Hurlimann v Lilley
[2022] NZHC 1751
•20 July 2022
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE
CIV-2021-454-23
[2022] NZHC 1751
BETWEEN JOSHUA HURLIMANN
Plaintiff
AND
PAUL LILLEY AND MELANIE LILLEY
Defendants
Hearing: 4 July 2022 (via AVL) Appearances:
M Freeman for Plaintiff
D Shepherd for Defendants
Judgment:
20 July 2022
JUDGMENT OF ISAC J
Introduction
[1] Mr Hürlimann wanted to buy a lifestyle section so he could build a home. Mr and Mrs Lilley wanted to subdivide their seven-hectare rural property into four lots so they could sell three of them. These propitious circumstances culminated in an agreement for sale and purchase between the parties relating to a section that was yet to be created.
[2] The agreement contained a provision dealing with the imposition of restrictive covenants. Mr Hürlimann considers the provision prevented Mr and Mrs Lilley from requiring covenants of any kind. Despite this, he agreed they could register a suite of them over the land he was to acquire. He then proceeded to settle the purchase and acquired his title subject to those covenants.
HURLIMANN v LILLEY [2022] NZHC 1751 [20 July 2022]
[3] In this proceeding Mr Hürlimann now says the Lilleys breached the agreement by insisting on the covenants. He says their imposition amounted to a variation of the sale agreement that was unsupported by consideration because his consent was the product of illegitimate pressure. He seeks their removal from the title both under the law of contract and in terms of the Court’s jurisdiction to remove covenants under s 317 of the Property Law Act 2007.
[4] The primary issue I need to determine is the effect of cl 23 of the agreement for sale and purchase. It governed the imposition of restrictive covenants and the rights of the parties in relation to them.
The evidence and my findings
Scope of the evidence and my approach to factual findings
[5] The trial occupied one day. The evidence consisted of a largely contemporaneous documentary record of communications between the parties’ solicitors as well as oral evidence from Mr Hürlimann, his solicitor at the time, Mr Matsis, and Mr Lilley.
[6]My findings of fact are drawn almost entirely from the documentary record.
[7] The areas of conflict between the witnesses were limited. The first area— relating to pre-contractual negotiations—is not relevant to the issues I have to determine. Mr Hürlimann has not brought a claim for misrepresentation or rectification, and the oral evidence does not establish a common pre-contractual understanding of the intended effect of cl 23.1
[8] The second area of conflict—relating to Mr and Mrs Lilley’s true motivations for requiring the restrictive covenants—involved a challenge to Mr Lilley’s credibility. As I record later in this judgment, I am not satisfied there is a safe basis on which to conclude that Mr Lilley was not truthful when giving his evidence so, again, I have not found the viva-voce evidence helpful.
1 I use the expression “oral evidence” to refer to both the affidavit evidence adduced as the witness’ evidence in chief, as well as the cross-examination that followed.
[9] Finally, Mr Hürlimann initially proceeded with his claim by way of summary judgment. In the course of dismissing the application, this Court noted that Mr Hürlimann’s case relied on a contention that the legal advice he had received about the effect of cl 23 had been wrong.2 This led the Associate Judge to observe that it would not be appropriate for the Court to embark on an assessment of that question without evidence from Mr Hürlimann’s solicitor, Mr Matsis.
[10] Subsequently, Mr Hürlimann appears to have waived privilege and called Mr Matsis as his witness. It follows that I have had the benefit of previously privileged communications between Mr Hürlimann and his lawyer which I have found helpful when considering the issues.
The facts
[11] Mr Hürlimann is in his late 20s, and was practicing as a qualified pharmacist until recently.
[12] In 2019 he became aware of a piece of land owned by Mr and Mrs Lilley on Kukutauaki Road, north of Levin, which had been listed for sale on TradeMe.
[13] In August he met with Mr Lilley at the property. Mr Lilley had recently engaged a local firm to prepare survey plans to subdivide his land into four lots. The proposed subdivision looked like this:
2 Hürlimann v Lilley [2021] NZHC 2689 at [40].
[14] After looking around the property together, Mr Hürlimann settled on an area that became Lot 3. Mr and Mrs Lilley already lived on the block, and in fact remain living in a home situated on Lot 1.
[15] Thereafter, the parties negotiated and signed an agreement for sale and purchase. Mr Hürlimann’s solicitors prepared the agreement. An original draft contained the following provision:3
No land covenants are to be registered over the property unless required by the local authority.
[16] Mr Hürlimann was unhappy with this drafting. He did not know the form of covenants the Council might require or whether they would be acceptable to him. So a new cl 23 was introduced. It provided:
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.
[17] By cl 22 of the agreement, Mr Hürlimann also had the right to cancel the agreement if the Lilleys failed to obtain a certificate of title for Lot 3 within nine months. And cl 25 contained a number of vendor warranties requiring, amongst other things, Mr and Mrs Lilley to fence the property and fell a shelter belt of trees on the southern boundary.
[18] The purchase price was $223,000, and a substantial deposit, $50,000, was due on execution of the agreement.4
[19] The agreement was finally signed on 13 January 2020, although it is dated 22 November 2019 (for reasons which are unclear). There is no evidence
3 In submissions, Mr Freeman advised that the initial draft of the agreement did not leave Mr Hürlimann’s solicitor’s office, and ought not form part of the admissible evidence available to the Court when considering an objective interpretation of the agreement. Nevertheless, Mr Hürlimann put the draft into evidence, and also relied on it in his affidavit in support of an application for summary judgment. He also relied on it to support his argument when seeking summary judgment: Hürlimann v Lilley, above n 2, at [14].
4 The deposit was immediately released to Mr and Mrs Lilley on execution of the agreement so they could undertake the physical works needed to complete the subdivision.
relating to the negotiation of the agreement, and certainly no communications between the parties or their solicitors which might cast light on the parties’ mutual intention in relation to the effect of cl 23.
[20] Initially the relationship between Mr Hürlimann and the Lilleys was constructive. Over the following months Mr Hürlimann and his partner, and their respective parents, would visit the section to undertake work improving it. They laid telephone cables, weeded and began clearing trees felled by Mr Lilley.
