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Thornley v Ford [2022] NZHC 667 (1 April 2022)

Last Updated: 20 June 2022

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 1 April 2022 at 4.30 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date: ...................................

THORNLEY v FORD [2022] NZHC 667 [1 April 2022]

Introduction

• [1] The plaintiffs are the registered proprietors of benefitted land under a registered easement for the supply of water to their land (“registered easement”).

• [2] Prior to 26 January 2021, the first defendants, being Dr Graeme Ford and Mrs Ngaire Ford, and their son, Mr Stephen Ford, were the registered proprietors of the burdened land in their capacity as trustees of the Footbridge Family Trust (“trustees” and “FFT”).

• [3] On 26 January 2021, the trustees transferred the land to the second defendant (“PPL”), of which Mr (Stephen) Ford is the sole director and shareholder.

• [4] For reasons given below, I am not persuaded that anything particular turns on the transfer to PPL. Accordingly, I shall refer to “the defendants”, and only distinguish between the trustees and PPL as necessary.

• [5] The registered easement provides that the pipes by which water is conveyed to the benefitted land, and an accompanying pumphouse, are to be located in an area marked A on DP 87873, to which I refer below (“area A”).

• [6] However, by agreement reached in 1980 or thereabouts, and after the easement was registered in 1979, a substantial section, if not all, of the pipes was laid outside area A. It was also agreed that the pumphouse would be located outside area A.

• [7] This agreement was reached between Dr Ford personally, who owned the burdened land at the relevant time, and a Mr Palmer, who was one of the then owners of what is now the first plaintiffs’ land.

• [8] Despite this agreement, no variation to the registered easement was ever registered and no caveat was ever lodged against the title to the burdened land, whether by Mr Palmer or anyone else.

• [9] In 2016, the trustees informed the plaintiffs that the pipes were not laid in, or wholly in, area A. More recently, the trustees, and now PPL, have advised they

propose to undertake works in the area where some or all of the offending section of the pipes is believed to be, and that the plaintiffs must re-lay those pipes or fresh pipes within area A if they wish to maintain their water supply.

• [10] The plaintiffs contend that they are entitled to continue to receive water supply through the pipes/pumphouse in their present location, and they seek:

(a) rectification of the registered easement to reflect the existing location of the pipes and pumphouse;

(b) alternatively an order that there is an equitable easement consistent with the existing route of the pipes and pumphouse, but otherwise on the same terms as the registered easement;

(c) alternatively an order that the defendants are estopped from denying the plaintiffs’ right to water supply through the existing pipes and pumphouse.

• [11] The defendants’ case is that the plaintiffs’ claim to rectification cannot succeed as there is no evidence of any mistake by the parties to the registered easement. Secondly, if the agreement referred to at [6] created an equitable easement, it did not survive the July 1996 transfer of the burdened land by Dr Ford to the then trustees of the FFT, Mr Frederick Wiley and Mr Leonard Mills. Alternatively, the defendants contend it did not survive the trustees’ recent transfer to PPL. Nor do the defendants accept they are estopped as alleged.

Background

Registered easement — Bridge City Lands Ltd to the Palmers and Mr Law

• [12] At the time the registered easement was created, the registered proprietor of the burdened land was Bridge City Lands Ltd (“BCL”). BCL had subdivided part of a larger holding, and sold two parcels, one to a Mr and Mrs Palmer, and another to a Mr Law, Mrs Palmer’s father, all of whom intended to establish orchards on their land.
• [13] By memorandum of transfer 815638.5 dated 20 November 1979, BCL as transferor granted the registered easement to Mr and Mrs Palmer, and Mr Law. The relevant part of the transfer provides that BCL transferred and granted to the transferees and, in summary, their successors and assigns:

... the full free uninterrupted and unrestricted right liberty and privilege from time to time and at all times to take and draw water in such quantities as they or either of them shall reasonably require from the [Hingaia stream] and to convey and lead the same in a free and unimpeded flow by underground pipe through and across that portion of the first land marked A on [DP] 87873 and also the further right to install a pump upon the said portion of the first land marked A on [DP] 87873 for the pumping of water for the aforesaid purposes

...

