Bealey Developments Limited v Mikaera
[2025] NZHC 129
•12 February 2025
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2024-409-171
[2025] NZHC 129
BETWEEN BEALEY DEVELOPMENTS LIMITED
Applicant
AND
AADEN PETERA JAMES MIKAERA AND MADELINE JESSIE EWAN
First Respondents
AND
OTHER RESPONDENTS
Continued over
Hearing: On the papers Appearances:
J K Holt for Applicant
Judgment:
12 February 2025
JUDGMENT OF DUNNINGHAM J
This judgment was delivered by me on 12 February 2025 at 10.15 am, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
BEALEY DEVELOPMENTS LIMITED v MIKAERA [2025] NZHC 129 [12 February 2025]
ABBEY KATHARINE MORATTI COLGATE AND JOSEPH FRANCIS GRADWELL
Second Respondents
ADAM GORDON GRAY AND RACHEL ANNE ROMANS
Third Respondents
ADRIAN JOHN COWIE
Fourth Respondent
AIMEE JAYNE BRADSHAW AND DYLAN SHANE GULLIVER
Fifth Respondents
AIMEE LOUISE BAILES AND GARETH RICHARD BAILES
Sixth Respondents
ALANA POLLOCK AND DAVID ANTHONY POLLOCK
Seventh Respondents
ALASDAIR RUARY COURTEN AND KIM GABRIELLE COURTEN
Eighth Respondents
ALEXANDER TOMAS GISLASON AND JACQUETTA ERINN TANGPANITHAN THONGSKUL
Ninth Respondents
ALICE ELIZABETH BROWN AND NATHAN BROWN
Tenth Respondents
ALISTAIR JOHN FERGUSON AND LINDA JEAN BOWIE
11th Respondents
AMY JANE JONES AND BLAIR STUART JONES
12th Respondents
ANDRE SCHOLTZ AND CHRISTELLE SCHOLTZ
13th Respondents
ANDREW DAVIDSON IRVINE
14th Respondent
ANNA MARIE BATESON AND PAUL IAN BATESON
15th Respondents
ANNA MARY MAHUIKA AND KEVIN JAMES MAHUIKA
16th Respondents
ANTHONY CHARLES CRAIG AND JENNIFER ROSE MULLER
17th Respondents
ARNO BENJAMIN VAN EEDEN AND NATASHA LESLEY FRASER
18th Respondents
AYLA JOY BROOKS AND JOSHUA PERCY BROOKS
19th Respondents
BARRY ANTHONY TOWES AND SHARON ELIZABETH TOWES
20th Respondents
BENJAMIN LLOYD SIMPSON AND GEORGIA AIMEE SHERLOCK
21st Respondents
BESPOKE INVESTMENTS 2019 LIMITED
22nd Respondent
BEVAN HEDLEY ROBINSON, BEVERLEY PHYLLIS ROBINSON, HILARY MAREE ROBINSON AND PAUL HEDLEY ROBINSON
23rd Respondents
BJORN CHRISTIAN DUNLOP AND SOPHIE JEAN DUNLOP
24th Respondents
BLAIR IAN RUTHERFURD AND LAURA JANE RUTHERFURD
25th Respondents
BRADLEY JAMES TAYLOR AND DANIELLE LEANA TAYLOR
26th Respondents
BRUCE GRAHAM HANSEN AND JOHANA JANE DIAO VILLAESTER
27th Respondents
CAMERON NEWMAN LIMITED
28th Respondent
CHATHURANI PERERA MADDUMARACHCHI AND DON NIHAL MADDUMARACHCHI
29th Respondents
CLAIRE LOUISE LANCASTER AND MATHEW JAMES SMITH
30th Respondents
CLAIRE MARIE WELLS AND JEFFREY NORMAN WELLS
31st Respondents
COLIN DAVID BENNETT AND KAYE CECILA BENNETT
32nd Respondents
CREIGHTON GREGORY DAWSON
33rd Respondent
DANA ANNABEL MULVANY, STANLEY MICHAEL NICHOLAS MULVANY AND MULVANY TRUSTEES LIMITED
34th Respondents
DARRYL LESLIE GALLAGHER AND LEAH JANE MUNRO
35th Respondents
DAVID JOHN GALBRAITH AND KYLIE MARIE GALBRAITH
36th Respondents
DENISE HORIANA WAIRITI MUNRO KAHUKURA AND SILEAUVAA BAINEY AFA
37th Respondents
DOUGLAS LLOYD GREEN AND KERIANA JUNE GREEN
38th Respondents
ELIZABETH BEDSER AND VAUGHN LESLIE BEDSER
39th Respondents
EMMA RACHAEL HEWAT AND MATTHEW MICHAEL JOHN HEWAT
40th Respondents
GABRIELLE THERESA SHERWOOD WHALL AND GRADY MACLEOD NUNN
41st Respondents
GAGAN DEEP, KYRIE-LEE JEAN BOYES AND MADHAV BHASKAR
42nd Respondents
