Brow
[2021] NZHC 304
•26 February 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV 2020-485-439
[2021] NZHC 304
UNDER Sections 316 and 317 of the Property Law Act 2007 IN THE MATTER OF
an application for orders extinguishing Land Covenant in Transfer 323489.1 on title
identifier WN16D/1156
BETWEEN
CHARLES JAMES BROW, HELEN BROW
and ZOFIA WISNIEWSKI as trustees of the ORATIA TRUST
ApplicantsAND
All those persons claiming an interest, right or entitlement pursuant to Land Covenant in Transfer 323489.1 on title identifier WN16D/1156
Respondent
On the papers Counsel:
I M Gordon and M R G van Alphen Fyfe for Applicants
I W Thorpe for Kapiti Coast District Council as interested party
Judgment:
26 February 2021
JUDGMENT OF COOKE J
Introduction
[1] By originating application dated 3 August 2020 the applicants apply for orders extinguishing a land covenant registered against the title in relation to a property at 13 Oratia Street, Waikanae. The application is made in reliance on ss 316 and 317 of the Property Law Act 2007. It is supported by an affidavit of Charles James Brow,
RE BROW [2021] NZHC 304 [26 February 2021]
sworn 29 July 2020. Further affidavits have been filed and served from him in relation to service.
[2] On 19 August 2020 Dobson J gave leave for the application to be commenced by originating application under Part 19 of the High Court Rules. On 15 October 2020 and 7 December 2020 further directions were given in relation to service on those potentially affected by the application.
[3] There has been some correspondence from those potentially affected which has been provided to the Court in the materials filed by the appellant. In addition, the Kāpiti Coast District Council (KCDC) has considered the application, and counsel instructed on its behalf has filed memoranda advising the Court of its position. I am satisfied based on the materials that have been filed that all relevant parties having an interest in the application have been given the opportunity to participate.
[4] Written submissions in support of the application were filed by counsel for the applicants in November 2020. Subsequent to the filing of those written submissions, counsel for the applicants and KCDC filed a joint memorandum that proposed the application be considered on the papers. On 4 February 2021, Mallon J granted the application for the matter to be determined on the papers and it has been referred to me.
[5] The only other material development to report by way of background is that, subsequent to the written submissions filed by the applicants, the Supreme Court has released its decision in Synlait Milk Limited v New Zealand Industrial Park Limited addressing the approach that should be adopted by the Court for applications under s 317.1 The joint memorandum of counsel referred to above invited the Court to consider the application and the submissions provided in support in light of the Supreme Court’s decision.
1 Synlait Milk Limited v New Zealand Industrial Park Limited [2020] NZSC 157.
Relevant facts
[6] The property at 13 Oratia Street, Waikanae Beach, is an undeveloped section in a subdivision on the northern side of the mouth of the Waikanae River. As part of that subdivision a covenant was registered against the title on 26 March 1979. The covenant is said to be contained in Transfer 323489.1.
[7] Attempts have been made to locate that transfer to identify what the covenants actually are. It has not been located at Land Information New Zealand (LINZ), the KCDC, with the applicants, the other landowners potentially affected, or even the solicitor for the developer, Mr Maurice Rowe. The applicants have contacted Mr Rowe, and he has been unable to locate a copy of the transfer. He was able to locate a draft memorandum of transfer together with an accompanying file memorandum. These memoranda record certain proposed covenants applying to all lots in the subdivision, and other more specific covenants that were to apply to particular lots. By way of summary, the draft covenants involved:
(a)a requirement that the landowner seek the developer’s approval of building plans before building;
(b)a requirement that the lot holder connect residential buildings or units to the Council sewer reticulation system;
(c)a requirement that the lot holder not call on the Council to contribute to erecting or maintaining fencing when the land abutted a public reserve;
(d)a requirement that the lot holder not call on the developer to contribute to erecting or maintaining fencing when the abutted land is still owned by the developer;
(e)a requirement (applying to only some lots) not to erect or permit to be erected any apartment house containing two or more units if the land comprised an area less than 809.4 m2;
(f)a further restriction (applying to only some lots) not to erect any building other than a single storey building having a roof height of less than 17 feet, being the average level of frontage of the land at Tairei Street;
(g)a final restriction (applying to certain lots) requiring the lot owner not to erect or permit to be erected any building shed or ancillary building within a distance of 25 feet of the public reserve.
