on several occasions and gave judgment for the plaintiff in the sum of $10,000 in respect of those trespasses: The Owners – Strata Plan 85044 v Murrell; Murrell v The Owners – Strata Plan 85044 [2020] NSWSC 20 (the principal judgment) at [141]–[320], [334]–[335] and [338]–[346].

On 13 October 2020, the defendants in proceeding 2019/201673 filed a notice of motion seeking an order under r 36.16(3A) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) setting aside the judgment for the plaintiff in the sum of $10,000 in respect of the defendants’ trespasses into the Airspace, and an extension of time for compliance with directions made for steps to be taken to facilitate the making of orders in accordance with the principal judgment pending determination of the notice of motion.

On 20 October 2020, I made the order extending time and listed the balance of the notice of motion for hearing on 30 October 2020. For the reasons explained below, the balance of the motion is dismissed.

These reasons assume familiarity with, and should be read together with, the principal judgment. The subject matter of the proceedings and the issues raised for determination are described in the principal judgment at [1]–[75]. I use the same abbreviations in these reasons as in the principal judgment, including using the term the Owners Corporation to refer to the plaintiff in proceeding 2019/201673 and defendant in proceeding 2019/229582, and using the term the Murrells to refer to the defendants in proceeding 2019/201673 and the plaintiffs in proceeding 2019/229582.

As recorded in the principal judgment at [32], the Owners Corporation claimed that the Murrells had trespassed on its property, including by repeatedly entering into the Airspace between about November 2018 and July 2019.

The claims relating to trespass on other property of the Owners Corporation are not relevant to the subject matter of the Murrells’ notice of motion filed on 13 October 2020. References to trespass claims in these reasons are references to the trespass claims relating to the Airspace only.

As recorded in the principal judgment at [38], the Murrells submitted that their entries into the Airspace owned by the Owners Corporation did not constitute trespass because:

It is convenient to refer to the second submission described in [7(2)] above as the construction submission.

The construction submission was made for the first time in the Murrells’ oral opening submissions on the first day of the hearing.

No implied positive covenant or implied easement had been pleaded or referred to in the Murrells’ written opening submissions served two days before the commencement of the hearing.

The point made in the written opening submissions concerning the construction of the Restriction was limited to a submission that the Restriction operated only to prevent the construction, erection or placement of matters or things on Lot 21 with some permanence that exceeded the height of RL 26 AHD. In their written opening submissions, the Murrells submitted that the Restriction, properly construed, did not prohibit the owners of Lot 21 from otherwise exceeding the height of RL 26 AHD, including by entering the Airspace on a temporary basis for the purpose of carrying out repairs and maintenance to structures on Lot 21 that existed below the height of RL 26 AHD.

In oral opening submissions, and in response to a submission made by the Owners Corporation that the Restriction became “otiose” upon the registration of the Airspace plan of subdivision (see the principal judgment at [111]–[123]), the Murrells developed the submission that the Restriction, properly construed, included an implied positive covenant or implied easement for the owner of Lot 21 to exceed the height of RL 26 AHD on a temporary or transitory basis to repair, maintain or improve any structures on Lot 21 below that height. It was submitted that this implied positive covenant or implied easement continued to have work to do, and continued to operate after the registration of the Airspace plan of subdivision. [1]

In answer to a question from me, senior counsel for the Murrells identified that the basis on which the Murrells contended that the Restriction should be construed as containing an implied easement that continued to have practical operation after registration of the Airspace plan of subdivision was: [2]

That was the only reference to an easement of necessity in the Murrells’ oral opening submissions.

Senior counsel’s reference to the “reasons we’ve outlined” in that exchange was a reference to the practical impossibility of affecting repairs and maintenance to the concrete roof, given the space of only 11 to 16cm between the roof and the lower boundary of the Airspace owned by the Owners Corporation as shown on DP 645772 which was registered with the s 88B instrument when the Restriction was created. [3]

In referring to an easement of necessity in the context of that exchange, senior counsel for the Murrells was submitting that the Restriction, properly construed, included an implied easement because it was plain that such an easement was necessary in order for the owners of Lot 21 to repair and maintain the concrete roof. Senior counsel was not (at that stage) submitting that an implied easement of necessity had arisen by operation of law in favour of the owners of Lot 21 when the Restriction was created on 10 June 1992 or at any other time. On the contrary, senior counsel eschewed reliance on such general law principles and submitted that, if the Court rejected the Murrells’ submission concerning the proper construction of the Restriction, then the Restriction should be modified pursuant to s 89 of the Conveyancing Act 1919 (NSW). [4]