GARY WILLIAM WAREHAM AND KAREN WAREHAM
43rd Respondents
GAYLENE ELIZABETH WEIR AND GORDON JAMES WEIR
44th Respondents
GEMMA ANNE BALDOCK AND NEIL BAXTER
45th Respondents
G J CARLYON DEVELOPMENTS LIMITED
46th Respondents
GREGORY DONALD PROUDFOOT, MICHELLE KATHLEEN PROUDFOOT, AND JOHN ROGER PARKES
47th Respondents
HANNAH MAREE BAILEY AND SCOTT GARETH MILLS
48th Respondents
HARDEEP SINGH AND MANISHA SEMWAL
49th Respondents
HIS MAJESTY THE KING OF LEVEL 3, JUSTICE CENTRE,
19 AITKEN STREET, THORNDON, WELLINGTON
50th Respondent
IAN ALEXANDER DICKIE AND ROBINNE LEE WEISS
51st Respondents
INNERO ENTERPRISE LIMITED
52nd Respondent
JASON JAMES BOULTON AND JUDITH MICHELLE BOULTON
53rd Respondents
JASON PAUL MCBRIDE AND LAUREN MAY TERRY
54th Respondents
JDC & NEK 2022 LIMITED
55th Respondent
JEANETTE MARY BRAID AND MITCHELL BLAIR KING
56th Respondents
JEANETTE MARIE WILLIAMSON AND RORY SEBASTIAN BURGESS
57th Respondents
JING ZHANG AND YU LI
58th Respondents
JO-ANNE FAY HENDERSON AND LESLIE MATTHEW HENDERSON
59th Respondents
JODYNE JAYNE O'LEARY AND MARK ADRIAN DOBBS
60th Respondents
JOHN FONOFAAVAE LEALAIAULOTO AND LOPASI OFA
61st Respondents
JOHN LESLIE TAYLOR AND SUSAN MARY TAYLOR
62nd Respondents
JONATHAN JOSEPH ALEXANDER SCOTT AND LARISSA MAIA SCOTT
63rd Respondents
JUDITH ROSE STEEGH AND STEPHEN JACK HAYDEN
64th Respondents
KAD BUILD LIMITED
65th Respondent
KANE MALCOLM MCVICAR AND SAMANTHA FELICITY WITT
66th Respondents
KARL GLENN STAPLES AND MELANIE ELIZABETH STAPLES
67th Respondents
KELLY MARIE CAWTHORN
68th Respondent
KERRI ANNE PRING AND MARK ALAN TYRER
69th Respondents
KIRWEE CENTRAL PROPERTIES LIMITED
70th Respondent
LANA ELIZABETH WIGLEY
71st Respondent
LATA I MULI FAHINA AND VAOPINA OFA
72nd Respondents
LEOLA JANICE YOUNG
73rd Respondent
LIAM MICHAEL O'CALLAGHAN AND MATTHEW ALAN ROBERTS
74th Respondents
LUCY LOUISE JUNE HARRINGTON, MICHAEL ROSS HARRINGTON AND NATASHA LOUISE DIERCK
75th Respondents
MAFGAF LIMITED
76th Respondent
MASON CONRAD BAILEY AND OLIVIA CLAIRE HARRIS
77th Respondents
MATTHEW GREGORY MARTIN MEYER AND SARA LEE MEYER
78th Respondents
MATTHEW JOHN ARTHER ROBINSON AND
RACHAEL ANN ROBINSON
79th Respondents
MATTHEW JOHN BUCKLAND AND ZOE LAURA BUCKLAND
80th Respondents
MICHAEL ROGERS
81st Respondent
NATALIA MARIE RIETVELD AND SEAN SELWYN PERRETT
82nd Respondents
NATALIE JANE MCGEADY AND WAYNE LESLIE MCGEADY
83rd Respondents
NAVJOT KAUR AND NAVJOT SINGH
84th Respondents
NICOLA ANN DE VOS VAN STEENWIJK AND
PATRICK DE VOS VAN STEENWIJK
85th Respondents
NIGEL DAVID CUTTS AND RACHELLE AMBER CLARKE
86th Respondents
PAUL WALTER TAYLOR BERRY AND TRACEY SHIRLEY BERRY
87th Respondents
PHILIP BRENDAN SMITH AND TRACIE JANE SMITH
88th Respondents
RACHEL ANNE HARRISON AND THOMAS ASHLEY HARRISON
89th Respondents
SELWYN DISTRICT COUNCIL
90th Respondent
SGA BUILDERS LIMITED
91st Respondent
SHIVANI BHATIA
92nd Respondent
TARU SAWHNEY
93rd Respondent
TRAVIS CALVIN DU PREEZ
94th Respondent
TRUSCOTT BUILDING LIMITED
95th Respondent
WILLIAMS BUILDING CANTERBURY LIMITED
96th Respondent
ZANE CRAIG TOMLINSON
97th Respondent
Introduction
[1] The applicant, Bealey Developments Ltd (Bealey), seeks an order extinguishing the covenant over its land, and land owned by surrounding land owners, pursuant to ss 316 and 317 of the Property Law Act 2007 (PLA).
