Bailey v Auckland Council
[2022] NZHC 2632
•12 October 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-001801
[2022] NZHC 2632
IN THE MATTER of an application for review under the Judicial Review Procedure Act 2015 BETWEEN
GORDON MARTIN ROSS BAILEY
First Plaintiff
COOPER SCIENCE CONSULTING LIMITED
Second PlaintiffAND
AUCKLAND COUNCIL
First Respondent
JOHN BARRY BOLLAND and JUSTIN MARK JAMES WYBORN
Second Respondent
Hearing: 6 October 2022 Appearances:
A J Sherlock, S J Ryan and A C Eager for the Plaintiffs No appearance for the First Respondent
D M Salmon KC and R M Keane for the Second Respondent
Judgment:
12 October 2022
JUDGMENT OF DUFFY J
This judgment is delivered by me on 12 October 2022 at 4 pm pursuant to r 11.5 of the High Court Rules.
.....................................................
Registrar / Deputy Registrar
Solicitors:Hesketh Henry, Auckland (A J Sherlock, A C Eager) Lee Salmon Long, Auckland (R M Keane)
Counsel: S Ryan, Barrister, Auckland
D Salmon KC, Auckland
BAILEY v AUCKLAND COUNCIL [2022] NZHC 2632 [12 October 2022]
[1] The first plaintiff is the sole trustee of a bare trust which holds 7 Marine Parade and the second plaintiff is a company with an interest in that property.1 I refer to them jointly as “the plaintiffs”. The second respondents own (more or less) adjacent land at 13 Marine Parade.2 Both properties front on to a sea cliff which has the Waitematā Harbour at its base.
[2] On Thursday 22 September 2022, the plaintiffs filed proceedings and two applications for urgent interim relief being:
(a)An application for an interim injunction in relation to the construction of a swimming pool and cabana, landscaping and earthworks, pruning of protected trees and coastal works for a boat shed at 13 Marine Parade, Herne Bay; and
(b)An application for interim orders under the Judicial Review Procedure Act 2016 (JRP Act) prohibiting the second respondents or their contractors from undertaking or continuing works at 13 Marine Parade and in the adjacent coastal marine area.
[3] The plaintiffs sought, but did not receive, an agreement from the second respondents that work would be stopped until the application for an interim injunction/order could be heard. Therefore on 30 September 2022 I urgently heard the parties and granted “interim interim” orders protecting the plaintiff’s position (via cessation of work) until the present hearing. I granted these orders pending the hearing for interim relief, which was heard on Thursday 6 October 2022. My judgment on that application now follows.
[4] The first respondents, Auckland Council, did not appear before me for the purposes of the opposed interlocutory hearing.
1 Cooper Science Limited was previously named Marine Parade Ltd and the subject encumbrance is registered in favour of the previous name.
2 There is a small strip of land between the properties belonging to 11 Marine Parade.
The dispute
[5] The dispute relates to the second respondent planning to undertake development to build a swimming pool, cabana and boat shed. Auckland Council decided that the relevant resource consents would progress on a non-notified basis on 2 March 2022.3 The consents were granted by Auckland Council on 3 March 2022 and a variation was granted on 24 March 2022. They permit the second respondent to, inter alia, do earthworks and prune the branches of pōhutukawa trees. Work on the ground began relatively recently and at present parts of the second respondent’s yard has been dug up to bare earth.
[6] The plaintiffs hold a memorandum of encumbrance over 13 Marine Parade which protects existing native trees and, they say, imposes an obligation to plant further native flora.4
[7] The substantive claim consists of a civil claim to enforce the encumbrance, a claim in nuisance (which did not feature in the arguments for interim relief) and an application for judicial review of Auckland Council’s decision to proceed on a non-notified basis for the relevant resource consents.
Legal test
[8] The purpose of an interlocutory injunction is to protect the plaintiff from injury that cannot be adequately compensated in damages.5 There are two broad limbs that provide a framework for whether the application should be granted:6
(a)Whether there is a serious question to be tried; and
(b)The balance of convenience between the parties.
3 There are a coastal and land use consent both of which relate to the erection of a boat shed on the foreshore immediately below the cliff face of 13 Marine Parade and a walkway to that shed.
4 Strictly the encumbrance is held by Marine Parade Ltd (i.e. Cooper Science Ltd, the second plaintiff).
5 American Cyanamid v Ethicon Ltd [1975] AC 396, 407, [1975] 2 WLR 316, 321, [1975] 1 All ER504 (HL).
6 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA).
[9] At first instance in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd the Court considered “a serious case to be tried” could be conceptualised as whether there is a tenable resolution of the use of fact and law on which the plaintiff may be able to succeed at trial.7 The general aim when assessing the balance of convenience is to determine where the overall justice lies.
[10]The plaintiff must give an undertaking as to damages.8
[11] An application for interim order, in relation to a judicial review proceeding, may be granted under s 15 of the JRP Act:
(1) At any time before the final determination of an application, the court may, on the application of a party, make an interim order of the kind specified in subsection (2) if, in its opinion, it is necessary to do so to preserve the position of the applicant.
(2)The interim orders referred to in subsection (1) are interim orders—
(a) prohibiting a respondent from taking any further action that is, or would be, consequential on the exercise of the statutory power:
(b) prohibiting or staying any proceedings, civil or criminal, in connection with any matter to which the application relates:
(c) declaring that any licence that has been revoked or suspended in the exercise of the statutory power, or that will expire by the passing of time before the final determination of the application, continues and, where necessary, that it be deemed to have continued in force.
…
(4)An order under subsection (2) or (3) may—
(a) be made subject to such terms and conditions as the court thinks fit; and
(b) be expressed to continue in force until the application is finally determined or until such other date, or the happening of such other event, as the court may specify.
[12] The Court must be satisfied that the orders sought are reasonably necessary to preserve the position of the applicant.9 The Court may consider all the circumstances of the case, including the apparent strengths or weaknesses of the claim, the statutory
7 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries [1985] 2 NZLR 129 (HC) at 133.
8 High Court Rules 2016, r 7.55.
9 Carlton & United Breweries Ltd v Minister of Customs [1986] 1 NZLR 423.
framework, the public interest, and the private and public repercussions of granting relief. Consideration must also be given to the purpose of interim relief power, being to:
(a)relieve the applicant from the adverse effects of a challenged decision until the challenge is heard and determined; and
(b)reserve the ability of the Court to grant effective relief if the challenge is successful.
[13] The strengths and weaknesses of the claim are relevant to the Court’s discretion, however a detailed discussion of the merits of the application, beyond the limited purposes for which the merits are relevant to interim relief, is not required.
The parties’ positions
[14] The plaintiffs seek to protect their ability to enforce the encumbrance. Their concern is that if works go ahead the resulting structures will preclude the ability to enforce, for instance, planting of further native flora in the encumbrance protected area. If trees are pruned in breach of the encumbrance it will not be possible to undo that. Additionally, they seek to preserve the amenity value of their property and the view from the property.
[15] Initially, the plaintiffs were also concerned about cliff instability that may result as a consequence of the works. The properties are effectively adjacent with only a small sliver of 11 Marine Parade (which gives that property access to the foreshore) between them so any cliff instability would affect both properties. However in the course of the hearing this concern was withdrawn. The evidence of Nicholas Speight, a Geotech engineer, for the respondents confirmed there were no stability issues. The plaintiffs chose not to challenge this evidence at the interlocutory hearing.10 Accordingly, for interim relief in relation to their civil claim they rely entirely on the memorandum of encumbrance.
10 The preparation for the opposed hearing on 6 October 2022 was necessarily rushed.
[16] The second respondents are concerned about financial loss. The work involves specialist expertise and equipment, and steps that are inter-reliant on one another. Some contracts have already been entered into and materials bought.
[17] The second respondents also have concerns about the loss of amenity of the north facing yard at 13 Marine Parade, part of which is within the delineated area of the encumbrance. This yard presently has been dug up and if an injunction were granted it would remain in that state. It cannot presently be used for recreation and the second respondents find it an eyesore. Because of the nature of the proposed works, if they cannot proceed now they will be substantially delayed as the works cannot go ahead during the winter of 2023. Accordingly, from the second respondents’ perspective the disputed works need to be completed before winter 2023. Further, they have current contractual obligations based on the works commencing now. Delay will disrupt the performance of those obligations and may incur a liability to contractors.
