Re Yoursection Ltd

[2019] NZHC 1825

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-396

[2019] NZHC 1825

IN THE MATTER OF

Part 19 of the High Court Rules and ss 316 and 317 Property Law Act 2007

AND

BETWEEN

An application by YOURSECTION

LIMITED for an order extinguishing an easement

Applicant

Hearing:	On the papers and a telephone conference on 25 July 2019
Counsel:	J E Bayley for the Applicant
Judgment:	31 July 2019

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 31 July 2019 at 11.00am pursuant to rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 31 July 2019

Re YOURSECTION LIMITED [2019] NZHC 1825 [31 July 2019].

[1]                 The applicant seeks to extinguish a covenant pursuant to ss 316 and 317 of the Property Law Act 2007 (“the Act”).

[2]                 The applicant seeks to use the originating application procedure and to have the application dealt with, without notice to any other party. Whether those steps are appropriate will turn on the merits of the application.

Background

[3]                 The applicant is the registered proprietor of land in Halswell, Christchurch contained in Record of Title CB11K/1284 (“the applicant’s title”)

[4]                 The applicant intends to complete a staged development of its title into residential lots. This will involve part of the applicant’s title vesting in the Christchurch City Council (“the Council”) as reserve and road.

[5]                 The applicant’s title is subject to “the easement contained in Transfer 75300 to keep drains clear” (“the covenant”). While the title refers to the transfer creating an easement, the applicant referred to the obligation as a “covenant” and I adopt that term in this judgment.

[6]                 The covenant is more than 110 years old, having been executed in 1907, and provides:

AND the said Thomas Charles Eivers doth hereby for himself his executors administrators and assigns and the tenants and occupiers for the time being of the said land covenant with the said Robert Rainey and John Eccles Ferguson their executors and administrators that he or they will at all times and hereafter keep open and clear from all rubbish weeds and obstructions of all kinds the drains and shown in the said plan running through the said Lot numbered 6 and will keep the said drains clear and in good working order so that the same may act efficiently in draining all the land shown on the said plan intended to be drained thereby.

[7]The applicant seeks the extinguishment of this covenant.

[8]The application is brought on a number of grounds as follows:

(i)that the covenant cannot be enforced;

(ii)that it has become redundant; and

(iii)is that the subdivision is a change of circumstances that warrants the extinguishment of the covenant.

The without notice application

[9]                 The applicant recognises that the application is brought on a without notice basis. While the applicant’s title still has the “burden” of the covenant, no other title is recorded as having the benefit of it.

[10]             Section 316(3) of the Act provides that an application such as this “… must be served on the territorial authority … unless the court directs otherwise”. I will return to this requirement at the end of this judgment.

Covenant cannot be enforced

[11]             The applicant has submitted that the covenant on its face was only expressed to be for the benefit of Messrs Rainey and Ferguson and their executors and administrators. The applicant’s research shows that Messrs Rainey and Ferguson died in the middle of the last century. The executors of Mr Rainey’s estate are also deceased.  There is no record of any probate being granted in respect of a Will for  Mr Ferguson and it is suggested that he may have died intestate. In any event, the submission that it is inconceivable that there would still be executors and administrators of the estate is a submission that I accept.

[12]             In the telephone conference held on 25 July 2019, I discussed with Mr Bayley the applicant’s submission that s 301(2)(b) of the Act did not apply to covenants that

were created in 1907. The submission is that the common law position set out in Land Law in New Zealand applies to the 1907 covenant:1

At common law the benefit of a covenant prima facie enures only in favour of the covenantee and the covenantee’s heirs. If it is to have a wider operation, with a greater burden on the covenantor, that intention must be clearly stated in the covenant. To achieve this, covenants were expressly made with “the covenantee and his successors in title and the persons deriving title under him or them”. These words are now implied into any covenant relating to any land of the covenantee unless a contrary intention is expressed, thereby causing the requirement to be satisfied automatically.

