Greenstone Land Developments Limited

[2022] NZHC 1419

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE

CIV-2022-441-34

[2022] NZHC 1419

UNDER

the Property Law Act 2007

IN THE MATTER

of Parts 7 and 19 of the High Court Rules 2016 and ss 316 and 317 of the Property

Law Act 2007

AND

IN THE MATTER

of an application by Greenstone Land Developments Limited for an order

extinguishing easements

BETWEEN

GREENSTONE LAND DEVELOPMENTS LIMITED

Applicant

Hearing:	On the papers
Appearances:	A McEwan for the Applicant
Judgment:	16 June 2022

JUDGMENT OF COOKE J

[1]    Greenstone Land Developments Limited seeks orders under ss 316 and 317 of the Property Law Act 2007 (the Act) to partially extinguish two easements which are affecting a subdivision that it is in the process of completing. The application is supported by affidavits from Timothy Wilkins, a Director and Shareholder of the applicant, Adam Jones an engineer involved in the subdivision, and Stuart McLauchlan a legal advisor to the applicant.

RE GREENSTONE LAND DEVELOPMENTS LIMITED [2022] NZHC 1419 [16 June 2022)

[2]    By minute dated 27 May 2022 I granted leave for the application to be brought by way of originating application under Pt 19 of the High Court Rules 2016. I also directed that the application be served on Hastings District Council (the Council) in accordance with s 316(3) of the Act. When doing so I indicated that it might well be unnecessary for any other persons to be served, but that the Council should be given the opportunity to be heard on that question.

[3]    Service has been affected, and the Council has since filed a memorandum advising that it abides by the decision of the Court.

Background

[4]    The applicant is a land development company based in Hawkes Bay. In 2020 it purchased rezoned farmland adjacent to the coastal settlement of Te Awanga for the purposes of subdivision. It was duly granted subdivision resource consent from the Council. The subdivision earthworks and civil works are now complete.

[5]    The applicant is seeking approval of a survey plan under the Resource Management Act 1991 (RMA) so that it can obtain titles for stage one of the development. In order to do so there are lots that need to vest to Council for roads and general reserves. This is required under the conditions of the resource consent.

[6]    The title to the land has two memorials for easements registered on it, which are the subject of the application. The two memorials are Conveyance 56404 which relates to water and pipeline rights, and Deed 39985 which relates to drainage rights (together “the easements”).

[7]    Under ss 238 and 239 of the RMA vesting a road or a reserve has the effect of freeing the land from any encumbrance or interest that it is subject to.1 Both provisions are enabled by the Registrar-General of Land depositing a survey plan. However, under s 224 there are restrictions upon the deposit of a survey plan. Section 224 relevantly provides:

1      Resource Management Act 1991, ss 238 and 239.

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; or

(ii)in the case of land not subject to that Act, every person having an interest, including any incumbrance, in the land that is evidenced by an instrument registered under the Deeds Registration Act 1908; and

(emphasis added)

[8]    So the deposit of the survey plan by the Registrar-General of Land is prohibited unless the written consent of every registered proprietor with an interest in any encumbrance is received. That would include all landowners who benefit from the easements here.

[9]    The applicant submits it would be both costly and timely to obtain the consent of  all  landowners  affected  by  the  easements.  The  applicant’s  legal  advisor,   Mr McLauchlan, searched for the instruments containing the easements. They were not available electronically. Mr McLauchlan then requested a manual search be done through Land Information New Zealand’s (LINZ) website. By email dated 1 July 2019 LINZ advised that it had undertaken a special search in an effort to find the record, but that it could not find a document or a copy that could be supplied to the applicant’s solicitor. On 1 April 2022 LINZ advised that Deed 39985 was missing and that “it was most likely destroyed in the 1931 Napier earthquake and fire that followed”.

[10]   The applicant says that because the instruments containing the easements no longer exist their parameters cannot be defined. For example, the areas for a pipeline or drain cannot be defined. Further, the rights or benefits arising out of the easements cannot be ascertained. The easements also affect numerous properties — a search

indicates potentially 53 titles are affected by Conveyance 56404 and 58 titles are affected by Deed 39985, although the actual number may not be certain. So the applicant is in a position of having to seek consent from an undefined number of benefiting titles, without being able to ascertain what the benefits of the easements are.

[11]   The applicant is required to settle 18 Agreements for Sale  and Purchase by 30 July 2022. This matter is accordingly one of some urgency.

Further service of the application

[12]   In my minute of 27 May 2022 I reserved the question on whether any other parties ought to be served, including following hearing the Council on this issue. The Council has not indicated that it wishes to be heard on that question.

[13]Section 316 relevantly provides:

316     Application for order under section 317

…

(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.

[14]   Having considered the matter further it would appear that there are two lines of authority on whether further service should be made on the other landowners in cases such as the present.