[21] However, by late July or early August 2020, Mr Hürlimann felt his relationship with the Lilleys had become strained for reasons he did not understand. He began to get the impression that Mr Lilley no longer liked him.
[22] On 9 September 2020, the Lilleys’ solicitor emailed Mr Hürlimann’s advising that for health and safety reasons Mr Hürlimann would need to give notice before visiting Lot 3. The communication also asked for Mr Hürlimann’s response in these terms:5
We refer to clause 24 and 23. Is your client satisfied with the survey plan and easements and consents to be registered?
…
We look forward to hearing from you shortly regarding clause 23 and 24.
[23]It is common ground between the parties that:
(a)at the date of this communication, Mr and Mrs Lilley had not sought to impose restrictive covenants on Lot 3 of any kind; and
(b)the only “easements and consents” in existence, and to which the Lilleys’ solicitors were referring in their email, were those required by the local authority.
5 Clause 24 of the agreement for sale and purchase provided that Mr Hürlimann would be provided with the final survey plan for approval before it was lodged with the local authority.
[24] This prompted a detailed response from Mr Hürlimann to Mr Matsis. In it, Mr Hürlimann set out in detail some of the difficult interactions that had recently arisen with Mr Lilley. He concluded:
I also feel that [Mr Lilley] knows that he can sell the property for a lot more as Lot 2 (half the size) sold for $265,000 (mine was $223,000) and is trying to push me out of the deal.
…
Moving forward:
It seems that the subdivision will proceed as he has sold Lots 2 and 4 also.6 It seems that all of the property is in [Mrs Lilley’s] name.
1.Does the property being in [Mrs Lilley’s] name (alone) change anything?
2.Would it be recommended to put a caveat on the new title once it releases to prevent sale to another party? I imagine there is no benefit putting a caveat on the parent title as it is/should be about to pass through LINZ?
3.In the longer term, would the property be able to be inherited with the caveat on it (or would they have to sell) and can my agreement be held indefinitely (and passed on)?
What are your recommendations?
…
[25] Mr Matsis recommended lodging a caveat.7 On 11 September 2020, Mr Hürlimann registered a caveat over the property. The evidence is unclear as to whether the caveat was lodged over the entire seven-hectare block of land to be subdivided, or simply Lot 3. Mr Freeman submitted the caveat was only over Lot 3, but this submission is not consistent with the evidence, which suggests that titles had not yet issued. In addition, there are references in subsequent correspondence to the caveat creating delays to the settlement of the sales of other lots.
[26] Regardless, it seems Mr Hürlimann’s decision to lodge a caveat was not well received by Mr and Mrs Lilley. On 22 October 2020, the Lilleys’ solicitors sent an
6 I infer from this comment that even at this stage Mr Hürlimann held some doubts about whether the subdivision would be completed and titles issued.
7 In fact he had recommended lodging a caveat much earlier, given that Mr Hürlimann had paid the
$50,000 deposit but had no security.
email to Mr Matsis. The email attached, “pursuant to clause 23”, both a series of Council consent notices and utility easements and, for the first time, a suite of restrictive covenants proposed by the Lilleys.
[27]The covenants were extensive. They included:
(a)a restriction on erecting any buildings “other than a new residential home”;
(b)a requirement to construct the new home from high quality building materials, and the use of specific forms of cladding. These requirements appear to have been inconsistent with Mr Hürlimann’s desire to build a log-house in part using timbers milled from trees felled on Lot 3;
(c)the dwelling would be required to have a floor area greater than 240m2, and would need to have more than two hips or gables;
(d)any construction had to be completed within 12 months of commencement of foundations;
(e)a requirement not to construct any clothesline near the subdivision laneway or Lot 3’s boundaries, and that any such clothesline would have to be “aesthetically sensitive in terms of design and location…”; and
(f)a liquidated damages provision, requiring payment of $100 per day for every day any of the covenants were breached.
[28] While the covenants were expressed to be intended to establish a modern, well-designed subdivision for the protection and interests of all owners in the development, there is no argument that of the four lots created by the subdivision, only Mr Hürlimann’s property is subject to any restrictive covenants. Other lots were in fact specifically advertised by Mr and Mrs Lilley as being free of any covenants.
[29] The proposed covenants put Mr Hürlimann in a difficult position. They clearly restricted what he could build on Lot 3. At the same time, while he had the option of cancelling, by this stage land values had appreciated and he would lose the benefit of any capital gain he would make if the sale proceeded.
[30] Mr Hürlimann then sought advice from Mr Matsis about the effect of cl 23. Specifically, he wanted to know whether Mr and Mrs Lilley were able to require restrictive covenants of the kind they had sought to impose.
[31] Mr Matsis’ clear advice was that they could. In an email of 28 October 2020 he said:
The way we read clause 23 of the agreement is that covenants can be required by the vendor as well as by the local authorities etc. While you have to consent in writing, the alternative for you, if you don’t consent to the vendor’s requirements, is to cancel the agreement.
…
Unfortunately the agreement is somewhat lacking in clarity in some areas that perhaps were not contemplated when it was drafted. If you wish to get a second opinion on it, we can provide some specialist property lawyers whom we use on occasion.
[32] Mr Hürlimann and Mr Matsis then discussed their strategy and what might be best in terms of Mr Hürlimann’s commercial interests. In an email of 30 October 2020, Mr Hürlimann raised the possibility of on-selling Lot 3 to another party interested in the subdivision. He said:
On another note, would it be difficult or ill advised to try to sell my purchase agreement (for a profit) to one of the other purchasers if they are interested? If that works the vendor doesn’t get me as a neighbour, they get it for a reasonable price and may be able to talk him out of adding the covenants and I get some money out of this. The vendor is also less likely to delay settlement and this can be over.
[33] Mr Matsis continued to give advice on Mr Hürlimann’s options. In a file note of 2 November 2020, Mr Hürlimann is recorded as having said that he wanted to stall for time in relation to the restrictive covenants. He indicated to Mr Matsis he could buy Lot 3 “if he has to” and that an agent had advised him he could on-sell at a higher price even with the covenants. It appears that as a result of this conversation, Mr Matsis emailed Mr and Mrs Lilley’s solicitors to advise that while Mr Hürlimann was satisfied
with the easements and Council consent notice, he would require further time to consider the restrictive covenants “as these were not expected”.
