Mt Cardrona Station Limited v Elliston
[2021] NZHC 3537
•17 December 2021
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE
CIV-2019-425-135
[2021] NZHC 3537
UNDER Sections 316 and 317 of the Property Law Act 2007 IN THE MATTER
of an application for an order modifying land covenants
BETWEEN
MT CARDRONA STATION LIMITED
Applicant
AND
DEBBIE LEE ELLISTON and JAMES RICHARD ELLISTON, CSI ELECTRICAL SERVICES AND INSPECTION LIMITED, HILDEGARD PAULA KIESOW, MARIO KIESOW and SIMON JAMES REDAI, PATRICK ANDREW FRENGLEY, PAUL BENJAMIN FRIEDLANDER and SALLY MARGARET FRENGLEY, BRENT O’CALLAHAN and SIOBHAN CAROLINE McCAULEY, JACQUELINE
PATRICIA YEE, PHILLIPA MARIE KYLE, JONATHAN PATRICK HOLMES, RACHEL ELIZABETH RUTH SHIELDS and SCOTT VINCENT ROBERT
SHIELDS, IAN DAVID LESLIE and PETI NADIA NOHOTIMA, CHARLES
LAYTON ROBERTS, CHRISTINE JENNIFER ROBERTS and JO-ANNE LESLIE JOHNSFirst Respondents continued…
Hearing: (On the papers) Counsel:
F B Barton and I H Miller for Applicant
Judgment:
17 December 2021
JUDGMENT OF ASSOCIATE JUDGE LESTER
MT CARDRONA STATION LIMITED v ELLISTON & ORS [2021] NZHC 3537 [17 December 2021]
AND PURE H20 CARDRONA LIMITED
Second Respondent
AND
AND AND
CHARLES LAYTON ROBERTS, CHRISTINE JENNIFER ROBERTS and JO-ANNE LESLIE JOHNS, AURORA ENERGY LIMITED, CARDRONA VALLEY FARMS LIMITED, QUEENSTOWN LAKES DISTRICT COUNCIL,
CARDRONA DISTILLERY PROPERTY LIMITED and MT CARDRONA STATION LIMITED
Third Respondents
IAN LESLIE and PETI NOHOTIMA
Fourth RespondentsQUEENSTOWN LAKES DISTRICT COUNCIL
Fifth Respondent
[1] This proceeding is an application seeking to modify land covenants under s 317 of the Property Law Act 2007 (the Act).
[2] Counsel for the applicant, Mt Cardrona Station Limited (Cardrona), has by memorandum sought that the Court reconsider making the orders applied for in this proceeding on a without notice basis. Counsel acknowledges that when this proceeding was filed in December 2019, the Court directed that the matter be dealt with on notice. However, counsel submits that since December 2019 there have been significant developments in the law regarding s 317 of the Act which mean it is now appropriate for the Court to deal with the applications on a without notice basis.
History of the proceeding
[3] After the application to proceed on a without notice basis was dismissed, Cardrona initially advised the Court that, because of the considerable cost in serving the various respondents (some 17 parties), it wished to stay the proceeding while it considered its options. Associate Judge Paulsen was not prepared to stay the proceedings and in a Minute of 7 February 2020, he granted a lengthy adjournment of
the telephone conference to a date after 1 May 2020 so that Cardrona could be in a position to advise whether it intended to proceed.
[4] The next telephone conference was to be held on 22 June 2020, but it was vacated in a Minute of Mander J on 17 June 2020, essentially as the first COVID-19 lockdown had meant Cardrona had not been able to finalise its position in respect of the proceeding.
[5] A further telephone conference was scheduled for 21 September 2020. Cardrona again sought further time and the telephone conference was adjourned to 16 November 2020.
[6] Cardrona sought that the November 2020 conference be adjourned as it was actively engaged with the first and second respondents as to whether a variation of the covenant could be reached by agreement. Further, Cardrona had had discussions with one of the third respondents, Cardrona Valley Farms Ltd, resulting in an agreed variation to one of the covenants subject to the application. Accordingly, the 16 November 2020 telephone conference was adjourned by Dunningham J through to 9 February 2021.
[7] On 5 February 2021, counsel for the applicant filed a memorandum seeking a further adjournment, advising it continued to negotiate with the first and second respondents as to a variation of the covenant and continued to have discussions with the third respondents.
[8] I note here that, while discussions were underway, formal service on the various respondents had not been completed.