[18] In addition, the second respondent is concerned about the present stability of the land if piles, which are intended to support the swimming pool structure, are not able to be put in. They say that their insurance policy is unclear as to whether any slip that occurs would be covered in the context of an interim injunction stopping works.
Civil case to be tried – the encumbrance
Is the encumbrance enforceable?
[19] The memorandum of encumbrance has been registered on the title of 13 Marine Parade since 20 February 2008 (the encumbrance).11 It is in a form that was used as a device to secure the performance of ongoing non-financial obligations. This use is described in Parihoa Farms Ltd v Rodney District Council.12
11 The executed document is called a memorandum of encumbrance. Its registration on the title of 13 Marine Parade post-dates the Land Transfer (Computers Registers and Electronic Lodgement) Amendment Act 2002. This Act introduced a name change to “encumbrance instruments.”
12 Parihoa Farms Ltd v Rodney District Council HC Auckland CIV-2009-404-0537, 26 November 2010 at [8]–[11].
[20] The encumbrance in Parihoa Farms Ltd restricted owners of the subject land from subdividing it. The current owner, Parihoa Farms Ltd (Parihoa), wanting to subdivide had offered to pay the entire sum owing under the rent charge and then sought to have the encumbrance discharged. This Court, in reliance on the Court of Appeal decisions in Jackson Mews Management Ltd v Menere13 and ANZCO Foods Waitara Ltd v AFFCO New Zealand Ltd14 rejected Parihoa’s argument and found there was no lawful basis for requiring discharge of the encumbrance on payment of the rent outstanding. The commitments the encumbrance secured were found to be intended to and did on the current state of the law endure for the period originally assumed (in total a period of 999 years).
[21] There was a suggestion that Parihoa had not fully appreciated the effect of the encumbrance when it purchased the subject land. As to this the Court found:
[88] … The adverse effect on property values of accepting a constraint on subdivision is a matter on which valuers can provide advice. The extent of adverse impact on value can be measured against the advantage gained by more subdivisional consents at the other site. Once a constraint such as the encumbrance in the present case is in place, the impact of the constraint on value of the property is factored into the market so that subsequent owners acquire a property reflecting the lack of any subdivisional potential. In addition, equitable concerns are less likely to be raised when the encumbrance does not include any power of sale, which feature has added weight to concerns of unconscionability in the past.
[89] … However, as a matter of law, the purchase was completed with the purchaser on notice of the existence of the encumbrance so that any issue of this type is a matter between vendor and purchaser, and not between the purchaser and the RDC.
[22] Parihoa Farms Ltd is a helpful case. It clearly establishes the legal enforceability of a registered memorandum of encumbrance that operates as an encumbrance in gross and imposes restrictions on the owner’s use of the affected land. The fact the restrictions on use are in substance the primary obligation and payment of a rent charge the secondary obligation does not detract from the encumbrance’s legal force on the successors in title of the original encumbrancer.
13 Jackson Mews Management Ltd v Menere [2009] NZCA 563, [2010] 2 NZLR 347.
14 ANZCO Foods Waitara Ltd v AFFCO New Zealand Ltd [2006] 3 NZLR 351 (CA).
[23] I am satisfied for the purpose of this hearing that the subject encumbrance is legally the same as that in Parihoa Farms Ltd. There are the following common features. Both are encumbrances in gross. Both impose a nominal rent charge. In the case of the encumbrance in Parihoa Farms Ltd there was an annual rent charge of “5 cents” to be paid on a specified date “if demanded by that date.” The encumbrance was for a term of 999 years. Here there is an annual rent charge of $1.00 to be paid on a specified date if demanded. The term of the covenant is 99 years. In both cases the imposition of a rent charge enabled the encumbrance to be registered as a mortgage, which ensured the obligations it imposed bound successors in title. In Parihoa Farms Ltd the encumbrance imposed a non-financial obligation which restricted subdivision of the land without specified approvals. Here the encumbrance imposes a non-financial obligation which restricts the use of the land in the delineated area that the encumbrance protects. Accordingly, I am satisfied that there is a serious argument that the encumbrance in this case is legally enforceable.
[24] The next question is the effect of the encumbrance, which turns on how the encumbrance should be read.
Effect of the encumbrance
[25] Clause 3 of the encumbrance requires the encumbrancer to carry out the obligations strictly in accordance with their terms as specified in the memorandum. Those obligations are set out in two schedules. The First Schedule sets out the ongoing obligations; the Second Schedule sets out temporary obligations.
[26]Clause 4 of the encumbrance provides:
SURRENDER OF TEMPORARY OBLIGATIONS
The Encumbrancer shall be released from the Temporary Obligations once it has completed:
4.1The plantings required pursuant to clause 1.5 of the First Schedule to this memorandum to the reasonable satisfaction of the Encumbrancee whose consent shall not be unreasonably withheld or delayed; and
4.2The major renovation of the existing house on the Land in accordance with the attached concept plans is completed to an extent that the existing house has a resulting registered valuation value of at least
$600,000.
[27] Clause 5 of the encumbrance precludes any waiver of the obligations in the encumbrance:
NO WAIVER
Subject to the provisions in the preceding paragraph the Encumbrancer will not be released from any liability under this memorandum by any delay, extension of time, forbearance or waiver by the Encumbrancer or by any failure or neglect by the Encumbrancee to enforce any of the Obligations.
[28] Clause 6 of the encumbrance provides implied terms which include ss 203, 204 and 205 of the Property Law Act 2007. However, certain aspects of the Land Transfer Act 1952 and the Property Law Act 2007 are excluded:
6.1the Encumbrancer is entitled to none of the powers and remedies of encumbrancees by the Land Transfer Act 1952 and the Property Law Act 2007; and
6.2no covenants by the Encumbrancer or his or her successors in title are implied in this encumbrance other than the covenants for further assurance implied by section 154 of the Land Transfer Act 1952.
[29] The substance of the obligations are found in the first and second schedules which provide as follows:
First Schedule (Ongoing Obligations)
Tree Protection
1.The Encumbrancer covenants with the Encumbrancer that for 99 years from the date of this memorandum the Encumbrancer:
1.1will preserve the natural landscape, trees and areas of bush marked as “Existing Native Plantings to remain” on the Landscape Plan in the Covenant Area;
1.2will not (without the prior written consent of the Encumbrancee and then only in strict compliance with any conditions imposed by the Encumbrancee) cut down, damage or allow the cutting down or damaging of any of the area marked as “Existing Native Plantings to remain” on the Landscape Plan in the Covenant Area;
1.3will not do or allow to be done anything which would affect the health of any of the trees or bush marked as “Existing Native Plantings to remain” on the Landscape Plan in the Covenant Area;
1.4will remove any self seeding exotics, such as phoenix palms, from the Covenant Area; and
1.5will plant all of the plantings marked as “Proposed Additional Planting – key species” which have not been planted at the date of this memorandum provided that these plantings shall take place no later than 30 November 2008. It is acknowledged that following these plantings a purchaser from the Encumbrancer described in this Covenants shall not be bound to undertake any further plantings.
2. The Encumbrancer will not be in breach of the covenant in the preceding clause 1 if:
2.1Any of the trees or bush from natural causes not caused by any act or default by or on behalf of the Encumbrancer or for which the Encumbrancer is responsible; or
2.2Where an arborist provides a written recommendation (Recommendation) that the removal of such tree or bush will be for health and safety reasons; provided that:
2.2.1the Encumbrancer shall provide the Encumbrancee with a copy of the Recommendation:
2.2.2The Encumbrancee following receipt of the Recommendation may obtain a second opinion of the Recommendation from another arborist at the Encumbrancee’s cost. The Encumbrancee has 7 working days from receipt of the Recommendation to provide the Encumbrancer with a copy of the second opinion if it disagrees with the Recommendation. If no such notice is received within this period the Encumbrancer may undertake the removal of the tree or bush in accordance with this recommendation;
2.2.3If the Encumbrancee provides the Encumbrancer with notice pursuant to the terms of clause 2.2.2 the matter shall be settled by an independent arborist appointed by the arborist who is appointed in accordance with clause 2.2.2 above with the costs of this report to be shared evenly between the Encumbrancee and Encumbrancer.