[34] Mr and Mrs Lilley’s solicitors then began to put pressure on Mr Hürlimann to confirm whether or not the restrictive covenants were acceptable. They noted that Mr Hürlimann was not the only one waiting on title, and sought a response by 6 November 2020. Mr Matsis responded indicating that Mr Hürlimann would require “a minimum of one month” to consider the covenants and respond.
[35] This led to an email of 4 November 2020 from the Lilleys’ solicitors. In it they proposed an amendment to cl 23. They noted the purpose of the clause “is clearly to give your client the right to cancel should the subdivision not meet his needs”. The amendment proposed was that Mr Hürlimann would have five working days to consider the covenants and “therefore whether to accept the property or cancel the agreement”. The email noted that the title would issue with the covenants provided by the Lilleys, and that if Mr Hürlimann did not agree to the variation of cl 23, Mr and Mrs Lilley would take steps to challenge the caveat. It concluded:
If you do not provide caveator consent to lodge documents by Friday 6 November, our client will take steps to lapse your clients caveat. Costs will be in issue. In addition our client will look to your client for losses incurred by our client due to your client failing to provide consent in a reasonable timeframe.
[36] Following this Mr Hürlimann obtained further advice from Mr Matsis about the likely process—and cost—involved with an application to the High Court to ensure his caveat did not lapse. Mr Hürlimann and Mr Matsis then spoke again on 5 November 2020. The discussion is recorded in a file note. Mr Matsis set out Mr Hürlimann’s options as:
(a)argue over the covenants and the caveat;
(b)cancel the agreement;
(c)nominate a new purchaser; or
(d)accept the covenants and deal with the Lilleys in relation to completion of the subdivision works later.
[37] The file note also records Mr Hürlimann was conscious of the risk of losing the apparent capital gain on the value of the section. It recorded that Mr Hürlimann did not really see the point of playing for time, and that there may not be a lot of point arguing over the covenants. Importantly, it also recorded that Mr Hürlimann would “try to flick [Lot 3] before settlement”.
[38] The following day, 6 November, Mr Matsis and Mr Hürlimann spoke again. Mr Matsis’ file note records his further advice about Mr Hürlimann’s options and the pros and cons of each. He noted that if Mr Hürlimann cancelled, he would “lose potential capital gain”. Alternatively, he could hold on and try and sell the section after he “gets ownership”. Finally, Mr Hürlimann could accept the proposed amendment to cl 23 and gain five working days to consider the position further. The file note concludes with the following comment:
… Joshua didn’t want to argue about [the] reasonableness of [the] covenants etc as his plan is to sell it. He doesn’t see a purpose in delaying title issuing by negotiating these.
[39] Then, following instructions from Mr Hürlimann, on 11 November 2020 Mr Matsis emailed the Lilleys’ solicitor confirming that Mr Hürlimann “consents to the covenants”.
[40] Title for Lot 3 then issued promptly—on 16 November 2020—with the covenants registered.
[41] The relationship between the parties did not improve with resolution of the impasse over the restrictive covenants. On 19 March 2021, Mr and Mrs Lilley’s solicitors sent a second set of restrictive covenants. The email recorded that the Lilleys had realised that their solicitors had “inadvertently registered the incorrect Land Covenant over your client’s lot”. The email attached a new set of conditions that were surprising. The first new clause recorded:
No residential building or any other building shall be erected on the property.
[42] The email also noted that if consent was not granted within five working days, the Lilleys had instructed their solicitors to challenge Mr Hürlimann’s caveat, and advised costs would be sought in that event.
[43] Unsurprisingly, the attempt to impose further covenants that would render the land worthless for residential development led Mr Hürlimann to issue proceedings. The Lilleys abandoned their effort to impose more onerous conditions on Mr Hürlimann.
[44] Shortly after the proceedings were commenced the purchase of Lot 3 was settled by consent, but without prejudice to Mr Hürlimann’s claim that the covenants ought to be removed from the title. Mr Hürlimann sought summary judgment but was unsuccessful.8
[45] So the position today is that Mr Hürlimann now owns a property directly over a lane from Mr and Mrs Lilley, subject to restrictive covenants on his title that are not reflected on any of the other titles in the subdivision. The other lots in the subdivision have also been sold, and houses have been constructed on one of them.
Issues for determination
[46] With settlement of the sale and purchase, the only remaining cause of action concerns the removal of the restrictive covenants. The amended statement of claim pleads that:
(a)Clause 23 is restricted to land covenants, easements or consents required by the Council or local authority, and that the covenants required by the Lilleys are “not permitted by cl 23 or otherwise in the Agreement”.
(b)Alternatively, lodging the restrictive covenants was in breach of an implied term in cl 23 requiring the Lilleys to exercise any power to impose restrictive covenants “honestly and in good faith, consistent
8 Hürlimann v Lilley, above n 2.
with the purpose of the power, and not in an arbitrary and capricious manner”.
(c)Mr Hürlimann did not freely consent to the covenants in circumstances where he understood he had no choice but to accept them if he did not want to cancel the agreement.
(d)Finally, and further in the alternative, it is just and equitable to remove the covenants pursuant to s 317 of the Property Law Act 2007.
[47] In response, the Lilleys argue that cl 23 clearly contemplated the imposition of restrictive covenants not only by the Council but also by them. In the event Mr Hürlimann did not find the covenants acceptable, his right was cancellation. They also advance affirmative defences, pointing to Mr Hürlimann’s decision to accept the covenants rather than cancel the agreement following independent legal advice. This supports defences of waiver, variation of the agreement, estoppel and affirmation.
[48]The issues for consideration can therefore be summarised as follows:
(a)Did cl 23 permit Mr and Mrs Lilley to require restrictive covenants on Lot 3?
(i)If not, did Mr Hürlimann consent to a variation of the agreement for sale and purchase, or was his “consent” the product of duress or illegitimate pressure?
(ii)If it did, were the covenants they required an abuse of a discretionary contractual power that ought to be overturned?
(b)Outside of the terms of the agreement, should the Court order the removal of the covenants under s 317 of the Property Law Act?
First issue: did cl 23 permit the imposition of restrictive covenants on Lot 3?
[49] The leading authorities on the approach to contractual interpretation, and the admissibility of extrinsic evidence going to the common contractual intention, are the Supreme Court’s decisions in Firm PI 1 Ltd v Zurich Australian Insurance Ltd9 and Bathurst Resources Ltd v L&M Coal Holdings Ltd.10 The relevant principles are these:
(a)The proper approach to interpretation of a contract is objective, the aim being to ascertain the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.11 This is known as a contextual or purposive approach to contract interpretation. It is not dependent on ambiguity in the contractual language.12
(b)While context is a necessary element of the interpretive process, and the focus is on interpreting the document rather than particular words, the text remains centrally important. Thus if the language of the clause in issue, construed in the context of the contract as a whole, has an ordinary and natural meaning, that will be a powerful but not conclusive indicator of what the parties meant.13
(c)When interpreting commercial contracts, the courts should have regard to their commercial purpose and the structure of the parties’ bargain, to the extent they can be reliably identified.14
(d)Both pre-contractual negotiations and the parties’ post-contractual conduct may be admissible when interpreting a contract. The admissibility of such evidence is determined by the laws of evidence.15 However, evidence of uncommunicated subjective intent is irrelevant
9 Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432.
10 Bathurst Resources Ltd v L&M Coal Holdings Ltd [2021] NZSC 85, [2021] 1 NZLR 696.
11 Firm PI 1, above n 9, at [60].
12 At [61].
13 At [63].
14 At [78]–[79].
15 Bathurst Resources, above n 10, at [54].
to an objective, contextual interpretation of contracts.16 Equally, if evidence reveals what a party intended the words to mean, and that intention was communicated to and accepted by the counterparty, the evidence may demonstrate a common understanding of the meaning of the provision in issue.17
Consideration
[50]It is helpful to begin by repeating the terms of cl 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.
[51] Two further points are also worthy of repetition. First, there is no documentary evidence of a negotiation between the parties about the intended scope of cl 23.18 Second, cl 23 was drafted by Mr Hürlimann’s solicitors.19
[52] Mr Hürlimann argued that cl 23 prevented the Lilleys from imposing any restrictive covenants on Lot 3. First, the opening sentence records that they are “not [to] allow any land covenants”. This phrasing appears to contemplate land covenants being sought by parties other than the Lilleys, and is inconsistent with the Lilleys themselves having an ability to impose covenants. Second, Mr Hürlimann’s option to cancel the agreement, recorded in the second sentence, relates to covenants “which are required to be registered on the title”. But there was no obligation on Mr and Mrs Lilley to require covenants at all. Instead, any covenants they sought to impose would be purely discretionary.
16 At [48] and [68].
17 At [75]–[76].
18 As noted above at [7], there is a conflict of evidence between Mr Hürlimann and Mr Lilley about their pre-contractual discussions about the possibility of vendor covenants. Mr Hürlimann has not satisfied me on the balance of probabilities that his account of those discussions is accurate, and Mr Lilley’s is not.
19 Given this is not a claim for rectification, an argument by Mr Hürlimann that the clause did not achieve what he intended it to achieve runs foul of the admissibility rule identified by the Supreme Court in Bathurst—that uncommunicated evidence of subjective understanding is irrelevant— and is at odds with the fact that his solicitors, as his agent, prepared the document.
[53] In seeking to interpret cl 23 it is important to consider the contract as a whole and the context in which it was drafted.
[54] The agreement was negotiated at a time when there was still uncertainty about whether a subdivision could be completed and long before title to Lot 3 would issue. The areas of uncertainty facing the parties included the conditions of subdivision consent which might be imposed by the Council, easements which might be required by utility providers, and of course whether Mr and Mrs Lilley might also propose restrictive covenants of their own.
[55] In order to deal with these uncertainties, the contract provided, first, a sunset provision permitting Mr Hürlimann to cancel the agreement if title did not issue withing nine months (cl 22). Second, Mr Hürlimann would be provided with the draft survey plan for approval before it was lodged with the Council (cl 24). Finally, given Mr Hürlimann did not know whether conditions or covenants required by any party would be acceptable to him, cl 23 sought to balance the risk that covenants might be required as part of the subdivision process with their impact on Mr Hürlimann’s plans for Lot 3.20
[56] Against that context the effect of cl 23 is in my view clear. Although unhelpfully passive in its construction, its grammar contemplates at least two potential sources of covenants and conditions. First, there are “land covenants” and “easements”. These are to be contrasted with “Council consents”. Notably, the word “Council” only qualifies the word “consents” and not the other types of instruments identified in cl 23 (that is, “land covenants” and “easements”).
20 In his judgment dismissing Mr Hürlimann’s application for summary judgment, above n 2, Associate Judge Johnston pithily summarised the contractual context in similar terms:
[20] It appears to me to be important to appreciate as a starting point that the parties were negotiating for the sale and purchase of an un-subdivided block of bare land — an interest that, from a legal perspective, existed only in their imaginations at the time. It is quite apparent that the solicitors acting for Mr Hürlimann in the negotiations were alert — as one would naturally expect
— to the importance of ensuring that he received a satisfactory title. The protection mechanism that they developed and proposed, and that the Lilleys accepted unchanged, was cl 23. The overarching purpose of the clause was to ensure that Mr Hürlimann received a title that was satisfactory to him. As Mr Jessen submits, the core element of the protection mechanism was Mr Hürlimann’s entitlement to withhold consent to any proposed impediment or impediments — not any limitation or restriction on the source of any such proposed impediment or impediments.
[57] The clear implication of this language is that cl 23 contemplates consents required by the Council, as distinct from land covenants and easements imposed by other parties.21 And the source of these instruments, not being the Council, must logically include Mr and Mrs Lilley as vendor and subdivision developer.
[58] The differentiation between Council consents on the one hand, and land covenants and easements on the other, is repeated in both the first and second sentences of the clause. So the distinction is deliberate and sustained. It is not accidental or mere inelegance.22
[59] It follows that the two sentences forming cl 23 must be read together. Read together, the clause functioned in this way:
(a)Restrictive covenants and “Council consents” could be “required” either by Mr and Mrs Lilley or the territorial authority respectively.
(b)However, Mr and Mrs Lilley were not “allowed” to register such covenants on the title to Lot 3 without Mr Hürlimann’s prior written consent. In other words, Mr Hürlimann was not obliged to settle the purchase of Lot 3 if he did not find the covenants acceptable.
(c)If Mr Hürlimann objected to the covenants he had the option of cancelling the agreement and receiving a full refund of his deposit. He did not have a right to require a title free of covenants regardless of their source.
[60] In my view, the interpretation advanced by Mr Hürlimann is at odds with the context of the contract as a whole, the uncertainties cl 23 sought to deal with, and the
21 Had the provision been limited to Council instruments alone, the clause would have referred to “Council covenants, easements and consents” rather than “any land covenants, easements or Council consents”.
22 I also note, in passing only, that the original wording adopted by Mr Hürlimann’s solicitors of cl 23 (noted above at [15]) clearly would clearly have achieved the outcome Mr Hürlimann urges on the Court in relation to the much-revised language of cl 23. Had I been required to consider it, I would have found that the original drafting indicates a deliberate expansion of the source of restrictive covenants beyond the Council alone.
text of the provision itself. The interpretation would require the Court to ignore the distinction drawn between Council consents on the one hand and land covenants and easements on the other. It also fails to reflect the nature of the negative obligation imposed on Mr and Mrs Lilley “not to allow” the registration of land covenants, which on its face does not prevent them requiring such covenants. It also overlooks the machinery in the second sentence of cl 23, which specifically deals with the situation where Mr Hürlimann “objects to any of the proposed land covenants”.
[61] While Mr Freeman suggested the Supreme Court’s decision in Bathurst Resources supported his interpretation, it is not obvious that is the case.
[62] In Bathurst the majority held that the respondent, L&M, had assumed the risk that Bathurst could defer performance of a contractual obligation indefinitely.23 Even though in hindsight that was an unattractive outcome for L&M, there was nothing improper about Bathurst taking commercial advantage of contractual wording favourable to its changed circumstances.24 Further, in my view, this is not a case where the contract in question did not clearly contemplate the situation that arose. Instead, as I have found, cl 23 appears to contemplate that vendor covenants could be a requirement of title.
[63] It follows that Mr and Mrs Lilley were permitted to require restrictive covenants as they proposed. It also follows that Mr Hürlimann’s legal advice about the effect of cl 23 was sound, and he made an informed decision to accept the covenants and affirm, rather than cancel, the contract.
Did Mr Hürlimann consent to the covenants?
[64] Given my conclusion on the effect of cl 23 it is strictly unnecessary to consider Mr Hürlimann’s further argument: that the imposition of the covenants was a variation of the agreement for which he did not provide consideration due to “illegitimate pressure”.25
23 Bathurst Resources Ltd v L&M Coal Holdings Ltd, above n 10, at [244].
24 At [245]–[249].
25 It was necessary for Mr Hürlimann to make this argument because even if his interpretation of cl 23 had been successful, he still needed to overcome the apparent variation of the agreement for sale and purchase resulting from his decision to accept the restrictive covenants.
[65] Mr Freeman’s submission rested on an interpretation of the Court of Appeal’s decisions in Teat v Willcocks26 and Antons Trawling.27 He argued illegitimate pressure short of duress was sufficient to deprive the putative variation of the agreement for sale and purchase of consideration. Here, there was no “benefit in practice” for Mr Hürlimann; the covenants changed the nature of the bargain with no element of reciprocity.
[66]I am unable to accept this argument both on the law and on the facts.
Is illegitimate pressure something different to duress?
[67] Turning to the law, I am unable to accept Mr Freeman’s submission that the effect of the relevant authorities creates a category of conduct short of actual duress— “illegitimate pressure”—that operates to deprive a variation of a contract of consideration.
[68] The leading case on economic duress is the Court of Appeal’s decision in McIntyre v Nemesis DBK Ltd.28 The case concerned a claim that Mr McIntyre had pressured his counterparty to vary their contract by threatening not to perform the contract unless his remuneration was increased.
[69] O’Regan J, delivering the judgment of the Court, noted that contractual duress is the imposition of “improper pressure by threats that coerce a party to enter a contract”. And while originally duress was limited to threats of physical injury, it has subsequently been expanded to encompass the exertion of economic pressure.29
[70]The Court then found:30
Duress involves two fundamental elements… First, there must be the exertion of illegitimate pressure on a victim. Second, the imposition of that pressure must have compelled the victim to enter into the contract.
(emphasis added)
26 Teat v Willcocks [2013] NZCA 162, [2014] 3 NZLR 129.
27 Antons Trawling Co Ltd v Smith [2003] 2 NZLR 23 (CA).
28 McIntyre v Nemesis DBK Ltd [2009] NZCA 329, [2010] 1 NZLR 463.
29 At [19].
30 At [20].
[71] As can be seen, the Court of Appeal used the expression “illegitimate pressure” as a synonym for “duress”. It did not intend to create a new and intermediate category of improper conduct depriving a contract of consideration, as Mr Freeman suggested.
[72] This conclusion is confirmed by the other cases cited by counsel, including Teat v Wilcocks31 and Gloria Jean’s Coffees International Pty Ltd v Daboko Ltd.32 Those cases also addressed the requirements of consideration for a variation of contract.
[73] Although the requirement for consideration in relation to variation is a developing area of law,33 the common thread in the authorities is that a variation accepted by one party without illegitimate pressure from the other, and which confers a benefit in practice on the promisor, is sufficient to vary the contract. And, the courts have used the expression “illegitimate pressure” in these decisions consistently with the Court of Appeal’s use of the term in McIntyre, as another term for duress.
[74] It follows that I am unable to accept Mr Hürlimann’s submission that something less than actual economic duress will suffice.
Was there illegitimate pressure in fact?
[75] I now turn to the second difficulty with this aspect of Mr Hürlimann’s claim, namely, that it cannot succeed on the facts.
[76] The first fundamental element of duress is the exertion of illegitimate pressure on the victim.
[77] Here, Mr Freeman argued that Mr Hürlimann had “no choice” but to accept the covenants if he wanted to keep Lot 3. However, inherent in this argument is a choice. That choice was precisely the one cl 23 contemplated: object to the covenants and cancel, and lose any capital gain, or accept them, and take title and any capital gain. This was all but conceded by Mr Hürlimann in his evidence.
31 Above n 26.
32 Gloria Jean’s Coffees International Pty Ltd v Daboko Ltd [2020] NZHC 29, [2020] 2 NZLR 488.
33 At [19]–[32].
[78] In answer to questions from Mr Sheppard, Mr Hürlimann acknowledged that he had followed the legal advice he was given by Mr Matsis on the effect of cl 23 when deciding not to object to the restrictive covenants. Later during his cross- examination, Mr Hürlimann accepted that he set aside his own feelings about his legal advice and “found the least unfavourable way through that and proceeded [with the agreement]”. Mr Hürlimann also accepted that he had considered “multiple options” before accepting the covenants, including the ability to on-sell the section subject to the covenants.
[79] While Mr and Mrs Lilley’s solicitors’ email of 4 November 2020 was in forceful terms—proposing an amendment to cl 23 and threatening litigation to challenge Mr Hürlimann’s caveat—I do not consider it constituted an improper threat amounting to economic duress.34 Mr and Mrs Lilley had provided the restrictive covenants for Mr Hürlimann’s acceptance, or objection, on 22 October 2020. A week later, they had not received a response.
[80] Mr Hürlimann’s initial instructions to Mr Matsis were to stall for time. No doubt alive to this possibility, Mr and Mrs Lilley were faced with a provision in cl 23 that did not require a response from Mr Hürlimann to the covenants within any set timeframe.
[81] By 4 November 2020, it appears that other purchasers in the subdivision were also waiting on title, and Mr Hürlimann’s caveat was preventing settlement of their transactions. Accordingly, while clearly firm in its tone, I find nothing in the email of 4 November amounting to illegitimate pressure. Given my view that cl 23 permitted Mr and Mrs Lilley to require restrictive covenants of their own, their solicitor’s email certainly did not, as may be considered essential, involve a threat to breach an existing obligation in the agreement for sale and purchase unless a concession was made.35 Instead, it constituted a firm response to a situation where Mr Hürlimann had been asked to provide consent but almost two weeks later had not given any meaningful response.
34 McIntyre v Nemesis DBK Ltd, above n 28, at [26]–[32].
35 In addition, the request to vary cl 23 made in the 4 November 2020 email was never accepted or acted on by Mr Hürlimann.
Was Mr Hürlimann in fact coerced?
[82] The second essential element of duress is that the imposition of illegitimate pressure must have compelled the victim to enter into the contract or, in this case, agree to vary the contract. Put another way, the illegitimate pressure must cause the victim to change their position.
[83] As Mr Sheppard argued, consideration of whether there has been coercion in fact focusses on the availability of alternatives.36 Other factors relevant to that question are whether the person said to have been coerced:
(a)did or did not protest;
(b)was independently advised; and
(c)after entering into the contract, took steps to avoid it.
[84] Here, Mr Hürlimann was legally represented and independently advised on his choices at the time the 4 November email arrived. He did not make any protest in relation to the covenants when confronted with them. He did not seek to alter them. Instead, he made a careful decision informed by legal advice to accept the covenants. He did so in order to preserve the sale. And after accepting the covenants, Mr Hürlimann did not take any steps to avoid them for 20 weeks. On the contrary, he sought specific performance of the agreement and continued to pursue the defendants to complete the works required by the vendor warranties so that settlement could occur.
[85] These factors all clearly tell against a finding that Mr Hürlimann was, in fact, coerced. Some element of pressure is inevitable in commercial dealings. That alone is not sufficient to render a contract (or a variation of a contract) voidable.37
36 See McIntyre v Nemesis DBK Ltd, above n 28, at [68].
37 At [26].
[86] Without determining the question, while the second set of covenants the Lilleys sought to impose may have been an effort to force Mr Hürlimann to cancel the contract, he opposed those covenants and they were abandoned.38 So they did not give rise to any coercion in fact.
[87] In relation to the covenants in issue, Mr Hürlimann has not satisfied me on the balance of probabilities that the alleged illegitimate pressure in fact compelled him to accept the covenants. I find it is more probable that Mr Hürlimann accepted the covenants because he wished to secure Lot 3 and what he perceived to be a capital gain. In order to do so, he concluded it was better to accept the covenants rather than cancel the agreement or seek to vary their terms.
[88] Given the evidence, I also consider there was a clear benefit in practice for Mr Hürlimann accepting the covenants. First, he stood to secure title and with it what he considered a valuable capital gain. Second, it avoided the prospect of litigation as the Lilleys were intending to challenge Mr Hürlimann’s caveat given his initial efforts to delay making his election to affirm or cancel the agreement under cl 23.
Was the imposition of restrictive covenants the unreasonable exercise of a contractual discretion?
[89] If, as I have found, it was permissible for the Lilleys to require restrictive covenants under cl 23, Mr Freeman’s subordinate argument was that their decision to do so was nevertheless an unreasonable and improper exercise of a contractual discretion.
[90] Contractual discretions are controlled by what is known as the “default rule”, which requires a discretion to be exercised in good faith, and not arbitrarily, capriciously or unreasonably.39 As I said in Woolley v Fonterra Co-operative Ltd:40
38 Mr Lilley gave evidence that there was a justification for the second set of restrictive covenants. He said that Mr Hürlimann had been made aware that Lot 3 was a “dump site” and might be contaminated from past horticultural use. He said the reason why the second set of covenants had been presented was that Mr Hürlimann had disclosed to a neighbour he was intending to sue Mr and Mrs Lilley over some trees that had been felled, and the Lilleys were eager to prevent or limit any further claims that might arise in the event Mr Hürlimann discovered contamination on Lot 3.