[2] The covenant is contained in easement 11146468.1, registered on 7 September 2018.
[3] The covenant was put in place at the time that Bealey sold part of its farmland to a developer, Kirwee Central Properties Ltd, the seventieth respondent (KCPL), in order to ensure that KCPL or subsequent purchasers would not take any steps to prevent Bealey continuing to carry out its farming operations on its remaining land.
[4] It also contained a reciprocal requirement that Bealey keep the farmland it held as grassland pasture for a period of time to prevent the planting of winter crops and this was inserted for the benefit of KCPL.
[5]The specific wording of the covenant is as follows:
The Grantor [KCPL] shall not:
(a)Take any steps to prevent the Grantee [Bealey] from continuing their farming operations on Lot 1002 (705882) and Lot 46 (705887).
(b)Bring any proceedings for damages, negligence, nuisance, trespass or interference arising from the farming operations, so long as the operation of the farm is carried out in accordance with the Selwyn District Plan, any replacement plan, or in accordance with any resource consent or in accordance with the Grantee’s covenant below.
(c)Make nor lodge; nor be party to; nor finance; nor contribute to the cost of any submission, application, proceeding or appeal (either pursuant to the Resource Management Act 1991 or otherwise) designed or intended to limit, prohibit or restrict the continuation and expansion of the Grantees existing farming operations including without limitation any action to require the Grantee to modify the operations carried out.
In consideration of the above, the Grantee and the Grantor covenants that they shall maintain lots 1002 and Lot 46 in grassland pasture for grazing purposes for a period to expire 21 July 2027 unless they receive the prior written consent of the Grantor to any change in use.
[6] As counsel for Bealey explains, things have moved on significantly since the covenant was put in place. The Bealey farmland which is subject to the covenant (the Bealey land) has now been sold for residential development following rezoning which allows more intensive development since the covenant was put in place. Accordingly, Bealey does not need the protection that the covenant afforded, and the obligation to maintain the Bealey land in grassland pasture will become impractical.
Grounds for the application
[7] The application is advanced on the grounds in ss 317(1)(a), (b), (c), (d) and (f) of the PLA. Only one ground needs to be met and, as counsel explains, the grounds are therefore advanced on additional or alternative bases.
[8] Bealey seeks the extinguishment of the whole of the covenant. Partial removal is unworkable and undesirable given the covenant contains reciprocal obligations. For that reason, it is sought that the covenant be removed both from the Bealey land and all the land that was part of the KCPL subdivision.
[9] The application is supported by affidavit evidence from Mr Gary Robert Wilson, a director of Bealey. Bealey was incorporated in July 2008 to hold some of the land which had been farmed by Mr Wilson and his family for many decades.
