South Pacific Tyres N.Z. Limited v Powerland (NZ) Limited HC Wellington CIV 2008-485-427

[2008] NZHC 2331

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2008-485-427

BETWEEN  SOUTH PACIFIC TYRES N.Z. LIMITED Plaintiff

ANDPOWERLAND (NZ) LIMITED Defendant

Hearing:         12 May 2008

Appearances: S Bacon for the plaintiff

G Turkington for the defendant

Judgment:      16 May 2008 at 11.30 am

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by Associate Judge Gendall on 16 May 2008 at

11.30 a.m.  pursuant to r 540(4) of the High Court Rules 1985.

Solicitors:           Izard Weston, Solicitors, PO Box 5348, Wellington

Upper Hutt Law, Solicitors, PO Box 40 501, Upper Hutt

SOUTH PACIFIC TYRES N.Z. LIMITED V POWERLAND (NZ) LIMITED HC WN CIV 2008-485-427 16

May 2008

Introduction

[1]      The plaintiff seeks summary judgment against the defendant with respect to a Covenant the parties entered into on 2 October 2002 (“the Covenant”). The plaintiff says that the Covenant required the defendant to register a “Transfer Creating a Restrictive Covenant” (“the Transfer”) against a property that the defendant owned at that time, being Certificate of Title 26D/355 Wellington Registry (“the Powerland land”). Powerland has purported to unilaterally cancel the Covenant on the grounds of illegality.

[2]      Specifically,   the   plaintiff   seeks   an   order   requiring   the   defendant   to specifically perform the Covenant by registering it against the Powerland land. The plaintiff also seeks costs.

[3]      In  addition,  the  plaintiff  seeks  an  order  to  prevent  the  lapse  of  caveat

536953.1  (“the  Caveat”)  lodged  against  the  Powerland  land.  This  caveat  was intended to protect the plaintiff’s interests in the Covenant.   Before me the parties were agreed that the caveat application need only be considered if the plaintiff is unsuccessful in its present summary judgment application.

[4]      Both the summary judgment application and the application for an order to prevent the lapse of the Caveat are opposed by the defendant.

Background Facts

[5]      The plaintiff is a tyre manufacturing company. At the time the Covenant was executed, the plaintiff owned land in Upper Hutt totalling 22.2 hectares (“the SPT land”) adjoining the Powerland land.  As I understand the position, the SPT land had been the site of tyre manufacturing facilities since 1948 and that both the SPT land and the Powerland land are zoned “Business Industrial” under the Upper Hutt City Council (“UHCC”) District Plan.

[6]      In August 2002, the plaintiff apparently became aware that the defendant was planning  to  develop  the  Powerland  land  for  residential  purposes.    Around  6

September 2002 the defendant notified the UHCC of its plans to build a “residential dwelling” on the Powerland land. (I understand that the residential dwelling was already near to completion at this time.) The UHCC was prepared to approve the

defendant’s resource consent application made at the time on the basis that the plaintiff consented to the application in terms of the Resource Management Act 1991 (“the RMA”).   As  I understand  it,  this  residential  use  and  development  by the defendant would not have been permitted in this fashion at the time without the consent of the plaintiff.

[7]      The plaintiff’s solicitor wrote to the defendant’s then-solicitors around 12

September 2002, stating that the plaintiff was prepared to consent to the defendant building the residential dwelling if:

•    A  memorandum  of  encumbrance  in  relation  to  noise  and  smell  was entered into;

•    This memorandum was registered against the certificate of title for the

Powerland land such that it would run with the land; and

•    No more dwellings were to be built on the Powerland land.

[8]      After some correspondence, the defendant agreed to the first two conditions and the plaintiff accepted this. The defendant’s (then) solicitors then drafted the Covenant and the Transfer.

[9]      Clauses 1 to 5 of the Covenant stated as follows:

“1.Powerland will allow SPT to carry on its operations and activities without interference or restraint from Powerland.

2.Powerland will not in any way inhibit SPT from carrying out any activities pursuant to any existing use or rights under section 10 of the RMA or pursuant to any other industrial activity on the land likely to be approved by the Upper Hutt City Council under the current or replacement District Plan.

3.        Powerland will not bring any proceedings for damages.

4.Powerland  will  make  no  complaint  or  submission  or  rejection relating to the effects of the use of SPT’s land.

5.        Powerland will not:

a.    make nor lodge; nor

b.    be party to, nor;

c.    finance nor contribute to the cost of any submission, application, proceeding (either under the RMA or otherwise) designed or intended to limit, prohibit or restrict continuation of the current or future uses of SPT’s land including without limitation  any action to require SPT to modify the current or future uses carried out within SPT’s land.

