Repotane Trust Limited v Hart
[2024] NZHC 3655
•3 December 2024
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2023-419-278 [2024] NZHC 3655
IN THE MATTER of an Enforcement of Covenant in Easement Instrument 10104470.2 BETWEEN
REPOTANE TRUST LIMITED
Plaintiff
AND
SHEREE ANN HART, MATTHEW NORMAN HART, and BR LEGAL TRUSTEE COMPANY LIMITED as
trustees of the HART FAMILY TRUST NO.2
Defendants
Hearing: 22, 23 and 24 April 2024 Appearances:
P Cornegé and A Cox for the Plaintiff T Braun and J Perry for the Defendants
Judgment:
3 December 2024
JUDGMENT OF ROBINSON J
This judgment was delivered by me on 3 December 2024 at 4:30 pm pursuant to Rule 11.5
of the High Court Rules
Registrar/Deputy Registrar
Solicitors/counsel: McCaw Lewis, Hamilton BBL Lawyers, Hamilton P Cornegé, Hamilton
REPOTANE TRUST LIMITED v HART & ORS [2024] NZHC 3655 [3 December 2024]
Introduction and background [1]
The facts [8]
Subdivision [8]
The covenant [11]
420A [14]
The agreement [25]
Communications about the designs/covenant [26]
The Harts seek Ms Waddell’s consent [31]
Ms Hart sends Ms Waddell the plans [32]
Would the Harts’ home be “boxy”? – Expert evidence [58]
The law [66]
Interpretation [66]
Unreasonably withholding consent [68]
What were Repotane’s reasons for withholding consent? [71]
Did Ms Waddell unreasonably withhold consent? [73]
Case law [73]
English authorities [76]
Submissions [84]
Discussion [88]
Counterclaims [97]
Result [102]
Costs [104]
Introduction and background
[1] In 1978, Andrea Waddell’s parents purchased a block of land at 420 Pencarrow Road, Tamahere, Hamilton. They operated it as a family farm. The area surrounding the property has developed and changed since then, but it has always been special to Ms Waddell.
[2] When her father died in 2001, she moved back to the property and into the family home. She has lived there ever since. Ms Waddell has renovated the home, but its footprint remains essentially as it was when her parents lived there. It has expansive views of the Waikato River along the southern boundary.
[3] Ms Waddell is the sole director and shareholder of the plaintiff, Repotane Trust Limited (Repotane). She is also the sole director and shareholder of Repotane Investments Limited (RIL) which purchased the property from her father’s estate in August 2002. By that time the property had largely been sold off. All that remained was approximately 10 acres with the family home.
[4] Through RIL and Repotane, Ms Waddell arranged to subdivide the property further, selling off two parcels of land. Each of these was originally a paddock on either side of the driveway which Ms Waddell/RIL had previously grazed or leased to neighbours. They became 420A and 420B Pencarrow Road (420A and 420B respectively).
[5] When the property was subdivided in 2015, Ms Waddell arranged for restrictive covenants to be registered on the titles of each of the two new sections, for the benefit of the land next door to be retained by Repotane (Lot 2). The covenant provides:
3. [The covenantors are] not to construct any dwelling on [420A and 420B] without first obtaining written approval as to the plans and colours to be used on the exterior of the dwelling of the registered proprietor of Lot 2 DP 453154. The registered proprietor of Lot 2 [Repotane] shall not unreasonably withhold their consent.
[6] On 11 March 2022, Repotane agreed to sell 420A to the defendants, the Harts, for $1.3 million. In July 2022, the Harts sought Repotane’s approval of their
architectural plans for the home they proposed to build at 420A. Repotane has withheld consent. The Harts say it has done so unreasonably and have commenced construction.
[7] In this proceeding Repotane applies for an order that the Harts not undertake any construction work at 420A unless consent is provided in accordance with the covenant. It also seeks an order that the Harts reinstate 420A, removing any structures and remediating the land. The Harts counterclaim. They say Repotane has breached its obligations under the covenant by unreasonably withholding consent. Amongst other things, they seek an order requiring the plaintiff to consent to their proposed plans.
The facts
Subdivision
[8] Ms Waddell wished to continue living in the home, but also to raise funds by selling a portion of the overall property. She explains that because she intended to continue living in the home, the subdivision was a very important decision for her. It was critical to Ms Waddell that the rural feel of the property was maintained. She envisioned that any houses subsequently built would be sympathetic to their surroundings and, from her perspective, would look like they were “at home” in the private enclave they shared.
[9] Ms Waddell explains that she considered various forms of covenants to protect what was important to her. She decided not to prescribe specific design details because there were only two sections and she wanted flexibility. She decided the best approach would be that a covenant record a general obligation that she would need to approve the design of any house to be built on the subdivided sections. That way, potential purchasers could discuss the plans with her when the sections were marketed for sale. Ms Waddell explained she also took this approach because she wanted to hold one of the sections for as long as she could. She was mindful that design trends would change over time.
[10] The covenant was recorded in Easement Instrument 10104470.2. RIL was the original grantor and grantee. It was drafted in consultation with the purchasers of 420B.
The covenant
[11]The covenant relevantly provides:
The Grantor and Grantee acknowledge and agree that the following land covenants will be registered on the titles for Lots 1, 2 and 3 DPS 453154 so as to bind themselves and their respective successors and assigns as follows:
…
3.Not to construct any dwelling on Lots 1 and 3 DP 453154 without first obtaining written approval as to the plans and colours to be used on the exterior of the dwelling of the registered proprietor of Lot 2 DP 453154. The registered proprietor of Lot 2 shall not unreasonably withhold their consent.
