Johns Road Horticultural Limited v Powell
[2023] NZHC 511
•15 March 2023
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2022-409-288
[2023] NZHC 511
BETWEEN JOHNS ROAD HORTICULTURAL LIMITED
ApplicantAND
JOHN WILLIAM POWELL
First Respondent
AND
DEVONDALE NURSERIES LIMITED
Second Respondent
AND
BELFAST VILLAGE CENTRE LIMITED
Interested Party
AND
ATTORNEY-GENERAL
Party directed to be served
Hearing: 21 February 2023 Appearances:
A L Davidson and S D Munro for Applicant S P Rennie for First and Second Respondents M K Prendergast for Interested Party
A Hill for Attorney-General
Judgment:
15 March 2023
JUDGMENT OF DUNNINGHAM J
This judgment was delivered by me on 15 March 2023 at 11 am, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
JOHNS ROAD HORTICULTURAL LIMITED v POWELL [2023] NZHC 511 [15 March 2023]
[1] This is an application by Johns Road Horticultural Ltd (JRHL) under ss 316 and 317 of the Property Law Act 2007 (the Act) to modify easement instruments 704856.5 and 6863907.5 (the Easements) so that, to the extent the Easements affect JRHL’s land, they are extinguished.
[2] Easement 704856.5 (the First Easement) was registered on or about 30 September 1987 and provides the benefited properties with the right to drain water over the burdened properties.
[3] Easement 6863907.5 (the Second Easement) was registered on or about 4 May 2006 and provides the benefited properties with a right of way, right to drain water and sewage, right to convey water, electric power and telephonic communication over the burdened properties.
The parties to the application
[4] The application was served on all parties with the benefit of the Easements, along with the Christchurch City Council. Responses to the application were filed by the following parties:
(a)the Attorney-General;
(b)Devondale Nurseries Ltd (DNL) and John William Powell;
(c)Perpetual Trust Ltd as trustee of the Belfast Community Trust;
(d)Belfast Village Centre Ltd (BVCL).
[5] The Attorney-General abides the decision of the High Court, as does Belfast Community Trust.
[6] DNL and Mr Powell opposed the application, initially on broad grounds but, by 14 February 2023, on the limited basis that “the purpose of the Easements, drainage of water, remains” and “is a circumstance relevant to the application”, and the proposed modification would “substantially injure” Mr Powell and DNL.
[7] BVCL did not oppose the application but, in the event the Court granted JRHL’s application, it sought the extinguishment of the First Easement as it relates to BVCL’s property as well. It asked the Court, in the particular circumstances of the case, to dispense with the need to serve all affected parties.
[8] A hearing of JRHL’s application commenced on 21 February 2023. However, after hearing from Mr Munro, counsel for JRHL, the parties sought an adjournment to see if agreement could be reached. In due course, agreement was reached permitting the application to proceed unopposed. At that point I also heard from counsel for BVCL, and I was satisfied it was appropriate to extinguish the Easements as sought by both JRHL and BVCL. I confirmed that in open Court.1 I said a decision recording my reasons for being satisfied that it was appropriate to extinguish the Easements would issue in due course. I now record those reasons in this decision.
Relevant background
[9] JRHL is the owner of the following properties (the JRHL Land) that are subject to the Easements:
(a)Lot 10 DP 51346 contained in Record of Title 1065994;
(b)Lot 3 DP 416532 contained in Record of Title 463742;
(c)Section 3 SO 533991 contained in Record of Title 1065994;
(d)Section 4 SO 533991 contained in Record of Title 1065993; and
(e)Lot 3 DP 540607 contained in Record of Title 1065993.
The JRHL Land forms a large, roughly L-shaped block of land located to the west of a strip of residential properties situated along Main North Road in the suburb of Belfast, Christchurch.
1 Johns Road Horticultural Ltd v Powell [2023] NZHC 255.
[10] In 1987, when the First Easement was registered, the JRHL Land was rurally zoned and was used for, or was being developed as, apple orchards. The First Easement was registered to create a drainage system for the apple orchards in the area. The system used perforated pipes situated below ground, which drained water away from the roots of the trees and in a northerly direction into collector pipes which conveyed the water either eastward through to Council infrastructure in Main North Road, or northwards to where it drains onto unformed legal road.
