RCL Henley Downs Limited v RCL Jack's Point Limited

[2021] NZHC 984

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-417

[2021] NZHC 984

BETWEEN

RCL HENLEY DOWNS LIMITED

Applicant

AND

RCL JACK’S POINT LIMITED & ORS

First Respondents

AND

QUEENSTOWN LAKES DISTRICT COUNCIL

Second Respondent

Appearances:	P J Wright and J Storey for Applicant M Needham for Second Respondent
Judgment:	5 May 2021
(Determined on the papers)

JUDGMENT OF OSBORNE J

This judgment was delivered by me on 5 May 2021 at 12.00 noon pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

RCL HENLEY DOWNS LTD v RCL JACK’S POINT LTD & ORS v QUEENSTOWN LAKES DISTRICT COUNCIL [2021] NZHC 984 [5 May 2021]

Introduction

[1]        This proceeding, commenced in September 2020, has already been the subject of a judgment granting the extinguishment of land covenants in respect of land owned by the applicant (the earlier judgment).1

[2]        Leave was reserved to the applicant to apply by way of interlocutory application for further relief in respect of the land subject to the covenants, should that prove necessary.

[3]        Further application seeking the extinguishment of an additional covenant on the subject land has been made. The current application has been served in accordance with directions made on 26 March 2021. No opposition has been filed within the time directed in that Minute and in part the application is consented to. The applicant now seeks orders on the papers.

[4]        Given the application concerns the same block of land referred to in the earlier judgment, I refer only briefly to the background.2

Background

[5]        The applicant, RCL  Henley  Downs  Limited  (Henley)  is  undertaking  on  a staged basis a substantial residential subdivision near Queenstown.

[6]        The present application concerns land that is referred to by Henley as the “Spur land”. It contains 2,608 m2. The subdivision of the Spur land will produce a number of lots, two of which are:

(a)proposed Lot 27 which contains 1,079 m2 intended for public road; and

(b)proposed Lot 94 containing 382 m2 which, while originally earmarked as public reserve, may no longer be required as reserve.

1      RCL Henley Downs Ltd v RCL Jack’s Point Ltd [2020] NZHC 3020.

2      Above n 1.

[7]        The present application seeks the extinguishment of a covenant affecting the same proposed lots as were subject to the earlier judgment.

[8]        The covenants that are the subject of this application were created for the benefit of the Queenstown Airport Corporation Limited (QAC). The covenants exist to protect QAC’s ability to operate its airport. The covenants place the risk of disturbance and annoyance from the effects of the operation of the airport on the servient tenement and generally require the owner of the servient land not to take any steps that might have an adverse impact on the operation of the airport.

Lot 27

[9]        QAC has consented to the road land, that is, Lot 27 being vested in the Queenstown Lakes District Council (the Council) as roading. The vesting of Lot 27 as road necessarily involves removal of the covenants.

[10]      The land with the benefit of the covenants has been subdivided by QAC so that eleven additional land owners who own lots with the benefit of the covenants.

[11]      The additional land owners cannot be adversely affected by the extinguishment of the covenant. As none of the eleven landowners of the subdivided lots operates an airport, the covenant is irrelevant to them.

[12]      Accordingly, QAC is the only party with the practical benefit of the covenant to which the land intended to be vested in the Council as road is subject.

Lot 94

[13]      The second lot which is intended to be created in the subdivision and from which it is sought that be covenant be removed is proposed Lot 94. This lot was originally intended to be vested in the Council as reserve. It is now unclear as to whether the 384 m2 proposed reserve lot will in fact be required by the Council. The deponent for Henley records the Council had indicated, due to costs concerns, it may not wish to receive Lot 94 for the purposes of a reserve. Lot 94 will accordingly not be vested in the Council on deposit of the current subdivision plan. It may, however,

still vest in the Council at a future stage of the subdivision, in which case the covenant subject to this application would need to be extinguished at that time.