…
9.The Grantor covenants for the Grantor personally and their successors and assigns that should the Grantor fail to comply with, observe, perform or complete any of the covenants and restrictions contained herein, and without prejudice to any other liability the Grantor may have to the Grantee or any other person the Grantor will:
(i)Immediately upon receipt of a written demand for payment from the vendor or dominant tenement or their solicitors pay to the Grantee as liquidated damages the sum of FIVE HUNDRED DOLLARS ($500.00) per day for each day the default continues unremedied such liquidated damages to be limited to a maximum value of $50,000.00 and
(ii)Shall immediately undertake such remedial action as may be required by the Grantee including but not limited to permanently removing or causing to be permanently removed from the property any improvement or structure so erected or repaired or other cause of any breach or non-observance of the foregoing covenants;
(iii)Pay on demand the Grantee’s costs incurred in respect of the default and any enforcement or attempted enforcement of the Grantee rights such costs to include but not be limited to legal costs on a solicitor client basis;
(iv)Pay interest at the rate of 15% on any money which may be demanded and not paid, such interest to accrue from the date of the demand until the date it is finally received by the Grantee;
P ROVIDED that:
Except for those defaults notified to the Grantor when it is a registered proprietor the Grantor shall only be liable while the Grantor is a registered proprietor of the land;
If the default is completely and finally remedied within one month of notice in writing requiring the removal or remedy of such cause of default and the payment by the defaulting party of all reasonable legal costs and other expenses incurred by the party enforcing the said covenants the sum payable under this clause shall abate to $1.00 per day.
[12] Ms Waddell says she intended the covenant to assure future purchasers that she was open to a range of designs. She believed this approval would encourage the parties to engage positively and reasonably to arrive at a mutually agreeable aesthetic.
[13] In May 2017, the purchasers of 420B provided Ms Waddell with their architect’s plans of the home they intended to build. They and Ms Waddell had previously discussed possible designs. Ms Waddell explains that she had no concerns with those plans because she considered the design to be very sympathetic to the landscape. She describes the design as being “contemporary but still country”. Construction of that home was completed in December 2020.
420A
[14]Repotane listed the section at 420A for sale in March 2022.
[15] Ms Waddell engaged a real estate agent, Paula Wenham, to market 420A. A marketing campaign commenced on 4 March 2022, with a deadline sale date of 23 March 2022.
[16] The marketing material Ms Wenham prepared for Repotane included a statement to prospective purchasers as follows:
BUILD YOUR LIFESTYLE
Here is your opportunity to secure a picturesque lifestyle block. In close proximity to St Peters School and an easy commute to Cambridge and Hamilton, 420A Pencarrow Road is the forever location you have been searching for. The fully fenced lot is prime buying in the tightly held Tamahere lifestyle [sic], located close to the Tamahere Village, Local Cafes and shops.
…
The block is 1.13 hectares of enticing lifestyle living in a peaceful location that sits pride of place giving you a unique opportunity to build your dream home on a fantastic building platform in an established country location … With limited covenants and the title through [sic] this is your opportunity to act fast and get your dream home underway.
The overall ambience is of peace, privacy, tranquillity, and the ability to surround yourself with space and wonderful views of Pirongia. There is room for a pony and above all the opportunity to develop your new home to suit your lifestyle.
[17] A copy of the covenant was also included in the information pack prepared by Ms Wenham for prospective purchasers.
[18] Ms Waddell says she discussed the covenant with Ms Wenham, telling her that she was open to a range of designs but that she specifically disliked very modern houses with square or box-like designs.
[19] On 4 March 2022, Ms Wenham contacted Ms Hart to advise that 420A was being listed for sale. Ms Hart had previously told Ms Wenham that she and her husband were looking to build their dream home on a lifestyle section within the Waikato landscape.
[20] Ms Wenham advised Ms Hart that there was unprecedented interest in the property. On 7 March 2022, Ms Hart and her husband took legal advice about the sale and purchase agreement and the covenant.
[21] Ms Hart asked Ms Wenham whether there was anything she should know about the vendor’s likes and dislikes, and whether the covenant would create any problems. Ms Hart says Ms Wenham told her that Ms Waddell “does not like ‘boxy homes’”, referring specifically to two particular properties in the area: a property at 424B Pencarrow Road (424B), and a property at Armistead Lane (Armistead Lane).
[22] Ms Hart says Ms Wenham pointed these homes out to her on-site, explaining that as long as Ms Hart’s house was not going to be like 424B and Armistead Lane
then there would be no problem with consent.1 Ms Hart says that she observed to Ms Wenham that those houses had flat roofs and were of very boxy designs. She recalls saying that she would be fine with this restriction in design because the style of those two houses was not a design that she and her husband would want for their home.
[23] Ms Hart told Ms Wenham that she and her husband were thinking of building something with a more organic and earthy aesthetic. Ms Hart says Ms Wenham told her that Ms Waddell was “quite relaxed” about the design process, and that the covenant would not present any impediment to building a modern home of the sort Ms Hart had described.
[24] At that stage, Ms Hart did not know the extent of Ms Waddell’s lengthy connection with the property. Ms Hart says that she was reassured by her discussions with Ms Wenham because Ms Hart and her husband were not looking to build a house like 424B or Armistead Lane.
The agreement
[25] Due to high levels of interest in the property, the deadline sale date was brought forward to 12 March 2022. Ms Waddell says she was not entirely comfortable with changing the date but did so on advice from Ms Wenham. The defendants (and others) presented offers on 11 March 2022. After discussion with Ms Wenham, the defendants increased their offer to $1.3 million, which Repotane accepted on 12 March 2022.
Communications about the designs/covenant
[26] Ms Hart explains that she and her husband had not decided on a specific design at the time they purchased the property. As noted, she says they did not want a house like the two Ms Wenham had pointed out as being “boxy” houses of the sort Ms Waddell did not like.
1 Neither party called Ms Wenham as a witness. There is no dispute that the exchange between Ms Hart and Ms Wenham was as Ms Hart described in evidence.
[27] On 28 March 2022, the Harts had their initial consultation with their architect, Nick Timms of Ink Architectural Design Ltd (Ink). Ms Hart says she pointed out the two homes that Ms Wenham had referred to and instructed Mr Timms not to design a home like them. She says she did not like their boxy look either.
[28] Mr Timms confirms that the Harts told him that Repotane did not want to build a boxy home like the homes at 424B and Armistead Lane. He says that it was clear to him he needed to avoid a singular mono-pitched roof or dominant parapet walls, which tend to create a square and boxy front façade. So, Mr Timms says he designed a home with a front façade with two distinctive roof designs at pitches of 10 and 12 degrees. Mr Timms describes all this as “a modern twist on the traditional gable roof”.