[11] The Second Easement was also registered while the JRHL Land remained rurally zoned.
[12] Since the registration of the Easements, the JRHL Land has undergone a series of zone changes. The JRHL Land was zoned residential in around 2012 and is now zoned Residential New Neighbourhood (RNN) (with a small area of Commercial Core zoning). The JRHL Land is now being developed in accordance with the residential and commercial zoning of the properties and in accordance with a resource consent which allows for the development of a greenfield subdivision providing approximately 338 residential sections, along with associated roading, utilities and reserves.
[13] DNL (of which Mr Powell is the director) owns the land contained in Record of Title 568111. The DNL land is comprised of several parcels – one sits to the south-east of the JRHL Land and another abuts it on its western side.
[14] Mr Powell and his wife, Lynda Powell, own Record of Title 568113. John and Lynda Powell’s land comprises part of a rural residential subdivision situated to the west of the JRHL Land known as Devondale Estate.
[15] BVCL is the registered proprietor of Lot 2 DP 540607, and this land abuts the JRHL Land on its south-eastern side.
[16] For completeness, the Crown, represented by the Attorney-General, acquired land for educational purposes on 11 April 2022 by agreement with JRHL, pursuant to s 20 of the Public Works Act 1981. The Attorney-Gernal confirms that through this
process, the Second Easement was severed. That land abuts the JRHL Land to the south and comprises 3.4178 hectares, being sections 1 and 2 on SO 533991.
The relevant provisions of the Property Law Act 2007
[17] The application is brought under s 317 of the Act. That section provides as follows:
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.
[18] JRHL submits that a number of the grounds under s 317(1) are made out in respect of this application, and it is appropriate that I exercise my discretion to grant it. I discuss each of the relevant grounds below.
Change in the nature or extent of the use of the subject land: s 317(1)(a)(i)
[19] When assessing whether there has been a change in the use of the land, the Court will consider the effect of the Easements if they are not modified as sought, and whether the effects arising from continuing the Easements have become disproportionate to what was originally intended.2 The focus is not on the fact of the change, but on the impact of the change to the benefit or burden that flows from the Easements.3
[20] JRHL says that the nature and extent of the use of the JRHL Land has changed significantly, and in a way not contemplated by the original parties when the Easements were registered.
[21] Neither the JRHL Land nor the properties benefited by the Easements are currently being used for apple orchards. The JRHL Land and other properties in north-west Belfast have been rezoned from rural/horticultural uses to residential development.
[22] The JRHL Land is now being developed in accordance with the RNN/Commercial Core zoning and with the resource consent which has been granted.
[23] Development of neighbouring properties which are also burdened by the Easements has commenced. This includes the now completed development of a Countdown supermarket and carpark on part of the land owned by BVCL.
2 Manuka Enterprises Ltd v Eden Studios Ltd [1995] 3 NZLR 230 (HC) at 234.
3 Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657 at [138].
[24] If the Easements were to continue to apply to the JRHL Land, they would prevent JRHL vesting infrastructure such as roads in the Christchurch City Council, which is required to give effect to the consent and therefore to the residential and commercial zoning of the JRHL properties.
[25] Mr Munro notes that in a decision confirming the removal of land covenant 732515.1 which was registered in 1988 from the same land, Nation J confirmed there had been a change in the nature of the use being made of the benefited and burdened land given the transition from rural zoning to its current zoning.4
[26] Furthermore, Mr Munro points out that Mr Powell’s affidavit evidence acknowledges the rezoning of the land and the fact that it will “result in eventual changes to the burdened land and character of the neighbourhood from a rural area to a residential neighbourhood”.
[27] Finally, Mr Munro notes that with respect to the Second Easement, this was partially extinguished over the land acquired by the Crown for the purposes of establishing a school. As a result, only small parts of the Second Easement remain, meaning the Second Easement is now redundant and provides no remaining benefit to any parties. For this reason, Mr Munro says there has been a change in use which clearly justifies the extinguishment of the Second Easement as proposed.