Second Schedule (Temporary Obligations)
1.The Encumbrancer covenants with the Encumbrancer that the Encumbrancer will:
1.1.not to allow the Land to be amalgamated with either 11 or 16 Marine Parade with the intent that no development, building or structure shall be built across the present boundaries of 11, 13 or 15 Marine Parade and that no part of 11 or 15 Marine Parade shall be added to the area of the Land so as to increase the bulk and density requirements of the Land;
1.2not to permit, consent and agree to at any time 11 and 15 Marine Parade increasing their bulk, density or height to boundaries beyond that existing at 1 July 2007;
1.3ensure that all work on the planned retaining wall on the Land is to be carried out from the southern side of the dividing wall which exists on the Land as at the date of this memorandum. There shall be no encroachment or earthworks on the Covenant Area.
[30] In addition to the First and Second Schedules there is a landscape plan that is attached to and which forms part of the encumbrance. A copy is attached to this judgment.
[31] Put shortly, the encumbrancer (now the owners of 13 Marine Parade) is obliged to comply with the “ongoing obligations” set out in the First Schedule and with the temporary obligations set out in the Second Schedule. Further, the encumbrancer is only to be released from the temporary obligations once certain obligations set out in the First Schedule are met to the reasonable satisfaction of the encumbrancee.
What is the meaning of “natural landscape” in relation to the encumbrance?
[32] The plaintiffs and second respondents dispute the meaning of “natural landscape” in Clause 1.1 of the First Schedule.
[33] The second respondents argue that “the natural landscape” pertains only to vegetation, whereas the plaintiffs contend that it relates to landform or any alteration of the earth. This is an issue because of the earthworks associated with the proposed swimming pool and relocated works, and those already done by previous owners. If the plaintiffs’ interpretation is correct then the bulk of the work associated with the swimming pool installation will be in breach of the encumbrance.
[34] The relevant definitions of “landscape” in the Oxford English Dictionary include:
(a)A tract of land with its distinguishing characteristics and features, especially considered as a product of modifying or shaping processes and agents (usually natural).
(b)A view or prospect of natural inland scenery, such as can be taken in at a glance from one point of view; a piece of country scenery.
(c)Inland natural scenery.
[35] “Natural landscape” is also a term of art in relation to resource management and particularly in the context of “outstanding natural landscape” assessments where the Court must often determine the meanings of “landscape” and “natural landscape”.
In this context the Court takes into account both the landform and vegetation.15
[36] The plaintiffs point to evidence that the stability of the two plots is an issue, both in relation to 13 Marine Parade being a historic slip site of 7 Marine Parade and to cliff instability around 13 Marine Parade (which would affect both properties). A clause directed at retaining the natural landform would go towards protecting the properties from this risk and this rationale would explain the plaintiffs’ interpretation.
[37] Further, they argue that the phrase “natural landscape” has been purposely included in the clause. If this phrase were intended to only refer to vegetation (that is, trees and bush), it would be redundant in the sentence.
[38] The second respondents submit the plain construction of the clause 1.1 read in conjunction with the Landscape Plan suggests that it relates to vegetation only. They argue that in terms of cl 1.1 the list of the three subjects of protection, namely “natural landscape, trees and areas of bush”, all appear to take the qualifier “marked as ‘Existing Native Planting to remain’ on the Landscape Plan”. They further argue that it would not make sense for the qualifier to relate only to “trees and areas of bush” unless the sentence was drafted with a grammatical error. The Landscape Plan has a list of eleven species under the heading “Existing native planting to remain”, each assigned a letter which, by placement on the map, demonstrates where on the property it is located.
15 See Wakatipu Environmental Society Inc v Queenstown Lakes District Council [2000] NZRMA 59 (EnvC) at [72]–[80] and [87]–[89].
[39] Additionally, the second respondents submit that under the “Notes” heading on the Landscape Plan, elements of landscaping are referred to that would change the natural landform. Thus they say that change to the landform was envisioned at the time and the encumbrance cannot logically prohibit it.
[40] However, the plaintiffs point out that there are only two proposed changes recorded under the “Notes” heading that are proposed to be in the covenant area: these are the removal of palms and construction of a boardwalk path. Neither of these involves any material change to the natural land form of the protected area.
[41]Further, the Second Schedule, cl 1.3 states:
ensure that all work on the planned retaining wall on the Land is to be carried out from the southern side of the dividing wall which exists on the Land as at the date of this memorandum. There shall be no encroachment or earthworks on the Covenant Area.
(emphasis added).
[42] The plaintiffs contend cl 1.3 applies to the anticipated earthworks at the time, ensures they happen south of the covenant area, and excludes any other earthworks that were anticipated from the protected area. The second respondents argue that cl
1.3 relates to the earthworks that were carried out following the purchase of 13 Marine Parade from the second plaintiff and that the temporary obligations in cl 1.3 of the Second Schedule are now redundant.
Analysis
[43] At the time the encumbrance was executed the second plaintiff had an interest in both 7 and 13 Marine Parade.16 It executed the encumbrance as both encumbrancer and encumbrancee knowing 13 Marine Parade was to be sold. The purpose of the encumbrance was seemingly to protect the delineated part of the north facing front yard at 13 Marine Parade that was subject to the encumbrance by restricting interference with it. It is the extent to which the restriction still applies that is now in issue in this proceeding.
16 The second plaintiff was then called Marine Parade Ltd which is the name used in the encumbrance.
[44] The purchasers of 13 Marine Parade in 2008 are not the current owners. At the time of purchase the north facing front yard of 13 Marine Parade included land covered by native bush and some exotic trees which sloped down towards a cliff face that abutted the Waitemata Harbour. The purchasers were intending to do a major renovation of the house on 13 Marine Parade (as recorded in cl 4.2 of the encumbrance). This included the addition of a swimming pool. The landscape plan attached to the encumbrance allowed them to construct a swimming pool beside the western side of the house situated on 13 Marine Parade and also allowed for some paving and a pathway that led in a meandering fashion to stairs going down the cliff face. The landscape plan also delineated an area in front of the house that was to be subject to and protected by the encumbrance. The swimming pool and paving were outside the protected area. The meandering path ran through the protected area.
[45] There is a strong delineation on the landscape plan between the manmade area (which includes a swimming pool that sits outside the protected area) and the natural area, the latter of which is covered by the encumbrance but the former not.
[46] Where there are two opposing interpretations, it is possible that both interpretations are arguable. The question is whether the competing interpretation put forward by the second respondent means that the plaintiffs’ interpretation is not seriously arguable. I do not consider that it does. Photographs of 13 Marine Parade in 2008 before the works in the landscape plan were done show that in the area that is now protected by the encumbrance there were trees and other vegetation growing there. The landform appears to be in or close to a natural state. Clause 1.5 of the First Schedule required additional planting of native trees to occur. Clause 4 of the encumbrance stated that until the additional native plantings were done there would be no release from the temporary obligations in the Second Schedule. Clause 1.3 of the Second Schedule requires all works on a planned retaining wall to be done south of the protected area and specifically states that “There shall be no encroachment or earthworks on the Covenant area.” I acknowledge that the earthworks referred to could be understood to be those undertaken at the time. However, the sentence prohibiting encroachment or earthworks in the covenanted area could also be read as a stand-alone sentence that would continue to have force for as long as the temporary obligations had force.
[47] One way of reading the encumbrance is that the First Schedule prohibited the cutting down or damage of trees. So once trees were planted any disturbance around them would be subject to scrutiny as to whether the encumbrance prohibited the activity or not. Before the obligatory planting of native trees occurred cl 1.3 of the Second Schedule prohibited the encumbrancer from carrying out any encroachment or earthworks in the covenant area. And cl 4 of the encumbrance expressly determined the life of the temporary obligations by making express provision for when they would be considered to have been surrendered. As matters stand there appears to be no argument that cl 4.2 of the encumbrance has not been satisfied. However, as regards cl 4.1 the plantings that were required to be done by cl 5 of the First Schedule are yet to be done. Accordingly, by operation of cl 4.1 and the failure of the encumbrancers to perform cl 1.5 of the First Schedule cl 1.3 of the Second Schedule is arguably still live.
[48] This interpretation of the overall effect of the encumbrance is consistent with the phrase “the natural landscape” in cl 1.1 of the First Schedule being intended to protect the natural landform of the covenanted area as well as the trees and vegetation growing on it. If the encumbrance were only intended to protect native trees and vegetation as well as to ensure the planting of additional natives there would been no need to provide ongoing protection against encroachment and earthworks in cl 1.3 of the Second Schedule. In this way clause 4 and the First and Second Schedules can be seen as inextricably linked, with each bolstering the strength of the others. I accept that this view of the Second Schedule hinges also on whether it is viewed as still live. However, I am satisfied there is a serious argument that the Second Schedule remains live. Even if it were not, I still consider, based on the other factors I have identified, that there is a serious argument that cl 1.5 protects natural landform and typograph as well as trees and vegetation.