On 20 April 2022, Mr Timms texted Ms Hart and asked her to send him a picture of the “boxy look” she did not like. In response, Ms Hart sent Mr Timms nine pictures taken from various websites. She explained:
Not huge fan of flat roof… like simple lines but not boxey [sic] if that makes sense. Like a bit of change in height.
[29] Ms Hart considers that the pictures of the houses she texted Mr Timms had the same aesthetic as the two homes that Ms Wenham had said Ms Waddell did not like.
[30] On 24 April 2022, Ms Hart sent Mr Timms a link to the 2021 “Home of the Year” on the HOME Magazine website. This was known as the “Black Quail House”. Ms Hart told Mr Timms she liked this design, noting in particular its sloped, simple roofline.
The Harts seek Ms Waddell’s consent
[31] A month or so later, towards the end of May 2022, the Harts visited Ms Waddell at her home to discuss the possibility of renting it while they built their house on 420A. Whilst there, Ms Hart told Ms Waddell that their concept plans were almost ready. She remembers Ms Waddell being relaxed about the process and the design. During that discussion Ms Waddell said to Ms Hart, “as long as you don’t build a pink palace, all will be fine”. Ms Waddell remembers saying this, but says it was just “tongue-in- cheek”.
Ms Hart sends Ms Waddell the plans
[32] Early on the morning of 7 July 2022, Ms Hart emailed the concept plans to Ms Waddell.
[33]A few hours later Ms Waddell responded:
Hi Sheree,
…
Thanks for sending through the plans. We probably need to sit down and discuss it further as the design is very boxy and really doesn’t sit well with me in terms of a house more suited to the country. At first glance it appears to be more a metro design than I would be happy with. Let’s discuss it further when you have time.
I also would like to see the exterior finishes in more detail, so I get a sense of the colour scheme and look as I pass up the driveway.
Sorry this is probably not what you need right now but I’m happy to work toward something that look [sic] less metro and something softer on the landscape.
[34] Ms Waddell explained that as soon as she saw the plans she had reservations with the design because it was not what she thought would sit well in the setting. Ms Waddell says the plans looked boxy in design, which she had said from the outset she would not approve.
[35] On 12 July 2022, Ms Hart emailed Ms Waddell to ask whether it would suit to meet with Mr Timms and their designer at Mr Timms’ office on 22 July 2022. In the meantime, Ms Hart sent Ms Waddell the link to the Black Quail House so she could get a sense of the final look.
[36]On 17 July 2022, Ms Waddell emailed Ms Hart relevantly as follows:
Hi Sheree
…
In terms of the house, I think we are completely [sic] different pages and I made it really clear to [Ms Wenham] when I talked about the house design I did not want a square ultra modern house or boxy shaped houses. Although the quail house might sit well in central Otago it is certainly not what I conveyed to Paula, when we talked about telling a prospective purchaser in
terms of design [sic]. I was very keen ahead of signing the agreement for sale and purchase to get design concepts in front of me but it all happened very quickly, so in hindsight perhaps that might have been prudent to have better managed the understanding and expectations.
I conveyed to her that a more traditional country look with a modern edge (much like [420B]) would be acceptable. Perhaps if you could look at a roofline and exterior finishes?
Homes I am more aligned with are in keeping with something like but obviously not at all limited to: - 1) [420B]; 2) The Urban homes house along at about 410 Pencarrow Road. 3) [Another house showcased on the website of an architectural firm]. It sits low in the landscape but the roofline is more traditional.
If you want to go ahead and when you meet with the architect we could progress this further towards something agreeable. It is mainly the really boxy nature of the design and flattish roof that I am not at all keen on. I hope this gives you a better idea.
Otherwise please let me know if the following week works for you, probably Tuesday 26.
Thanks Andrea.
[37] Ms Hart says Ms Waddell’s email of 17 July 2022 came as something of a shock. She says she was never told that Ms Waddell required a “traditional country looking home” to be built on the section. She confirmed in evidence that she and Mr Hart would not have put an offer on the property if they were aware of any specific requirement to build a traditional country style home like the one on 420B. They have previously built a home in that style and wanted something different.
[38]Ms Hart replied to Ms Waddell later that morning:
Hi Andrea
I have spoken to my Designer and she can meet us at Ink Architecture Tuesday 26th July 10.30am. Trust this suits
In response to your comments below:
1. I will get [Mr Timms] to show you the 3D drawings on his computer which show our design is not flat roof/boxy. I was very clear with [Mr Timms] that we do not want a flat roof/boxy look but rather a sloped roof line. I agree that the elevations on the plans do look flat and so do not give a true representation of the look but the 3D conceptual design should show the sloping roofline more clearly. FYI though, we are not interested in a pitched roof line to look like [420B].
2. If you had asked for potential purchasers of the section to spend thousands of dollars on a concept design, we would not have put in an offer. If you wanted a traditional country home for thesection you probably should have stipulated that in the covenants. Again if it was, we would not have put in an offer.
I hope we can alleviate your concerns once you see the 3D computerised design. Note also that landscaping will soften the look.
See you Tuesday 26th. If you can come with a list of your concerns so we can work through these as we would like to get to a solution and next steps on Tuesday.
[39] On Friday 22 July 2022, Ms Waddell emailed Ms Hart to explain that she was unwell and would be unable to attend the meeting on 26 July 2022. She said this would have to be rescheduled or possibly take place by Microsoft Teams.
[40] Ms Hart responded by advising that Mr Timms had made some changes to the roofline to increase the pitch. She said that once she had copies of the amended plans, she would deliver them to Ms Waddell’s letterbox. Ms Hart suggested they meet via Microsoft Teams if Ms Waddell was up to it.
[41] On 25 July 2022, Ms Hart delivered the amended plans to Ms Waddell’s letterbox. Ms Waddell still disliked them. She did not think they were significantly different from the previous plans. She said in evidence she was worried her concerns were not being heard.
[42] Because Ms Waddell was feeling unwell, she asked Ms Wenham to assist, rather than going back to the Harts directly. At 7:29 pm on 25 July 2022, Ms Waddell emailed Ms Wenham as follows:
Hi Paula,
Sorry to land this with you again but here are the latest plans dropped off by [Ms Hart] today.
