25 KBR Limited
[2022] NZHC 1194
•26 May 2022
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2022-409-213
[2022] NZHC 1194
UNDER the Property Law Act 2007 IN THE MATTER
of an application to extinguish a covenant
BETWEEN
25 KBR LIMITED
Applicant
Hearing: 25 May 2022 Appearances:
J R Pullar for the Applicant
Judgment:
26 May 2022
JUDGMENT OF ASSOCIATE JUDGE LESTER
Re 25 KBR LIMITED [2022] NZHC 1194 [26 May 2022]
[1] The applicant seeks an order extinguishing covenants relating to the maintenance of drains on nearby land dating back to 1907 and seeks an order dispensing with service on the owners of the titles which may have the benefit of the covenants, and leave to use the originating application procedure. There are two drains to which the two covenants relate.
[2] The area originally subject to the covenants, which was a farm, has been subsequently subdivided resulting in the covenants being brought down onto various titles. The covenants have in fact been extinguished from some titles which have been subdivided into residential Lots. The applicant is in the process of completing a subdivision of a further area subject to the covenants.
[3] The applicant seeks to have the covenants removed only from what it calls “the Application Site” marked as such on Plan A attached and in purple on Plan B attached. It is necessary for the covenants to be removed because, as is normally the case in a subdivision, the roading created for the subdivision is to vest in the Christchurch City Council (the Council).
[4] Section 238 of the Resource Management Act 1981 provides that any land that vests in the territorial authority for the purposes of a road must vest free of all interests in the land including any encumbrances. Hence this application.
[5] The application to extinguish the 1907 covenants is made pursuant to ss 316 and 317 of the Property Law Act 2007 (the Act). The applicant relies on the following provisions of those sections:
(a)that the covenants should be extinguished pursuant to s 317(1)(a) of the Act on the basis that there has been a change to the purpose for which the land is used since the covenants were created in 1907;
(b)that the covenants should be extinguished pursuant to s 317(1)(b) on the basis that their continuation in force would impede the reasonable use of the burdened land in a manner which could not reasonably have
been foreseen by the original parties to the covenants at the time of their creation; and
(c)that the covenants should be extinguished pursuant to s 317(1)(d) of the Act on the basis that the removal of the covenant will not substantially injure any person entitled to their benefit.
[6] Having considered the application for directions dispensing with service, I convened a hearing where Mr Pullar, counsel for the applicant, provided requested maps and diagrams to explain the application in more detail. While that hearing was aimed at dealing with the application for directions as to service, I am satisfied that the matters canvassed by Mr Pullar illustrate that the extinguishment of the covenants will not substantially injure any person entitled to the covenants. For the same reason, I was satisfied that it was appropriate to dispense with service on the registered proprietors and only require the application to be served on the Council as required by s 316(3) of the Act.
[7] It is easiest to explain this application both in terms of why I am satisfied it is not necessary to serve any of the landowners with the benefit of the covenants and why it is appropriate to make the orders sought, albeit on a conditional basis, as I will explain below by reference to the plans prepared by Mr Pullar and attached as Plans A and B.
[8] I refer to “Plan A”. The application only seeks to remove the covenants from the “Application Site” which is outlined in red on the bottom left of Plan A. Plan B shows the locations of Lots 1, 2 and 3 referred to in this Judgment. The Lot immediately above the Application Site is Lot 1 Deposited Plan 547871, which is not owned by the applicant and has the benefit of the covenants.
[9] The covenants relate to two drains. The first is the short section marked in red on Lot 2 Deposited Plan 68682 in the centre of Plan A which is marked “Covenant area 2.41 metres wide”. That area runs from the bluish-grey line, which runs from above the area in red up to Sparks Road and has the notation “Covenant area now
cancelled”. The covenants in issue in this proceeding were cancelled by an earlier judgment of the Court to the extent shown by the bluish-grey area.
[10] The second drain to which the covenants relate is on Lot 3 Deposited Plan 52374 being the line in red on the right of Plan A that runs from the top of Sparks Rd down to the bottom right of Plan A. This is also labelled “Covenant Area 2.41 wide”.
[11] As Plan B shows, Lot 2 is the Lot which contains the shorter drain in the centre of Plan A. The covenant area in fact extends through the area which is marked yellow and green at the bottom of the short area in red.
[12] The first practical point is this. Lot 2 in the centre of Plan A is owned by the applicant and is also subject to the 1907 covenants. That is, if the covenants are removed from the Application Site, the applicant will remain subject to the 1907 covenants by virtue of its ownership of Lot 2.
[13] Accordingly, any landowner with the benefit of the two covenants will not be prejudiced as they will retain the ability to enforce those covenants against the applicant by virtue of its ownership of Lot 2.