Change in the character of the neighbourhood: s 317(1)(a)(ii)
[28] For much the same reasons as those discussed above, Mr Munro submits that the properties that are burdened and benefited by the Easements have undergone significant changes in character since the Easements were first registered. The essential character of the JRHL Land in 1987 and 2006, when the Easements were respectively registered, was that of apple orchards and rurally zoned land. That has now substantially changed due to the changes to zoning and resulting development being carried out by JRHL and BVCL. The proposed development of the school also demonstrates changes to the character of the neighbourhood.
4 Johns Road Horticultural Ltd v Fox [2022] NZHC 1747.
Other relevant circumstances: s 317(1)(a)(iii)
[29] The Supreme Court in Synlait confirmed that s 317(1)(a)(iii) allows the Court to take into account a broad range of considerations, including the rezoning of land.5
[30] Again, Mr Munro refers to the various changes in zoning and land use that have occurred as supporting the extinguishment of the Easements under this ground. In particular, he notes that the First Easement was registered for the purpose of providing a “basic surface drainage system … so that the roots of horticultural trees would not be notably compromised”, and the evidence shows this system is completely inadequate for the purpose of draining the significantly increased run-off resulting from urbanised land use. This underscores the fact that the Easements are now entirely redundant.
[31] In respect of the Second Easement, the fact it has been severed by the acquisition of land for the school, rendering the balance of the Easement redundant and of no benefit, is also clearly a circumstance which the Court should take into account as relevant.
The Easements impede the reasonable use of property: s 317(1)(b)
[32] In assessing whether the grounds under s 317(1)(b) have been made out, the Court should consider:6
(a)What reasonable use can the land currently be put to?
(b)What was the previous reasonable use of the land?
(c)Has the reasonable use of the burdened land become different from that which could have been reasonably foreseen by the original parties to the Easement at the time of its creation.
5 Above n 3, at [89].
6 North Holdings Development Ltd v WGB Investments Ltd [2014] NZHC 670 at [31].
[33] In that regard, JRHL submits that the reasonable use of the JRHL Land at the time the Easements were registered was for rural and horticultural purposes. However, in light of the zone changes and the issuing of the resource consent to give effect to the zoning of the JRHL Land, the reasonable use of the JRHL Land is now urban use, and that is a change that was not reasonably foreseen by the parties at the time the Easements were registered.
[34] Similarly, with respect to the Second Easement, the acquisition of land burdened by the Easement for the purposes of constructing a school, which has resulted in the partial extinguishment of the Second Easement, could not have been reasonably foreseen by the parties at the time it was registered.
[35] Furthermore, JRHL points out that the Easements in their current form impede the use of the property for urban development because, in accordance with s 238 of the Resource Management Act 1991, any land that vests in the territorial authority for the purposes of a road must be free of all interests in the land, including any encumbrances. Without the modification of the Easements as proposed, JRHL will be unable to vest roads in the Christchurch City Council or complete its development.
[36] For these reasons, JRHL submits the Easements impede the reasonable use of the JRHL properties in a different manner and extent from that which could have been reasonably foreseen by the original parties to the Easements.
No substantial injury – s 317(1)(d)
[37] The Court can modify or extinguish an easement if it is satisfied that doing so will not “substantially injure” the owners of the benefited land. In order for an injury to be “substantial” it must be “real, considerable, significant, as against insignificant, unreal or trifling”.7 While this was the primary ground on which DNL and Mr Powell initially opposed the application, JRHL submitted that modifying the Easements it sought would not cause any injury, let alone substantial injury to them, as:
7 Synlait Milk Ltd, above n 3; at [104].
(a)the existing drainage system is only appropriate for rural/horticultural purposes and is completely inadequate for the significantly increased run-off resulting from urbanised land use. Mr Brent, JRHL’s civil engineer, confirms that the existing drains would not comply with the Council’s consenting requirements; and
(b)construction of new infrastructure has superseded the existing drainage system. JRHL has constructed a new stormwater collection, treatment and disposal system (the JRHL Stormwater System), which is sized to service the entire development of the JRHL properties and also allows for connections from DNL’s land as well as other land benefited by the Easements including the land owned by the Ministry of Education, Perpetual Trust Ltd, Progressive Construction Ltd and BVCL. Specifically, the sizing of JRHL’s stormwater system allows for stormwater flow at a level expected from the land as developed.