…
Clearly this design is aligned with the style of house [that 424B had], which I specifically stated was not acceptable for sign off by me.
I have been advised to go back to you to try to resolve. Harts have already committed funds to a design that even with the tweaking they have done is far from “going to fly” with an acceptable look for me.
Harts want to Skype in with their designer tomorrow … I think a very clear conversation needs to take place before they spend any more money.
[43]On 26 July 2022, Ms Wenham emailed Ms Waddell as follows:
Morning Andrea
I did say no boxy homes like the Webbers to the Hart’s, you didn’t like that style. That you like the style of [420B].
This plan looks better, the top looks different. See how you feel today and if your [sic] up to having a meeting today with the architect. I actually like the roof line of the bottom level.
I did see [Ms Hart] briefly on Sunday and she acknowledged I said the above. There has to be a compromise. They will make it look amazing and it will improve the value of all the properties surrounding it.
I’m sorry this is happening I certainly didn’t expect it. I hope your feeling better.
Talk soon Paula
[44]45 minutes later, Ms Waddell responded to Ms Hart’s email of 22 July 2022 (at
[39] above):2
Hi Sheree
Further to the proposed design of your residence at the property at [420A]. As previously advised, the initial plans sent to me did not meet with my approval.
As stated prior to the sale of the property, a design needed to look in my opinion “at home in the country” and I was open to review designs prior to signing off an agreement if anyone wanted to submit a look and feel of what they wanted to build. It was definitely my preference to ensure both parties would be on a similar page. I did strongly convey and specifically state that I did not want an ultra modern square design that “looked anything like the house at [424B]” or the other large white house that stands out from the others down nearby Armistead Lane. Similarly I mentioned the large square house that is down at the Airport Rd of Pencarrow Rd. I understand that this was advised by Paula to all prospective purchasers.
Sheree, whilst I appreciate that the covenant does not specify this design exclusion, when they were originally drafted (when the subdivision was done approximately 10 years ago), the solicitor who drafted themunderstood it may be sometime before I sold off the sections and advised as time passes designs, building materials and my design preferences may evolve and having over prescriptive covenants may result in them having to be repeatedly amended.
2 The email correspondence between Ms Hart and Ms Waddell from 7 –26 July is set out in full because it records Ms Waddell’s reasons for refusing consent.
She suggested the clause, as per the covenants, and at the time said any prospective purchaser having read them should clearly be happy that they would be able to satisfy the covenant before proceeding with a purchase. This clause would open up a dialogue between myself and a future purchaser/neighbour to ensure a design that both parties would be happy with. This is why having a discussion with a prospective buyer was important to me. This worked very well when I sold the property at 420B to [the purchasers] and it was a seamless process for both parties and their design was signed off without amendment.
When your original design was submitted I was taken back as it was very much contrary to the expressed views conveyed in terms of house design to my real estate agent. I expressed that I would not be approving a design of this type of design and reiterated my long held view and some suggestions of the type of house that would be satisfactory to me. I was prepared to work toward a compromise if possible, but the design dropped off yesterday still looks more like the house at [424B] than is acceptable to me.
I understand that you did not havea concept design drawn up prior to purchase and there was not an expectation by me that you necessarily would. However, from the email you sent on 12th July you clearly had a design along the lines of the Black Quail House in mind. Had this been tabled prior to the agreement being signed I would have definitely not signed this off and therefore not proceeded with the sale.
I am not sure where to go from here but certainly I don’t think participating in a meeting with the specific objectiveof progressing a design which I presently do not intend signing off on is at all a fair, respectful or honest way of proceeding. I think it would be wholly disingenuous of me to proceed with the meeting today with the current plans in play. Rather than spending more time and money with the designer today I think it may be prudent to review the current situation and reflect where things stand. Also I [am unwell] and feel utterly miserable this morning having had very little sleep last night.
Regards Andrea
[45] On 30 July 2022, Ms Hart advised Ms Waddell that the Harts had taken legal advice and they considered she was unreasonably withholding consent to their design. She pointed out that the covenant is not specific. She accepted that Ms Wenham verbally conveyed that she did not like the “boxy” look of 424B or Armistead Lane. However, Ms Hart advised that the Harts did not consider their design “boxy”.
[46] Ms Hart attached an email from Mr Timms in which he confirmed the Harts had made it clear from the outset that they wanted to avoid “box” style architecture. He explained that:
From an architectural view point, the Pencarrow design is not at all a box. We have formed the external walls to the underside of the roof, which exposes the rooflines, the roof cladding/wall junction forms barges and external spouting around the roof perimeter. The design emphasises the roof angleand has a unique shape where the walls follow the roof form. This provides a much more interesting multi angled exterior.
[47] Ms Waddell never responded to that email, although she said in evidence that she remained happy to engage with the Harts to see whether or not there was a way forward on the design. She says that from her perspective, Ms Hart confirmed that they knew she would not approve a boxy design, but that the parties seemed to have different views as to what boxy meant.
[48] Ms Waddell says she did not hear anything further from the Harts for approximately seven months. For her part, Ms Hart says she and her husband considered they had been clear about their position and, having received no response from Ms Waddell, they proceeded on the basis that she had accepted the Harts’ position. Accordingly, the Harts finalised their plans. Ms Hart says they ensured the colours used were similar to those that had been used by the owners of 420B, which Ms Waddell had previously approved.
[49] On 8 March 2023, Ms Hart sent what she describes as a “courtesy email” to Ms Waddell as follows:
Hi Andrea
I realise we have fallen out over the style of our home but out of courtesy I thought I would email you the colour pallet [sic] which we have just finalised. As already mentioned we intend to do extensive landscaping with a lot of greenery and tree lined [sic]. Marcus Grayling will be building our home and he intends to start the excavation within the next few weeks. We are very excited.
[50]Ms Waddell replied within the hour:
Hi Sheree,
Do you have new plans for the house or are you intending to breach the covenants? This plan is not approved by me.
Please advise why you think you can proceed without my approval?