[10] In 2018 Mr Wilson and his family decided to sell part of the farm to KCPL and, as part of the arrangements entered into for the sale and purchase of the land, the parties entered into the covenant. The covenant was registered over the land sold to KCPL and on the neighbouring titles retained by Bealey. Mr Wilson explains that the covenant was intended to ensure that Bealey’s farming operations on its remaining land would not be jeopardised by the sale to KCPL, particularly once KCPL subdivided the land and on sold it.
[11] The agreement to keep the Bealey land as grassland pasture until 2027 was to ensure winter crops (and subsequent winter grazing on the land) did not occur, as KCPL thought that might affect its ability to sell lots in the plan subdivision. This obligation was agreed to lapse in July 2027 because it was expected that KCPL would
have completed its subdivision by that date. However, the obligation not to interfere with Bealey’s farming operation is expressed in the covenant to continue indefinitely.
[12] For completeness, Mr Wilson notes that as a result of events that occurred during the subdivision, there was a slight boundary adjustment to the land owned by Bealey that is subject to the covenant and that land is now identified as Lot 109 and Lot 1002, Lot 46 referred to in clause (a) of the covenant having become Lot 109.
[13] The circumstances which give rise to the present application are that Bealey has decided to sell Lots 109 and 1002 to NTP Development Holdings Ltd (NTP) with settlement to occur 20 working days following 21 July 2027, or the date that Bealey provides NTP with a copy of record of title 1035133 with the easement in question extinguished by Court order.
[14] As part of the sale process, Lots 109 and 1002 have been rezoned from Large Lot Residential to Settlement, allowing for greater density of residential housing. There has also been significant infrastructure work carried out on the Bealey land which limits the farming operations that Bealey is able to carry out on the Bealey land. In particular, inspection holes for the sewage system have been installed on the Bealey land that make it impracticable for crops to be sowed and for farm machinery to be used in the paddocks. The earthworks have also negatively affected soil fertility. In short, Bealey can now no longer farm Lots 109 and 1002 to the extent it could before entering into the sale and purchase agreement with NTP. As a consequence, the covenant to protect Bealey’s farming operation is redundant.
Effect on the respondents
[15] The application is not opposed by any party despite the application having been served on all respondents pursuant to orders made by Associate Judge Paulsen on 21 May 2024.
[16] The obligation for Bealey to maintain its land as grassland was for the benefit of the KCPL while it marketed its subdivision. However, the majority of the subdivided lots have now been sold and, because of the sewage scheme work, it is not possible to plant winter crops on the land in any land. The only benefit of the covenant
which the respondents could expect to receive is to not have an alternative activity to pasture, implemented on the adjacent land, but that restriction is temporary in any event. For that reason, the applicant does not consider any person entitled to the benefit of the covenant would be substantially injured by the proposed extinguishment.
[17] On the other hand, if the covenant is not varied the applicant says it will suffer substantial injury. The sale to NTP cannot settle until the restriction is removed, either by direction of the Court or the passage of time. Bealey has to bear the financing costs in the intervening period. While Bealey acknowledges that this is partly due to its own decision to sell before the removal of the covenant, it also notes that because of infrastructure works which are for the benefit of many of the respondents, it is left with land that it cannot farm to the same extent as it was able to before.
Legal principles applying to an application to extinguish a covenant
[18] Section 316 of the PLA provides that a person bound by a restrictive covenant may apply to the Court for an order under s 317 modifying or extinguishing the covenant.
[19]Section 317 of the PLA relevantly provides:
(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;
(ii)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
…
(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.
[20] The use of the word “may” in s 317(1) indicates that even if the Court is satisfied that one or more of the pre-requisites for an order under s 317 is met, it must still consider whether it is appropriate to grant the application in the exercise of its discretion. However, although the Court retains that residual discretion, this Court has said:1
… There is no basis for exercising the Court’s discretion against the grant of the application particularly where no party has objected to the modification.
Grounds for extinguishment of the covenant
[21] The submissions of counsel for the applicant rely primarily on the grounds in s 317(c) and (d), although they also submit that the grounds in s 317(a), (b) and (f) are met. I address each of these in turn.