[38] Importantly, JRHL has also confirmed it has agreed to allow DNL to access JRHL’s new drainage infrastructure on conditions, and a connection has now been installed from the DNL land to JRHL’s Stormwater System.
[39] While Mr Powell’s evidence raised concerns about increased flooding of the surrounding land because of removal of the farm drainage system, that was rejected by JRHL’s experts. They say the JRHL Stormwater System which has now been constructed, provides greater capacity to drain private properties. Furthermore, the existing farm drainage system is not designed to drain surface water as Mr Powell suggests, but the JRHL Stormwater System is.
[40] In respect of the Second Easement, JRHL submits that the fact it has already been extinguished over the land acquired by the Ministry of Education means it provides no remaining benefit to any parties and no party could suffer any prejudice or injury (substantial or otherwise) if that easement was extinguished.
[41] Mr Munro also notes that to the extent the benefitted parties have suffered any injury as a result of the Second Easement being extinguished (although it is not
accepted that they have), they would be entitled to seek compensation for such injury from the Crown pursuant to the compensation regime in the Public Works Act 1981.
The exercise of discretion by the Court
[42] If the Court is satisfied that at least one of the elements of s 317(1) is made out, then it must determine whether it is appropriate to exercise its discretion and grant the orders sought.8
[43] For the reasons set out in the evidence filed by JRHL and summarised in the submissions, Mr Munro submitted it was appropriate for this Court to exercise its discretion to modify the Easements as sought by JRHL in terms of a draft order filed with the Court.
Discussion
[44] I readily accept that the relevant grounds in s 317(a) to (f) are made out for the reasons set out in JRHL’s submissions. Indeed, the evidence of the respondents confirms the nature of and extent to which the use of the subject land has changed, as has the character of the neighbourhood. That evidence also confirms that, when fully implemented, JRHL’s stormwater infrastructure will improve the existing drainage in the area. Mr Powell says, “the stormwater system designed by JRHL will, once complete, prevent flooding”, and his primary concern was that until the development works had been completed, the Easements would be required to avoid flooding.
[45] In any event, his, and DNL’s, objection on that ground was withdrawn during the hearing and, in my view, that was appropriate, particularly given the evidence that JRHL’s Stormwater System had already been installed and DNL was using that infrastructure.
[46] I am therefore satisfied that there is no injury, let alone substantial injury, resulting from the extinguishment of the First Easement over the JRHL Land. It is also inevitable there could be no injury caused by the extinguishment of the Second
8 Davey v Barker [2016] NZCA 313, [2016] 3 NZLR 776 at [75].
Easement from the JRHL Land, given it has already, in part, been extinguished and is of no utility whatsoever to the benefited properties.
BVCL’s application
[47] That then leaves the position of BVCL, which has applied to modify the First Easement by extinguishing it over BVCL’s land, should it be extinguished over the JRHL Land. In support of that application, BVCL adopts JRHL’s grounds for modifying the First Easement, observing that the Easement has, in practical terms become redundant and, because BCVL’s application is contingent on JRHL’s application being successful, that easement would be “isolated and useless”. In those circumstances, there could be no substantial injury to any party if the First Easement is modified as sought by BVCL on the back of JRHL’s application.
[48] In terms of this Court’s jurisdiction to consider BVCL’s application in the context of JRHL’s application, BVCL says its application can be made under s 316(2) with orders that the application may be determined without directions being made as to service.
[49] In support of the application that there is no need for BVCL to make its own standalone application under the Act, counsel point out that while it is conventional for applications for orders under s 317 to be made to the High Court under pt 19 (with leave), BVCL’s application is not an originating or standalone application. Rather, it is conditional on JRHL obtaining the orders it seeks. Thus, if JRHL’s application is not granted, then BVCL’s application would fall away and not need to be considered.
[50] Mr Prendergast says the Act provides a mechanism for BVCL’s application to be considered as part of JRHL’s application because, under s 316(2), a person bound by an easement may make an application to modify or extinguish an easement within an application brought by any other person in relation to the subject easement.