(my emphasis)

[10]     The Covenant here is an example of what has been broadly termed a “reverse sensitivity covenant” or “no complaints covenant”. For example, the inclusion of such covenants as conditions on resource consents is discussed by Mr Asher Davidson in “Reverse Sensitivity – Are No-Complaints Instruments a Solution?” (2003) 7 New Zealand Journal of Environmental Law 203. Mr Davidson explains that reverse sensitivity covenants are now being used on an increasingly common basis as an attempt at a “win-win” solution in situations where there is a land-owner engaging in an existing “effects-producing” activity (ie. one that has unavoidable adverse effects) and neighbouring land-owners wish to obtain a resource consent to develop their property.   These arrangements are considered desirable because the effects-producing activity may be a beneficial and necessary activity – such as, for example, an airport, a refuse station or (as here) a tyre manufacturing plant. Without such a Covenant, new residents of nearby land may subsequently complain about the effects of the activity, with the potential for the activity to be shut down or excessively curtailed.

[11]     The Covenant and Transfer were executed around 2 October 2002 and, on this date, the plaintiff also consented to the defendant’s resource consent application. Then, the Covenant and Transfer were sent to the defendant’s solicitors for registration against the Certificate of Title for the Powerland land.

[12]  The defendant’s resource consent was granted by the UHCC on 2 October

2002.

[13]  Almost immediately thereafter, on or about 4 October 2002, the defendant indicated to the plaintiff that it intended to unilaterally cancel the Covenant. Three

days later, on 7 October 2002, as I understand the position, the defendant complained to the UHCC about noise it says was created by the plaintiff. In December 2002, the defendant served draft Environment Court proceedings on the plaintiff. In the end, these were not filed.

[14]  On 3 March 2008 the plaintiff filed its present statement of claim. It alleges first that the defendant has unlawfully purported to cancel the Covenant, secondly, it has refused or failed to perform its obligations to register the Transfer against the Powerland land, and thirdly it has refused to deliver up the original Transfer to the plaintiff to allow the plaintiff to register the Transfer in its stead. The plaintiff says that it has performed all of its obligations under the Covenant and seeks an order requiring the defendant to specifically perform the Covenant by registering the Transfer.

[15]  The statement of defence (filed 21 April 2008) indicates that the defendant defends this proceeding on the basis that the Covenant is illegal under the Illegal Contracts Act 1970 (the ICA) in that it contravenes the RMA (in particular, ss 16 and 17).

[16]  In the present application, filed on 3 March 2008, the plaintiff seeks summary judgment against the defendant on the basis that the defendant has no defence to the plaintiff’s claim.

[17]  Finally, I note that both the defendant and the plaintiff have subsequently sold the land that is relevant to these proceedings (ie. the Powerland land and SPT land respectively). However, the parties are agreed that this does not affect these proceedings and I have consequently decided this application on that basis.

The Resource Management Act 1991

[18]  It is useful to set out a brief summary of the relevant provisions of the RMA.

[19]  The  purpose  of  the  RMA  is  stated  in  s  5(1)  as  being  to  “promote  the sustainable management of natural and physical resources”. “Sustainable management” is defined in s 5(2) as meaning:

“Managing the use, development, and protection of natural and physical resources in a way, or at a rate, which enables people and communities to provide for their social, economic, and cultural wellbeing and for their health and safety while—

(a) sustaining the potential of natural and physical resources (excluding minerals)   to   meet   the   reasonably   foreseeable   needs   of   future generations; and

(b) safeguarding the life-supporting capacity of air, water, soil, and ecosystems; and

(c)  avoiding, remedying, or mitigating any adverse effects of activities on the environment.”

[20]  As part of achieving this purpose, the RMA sets out various duties in Part 3. Among these are, for example, the following duties:

•     Duty not to discharge contaminants into the environment – s 15.

•     Duty of occupier of land to avoid unreasonable noise – s 16.

•Duty of occupier of land to avoid, remedy, or mitigate any adverse effects on the environment that are associated with their use of their land – s 17.

[21]  Section 9 also imposes a restriction against any person using land in a manner that contravenes a rule in a district plan or proposed district plan unless the activity is either expressly allowed by a resource consent or a permitted existing use allowed by s 10 or s 10A.

[22]  In Part 12 of the RMA, s 316 provides that certain persons may apply to the Environment Court for various “enforcement orders” as specified in s 314. Specifically, “any person” may apply for an order under s 314(1)(a) to (d). These orders include, for example, an order requiring a person to cease doing something that contravenes the RMA, associated regulations or a resource consent, or which is

likely to be noxious, dangerous, offensive, or objectionable to such an extent that it has or is likely to have an adverse effect on the environment (s 314(1)(a)).

[23]  Alternatively, an “enforcement officer” may issue an abatement notice under s

322.  For  example,  s  322(1)(a)  provides  for  a  notice  to  similar  effect  as  an enforcement order under s 314(1)(b). An enforcement officer is someone authorised as such by a local authority to carry out the functions and powers of an enforcement officer under the RMA (ss 2 and 38).

[24]  Section 17(3) explicitly refers to the possibility of obtaining an enforcement order or abatement notice to enforce the duty to avoid, remedy, or mitigate adverse effects.

[25] Section 338(1) specifies certain offences against the RMA, including, for example, a breach of ss 9 and 15 or any enforcement order or abatement notice (with one exception). Section 338(4) provides that:

“Notwithstanding anything in the Summary Proceedings Act 1957, any information in respect of any offence against subsection (1) of this section may be laid by any person at any time within 6 months after the time when the  contravention  giving  rise  to  the  information  first  became  known,  or should have become known, to the local authority or consent authority.”

The Illegal Contracts Act 1970 (“ICA”)

[26]     An “illegal contract” is defined in s 3 of the ICA in the following terms:

“Subject to section 5 … any contract … that is illegal at law or in equity, whether  the  illegality  arises  from  the  creation  or  performance  of  the contract;  and  includes  a  contract  which  contains  an  illegal  provision, whether that provision is severable or not.”

[27]     Section 5 states that:

“A contract lawfully entered into shall not become illegal or unenforceable by any party by reason of the fact that its performance is in breach of any enactment, unless the enactment expressly so provides or its object clearly so requires.”

[28]  If a contract is illegal or contains an illegal provision, the whole contract will be illegal, and will be of no effect, notwithstanding any rule of law or equity to the contrary: s 6. However, the Court has power to grant relief under s 7.

[29]  Lastly, relevant to the present proceedings is s 11(1)(b), which provides that the ICA does not affect the law relating to contracts, or provisions of contracts, which purport to oust the jurisdiction of any Court (except as regarding restraints of trade). As such, the common law continues to apply with respect to such contracts.

Counsel’s arguments and my decision

[30]     Rule 136(1) of the High Court Rules provides for the jurisdiction to grant summary judgment:

“(1)  The Court may give judgment against a defendant if the plaintiff satisfies the Court that the defendant has no defence to a claim in the statement of claim or to a particular part of any such claim.”

[31]  The onus is clearly on the plaintiff to satisfy the Court that the defendant has no defence to the claim – McGechan on Proceedure at HR136.04. In Pemberton v. Chappell [1987] 1 NZLR 1, 3 Somers J commented on what this onus requires as follows:

“At the end of the day Rule 136 requires that the plaintiff “satisfies the Court that a defendant has no defence”. In this context the words “no defence” have reference to the absence of any real question to be tried. That notion has been expressed in a variety of ways, as for example no bona fide defence, no reasonable ground of defence, no fairly arguable defence…

Where the only arguable defence is a question of law which is clear-cut and does not require findings on disputed facts or the ascertainment of further facts the Court should normally decide it on the application for summary judgment, just as it will do so on an application to strike out a claim or defence before trial on the ground that it raises no cause of action or no defence: cf R Lucas & Son (Nelson Mail) Ltd v O'Brien

[1978] 2 NZLR 289; and see European Asian Bank AG v Punjab and

Sind Bank [1983] 2 All ER 508, 516. …”

[32]  The Court is entitled to take a robust approach to cases involving summary judgment, and to dismiss defences which do not stand up to scrutiny.  As to this, in Bilbie Dymock Corporation Ltd v Patel (1987) 1 PRNZ 84 at 85-86 the Court said:

“But the need for judicial caution has to be balanced, when considering a summary judgment application, with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case.  In the end it can only be a matter of judgment on the particular facts.”

[33]  Here, the defendant has limited its defence to one primary issue – namely, whether the Covenant is an illegal contract. This is a discrete question of law involving no disputed questions of fact. As such, this proceeding in my view is well suited to determination by summary judgment.

[34]  The defendant submits that the Covenant is illegal under the ICA on the basis that it restricts the defendant from complaining about, and enforcing orders against, any activities carried out by the plaintiff which are unlawful under the RMA. Specifically, the defendant says that the Covenant ousts the defendant from making complaints  to  the  Environment  Court  under  Part  12  of  the  RMA  in  respect  of statutory duties imposed on the plaintiff under ss 16 and 17, it restricts the defendant from proceeding to the Court in respect of other duties under Part 3 of the RMA, and it  restricts  the  defendant  from  lodging  an  information  under  the  Summary Proceedings Act 1957 (“the SPA”) in respect of offences arising by a failure by the plaintiff to observe any enforcement order, abatement notice or breach of its duties as provided by s 338 of the RMA.

[35]  The defendant says that “it is inimical to the public interest that it be prevented from complaining about those duties…which are to promote the safety and health of persons living in the vicinity and ensure that the integrity of principles of the RMA are preserved”. It says that the importance of health and safety and averting or mitigating adverse environmental effects is illustrated by the s 5 purposes of the

RMA, and that the Court should be very slow to restrict persons from coming to the

Court when these purposes are at risk.

[36]  As  such,  the  defendant  says  that  the  Covenant  “cannot  trump  the  duty provisions of the RMA” (and, in particular, ss 16 and 17). In this respect, the defendant relies on either:

•     The common law of ouster (as preserved by s 11(1)(b) ICA), or

•Section 5 ICA, under which a contract will be illegal by reason of the fact that its performance is in breach of an Act if the Act’s object “clearly so requires”. (The defendant acknowledges that the RMA does not explicitly provide that a contract will be illegal in such a case.)

Illegal for ousting the jurisdiction of the Courts?

[37]  One clause in the Covenant attracts immediate attention.   This is clause 4 which restricts Powerland from making any complaint or submission or rejection relating to the effects of the use of SPT’s land.  From this clause and the Covenant generally, it is clear that the Covenant precludes the defendant from applying under s

316 of the RMA to enforce the plaintiff’s duties under  ss 16 and 17 – ie. that the Covenant cannot be read down to allow the defendant (as “any person”) under s 316 to make a complaint under the RMA or seek an enforcement order.

[38]  The common law of ouster, as preserved by s 11(1)(b) ICA, is described in

Burrows Finn & Todd Law of Contract in New Zealand (3ed 2007) at para 13.3.2:

“It has long been established that a contract which purports to destroy the rights of one or both of the parties to submit questions of law to the Courts is contrary to public policy and is pro tanto void. (Footnotes excluded).”

[39]  The learned authors cite examples of this common law precept, including “a series of older” family law decisions involving covenants by wives to accept fixed maintenance sums, cases involving covenants not to commence litigation, and cases with covenants allowing access to the Courts but imposing some detriment on a party. Burrows Finn & Todd also note the application of this rule in situations where a club or society attempts to restrict members to having all disputes determined

within the club or society. In this respect they quote the following comment of Lord

Denning in Lee v Showmen’s Guild of Great Britain [1952] 2 QB 329 at 342:

“Parties cannot by contract oust the ordinary Courts from their jurisdiction

… They can, of course, agree to leave questions of law, as well as questions of fact to the decision of the domestic tribunal. They can, indeed, make the tribunal the final arbiter on questions of fact, but they cannot make it the final arbiter on questions of law. They cannot prevent its decisions being examined by the Courts. If parties should seek, by agreement, to take the law out of the hands of the Courts and put it in the hands of a private tribunal, without any recourse at all to the Courts in cases of error of law, then the agreement is to that extent contrary to public policy and void.”

[40]  The defendant submits that the concept of ouster applies as regards to access to both criminal and civil courts – and, indeed, to specialist tribunals.

[41]  The defendant contends that the Courts will jealously guard any restriction on access to its remedies on the grounds of the public interest, and that, even in arbitration cases (where the Courts have been willing to allows parties to contract out of litigating before the Court) there continues to be an exception to ouster infringing principles injurious to the public good. Thus, in CBI NZ Ltd v Badger Chiyoda [1989] 2 NZLR 669 at 679, Cooke P suggested this may arise where there is “manifest inequality of bargaining power or exploitation of a monopoly trade position or the like, so that one party is virtually forced to submit to an ouster or waiver clause”.

[42]  In response, the plaintiff contends that the cases cited by Burrows Finn & Todd are limited.  As has been noted above, it is clear they do involve “older family law concepts” and concepts relating to societies and clubs – each of which, the plaintiff contends,  have  other  policy reasons  why the  Court’s  jurisdiction  should  not  be excluded.