In written closing submissions dated 13 May 2020, the Murrells again addressed the Owners Corporation’s contention that the Restriction became “otiose” when the Airspace plan of subdivision was registered. Again, the Murrells submissions’ drew on principles relevant to implied easements of necessity by operation of law only in support of the construction submission. The Murrells submitted that: [5]

The Murrells submitted that “the implication of an easement in this manner” – that is, by construing the Restriction as including an implied easement and by construing the Airspace plan of subdivision as noting and preserving the Restriction – “involves no derogation from the principle of indefeasibility of title. By the notation of the Restriction on [the Airspace plan of subdivision], the Restriction is expressly recorded on the register”. [6] The submissions continued (my emphasis): [7]

As is plain from the preceding submission, the reference to “an implied term in a registered instrument” is a reference to the positive covenant or easement that the Murrells submitted should be implied in the Restriction in the s 88B instrument as a matter of construction and/or the Airspace plan of subdivision (because it noted the Restriction).

In oral closing submissions, senior counsel for the Murrells initially continued to rely on principles relevant to implied easements of necessity by operation of law only in a manner that was tied to, and dependent upon, the Court accepting the Murrells construction submission. Senior counsel for the Murrells said (my emphasis): [8]

The Murrells’ construction submission was ultimately rejected for the reasons set out principal judgment [77]–[110]. As explained in those paragraphs (and particularly at [103]), I considered that the implication of the easement contended for by the Murrells was not necessary in order to avoid an absurd outcome of the Restriction preventing the owners of Lot 21 from accessing the concrete roof to carry out repairs and maintenance because:

I raised these matters with senior counsel for the Murrells in oral closing submissions (my emphasis): [10]

As senior counsel for the Murrells accepted at the hearing of the notice of motion, the emphasised passages in the above exchange represent the first and only occasion on which the Murrells raised a contention that an implied easement of necessity by operation of law arose when the Airspace plan of subdivision was registered, separately from the construction submission that I have summarised in [12]–[20] above.

It was the Murrells’ submission in oral closing submissions emphasised in the passage set out above that was identified as the alternative submission in [38] of the principal judgment: see [7(3)] above. For brevity, I shall refer to it as the alternative submission.

The Owners Corporation did not object to the Murrells introducing the alternative submission without pleading or other prior notice at the very end of oral closing submissions on the fourth day of a four day hearing. Unsurprisingly in the circumstances, the Owners Corporation’s response to the alternative submission was very brief. Counsel for the Owners Corporation submitted that no easement of necessity arose by operation of law because access to the concrete roof was a matter of convenience rather than necessity. [11]

Neither the Murrells nor the Owners Corporation addressed the question whether, if an implied easement of necessity arose by operation of law at the time of registration of the Airspace plan of subdivision, s 42 of the Real Property Act 1900 (NSW) precluded the Murrells (who are successors in title to the then owners of Lot 21) from now enforcing that implied easement against the Owners Corporation (which is the successor in title to the then owners of the Airspace).

At the very end of the fourth day of the hearing, the Murrells made an oral application for leave to amend the terms of relief sought pursuant to s 88K of the Conveyancing Act in their statement of claim in proceeding 2019/299582. (Leave was subsequently granted: see principal judgment at [364]–[381]. The Murrells made no application to amend by adding to their claims for declaratory relief a declaration to the effect that they had the benefit of an implied easement of necessity that arose by operation of law.

In relation to the alternative submission, I concluded that the Court should attribute to the predecessors in title to the Murrells and the Owners Corporation a common intention, at the time of registration of the Airspace plan of subdivision in September 1997, that the owners of Lot 21 (the predecessors in title to the Murrells) would be entitled to enter the Airspace on a temporary or transitory basis for the purpose of maintenance and repair of structures on Lot 21 below the height of RL 26 AHD. That common intention was to be attributed to those predecessors in title by reason of the circumstances associated with the subdivision of the Airspace from Lot 21 – namely, the close proximity of the lower boundary of the Airspace to the concrete roof of the dwelling on Lot 21 otherwise made access to that roof practically impossible. On the basis of that presumed common intention, an implied easement of necessity arose by operation of general law at the time of registration of the Airspace plan of subdivision: see principal judgment at [125]–[135].

However, I also concluded that the implied easement of necessity was not enforceable by the Murrells (the successors in title to the owners of Lot 21 at the time the implied easement of necessity arose) against the Owners Corporation (the successors in title to the owner of the Airspace at the time the implied easement of necessity arose), by reason of s 42 of the Real Property Act: see principal judgment at [136]–[138].

