Carabell Trust v Tauranga City Council

[2019] NZHC 2725

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2019-470-84

[2019] NZHC 2725

UNDER

Sections 316 and 317 of the Property Law Act 2007

AND

UNDER

Part 19 of the High Court Rules 2016

AND

IN THE MATTER

of an originating application by Craig Alexander Bell, Robyn Alexandra Bell and Mackenzie Elvin Trustees No 1 Ltd as

trustees of the Carabell Trust for an order

that Land Covenant in Transfer B504462.17 on the title identifier SA65C/637, legally described as Lot 213 Deposited Plan South Auckland 81027 be modified

Applicants

Hearing:	(On the papers)
Judgment:	24 October 2019

JUDGMENT OF BREWER J

Solicitors:

Mackenzie Elvin Law (Tauranga) for Applicants

CARABELL TRUST v TAURANGA CITY COUNCIL [2019] NZHC 2725 [24 October 2019]

Introduction

[1]                 The applicants, as trustees of the Carabell Trust, have applied by way of originating application1 to modify a land covenant (the covenant) registered against the title of the property at 62 Domain Road, Papamoa, Tauranga (the property).

[2]                 The purpose of the application is to remove the restriction contained in (vi) of Schedule 1 to the covenant, which provides:

The Transferee will not erect any more than one single family dwellinghouse on the land, nor subdivide the land further.

Jurisdiction

[3]                 The jurisdiction of the Court is conferred by s 317 of the Property Law Act 2007:

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—

1      Permission to commence the proceeding by way of originating application was granted by Associate Judge Smith on 10 September 2019.

(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.

Background

[4]                 The history of the covenant, and its planning and resource management context, are discussed in the affidavit of Peter Bruce McCoskrie sworn on 20 August 2019. I accept Mr McCoskrie’s expertise, the accuracy of the facts to which he deposes and the opinions he expresses.

[5]                 In short, the property was created as part of a significant subdivision in 1998 comprising more than 158 lots. Originally, the property was part of a larger piece of land intended by the developer to vest in the Tauranga District Council as Reserve. The Council did not want the land as a Reserve and so, towards the end of the subdivision process, the proposed Reserve land was divided into two residential lots, one of which is the property. Its area is 4700m², considerably larger than the other residential lots which have an average area of 740m². The property is part of the Suburban Residential Zone under the current Operative Tauranga City Plan. Under that Plan, rules provide for subdivision within the Suburban Residential Zone resulting in a minimum allotment size of 325m² as a Controlled Activity.

[6]                 The applicants do not themselves wish to subdivide the property. However, they want the restriction in the covenant removed so it will not restrict the options of any subsequent purchaser.

Discussion

[7]                 Before turning to the merits of the application, I refer to s 316 of the Property Law Act 2007 because it raises a threshold which must be crossed before an order can be made under s 317. Having provided that a person bound by a restrictive covenant may apply for an order under s 317, subs (3) directs:

That application must be served on the territorial authority in accordance with the relevant rules of court, unless the court directs otherwise on an application for the purpose, and must be served on any other persons, and in any manner, the court directs on an application for the purpose.

[8]                 In this case, the territorial authority (the Tauranga City Council) has been served with the application and consents to it.

[9]                 Associate Judge PJ Andrew considered the owners of the 77 dominant tenements should be given notice of the application, so they could oppose it if they wished. In his Minute of 4 October 2019, Associate Judge Andrew directed that service of the proceedings on the owners of the dominant tenements be effected by way of advertisement in the Bay of Plenty Times newspaper. The approved advertisement duly appeared in the newspaper on 8 October 2019. It gave notice that the application would be called on 21 October 2019 and stated that any land owner with a beneficial interest in one or more of the 77 properties concerned could file an appearance and appear. Nothing was filed, and no-one sought to appear. As a result, by Minute dated 21 October 2019, Associate Judge Andrew directed the proceedings be placed before a Judge of this Court “with a view to determining whether there should be a hearing or whether the application can be dealt with on the papers …”.

[10]              In the circumstances I have outlined, I am satisfied it is appropriate to proceed on the papers. A hearing would serve no useful purpose and the merits of the application are clear.

[11]I am satisfied the identified restriction should be extinguished:

(a)Since the covenant was created the neighbourhood has been substantially built on. The property is surrounded by much smaller pieces of land on which dwellings have been erected.2

(b)The restriction in the covenant appears to have been imposed by the developer because a large part of the property was thought swampy and unsuited for residential development. Such a view is no longer justified given the availability of engineering solutions.3

(c)The proposed extinguishment will not substantially injure any person entitled.4

(d)The restriction in the covenant serves no useful purpose but needlessly restricts the rights of the owner of the property. Accordingly, it is just and equitable to extinguish it.5

Decision

[12]I make the following order:

(a)The land covenant in transfer B504462.17 on the title identifier SA65C/637, legally described as Lot 213 Deposited Plan South Auckland 81027 is modified by removing the restriction contained in

(vi) of Schedule 1 to the said covenant.

Brewer J

2      Property Law Act 2007, s 317(1)(a)(ii).

3      Section 317(1)(a)(iii).

4      Section 317(1)(d).

5      Section 317(1)(f).