39 Abu Dhabi National Tanker Co v Product Star Shipping Ltd (The “Product Star”) (No 2) [1993] 1 Lloyd’s Rep 397 (CA).
40 Woolley v Fonterra Co-operative Group Ltd [2021] NZHC 2690 at [411] (footnote omitted).
Contractual discretions are powers granted by one contracting party to another, and generally allow one party to exercise contractual rights for their own purposes, or without express restrictions. While contracts that confer unilateral powers are common, they have the potential to be abused. The common law has therefore developed a default rule controlling the exercise of contractual discretions. The default rule provides that where a contract confers a discretionary power on one party, that party must not exercise the discretion arbitrarily, capriciously or in bad faith, or unreasonably, in the sense that no reasonable contracting party could have so acted.
[91] Mr Freeman argued the imposition of the restrictive covenants was an abuse of a discretionary contractual power because it had not been exercised “reasonably”.41 He pointed to the imposition of the covenants on Mr Hürlimann alone, the second set of clearly unreasonable covenants, and the more onerous conditions in the first set of covenants. He invited me to infer that the real reason for the covenants was not to protect the amenity of the subdivision but to drive Mr Hürlimann out of the purchase to obtain the capital gain in Lot 3.
[92]I do not accept this argument for three reasons.
Clause 23 does not confer a unilateral discretion controlled by the default rule
[93] First, like Associate Judge Johnston, I do not consider cl 23 confers a contractual discretion, at least not one controlled by the default rule recognised in the United Kingdom or New Zealand.42
[94] The default rule attaches to unilateral discretions. But cl 23 does not confer a unilateral power on Mr and Mrs Lilley to impose restrictive covenants on Mr Hürlimann’s title. Instead, he held the power to determine whether any requirements were acceptable, or reasonable. If they were not, he had the right to cancel the agreement. That was the mechanism the parties adopted to protect Mr Hürlimann’s interests. The default rule therefore has no role to play here.
41 Relying on Bos International (Australia) Ltd v Strategic Nominees Ltd [2013] NZCA 643 and
Woolley v Fonterra Co-operative Group Ltd, above n 40.
42 Hürlimann v Lilley, above n 2, at [22]–[27].
Mr Hürlimann has not established that Mr and Mrs Lilley’s conduct was improper
[95] Second, even if this was a power subject to the default rule, the covenants Mr and Mrs Lilley required were not so obviously unreasonable that it is open to conclude the power has been abused. Nor do I find that the evidence establishes they acted irrationally, arbitrarily, capriciously or in bad faith.
[96] Most of the covenants appear to be typical of those found in residential subdivisions. They are often thought to be desirable to purchasers as they provide some measure of confidence about post-development amenity.
[97] While there is some initial force in Mr Freeman’s argument that the covenants operate unfairly because they only affect Mr Hürlimann’s property, I accept Mr Lilley’s evidence that the nature of his interactions with Mr Hürlimann, his partner and their families gave rise to a concern on his part (whether warranted or not) about what they proposed to build on Lot 3.
[98] Mr and Mrs Lilley remain living on Lot 1 and are situated virtually opposite Mr Hürlimann’s property. While ordinarily one might have expected covenants of a uniform nature to have been imposed on all of the lots in the subdivision, Mr Lilley’s evidence is that he had satisfied himself about the likely use by other purchasers of their lots through a pre-contractual vetting process. He did not have any concerns about what they proposed to build.
[99] In contrast, Mr Hürlimann was in his 20s, was a first home buyer, had no construction experience “and did not provide us with any reassurance that the type of home he wanted to build would be of adequate quality for the subdivision”.43
[100] It follows, in my view, that while Mr Hürlimann may feel that the Lilleys’ decision to require restrictive covenants on his lot is unfair, their evidence is that they had—in their view at least—properly held concerns that warranted the imposition of the covenants. Despite Mr Freeman’s robust cross-examination of Mr Lilley, he was
43 Mr Hürlimann’s evidence, as noted, was that he planned to construct a log house and live organically on the property as a “mini” farm.
not shaken from his evidence that it was these concerns, and not some improper motive, that was the genesis of the requirement for the restrictive covenants.
[101] In those circumstances, while there is a distinct possibility Mr and Mrs Lilley may have hoped the first set of restrictive covenants would cause Mr Hürlimann to cancel the agreement, there was no guarantee that would be the outcome. More importantly, there is no evidence on which to safely conclude that hope was their real aim.44
[102] Even if I had found that the Lilley’s real purpose was to trigger Mr Hürlimann’s right of cancellation because they no longer wanted him to purchase the lot, I would have been slow to find that was something they were not entitled to do. The agreement permitted Mr and Mrs Lilley to require restrictive covenants. Mr Hürlimann could either accept the covenants, seek to negotiate better terms, or cancel the agreement. It is generally not appropriate for the Court to police the underlying commercial motives of parties exercising a contractual power in these circumstances, or to impose its own view of what is reasonable.
[103] As it is, the covenants did not force Mr Hürlimann to cancel the agreement. He made an informed decision to accept them based on legal advice. It is clear his decision was not the product of illegitimate pressure or duress. Mr Matsis’ file notes reveal Mr Hürlimann was aware of the options available to him, including cancellation or seeking to negotiate amendments to the covenants. He made the decision to accept them because he believed he could on-sell the section even with the covenants for a profit. None of that sounds in an abuse of a discretionary power.
Mr Hürlimann’s argument misstates the scope of the default rule
[104] Finally, Mr Freeman’s argument that the use of the power to require covenants was “unreasonable” does not accurately reflect the nature of the default rule’s constraint on contractual discretion.
44 There is certainly insufficient evidence on which to conclude that their intention was to obtain the apparent capital gain on Lot 3 at Mr Hürlimann’s expense by forcing him to cancel the agreement.
[105] As I noted in Woolley v Fonterra Co-operative Group Ltd, the default rule prevents those exercising contractual discretions from acting irrationally. In other words, to be amenable to challenge the decision must be so unreasonable that no reasonable counterparty could have made it.
[106] Despite this, Mr Freeman argued that it was open to the Court to review a contractual discretion on the basis that its exercise was “unreasonable”. However, that approach would result in courts ultimately exercising contractual discretions for the parties, rather than supervising their exercise. As some commentators have noted, such an approach would seriously undermine contractual certainty and party autonomy.45
[107] For these reasons, Mr Hürlimann’s claim, to the extent it rests on a challenge to a contractual discretion, must also fail.