It followed from my rejection of the construction submission, my conclusion that the implied easement of necessity was not enforceable by the Murrells against the Owners Corporation, and my rejection of the defence of necessity to the trespass claims that some of the Murrells’ entries into the Airspace had constituted trespass: see principal judgment at [304]–[320].

The Murrells now submit that:

Those are the grounds on which the Murrells apply for an order under UCPR r 36.16(3A) setting aside the judgment in favour of the Owners Corporation in relation to trespasses to the Airspace. [12]

The Murrells submit that paragraph 57 of their written closing submissions stated that “the implication of an easement in this manner involves no derogation from the principle of indefeasibility of title …” and the Owners Corporation made no submission to the contrary as noted at [121] of the principal judgment. If the Owners Corporation had raised s 42 as the reason why an implied easement of necessity could not be enforced, then the Murrells would have addressed that submission.

I reject these submissions for three reasons.

First, the submission in paragraph 57 of the Murrells’ written closing submissions was plainly directed to the construction submission and the recording of the Restriction on the Airspace plan of subdivision: see [17]–[19] above. The alternative submission relying on an implied easement of necessity by operation of law had not yet been made: see [22]–[24] above.

Second, the Murrells’ reliance on the principal judgment at [121] is misconceived. It is correct that the Owners Corporation did not submit that its title to the Airspace was not subject to the Restriction by reason of the operation of s 42 of the Real Property Act. (I did not find it necessary to determine that issue in circumstances where I had concluded that the Restriction did not include the implied easement for which the Murrells contended in their construction submission: principal judgment at [75]–[123].) Whether or not s 42 of the Real Property Act precluded the Owners Corporation’s title being subject to an implied easement of necessity that had arisen by operation of law when the Airspace was subdivided by registration of the Airspace plan of subdivision in September 1997 is an entirely separate issue, about which neither party made submissions.

Third, as is plain from the history recorded in [7]–[26] above, the Murrells had ample opportunity put all submissions they wished to rely on during the course of the hearing, including submissions raising issues that had not been pleaded. Once they raised the alternative submission in oral closing submissions, it was incumbent on them to address all matters that they wished to put before the Court in support of that submission. They had the opportunity to do so during the hearing. If further thoughts had occurred to them after the conclusion of the hearing, they could have sought leave to make further submissions. They did not do so.

In their written and oral closing submissions drawing on the principles concerning implied easements of necessity in support of their construction submission, the Murrells had relied on Rixon v Horseshoe Pastoral Co Pty Ltd [2017] NSWSC 1293 at [44] as setting out those principles. In that case, Brereton J (as his Honour then was) had considered the question whether implied easements (including implied easements of necessity) can arise in respect of land under the Real Property Act (at [37]–[43]). His Honour referred to s 42 and to the prevailing view that easements can be created over Torrens land only in the manner provided by s 46. His Honour stated that this did not admit of implied grants of the Wheeldon v Burrows (1879) 12 Ch D 31 variety or implied easements of necessity but that (at [37]):

His Honour then considered McGrath v Campell (2006) 68 NSWLR 229; [2006] NSWCA 180 and other authorities before concluding that (at [42]):

It was plain from those passages of Rixon v Horseshoe Pastoral Co Pty Ltd (supra) that, if the Murrells wished to establish that they had the benefit of an implied easement of necessity that arose by operation of law when the Airspace plan of subdivision was registered which was enforceable against the Owners Corporation (a successor in title to the entity that took ownership of the Airspace on registration of the Airspace plan of subdivision), and provided them with a defence to the Owners Corporation’s claim in trespass, the Murrells needed to identify why the Owners Corporation’s registered title to the Airspace was subject to the implied easement notwithstanding the provisions of s 42 of the Real Property Act. The Murrells (by choice or by oversight) did not address this issue in making the alternative submission.

It is plainly wrong for the Murrells to suggest that it was for the Owners Corporation to rely on s 42 in responding to the alternative submission before the Murrells were required to address the issue.

For the reasons in [33]–[41] above, I reject the submission that the Murrells were denied procedural fairness.

The Murrells now submit that, in determining that the Owners Corporation’s indefeasible title to the Airspace was not subject to the implied easement of necessity that arose when ownership was conferred on its predecessor in title by registration of the Airspace plan of subdivision, I may have overlooked that:

The Murrells submit that, as a result of overlooking this matter, I erred in concluding that the Owners Corporation’s registered title was not subject to the implied easement of necessity. The Murrells submit that the easement arose “by necessary implication from the registered instruments”. At the hearing of the notice of motion, senior counsel for the Murrells explained this submission, saying that the circumstances from which the implied easement of necessity was found to have arisen were matters that were noted in the Airspace plan of subdivision (as I have described immediately above) or were matters of law: see principal judgment at [131]–[132]. It followed, in the Murrells’ submission, that “s 42 does not prevent the Murrells from relying on the easement as a defensive shield to the trespass claim”.