[51] BVCL observes that it is appropriate to do this and consistent with the overriding objective of the High Court Rules.
[52] BVCL submits that the application can be determined without the need for BVCL to formally serve it on the Christchurch City Council or any other interested parties. Section 316(3) provides that an application for orders under s 317 must be served on the relevant territorial authority and any other persons the Court directs “unless the court directs otherwise”. In the present case, BVCL submits that service on the affected property owners is not necessary because:
(a)BVCL’s application for orders is conditional on JRHL’s application, as filed and served, being granted;
(b)all parties potentially affected by BVCL’s application have had constructive notice by virtue of being served with JRHL’s application;
(c)if JRHL’s application is granted, then it would be inconsequential to those parties if the modification extends to extinguishing the First Easement from BVCL’s property; and
(d)the key players possibly affected by BVCL’s application are the Christchurch City Council and the Powell interests, and both have indicated that they would not oppose the application.
[53] I concur that all potentially affected parties have had notice of JRHL’s application, and no practical purpose would be served by requiring BVCL to separately serve its application for the reasons set out above. I therefore dispense with the requirement for service under s 316(3) of the Act.
Orders made
[54] As advised at the hearing, I make orders in accordance with the draft order9 and the attached plan prepared by Graham Surveying which was filed in the Court on 21 February 2023 (and then amended as filed on 24 February 2023). Those orders are:
9 With a minor correction to ensure consistent cross-referencing between the paragraphs of the order.
1.The Easements are modified so that specified parts of the Easements are extinguished over the Applicant’s land and Belfast Village Centre Limited’s land, as follows:
(a)in respect of easement 704856.5:
(i)the area marked “O” on DP 51346, burdening Lot 10 DP 51346 contained in Record of Title 1065994 (shown in green on the plan annexed to this order and marked “A” (the Plan)) is extinguished;
(ii)the areas marked “I”, “J”, “K”, “T”, “U”, “FG”, “GH”, “LM”, “MN”, “NO”, “OP”, “PQ”, “QR” and “QS” on DP 416532, burdening Lot 3 DP 416532 contained in Record of Title 463742 (shown in blue on the Plan) are extinguished;
(iii)the area marked “DE” on SO 533991, burdening Section 3 SO 533991 contained in Record of Title 1065994 (shown in yellow on the Plan) is extinguished;
(iv)the areas marked “E”, “B”, “FG”, “GH”, “IJ”, “JA”, “JD”, “KL”, “LM”, “MN”, “OP”, “PA”, “PD”, “RS”, “UV”, VX”, “XY” on SO 533991, burdening Section 4 SO 533991, contained in Record of Title 1065993 and “PB” and “JB” on DP 540607 burdening Lot 3 DP 540607 contained in Record of Title 1065993 (shown in red on the Plan) are extinguished;
(v)the area marked “SK” burdening Section 4 SO 533991 contained in Record of Title 1065993 (shown in pink on the Plan) is extinguished; and
(vi)the area marked “Area A” on DP 540607, burdening Lot 3 DP 540607 contained in Record of Title 1065993 (shown in purple on the Plan) is extinguished;
(vii)the areas marked “JC”, “PC” “Area G” and “Area F” on DP 540607, burdening Lot 2 DP 540607 contained in Record of Title 907213 (as shown in grey on the Plan) are extinguished; and
(b)in respect of easement 6863907.5: the areas marked “D” and “F” on SO 533991, burdening Section 4 SO 533991 contained in Record of Title 1065993 (shown in brown on the Plan) are extinguished.
2.The Registrar-General of Land shall extinguish the Easements from the burdened allotments as detailed in paragraph 1 above.
3.To the extent that the Registrar-General of Land requires, the registered proprietors of the relevant benefitted or burdened land will sign all documents (including Authority and Instruction forms), and do all things required to give effect to the orders at paragraphs 1 and 2 above.
4.Leave is reserved to seek further directions from the Court if necessary.
Solicitors:
Anderson Lloyd, Christchurch Rhodes & Co., Christchurch
Hornabrook MacDonald, Auckland Crown Law, Wellington
Copy To:
M K Prendergast, Barrister, Christchurch
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