• [14] BCL also transferred to the transferees the right to, in summary, enter onto area A to lay and maintain the pipes and pump and ancillary equipment.

• [15] DP 87873 showing area A is reproduced below:

• [16] At the material time BCL’s land, and now PPL’s, was that marked “Pt. Allot. 57”. This land is adjacent to the Hingaia stream to the north (the top right-hand corner of the plan).
• [17] Mr and Mrs Palmer were the registered proprietors of Lot 2, which the first plaintiffs, Mr Thornley and Ms van Houten, now own. Mr Law was the registered proprietor of Lot 1. He later subdivided his land into two lots. The second plaintiff, Mr Ruiterman, purchased one of those lots in November 1989, his land being adjacent to Mr Thornley and Ms van Houten.

Registered easement —Palmers to Law

• [18] Mr and Mrs Palmer also granted an easement in favour of Mr Law, to continue supply to Lot 1. This is the area marked C on DP 87873.

BCL to Dr Ford

• [19] Memorandum of transfer 815638.5 was registered on 7 December 1979. By then BCL had agreed to sell its land to Dr Ford. BCL’s transfer of its land to Dr Ford was registered immediately after memorandum of transfer 815638.5.

Variation

• [20] In about 1980, Mr Palmer engaged a firm to lay the pipes across what was, by then, Dr Ford’s land.

• [21] As it turned out, some of the land in area A was basalt rock. The cost to cut through the rock was prohibitively expensive to Mr Palmer, and he approached Dr Ford who, Mr Palmer recalls, was having a trench dug for pipes to supply water to his own land and dwelling. Mr Palmer’s recollection is Dr Ford agreed that he, Mr Palmer, could lay his pipes in that same trench, that they divided the cost of that trench equally, and that they also agreed another route for the balance of Mr Palmer’s pipes which would avoid the rock. It is in this way that the balance of the pipes to supply water to the plaintiffs’ land came to be laid outside area A.

• [22] Dr Ford likewise recalled that Mr Palmer came to him in a very anxious state, that he wished to help Mr Palmer if he could, and that together they walked over his, Dr Ford’s, land and plotted a route that avoided the rock. In addition, and even though he was only young at the time, Mr (Stephen) Ford recalls being present and he described the discussion in the same way.
• [23] At the time the registered easement was granted it seems to have been intended that the pumps for the Palmer and Law land would be housed in an existing pumphouse in area A. However, that pumphouse was dilapidated, and Mr Palmer and Dr Ford agreed to share the cost of a new pumphouse, also located outside of area A.

• [24] The pipes and pumphouse have remained in the same locations since, so for some 40 years.

• [25] It is this agreement (or agreements) between Dr Ford and Mr Palmer, that is as to the varied location of the pipes and pumphouse, and the sharing of costs, which the plaintiffs contend gives rise to an equitable easement.

Location

• [26] Neither Dr Ford nor Mr Palmer kept a record of the actual route of the pipes, which are largely underground, and none of the parties ascertained their location prior to the hearing. To the extent there was evidence about the location of the pipes, it was on a “best guess” basis. However, the defendants believe that the section of the pipes laid to circumvent the rock is under one or other of two relatively flat areas on what is now PPL’s land, and on which the trustees, and now PPL, have said they wish to construct new buildings, as referred to below.

NA45C/332 — first plaintiffs

• [27] Mr and Mrs Palmer transferred their land to a third party in July 1988. It was transferred several times thereafter until Mr Thornley and Ms van Houten purchased it in 2009. Ms van Houten’s evidence was that she and Mr Thornley use the water from the stream for their domestic supply, that they knew they had the benefit of the registered easement when they purchased but they were not told, whether by their vendors or anyone else, that the pipes and pumphouse were not wholly within area A. Ms van Houten’s evidence was that they would not have purchased had they known this.