[15]   One line of authority is to the effect that no such service should be directed given the lack of a legitimate interest to be advanced by affected landowners, the difficulty in serving them, and the risk of unreasonable obstruction.2 For example in RCL Henley Downes Ltd v Hansen Matthews AJ said:3

… it is clear that for the covenant to be extinguished by way of execution of documentation … cooperation and action would be required from the registered proprietors of all land on which the covenant is registered, which

2      See Re Stoke Valley Holdings [2020] NZHC 430; Re Yoursection Ltd [2019] NZHC 1825; RCL Henley Downs Ltd v Hanson [2018] NZHC 2714; Re Horncastle Homes Ltd [2015] NZHC 987.

3      RCL Henley Downs Ltd v Hanson, above n 2, at [9] and [12].

now includes the 88 title holders from stage one of the subdivision. In my opinion [the applicant] is correct in its view that this would be time-consuming and very expensive, and would certainly delay progress with the subdivision (and in short order availability of titles for stage two). Further, I accept that there is a real risk of one owner failing to cooperate or being difficult to locate.⁴ So far as the sections within the subdivision are concerned, both developed or intended in the future, I am satisfied that the correct course is for the Court to make an order which will have the effect of allowing the covenant to be extinguished from titles which are required to vest in [the Council].

…

The second procedural point relates to service. [The applicant] asks for an order that no other party be served. Given the circumstances which I have outlined and the views I have formed, as recorded above, in relation to the proposals now being made by [the applicant], I am satisfied that there is no need for any of the respondents to be served with this application. I am unable to discern any basis upon which any of the parties to this case can be adversely affected by the proposals now before the Court.

[16]   On the other hand other decisions have taken the view that some form of service on the affected property owners take place.5 In Re Baigent after reviewing the authorities Isac J said:6

Service of proceedings is a fundamental requirement of the right to be heard. I agree … that it would be extraordinary to extinguish a property right — even one which is ostensibly redundant — without any notice of the issue. And while in appropriate cases it may be that practicality favours proceeding without notice to affected parties, or with substituted service, I am not satisfied this case is one of them.

[17]   Rights of natural justice are fundamental. Property owners would normally be expected to be served, or given notice of an application affecting their property. But the extent of rights of natural justice are informed by the circumstances, and s 316(3) recognises that the Court must exercise judgment in the circumstances of the case. Much may depend on the apparent purpose and utility of the easement, and the circumstances in which it is sought to be extinguished or modified.

[18]   In the present case I accept there is no need for service, or other form of notification of affected landowners. As I will explain in greater detail below, there has been diligence in seeking to find out the nature of the relevant easements, and it is now

4      An example of this is recorded in the judgment in Southern Lifestyle Ltd [2018] NZHC 2469.

5      Re Baigent [2021] NZHC 2729; Re Baigent [2021] NZHC 2478.

6      Re Baigent [2021] NZHC 2729 at [13].

not possible to identify what the content of them actually is. Progress with the subdivision has a degree of urgency, and there is no apparent issues that could be raised in relation to the vesting of the land with the Council as part of the subdivision. I also accept that there is a risk that objection might be taken by the landowners which could delay the subdivision, but which ultimately have no merit.

[19]   For these reasons I accept that the application can be dealt with without the need for any further directions for service or notification to the landowners.

The substantive application

[20]Section 317 of the Act 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.

[21]The substantive orders the applicant seeks are in the following terms:

(b)Partially extinguish the easement described as “subject to water and pipeline rights over the within land created by Conveyance 56404” registered against lot 3 deposited plan 519212 being 11.9646 hectares in identifier 815156, to the extent that this lot is no longer subject to the easement.

(c)Partially extinguish the easement described as “subject to drainage rights (if any) over the within land created by Deed 39985” registered against lot 3 deposited plan 519212 being 11.9646 hectares in identifier 815156, to the extent that this lot is no longer subject to the easement.

[22]   The applicant’s solicitor has explained that a search has been undertaken to try to identify and understand the nature of the easements. He explains that the areas of pipelines and drains cannot be defined, and that for this reason LINZ has treated the easements as covering the entire land.

[23]   It seems likely that the easements were destroyed by fire during the Napier earthquakes. Under the Land Transfer (Hawkes Bay) Act 1931 a new land transfer register was authorised to replace the register destroyed in the earthquakes. Section 15 provides that the registered proprietor was bound to execute new instruments where originals had been destroyed. It appears that this did not happen.

[24]   The nature of the easements is now not known. They appear to no longer be of significance. There is not even a record of what they are. It is also relevant that the applicant only seeks to remove the easements in relation to a small part of the land in

question and only for the purpose of establishing the roadways and general reserves in accordance with the resource consent.

[25]   I am satisfied that the above circumstances fall within s 317(1)(iii). For these reasons the application is granted in the terms sought.

Cooke J

Solicitors:
Langley Twigg, Napier for the Applicant