Donnelly v Gibbons
[2012] NZHC 2280
•5 September 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-3511 [2012] NZHC 2280
BETWEEN DUNCAN CLIFFORD DONNELLY AND TERESA LINDA DONNELLY
Plaintiffs
ANDJOY NEAVE GIBBONS Defendant
Hearing: 29 August 2012
Counsel: D Mitchell for the Plaintiffs
D A Wood for the Defendant
Judgment: 5 September 2012
RESERVED JUDGMENT OF ELLIS J
This judgment was delivered by me on 5 September 2012 at 3 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors: Turner Hopkins, PO Box 33-237, Takapuna
Clendons, PO Box 305349, North Shore City 0757
Counsel: D A Wood, PO Box 1452, Auckland 1140
DONNELLY V GIBBONS HC AK CIV-2012-404-3511 [5 September 2012]
[1] The Donnellys and Mrs Gibbons are neighbours. The Donnellys live on a property that was subdivided from the Gibbons’ farm in 2005 (“Lot 1”). When the subdivision occurred, Mrs Gibbons and her late husband created a restrictive covenant over part of their property (“Lot 2”) in favour of what is now Lot 1. That covenant provides:
The Grantor, with the intent to bind the registered proprietor for the time being of the Servient Tenement hereby covenants for the benefit of the Grantee or other registered proprietor for the time being of the Dominant Tenement that the Grantor will not at any time in the future erect or permit to be erected any dwelling or other building or major structures on the Servient Tenement provided however that the liability hereunder of the Grantor or any other registered proprietor of the Servient Tenement shall apply only in respect of the period of such party being the registered proprietor of the Servient Tenement.
[2] In the present application the Donnellys seek an interim injunction in relation to an alleged breach of that covenant. The alleged breach is the recent construction by Mrs Gibbons of a cattle race, together with what the Donnellys call a a “loading platform”, a retaining wall and a 200 metre gravel road within the covenanted area (collectively referred to in this judgment as “the works”).
[3] Mrs Gibbons disputes that there is a “platform” properly so-called and also that the road is new; she says it is simply the reinstatement of a pre-existing one. She also says that the cattle race is merely a natural extension of the existing stock yard.
[4] The relief sought is an injunction restraining Mrs Gibbons from undertaking any further construction in relation to these works and an injunction preventing her from using the works pending their removal. In the underlying substantive proceeding, removal of the works is the relief sought.
[5] Before turning to the issues raised by the application it is necessary to set out the background in a little more detail.
Background
[6] The restrictive covenant I have set out above was registered on 1 December
2005. At that time:
(a) There were already some buildings and structures on Lot 2, including most of the Gibbons’ house, a woolshed and adjacent stockyards;
(b) the Gibbons operated a working farm on Lot 2; they had between
30 and 50 cows and between 300 and 400 sheep;
(c) Lot 2 did not have on it any loading race for loading stock onto stock trucks. The Gibbons’ farm was, and had been for many years, serviced by a loading race on another part of the farm. That part of the farm which contained the loading race has, however, recently been subdivided off as a separate lot;
[7] The Donnellys bought Lot 1 from the original purchasers on 30 April 2008. They have said that their house is approximately 40 metres away from the nearest part of the works.
[8] In 2009, Mr Gibbons died. From April 2010 Lot 2 has been leased to
Mr McCathie.
[9] It appears that in mid-2011 there were some discussions between Mrs Gibbons and the Donnellys about the possibility of a variation to the restrictive covenant. There is a dispute, however, about exactly what was sought or said during those discussions. It appears generally to be accepted, however, that one of Mrs Gibbons’ concerns was that in the event that her house or the existing woolshed was damaged, or needed to be replaced, the restrictive covenant might not permit that. She says it was never intended that her home be included in the covenanted area.
[10] On 2 March 2012 Mrs Gibbons sold the lot which contained the existing loading race. In the same month she started to construct the works. An exchange of correspondence between the parties’ respective solicitors ensued, but no resolution of the issues raised by the Donnellys was reached. These proceedings were commenced on 21 June 2012.
[11] Mrs Gibbons has deposed that the works were completed in March and that there will be no further addition to them. The Donnellys say that they have no way of knowing whether this is correct. Equally, however, they are in no position to dispute it and that there is no evidence to the contrary. Rather, the evidence is that Mr McCathie has used the works once (in May) since the completion of the works.
[12] Future use of the works is necessarily speculative although Mrs Gibbons has deposed that it is likely to be minimal.
Issues
[13] The issues that are raised by the present application are:
(a) Does the Donnellys’ claim that Mrs Gibbons has breached the restrictive covenant and that they are entitled to removal of the works raise a serious question to be tried. More particularly, does the argument that the works breach the restrictive covenant have a real prospect of succeeding at trial?
(b)If so, then can and should the relief sought be granted (ie where does the balance of convenience lie)?[1]
[1] American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL).
A serious question to be tried?
[14] As to the first issue, the existence of a breach turns on the meaning of the words in the covenant “any dwelling or other building or major structures”.