[51] At this point the parties began to correspond through their solicitors. Essentially, their respective positions were as they remained at trial. Ms Waddell says that the Harts will be in breach of the covenant if they construct a dwelling in accordance with the plans they had provided, because Ms Waddell has not approved those plans. The Harts maintain that, through Ms Waddell, Repotane has withheld consent purely on the basis of her personal design preferences, which is unreasonable.
[52] For completeness, it should be noted that in his email of 9 March 2023, Ms Waddell’s solicitor advised that she was “happy to consider alternative acceptable plans”. On 3 April 2023, Ms Waddell’s solicitor advised that Ms Waddell would consider agreeing to the proposed dwelling on the basis that the proposed flat roof was replaced with a “pavilion style” pitched roof with a pitch of at least 30 degrees. There would also need to be a detailed landscaping plan. Ms Hart explains that this would require a complete redesign of the home and a new building consent.
[53] There was extensive correspondence between solicitors as to how to break the impasse. On 9 May 2023, there was correspondence as to who should attend a face-to-face meeting, and the agenda for that meeting. Ultimately, Ms Waddell met with the Harts’ architect, and left with them a bundle of house designs that were along the lines of what she would find acceptable. Each of these appear to be of a traditional country style with distinctly gabled rooflines.
[54] Various attempts to resolve matters were unsuccessful. The Harts began construction. Repotane issued proceedings alleging the Harts were in breach of their obligations under the covenant. Repotane seeks orders restraining the Harts from carrying out construction work at 420A, and requiring them to remove any structures and remediate the land. It claims liquidated damages calculated in accordance with cl 9 of the covenant.
[55] By way of affirmative defence, the Harts say Repotane is estopped from withholding consent to their plans. They say that they relied both on Ms Wenham’s pre-contractual representation on Repotane’s behalf, and Ms Waddell’s post- settlement representation that all would be fine provided the defendants did not build a “pink palace”. The Harts say that, in reliance on those representations, they
submitted plans to Repotane in accordance with the covenant, and will suffer detriment if consent continues to be withheld.
[56] The Harts also pursue counterclaims against Repotane. They allege Repotane has breached its obligations under the covenant by unreasonably withholding consent. They seek an order that Repotane consent to their plans, and for damages. Alternatively, they seek damages under s 35 of the Contract and Commercial Law Act 2017 (CCLA) for pre-contractual misrepresentation, and misleading and deceptive conduct contrary to ss 9 and 14 of the Fair Trading Act 1986 (FTA).
[57] Repotane also sought an interim injunction restraining the Harts from carrying out any building works at 420A. On 18 December 2023, Walker J declined that application,3 finding that the balance of convenience weighed against the granting of an injunction. She found that granting an injunction would have adverse effects on third party contractors, also taking into account the fact that the Harts would be obliged to reinstate the land if Repotane’s claim was ultimately successful.4
Would the Harts’ home be “boxy”? – Expert evidence
[58] There was evidence from Ms Waddell, Ms Hart, Mr Timms and an expert witness for each of the parties as to whether the home the Harts planned to build is “boxy”. Perhaps unsurprisingly, Ms Waddell and Repotane’s expert, Darrell Bell, think that it is, but Mr Timms, Ms Hart and the Harts’ expert, Andre Laurent, do not.
[59] Mr Bell has been an architectural designer for over 40 years. He explains that based on his experience he has an opinion on the meaning of the word “boxy”, and has completed further research to determine the commonly understood meaning of “boxy” within the architectural design industry.
[60] Mr Bell refers to an article by Rebecca Gross, design writer and historian. Her article “So you live in a … Box-Style House” published online in October 2014, begins as follows:
3 Repotane Trust Ltd v Hart [2023] NZHC 1754.
4 At [79].
The box style house is not technically a style of architecture, but it is increasingly common in contemporary housing today. It draws on themodern, geometric forms of the International Style of the 20th Century with large blocks or cubed-shaped volumes stacked, intersecting or arranged to form residences. In combination with contrasting colours and bold materials, box- style houses are visually exciting and dynamic.
[61] In ArchiPro: Contemporary House Styles of New Zealand, the author Gerald Parsonson described a “box form” home in the following terms:
Four walls, a floor and a ceiling – all at 90-degree angles. Inevitably, box forms have been a popular style of architecture since early human civilisation. They are generally an more efficient with space [sic] with a maximised floor area, although with newer computer programmes, they are developing an ever- increasing degree of sophistication.
[62] In Mr Bell’s opinion, considering relevant terminology and the “boxy” examples pointed out by Ms Wenham, the Harts’ design is “boxy”. He acknowledges that the Harts’ plans are for a home that is dissimilar to 424B and Armistead Lane, but says that all three houses can be grouped together as being different variations of box- like houses. He says the most recent plans prepared by Mr Timms create a “boxy” form, and give the property a “boxy” imposing structure.
[63] Mr Laurent disagrees. In his opinion, the two properties pointed out by Ms Wenham are “boxy” because they are designed predominantly with “box” forms. He says the Harts’ plans are quite different. Although they all have a flat floor and walls at 90 degrees, Mr Laurent points out that the Harts’ home will have roof faces that are cut on a slope that is also angled. He refers to these as a “sloped truncated prisms” or a “folded-extruded form”. Mr Laurent says this is a substantial design deviation from those of 424B and Armistead Lane, which are clearly based on box forms.
[64] As noted above, Mr Timms’ evidence was that he designed a home with two distinctive roof designs at pitches of 10 and 12 degrees in response to the Harts’ instructions to avoid designing a “boxy” home. He says the roof pitch is complex, but is “most certainly not ‘boxy’”. He explains the various ways in which he says the Harts’ design differs from the two he was told to avoid. He rejects any suggestion that the design does not fit within the landscape.
[65] I summarise this evidence for completeness. Clearly, rational professional opinions can differ. However, I do not need to determine whether or not the Harts’ home would be “boxy”. The real question is whether it was unreasonable for Repotane to withhold consent because Ms Waddell thinks the home would be “boxy”.