[49] I am satisfied that at a time when the landform for the north yard was partially covered with native trees and vegetation which the encumbrance was intended to protect it is seriously arguable that its scope was intended to protect the natural form of that land from interference, such as from earthworks, as well as the trees and vegetation growing on or around it. Preservation of the natural landscape would ensure the most natural unaffected appearance of the trees and bush, which is how
everything in the north front of the yard appeared in 2008 before the purchasers had undertaken their works. The intrusion of a path/boardwalk in this area to gain access to the steps to the foreshore would have had a light footprint that made no material impact (as encroachment or earthworks would) on the overall natural native bush/vegetation appearance of this area. This appearance was obviously something the encumbrancee wanted to preserve because in this case it went so far as to put the encumbrance on the title, and it acknowledged the presence of the encumbrance had reduced the value of the land; hence the acknowledged reduction in sale price.
Is the proposed trimming of pōhutukawa trees captured by the encumbrance?
[50] As part of the installation of the proposed boat shed, the second respondents need to prune several branches of existing pōhutukawa trees that grow out of the side of the cliff. Overall, the pruning is expected to comprise (adopting the tree labels from the Tree Consultancy Company report):
(a)Tree 1 – Smaller second and third-order branches which range in diameter up to 100 mm. This is primarily concentrated to the lower western canopy edge.
(b)Tree 2 – Removal of the two lowest limbs off the main trunk. These branches have diameters estimated to be approximately 200 mm in diameter.
(c)Tree 3 – Pruning of the lowest eastern limb, back to epicormic growth shoots, mid-way along the stem. (This limb is partially dead).
[51] Prima facie the proposed pruning appears to fall within the definition of “damage” of the trees per cl 1.2 of the First Schedule. Clauses 1.1 and 1.3 of the First Schedule are potentially engaged.
[52] However, the second respondents submit, with reference to the arborist reports, that the pruning of the trees will support the health of the trees. The pruning of Tree 2 prevents the risk of the trunk rotating and damaging the cliff (thus risking the tree)
and the pruning of Tree 3 would remove a dead limb and encourage new growth. Accordingly the second respondent submits there is no “damage”.
[53] The first question is whether the three pōhutukawa trees are located within the title of 13 Marine Parade. If not, the encumbrance does not apply to them.
[54] Mr Bailey’s affidavit describes “four significant pōhutukawa trees” which were “in the Covenant Area”. (One of these trees was cut down by A R Development.).
[55] The pōhutukawa trees are identified on the Landscape Plan attached to the memorandum of encumbrance, however, it is unclear from this image whether they all fall within the boundary of 13 Marine Parade.
[56] In the Tree Consultancy Company report, Appendix B shows the trunk of “Tree 1” is within the property boundary of 13 Marine Parade. The trunk of “Tree 2” is shown just outside the boundary on the seaward side. Aerial photography suggests at least one branch and some foliage are within the property boundary. On the Architect’s plans, Tree 2 appears to be on the boundary line.
[57] The trunk of “Tree 3” appears in the Tree Consultancy Company report image and the Landscape Plan annexed to the encumbrance memorandum to be on the corner of the neighbouring property. The Tree Consultancy company report states “[t]hree protected pōhutukawa trees are located within the Significant Ecological Area adjacent to the cliff face of the property. One of these trees is further to the west of the property boundary. … Tree 3 is the most western…All three trees are perched on the cliff edge”.
[58] However, the source of the Tree Consultancy Company’s boundary markings and map image is not apparent.
[59] The record of title as of 2009 shows the seaward boundary of the property as the mean high water mark. The property is on a cliff face, which the pōhutukawa grow out of/on. Given the landscape I infer that the mean high water mark would be somewhere below the foot of the cliff and thus, growing on the cliff face, Tree 1 and
2 would be within the property boundary.17 Tree 3 still appears to be west of the property boundary, but very close to it.
[60] I consider there is ambiguity as to the legal position of some of the trees such that there is an arguable case that they are covered by the encumbrance.18 Some are obviously within the covenant area. The exact position of the mean high water mark, and thus the property boundary, as well as the three trees to be protected needs to be surveyed. It would be helpful if this were done before the substantive hearing. There is a separate issue if one or more of the pōhutukawa trees are growing on adjoining properties (11 and 15 Marine Parade) because that will mean the interests of those owners are engaged.
[61] Whether the proposed pruning amounts to “damaging” the pōhutukawa trees hinges on the meaning of those words in the encumbrance and a factual assessment of the impact of the proposed pruning on the subject trees. Such assessment will be influenced by expert evidence from arborists as well as evidence from surveyors on the location of the trees in relation to the boundary of 13 Marine Parade. There is conflicting evidence on these matters. Such conflicts cannot be resolved at a hearing for interim relief. However, I am satisfied the evidence of the plaintiffs’ witnesses supports there being a serious argument for preservation of the affected trees in their current form.
Does the “replanting” obligation apply to the second respondents?
[62] Under the Property Law Act 2007, a mortgage includes “any charge over the property for securing … the performance of obligations” and an encumbrance includes “a mortgage, a trust securing the payment of money, or a lien”.19 The construction of s 101 of the Land Transfer Act 1952 also suggests an encumbrance is a mortgage.20
17 Although Tree 1 is arguably to the east of the property boundary on 11 Marine Parade.
18 The location of Tree 3 (and possibly Tree 1) raises the issue of why the Council have granted a consent allowing the alteration of a tree that is, or may be, on the property of a neighbour.
19 Property Law Act 2007, s 4.
20 See Walker v Walker [1932] NZLR 1440. See also ANZCO Foods Waitara Ltd v AFFCO New Zealand Ltd (2005) 2 NZCCLR 759 (CA) at [51].
[63] The encumbrancee under a registered encumbrance instrument has the normal remedies of a mortgagee under a registered mortgage.21
[64] Any purchaser of mortgaged land subject to a mortgage is personally liable to the mortgagee for the payment of all principal money and interest secured by the mortgage as if he or she were an original mortgagor of the land:
203 Person who accepts transfer, assignment, or transmission of land personally liable to mortgagee
(1) If a person accepts, subject to a mortgage, a transfer, assignment, or transmission of mortgaged land,—
(a) the person becomes personally liable to the mortgagee—
(i) for the payment of all amounts and the performance of all obligations secured by the mortgage; and
(ii) for the observance and performance of all other covenants expressed or implied in the mortgage; and
(b) the mortgagee has all remedies under or in connection with the mortgage directly against that person as if that person were the person who gave the mortgage.
[65] The applicability of this provision to encumbrances was confirmed by the Court of Appeal in ANZCO Foods Waitara Ltd v AFFCO New Zealand Ltd.22
[66] As per the encumbrance memorandum here, “encumbrancer” means “the person named as the encumbrancer in this memorandum and includes the person for the time being registered as proprietor of the Land but only for as long [as] that person has an interest in the Land”. The encumbrancer is named as the second plaintiff (the land had not yet been sold when the encumbrance memorandum was prepared and Marine Parade Ltd owned both properties). The second plaintiff is also named as the encumbrancee (which includes its successors and assigns).
21 Neil Campbell “Land as Security: Encumbrance Instruments” in Hinde McMorland and Sim Land Law in New Zealand (online ed, LexisNexis) at [15.165], citing Walker v Walker [1932] NZLR 1440.
22 ANZCO Foods Waitara Ltd v AFFCO New Zealand Ltd (2005) 2 NZCCLR 759 at [51] referring to the analogous s 104 of the Property Law Act 1952.
[67] Clause 6 confirms that section 203 of the Property Law Act 2007 applies to the encumbrance. Accordingly the second respondents, as successors in title to the original encumbrancer are liable to perform the obligations set out in cl 1.5 of the First Schedule.
[68] However, there is a question as to the construction of the clause and thus the nature of the obligation. The plaintiffs argue that the date of 30 November 2008 was the date by which the replanting was to be done. The planting having not been done by that that date the previous owners were in breach, and the second respondents remain obligated to remedy the breach. The second respondents argue that upon 30 November 2008 the obligation expired.
