LMM Investments 2012 Limited v Cumming
[2022] NZHC 2639
•5 October 2021
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2021-409-000441
[2021] NZHC 2639
UNDER the Property Law Act 2007 IN THE MATTER
of an application to vary a covenant
BETWEEN
LMM INVESTMENTS 2012 LIMITED
Applicant
AND
DAWN MICHELLE CUMMING and PAUL JAMES JONES
First Respondents
… Continued page 2
Hearing: On the papers Counsel:
S J Jamieson and J A Higby for Applicant
Judgment:
5 October 2021
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 5 October 2021 at 11.00 am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
LMM INVESTMENTS 2012 LTD v CUMMING [2021] NZHC 2639 [5 October 2021]
ANDCARL WILLEM HENDRICK KRIJT and FVM TRUSTEES (NO. 1) LIMITED
Second Respondents
ANDDAVID IAN GLASS and TAMSYN LEAK
Third Respondents
ANDNICHOLAS DAVID BOYCE and DE- ANNA JODIE BOYCE
Fourth Respondents
ANDBRIAN GARNETT LUSTY and MARGARET ANNE LUSTY
Fifth Respondents
ANDPRUDENCE JOAN KAY and STUART DOUGLAS KAY
Sixth Respondents
ANDMAIA MARIE LAING and NOLTON MURRAY LAING
Seventh Respondents
ANDDARREN FIFIELD and ANDREA RHIANAN FIFIELD
Eighth Respondents
ANDNEVILLE CHARLES WESTERBEEK VAN EERTEN and CHRISTINE
WESTERBEEK VAN EERTEN
Ninth Respondents
ANDGERARDU WILHELMUS NIJENHUIS and GLENYS NIJENHUIS
Tenth Respondents
ANDDAVID PAUL DRAKE and NICOLA JEAN CONIBEER DRAKE
Eleventh Respondents
ANDJAN MADERA and JINDRA MADEROVAC
Twelfth Respondents
ANDSUSAN JOY SOPER and GRAEME LESLIE SOPER
Thirteenth Respondents
ANDROBERT WILLIAM CAVANAGH and AMBER RAE CAVANAGH
Fourteenth Respondents
ANDNEAL JAMES HARDING and NORA MARGARET HARDING
Fifteenth Respondents
ANDMURRAY REGINALD HERMAN and MARION SELINA HERMAN
Sixteenth Respondents
ANDMARC KENNETH JOHN PIERCE and LOUISE CORNELIA APOLONIA PIERCE
Seventeenth Respondents
ANDDARRYL JOHN SMITH and SANDRA JANICE SMITH
Eighteenth Respondents
ANDANDREW CHARLES TAYLOR and ANGELA MAREE TAYLOR
Nineteenth Respondents
AND STUART WILLIAM MACHAM
Twentieth Respondent
ANDBRIAN ROBERT JOHNSTONE and KRISTINE LOUISE JOHNSTONE
Twenty-First Respondents
ANDDAVID GILBERT ATKINSON and LESLEY ANN ATKINSON
Twenty-Second Respondents
AND PAUL ROBERT HEWETT and CLARE
ANN HEWETT
Twenty-Third Respondents
AND KYLIE JANE THOMSON
Twenty-Fourth Respondent
ANDSTEVEN LLOYD OLLIVER and WENDY JOY ANNE OLLIVER
Twenty-Fifth Respondents
ANDMICHAEL ANDREW ANDERSON and SARAH LOUISE JOY WILSON
Twenty-Sixth Respondents
ANDCLAYTON LEVI HUGHES and LAUREN EMMA BRINSFORD
Twenty-Seventh Respondents
ANDSARA FRANCES MICHELLE THORNTON and PAUL KEVIN THORNTON
Twenty-Eighth Respondents
ANDMALCOLM VICTOR PULLEY and COLLEEN PULLEY
Twenty-Ninth Respondents
ANDJOSEPH WILLIAM HADLEY and VERONICA NORA HADLEY
Thirtieth Respondents
ANDJOHN ABEL WARD and DANAE ELISE WARD
Thirty-First Respondents
AND JASON ROBERT PRICE and
STEPHANIE WAIOHINE PRICE
Thirty-Second Respondents
[1] The applicant, LMM Investments 2012 Ltd (LMM), wishes to commence a proceeding under ss 316 and 317 of the Property Law Act 2007 to vary a covenant specified in an easement instrument. The application that is before me is for leave to commence the proceeding by way of originating application under pt 19 of the High Court Rules 2016.
The facts
[2] LMM purchased land in Amberley, North Canterbury for the purposes of a subdivision development known as Tekoa Estate. It undertook the first and second stages of the subdivision as one combined stage. This resulted in the subdivision of the land into 36 lots. Lots 1-32 were developed and sold as residential sections. Lots 100-102 vested in the Hurunui District Council and Lot 200 was retained by LMM for future stages of the development.
