Ashley Trust Nominee Limited v Nelson City Council

[2025] NZHC 1858

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2025-442-10

[2025] NZHC 1858

UNDER

Sections 316 and 317 of the Property Law Act 2007

IN THE MATTER

of an application to modify land covenant

BETWEEN

ASHLEY TRUST NOMINEE LIMITED

Applicant

AND

NELSON CITY COUNCIL

First Respondent

SECOND TO ONE-HUNDREDTH

RESPONDENTS as listed at Schedule A of the applicant’s memorandum dated 5 May 2025

On the papers:
Counsel:	J P Forsey for Applicant
Judgment:	9 July 2025

JUDGMENT OF McHERRON J

Introduction

[1]    Ashley Trust Nominee Limited, the applicant, owns a property which it wishes to subdivide as the final stage of the Marsden Park subdivision in Stoke, Nelson. Currently there is a land covenant applying to the property which prevents the applicant from completing the final stages of its subdivision. The applicant submits that this covenant was never intended to be registered on the title to the property and appears to have been accidental. The applicant therefore seeks orders modifying land

ASHLEY TRUST NOMINEE LIMITED v NELSON CITY COUNCIL [2025] NZHC 1858 [9 July 2025]

covenant instrument 8814182.9 (Covenant), to enable it to subdivide the property as the final stage of the subdivision.

[2]The respondents in this proceeding are:

(a)the Nelson City Council; and

(b)the owners of properties neighbouring the property which the applicant seeks to subdivide, and whose properties are simultaneously the dominant and servient tenements of the Covenant.

[3]    The present application has been served on the respondents, but no formal opposition or appearance has been filed by them.

What happened?

[4]    The Ashley Trust is the developer of the Marsden Park subdivision, which commenced in 2011 and has taken place in various stages. The applicant is a trustee company which holds the property on the Ashley Trust’s behalf.

[5]    A parcel of land was subdivided into the titles for the first stage of the subdivision on 14 July 2011, as well as a further title comprising the balance of the land set aside for further subdivision.

[6]    The applicant submits that Glasgow Harley, who undertook the subdivision and conveyancing works for the Trust between 2011 and 2023, erroneously registered the Covenant on the balance of the land, rather than only on the titles subdivided for the first stage.

[7]    The Covenant precludes the owner from further subdividing the title beyond minor boundary adjustments that do not create new titles. This restriction is contained in cl 23, which states:

No further subdivision of any Lot or creation of any easements affecting any Lot is permitted provided than [sic] minor boundary adjustments are permitted if no additional titles are created.

[8]    Following completion of the first stage of the subdivision, the applicant (with Glasgow Harley’s assistance) further subdivided the balance of the title into further stages of the subdivision. At each stage, each title (including the applicant’s balance land at the time) inherited the Covenant, including cl 23. Following completion of the seventh stage of the subdivision in around 2020, the property is now the balance of the applicant’s land intended for future subdivision and is burdened by the Covenant, via inheritance from previous historic titles.

[9]    The applicant was unaware the Covenant was registered on the balance title property until Glasgow Harley advised it as such on 20 June 2023, nearly 12 years after it had first erroneously been registered. The applicant never intended for it to be registered on its land. The applicant always intended to use its land for each stage of the subdivision until its completion.

[10]   Despite inquiring into Glasgow Harley’s files, it is not apparent to the applicant how the mistake came about.

[11]   The applicant now wishes to complete the final stage of the subdivision,  stage 4B, which would subdivide the property into nine titles. However, the Covenant prevents the applicant from doing so. This is contrary to the applicant’s long-standing intention to subdivide its land for the completion of the subdivision. This intention is demonstrated by:

(a)resource consents issued by the Nelson City Council with enclosed multi-stage survey plans of the subdivision.

(b)the marketing materials by the Trust advising the subdivision as a multi- stage development.

(c)clause 17 of the Covenant, which refers to the trust “progressing or completing the Marsden Park Development”.

Obtaining consent from the respondents

[12]   The applicant has written to the owners of the properties affected by the Covenant seeking their consent for its modification.1

[13]The applicant received the following responses:

(a)The seventeenth and forty second respondents provided their written consent for the extinguishment of the Covenant (rather than modification).

(b)The sixty-sixth respondents provided their written consent for the modification of the Covenant.

(c)The ninety-fourth respondents would not consent to modification of the Covenant, but have not filed a formal opposition or appearance in this proceeding.

(d)The ninety-second respondent raised concerns and requested further information on the development of stage 4B but did not expressly oppose or consent and did not file a formal opposition or appearance in the proceeding.

(e)The applicant did not seek consent from the current nineteenth, twenty- fifth, thirty seventh, eighty second and ninety first respondents as they were not owners of their respective properties at the time.