Analysis
[69] The plaintiffs’ argument is seriously arguable. The landscape plan annexed to the memorandum of encumbrance sets out a development plan with the location of each site of proposed additional planting. The purchase price in 2008 was lowered in recognition of the work that the purchasers would need to do to comply with the encumbrance. Clearly this plan was intended to be implemented rather than elapse and be abandoned within 10 months of the encumbrance being registered.
[70] Further, the encumbrance expressly includes clause 5 which essentially provides that past failures by the encumbrancee to enforce the encumbrance cannot preclude subsequent enforcement. The inclusion of this clause is consistent with the requirement continuing to have effect after 30 November 2008. That the elapse of the date merely entitles the encumbrancee to remedies in relation to the breach but does not lift the obligation, is seriously arguable. Indeed, I find it difficult to read cl 1.5 any other way.
Are the plaintiffs estopped from enforcing the encumbrance?
[71] The second respondents argue that the plaintiffs have sat on their hands in relation to the encumbrance and are estopped from enforcing it due to delay and misrepresentation.
[72] The principles of equitable estoppel were reviewed by the Court of Appeal in Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd.23 The elements of estoppel were set out in that case as follows:
(a)a belief or expectation by [A] has been created or encouraged by words or conduct by [B];
(b)to the extent an express representation is relied upon, it is clearly and unequivocally expressed;
(c)[A] reasonably relied to its detriment on the representation; and
(d)it would be unconscionable for [B] to depart from the belief or expectation.
[73] The bulk of the work done in breach of the encumbrance was undertaken by AR Developments Ltd. The individuals who have occupied 7 Marine Parade since the plaintiffs have held interests in this land did not become aware of the works done by AR Developments Ltd until they returned from overseas. However, shortly after they returned, AR Developments Ltd went into liquidation. The plaintiffs submit that this pragmatically precluded any options for relief.
[74] On 27 March 2018 the plaintiffs wrote to the previous owners of 13 Marine Parade (Mr and Mrs Coster) informing them of the breaches of the encumbrance committed by them and the fact they had failed to rectify damage done in breach by their predecessor, AR Developments Ltd. This letter noted that the plaintiffs were “aware that you are selling the property, and accordingly any potential purchaser needs to be made aware of the covenants contained in the Easement (sic) and the current breaches”. Mr and Mrs Coster then sold the property to the second respondents.
[75] It therefore appears that, contrary to representing that the encumbrance would not be enforced, the plaintiffs made their rights known to Mr and Mrs Coster and requested they inform the purchaser. Also, the plaintiffs’ lawyer wrote to Auckland
23 Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZLR 567.
Council on 23 March 2021 informing it about the encumbrance and requesting the existence of the encumbrance be recorded for any potential future resource consent applications.
[76] Additionally, it is the plaintiffs’ evidence that as against the second respondents they were not aware of any new potential breaches of the encumbrance until work began shortly before proceedings were filed.
Analysis
[77]Clause 5 of the memorandum of encumbrance provides:
5. NO WAIVER
Subject to the provisions in the preceding paragraph the Encumbrancer will not be released from any liability under this memorandum by any delay, extension of time, forbearance of waiver by the Encumbrancee or by any failure or neglect by the Encumbrancee to enforce any of the Obligations.
[78] The Court of Appeal case of Infinity Enterprises NZ Ltd v Kinara Trustee Ltd provides helpful guidance here.24 In that case, Kinara enjoyed a right of way over an adjacent piece of land that separated its land from Infinity’s land. The driveway continued over the adjacent land onto Infinity’s land before joining with the main road. The right of way was registered over the adjacent land, but was not registered on the title of Infinity’s land. Kinara argued that Infinity was estopped from refusing to recognise an equitable right of way because it had been silent and had not sought to prevent Kinara from using the driveway.
[79] The Court of Appeal held that the effect of the Torrens system of title registration meant Kinara had constructive knowledge of Infinity’s clear title. That constructive knowledge precluded a claim for estoppel by silence.25 In this regard the Court of Appeal found that the duty to speak out is not based on the reasonableness of the assumption of the party seeking estoppel.26 Instead the question is whether an objective reasonable person would expect the silent party to speak out.27 In the case
24 Infinity Enterprises NZ Ltd v Kinara Trustee Ltd [2020] NZCA 309, [2020] 3 NZLR 626.
25 At [116]–[117].
26 At [125].
27 At [102]–[103].
of constructive knowledge, there would be no mistake to correct. Additionally the duty to speak out in this situation would run counter to the principle of indefeasibility and the maxim that the register gives notice to the world of the facts it contains.28
[80] Here, the second respondents have either constructive or actual knowledge of the encumbrance registered on their title. Accordingly, following the reasoning of Infinity v Kinara, there is no duty on the plaintiffs to speak out about their rights. They are simply entitled to rely on the fact the encumbrance is registered on the title of 13 Marine Parade.
[81] Given the factual background before me I consider it unlikely that an argument based on estoppel, acquiescence or waiver would succeed.
[82] The second respondents argue that through force of circumstance and previous breaches of the encumbrance it is now essentially redundant as any landform, trees and vegetation it was intended to protect largely no longer exist by reason of past breaches of the encumbrance. This is particularly so in relation to the trees and vegetation above the cliff face. I acknowledge much of the subject areas are significantly changed, particularly the protected area in front of the house on the top of the cliff face. The work actually carried out by the purchaser in 2008 appears to have gone well beyond what the encumbrance permitted and now after the recent demolition of the work done by successive owners in preparation for the new swimming pool and associated structure the area is largely nothing like what was to be protected in 2008. However, that is not a basis for this Court to disregard the obligations the encumbrance imposes. I am not persuaded the encumbrancee has waived its rights, acquiesced, or is estopped from enforcing its rights. Accordingly, I must view the encumbrance for the purpose of interim relief as still capable of enforcement.
[83] Insofar as the second respondents would contend it is unreasonable and impractical to expect to enforce the encumbrance now they may have a remedy available to them under s 317 of the Property Law Act 2007. Under this provision, it if applies, they could apply to have the encumbrance removed from the title on the
28 At [110] and [114].
ground it is redundant. To date they have not taken this step.29 If s 317 does not apply it follows that the encumbrance will remain on the title and therefore available for enforcement subject to any other statutory mechanism that would allow for its removal.
Conclusion on case to be tried
[84] It follows from the above reasoning that I am satisfied the plaintiffs have a seriously arguable case to be tried.
Balance of convenience
[85] The plaintiffs submit that certain elements of the proposed works cannot be reversed and the loss of amenity cannot be compensated with damages. The plaintiffs are concerned that if the works went ahead, it would be difficult to undo the works both physically and because there would be a human reluctance to do so. Additionally they are concerned that it may not be possible to reverse the “environmental degradation” that they say would occur due to the pruning of the trees. Further if piles are put in the proposed swimming pool area within the covenant they may not be able to be removed and some piles may preclude trees from growing in the area (as may be required by the replanting obligation).
[86] The second respondents submit that it would be preferable to continue with the works and stay open to the risk of a final injunction which may require the works to stop or be undone. Accordingly, they would agree not to argue at the substantive hearing that the works should not be undone because they had been completed. In support the second respondents cite the case of Kawau Island Action Inc Society v Auckland Council where the Gordon J returned a resource consent notification to the Council for fresh consideration despite the subject boatshed being partially built.30 The Judge noted that the party building the boatshed had done so in the knowledge of the proceedings.31
29 I note that in Parihoa Farms Ltd v Rodney District Council there was no discussion about removal of the encumbrance by s 317.
30 Kawau Island Action Inc Society v Auckland Council [2018] NZHC 3306 at [218].
31 At [218].
[87] The second respondent also argues that it is likely that even if the encumbrance were enforced, it is unlikely that specific performance would be ordered, relying on Ruxley Electronics Ltd v Forsyth.32 Accordingly, it is likely damages would be paid, if the plaintiffs’ case succeeds. The continuance of the work would not prevent the payment of damages.
[88] Finally the second respondent submits that the plaintiff is a company that cannot enjoy amenity values.
Analysis
[89] I do not accept the present situation is the same as that in Ruxley Electronics Ltd. In that case the contracted works had been completed but to what the Court found to be a minimal extent they fell short of the design specification. The Court was not prepared to order that the works be completely demolished and built in full compliance with the specified design.