[3] As part of the development LMM included a land covenant on the titles to be issued for the residential sections to protect the aesthetic aspects of the subdivision by imposing certain design standards and controls on the use of the land. One of these controls was the inclusion of a restriction on any of the residential sections being further subdivided for a period of 10 years from the date of issue of the titles. LMM says that Lot 200 was never intended to be burdened by the covenant and its inclusion as such was a drafting error that was not picked up until recently.
[4] In 2021, LMM commenced work on the third and fourth stages of Tekoa Estate and has entered into multiple sale and purchase agreements for lots that are being created, many of which are only conditional upon the issue of title. LMM has now become aware that the covenant in its present registered form includes Lot 200 and prevents further subdivision of Lot 200 before 18 February 2026. From LMM’s perspective, should the covenant not be varied to allow for the subdivision of Lot 200, it will be unable to meet its obligations under the sale and purchase agreements it has entered into and is likely to face legal claims for compensation from the purchasers of those lots. By contrast, LMM says there will be minimal, if any, impact on current residential owners should the covenant be varied as it proposes.
The law
[5] A proceeding for relief under ss 316 and 317 of the Property Law Act is to be commenced as an ordinary proceeding under pt 5 of the High Court Rules. However, under r 19.5, the Court may in the interests of justice permit a proceeding not mentioned in rr 19.2 to 19.4 to be commenced by originating application under pt 19. The proceeding LMM proposes to bring is not one mentioned in rr 19.2 and 19.4 and it requires leave to proceed under pt 19. The Court’s permission may be sought without notice.1
[6] The principles upon which the Court relies in granting leave under r 19.5 are well-established. The interests of justice means that the Court must secure the just, speedy and inexpensive determination of the proceeding in considering an application
1 High Court Rules 2016, r 19.5(2).
under r 19.5.2 The use of the pt 19 procedure is not limited to applications where there is no opposing party and leave will generally only be granted in cases where there is no need for particularised pleadings or interlocutory steps such as discovery for the proper determination of the issues.
[7]In Solar Bright Ltd v Martin Osborne J observed:3
[18] What Erceg and other cases indicate is that resort to r 19.5 is to be exceptional rather than so common place that it becomes the rule that leave is granted. The cases recognise, as the rule itself stipulates, that it is the interests of justice which this Court must apply as the overarching test. The interests of justice mean that the Court must secure the just, speedy, and inexpensive determination of this proceeding in its consideration of a r 19.3 application.4
[8]In Hong Kong and Shanghai Banking Corp Ltd v Erceg, Asher J said:5
[25] These cases show that the type of proceeding suited to the originating application procedure is a straightforward application, not requiring detailed pleadings or interlocutory orders for its fair resolution. Such a type of proceeding tends to be an application under a specific statutory provision, where the issue that arises can be clearly defined, and the issues confined. The procedure is not well suited to the determination of substantive rights involving the application of common law doctrines as distinct from statutory tests. It is not well suited to cases involving multiple parties, and cases where there is the possibility of cross claims or counterclaims.
[9] In Clarkson v Clarkson, Cooke J compared the pt 18 and 19 procedures and granted leave to bring an application seeking the removal of trustees, the appointment of an independent trustee and for a variation to the terms of the trust deed using the pt 19 procedure.6 The interests of justice requirement in r 19.5 was met because of the possibility the parties may lose perspective and the real prospect that the proceeding would be uneconomic.7 Cooke J considered it appropriate to be guided by the procedural pathway that reduced the prospect of unnecessary interlocutory steps and focused on what was necessary to enable the dispute to be resolved.8
2 Solar Bright Ltd v Martin [2019] NZHC 300 at [18].
3 Solar Bright Ltd v Martin, above n 2, at [18].
4 High Court Rules, r 1.2.
5 Hong Kong and Shanghai Banking Corp Ltd v Erceg (2010) 20 PRNZ 652 (HC).
6 Clarkson v Clarkson [2020] NZHC 2211.
7 Att [18].
8 At [19].
[10] There have been a significant number of cases where the Court has allowed applications under ss 316 and 317 to be brought by originating application. In Re Marriner Property Ltd Doogue J observed:9
… By contrast, r 20.13 of the District Court Rules 2014 provides that applications made to the District Court under s 316 of the Property Law Act are to be brought by way or originating application.
[31] Therefore, the omission of s 316 of the Act from the equivalent High Court Rule (r 19.2) may be an oversight. But, in any event, there appears to be no sound reason why applications made to the High Court under s 316 of the Act should not also be brought by way of originating application. The originating application process is more efficient and appropriate for s 316 applications than a proceeding brought by way of statement of claim, particularly where there are no named parties.