[15] It was not disputed that covenants are generally construed in light of the surrounding circumstances existing at the date when the instrument was executed. These circumstances include the physical circumstances of the servient land, the nature and description of the land or buildings comprising the dominant tenement, and the purpose of the covenant.[2]
[2] Hinde, McMorland and Sim Land Law in New Zealand (3rd ed, Lexis Nexis, Wellington) at [16.037]
and [17.045].
[16] I am prepared to accept Mr Campbell’s submission that it could reasonably be inferred that the purpose of the restrictive covenant was to some extent to protect and enhance the enjoyment and privacy of Lot 1. Equally, however, the circumstances relating to Lot 2, namely that it was, at the time, a working farm, are also, in my view, important. It seems improbable, for example, that Mr and Mrs Gibbons would have agreed to a covenant that restricted in any significant or substantial way the day to day operations of that farm.
[17] In terms of the interpretation of the critical words themselves, I find it difficult to accept that the works come within the natural meaning of the term “major structures”.
[18] Photographs of the works were in evidence before me. While necessarily expressing no definitive view, the race itself looks to me like little more than a moderately attractive fence of approximately one metre high. As I have said, the road looks like a (200 metre) stretch of gravel. The retaining wall appears to me of no greater size than is found in many gardens and the “platform” is not significantly built up and seems generally unobtrusive. The works overall appear to be integrated with the existing stockyard.
[19] Moreover, a cattle race is, I would have thought, an integral and unremarkable part of operating a farm of the kind that the Gibbons own. Nor is the race, road, or platform unsightly in any remarkable way or poorly finished.
[20] I accept Mr Campbell’s submission that a distinction is logically to be drawn between the word “structure” and the word “building” and that it therefore appears to
contemplate some other form of construction. I would also be prepared to accept, at this stage of the proceeding, that some or all of the works might fairly be described as a “structure”, although it is arguable that the associated reference to a dwelling or building suggests that some of structure that is completely enclosed was contemplated.
[21] But it is the adjective “major” that appears to me to be the most significant impediment to the Donnellys’ position. While of course what is “major” or “minor” will vary, depending on the context, here the phrase as a whole (“any dwelling or other building or major structures”) suggests that to be “major” a structure would need to be akin (of a similar size) to a house or building.
[22] In my view there is simply no way that a one metre high cattle race and the associated “structures” would qualify. The works here seem to me to lack entirely any significant vertical dimension. The requirement for such a dimension might not only reasonably be inferred from the association with “building” and “dwelling”, but also from the likely purpose of the covenant to which I have already referred. It is difficult to see how a low fence and a short gravel road would significantly interfere with the Donnellys’ enjoyment of Lot 1. Conversely, and given that Lot 2 has always formed part of a working farm, it seems unlikely that it could reasonably be interpreted as preventing the erection of structures such as these.
[23] My own assessment therefore is that the Donnellys have a low prospect of success on the issue of breach.
[24] Even if I were satisfied that the “serious question to be tried” threshold had been passed here, I do not think the balance of convenience favours the grant of relief. Mrs Gibbons has deposed that the works are complete. As I have said, there is no basis on which I could question that. There is therefore no need to restrain her from undertaking further work on the structures.
[25] The possible restraint of future use is also problematic. Although it is, of course, difficult to predict future use, the evidence before me suggests that it is unlikely to be great. Moreover, the reality is (and always was) that a farm is being
operated on Lot 2. Certain structures that are an integral part of that farm (the stockyards and barn) have always been within Lot 2 and (no doubt) have been routinely used in that context. The new works seem to me to be little more than an extension of those. Moreover any restraint on use would, as I understand it, directly affect Mr McCathie who is not a party to the proceedings.[3] To restrain their use in these circumstances would in my view be unreasonable, particularly in light of the views I have formed about the tenability of the underlying claim.
[3] Mr McCathie is the only person to have used the works thus far and, as I understand it, is the person most likely to be using the cattle race in the immediate future.
[26] In terms of assessing the adequacy of damages from the Donnellys’ perspective I necessarily ignore the issue of compensation for any harm resulting from the construction of the works per se. Any interim injunction made by me could not ameliorate harm that has already occurred; because the works are now complete there is, in my assessment, no risk of further losses being sustained as a result of further construction. Thus there is nothing I could do at this interim stage that would make a difference to the adequacy of damages in relation to the alleged breach of the covenant.
[27] I nonetheless accept that, in the event that the Donnellys do ultimately succeed, they may have suffered loss in the interim as a result of further use of the works. I also accept that there may be some difficulty in quantifying the harm they have suffered in that respect (ie if interim use is not restrained). An award of damages is not capable of directly restoring to them any past loss of enjoyment or amenity value. That said, however, it does not seem to me that any further harm that might be suffered by them during that interim period as a result of sporadic use of the works is likely to be great.
[28] I do not consider that the balance of convenience scales are tipped in the
Donnellys’ favour by the adequacy of damages issue.
[29] For the reasons I have given, the application for (interim) injunctive relief must fail. In the event that the position as to costs cannot be agreed, memoranda
may be filed.
[30] The substantive proceeding is to be called in the next available Duty Judge
list so that appropriate pre-trial timetabling orders can be made.
Rebecca Ellis J
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