[90] Here, as matters stand, when it comes to the area subject to the replanting clause in the encumbrance it has been substantially demolished in preparation for the proposed new works. The works the previous owners had constructed in contravention of the encumbrance have been demolished. There is now mainly bare earth. Whether the remaining parts of demolished concrete retaining wall are removed and the area recontoured for native plantings or for the construction or prepared for the construction of a swimming pool are alternate available choices. There appears to be no physical impediment to the removal of the remnants of the former retaining wall and works then carried out enabling replanting in native vegetation. That is not the landscape the owners of 13 Marine Parade want to have in their front yard, but it is the landscape required by the encumbrance.
[91] If the proposed new works go ahead the opportunity to enforce the encumbrance will be lost, in that once a swimming pool is constructed over the protected area and landscaping relevant to a swimming pool is in place it will not be
32 Ruxley Electronics Ltd v Forsyth [1996] 1 AC 344.
possible for the native plantings to be done. On the other hand, if the proposed works are delayed the second respondents will suffer loss of amenity of the property and there will no doubt be a financial cost through the works being delayed. Weighing up the alternate outcomes it is clear to me that money can compensate the second respondents, but it is difficult to see how money could compensate for contravention of the protected area. It is hard to see how there could be a money equivalent for the protected natural landscape that the encumbrance has sought to preserve. Whilst much of the original landscape may have been lost the possibility of replanting remains open and available.
[92] As regards the second respondent’s reliance on the approach taken in Kawau Island Action Inc Society v Auckland Council I do not consider that case to be comparable to the present.
[93] There the Court granted final relief and sent the resource consent back to Auckland Council for reconsideration. In that case the Dukes who had benefited from the resource consent under challenge had demolished and rebuilt a boatshed. The boatshed was partially rebuilt at the time of the substantive hearing of the judicial review. This did not deter the Court from setting aside the consent and sending it back to the Council for reconsideration. The Court found that the Dukes had commenced rebuilding the boatshed in knowledge of the challenge to the resource consent on which they relied.
[94] However, in Kawau Island Action Inc Society v Auckland Council the issue was about the use of a helicopter pad that was to be incorporated into the boatshed. The fact a new boatshed was partially built was not the pivotal issue. Had the ultimate outcome of the reconsideration resulted in a resource consent for use of the helipad and the boatshed being refused there was still no objection to the construction of the proposed new structure as a boatshed. The fact work may have been done on a helipad that might ultimately not be available for use would not in itself require removal of the boatshed.33 Accordingly, there appears to have been nothing in issue in Kawau Island Action Inc Society v Auckland Council that required the construction of the
33 The design of the boatshed meant the helipad was internal with a moveable roof section that opened to allow the helicopter entry.
boatshed to be stopped before the lawfulness of the Council’s decision on the resource consent was finally known.
[95] Here the matter is quite different because the construction of the swimming pool and associated structures would require demolition if the new planting provision in the encumbrance were subsequently found by the Court to be enforceable. That would entail significant upheaval of the north-facing front yard. Placement of the new boatshed requires removal of boughs from pōhutukawa trees that are arguably protected by an encumbrance which the plaintiffs hold over the land on which they grow.
[96] Accordingly, I consider the balance of convenience favours the granting of an interim injunction restraining the proposed works on the cliff top (swimming pool) and any associated building/earthworks in the protected covenant area from going ahead (until this proceeding has gone to trial and been determined). I also find the pōhutakawa trees that require pruning for the boat shed to be constructed, should be protected by interim relief, however, I consider for reasons given later in this judgment that can be done by the interim relief sought in the JRP Act cause of action.
[97] The second respondents raised delay as a reason for denying interim relief. This is relevant to the injunction application and the application for relief under the JRP Act. I shall deal with delay relevant to both forms of relief at the end of the judgment.
Undertaking as to damages
[98] At the hearing the second respondents queried the plaintiffs’ ability to provide assurance that their undertaking as to damages could be relied upon to provide the level of financial compensation the second respondents consider they would be entitled to should they succeed at trial.
[99]When the application for interim relief was first made the plaintiffs referred to
$50,000 being held to meet costs. Since then that sum has been increased to $200,000. The second respondents say the compensation they would be entitled to well exceeds
$200,000. To date the beneficiaries of the trust of which Mr Bailey is trustee have
been reluctant to provide evidence to show that they would indemnify Mr Bailey to the extent of any compensation the second respondents might be granted. Further, the second plaintiff has provided no financial statements to show the extent to which it could meet a damages award.
[100] At the hearing I was advised that the plaintiffs would look at providing a larger sum of money to essentially be held in escrow until the substantive matter was determined. Ultimately it is for the plaintiffs to determine whether they provide financial statements that would provide a surety that they can meet the higher sum of damages than the $200,000 that has presently been put aside, or they put a higher sum of money aside for that purpose.
[101] At present the second respondents have not provided a detailed evidential outline of the financial loss they will suffer if interim relief is granted. Following the hearing, their counsel filed a memorandum which advanced further factual and legal submissions on the financial loss for the second respondents if their works were stopped by interim relief. I cannot rely on generalised statements of loss from counsel’s submissions. Until the second respondents provide a proper foundation for their claim of significant potential loss, it is difficult for the plaintiffs to know what additional funds should be set aside. Also, it is difficult for the Court to assess properly the extent of this alleged effect and, therefore, the need to make provision for the second respondents’ concerns vis-a-viz the undertaking as to damages. Thus, more information about the potential future loss that might be suffered by the second respondents is required before it can influence the assessment of whether the present undertaking is sufficiently supported or not.
[102] The beneficiaries of the trust have to date acted in a way which to me indicates they very much value their privacy. It may be that they were reluctant to provide information setting out their financial position before they knew whether interim relief would be granted to them. It may be even then that they would rather set aside a sum of money to which would be sufficient to cover any compensation the second respondents were entitled. At present I do not have the answer to these uncertainties. However, I do know that there is $200,000 presently available to meet any loss that would be covered by the undertaking as to damages.
[103] In such circumstances I consider it appropriate to grant the relief sought, but to allow it to be revisited once the parties have provided better information to the Court on the undertaking question. The availability of the $200,000 sum set aside in escrow satisfies me that the undertaking is covered at present. Once the parties have the benefit of my judgment each group will then be in a better position to ensure I have the information before me that I need for the injunction to continue.
[104] Accordingly, I propose to extend the injunction granted on 30 September 2022 to 14 November 2022 in relation to the north facing yard on the cliff-top of the land protected by the encumbrance. Counsel should liaise with the registry to obtain a half day hearing date after 14 November 2022 to resolve the undertaking issue. The parties should confer with each other regarding a timetable and when they can next be before the Court on the undertaking question.
The judicial review
Should the consents have been notified on a limited basis?
[105] The claim can be briefly summarised as follows. The plaintiffs claim the resource consents from Auckland Council should have progressed on a limited notification basis to allow them to make a submission. This is because they consider they are adversely affected by the proposed works because it impinges on the protection they are entitled to under the encumbrance.
[106] The plaintiffs claim that the Council made several errors of fact and law in its assessment of adversely affected parties. Notably, the Council appears to have made several errors relating to the encumbrance. On the Planning Officer Processing Checklist, the Council planner recorded next to the “Encumbrances” checkbox: “One to Marine Parade Limited and one to Council. Not subject to RMA and do not impact processing”. It is the plaintiffs’ position that the encumbrance does impact processing. Additionally it appears that the Council mistakenly attributed the encumbrance to itself and confused it with its encumbrance as to water quality/drainage:
The title is subject to two encumbrances: one to Marine Parade Limited and one to Auckland City Council. The encumbrance to Council includes tree protection requirements within the covenanted area (space between the existing dwelling and coastal boundary), without written consent from Council.
(emphasis added)
[107] It is clear that the Council has seemingly failed to realise that the encumbrance to “Marine Parade Limited” included tree protection and therefore that this encumbrance had an interest in what happened to the trees within the covenant area, which includes the trees to be pruned. The Council was made aware of the encumbrance by letter from the occupier’s solicitors of 23 March 2021 which predated the resource consent applications.
[108] Accordingly the plaintiffs seek that the notification decision is quashed. They claim that if the resource consents should have been notified but were not, they are invalid and should too be quashed and reconsidered on a notified basis.
