Nelson Lakes Holdings Ltd v Seifried

[2018] NZHC 521

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2017-442-47

[2018] NZHC 521

BETWEEN

NELSON LAKES HOLDINGS LIMITED

Applicant

AND

HERMANN AND AGNES SEIFRIED

Respondents

Hearing:	On the Papers
Counsel:	C Heaton for Applicant
Judgment:	23 March 2018

JUDGMENT OF CLARK J

Introduction

[1]    Nelson Lakes Holding Ltd (the applicant or NLH) applies to extinguish an easement registered against its property.1

[2]    Following directions as to service relevant property owners and Tasman District Council were served with the application. No party has filed any opposition. The application therefore proceeds by way of formal proof.

Background

[3]    Lot 62 on Deposited Plan 413403 was zoned commercial by the Tasman District Council in 2002.2

1      Pursuant to s 317 of the Property Law Act 2007.

2      Resource consent decision RM990381 dated 5 August 2002.

NELSON LAKES HOLDINGS LIMITED v SEIFRIED [2018] NZHC 521 [23 March 2018]

[4]    On 27 May 2009 Beechnest Ventures Ltd, a company which managed the development prior to St Arnaud Property Holdings Ltd (from whom NLH purchased Lot 62), registered Easement Instrument 8171105.9 against the certificate of title for Lot 62. The restrictive covenants contained in sch 2 to the easement instrument include a number of restrictions clearly relating to residential properties. Under clause 8 the transferee covenants:

Not to use the property for any purpose other than for residential activity….

[5]    The applicant purchased Lot 62 on 16 July 2010 from St Arnaud Property Holdings Ltd. The applicant was not made aware of the covenant when purchasing the property. The property was advertised as a sub-divisible commercial section and was, indeed, purchased for commercial purposes.

[6]    In 2012 the Council consented to NLH building a commercial centre on Lot 62. The applicant built a café, gift shop and boat shed on part of the property all of which are used by the public.

[7]    In 2016 Lot 62 was subdivided and two new certificates of title were issued: Lots 1 and 2 on Deposited Plan 480563.

[8]    The applicant entered into an agreement whereby the applicant is to adjust the boundary with its neighbour. A boundary adjustment plan was deposited and the legal description of the applicant’s property changed to Lot 2 Deposited Plan 480563 and Lots 3 and 5 Deposited Plan 513339.

Originating application

[9]    The applicant seeks to have the easement instrument extinguished pursuant to s 317 of the Property Law Act 2007 on the basis the proposed extinguishment will not substantially injure any person entitled. Section 317 provides:

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—

…

(d)the proposed modification or extinguishment will not substantially injure any person entitled.

[10]   The applicant believes Beechnest Ventures Ltd did not consider the details in the 2002 resource consent relating to the commercial zoning of the property and the property was mistakenly included in the schedule to Easement Instrument 8171105.9. Rectification of the mistake would not adversely impact the dominant owners and conversely, enforcement of the provisions of the restrictive land covenant would unreasonably curtail the applicant’s ability to use the property in the manner for which it was zoned.

Decision

[11]   I am satisfied that the application should be granted and the easement should be extinguished:

(a)The land has been zoned for commercial use since 2002. The covenant registered seven years later is contrary to the commercial zoning of the land.

(b)At no point since 2002 has the property been considered a residential section.

(c)The land has been used for a number of years as a commercial property without objection from surrounding landowners and in accordance with district zoning. No person entitled has ever sought to enforce the covenant.

(d)All parties have been served. No objections have been raised to extinguishment of the easement. The Council has specifically confirmed it does not oppose the removal of the covenant from the applicant’s titles 683927 and 683926 (being Lots 1 and 2 Deposited Plan 480563). The extinguishment will not injure substantially, or otherwise, any person entitled.

Result

[12]   An order is made in the following terms: Easement Instrument 8171105.9, registered against the properties Lot 2 Deposited Plan 480563 and Lots 3, 4 and       5 Deposited Plan 513339, is extinguished.

[13]   The form of this order is different from the form of the order sought in the originating application. The form of the order I have made reflects an agreement for an exchange of land entered into prior to filing the originating application. The legal description of the applicant’s property has therefore changed.

[14]   I reserve leave to apply further should the order not be in the terms anticipated by the applicant.

Karen Clark J

Solicitors:

Morrison Kent, Wellington for Applicant