• [28] In 2016, Mr Thornley and Ms van Houten established a greenhouse on their land. The defendants are suspicious that they are using water from the stream to

service the greenhouse, for which Dr Ford believes they would require resource consent. Ms van Houten denied this in her evidence. Although immaterial to the legal issues, this point has been the cause of much dispute.

NA76C/398 — second plaintiff

• [29] Mr Law’s land was already planted in kiwifruit when Mr Ruiterman acquired it in November 1989. Mr Ruiterman’s evidence was that, in purchasing the land, he relied upon the registered easement, as he required a secure water supply from the stream for irrigation. Neither Mr Law, nor anyone else, informed Mr Ruiterman that the pipes etc were not laid in area A. Mr Ruiterman was adamant that he would have purchased elsewhere had he known, so as to avoid any difficulties on that score.

Footbridge Family Trust

• [30] In December 1995, Dr Ford settled the FFT. It is unclear whether the first trustees were Dr and Mrs Ford or Messrs Wiley and Mills, but it was certainly the latter by July 1996 when Dr Ford transferred the land to them. The defendants rely on this transfer as extinguishing any equitable easement which might have existed at the time.

• [31] Messrs Wiley and Mills retired as trustees in December 1997. Dr and Mrs Ford were appointed in their place, and a transfer of the land to them was registered in August 1999.

• [32] Mr (Stephen) Ford was appointed a trustee of the FFT in April 2019. Likewise his colleague, Mr Wallabh, although Mr Wallabh resigned shortly thereafter.

• [33] Dr and Mrs Ford carried out a modest subdivision in April 2007 and resource consent for another, equally modest, subdivision has been obtained.

Dispute

• [34] In or about October 2016, Dr Ford informed Mr Thornley and Ms van Houten that the pipes servicing their land were not laid in area A. The plaintiffs’ evidence is that this was when they learnt of this.
• [35] In February 2019, Dr Ford went onto Mr Thornley and Ms van Houten’s land, as I understand it, to investigate the water supply to their greenhouse. Apparently this ended in a physical altercation between Mr Thornley and Dr Ford. Following this, the trustees cut off the water supply to the plaintiffs’ land, contending they were entitled to do so as the pipes were not laid in accordance with the easement plan.

• [36] The plaintiffs then commenced this proceeding. By consent, orders were made for the restoration of supply, although the plaintiffs say that the trustees did not comply with those orders, and they were required to obtain a further order permitting them to undertake the necessary work themselves.

Research centre

• [37] The reason given as to why the plaintiffs cannot continue to obtain their supply through the existing infrastructure is that the defendants now wish to bring to fruition a long held plan of a science park or research centre on the land. The defendants have resource consent for this activity. However, as yet they do not have resource consent to construct the buildings that will be required, nor on Ms Simkiss’s, counsel for the plaintiffs, submission is any building work imminent, as a result of PPL’s lender restructuring its loan shortly before the transfer to PPL. In any event, the defendants say the best location for these buildings is one or both of two flat areas on the land to which I referred in [26] above. The defendants say that any pipes servicing the plaintiffs’ land below those areas, as they are believed to be, are likely to be disturbed and damaged during construction. Hence the defendants’ advice to the plaintiffs that they will need to lay the pipes for their land in area A.

• [38] The plaintiffs are sceptical of the defendants’ professed intentions, given the lack of resource consent and what they believe to be a present lack of funds.

Transfer to PPL

• [39] In late-2020, Mr Ford began taking steps to acquire the first defendants’ land, including incorporating PPL and arranging finance.
• [40] By agreement for sale and purchase dated 21 January 2021, the trustees agreed to sell the land to PPL for $3 million. The sale was settled and title transferred to PPL on 26 January 2021.

First cause of action — rectification

• [41] The plaintiffs did not press their claim to rectification of the registered easement at trial. In any event, I accept Mr Hayes’, counsel for the defendants, submission that there is no evidence of the required mistake between the parties to memorandum of transfer 815638.5, and so I put rectification to one side.

Second cause of action — equitable easement and indefeasibility

• [42] The second cause of action requires determination of whether the agreement between Dr Ford and Mr Palmer to lay the pipes and locate the pumphouse other than in area A created an equitable easement and, if so, whether that equitable easement survived subsequent transfers of the burdened land.

Equitable easement

• [43] In Street v Fountaine, the Court of Appeal discussed the circumstances in which an equitable easement is created.¹ The principal issue in that case was whether equitable easements existed to support the presence of infrastructure on the respondents’ (burdened) land, that infrastructure being used to carry water from a nearby stream to farms in the vicinity, including to land owned by the appellants.

• [44] The Court held that the parties’ dealings had created equitable easements running with the land, and said:
  • [50] The most common way in which an equitable easement is created is by agreement to grant that easement. Three elements are essential:

(a) The right granted must have the essential characteristics of an easement.

(b) The agreement must be supported by valuable consideration.

¹ Street v Fountaine [2018] NZCA 55, (2018) 19 NZCPR 236.

(c) There must be either a sufficient record in writing to satisfy the requirements of the Property Law Act 2007 (or in this case its statutory predecessor, s 2 of the Contracts Enforcement Act 1956), or a sufficient act of part performance.

...

• [45] The Court of Appeal identified the essential characteristics of an easement as follows:
  • [48] ... the following requirements must be met:²

(a) there must be a servient tenement;

(b) the easement must accommodate the dominant tenement if there is one;

(c) the dominant and servient owners must be different persons; and

(d) the right must be capable of being the subject-matter of a grant.

...

• [46] I am satisfied, and it was not seriously disputed, that the agreement between Dr Ford and Mr Palmer to vary the route of the pipes and location of the pumphouse gave rise to an equitable easement, that easement being on the terms of the registered easement subject to the variation in the location of the infrastructure. The agreement had the essential characteristics of an easement that the Court of Appeal identified. The required “valuable consideration” may comprise either a benefit to the promisor, Dr Ford, or detriment to the promisee, Mr Palmer. In my view there was both. There was benefit to Dr Ford in that Mr Palmer contributed to the cost of the trench to the point it ceased to carry both sets of pipes, and they shared the cost of the pumphouse. There was detriment to Mr Palmer in that he contributed to those costs, and bore the cost of the laying of the pipes thereafter, rather than bearing the cost of laying the pipes and locating the pumphouse in area A. The laying of the pipes, construction of the pumphouse, and the subsequent drawing of water also constitute part performance.

² Re Ellenborough Park [1956] Ch 131 (CA) at 140; and Attorney-General v Holland [2007] NZHC 498; (2007) 5 NZ ConvC 194,480 (HC).

• [47] Other matters indicative of an easement are the omission of any time limit on the agreement; the installation of semi-permanent infrastructure underground; and the subject matter of the easement, namely water supply required for the use of the benefitted land.³

Indefeasibility

• [48] The next issue is whether, as the defendants contend, the equitable easement created was extinguished on Dr Ford’s transfer of the burdened land, whether to Messrs Wiley and Mills in 1996 or subsequently.

• [49] There is no dispute that, absent fraud, a registered proprietor takes title free of any unregistered interest, in this case the equitable easement that I have found existed. Fraud in this context equates to actual knowledge of, or wilful blindness to, the existence of the unregistered interest, coupled with an intention that registration will defeat that interest. Such intention must be present at the time of registration, as opposed to subsequently.⁴ These matters are now provided for in ss 6, 51 and 52 of the Land Transfer Act 2017, but nothing turns on those provisions themselves or their predecessors. The principle is well established.⁵

• [50] In support of his submission that any equitable easement was extinguished by the transfer to Messrs Wiley and Mills, Mr Hayes relies on Duffy J’s decision in Kinara Trustee Ltd v Infinity Enterprises NZ Ltd, and the Court of Appeal’s decision on appeal in that case.⁶

Kinara Trustee Ltd v Infinity Enterprises NZ Ltd

• [51] Kinara claimed the benefit of a right of way over land which Infinity purchased after Kinara’s equitable interest (if any) had arisen. Infinity’s case was that any equitable easement that may have existed in Kinara’s favour had been extinguished on

³ Street v Fountaine, above n 1, at [52].

⁴ Sutton v O’Kane [1973] 2 NZLR 304 (CA) at 314.

⁵ Kinara Trustee Ltd v Infinity Enterprises NZ Ltd [2019] NZHC 1526, (2020) NZCPR 318.

⁶ Kinara Trustee Ltd v Infinity Enterprises NZ Ltd, above n 5; and Infinity Enterprises NZ Ltd v Kinara Trustee Ltd [2020] NZCA 309, [2020] 3 NZLR 626.

a prior transfer of the land to one of Infinity’s predecessor transferees who purchased without knowledge, actual or with wilful blindness, of Kinara’s equitable interest.

• [52] Duffy J accepted this submission and said that, if Kinara were to succeed, the Court would need “convincing evidence of the degree of knowledge each purchaser had when it took title”, that is to the land which Infinity had acquired.⁷ Duffy J did acknowledge that it was possible a transfer to a purchaser without the requisite knowledge might only put an equitable easement into “... an unenforceable dormant state from which it might be re-awakened if the property was purchased by a future successor in title who knew enough about the easement’s history to satisfy the fraud exception ...”, but she expressed a clear preference for Infinity’s submission.⁸

• [53] The Court of Appeal, although not required to decide the issue, considered Duffy J’s preferred approach likely to be correct.

• [54] For the sake of completeness, I note that Kinara sought leave to appeal to the Supreme Court, which acknowledged this particular point — extinguished or in abeyance — had not been finally determined but declined leave in any event.⁹

• [55] Given Kinara, Mr Hayes submits that any equitable easement that may previously have existed was extinguished on Dr Ford’s transfer to Messrs Wiley and Mills, absent evidence of knowledge in the required sense. There is no evidence of any such knowledge.

• [56] As Ms Simkiss submits, the difference between Kinara and the present case is that Messrs Wiley and Mills took a transfer in their capacity as trustees, and as trustees of a trust settled by and closely connected to Dr Ford, a party to the agreement giving rise to the equitable interest. Before I address this point further, I should say that I would have been assisted by having a copy of the original trust deed for the FFT. That, however, is not able to be found, and the only document available to me is a later, amended version of the deed executed on 19 July 2006.

⁷ Kinara Trustee Ltd v Infinity Enterprises NZ Ltd, above n 5, at [66].

⁸ At [69].

⁹ Kinara Trustee Ltd v Infinity Enterprises NZ Ltd [2020] NZSC 131, (2020) NZCPR 616.

• [57] What can safely be said, however, is that Dr and Mrs Ford were/are the principal beneficiaries of the FFT, and their children, thus Mr Ford and his siblings, and grandchildren were also beneficiaries. Dr Ford also set out in a statement of wishes that the trustees were to give principal consideration to his and Mrs Ford’s interests and, as noted, he and Mrs Ford were subsequent transferees of the land. Accordingly, if the equitable easement simply went into abeyance on the transfer to Messrs Wiley and Mills, it might have been “re-awakened” subsequently.

• [58] Ms Simkiss also referred me to Potts v Anderson.¹⁰ It was common ground in that case that Mr Potts and Mr and Mrs Anderson had reached an agreement giving rise to an equitable easement in Mr Potts’ favour, entitling him to take water from a reservoir on the Andersons’ land.

• [59] The Andersons subsequently settled a family trust, and transferred the land to themselves and a trustee company as trustees. The trustees later sought to avoid Mr Potts’ equitable interest, contending that they had obtained an indefeasible title on transfer.

• [60] Miller J did not accept this, saying:

[67] The first cause of action rests on an equitable obligation admittedly assumed by the Andersons. Indefeasibility of title protects from equitable encumbrances a registered proprietor who has no personal liability in respect of them. Mr Goldsbury contended that the enforceability of the easement in equity was affected by the change in the Andersons’ capacity from beneficial owners to trustees. But there was no evidence of competing equities in the form of conflicting obligations to beneficiaries of the family trust. In any event, the Andersons transferred the land to the trustees with knowledge of Mr Potts’ interest and the intention of honouring it. There was no suggestion that it was not within their power to comply with the easement after 1999.

• [61] Potts is not entirely on point, however, in that the Andersons themselves were transferees.

• [62] As far as I can ascertain, to the extent the Court has previously determined that an equitable interest has survived intermediate transfers of the burdened land, the transferees have taken with notice of the claimed interest. For instance, in

¹⁰ Potts v Anderson HC Wanganui CIV-2003-483-304, 5 April 2005.

Merrie v McKay, Prendergast CJ held that an equitable lease survived two intermediate transfers of the leased land, but even then both transferees had notice:¹¹

In my opinion the only distinction that can be drawn between this case and Finnoran v Weir and Locher v Howlett is the circumstance that there had been two intermediate purchases and registrations ... But it is proved beyond question that each of the registered proprietors took with notice of the plaintiff’s agreement, possession and expenditure.

• [63] Likewise in McCrae v Wheeler:¹²

Bethell was uncertain as to the legal position but he did know that there was an old deed giving the adjoining owner a right of way across his land, and like his father and his grandfather he had always recognised that owner’s rights in the matter.

...

... on the facts there can be no doubt that each of the intermediate registered proprietors took with notice of the grant and recognised their obligations under it.

• [64] Ultimately, I am not persuaded that the equitable easement survived Dr Ford’s transfer of the land to Messrs Wiley and Mills. There is no evidence that Messrs Wiley and Mills knew of the equitable interest. There is also no suggestion that the transfer was motivated by any intention to defeat that interest. The position might be different if, for instance, the transfer to the trustees had not brought about any change in the beneficial interest in the land, but it did. Likewise, it may be that Dr Ford’s powers under the trust deed as it stood at the time meant that he retained virtual control of the land. However, as I have said, I do not have a copy of the deed. Another matter I consider relevant is that Messrs Wiley and Mills mortgaged the land to the ASB. In my view, this makes the transfer to Messrs Wiley and Mills more akin to a transfer to a purchaser at arm’s length, as opposed possibly to a purchase by trustees with vendor finance.

• [65] Given this conclusion, the plaintiffs’ second cause of action fails.

¹¹ Merrie v McKay (1897) 16 NZLR 124 (SC) at 126.

¹² McCrae v Wheeler [1969] NZLR 333 (SC) at 334 and 336.

Fraud

• [66] In case I am wrong, I shall address the plaintiffs’ submission that any existing equitable interest was not defeated by the trustees’ transfer to PPL in January 2021.

• [67] I would have accepted this submission for the following reasons.

• [68] As a preliminary point, nothing turns on the distinction between Mr Ford and PPL. As PPL’s sole director, Mr Ford’s knowledge can be attributed to PPL. Moreover, Mr Ford consistently referred to himself as the owner of the land, both in contemporaneous correspondence and in evidence.

• [69] Mr Hayes submits that the knowledge necessary to prove fraud must be of a known existing right, and not an asserted right, and that the plaintiffs did not have a known existing right. In support of this submission, Mr Hayes relies on a passage from Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd in which Salmond J said:¹³

... knowledge... that an adverse claim exists, that it may possibly be well founded, and that it will be destroyed by an alienation of the property, is not in itself sufficient to stamp the transaction as fraudulent within the meaning of the Land Transfer Act.

• [70] I do not accept that it was necessary for Mr Ford to know that the plaintiffs had an existing right. I am satisfied that the knowledge he had at the time of the transfer to PPL was sufficient. He knew the plaintiffs were pursuing their claim to an equitable interest with diligence. He also knew that the Court had made orders, with his and his parents’ consent, requiring the maintenance of the plaintiffs’ supply. I add that Salmond J also said in Waimiha Sawmilling that:¹⁴

An equally extreme and equally unfounded view is that cases of this kind never amount to fraud, and that fraud necessarily involves actual knowledge or belief that the adverse right exists.

• [71] Turning to the requirement that the transfer be intended to defeat the claimed right, such intention is not required to be the sole or even dominant motive. It is sufficient that it is a causative factor.¹⁵

¹³ Waimiha Sawmilling Co Ltd v Waione Timber Co Ltd [1923] NZGazLawRp 32; [1923] NZLR 1137 (CA).

¹⁴ At 1175.

¹⁵ Waller v Davies [2005] NZHC 1236; [2005] 3 NZLR 814, (2005) 6 NZCPR 341 at [52].

• [72] In evidence, Mr Ford said that the trustees transferred the land to PPL for financial reasons and Dr Ford’s ill-health. They may have been factors motivating the transfer, but I am also satisfied that the transfer was motivated by an intention to defeat the plaintiffs’ interest, for the following reasons.

• [73] Mr Ford’s evidence was that he gave no thought to the effect of the transfer on the litigation, and that it was not until late on 17 February 2021, on reading a letter from Mr Hayes to Ms Simkiss, that he learned the transfer to PPL might extinguish the equitable easement the plaintiffs claimed.

• [74] This evidence is implausible. Mr Ford was a trustee of the FFT and a party to the litigation. It is inconceivable that he would not have taken legal advice on the effect of a transfer on the litigation prior to setting the wheels in motion. Mr Ford waived privilege in his correspondence relating to the transfer, and it is apparent that he was keeping Mr Hayes (who did not act for PPL on the transfer) informed of all the steps he was taking. The obvious explanation for this is a belief on Mr Ford’s part that a transfer to PPL would have implications for the litigation.

• [75] Nor am I able to reconcile Mr Ford’s evidence that he “gave no thought to it” with his contemporaneous correspondence. On 28 January 2021, the day after registration of the transfer to PPL, Mr Ford emailed Mr Hayes as follows:

... As I am now the owner of Footbridge as the settlement closed yesterday, I guess we will have to notify the other side.

On behalf of the new owner [PPL] of which I am the sole Director and Shareholder could you continue on the case please.

Please notify the other side that I require them to shift their pipeline to the original easement facility and that if this does not happen I will not be responsible for ensuring water is supplied to them during the landscaping that is due to take place from the 2^nd week of February. However unlikely as it may be should the water pipe be damaged during the site works I will ensure that supply for domestic use only is maintained via tanker water delivery if necessary ...

• [76] In response to an email from the plaintiffs of 9 February 2021, Mr Ford wrote “These people must be stupid, PPL has no obligation towards them and FFT cannot be compelled to do anything as it no longer owns the property”.
• [77] On about 17 February 2021, the plaintiffs lodged a caveat against the burdened land claiming an equitable easement. Shortly thereafter, Mr Ford sent an email to Mr Hayes saying “Ha, equitable easement, they have no equitable easement as the case was thrown out”.

• [78] As I have said, I am not able to reconcile this correspondence with Mr Ford’s evidence at trial that it was not until after this that he learned the transfer to PPL might affect the plaintiffs’ claim.

• [79] I also note that, in December 2021, the third party lender to PPL required Mr Ford, as guarantor, to certify “that there are no claims or legal proceedings either civil or criminal, pending or in progress, against [you]”. Mr Ford gave the necessary certificate, which was untrue at the time. Mr Ford’s explanation was that this was a legal document and he did not know what it meant. I do not accept that explanation. It is a straightforward enough matter to know whether you are a party to litigation. Mr Ford’s certificate is more consistent with an expectation on his part that the plaintiffs’ existing proceeding would cease once the transfer to PPL was effected.

• [80] It is for these reasons that I would have accepted the plaintiffs’ submission in

[66] above.

Third cause of action — estoppel

• [81] I can deal briefly with the plaintiffs’ claim that the defendants are estopped from insisting that the pipes conveying water to their land and the pumphouse be situated in accordance with the registered easement.

• [82] To succeed in a claim for an estoppel, the plaintiffs must establish each of the following:¹⁶

¹⁶ James Every-Palmer “Equitable Estoppel” in Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [19.2].

(a) that a belief or expectation has been created or encouraged through some action, representation, or omission to act by the party against whom the estoppel is alleged;

(b) the belief or expectation has been reasonably relied on by the party alleging the estoppel;

(c) detriment will be suffered if the belief or expectation is departed from; and

(d) it would be unconscionable for the party against whom the estoppel is alleged to depart from the belief or expectation.

Discussion

• [83] Addressing [82](b) above first, I accept that, when they purchased their land in 1989 in the case of Mr Ruiterman, and in 2009 in the case of Mr Thornley and Ms van Houten, the plaintiffs knew of the registered easement, relied on it as securing water supply to their land, knew that water was being supplied to their land, and were not told and had no reason to believe that some of the pipes and pumphouse were located other than in accordance with the registered easement.

• [84] Mr Hayes submitted to me that it must have been apparent to the plaintiffs that the pumphouse was not within area A. That, however, is much less of an issue than the pipes.

• [85] However, as is clear from [82](a) above, the plaintiffs must establish that their belief, that is their belief that their supply was derived in accordance with the registered easement, emanated in some way from the defendants, and I do not consider they are able to do so. The most that can be said is that the defendants were silent, and even that puts to one side that Dr Ford alone was the registered proprietor of the burdened land as of 1989 when Mr Ruiterman purchased.

• [86] A representation, referred to in [82](a) above, may be made by silence. In

Infinity Enterprises NZ Ltd v Kinara Trustee Ltd, the Court of Appeal said that estoppel

by silence or acquiescence may protect a party who relies on a belief or expectation fostered by the silence of another in circumstances rendering it unconscionable for the silent party to resile from that fostered belief or expectation.¹⁷ The Court of Appeal also said the crucial issue is whether the silent party had a duty to warn the mistaken party of its mistaken assumption.¹⁸

• [87] I do not consider it can be said that the trustees (or Dr Ford) fostered the plaintiffs’ belief or that they had a duty to warn the plaintiffs prior to their purchases. There is no evidence that Dr Ford or the defendants even knew of the plaintiffs’ intention to purchase. Nor did the plaintiffs make any submission as to how such a warning could be given.

• [88] The plaintiffs also submitted to me that the notation of the registered easement on the new titles issued on the trustees’ subdivision in 2007, to which I referred in [33] above, constituted a representation that the existing water supply was in accordance with the terms of the easement. I do not accept that submission. That the easement came down on the new titles is a product of the relevant legislation. Nor is there evidence that Mr Thornley and Ms van Houten searched the new titles prior to purchase.

• [89] It follows that I am not persuaded that the estoppel claimed by the plaintiffs operates against the defendants and this third cause of action also fails.

Other matters

• [90] The plaintiffs must be given time to consider their position, and the existing supply maintained whilst they do so.

• [91] It is, of course, open to the plaintiffs, or one of them, to appeal this judgment. It is also open to them, appeal or no appeal, to commence an investigation as to what would be required to relocate the necessary infrastructure in area A. If the plaintiffs, or one of them, were ultimately to conclude they wished to undertake that work, then all things being equal, and provided they acted with reasonable expedition, they could

¹⁷ Infinity Enterprises NZ Ltd v Kinara Trustee Ltd, above n 6.

¹⁸ At [99].

expect orders to ensure the continuation of their supply in the intervening period. The plaintiffs may have other options of water supply which they might prefer to investigate.

• [92] I shall allow the plaintiffs a period of three months to consider their position and communicate their intentions to the Court. Any appeal would, of course, need to be filed within 20 working days.

• [93] The status quo is to prevail in the meantime. The existing injunction remains in force and continues to bind all parties pending further order of the Court.

• [94] I reserve leave to apply.

Result

• [95] Subject to [90] to [92] above, I dismiss the plaintiffs’ claim.

• [96] The defendants, as the successful parties, are entitled to an award of costs and disbursements. Absent agreement, the parties may submit memoranda.

Peters J

Solicitors: MinterEllisonRuddWatts, Auckland

Hunwick Law, Hamilton

Counsel: D G Hayes, Hamilton