BRIGHAM CREEK BUSINESS PARK LIMITED AND AUCKLAND COUNCIL

[2024] NZHC 2692

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1669

[2024] NZHC 2692

UNDER

Sections 316 and 317 of the Property Law Act 2007 and Parts 7 and 19 of the High Court Rules 2016

IN THE MATTER OF

an application for an order by Brigham Creek Business Park Limited that covenants be modified under s 317 of the Property Law Act 2007

BETWEEN

BRIGHAM CREEK BUSINESS PARK LIMITED

Applicant

AND

AUCKLAND COUNCIL

Respondent

Hearing:

On the papers

Counsel:

S Jeffs for the Applicant

K M Parker for Respondent

Judgment:

17 September 2024

JUDGMENT OF MUIR J

Modification of Land Covenants

This judgment was delivered by me on 17 September 2024 at 3.30 pm, Pursuant to Rule 11.5 of the High Court rules.

Registrar/Deputy Registrar Date: ……………………………

Solicitors:

Lawler & Co, Auckland

Auckland Council

BRIGHAM CREEK BUSINESS PARK LIMITED v AUCKLAND COUNCIL [2024] NZHC 2692

[17 September 2024]

Introduction

[1]    The applicant, Brigham Creek Business Park Ltd, applies under ss 316 and 317 of the Property Law Act 2007 (PLA) to modify land covenants in an easement instrument in order to have two lots vest as a road and a reserve in an industrial business park in Auckland.

[2]    The application is unopposed. It has been served on Auckland Council who abides the decision of the Court.1 The application came before me as Duty Judge and proceeds by way of originating application.

The Brigham Creek Development

[3]    In 2010, the applicant purchased 19.5 hectares of land at 106–108 and 110 Hobsonville Road, Auckland. The applicant intended to develop an industrial business park on the land.

[4]    In 2016, the applicant obtained a resource consent to subdivide the site in five stages. Among other things, the applicant intended for two lots on the subdivision plan (Lots 42 and 103) to vest in Auckland Council as a road and reserve. The lots are shown below:

1      Service was not required on any other parties.

[5]    The resource consent decision records that the proposal included, among other things, that there would be construction and vesting of two roads and the vesting of a 1,615 square metre parcel of land as a recreation reserve.2

[6]    In 2017, the applicant registered land covenants on 19 new titles by easement instrument no. 10729140.11 (the Instrument). The land covenants were intended to maintain, preserve and enhance the high quality of the commercial development. For instance, they include requirements that buildings be designed by a registered architect and that cladding and roofing materials be “relatively neutral in colour”.

[7]    The Instrument is currently registered against 17 individual records of title and four supplementary record sheets, which relate to unit title developments containing 36 units in total.

Problem with titles issuing

[8]    Earlier this year, the applicant received approval as to survey for stage four of the subdivision. The applicant then applied, as the registered proprietor of the head title (identifier 753441), to Land Information New Zealand (LINZ) for the registration of 15 new titles. The head title is subject to the easement instrument.

[9]However, LINZ requisitioned the application because:

… As Land Covenant 10729140.11 has Lot 901 DP 502477 as burdened land, and parts of Lot 901 DP 502477 are being vested as Road and Recreation Reserve either consent from the benefitting land owners is required to vest Lots 42 and 103 OR this land covenant must be revoked as to Lot 42 and Lot 102 DP 564416.

[10]   The decision made by LINZ to requisition the application reflected a change of policy.3 The applicant considers it impractical to obtain the consent of every registered proprietor of land subject to the easement instrument, as well as all mortgagees and caveators.

2      Decision  on  Applications  for  Resource  Consent,   LUC-2015-0031   and   SUB-2015-0033, 16 August 2016.

3      LINZ had previously allowed for a ‘work-around’ when it was impractical to obtain the consent of all benefitting owners. That work-around is no longer available.

