Cashmere Downs Company Limited v Cashmere Downs Company Limited
[2022] NZHC 1199
•27 May 2022
IN THE HIGH COURT OF NEW ZEALAND MASTERTON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKAORIORI ROHE
CIV-2022-435-1
[2022] NZHC 1199
UNDER The Property Law Act 2007 IN THE MATTER OF
An application under ss 316 and 317 of the Property Law Act 2007
BETWEEN
CASHMERE DOWNS COMPANY LIMITED
a duly incorporated company having its registered office at 40 Dixon Street, Masterton 5810
Applicant
AND
CASHMERE DOWNS COMPANY LIMITED
a duly incorporated company having its registered office at 40 Dixon Street, Masterton 5810
First Respondent
AND
OTHER RESPONDENTS listed in Schedule One to the Originating Application
Other Respondents
Hearing: 19 May 2022 via VMR Appearances:
C Houlahan for Applicant
Judgment:
27 May 2022
JUDGMENT OF CULL J
[1] Cashmere Downs Co Ltd (Cashmere Downs) is carrying out a multistage residential development and seeks orders under ss 316 and 317 of the Property Law Act 2007 (PLA) to modify certain covenants currently burdening the land to be vested
CASHMERE DOWNS COMPANY LIMITED v CASHMERE DOWNS COMPANY LIMITED [2022] NZHC 1199 [27 May 2022]
for use as a road or reserve land as part of the development. The applicant also seeks the insertion of a new clause allowing for the provision of roads and reserves on land over which Cashmere Downs is the registered proprietor.
[2] This matter comes before the Court by way of a formal proof hearing as no notices of opposition were filed by any of the 89 respondents.
Background
[3] The multistage residential development named the Cashmere Oaks Estate Subdivision (“the development”) in Lansdown, Masterton is near completion with six out of seven stages have been completed. The land to be subdivided for the final stage, Stage 7, is Lot 6 of Deposited Plan 558083. Cashmere Downs wishes to further subdivide that land for Stage 7. A number of sections have already been sold.
[4] The land for Stage 7 is subject to three covenants (together “the covenants”). The covenants govern over the number and standard, quality, use and occupation of the land. They do not themselves affect the development of a road.
[5] Cashmere Downs say that due to an oversight by their previous lawyers, the covenants have also been registered against land required for a road which is to be vested in the Masterton District Council. The effect is that under s 224(b)(i) of the Resource Management Act 1991 (RMA), before the survey plan vesting the road can be deposited, consent of every registered owner of lands that obtain benefit of the covenants is required.1 This means the consent of 89 separate parties is required.
[6] On 9 March 2022 Associate Judge Johnston made orders for substituted service. Between 28 March and 4 April, the applicant served the 89 respondents in accordance with those orders. No notices of opposition were filed by the respondents. The matter was directed to be set down for a formal proof hearing.2
1 Resource Management Act 1991, s 224(b)(i).
2 Cashmere Downs Co Ltd v Cashmere Downs Co Ltd HC Masterton CIV-2022-435-01, 26 April 2022.
[7] The applicant now seeks orders modifying the covenants with the addition of the following clause:
21Roads and Reserves
21.1The Grantee:
a.hereby irrevocably consents to the deposit or registration of any survey plan has the effect of vesting or dedicating all or any part of that land as a road or reserve in any local authority, territorial authority or the Crown.
b.agrees that:
i. the covenants in this instrument shall cease to apply in respect of any such land to vest or dedicate immediately prior to the deposit with Land Information New Zealand of the land transfer plan or survey plan effecting such vesting or declaration.
ii. this clause will be deemed to be the Grantee’s written consent to any such plan which may be endorsed thereon by the Grantor including for the purposes of s 224 of the Resource Management Act 1991.
iii. without prejudice to the foregoing, the Grantee will, at the Grantor’s request and at no cost to the Grantor, immediately give any additional written consent as required by the Grantor to any such deposit or registration of any such instrument or plan deposit.
Relevant law
[8] Under ss 224, 238 and 239 of the RMA, the covenants are currently an obstacle to subdivision for Stage 7. Section 238 provides that land shown on a survey plan as road to be vested in the council, vests free of all interests in the land including any encumbrances in the territorial authority.3 Section 239 similarly provides for reserves however it does allow the territorial authority to accept the vesting of reserve land subject to specified interests.
[9] However, s 224 places a restriction on the deposit of the survey plan. It requires the written consent of every registered owner of an interest in the land that is to be vested in the council. Section 224 of the RMA relevantly provides:
3 Resource Management Act 1991, s 238(1).
224 Restrictions upon deposit of survey plan
No survey plan shall be deposited for the purposes of section 11(1)(a)(i) or
(iii) unless—
…
(b)where land shown on the survey plan will vest in the Crown or a territorial authority, there is endorsed on the survey plan or deposited with the Registrar-General of Land, written consent to the subdivision given by—
(i)in the case of land subject to the Land Transfer Act 2017, every registered owner of an interest, including any encumbrance, in the land…
[10] Section 11(1)(a)(i) and (iii) relates to the restriction on subdivision of land. It requires a survey plan to be deposited by the Registrar-General of Land.