The law
Interpretation
[66] Restrictive covenants run with the burdened land once registered on the title of that land, binding subsequent owners.5
[67] The covenants are to be interpreted in accordance with the general principles of contract interpretation. Interpretation is an objective exercise, the aim of which is to ascertain the meaning the contract would convey to a reasonable person having the relevant background knowledge reasonably available to the parties in the situation they were in at the time of the contract.6
Unreasonably withholding consent
[68] It is a relatively common contractual arrangement that when one party requires the consent of another before embarking on a particular course of action, the party whose consent is required may not unreasonably withhold it. Similarly, s 226 of the Property Law Act 2007 (PLA) provides that where a lessee requests the lessor’s consent to do any of the things set out in s 225(1),7 the lessor’s consent must not be unreasonably withheld.
[69] It is well established that an inquiry as to whether consent was unreasonably withheld is a two-stage inquiry. The Court must first establish the lessor’s reasons for withholding consent. This is a subjective exercise. Secondly, the Court must then
5 Land Transfer Act 2017, s 51; and Webster v Doak [2017] NZCA 396, [2018] NZRMA 169 at [11].
6 Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60]–[63], cited in Kaimai Properties Ltd v Queen Elizabeth the Second National Trust [2021] NZCA 10, (2021) 21 NZCPR 889 at [44].
7 That is, transfer or assign the lease; enter into a sublease; part with possession of some or all of the leased premises; change the use of the lease premises; or mortgage the leasehold estate.
determine whether those reasons constitute reasonable grounds for withholding consent.8 This second test is objectively assessed.
[70] Counsel referred me to various authorities concerning covenants prohibiting a covenantee from unreasonably withholding consent to the design of building works sought by the covenantor. These show that what is reasonable will ultimately turn on the terms of a covenant and the relevant factual context in each case. I refer to these cases in more detail below.9
What were Repotane’s reasons for withholding consent?
[71] Repotane withheld its consent to the Harts’ request for approval of their plans on 26 July 2022. That was when Ms Waddell advised that it would be “wholly disingenuous” for her to proceed with a meeting to discuss the proposed plans, and that she “would not be approving a design of this type”. Repotane’s reasons for declining consent were set out in Ms Waddell’s emails of 7, 17 and 26 July 2022.10 Ms Waddell considered that the Harts’ planned design was too modern and, with its “flattish roof”, too boxy. She did not think it suited the country setting and saw it as unacceptably similar to 424B and Armistead Lane.
[72] Further, Ms Waddell had previously given the Harts examples of homes that she was “more aligned with”. They can be broadly but accurately described as traditional country homes with gabled roofs. In my view, it is clear from the emails and Ms Waddell’s evidence that Repotane withheld its consent to the Harts’ plans because Ms Waddell did not like the aesthetics of the home the Harts wish to build.
8 Greymouth Gas Kaimiro Ltd v GXL Royalties Ltd [2010] NZSC 117, [2011] 1 NZLR 289 at [10]–[11]; and Louis Vuitton New Zealand Ltd v Prince’s Wharf Property Fund Ltd (2005) 5 NZ ConvC 194,073 at [30]. Louis Vuitton New Zealand Ltd v Prince’s Wharf Property Fund Ltd concerned the reasonableness of a landlord’s refusal to consent to a change of use. The Court noted the principles were broadly the same as those that apply in assessing the reasonableness of a landlord’s refusal to consent to an assignment. More recently, in Martelli v Liow [2024] NZHC 968, the Court confirmed that a two-stage inquiry is required when assessing the reasonableness of a cross-lessor’s withholding of consent to works proposed by a cross-lessee.
9 At [65]–[75] below.
10 At [32]–[44] above.
Did Ms Waddell unreasonably withhold consent?
Case law
[73] As noted above, counsel referred me to various cases in which a covenantee withheld consent to a covenantor’s plans and designs.
[74] In Omaha Beach Residents Society Inc v Ocean Management Ltd11 a covenant required the defendant to obtain the plaintiff’s approval of its plans and designs before it began construction of any building or improvements on its property. The plaintiff, through its Design Control Committee, could not unreasonably withhold its approval of the defendant’s design provided it complied with specified parts of the Rodney District Plan 1993 and the plaintiff’s own design guidelines. Lang J observed in obiter that the plaintiff had not unreasonably withheld its consent to the defendant’s plans, which complied with the recently amended District Plan, but not the plaintiff’s design guidelines.12
[75] The covenant in the present case, however, refers to no such design guidelines, or district plan, or any other external, verifiable standards which the Harts must meet in order to obtain Repotane’s consent. The covenant sets no express standard against which the reasonableness of Repotane’s withholding of consent can be measured.
English authorities
[76] There are helpful English authorities. In Hicks v 89 Holland Park (Management) Ltd13 the defendant company owned the land occupied by a row of Victorian townhouses; the owners of the townhouses owned shares in the defendant, and leased the land. The plaintiff’s land was situated in front of the townhouses. The plaintiff was bound by a restrictive covenant prohibiting her from applying for planning permission for any plans the defendant had not approved.
11 Omaha Beach Residents Society Incorporated v Ocean Management Ltd (2007) 8 NZCPR 796 (HC).
12 At [70].
13 Hicks v 89 Holland Park (Management) Ltd [2020] EWCA Civ 758, [2021] Ch 105.
[77] The plaintiff, an award-winning architect, planned to build a house with a single storey glass cubed structure above ground, which would serve as an entrance to two floors below ground. The defendant refused consent on various grounds, including aesthetics. The defendant observed that the glass cubed entrance was “out of keeping” with the Victorian townhouses, and did “not seem to [the defendants] to be an attractive choice”.14
[78] The High Court had previously held that the defendant could not reasonably withhold its approval on aesthetic grounds that had nothing to do with the value of its reversionary interest or protection of its property interests.15 It did not actually assess the reasonableness of the defendant’s reasons for withholding approval.