[9] On 18 March 2021, counsel for the applicant filed a further memorandum advising that a meeting had been held with the first and second respondents and Cardrona was now considering a proposal that the first and second respondents had advanced. The memorandum recorded that an agreement had been reached with the third respondents on an amendment to the covenant and further time was necessary to have the variations finalised and registered.
[10] The March 2021 telephone conference was accordingly adjourned through to 31 May 2021. On 28 May 2021, applicant’s counsel advised that Cardrona was continuing to consider a proposal put forward by the first respondents and confirmed the agreement reached with the third respondents, but again, time was required to have the variations finalised and registered. The memorandum noted that the Queenstown Lakes District Council (QLDC) as landowner and the fifth respondent had agreed to a simpler solution, which was that it would surrender the relevant covenant from its land. If that was done, it would not be necessary to vary the covenant.
[11] On 28 May 2021 the Court granted a further adjournment to 26 July 2021. On 22 July 2021, applicant’s counsel advised that Cardrona was still working through the matters outlined in the previous memorandum and sought a telephone conference date after 27 September 2021.
[12] The next telephone conference was to be on 13 October 2021. In a memorandum dated 12 October 2021, Cardrona sought a further adjournment. The memorandum set out the progress made in relation to the modification of the three covenants subject to the application and advised that, with some respondents, limited progress had been made. Discussions were to continue and it was said that further time was necessary.
[13] A further telephone conference for the first available date after 15 December 2021 was sought. A telephone conference was set down for 16 December 2021.
The renewed application to proceed without notice
[14] Against the background of the applicant discussing modification of the covenants with the respondents for an extended time, albeit having not formally served the proceeding, Cardrona now seeks on a without notice basis the outcome it sought to obtain by negotiation.
[15] This proceeding was commenced by leave as an originating application. Rule 19.10 of the High Court Rules 2016 (the Rules) makes r 7.23 (application without notice) applicable to proceedings commenced by originating application.
[16]Rule 7.23(2)(a) and (b) provide:
7.23 Application without notice
(1) …
(2)An application without notice may be made only—
(a)on 1 or more of the following grounds:
(i)that requiring the applicant to proceed on notice would cause undue delay or prejudice to the applicant:
(ii)that the application affects only the applicant:
(iii)that the application relates to a routine matter:
(iv)that an enactment expressly permits the application to be made without serving notice of the application:
(v)that the interests of justice require the application to be determined without serving notice of the application; and
(b)if the applicant has made all reasonable inquiries and taken all reasonable steps to ensure that the application and supporting documents contain all material that is relevant to the application, including any defence that might be relied on by any other party and any facts that would support the position of any other party.
…
[17] Cardrona relies on r 7.23(2)(a)(i) and (v). I am satisfied it is not open to the applicant to rely on undue delay when this proceeding has been alive for two years. I am also satisfied that it is not in the interests of justice for this matter to proceed without notice.
[18] While the Supreme Court decision in Synlait Milk Ltd v New Zealand Industrial Park Ltd , contains statements of law helpful to Cardrona, that decision was released on 22 December 2020.1 We are now almost a year down the track from that decision.
1 Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657..
[19] Again, having been in negotiations with the respondents for all of 2021, I do not consider that Cardrona now seeking to obtain orders without notice is in the interests of justice. Once negotiations were commenced, the parties were not standing on their legal entitlements but attempting to find a compromise which may not reflect what a Court would order. Cardrona would, no doubt, have been negotiating in good faith. I do not consider it consistent with that approach to break off discussions without notice to the respondents and seek orders on a without notice basis.
[20] Cardrona submits “the respondents will not be substantially injured by modification of the covenants as sought” (my emphasis). That is not the threshold to be satisfied under r 7.23(2)(a)(ii) (albeit the application does not rely on this sub-paragraph). If Cardrona believes that the law change means that the respondents do not have a defence to the claim to modify the covenant then the proper course is for it to seek leave to apply for summary judgment. Further, it is clear from the memoranda filed that Cardrona is in communication with the respondents, albeit the proceedings have not been served. Cardrona can raise with all respondents with whom agreement has not been reached, that it will apply for leave to seek summary judgment and will seek increased costs should any respondent’s opposition prove to have been unwarranted or indeed, if they take no steps once the asserted legal merits of the applicant’s position have been set out.
[21] Further, as set out above, Cardrona has settled in part or in whole with a number of respondents. Having reached a settlement it is not clear to me how the applicant can then seek orders when the applicant’s claim will have merged in any settlements.
[22] Accordingly, the renewed application to vary the covenants on a without notice basis is declined.
Associate Judge Lester
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