Application under s 317 of the Property Law Act

[11]   The applicant has therefore applied pursuant to ss 316 and 317 of the PLA to modify the Instrument by inserting the following clause:

12.0     Extinguishment on Vesting of Roads and Reserves

The covenants set out herein shall automatically extinguish in respect of any land which is intended to vest in the Crown or a territorial authority as a road or reserve upon the survey plan relating to such land being approved as to survey and being accepted for deposit by Land Information New Zealand.

[12]   LINZ has confirmed that, if the Court grants this modification, it will issue new titles. The applicant has therefore applied under s 317(1)(d) and (f) on the basis that the proposed modification will not injure any person benefiting from the land covenants and it is just and equitable that they be modified.

[13]   The applicant says that unlike most cases under s 317, this is not a case where there has been a change in the nature or use of the benefitted or burdened land. They say that they are instead seeking to give effect to the resource consent and progress the development as planned.

[14]   The application is time sensitive as the applicant has building works underway as part of stage four of its development. The applicant says that if titles are not issued soon, they will be unable to obtain code compliance certificates for the building works when they are completed in September or October 2024. This will clearly have adverse consequences for the applicant.

Procedure

[15]   The applicant sought and was granted leave to commence this proceeding by way of originating application under Part 19 of the High Court Rules 2016. The applicant also sought and was granted an order that the application did not need to be served on any party, save on Auckland Council. Tahana J agreed with the applicant that “there is no practical consequence to modifying the instrument in circumstances

where the covenants relate to design standards and the lots will be vested in the Auckland Council as a road and reserve”.4

[16]   Auckland Council has been served with the application and has advised the Court that it has no objection to the orders being made and will abide the decision of the Court.5

Legal principles

[17]   Section 316(1) of the PLA entitles a person bound by an easement or covenant to apply to the Court for an order under s 317 modifying or extinguishing that easement or covenant. Section 317 allows the Court to, by order, modify or extinguish (wholly or in part) the easement or covenant to which the application relates if it is satisfied that one or more of the grounds in s 317(1) have been met.

[18]The applicant relies on s 317(d) and (f), which provide:

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—

…

(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.

[19]   Section 317 requires a two-stage approach.6 First, the Court must determine whether the relevant ground has been made out. Secondly, the Court must determine

4      Brigham Creek Business Park Ltd v Auckland Council HC Auckland CIV-2024-404-001669, 23 August 2024 at [3].

5      Auckland Council have confirmed that its position remains unchanged after service of the amended application.

6      Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657 at [90].

whether to exercise its discretion to extinguish or modify the easement or covenant, which requires consideration of all relevant factors.

Discussion

[20]   The proposed modification will not impact negatively on anyone, including the owners of the benefitted land. It is intended to address the practical problem of titles issuing for stage four of the development by effectively removing the land covenants from Lots 42 and 103 so that they can vest as a road and reserve respectively.

[21]   The land covenants largely pertain to design standards. Since no commercial buildings will be built on Lots 42 and 103, the land covenants are otiose in that respect. The application has only become necessary due to a change of policy in how LINZ processes the vesting of roads and reserves. LINZ confirms that if I grant the application, the road and reserve titles can vest.

[22]   This application is consistent with the applicant’s intention for the development and with the terms of the resource consent, which always contemplated that Lots 42 and 103 would vest as a reserve and road. I consider it just and equitable that the land covenants be modified so that they do not apply to land that will vest as a road or reserve. The applicant has satisfied the requirements in s 317(1)(d) and (f).

Result

[23]I make the following orders:

(a)The Instrument is modified by the insertion of the following clause:

12.0     Extinguishment on Vesting of Roads and Reserves

The covenants set out herein shall automatically extinguish in respect of any land which is intended to vest in the Crown or a territorial authority as a road or reserve upon the survey plan relating to such land being approved as to survey and being accepted for deposit by Land Information New Zealand.

(b)Leave is granted to the applicant to apply by way of interlocutory application in this proceeding for further orders should there be any

technical or administrative difficulties in the administration of the order in [23(a)].

Muir J