[79] The Court of Appeal disagreed and held that the defendant could reasonably take aesthetic considerations into account. In doing so, it referred to several earlier cases where lessors were found to have reasonably refused consent to alterations on aesthetic grounds.16 Lewison LJ noted counsel’s “powerful point” that aesthetic objections cannot be objectively evaluated, but held that aesthetic objections may be valid, even where a covenant contains a proviso that consent may not be unreasonably withheld.17 He noted that the covenant was between neighbours, and that a neighbour has a legitimate interest in the appearance of what is built next door.18 He rejected the argument that an aesthetic objection could only be relevant if it was tied to a detrimental effect on the value of the land with the benefit of the covenant: “that, in my judgment, is to take a very narrow view of what interests a covenant of this kind is intended to protect”.19
[80] Having determined that the covenantee could take aesthetics into account, the Court of Appeal remitted the case back to the High Court to determine whether the
14 At [14].
15 Hicks v 89 Holland Park (Management) Ltd [2019] EWHC 1301 (Ch), [2019] EGLR 39.
16 Lambert v FW Woolworth & Co Ltd (No 2) [1938] Ch 883; and Cryer v Scott Brothers (Sunbury) Ltd [1988] 55 P & CR 183.
17 At [47].
18 At [41].
19 At [47].
covenantee’s aesthetic (and other) objections were reasonable. In doing so, Lewison LJ made the following comments:20
The letter of refusal presents a rational case; but rational is not necessarily the same as reasonable. Apart from Mr Rainey QC’s general submission that it was impossible to evaluate an aesthetic objection, the question what [sic] might be appropriate criteria for that evaluation was not fully explored in argument. I am inclined to agree with him that merely to say that the proposed building is not to the taste of the [covenantee] would be entirely subjective; and would not be enough. On the other hand, to limit aesthetic objections to a case in which there is an effect on capital or rental value is too narrow. … an objection that a proposal is “out of keeping” or that it would have “a potential adverse effect upon the amenities” of the land with the benefit of the covenant may be enough. … the current state of the land may also be a relevant consideration. …the judge will also be able to take into account the fact that the 1968 Deed contained a positivecovenant to build, and expressed an approval of a particular design. Whether against that background (and any other relevant consideration) the refusal of consent was reasonable on the facts will be for the Judge to decide.
[81] Back in the High Court, HHJ Pelling KC considered the following principles to apply in determining the reasonableness of withholding consent on aesthetic grounds:21
(a)the legal onus of establishing that the defendant’s reasons for refusing permission were unreasonable rests on the claimant;
(b)what is or is not reasonable is in every case a question of fact and degree, to be assessed at the date when the relevant consent is sought. The concept of “reasonableness” should be given a broad common sense meaning, tested by asking whether a notional hypothetically reasonable person in the position of the defendant might have arrived at the conclusion under challenge;
(c)the court should not “simply substitute its judgment as to what is reasonable for that of the covenantee”. A refusal of approval will only be unreasonable if the court is satisfied that no reasonable covenantee would have refused approval in the circumstances;22
20 At [56].
21 Hicks v 89 Holland Park (Management) Ltd [2021] EWHC 930 (Comn) at [16].
22 Citing Mahon v Sims [2005] 3 EGLR 67 at [29].
(d)generally, the purpose of covenants is to protect the covenantee from the subservient tenement being used in a way that is undesirable from the point of view of the covenantee;
(e)the property interests protected by covenants are not limited to adverse effects on the capital or rental value of the property but extend to the amenity value of the right to enjoy the property in question;
(f)it will be unreasonable for a covenantee to refuse consent for the purpose of achieving a collateral purpose, or for the purpose of obtaining an uncovenanted advantage; and
(g)there may be cases where there is such a disproportion between the benefit to the landlord and the detriment to the tenant if the landlord withholds his consent that it is unreasonable for the landlord to refuse consent.
[82] Ultimately, HHJ Pelling KC found that a reasonable decision-maker in the position of the covenantee was entitled to withhold approval of the glass entrance pavilion on aesthetic grounds. However, this was only on the basis of a concession by the claimant that there was a reasonable prospect she would obtain planning consent for an alternative design she had proposed.23
[83] In Davies-Gilbert v Goacher, the High Court considered the Court of Appeal’s decision in Hicks v 89 Holland Park (Management) Ltd, commenting that:24
[48] Having considered the judgment of the Court of Appeal I considerthat the proper legal principle is different from that proposed by both parties. In my judgment the proper legal principle is that if an objection to an application for consent is based on aesthetic grounds, then it would not be enough merely to say that the proposed building/alterations were not to the taste of the covenantee (or others entitled to the benefit of the covenant) as this would be entirely subjective.
23 At [81].
24 Davies-Gilbert v Goacher [2022] EWHC 969 (Ch).
Submissions
[84] Mr Cornegé for Repotane submits that the covenant is expressed in broad terms, and is clearly intended to give Repotane some control over the aesthetics of any dwelling that a covenantee might build next door. He emphasises that Ms Hart knew that Ms Waddell lived next door, and that she would decide on Repotane’s behalf whether to consent to the Harts’ plans. Mr Cornegé says that Ms Hart knew that the property was a rural, lifestyle property, and that Repotane’s subdivision was small and closely held. He emphasises that Ms Hart accepted in cross-examination that the defendants assumed a risk that Ms Waddell might not approve their plans.
[85] Ms Hart agreed with Mr Cornegé that the covenant focused on aesthetics, which is why she had a discussion with Ms Wenham about Ms Waddell’s preferences. Ms Hart was told by Ms Wenham that Ms Waddell did not like “boxy” homes like 424B and Armistead Lane. Ms Hart also acknowledged that whether a design is “boxy” is necessarily subjective. For these reasons, Mr Cornegé submits the parties always understood that Ms Waddell’s subjective view of the Harts’ design would inform her decision.
[86] Mr Cornegé says that, in these circumstances, the principle that a covenantee cannot withhold consent on the basis of subjective taste alone does not apply. Mr Cornegé submits that it is not unreasonable for Repotane to withhold consent because Ms Waddell finds the design “too boxy”.
[87] Mr Braun for the Harts submits that Repotane has withheld consent only because of Ms Waddell’s subjective preferences, which he says is unreasonable. Amongst other things, Mr Braun submits that the Harts have complied with the guidelines they were given – to construct a home that did not look like 424B and Armistead Lane. He points out that Repotane’s own expert witness accepted that the Harts’ house will look quite different to 424B and Armistead Lane.