The defendants’ affirmative defences
[108] Before leaving Mr Hürlimann’s challenge to the restrictive covenants based in contract, I turn briefly to consider Mr and Mrs Lilley’s affirmative defences.
[109] In short, they argue that Mr Hürlimann’s consent to the covenants renders the true interpretation of cl 23 irrelevant. That is because even if Mr Hürlimann’s interpretation is preferred, the affirmative defences are a complete answer. They say Mr Hürlimann’s consent establishes:
(a)a variation to the agreement, even if cl 23 did not permit the Lilleys to require the covenants;
(b)a waiver of any right to bring the claim in contract; and
(c)an estoppel on the same basis.
[110] Given the findings I have made about the effect of cl 23 it is unnecessary to deal with these affirmative defences in detail. The evidence indicates that
45 See for example the discussion in Woolley v Fonterra Co-operative Group Ltd, above n 40, at [443]–[448] and [452].
Mr Hürlimann made a careful decision free from illegitimate pressure to accept the covenants in order to preserve the agreement. He did so because he perceived he would make a substantial capital gain in the value of Lot 3. That amounted to a benefit in practice.
[111] Accordingly, even if I am wrong about the effect of cl 23, I find that the agreement was lawfully varied by consent.
Second issue: is it just and equitable to remove the covenants pursuant to s 317 of the Property Law Act?
[112] If Mr Hürlimann’s claims based on the effect of cl 23, illegitimate pressure and contractual discretion fail, his final alternative argument is that the Court should direct removal of all the covenants under s 317 of the Property Law Act. That section 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.
[113] Self-evidently, the power in s 317 is not all-or-nothing; the Court may modify, rather than extinguish, a covenant “in whole or in part”.
[114] In this case Mr Hürlimann seeks extinguishment of the covenants entirely. He does so on the basis that extinguishment is just and equitable, in terms of s 317(1)(f). Mr Freeman submitted the purpose of the covenants, to establish a modern and well- designed subdivision for the protection of all owners, cannot be achieved because the covenants attach only to Mr Hürlimann’s section. Accordingly, the covenants are inherently inequitable. The Lilleys were unconcerned about controlling use of the subdivided land because they advertised the other lots for sale expressly on the basis they were free of any building restrictions. The covenants are unnecessary because of the scale of the lots (being in a rural subdivision). Further, according to the defendants, the first set of covenants were originally imposed in “error”, or at least that was what the Lilleys’ solicitor claimed when sending the second set to Mr Hürlimann’s solicitor.
[115] Finally, Mr Hürlimann argues it is open on the evidence to conclude that the imposition of the covenants was in bad faith and for a collateral purpose, namely, to drive Mr Hürlimann out of the contract.
[116] I consider the factors that have led me to conclude Mr Hürlimann made a free and informed decision to affirm the contract and accept the covenants would make it inappropriate to exercise the discretion in s 317. To do so would undermine the terms
of the bargain the parties settled on, including the existence and scope of the covenants themselves.
[117]In particular, as I have already found:
(a)Clause 23 permitted Mr and Mrs Lilley to require restrictive covenants for their own benefit. That provision also provided that Mr Hürlimann could cancel the agreement if the covenants were not acceptable for any reason.
(b)Despite this, Mr Hürlimann made a careful decision with the benefit of sound legal advice to accept the covenants and affirm the contract.
(c)In doing so he obtained a practical benefit, namely an apparent increase in the value of the property he was to purchase.
(d)Mr and Mrs Lilley did not act irrationally, arbitrarily, capriciously or in bad faith when seeking to require covenants in relation to Lot 3. There was a reason for their decision to require covenants over Mr Hürlimann’s property but not others in the development.
[118] In light of this, I am not satisfied that it is just and equitable to order removal of the covenants under s 317.
[119] And while I accept to some extent the covenants are comprehensive, and might be considered by some purchasers onerous, there is no evidence on which to determine whether individual conditions go beyond what might ordinarily be expected for a subdivision of this nature. On my review of them, many appear relatively benign. Others may not be. But Mr Hürlimann was advised he could, if he wished, seek to negotiate more favourable terms. Despite that advice, he considered the better approach was to accept the conditions as they were. It seems he did so because, as he advised Mr Matsis, he believed he could sell the section for a profit even with the covenants.
[120] Finally, the power in s 317 is to extinguish or modify the covenants. Given I have concluded some of the covenants do not appear to be unreasonable, I would not have found it just and equitable to extinguish the covenants in their entirety. Modification would be a more appropriate response to specific concerns, but the case was not presented to me on this basis, and I have no evidence on which to make an assessment of the individual terms, or their impact.
[121] Ultimately, I come back to Mr Hürlimann’s decision to accept the covenants following legal advice on his options. He was aware of their effect and impact on building options. He decided to proceed with the purchase in order to preserve an apparent gain under the contract. Section 317 is not designed to alleviate the apparent burden imposed by the covenants in such circumstances.
[122] I therefore dismiss Mr Hürlimann’s application for orders under s 317 of the Property Law Act.
Conclusion and result
[123] Mr Hürlimann’s application for a permanent injunction preventing Mr and Mrs Lilley from enforcing the restrictive covenants is dismissed. I decline to make an order under s 317 of the Property Law Act 2007.
[124] Costs would ordinarily follow the event. I understand Mr Hürlimann to be legally aided. It may be in those circumstances no application for costs will be made. If one is, the parties may file memoranda, and I will deal with the issue on the papers.
[125] Finally, Mr Hürlimann and Mr and Mrs Lilley are now neighbours. They have not got off to a good start. But, with some common understanding, there is no reason that they cannot live as neighbours should. I would certainly encourage them to set aside the upset that litigation inevitably creates for all those involved, and look to build a friendlier, less fractious relationship.
Isac J
Solicitors:
Thomas Dewar Sziranyi Letts, Lower Hutt for Plaintiff Cooper Rapley Lawyers, Palmerston North for Defendants
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