I did not overlook the matters referred to in [43] above. Those matters were referred to in the principal judgment at [18]–[19] and considered in the context of other issues raised for determination in the proceedings at [77]–[123] of the principal judgment.

I did not take those matters into account in the context of determining whether the Owners Corporation’s title to the Airspace was subject to the implied easement of necessity because I did not consider that those matters were relevant to that issue. As I have explained above, the Murrells did not submit that they were relevant. Indeed, as I understood the Murrells’ alternative submission, it relied on the circumstances per se and not any notations in registered instruments. If, as they now say, the Murrells intended to submit that an easement of necessity arose by implication from the registered instruments and is therefore enforceable against successors in title to the entity to whom ownership of the Airspace was transferred by the subdivision, that is a novel submission that is unsupported by authority and would have surprising consequences for the Torrens system of title by registration if accepted. It was therefore incumbent on the Murrells’ legal representatives to make the intended substance of the submission clear during the final hearing, and to address the s 42 issue in some detail.

I have described it as a novel submission unsupported by authority because, on the hearing of the notice of motion, the Murrells were unable to refer the Court to any case law that provides direct support for the submission. The Murrells submitted that Hemmes Hermitage Pty Ltd v Abdurahman (1991) 22 NSWLR 343 was relevant by analogy. That case concerned the question whether s 42 of the Real Property Act precluded the owner of the dominant tenement of a registered right of way from enforcing against the registered owner of the servient tenement ancillary rights that were not included in the express terms of the right of way but that were implied as necessary for the enjoyment of the right of way (e.g. the right to go onto parts of the servient tenement outside the boundaries of the right of way for the purpose of making a right of way trafficable). The Court of Appeal held that such implied ancillary rights are just as much a part of the register as the express terms of the registered instrument. The Court therefore rejected the servient tenement owner’s argument that its registered title was not subject to such implied ancillary rights.

Hemmes Hermitage does not address the question whether an implied easement of necessity that arises by operation of law at a particular time as a result of circumstances existing at that time burdens the indefeasible title of subsequent registered proprietors of the servient tenement merely because the relevant circumstances (or some of the relevant circumstances) can be ascertained from notations on registered plans.

As I have said above, it seems to me that the submission that the Murrells now seek to make (which they say that they intended to make at the final hearing) would have surprising consequences for the Torrens system of title by registration, if accepted. At the hearing of the notice of motion, senior counsel for the Murrells described the consequences as meaning that a prospective purchaser of the Airspace would become aware of the implied easement of necessity that the Murrells now submit is enforceable against the Owners Corporation and its successors in title by the following steps:

The Murrells submitted at the hearing of the notice motion that, if the Court were to accede to their application to set aside the judgment in favour of the Owners Corporation in relation to the Murrells’ trespasses into the Airspace and if the Court accepted the submissions referred to in [44] above, then the Court could make a declaration to the effect that Lot 21 has the benefit of an implied easement of necessity permitting the owners of Lot 21 to enter the Airspace on a temporary or transitory basis for the purpose of maintenance and repair of structures on Lot 21 below the height of RL 26.00 AHD. This illustrates just how remote the alternative submission, and the submissions now made by the Murrells, are from the manner in which they conducted the trial. As I have referred to earlier in these reasons, no such declaration was sought by the Murrells at any earlier time in this proceeding.

The public interest in the finality of litigation requires that great caution be exercised before setting aside a final judgment pursuant to UCPR r 36.16(3A). The exercise of the power generally depends on establishing that the judgment is affected by:

I do not consider that the principal judgment is affected by any such misapprehension or irregularity. For all of the reasons that I have explained above, this is a case in which the Murrells apply to set aside part of the final judgment with which they are displeased and ask the Court to grant declaratory relief which they did not claim at the final hearing, on the basis of an entirely new submission that they now wish to make (as seems to me to be the case) or a significant reformulation of their alternative submission together with a new submission concerning the application of s 42 of the Real Property Act to an implied easement of necessity (adopting a more generous interpretation of the way in which the Murrells’ alternative submission was expressed at the final hearing). In my opinion, it would be inconsistent with the public interest in the finality of litigation and the authorities referred to in [51] above to accede to the Murrells’ application.

The Murrells accepted that there was no reason why they should not be ordered to pay the Owners Corporation’s costs of the notice of motion if the Court refused the relief sought in prayer 2 of the notice of motion.

For all of the reasons above, I make the following orders: