The recent New South Wales Supreme Court case of Jea Holdings (Aust) Pty Ltd v Registrar-General of NSW [2013] NSWSC 587, considers the current state of the law in relation to when an easement confers such extensive rights that it cannot be a valid easement. We therefore thought it would be a pertinent time to re-visit this legal principle and consider what is, and is not, an easement.

An easement is a right enjoyed by one person (the Easement Holder) over the land of another person (the Landowner) that interferes with the Landowner’s use of its own land. Common forms of easements are rights of way, where an Easement Holder can use the Landowner’s land as a walkway or driveway and drainage easements, where an Easement Holder uses the Landowner’s land for pipe work underground or drainage across the surface of the land.

One of the four basic characteristics for a valid easement is the legal principle that the easement must be “capable of forming the subject matter of the grant”. What this means is that:

  • the rights granted by the easement must not be too wide or vague;
  • the rights must not amount to joint occupation of the land between the Easement Holder and the Landowner and the rights must not substantially deprive the Landowner of legal possession of its land; and
  • the rights must not constitute mere rights of recreation.

In the Jea Holdings case, a number of parcels of land owned by Jea have a shopping centre and car-parks situated on them. There is a hotel situated on an adjoining parcel of land owned by Awar Pty Ltd. Awar claimed that it had been granted an easement for it and its customers to use 200 car parks on Jea’s land jointly with Jea and its customers. The dispute between the parties centred on whether the rights granted to Awar constituted a valid easement or whether these rights could not form a valid easement because the rights were so extensive that they deprived Jea of its legal rights of ownership and possession of its land.

The Court discussed two issues in particular in this regard. First, whether the burden on the Landowner by the easement should be considered in light of the impact of the easement on the whole of the Landowner’s land or only that part over which the easement rights exist. Second, whether it is sufficient that the Landowner retains ownership and control of its land for an easement to be valid or whether the Landowner needs to retain some substantive use of its land in order for an easement to be valid.

After detailed consideration of these points, the Court decided that the applicable test is whether there remains to the Landowner a reasonable use of its land in its entirety following the grant of the easement rights. On the facts of this case, the Court noted:

  • That the majority of the surface of the Landowner’s land was affected by the easement for car-parking.
  • That, notwithstanding this, the Landowner is still permitted to use the surface area to the extent that it does not interfere with car-parking, the airspace above the land and the ground below the land and that the Landowner therefore still had a very substantial use of its land.
  • That in cases where an easement allows both the Easement Holder and the Landowner to share a resource, it is necessary to look at how this will work in practice rather than what it would look like if the easement rights were exercised to the greatest extent possible.
  • The easement did not amount to “joint ownership” of the land by the Landowner and the Easement Holder because the Easement Holder was only able to use the land for a very limited purpose, namely car-parking.

As this case illustrates, there are very specific legal principles which determine if rights can form a valid easement. It is important to ensure that an “easement” is actually an easement rather than amounting to some greater property right (for example, a lease). In this case, the Court held that the car-parking rights could constitute a valid easement, although Awar’s claim for an easement was ultimately defeated on another point. Awar therefore found itself with a hotel but no car parks for its customers.