Body Corporate 162791 v Gilbert - [2016] NZHC 2404

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-003833 [2016] NZHC 2404

BETWEEN
BODY CORPORATE 162791

Plaintiff

AND

JOHN GILBERT First Defendant

QSM TRUSTEE LTD (in Receivership and in Liquidation)

Second Defendant

Hearing: 15 - 17 June 2016

Counsel:

J F Anderson QC and T J G Allan for the Plaintiff
NS Gedye AC, S M Jass and

J A MacGillivray for the Defendants R J MacDonald for the Non-Party [Ashton Investments Limited]

(Granted Leave to Withdraw at Commencement of Trial)

R J Cooke for Ashton Investments Limited (on 17 June 2016)

Judgment:

10 October 2016

JUDGMENT OF EDWARDS J

This judgment was delivered by Justice Edwards
On 10 October 2016 at 3pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Counsel: J F Anderson QC, Auckland
N S Gedye QC, Auckland

Solicitors: Grove Darlow and Partners, Auckland
Tompkins Wake, Auckland

Copy To: MBC Law Limited, Auckland

BODY CORPORATE 162791 v GILBERT [2016] NZHC 2404 [10 October 2016]

INDEX

Introduction ................................................................................................................[1] Background ................................................................................................................[5] Terms of the Covenant .............................................................................................[16] Pleadings ..................................................................................................................[20] Issues ........................................................................................................................[23] Interpretation of Covenants......................................................................................[25] Statutory context ......................................................................................................[28] Agreed declaration – interrelationship with the Unit Titles Act 2010 .....................[35] Issue 1 – Exhaustion of the Redevelopment Rights.................................................[40] Issues 2 and 3 – Subdivision consent under the Resource Management Act 1991..[56] Issue 4 – Compensation ...........................................................................................[65] Issue 5 – Redevelopment limited to creation of units? ............................................[70] Further units.........................................................................................................[72] Redevelopment below level three .........................................................................[83] Result .......................................................................................................................[94]

Introduction

[1] On 20 September 1994 the owner of the property known as the Mid City centre entered into a covenant securing certain redevelopment rights for itself and its successors and assigns (Covenant). The Covenant was registered against the title of the land and binds current and future proprietors of units in the centre.

[2] The plaintiff is the body corporate for the centre (Body Corporate). It seeks declarations as to the redevelopment rights secured by the Covenant. In particular, it seeks declarations relating to the exhaustion of the redevelopment rights; the scope of redevelopment allowed; and whether compensation is payable for common property taken under the Covenant.

[3] The second defendant (QSMTL) is the owner of five units in the centre and the Grantee of the Covenant. The first defendant is the receiver of QSMTL. The defendants oppose the declarations sought by the Body Corporate, although agreement has been reached on the interrelationship with the Unit Titles Act 2010,

and the scope of the rights as they affect common property below level three. The defendants counterclaim for two declarations confirming that the Covenant allows successive redevelopments, and does not require the Grantee to pay compensation for the taking or use of common property.

[4] Aston Investments Ltd is the financer of QSMTL. It was granted leave to intervene at the closing submissions stage of the hearing. It generally supports the position taken by the defendants although advocates caution in making the agreed declarations.

Background

[5] The Mid City centre comprises a basement; a mid-level of two…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] NZHC 2404
Decision Date: 10 October 2016

CaseChat Overview and Summary

The case of Body Corporate 162791 v Gilbert concerned a dispute over the interpretation of a covenant affecting the redevelopment rights of a property in Auckland, New Zealand. The plaintiff, Body Corporate 162791, sought declarations regarding the scope of the covenant and the defendants, John Gilbert and QSM Trustee Ltd (in Receivership and in Liquidation), opposed the claims. The court was required to decide several key issues, including whether the covenant allowed for successive redevelopments, whether redevelopment required a subdivision consent under the Resource Management Act 1991, whether compensation was payable for common property taken under the covenant, and whether redevelopment was limited to the creation of units. The court held that the covenant did not necessarily allow for multiple redevelopments, that redevelopment under the covenant did not require a subdivision consent, that the covenant did not obligate the grantee to compensate for common property taken, and that redevelopment under the covenant must involve the creation of further units. The court also held that redevelopment below level three must be ancillary to redevelopment on level three and above. The final orders included declarations that the covenant does not require the grantee to pay compensation, that a redevelopment involves the creation of further units, and that redevelopment below level three is ancillary to redevelopment on level three and above. Costs were ordered to lie where they fall.

Orders