BRD DEVELOPMENT LIMITED KARAKA MEWS DEVELOPMENT LIMITED AND AUCKLAND COUNCIL R BERSMA AND G C MONTGOMERY s …/continued
[2024] NZHC 3155
•30 October 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-2386
[2024] NZHC 3155
UNDER Section 316 of the Property Law Act 2007 and Rule 19.6 of the High Court Rules 2016 IN THE MATTER OF
an application for an order modifying covenant C892866.1
BETWEEN
BRD DEVELOPMENT LIMITED
First Applicant
KARAKA MEWS DEVELOPMENT LIMITED
Second Applicant
AND
AUCKLAND COUNCIL
First Respondent
R BERSMA AND G C MONTGOMERY
Second Respondents…/continued
Hearing: 23 October 2024 Appearances:
A G A Trask-Coombs for Applicants No appearances for Respondents
Judgment:
30 October 2024
JUDGMENT OF O’GORMAN J
This judgment was delivered by me on 30 October 2024 at 10 am pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
…………………………………
Solicitors:
Simpson Grierson, Auckland
BRD DEVELOPMENT LIMITED v AUCKLAND COUNCIL [2024] NZHC 3155 [30 October 2024]
(continued)
AND S V DUGGAN, M E FREWIN,
MEF TRUSTEE COMPANY LIMITED and VICKYS TRUSTEE COMPANY
LIMITED
Third RespondentsZE KANG INDUSTRIAL CO LIMITED
Fourth RespondentW GUAN
Fifth RespondentMARMITMORE LIMITED
Sixth Respondent
[1] This is an originating application seeking an order under s 317 of the Property Law Act 2007 (PLA) modifying a covenant so that it no longer applies to titles owned by the applicants (together, the Applicants’ Properties):
(a)an estate in fee simple in Lot 11 Deposited Plan 166291, as comprised in record of title NA100D/692 (25 Burberry Road); and
(b)an estate in fee simple in Lot 6 on Deposited Plan 193594, as comprised in record of title NA123A/67 (30 Burberry Road).
[2] The land covenant in question in this proceeding was created by a memorandum of transfer C892866.1 registered on 8 September 1995 (Covenant). It was registered on the records of title for the Applicants’ Properties on 8 August 1995. Restrictions imposed by the Covenant are contained in the Second Schedule, including:
(a)Restriction on use of the land “for any purpose which is not permitted or allowable by and in accordance with the Papakura District Council Plan”.
(b)Restriction of the construction of any “residential dwelling with a floor area of less than 210 square metres (excluding garage, carports and decking), which shall be constructed to a shape other than a simple rectangle containing at least one roof break of full valley in the floor”.
(c)Restrictions on the construction of any dwelling to be in keeping with “a high standard of rural residential amenity” and the Papakura District Council District Plan. Dwellings must not have metal clad roofing that has not been pre-painted, overhead powerlines or water tanks more than
1.5 metres above the natural ground level, and any ancillary buildings are required to blend in with “the rural nature of the surrounding area to ensure that a pleasing aesthetically compatible appearance is maintained for the benefit of all the lots”.
[3] The application has been served on all owners (and related interest holders) of the benefitting land, and none has taken any steps to oppose the application, nor has anyone indicated any intention to do so. To the extent that they have taken any steps, this has been to record or indicate consent.
Factual background
[4] The Covenant has been the subject of similar proceedings before, in which other property owners sought and obtained orders under ss 316 and 317 of the PLA that the Covenant no longer applies to their properties.1
[5] Accordingly, I can conveniently rely on that earlier judgment for the factual background of the Covenant:
[5] The covenant was executed in 1995 following the subdivision of some 57 hectares of land for the purposes of sale of those lots comprising rural residential lots suitable for horticulture or other agricultural or pastoral production or use accompanied by a rural residential lifestyle. The intention was that all the lots (except for one which already contained an existing high quality homestead and outbuildings in keeping with the intent) shall be subject to a general scheme applicable to and for the benefit of all of the rural lots to the intent that a high standard of rural residential amenities shall be enjoyed by the registered proprietors and all of the lots and that of the owner or occupier for the time being of each of the lots should be bound by the stipulations and restrictions in the schedule — relevantly that dwellings would be no less than 210 sqm in area and built at a cost of no less than a value based on $220,000 as at 1 September 1995 and indexed such that the figure as at 15 September 2017 had increased to $866,500.34. The covenant was to benefit and burden all of the respective owners and occupiers.