Section 317(1)(c)(ii) – respondents have abandoned or waived rights to the covenant
[22] Section 317(c)(ii) is met if every person of full age and capacity may reasonably be considered, by their acts or omissions, to have abandoned or waived the right to the covenant. In Wilkinson v Campbell, the Court was satisfied that this ground was met by the fact that the respondents, having been served with the application, had taken no step in the proceeding.
1 Wilkinson v Campbell [2020] NZHC 159 at [30].
[23] Here, no party has taken any step to oppose the application and the applicant says it can reasonably be considered that the respondents have abandoned or waived the right to the covenant.
Section 317(1)(d) – the extinguishment will not substantially injure any person entitled
[24] Alternatively, the applicant relies on s 317(1)(d) which is that the proposed modification “will not substantially injure any person entitled”. Counsel point out that the primary beneficiary of the covenant was intended to be Bealey by protecting it from interference with its farming operations. As Mr Wilson’s evidence shows the extinguishment of the covenant will not injure Bealey at all. Instead, the opposite will be true. Bealey will be able to complete the sale to NTP, with the financial benefits that flow from that.
[25] Considering the position of the respondents, there is no evidence that the change, by bringing forward the time when Bealey’s land no longer has to be kept in grassland pasture, will substantially injure any other party. In particular, counsel note that this restriction is a temporal benefit expiring in July 2027 and, even if the application is granted, Mr Wilson explains in his second affidavit that the status quo will persist until at least 2026, further reducing any injury which a respondent could arguably suffer. The fact that the injury is not substantial, is further supported by the fact that Bealey’s application is unopposed.
Section 317(1)(a), (b) and (f)
[26] The submissions for Bealey then also point out that s 317(1)(a) of the PLA is met given the change in the use of the benefited and the burdened land. In particular, counsel point to the re-zoning which has occurred under the Selwyn District Plan allowing for greater residential intensification on the land, and which mean Bealey does not now need or want the protection of farming operations because it no longer intends to farm that land. Instead, Bealey is prevented from settling its sale of the land to NTP. Accordingly, it submits, and I accept, that there is no reason to keep the covenant in place given the changed expectations created by the re-zoning.
[27] The same factors support the application under s 317(1)(b) in that continuing the covenant would impede the reasonable use of the land. The re-zoning and intensification has changed the reasonable use of the land since the covenant was put in place. The Bealey land is now able to be developed for residential purposes in a far more intensive manner than was envisaged at the time the covenant was agreed.
[28] Finally, for all the reasons set out above, counsel submit that, under s 317(1)(f), it is just and equitable to grant the application.
Discussion
[29] Having considered the affidavit evidence and the submissions of counsel, I am satisfied that all the grounds in s 317 relied on are made out. In particular, I note:
(a)Bealey is the primary beneficiary of the covenant and it wants it extinguished;
(b)no respondent is opposing the covenant being extinguished;
(c)the grassland pasture restriction in the covenant will expire in July 2027 anyway and in practical terms it will remain as pasture until 2026;
(d)Bealey is prevented from settling its sale under the agreement with NTP if the covenant is not extinguished.
[30] While there are circumstances in which compensation can be ordered when a covenant is removed, I am satisfied that there are no circumstances here which would warrant an order for compensation.
Result
[31]Accordingly, as sought by Bealey, I make the following orders:
(a)The Covenant specified in Easement Instrument 11146468.1 registered on 7 September 2018 (the “Covenant”), as registered against Records of Title 1035109 to 1035117 inclusive, 1035119 to 1035133 inclusive,
1069126 to 1069147 inclusive, 1073600, 1076229 to 1076232
inclusive, 1076234, 1096459 to 1096469 inclusive, 1122833, 849915
to 849923 inclusive, 855908 to 855915 inclusive, 880327 to 880342
inclusive, 880346, 923911 to 923921 inclusive and 957623 (the “Covenant Records of Title”), be extinguished over, and removed from, the Covenant Records of Title;
(b)The Registrar-General of Land shall record on the Covenant Records of Title that the Covenant has been extinguished by order of the Court; and
(c)No compensation is payable to the Respondents, or any other persons, by the Applicant (or any other person) for the extinguishment of the Covenant over the Covenant Records of Title.
Solicitors:
Tavendale and Partners Ltd, Christchurch
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