Discussion
[88] When the Harts delivered their plans to Ms Waddell for approval, they triggered Repotane’s obligation not to withhold its consent unreasonably. The onus is on the Harts to demonstrate that Repotane has breached that obligation.
[89] I agree with Walker J that, on the ordinary principles of construction, the covenant is focused on the aesthetics of any dwelling to be built by the covenantor.25 The covenantor is not to construct a dwelling without the covenantee’s approval of its exterior plans and colours. In this way the covenant gives the covenantee some control over the aesthetics of the covenantor’s home, but not complete control. Although the covenantee’s views on aesthetics might be inherently subjective, it must not withhold consent unreasonably.
[90] What is reasonable is a question of fact and degree in each case. Context is important. The covenant operates between neighbours. It runs with their land. Both Repotane’s property and 420A are large sites in an area that is developing but still semi-rural. The covenant expressly contemplates that the covenantor will construct a “dwelling” – a home where people live. Covenantors will inevitably have their own views about design and colour. Indeed, Repotane’s marketing material suggested to prospective purchasers that they would have “a unique opportunity to build your dream home … with limited covenants … to suit your lifestyle”. Mr Cornegé sought to dismiss this marketing material as mere puffery. But at the very least it reinforces that a notional covenantee would expect a covenantor to build a home that reflected their own tastes.
[91] In these circumstances, I agree with Lewison LJ in Hicks v 89 Holland Park (Management) Ltd26 and the statement of principle subsequently derived by the High Court in Davies-Gilbert v Goacher.27 It is not enough for the covenantee to say that the proposed dwelling was not to its taste when withholding consent on aesthetic grounds, because this would be entirely subjective. It would render meaningless the covenantee’s obligation not to withhold consent unreasonably. Reasonableness is an
25 Repotane v Hart, above n 3, at [55].
26 Hicks v 89 Holland Park (Management) Ltd , above n 13, at [56].
27 Davies-Gilbert & Goacher, above n 24, at [48].
objective standard, determined with reference to what the notional hypothetical covenantee would consider reasonable if he or she were in the covenantee’s position. Whether Repotane has withheld consent reasonably or unreasonably is to be measured against this objective standard.
[92] In the present case, Repotane withheld consent to the Harts’ plans essentially because Ms Waddell does not like them. In her opinion, the Harts’ home will be too boxy, too modern, and not suited to the country. These are her subjective views. As noted, Mr Cornegé submitted that it is not unreasonable for Ms Waddell to hold those views. But that is not the test. Ms Waddell’s subjective views might well be rational, but the test is whether it was reasonable for Repotane to withhold consent because Ms Waddell holds those views.
[93] There is no suggestion that the Harts’ home will devalue Repotane’s property. In terms of amenity, there is no suggestion that the Harts’ home will interfere with the views or the light that can be enjoyed from Repotane’s property. The home has been carefully and skilfully designed. It has architectural merit and it will be constructed with high-quality materials. It might not be to Ms Waddell’s taste, but there is no suggestion it is inherently objectionable. It does not fall within Ms Waddell’s (possibly hyperbolic) category of “pink palaces”.
[94] I also note that Ms Waddell’s complaint that the Harts’ home will not be “at home in the country” runs up against her separate complaint that it is too similar to 424B and Armistead Lane. Evidently, the Harts’ home is not out of keeping with other homes in the area.
[95] I do not accept Mr Cornegé’s submission that Ms Hart’s pre-contractual discussions with Ms Wenham entitled Repotane to withhold consent based on Ms Waddell’s subjective views. In circumstances where Repotane was selling the section by deadline sale, it is understandable that Ms Hart might ask about Ms Waddell’s preferences. However, the covenant is to be interpreted objectively, and I do not consider that those discussions qualify Repotane’s obligation not to withhold consent unreasonably.
[96] For these reasons, I accept Mr Braun’s submission that Repotane has unreasonably withheld its consent to the Harts’ plans. Repotane’s claim is dismissed. It is unnecessary to consider the Harts’ affirmative estoppel defence.
Counterclaims
[97]The Harts counterclaim. They allege three causes of action.
[98] First, the Harts allege that Repotane has breached the covenant by unreasonably withholding consent. They seek an order requiring the plaintiff to consent to their plans. They also seek damages in the amount of $1,109,509 (including GST) for costs associated with construction delays, together with interest pursuant to s 10 of the Interest on Money Claims Act 2016.
[99] For the reasons set out above, I find that Repotane has breached its obligation under the covenant not to unreasonably withhold its consent to the Harts’ plans. On that basis, rather than order that Repotane provide its consent, I consider it appropriate to make an order under s 313(1) of the PLA that the Harts are entitled to proceed without Repotane’s consent.
[100] The Harts also sought damages compensatory in the amount of $1,109,509. Their claim was based on quantity surveying evidence estimating costs associated with possible site and material deterioration, construction cost increases, and additional finance costs over a 15-year term. However, the evidence does not satisfy me to the necessary standard that the Harts have or will suffer losses in the sums alleged. Their claim for damages is dismissed.
[101] In their second cause of action, the Harts seek damages under s 35 of the CCLA. In their third cause of action, they seek damages for a breach of the FTA. In each case, the Harts alleged misrepresentations by Repotane about its requirements for approval under the covenant. However, the Harts pursue each of the second and third causes of actions only in the alternative, if Repotane’s claim against them is upheld and their first counterclaim is dismissed. I do not need to consider those alternative causes of action further.
Result
[102]The plaintiff’s claim against the defendants is dismissed.
[103] The defendants’ counterclaim against the plaintiff for breach of its obligations under the covenant succeeds in part. The plaintiff has unreasonably withheld its consent to the plans presented to it by the defendants. I make an order pursuant to s 313(1) of the Property Law Act 2007 that the Harts may proceed to construct their dwelling in accordance with those plans, notwithstanding that the plaintiff has withheld its consent.
Costs
[104] The defendants are entitled to costs. I encourage the parties, with the assistance of their experienced counsel, to reach agreement. If that is not possible, the defendants are to file written submissions of not more than five pages (excluding attachments) within 20 working days. The plaintiff is to respond within a further 15 working days. Unless I require anything further, I will deal with costs on the papers.
Robinson J
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