[6] When the covenant was established in 1995, the properties that are encumbered by it were all zoned Rural Plains in the former Papakura District Plan. They were also located outside the Metropolitan Urban Limits identified in the Auckland Regional Policy Statement 1999 and therefore were identified as part of Rural Auckland.
[6] As explained in the expert evidence filed in support in this proceeding, zoning for the land including the Applicants’ Properties has subsequently changed, from Rural Plains to a combination of Terrace Housing and Apartment Building, Mixed Housing Urban, Mixed Housing Suburban and Local Centre Zones.
1 Re Barfilon Investment Ltd [2019] NZHC 780.
(a)On 30 September 2013, Auckland Council notified the Proposed Auckland Unitary Plan (PAUP) for submissions. The PAUP proposed that certain land west of Drury be zoned “Future Urban” and identified within the Rural Urban Boundary (RUB).
(b)On 24 February 2022, Auckland Council issued a decision on private plan change 51 (PC51) — associated provisions were made fully operative on 16 December 2022. PC5l involved the rezoning of
33.65 hectares of land that was formerly located in the Future Urban Zone. It created a new Drury 2 Precinct, with provision for a Town Centre Zone, Mixed Housing Urban Zone (MHUZ), and a Terrace Housing and Apartment Buildings Zone. The site at 25 Burberry Road comprised the whole 4.61 hectare area within the MHUZ.
(c)The Drury 2 Precinct Plan that was developed as part of PC5l was incorporated into the Auckland Unitary Plan (AUP) in December 2022. The operative provisions of the AUP provide for the site to be developed in accordance with the existing MHUZ land use provisions in Chapter H5 of the AUP and the subdivision provisions for the MHUZ in Chapter E38 of the AUP.
[7] Accordingly, the present position is that subdivision within the MHUZ/Drury 2 Precinct that occurs in accordance with an approved land use component is provided for as a restricted discretionary activity in terms of Rule E38.4.2 (A14). This requires a resource consent application to provide details demonstrating how proposed dwellings comply with the standards listed in Table HS.4.1 for the MHUZ, such as a maximum building height of 11 metres (Rule HS.4.6.4) and maximum 45 per cent building coverage (Rule HS.6.10). Specific rules for residential development and subdivision in the Drury 2 Precinct require compliance with the Drury 2 Precinct Plan, and standards relating to transport infrastructure, connections with the adjacent Drury 1 Precinct, riparian planting, stormwater management and noise attenuation (where dwellings are within 75 metres of State Highway 22).
[8] Following its declaration of PC5l as fully operative, on 11 September 2023 Auckland Council granted resource consent to the first applicant for the establishment of 157 two-storey attached and detached dwellings on the site, along with associated urban infrastructure and subdivision. Reasons for consent include the proposal being in keeping with the planned residential character of the subject area and that, in terms of positive effects, it provides for additional residential living opportunities for communities of people within this area of Auckland.
[9] The second applicant does not currently have any resource consent to develop its own land, but it intends to seek one in due course.
[10] Adopted in November 2023, Auckland Council’s Future Development Strategy also identifies Drury as one of the priority areas for the short to medium-term (i.e. through to Year 2033), to support residential, centre and business development.
Legal principles
[11]The application is brought pursuant to s 317 of the PLA, which provides:
317 Court may modify or extinguish easement or covenant
(1) On an application (made and served in accordance with section
316) for an order under this section, a court may, by order, modify or extinguish (wholly or in part) the easement or covenant to which the application relates (the easement or covenant) if satisfied that —
(a) the easement or covenant ought to be modified or extinguished (wholly or in part) because of a change since its creation in all or any of the following:
(i)the nature or extent of the use being made of the benefited land, the burdened land, or both:
(ii)the character of the neighbourhood:
(iii)any other circumstance the court considers relevant; or
(b) the continuation in force of the easement or covenant in its existing form would impede the reasonable use of the burdened land in a different way, or to a different extent, from that which could reasonably have been foreseen by the original parties to the easement or covenant at the time of its creation; or
(c)every person entitled who is of full age and capacity —
(i)has agreed that the easement or covenant should be modified or extinguished (wholly or in part); or
(ii)may reasonably be considered, by his or her or its acts or omissions, to have abandoned, or waived the right to, the easement or covenant, wholly or in part; or
(d) the proposed modification or extinguishment will not substantially injure any person entitled; or
(e) in the case of a covenant, the covenant is contrary to public policy or to any enactment or rule of law; or
(f) in the case of a covenant, for any other reason it is just and equitable to modify or extinguish the covenant, wholly or partly.