[11] This application is made under ss 316 and 317 of the PLA. These provisions relevantly provide:
316Application for order under section 317
(1)A person bound by an easement, a positive covenant, or restrictive covenant (including a covenant expressed or implied in an easement) may make an application to a court for an order under section 317 modifying or extinguishing that easement or covenant.
(2)That application may be made in a proceeding brought by that person, or in a proceeding brought by any person in relation to, or in relation to land burdened by, that easement or covenant.
(3)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.
317Court 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.
Discussion
[12] It is plain that Cashmere Downs has standing to make the application, as it is the servient owner of land over which the covenants are placed.
[13] Cashmere Downs relies on s 317(1)(a)(i) of the PLA to say that the covenants should be modified because of a change since their creation in the nature or extent of the use made of the burdened land. It says the problem of vesting the road in the local Council did not arise until October 2020, when the Registrar-General of Land issued a ruling which prevented the alternative method of creating roads in its sub-division by way of transfer and dedication.
[14] In October 2020, the Registrar-General of Land gave consideration to the practice adopted in subdivision of land, of dedicating or creating roads by transfer. He
issued a ruling that creating roads by transfer and dedication is not authorised under the RMA and is therefore not a permitted alternative to the statutory vesting process. He emphasised that the authorised process for creating a new road under the RMA is to have the land vested as road, upon deposit of the plan under s 238 of the Act. This requires the consent of any person with a registered interest in the land under s 224(b) of the RMA. The Registrar-General noted that the consent and vesting process provided for under ss 224 and 238 of the Act is the appropriate mechanism for addressing existing interests. This cannot be avoided by having the land transferred and dedicated as road.4 Cashmere Downs says that the change in the method of creating roads had occurred since the Covenants’ creation.
[15] I am not satisfied that the Registrar-General’s clarificatory ruling is in itself a change to the nature or extent of the use being made of the burdened land. In Fair v Fair,5 a case before me, a similar covenant was registered over multi-stage residential development over land that was to become roads and reserves invested in the Council. In Fair, I specifically noted that ss 224, 238 and 239 of the RMA prevented the depositing of the survey plan for further sub-division, without the consent of the registered proprietors of the benefitted titles. Fair was decided before the Registrar- General’s ruling in 2020 and concerned the same provisions of the RMA that apply in this case. For that reason, I consider the Registrar-General’s clarification is in itself not a change in the nature or extent of the use of the land.
[16] However, I do accept that there have been changes since the covenants’ creation. The covenants were originally granted over certain titles as listed on the covenants themselves and with each sub-division of the original title, new titles were issued. The title under consideration,6 represents the portion of the original land that has not yet been sub-divided. Cashmere Downs points to the oversight by their previous lawyers, who registered the covenants against land that was going to be required for a road to be vested in the Masterton District Council. Now that stage 7 of the sub-division has commenced, with nine sections having been sold, there has
4 Toitū Te Whenua | Land Information New Zealand “Landwrap October 2020” (7 October 2020)
< v Fair [2019] NZHC 2349, (2019) 20 NZCPR 652.
6 979327.
been a change in circumstances which I consider to be relevant. The threshold of s 317(1)(a)(iii) is therefore met.
[17] From the evidence filed before me and the absence of any opposition by the 89 respondents served with this application, I am satisfied that modifying the covenants will not substantially injure any person entitled.7 As in Fair, I am also satisfied that in the absence of any opposition from the parties who obtain the benefit of these covenants, there is no adverse effect of modifying the covenants in the manner requested.
[18] I also accept that the purpose of the covenants is to protect “the nature and standard of the residential sections in the development.” The proposed modification will have no practical effect on the dominant landowners because the covenants remain in place for all land not being used as a road or as a reserve.
[19]Accordingly, I grant the application and make the following orders:
(a)The Registrar-General of Land shall note against all relevant titles that the covenants created by Registered Instruments 8850972.1, 8820524.1 and 8830524.2 are modified to insert a new clause 21 in the following terms:
21Roads and Reserves
21.1The Grantee:
a.hereby irrevocably consents to the deposit or registration of any survey plan has the effect of vesting or dedicating all or any part of that land as a road or reserve in any local authority, territorial authority or the Crown.
b.agrees that:
i. the covenants in this instrument shall cease to apply in respect of any such land to vest or dedicate immediately prior to the deposit with Land Information New Zealand of the land transfer plan or survey plan effecting such vesting or declaration.
7 Property Law Act 2007, s 317(1)(d).
ii. this clause will be deemed to be the Grantee’s written consent to any such plan which may be endorsed thereon by the Grantor including for the purposes of s 224 of the Resource Management Act 1991.
iii. without prejudice to the foregoing, the Grantee will, at the Grantor’s request and at no cost to the Grantor, immediately give any additional written consent as required by the Grantor to any such deposit or registration of any such instrument or plan deposit.
[20] Leave is granted to Counsel to seek further amendments to these orders, if required.
Cull J
Solicitors:
Gibson Sheat, Wellington, for Applicants
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