[11] There, the matter proceeded by way of formal proof. All relevant parties had been served, public advertisement had taken place and no party had expressed an interest in joining the proceeding or opposing the orders sought.10
[12] In Wang v Auckland Council, Toogood J agreed with Doogue J’s view and granted leave for an application under s 317 to be brought by way of originating application.11 He said:
[8] The High Court and the District Court have concurrent jurisdiction under s 316 of the Act to make orders under s 317. Although r 20.13 of the District Court Rules 2014 provides that applications made to that Court under s 316 are to be brought by way of originating application, there is no corresponding provision in the High Court Rules related to proceedings under s 316 issued in this Court. I agree with Doogue J’s suggestion in Re Marriner Property Ltd that the omission of s 316 of the Act from the equivalent High Court rule (r 19.2) may be an oversight; there is no good reason why applications to this Court under that provision should not also be brought by way of originating application. As Doogue J observed, the originating application process is more efficient and appropriate in this type of case than a proceeding brought by way of statement of claim.
[13] In Fair v Fair, Cull J allowed an application to extinguish/modify a land covenant to be brought by way of originating application.12 Cull J considered the circumstances to be well-suited to the originating application procedure because the application was brought under specific statutory provisions, the issues were confined
9 Re Marriner Property Ltd [2020] NZHC 1747 at [30] and [31].
10 At [4].
11 Wang v Auckland Council [2021] NZHC 499. (footnote omitted).
12 Fair v Fair [2019] NZHC 2349, (2019) 20 NZCPR 652.
and clearly defined, the issues could be addressed by way of affidavit evidence and the orders would not detrimentally affect any other party.13
[14] The following further cases relate to applications concerning land covenants or easements:
(a)In Re Auckland Council the land affected by the covenant had been re- purposed.14 Toogood J found no detriment to anybody arose by extinguishing the covenant and leave to proceed under pt 19 was granted.
(b)In Nelson Lakes Holdings Ltd v Seifried all the parties had been served and no objection had been filed; accordingly leave was granted.15
(c)In RCL Henley Downs Ltd v Hanson Associate Judge Matthews considered an application to extinguish a covenant relating to water.16 The applicant was in the process of undertaking a multi-stage residential development on land that was subject to a covenant. The covenant affected two titles not owned by the applicant. At issue was whether the covenant should be varied in a way so as to facilitate it being extinguished from the titles held by the local authority for the purpose of forming reserves or roads. Associate Judge Matthews found it was unnecessary for the covenant to apply to land used for those purposes. His Honour found there was no detriment to any of the parties affected, or to future owners. Leave was granted for the application to be brought by way of originating application.
(d)In Re Stoke Valley Holdings Ltd Grice J granted leave for the application to extinguish easements to be brought by way of originating application and directed the affected party (the Council) be served.17
13 At [26].
14 Re Auckland Council [2018] NZHC 275.
15 Nelson Lakes Holdings Ltd v Seifried [2018] NZHC 521.
16 RCL Henley Downs Ltd v Hanson [2018] NZHC 2714.
17 Re Stoke Valley Holdings Ltd [2020] NZHC 430 at [8].
The Council confirmed the easements were historical and no prejudice or harm to the interests of any benefitted party would arise.
[15] Applied to the present case, I am satisfied that it is appropriate to grant leave to bring this proceeding by way of originating application. In my view, the proceeding can be determined most promptly, inexpensively and efficiently under pt 19. as:
(a)the case law recognises that the pt 19 procedure may be appropriate for such cases;
(b)the proposed proceeding concerns the application of statutory provisions;
(c)the issue appears to be narrow and well defined and is whether the continuation in force of the covenant in its existing form will impede the reasonable use of Lot 200 in a different way or to a different extent from that which could reasonably have been foreseen by the original parties to the covenant at the time of its creation;18
(d)there is no need for particularised pleadings;
(e)I cannot imagine that there will be any significant interlocutory applications or close case management required; and
(f)I do not consider, either, that there is likely to be any significant disputes as to the facts upon which the application will turn.
18 Property Law Act 2007, s 317(1)(b). It appears that other sub-sections may be engaged such as s 317(1)(d), that the proposed modification will not substantially injure any person entitled, and s 317(1)(f), that it is just and equitable to modify the covenant.
Result
[16] I grant leave to the applicant to commence this proceeding under the pt 19 High Court Rules 2016 originating application procedure.
[17] I direct the application shall be served on all of the named respondents and, in addition, pursuant to s 316(3) of the Property Law Act 2007, it must be served on the Hurunui District Council which shall be entitled to be heard in support or opposition to the application.
[18] With the application, the named respondents and the Hurunui District Council shall be served with this judgment and the sealed judgment of the Court authorising the applicant to commence this proceeding under pt 19 of the High Court Rules.
[19]The application shall be called for mention before a Duty Judge on
22 November 2021.
[20]There shall be no order as to costs.
O G Paulsen Associate Judge
Solicitors:
Tavendale and Partners, Christchurch
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