[13]             I am not convinced that submission is correct. The equivalent provision in the Property Law Act 1905 provided:2

(1)A covenant relating to land, whether expressed or implied, shall be deemed to be made with the covenantee, his executors, administrators, and assigns, and shall have effect accordingly.

(2)This section applies only to covenants made after the commencement of this Act.

[14]             Mr Bayley suggested that the reference to “assigns” in the 1905 Act did not necessarily equate with “transferee” but no submissions were advanced on that point. I note the covenant in this case refers to the covenantor’s “executors administrators and assigns” and has been brought down on the successive titles of transferees. This is some indication that at least as far as the Land Transfer Office was  concerned,     a “transferee” was treated as an “assign”.

[15]Accordingly, I do not base my decision on this ground.

Redundancy and change of circumstance

[16]Section 317(1) of the Act provides:

317     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—

1      Hinde McMorland  &  Sim  Land  Law  in  New  Zealand  (online  loose-leaf  ed,  LexisNexis)  at [17.006].

2      Property Law Act 1905, s 47.

(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.

[17]Mr Bayley relies on s 317(1)(d) and s 317(1)(a)(iii).

[18]Mr Bayley makes the following key points:

1. no title is recorded as having the benefit of the covenant;

(ii)Mr Bayley advised at the telephone conference that his client had had no approach or contact in respect of the covenant from any party;

(iii)the Council has since, at latest 8 June 2012, maintained the only drain which could be subject to the covenant.

[19]             Mr Bayley was unable to advise from what point in time the Council had taken over maintenance of the drain. The 8 June 2012 date is taken from a letter from the Council confirming that the subject drain is maintained by the Council.

[20]             Accordingly, while at the moment the drain is apparently one that requires ongoing maintenance, such is now undertaken by the Council.

[21]             On the basis that the Council has taken over the obligation to maintain the drain, the extinguishment of the covenant will not substantially affect any person entitled to the benefit of the covenant, assuming that there are in fact land owners who are entitled to the benefit of the covenant. However, the terms upon which the Council has taken over that role are not known.

[22]             This application is required to be served on the Council pursuant to s 316(3). Given the significance that is placed on the Council having taken over the maintenance obligation, otherwise arguably covered by the covenant, while I ultimately consider the orders sought are appropriate there will be a condition that a copy of this Judgment be provided to the Council to confirm that it has no issue with the orders made or their basis.

[23]             As to the proposed subdivision, Mr Bayley advises that upon the subdivision being completed, some of the area that is subject to the drain will vest in the Council and some is likely to remain as a natural drain and may serve as a boundary between titles. The details are not clear.

[24]             The practical point, however, is that Mr Bayley advises a resource consent for the subdivision will not be granted without the maintenance of the drains being addressed, meaning when the subdivision is completed the covenant will be overtaken.

[25]             Given this Judgment is to be referred to the Council for it to confirm that it has taken on the obligation to maintain the drain, if this assumption is not correct or if the obligation is qualified in some way, no doubt the Council will advise.

[26]             However, on the assumption that the Council has taken on the obligation to maintain the drain and will continue to have that obligation after the subdivision or that the subdivision will reallocate that responsibility, I am satisfied that the removal of the covenant will not substantially affect any landowner.

[27]             Given I am satisfied of these factors, subject to the condition that I have indicated, I consider it appropriate that this application be commenced by way of an originating application and that it not be served other than the condition I have imposed in relation to providing a copy of this judgment to the Council.

[28]The following orders are accordingly made:

(i)A copy of this Judgment is to be provided to the Christchurch City Council.

(ii)Upon the Christchurch City Council confirming that it will continue to be responsible for the maintenance of the drain subject to the easement, and such confirmation may be provided by way of memorandum to the Court or by way of letter to the applicant’s solicitor, I will make an order that the easement contained in Transfer 75300 is extinguished from Record of Title CB11K/1284 (Canterbury Registry).

(iii)Should the Christchurch City Council wish to be heard on this application or should it not be willing to give the confirmation referred to then a further telephone conference may be sought.

Associate Judge Lester

Solicitors:

Rhodes & Co, Christchurch  Copy to: Christchurch City Council