[14] The second practical point is that photographic evidence provided to the Court shows that the drain in the short area marked red in the centre of Plan A, no longer exists with all that remains being a slightly sunken area. The drain for all intents and purposes has been subsumed into farmland. Accordingly, it seems the drain has not existed for some time. There is no suggestion it ceasing to exist has been of concern to anyone. To that can be added that the drain no longer exists above that area in red because that area has now been subdivided into residential Lots following the covenant being extinguished from those titles without any objection.
[15] The third practical point is that the owner of Lot 1, that is the Lot immediately above the Application Site, no longer has access to either drain as Lot 2 lies between Lot 1 and the drains. There is no suggestion Lot 1 has a right to drain across Lot 2 to
access the drain on Lot 2 let alone the drain on Lot 3. Thus, in a practical sense, the future of the drains is of no moment to them.
[16] The area marked green and yellow is protected by an easement in gross to the Council and follows a similar alignment to the original drain. As I set out below, the Council is to be served with this application and this Judgment.
[17] The long drain over Lot 3 Deposited Plan 52374 is on land owned by a third party. To the extent maintenance of that drain may be a live issue, the registered proprietor of Lot 3 Deposited Plan 52374 will have the same rights against the applicant as they did before by virtue of the fact that the applicant is the owner of Lot 2 in the centre of Plan A. I have already noted this title will remain subject to the burden of the covenants if they are only removed from the Application Site.
[18] As a practical point, it is not clear how the applicant would physically be able to meet its obligations to maintain the drain on Lot 3 under the covenants as it does not have rights of access onto Lot 3 for that purpose.
[19] In addition, the evidence is that the drain no longer exists at the northern end of Lot 3. The drain is, however, still in existence on the southern end of Lot 3 extending north some 80 metres from the bottom of the red line on the Plan. The evidence is that the Council is currently working towards naturalising the drain and having reserves vested to protect it. With this application going to the Council, any issues in relation to that portion of the drain can be addressed by them.
[20] Another practical point is that, as I have said, the Application Site is being developed as residential sections and that area is now a finished residential subdivision. The owners of the Lots with the benefit of the 1907 covenants would be aware of those works. The existence of the 1907 covenants is inconsistent with the residential subdivision of the Application Site. Had either of the registered proprietors with the benefit of the covenants had concerns about the impact of that development on the covenants, they would have raised such concerns by now. The practical reality is that Lot 1 Deposited Plan 547871, Lot 2 Deposited Plan 68682 and Lot 3 Deposited
Plan 52374 will, in due course, be subject to residential subdivision. The applicant has the first right of refusal to acquire Lot 1 Deposited Plan 547871.
[21] I am satisfied that it is not necessary to serve the registered proprietors of the titles with the benefit of the 1907 covenants, they being the titles set out at paragraph 2(a) of the application for directions as to service dated 19 May 2022. Accordingly, there is an order in terms of paragraph 2 of that application. I make that order on the basis those registered proprietors cannot be adversely affected by the removal of the burden of the 1907 covenants from the Application Site only. For the same reason, I am satisfied that it is appropriate that the 1907 covenants be removed from the Application Site.
[22] Other than Lots 1, 2 and 3 discussed above, Plan B shows residential sections to the left of the purple area being properties on Kennedy’s Bush Road and two titles above the purple area to the left of Lot 1 accessed by a long driveway marked yellow on Kennedy’s Bush Road. As residential sections now some distance from the drains, the covenants are no longer relevant to them but again, any residual concern is met by the fact Lot 2 remains subject to the covenants in any event. Those owners will not be affected by the orders sought.
[23] Accordingly, I make orders in terms of paragraphs 1(a) and 1(b) of the originating application dated 19 May 2022. It obviously follows that I also grant leave for this proceeding to be dealt with by way of originating application.
[24] That leaves the need to serve the Council, such being required, as recognised by Mr Pullar, by s 316(3) of the Act.
[25] Given it is necessary that the Council be served, the order extinguishing the 1907 covenants is subject to the following conditions:
(1)The proceedings, along with a copy of this Judgment are to be served on the Christchurch City Council.
(2)The above orders may not be sealed unless and until the Christchurch City Council files a memorandum with the Court confirming it has no objection to the orders sought at paragraphs 1(1) and 1(b) of the original application dated 19 May 2022.
(3)If the Christchurch City Council does not provide the memorandum referred to in the preceding paragraph, the applicant is to report that its substantive application be listed in the next available Duty Judge List.
[26]The Plans referred to in this Judgment are attached as Plan A and Plan B.
Associate Judge Lester
Solicitors:
Taylor Shaw, Christchurch
Copy to:
The Christchurch City Council
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