[14]      Accordingly, the order sought as to the removal of the covenant from the potential reserve block (Lot 94) is expressed to take effect only in the event the land that will become Lot 94 is vested in the Council.

The basis of the application

[15]      Henley seeks orders under ss 316 and 317 of the Property Law Act 2007 (the Act). Those sections provide:

316Application for order under section 317

(1)A person bound by an easement, a positive covenant, or a restrictive covenant (including a covenant expressed or implied in an easement) may make an application to a court for an order under section 317 modifying or extinguishing that easement or covenant.

(2)That application may be made in a proceeding brought by that person for the purpose, or in a proceeding brought by any person in relation to, or in relation to land burdened by, that easement or covenant.

(3)That application must be served on the territorial authority in accordance with the relevant rules of court, unless the court directs otherwise on an application for the purpose, and must be served on any other persons, and in any manner, the court directs on an application for the purpose.

317Court 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.

[16]      The application is made in reliance on s 317(d) of the Act which allows the Court to modify or extinguish an easement where the proposed modification or extinguishment will not substantially injure any person entitled.

[17]      Counsel rely on the recent  authority  of  the  Supreme  Court  in  Synlait  Milk Ltd v New Zealand Industrial Park Ltd.3

[18]      For injury to be substantial it must be “real, considerable, significant, as against insignificant, unreal or trifling” which is to say, “the injury must be real and have present substance, rather than merely be theoretical or fanciful”.4

3      Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157.

4 Above n 1, at [104].

Lot 27 – application of the Act

[19]      Applying that principle to the present case, I am satisfied that extinguishment of the covenant from Lot 27 cannot cause any injury, let alone substantial injury, to QAC (as QAC accepts through having consented to the vesting of the road in the consent). I am also satisfied that the removal of the covenant from the eleven smaller lots subdivided from the original benefitted land will also not in substance injure the interests of the owners of those lots. The removal imposes no disadvantages on those owners. The removal of protections for airport operations can be of no consequence to them.

[20]      The removal of the covenant is necessary to allow the long intended subdivision to be completed. As I have concluded, it will not cause any prejudice. An order as sought will be made.

Lot 94 – application of the Act

[21]      Henley recognises it is only upon the removal of any possibility of there being residential occupation on the land presently earmarked for possible reserve that there will be no prejudice to QAC in the covenant being removed from that land. The order therefore sought for removal of the covenant from the intended Lot 94 is that the removal will take effect only in the event proposed Lot 94 is vested in the Council for reserve.

[22]QAC does not oppose this application.

[23]      I am satisfied the order should be made. If Lot 94 is vested in the Council as reserve, QAC’s need for the protections in the covenant fall away. The owners of the eleven smaller subdivided lots are in the same position as in respect of Lot 94 as in respect of Lot 27. Provided an order in respect of Lot 94 takes effect only at such time as the reserve land vests, that order will not substantially inure the interests of QAC, for the reasons I have outlined.

[24]An order as sought will be made.

Order

[25]I order:

(a)the land covenants created by Easement Instrument EI 6863718.3 Otago Land Registry dated 27 April 2006, originally in favour of Queenstown Airport Corporation Limited, are extinguished from the parts of Lots 1027 DP 544558, RT 925582 that, on subdivision of Lot 1027 in accordance with Title Plan LT 547946, will become Lot 27, DP 547946;

(b)the land covenants created by Easement Instrument EI 6863718.3 Otago Land Registry dated 27 April 2006, originally in favour of Queenstown Airport Corporation Limited are extinguished from the parts of Lots 1027 DP 544558, RT 925582 that, on subdivision of Lot 1027 in accordance with Title Plan LT 547946, will become Lot 94, DP 547946, in the event that those parts are vested in the Queenstown Lakes District Council; and

(c)the Registrar-General of Lands shall note against all relevant titles that the said covenants have been extinguished in those terms by order of this Court.

Osborne J

Solicitors:

Burton Partners, Auckland

Counsel: P J Wright/J Storey, Barristers, Auckland