[12] In Synlait Milk Ltd v New Zealand Industrial Park Ltd, the Supreme Court observed that a two-stage approach to applications under s 317 is generally adopted:2
(a)first, whether one or more of the grounds in s 317(1) is made out; and
(b)whether the discretion to extinguish or modify the covenant and/or easement should be exercised.
Analysis
Grounds
[13] In terms of s 317(1)(a), the zoning changes described above have impacted the nature or extent of the use being made of the benefitted and burdened land, and the character of the neighbourhood.
[14] The Covenant (based on the former rural countryside living environment) now conflicts with the planning framework of the AUP and Drury 2 Precinct, along with the MHUZ zoning which applies to the site. It also conflicts with the integrated land use and subdivision consents and the anticipated outcomes in the Future Development Strategy.
2 Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157 at [67].
[15] The evidence in support includes aerial photographs comparing the area as it was in 1996, with the area again in 2022. This shows the extent to which the neighbourhood had already changed over that time. To the north of the Applicants’ Properties, the Auranga Project3 was starting development. When complete, the Auranga Project will deliver 2,650 dwellings through medium to high density development on formerly greenfield farm and lifestyle blocks. The project also involves the development of a new primary school (Ngākōroa School) which opened in 2022 a few hundred metres from the first applicant’s land, a preschool and a secondary school. The first applicant’s land will have access to the Auranga town centre via Tributary Parade — a new road that has been constructed.
[16] In the circumstances, I accept for the purposes of s 317(1)(b) that the continuation of the Covenant would impede the reasonable use of the Applicants’ Properties in a different way and to a different extent from that which could reasonably have been foreseen by the original parties to the Covenant at the time it was created in 1995. The terms of the Covenant would prevent or impose unreasonable restrictions on the development of the Applicants’ Properties in a manner that was not permitted or contemplated at the time the Covenant was created, including because clause 1 requires all dwellings to be constructed in line with the Papakura District Plan, a district plan which is no longer in force.
[17] Meanwhile, the continuation of the Covenant as a burden on these Applicants’ Properties would not serve any useful purpose because it would not prevent the inevitable development of the surrounding land. From a planning perspective, the stated purpose of the Covenant is no longer feasible, being to maintain the existence of a “rural residential lifestyle”.
[18] Accordingly, in the absence of any evidence in opposition, I accept that s 317(1)(d) is also satisfied, namely the proposed modification or extinguishment will not substantially injure any entitled person.
3 See Re Barfilon Investment Ltd, above n 1, at [2] and [14], in which the applicants held four properties that were to be developed as part of the Auranga Project.
Discretionary considerations
[19] In Re Barfilon Investment Ltd, the Court had to determine whether it was appropriate to exercise the discretion to modify the covenant, in circumstances where the application was opposed. Gault J determined that it was:4
Weighing these various factors, I conclude that I should exercise the discretion to modify the covenant. The significance of the changes I have referred to, reflecting the public interest in housing development in the [Special Housing Area], and the inevitability of development in some form, outweigh the important interest in maintaining the property right in the covenant, even taking into account that the applicants have proceeded with their eyes open.
[20] The same applies now, but the position is even stronger given the further development undertaken since 2019, and the fact that no-one opposes the present application.
[21] Accordingly, the applicants have satisfied me that there are proper grounds for extinguishment of the Covenant under s 317 of the PLA, and that it is appropriate to grant the orders as a matter of discretion.
Result
[22] I make an order under s 317 of the Property Law Act 2007 modifying covenant C892866.1 so that it no longer applies to the following properties:
(a)an estate in fee simple in Lot 11 Deposited Plan 166291, as comprised in record of title NA100D/692 (25 Burberry Road);
(b)an estate in fee simple in Lot 6 on Deposited Plan 193594, as comprised in record of title NA123A/67 (30 Burberry Road).
[23]As the application was not opposed, I make no order as to costs.
O’Gorman J
4 Re Barfilon Investment Ltd, above n 1, at [56].
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