Hurlimann v Lilley - [2023] NZCA 173

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA400/2022
[2023] NZCA 173

BETWEEN	JOSHUA SAMUEL HÜRLIMANN Appellant
AND	PAUL ANTHONY LILLEY AND MELANIE JANE LILLEY Respondents

Hearing:	21 March 2023
Court:	Brown, Lang and Palmer JJ
Counsel:	M Freeman and R A Bull for Appellant D I Sheppard and A J R Sinclair for Respondents
Judgment:	17 May 2023 at 11.30 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThere is no order as to costs.

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REASONS OF THE COURT

(Given by Lang J)

The issue in this appeal is whether the High Court erred in refusing to exercise its power under s 317 of the Property Law Act 2007 (the PLA) to remove restrictive covenants registered against land now owned by the appellant, Mr Hürlimann. The respondents, Mr and Mrs Lilley (the Lilleys), had registered those covenants against the title to the land shortly before Mr Hürlimann acquired it.

Background

The Lilleys owned a seven hectare rural property that they decided to subdivide into four sections. They proposed to retain one section for themselves and to sell the three remaining sections as lifestyle blocks. Mr Hürlimann entered into an agreement to buy one of those blocks.
The agreement for sale and purchase (ASP) contained the following provision:
23. The Vendor agrees not to allow any land covenants, easements or Council consents to be registered over the Property without the prior written consent of the Purchaser. If the Purchaser objects to any of the proposed land covenants, easements or Council consents which are required to be registered on the title, the Purchaser may cancel this agreement and receive a full refund of deposit paid.
The parties signed the ASP on 13 January 2020. At that stage titles to the subdivided sections had not been issued. After the agreement was signed the relationship between the parties remained cordial for some time. However, the relationship subsequently deteriorated for a variety of reasons. Matters were not improved when Mr Hürlimann lodged a caveat against the Lilleys’ property in September 2020.
At the point when Mr Hürlimann lodged his caveat the Lilleys had not indicated they intended to register any restrictive covenants against the title to the section to be purchased by him. However, on 22 October 2020, the Lilleys’ solicitor sent an email to Mr Hürlimann’s solicitor attaching a series of consent notices issued by the local territorial authority as well as some utility easements. These needed to be registered against the title to the land to be purchased by Mr Hürlimann before the new title could issue. In addition, the email attached a series of restrictive covenants that the Lilleys intended to register over the title to Mr Hürlimann’s section. The covenants imposed significant restrictions on any building that might be erected on that land. These included a prohibition on the erection of any buildings “other than a new residential home” and imposed design and construction specifications for any home that might be built.

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.

Continue reading Hurlimann v Lilley

Details

AGLC: Hurlimann v Lilley [2023] NZCA 173
Case: [2023] NZCA 173
Decision Date: 17 May 2023 at 11.30 am

CaseChat Overview and Summary

Joshua Samuel Hürlimann appeals against a decision of Isac J to refuse to exercise the court's discretion to extinguish restrictive covenants registered against land he purchased from Paul Anthony Lilley and Melanie Jane Lilley (collectively, the Lilleys). The covenants restricted the erection of buildings on the land, including residential homes. The appeal was heard by Brown, Lang, and Palmer JJ. The court was required to determine whether the High Court was correct to decide that it would not be just and equitable to extinguish or modify the covenants registered against the land. The court considered the legal principles governing the application of s 317 of the Property Law Act 2007, which permits a court to extinguish or modify restrictive covenants. The court noted that the Judge in the High Court had not erred in determining that the covenants ought not to be extinguished because Mr Hürlimann had agreed to them after receiving legal advice and the covenants were not imposed as part of a collateral purpose. The court held that the appeal should be dismissed. The court made no order as to costs.

Orders