Sidwell Developments Limited Partnership v Top Dream Development Ltd - [2024] NZHC 1928

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-388

[2024] NZHC 1928

UNDER ss 316 and 317 Property Law Act 2007

IN THE MATTER

of an application for an order that covenant D045783.3 be modified under s 317 of the Property Law Act 2007

BETWEEN

SIDWELL DEVELOPMENTS LIMITED PARTNERSHIP

Applicant

AND

TOP DREAM DEVLEOPMENT LTD

First Respondent

FULTON HOGAN LAND DEVELOPMENT LTD
Second Respondent

SIMON LEO ANDREW, JODIE ANN MARGARET ANDREW and NICHOLAS INDEPENDENT TRUSTEE CO LTD

Fourth Respondent

Judgment:

(On the papers)
15 July 2024

JUDGMENT OF BREWER J

(Costs)

This judgment was delivered by me on 15 July 2024 at 10.30 am pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Greenwood Roche (Auckland) for Applicant
Thorn Law Ltd (Auckland) for Fourth Respondents

SIDWELL DEVELOPMENTS LIMITED PARTNERSHIP v TOP DREAM DEVLEOPMENT LTD [2024] NZHC 1928 [15 July 2024]

Introduction

[1] On 23 April 2024 I gave judgment in favour of the applicant, Sidwell Developments Limited Partnership (Sidwell)1 and granted its application under ss 316 and 317 of the Property Law Act 2007 (PLA) to remove a restrictive covenant. The covenant Sidwell sought to extinguish was registered against six titles. The fourth respondents (the respondents, the owner of Lot 3) opposed the application, which was directed to Lot 6.

[2] The two major issues I determined in favour of Sidwell were that the covenant was to be extinguished and the respondents were not entitled to compensation.

[3]In the judgment I said:

[69] There are issues as to costs. The fourth respondents submit that if they are unsuccessful they should nevertheless not be liable for costs. The applicant is to file its memorandum no later than 30 working days from the date of this Judgment. The fourth respondents are to file their memorandum no later than 20 working days after receipt of the applicant’s memorandum.

[4]This judgment determines costs.

Costs

[5] The general principle that costs in civil litigation follow the event does not apply in proceedings brought under s 317 of the PLA where the unsuccessful party opposed extinguishment or modification.2 In the High Court, Katz J observed:
[11] … a party who opposes extinguishment or modification of a covenant starts from the position of being “in the right”. In opposing the application they are seeking to protect their existing legal rights. For that reason the normal rule that costs follow the event does not apply. A respondent who unsuccessfully opposes an application to extinguish or modify a covenant should generally not have to pay the applicant’s costs, unless he or she has acted unreasonably.

[6]The Supreme Court in Synlait Milk Ltd v New Zealand Industrial Park Ltd

endorsed Katz J’s observations.3 The Supreme Court considered that the respondent

1     Sidwell Developments Limited Partnership v Top Dream Developments Ltd [2024] NZHC 899.
2      North Holdings Development Ltd v WGB Investments Ltd [2014] NZHC 1175 at [11].
3      Synlait Milk Ltd v New Zealand Industrial Park Ltd

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 1928
Decision Date: 15 July 2024

CaseChat Overview and Summary

Sidwell Developments Limited Partnership sought to extinguish a restrictive covenant over Lot 6, which was registered against six titles. The fourth respondents, the owners of Lot 3, opposed the application. The court had to determine whether the covenant should be extinguished and, if so, whether the respondents were entitled to compensation. The court also had to decide the issue of costs, particularly whether the respondents should bear any of the applicant's costs for opposing the application.

The central legal issues in this case were whether the covenant was outdated and should be removed and whether the respondents were entitled to compensation if the covenant was removed. The court also needed to determine whether the respondents' opposition to the application was reasonable and, if so, whether they should be liable for any costs. The court had to balance the principle that costs follow the event against the principle that a party opposing the removal of a covenant starts from the position of being "in the right".

The court found that the covenant was outdated and should be removed, and that the respondents were not entitled to compensation. The court held that the respondents acted reasonably in opposing the application. The court found that the respondents' arguments were genuine and not unreasonable, and that they were entitled to defend their existing legal rights. The court also found that it was not unreasonable for the respondents to reject the applicant's offer to settle and to seek compensation. Accordingly, the court held that costs should lie where they fell.

The court's decision was that costs were to lie where they fell. The court found that the respondents did not act unreasonably in opposing the application and therefore should not be liable for the applicant's costs. This decision was based on the principle that a party opposing the removal of a covenant starts from the position of being "in the right", and that there must be some unreasonableness on the part of the respondent to justify an adverse award of costs.

Orders