(f)The rest of the respondents did not respond to the applicant’s letters.

Proposal to modify land covenant

[14]   As already stated above, the applicant is unable to subdivide the property for the final stage of the subdivision if the Covenant remains registered in its present form

1      There is a typographical error in the proposed modification for the property’s title number as shown in the correspondence issued to the property owners at the time. This error has been corrected in the application to the Court.

on the property. To overcome this obstacle, the applicant proposes to amend the Covenant by inserting the words underlined below into cl 23:

No further subdivision of any  Lot (but excluding any Lot owned by  Ashley

Trust Nominee Limited or any related company and excluding Lot 250 DP

433210 in RT 532792 and Lot 251 DP 505218 in RT 879977) or creation of any easements affecting any Lot is permitted provided than [sic] minor boundary adjustments are permitted if no additional titles are created.

[15]   The effect of this proposed modification will be to allow the applicant to subdivide the property for the final stage of the subdivision as intended. The applicant does not seek to obtain any additional rights under the Covenant as amended.

Applicable law

[16]   Section 317 of the Property Law Act 2007 provides that a covenant may be modified or extinguished by the Court:

317    Court may modify or extinguish easement or covenant

(1)On an application (made and served in accordance with section 316) for an order under this section, a court may, by order, modify or extinguish (wholly or in part) the easement or covenant to which the application relates (the easement or covenant) if satisfied that—

(a)      the easement or covenant ought to be modified or extinguished (wholly or in part) because of a change since its creation in all or any of the following:

(i)the nature or extent of the use being made of the benefited land, the burdened land, or both:

(ii)the character of the neighbourhood:

(iii)any other circumstance the court considers relevant; or

(b)      the continuation in force of the easement or covenant in its existing form would impede the reasonable use of the burdened land in a different way, or to a different extent, from that which could reasonably have been foreseen by the original parties to the easement or covenant at the time of its creation; or

(c)      every person entitled who is of full age and capacity—

(i)has agreed that the easement or covenant should be modified or extinguished (wholly or in part); or

(ii)may reasonably be considered, by his or her or its acts or omissions, to have abandoned, or waived the right to, the easement or covenant, wholly or in part; or

(d)      the    proposed   modification   or    extinguishment   will    not substantially injure any person entitled; or

(e)      in the case of a covenant, the covenant is contrary to public policy or to any enactment or rule of law; or

(f)      in the case of a covenant, for any other reason it is just and equitable to modify or extinguish the covenant, wholly or partly.

(2)An order under this section modifying or extinguishing the easement or covenant may require any person who made an application for the order to pay to any person specified in the order reasonable compensation as determined by the court.

My assessment

[17]   I am satisfied that it is appropriate to modify the Covenant in the manner sought by the applicant. The applicant’s intention to develop its land into a multi-stage subdivision was clear from the outset and was made expressly clear in the marketing materials, resource consents (including survey plans), cl 17 of the Covenant and stage plans for the subdivision including stage 4B.

[18]   The respondents or any prospective purchaser at the time could not reasonably be under the misapprehension that the subdivision was not intended to be a multi-stage development.

[19]I accept:

(a)The applicant only intended for the Covenant to apply to the sections of the subdivision created for sale rather than balance land left over for further subdivision.

(b)Glasgow Harley erroneously registered the Covenant on the balance title.

(c)The applicant was unaware of the Covenant being registered on its land until 20 June 2023, nearly 12 years after it was registered.

[20]   The modification will allow the applicant to complete the final stage of the subdivision as it always intended to do. Without modification, the Covenant would impede the reasonable use of the burdened land in a different way, or to a different extent to that which could reasonably have been foreseen by the original parties to the Covenant at the time of its creation (if they had been aware of its existence).

[21]   The applicant has obtained written consent from some respondents and none of the respondents have formally opposed the application. In terms of s 317(1)(c) of the Property Law Act, I am satisfied that every person entitled who is of full age and capacity has either agreed to the modification of the Covenant or may reasonably be considered by their acts or omissions to have abandoned or waived the right to the Covenant.

[22]   I am likewise satisfied that the modification will not substantially injure any person entitled.

[23]   I accept it is therefore just and equitable in the circumstances to modify the Covenant as sought in the application, as not doing so will prevent the applicant from completing the final stage of the subdivision as intended.

[24] Accordingly, I make an order that land covenant instrument 8814182.9 registered on the records of title detailed at schedule B of the applicant’s memorandum dated 5 May 2025 be modified by inserting the words as set out below paragraph [14].

[25]As the applicant does not seek an order as to costs, I make no order for costs.

McHerron J

Solicitors:
Duncan Cotterill, Christchurch for Applicant