[8] As indicated, these are only draft covenants, and in the case of the last covenant in [9(g)] above, it is crossed out in the document. Of the restrictions applying to specific lots, the only one applying to lot 62 relating to 13 Oratia Street is the one that has been crossed out in the draft.
[9] The subdivision was completed some time ago, and almost all of the properties have dwellings constructed on them, although that is not the case with 13 Oratia Street.
[10] There are other relevant circumstances which I will explain when considering the application of s 317.
Relevant principles
[11]Section 317 of the Property Law Act 2007 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.
(2)An order under this section modifying or extinguishing the easement or covenant may require any person who made an application for the order to pay to any person specified in the order reasonable compensation as determined by the court.
[12] As indicated, the Supreme Court has comprehensively reviewed the approach that should be adopted under s 317 in Synlait Milk Limited. The Court said:2
[90] To conclude on this point, s 317 requires a two-stage approach. The court’s first task is to determine whether one or more of the grounds in s 317(1) is made out. If so, the second task is to determine whether the discretion to extinguish or modify the easement or covenant at issue should be exercised (and, if so, to determine whether compensation should be payable). The exercise of the discretion to modify or extinguish the easement or covenant requires consideration of all relevant factors (including the power to award compensation). We do not see any intent that any one factor should be disqualifying.
[13]And in relation to the substantial injury referred to in s 317(1)(d) it held:3
[104] Section 317(1)(d) contemplates that the benefited owner may be injured by removal of the covenant so long as that injury is not substantial. It was common ground that for the injury to be “substantial”, it must be “real,
2 Above n 1, at [90].
3 At [104]-[106], footnotes omitted.
considerable, significant, as against insignificant, unreal or trifling”. Australian cases express this in slightly different language, but the substance is the same: the injury must be real and have present substance, rather than merely being theoretical or fanciful.
[105] The injury may be of an economic kind (for example, a reduction in the value of the benefited land), physical kind (for example, being subjected to noise or traffic), or intangible kind (such as impairment of a view, intrusion upon privacy, unsightliness or an alteration to the character or ambience of the neighbourhood).
[106] Assessment of substantial injury requires the court to compare the position of the owner of the benefited land with the covenant in place with the position if the covenant is modified or extinguished. In the present case, that assessment focuses on the impact of the modification on any future application for resource consent for a quarry on the NZIPL land and the operation of such a quarry if one is established.
[14]Here, the applicants rely on both s 317(d) and (f).
Assessment
[15]I accept that the grounds to make the orders sought under s 317 are made out.
[16] The first point is that it is unknown exactly what the covenants are. Service has been effected on the relevant parties, including the KCDC, and there has been communication with the solicitor initially involved in the subdivision. Nobody has been able to find the particular covenants in question. If any of those affected were able to identify what they were and why they would wish them to continue it may be a different matter. But no one is actually able to identify what the restrictions in the covenant are. For this reason alone the restriction ought to be removed, particularly given the broad circumstances outlined below. It is not appropriate for there to be an unclear restriction by way of a covenant listed on the title when it is not possible to identify what it is.
[17] Secondly, the draft covenants largely control steps that would be taken in association with the original formation of a subdivision in or about 1979. For that reason they are no longer of any real relevance. So, for example, the draft covenant restricting the approval of the building plans by the developer is now effectively spent. It has been confirmed that the developer no longer has any interest in this question.
That can be said in relation to many of the possible covenants in question assuming the draft document identifies their general character.
[18] Finally, to the extent that any covenants might be said to now impose material controls, they are superseded by other requirements. The setback requirements in the covenant referred to in [9(g)] above have been overtaken by the provisions in the Kāpiti Coast District Plan requiring a setback of approximately that extent in relation to coastal properties such as 13 Oratia Street. In relation to the draft building height limitation summarised in [9(f)], this does not seem to apply to 13 Oratia Street and I accordingly accept that no person could be substantially injured by the lifting of the covenant.
[19] The only issue that has been raised relates to the covenant, or potential covenant in relation to fencing between the property and any public reserve. Following discussions with KCDC, a draft order was approved retaining a similar limitation, as attached as appendix 1 to the submissions of counsel dated 6 November 2020.
[20] In accordance with the approach outlined by the Supreme Court, I have also considered the discretion in relation to the modification. For the reasons I have essentially explained, I think it appropriate that the potential covenants be clarified, and modified in the manner proposed.
[21] I accordingly grant the application and substitute the covenant for the covenant in the form set out in appendix 1.
Cooke J
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