[109] Sections 95 to 95E of the Resource Management Act 1991 (RMA) set out the circumstances in which a resource consent application should receive public notification, limited notification or no notification. It is sufficient to say here that public notification allows any member of the public to make a submission that the Council will consider on the application and limited notification the same but for those who are specifically notified.34 The power to lodge an appeal against the grant of resource consent is usually restricted to those who made a submission on the application.35
[110] Whether a consent should be notified on a limited basis is assessed by reference to the “steps” set out in s 95B of the RMA. Step 1 relates to identifying affected iwi groups. Step 2 precludes limited notification in certain circumstances which do not apply here. Under step 3, any “affected person” (determined in accordance with s 95E) must be notified. Additionally, under step 4 there may be “special circumstances” that warrant notification to persons not already eligible to be notified (excluding persons assessed under s 95E as not being affected persons).
[111]Section 95E reads:
Consent authority decides if person is affected person
(1) For the purpose of giving limited notification of an application for a resource consent for an activity to a person under section 95B(4) and (9) (as
34 Resource Management Act 1991, s 96.
35 Section 120.
applicable), a person is an affected person if the consent authority decides that the activity’s adverse effects on the person are minor or more than minor (but are not less than minor).
(2) The consent authority, in assessing an activity’s adverse effects on a person for the purpose of this section,—
(a) may disregard an adverse effect of the activity on the person if a rule or a national environmental standard permits an activity with that effect; and
(b) must, if the activity is a controlled activity or a restricted discretionary activity, disregard an adverse effect of the activity on the person if the effect does not relate to a matter for which a rule or a national environmental standard reserves control or restricts discretion; and
(c) must have regard to every relevant statutory acknowledgement made in accordance with an Act specified in Schedule 11.
(3) A person is not an affected person in relation to an application for a resource consent for an activity if—
(a) the person has given, and not withdrawn, approval for the proposed activity in a written notice received by the consent authority before the authority has decided whether there are any affected persons; or
(b) the consent authority is satisfied that it is unreasonable in the circumstances for the applicant to seek the person’s written approval.
(4) Subsection (3) prevails over subsection (1).
[112] It has been recognised in Tasti Products Ltd v Auckland Council that matters relevant for consideration of whether to grant a consent under s 104(1) are also relevant to the assessment that of whether a person is an affected person in terms of s 95E.36 The factors in s 104(1) are:
(a) any actual and potential effects on the environment of allowing the activity; and
(ab) any measure proposed or agreed to by the applicant for the purpose of ensuring positive effects on the environment to offset or compensate for any adverse effects on the environment that will or may result from allowing the activity; and
(b) any relevant provisions of—
(i) a national environmental standard:
(ii) other regulations:
36 Tasti Products Ltd v Auckland Council [2016] NZHC 1673, [2017] NZRMA 22 at [82].
(iii) a national policy statement:
(iv) a New Zealand coastal policy statement:
(v) a regional policy statement or proposed regional policy statement:
(vi) a plan or proposed plan; and
(c) any other matter the consent authority considers relevant and reasonably necessary to determine the application.
[113] The plaintiffs submit that if a property interest is affected by work that is the subject of a resource consent, then the interest holder is an affected person, particularly if the property interest has an environmental character as is here.37 Additionally, at least some of the trees grow out of the covenant area and are subject to protection under the encumbrance. Accordingly because of the proposed pruning of the pōhutukawa trees the plaintiffs would be affected persons.
[114] The second respondents say that a simple property interest is not enough. The Council must consider the environmental effect of the proposal in an objective sense. If neighbours are particularly sensitive this should not be taken into account. Accordingly the second respondent submits the environmental value indicated by the encumbrance is subjective and of no moment to the Council.
Analysis
[115] I consider there is merit in the plaintiffs’ argument that they are affected persons due to their encumbrance and the fact it relates to environmental effects. It could be said in failing to consider this test that Auckland Council made a decision on non-notification that was wrong in law or that the decision-making process was flawed by failing to consider the encumbrance, or both. In this regard I refer to the discussion in Kawau Island Action Incorporated Society v Auckland Council on the adequacy of information as a foundation for resource consent.38 In particular I refer to the following passages cited at [46] and [47] of this decision:39
37 See Westfield (NZ) Ltd v North Shore City Council [2005] 2 NZLR 597 (SC).
38 Kawau Island Action Inc Society v Auckland Council [2018] NZHC 3306 at [44]–[48].
39 Paragraph [46] cites a passage from Mills v Far North District Council [2018] NZHC 2082, at
[142] and [47] cites a passage from Gaber v Queenstown Lakes District Council [2017] NZHC 2086, at [65].
[46] … I accordingly proceed on the basis that while there is no separate ground for judicial review based on the (now repealed) statutory requirement for a consenting authority to be satisfied as to the adequacy of the information, a decision to notify a resource consent, and to grant a consent itself, must nevertheless be reached on the basis of adequate and reliable information. As Glazebrook and Arnold JJ observed in Auckland Council v Wendco (NZ) Ltd, “sound public administration permits nothing less.”
[47] …While a consent authority does not have to be “satisfied” of the “adequacy” of information, it still must decide the level of effects based on a sufficiently and relevantly informed understanding of those effects. I recognise there is room for debate whether the word “satisfy” as opposed to “decides” indicates a higher degree of certainty was required before the amendment, but a decision whether adverse effects are, for example, “less than minor” could not be reached unless the decision maker was satisfied of that. I do not see how a Council could decide something unless it was satisfied that it was sufficiently and relevantly informed and satisfied of the decision it makes. A Council could not say it was “not satisfied” about those matters but nevertheless go on to make a decision which affects the rights of others.
[116] Here the Council’s oversight in recognising the plaintiffs’ interest in the encumbrance and its effect arguably meant it reached a decision without adequate and reliable information on its effect.
[117] It was suggested in the course of the hearing by the second respondents that the encumbrance had no bearing on works permitted by the resource consents because the proposed pruning of the pōhutukawa trees was limited to branches which were outside the covenant area and in the coastal marine area. In support counsel referred to the common law principle that a neighbour may legally cut branches that overhang onto their property (even if the tree were protected on the property where its trunk grew by a private covenant). Thus the second respondent submitted that Auckland Council has the right to cut and allow others to cut overhanging branches.
[118] However, I do not consider this situation is comparable to that common law position. The coastal marine area in front of 13 Marine Parade is not owned by the Council. It is owned by no one as per s 11 of the Marine and Coastal Area (Takutai Moana) Act 2011. Accordingly there is no one with a higher or competing equivalent property interest in the branches than the registered owners of 13 Marine Parade where the trunks of the trees (arguably) lie. The owners’ interest is subject to the encumbrance. Although the Council has management powers relating to the coastal
marine area or zone it has no property interest in the trees within or partially within it. Accordingly in my view the encumbrance remains relevant to the proposed works.
[119] Additionally, similar reasoning applies if some of the trees are growing on adjacent neighbours’ properties. Those neighbours would have an interest in the branches of the tree, and this may bolster the plaintiffs’ case that the works should have been notified.
What is the potential remedy?
[120] Although it is premature to determine the remedy for the judicial review, it is relevant to canvass whether or not a remedy might be granted in order to determine how the parties’ positions can be preserved. If there is no possibility that relief would be granted then preservation of the plaintiffs’ position at this interim point would be futile.
[121]In Wallace v Auckland Council , van Bohemen J stated:40
[195] In Waiotahi Contractors, the Court of Appeal upheld a decision of Elias J to set aside decisions of a consent authority not to notify applications for resource consents to subdivide land and the resource consents that were then issued because errors of law had been made when deciding not to notify the applications and in issuing the consents. The Court of Appeal held that, because the consent authority had erred in law in its decision, the respondents in that case, who had been deprived of their opportunity of being heard, were prima facie entitled to have the non-notification decision and the ensuing substantive decision to grant resource consents set aside, subject to any discretionary matters which might mitigate against such relief.
…
In that case, the Court of Appeal agreed with Elias J that it was simply speculative to suggest that the result might have been the same if the consent authority had properly understood the scope of its powers. The Court of Appeal also rejected an argument that it could be satisfied that the consents would have been granted in any event because the proposal complied with the transitional district plan. The Court considered that the errors of law made in that case were material, in the sense that it was capable of influencing the ultimate outcome and, indeed, could be described as fundamental.
[198] I consider it would be similarly speculative for this Court to conclude that any reconsideration of the Decisions would lead to the same results.
