Chand v Auckland Council - [2020] NZHC 2422

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1114

[2020] NZHC 2422

IN THE MATTER of Part 19 High Court Rules and s 316 and s 317 of the Property Law Act 2007

AND

IN THE MATTER

of an application to modify and/or extinguish a restrictive covenant

BETWEEN

PARWATI CHAND, RAM CHAND and KHAN & ASSOCIATES TRUSTEE

COMPANY (NO.110) LIMITED
Applicants

AND

AUCKLAND COUNCIL

First respondent

Continued overleaf

Hearing: 27 July 2020

Appearances:

R O Parmenter for the applicants Appearance excused for the first respondent

P Moodley for the third, fourth and fifth respondents
No appearance for the second, sixth and seventh respondents

Date of judgment:

17 September 2020

JUDGMENT OF PALMER J

This judgment was delivered by me on Thursday 17 September 2020 at 3.00pm.
Pursuant to Rule 11.5 of the High Court Rules.

…………………………
Registrar/Deputy Registrar

Counsel/Solicitors:
R O Parmenter Barrister, Auckland Graham & Co, Auckland
Brookfields, Auckland

CHAND v AUCKLAND COUNCIL [2020] NZHC 2422 [17 September 2020]

CHAMROEUN KONG, KIMHENG
CHHIT and SOKCHAN ARUN KONG
Second respondents

XUANYU HE and QIUYU SU
Third respondents

RAAD ELIAS and SAHAR JAMEEL BAHNAM
Fourth respondents

RAJESH PRASAD, VIJAY RAGNI PRASAD and DR THOMAS LIMITED
Fifth respondents

WILLIAM GORDON CHIPLIN and THUY THI CHIPLIN
Sixth respondents

LIM THI HOANG, TRAC XUAN BUI, TONG DUC BUI and MEN THI LUU
Seventh respondents

Summary

[1] The parties all bought properties in a subdivision in Manukau, South Auckland. The titles are subject to a restrictive covenant preventing further subdivision, except by the original owners, the Smyths. The Chands bought the largest property from the Smyths and now apply to modify the covenant to allow them to subdivide it into five properties. They say that the modification will not substantially injure the respondents, under s 317(1)(d) of the Property Law Act 2007. But I accept the evidence of the respondents’ expert valuer, Peter Bates, that the modification would have a significant effect on the value of each of the respondents’ properties. I dismiss the application.

What happened?

Subdivision and covenant

[2] In 2007, Anne and Ransom Smyth subdivided their land at 41 Redoubt Road, Manukau, Auckland into several lots and an accessway. On 25 February 2008, a restrictive covenant was registered against the titles which required the owners, among other things:1
(j) Not to further subdivide the property, including by way of cross lease or unit title or otherwise, so that each lot shall always remain in one Computer Register and contain only one dwellinghouse PROVIDED that the said [Smyths] while still Registered Proprietors of any of the said Lots may further subdivide any of the said Lots provided that any additional Lots shall always remain in one Computer Register and contain only one dwellinghouse AND the Registered Proprietors of any of the said Lots hereby consent to any such further subdivision by [the Smyths] and acknowledge that such further subdivision may result in access Lot 8 being shared by more than 8 Lots and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] NZHC 2422
Decision Date: 17 September 2020

CaseChat Overview and Summary

The High Court of New Zealand was presented with an application to modify a restrictive covenant that prevented further subdivision of a property in Manukau, South Auckland. The applicants, Parwati Chand, Ram Chand, and Khan & Associates Trustee Company (No.110) Limited, sought to modify the covenant to allow for the subdivision of the largest property into five lots. The respondents, several property owners in the area, opposed the application, arguing that the modification would substantially injure them. The central legal issue before the court was whether the modification of the restrictive covenant would not substantially injure the respondents, as required by section 317(1)(d) of the Property Law Act 2007.

The court considered the expert evidence of two valuers. Warren Priest, called by the applicants, argued that the covenant had no significant impact on property values, and the proposed modification would not result in substantial injury. However, Peter Bates, called by the respondents, contended that the modification would significantly diminish the value of the respondents' properties by approximately $100,000 each. The court accepted Mr. Bates' evidence, finding his analysis more reliable and relevant to the current market conditions. Consequently, the court determined that the modification would indeed cause substantial injury to the respondents, who had purchased their properties with the benefit of the restrictive covenant. Given that the statutory conditions for modifying the covenant were not met, the court dismissed the application.

In conclusion, the court's decision was to deny the application to modify the restrictive covenant, thereby upholding the protection of the respondents' property interests. The court also awarded costs to the third, fourth, and fifth respondents on a 2B basis, reflecting the outcome of the proceedings.

Orders