40 Wallace v Auckland Council [2021] NZHC 3095.
[122] Also relevant in Wallace was that the developers were on notice very early on that the consents would be challenged, and costs in obtaining consent would not be wasted if there was to be reconsideration of its application.
[123] Without the benefit of full argument I cannot say for certain whether, if the plaintiffs case were successful, any discretionary matters would overcome the presumption that the resource consents should be quashed, nor would it be appropriate for me to do so at this stage. However, in the same vein, there is no certainty that relief would be discretionarily declined. There is a careful balancing of interests that the Court will need to undertake. Especially at this early point in the proceedings it is speculative to say that the Council would have made the same decision had it taken into account the encumbrance.
Discussion on interim order
[124] First, no physical works have commenced for the boat shed. For it to be erected the identified pōhutukawa trees need to be pruned. This may constitute damage to them. They are currently growing on land protected by the covenant. Their limbs may project beyond the covenant area but when they do it is over land owned by no one. The area of bough projection is not over land that forms part of 13 Marine Parade.
[125] Nonetheless the encumbrance provides the plaintiffs with an interest that would arguably entitle them to be notified of the proposed works, including the pruning of trees their encumbrance arguably protects. If the Council had taken this into account at the time the decision on consents was made it may have reached a different view and decided to proceed on a notified consent basis as regards the plaintiffs. It cannot be assumed the Council would reach the same decision had the consent been notified to the plaintiffs. The consents may not have been granted, or the proposal may have needed to be altered for the consents to be granted. Accordingly the plaintiffs have a position to protect, being the state of matters prior to resource consents being granted, and in particular, the intact state of the pōhutukawa trees they say are protected by the encumbrance.
[126] Secondly, I consider the plaintiffs have made out a serious case and there is a more than reasonable chance that will succeed at trial in showing the consent decisions are based on a flawed process which renders them unlawful.
[127] The plaintiffs also object to the construction of the boatshed itself based on a non-notified consent (that is, not relying on the encumbrance). This question raises broader issues about the impact of the boat shed on the amenity enjoyment of 7 Marine Parade. I have not relied on it in reaching the decision to grant interim relief. This is not to find the plaintiffs’ have a weaker case in this respect. I consider these matters are less clear cut than they are regarding the impact of the consents on the plaintiffs’ rights under the encumbrance because they turn on disputed evidence. I find it is not necessary to attempt to resolve this dispute now. I observe, however, that at present 7 Marine Parade has access to the foreshore abutting where the boat shed will be built. The boat house may be seen from a deck on the north-western side of the house at 7 Marine Parade. What is presently a pōhutakawa shaded private beach against which the titles of 13, 11 and 7 Marine Parade abut and which the public can only access by water may be an amenity that is of more value for any owner of 7 Marine Parade than the same area with a boat shed over part of it.
[128] Thirdly, I have had regard to the public and private repercussions of granting relief. I consider that there is public interest in ensuring that Council decisions are made lawfully. This is particularly so where the subject matter concerns the coastal marine area which is enjoyed by the public at large. I also consider there is a public interest in ensuring that encumbrances like the present are given proper recognition and consideration by territorial authorities when resource consents are in issue. Conversely the public repercussions of granting interim relief are minor, as it preserves the status quo.
[129] The second respondents’ main concerns relate to the works proposed to be done in the yard area and the fact that work has begun in that area. However, no work has begun at the foot of the cliff where the boatshed is proposed to be built. Some of their financial concerns in relation to timing and lost contracts relate to the boatshed construction. The main repercussions for injunctive relief in relation to the boatshed are likely to be limited to delay and possibly some financial loss.
[130] Fourthly, I consider the granting of interim relief fulfils the purpose of reserving the ability of the Court to grant effective relief if the challenge is successful. Once the pōhutukawa boughs are cut to make way for the boat shed they cannot be replaced. Refusal to grant relief will effectively determine the proceeding. It would preclude the practical impact of the Court directing the Council to reconsider the decision in light of the encumbrance because, with the trees already having been pruned, the proposal would have no (further) impact on the trees and would not engage the encumbrance in that regard. This would unfairly defeat the rights of the plaintiffs under the encumbrance insofar as it has an impact on resource consent applications. On the other hand the grant of interim relief will not effectively determine the proceeding because it is possible for the second respondents to proceed with construction following the resolution of proceedings.
[131] For those same reasons I consider an interim order is reasonably necessary to preserve the position of the plaintiffs.
[132] Accordingly I am also satisfied interim relief under the JRP Act should be granted to stop the works for which the consents were required.
[133] I have considered whether an undertaking as to damages should be required for the purposes of relief under the JRP. Having regard to Smith v Taupo District Council, I am satisfied that it is not a requirement in relation to interim orders in a judicial review context (but the fact one has been given may be relevant to the exercise of residual discretion).41 This position is consistent with public policy as there is a public interest in ensuring public decision-makers can be held to account without burdening the plaintiff with an undertaking they may not be able to afford. Therefore I do not require the plaintiffs to make any undertaking as to damages for the purposes of the judicial review interim relief.
41 Smith v Taupo District Council [2002] NZRMA 59 at [23].
Delay
[134] The second respondents contend that, separate to their submission on estoppel, delay should factor into my assessment of the balance of convenience/the interests of justice and militate against interim relief.
[135] However, I do not consider there is any delay that would sway the test for interim relief in the second respondents’ favour. The occupiers first became aware of works in the covenant area on 7 September 2022 and the plaintiffs filed proceedings on 22 September 2022, just over two weeks later. Although the second respondents delivered notice of the swimming pool related works on 24 August 2022 I accept the occupiers’ evidence that they do not receive personal mail to the address and do not check the letterbox. In any event, proceedings were filed just over four weeks from that notice which I do not consider to be an unreasonable delay.
[136] In Urban Auckland – Society for the Protection of Auckland City and Waterfront Inc v Auckland City Council Venning J held that a six-week delay between notice and filing proceedings was not a disqualifying delay for the purposes of granting relief in a judicial review application.42 The Judge noted the applications for resource consents in that case both took approximately six weeks to be determined, and this was important context for the alleged delay.43 Here from application to determination the resource consents took approximately nine months and another three months for approval of the variation. In this context the plaintiff’s delay is not substantial.
[137] Further I do not consider the fact that the plaintiffs did not earlier pursue previous owners for the breaches of the encumbrance nor the second respondents for their (alleged) breach by omission in relation to the replanting obligations to be relevant. This is for the same reasons discussed in relation to estoppel above, namely that the second respondents have deemed knowledge of the encumbrance and its clauses, including the no waiver clause.
42 Urban Auckland – Society for the Protection of Auckland City and Waterfront Inc v Auckland City Council [2015] NZHC 1382, [2015] NZRMA 235 at [183]–[184].
43 At [183].
Result
[138]The application for an interim injunction is granted in the following terms:
(a)the second respondents are restrained until 5 pm on 14 November 2022 from undertaking or progressing on the seaward side of the house at 13 Marine Parade, Herne Bay, the following works:
(i)the construction of a swimming pool and landscaping earthworks involving the use of machinery or drilling for piles in the north facing cliff-top area protected by the encumbrance.
[139] The application for interim orders under the JRP Act is granted in the following terms:
(a)the second respondents are restrained until further order of the Court from undertaking or progressing any cutting of pohutakawa trees relevant to the construction of the boat shed below 13 Marine Parade, Herne Bay.
[140] The interim restraining orders set out at [138] and [139] herein do not prevent the taking of measures necessary or essential in order to preserve and secure the site pending the substantive hearing including by:
(i)complying with silt and sediment controls required by Auckland Council;
(ii)existing earthworks undertaken within the cliff area being shaped to avoid any stormwater runoff from upslope infiltrating or ponding the ground surface near the cliff edge. For example a low bund may be formed upslope of the cliff to divert any surface water away from the cliff edge to discharge surface stormwater to a less sensitive location;
(iii)existing stormwater control devices such as discharge pipes being checked to ensure that the construction activities do not affect their function.
[141] Leave is reserved for the parties to apply to amend the injunction to allow for required stabilisation works.
[142] Leave is reserved for the parties to return to the Court on the issue of undertaking as to damages.
[143]Leave is reserved to the parties to file memoranda on costs.
[144] The substantive matters in dispute in this proceeding require urgent resolution. Counsel for the parties are directed to liaise with the Civil List Judge forthwith to seek a priority fixture for the substantive hearing.
Duffy J
Annexure: Landscape Plan
3
9
1