[43]  The plaintiff submits further that the common law here focuses on questions of law and not questions of fact – ie. that the law does not preclude agreements that waive statutory or common law rights provided that the agreement does not purport to prevent the Court from considering questions of law. The plaintiff notes that the

Environment Court does not, in exercising its enforcement jurisdiction, determine questions  of  law.  Instead,  the  Court  decides  whether,  as  a  matter  of  fact,  an occupier’s actions are those which the Court can prohibit or require the occupier to cease under s 314(1)(a) of the RMA. As such, the plaintiff says that s 11 and the common law rule are irrelevant.

[44]     The plaintiff does concede that agreements not to report, or to hinder the prosecution of,  a criminal offence are illegal: Polymer Developments Group Ltd v Tilialo [2002] 3 NZLR 258 (HC). However, the plaintiff submits that a breach of ss

16 or 17 of the RMA does not amount to a criminal act but is simply a breach of duty. Similarly, enforcement action under the RMA is neither criminal nor quasi- criminal but is a remedy provided  to enforce public duties.  In  this  respect,  the plaintiff notes that in Conway v Auckland Regional Council [2007] NZRMA 252, the High Court confirmed that the RMA gives the Environment Court the same powers that a District Court has in the exercise of its civil jurisdiction. The plaintiff submits that the effect of the Covenant here is the same as a settlement agreement in a civil action or an agreement in which a party waives his/her statutory right to freedom of expression – both of which are enforceable: Polymer Developments Group at [99]; and Christchurch International Airport Ltd v Christchurch City Council [1997] 1

NZLR 573. In Polymer Developments Group the Court severed from the agreement the reference to criminal proceedings, leaving the agreement not to bring civil proceedings in existence.

[45]  Moreover, the plaintiff submits that the Covenant, as an agreement within the particular context of a residential dwelling built in an industrially zoned area, is very different from a bald statement attempting to oust the jurisdiction of the Court(s) over the parties or their agreement. The plaintiff contends that the Covenant only prevents the defendant from applying to the Environment Court; it does not have the effect of “destroying the right of [the defendant] to submit questions of law to the Courts” – as the present proceeding would appear to illustrate clearly.

[46]  The plaintiff also submits that the Environment Court’s jurisdiction to make an enforcement order against the plaintiff is unaffected – all that the Covenant does is to prevent the defendant from applying for such an order. It is quite possible that the UHCC, for example, might apply in appropriate circumstances.

[47]  The  plaintiff  says  that  the  “Covenant  does  no  more  than  record  that Powerland  has  waived  its  statutory  right to  apply  for  an  enforcement  order  in accordance with section 316 of the RMA”. The plaintiff submits that the Courts have recognised the right of an individual to surrender personal rights, and “have done so in contexts much more closely aligned to the present scenario than the cases referred to in”  Burrows Finn & Todd – citing Christchurch International Airport at 584-584 and Ports of Auckland v Auckland City Council [1999] 1 NZLR 601 (CA). The plaintiff contends that the “right” to apply for an enforcement order under s 316 is a “right” that may be waived. It is submitted that it is not a right that is incapable of surrender for reasons of public policy.

[48]  Weighing  up  all  these  matters,  I  am  satisfied  here  that  the  effect  of  the Covenant is not to oust the jurisdiction of the Court in such a way that it is in breach of the common law as saved by s 11(1)(b) of the ICA. I am persuaded by the plaintiff’s submissions that the rule applies to agreements purporting to exclude the Court’s  jurisdiction  to  determine  questions  of  law,  and  that  this  is  not  such  a situation. Indeed, as the plaintiff notes, the present application as to the efficacy of the Covenant recognises that the Court retains jurisdiction on questions of law. I am satisfied that the true effect of the Covenant is more akin to a settlement agreement between parties in a dispute. Here, the defendant has simply waived its right to complain  under  the  RMA  (amongst  other  things)  in  return  for  the  plaintiff consenting to the residential dwelling. The Environment Court may still hear applications under s 316 RMA and issue enforcement orders under s 314 RMA; the effect of the Covenant is merely that the defendant has surrendered its right to be the person who brings such an application.

[49]  The question remains therefore whether this is a right that may be waived by the defendant.

[50]  In Christchurch International Airport rural land-owners near the Christchurch International Airport applied to the Christchurch City Council (“CCC”) for consent to erect dwellings on their land. Christchurch International Airport Ltd (“CIA Ltd”) sought a condition “that the consent would enure only so long as the consent holder was not annoyed by airport noise and did not complain about such noise”. The CCC thought that such a condition would breach s 14 of the New Zealand Bill of Rights

Act 1990 – the right to freedom of expression. However, Tipping J held (at 584) that where the person who is the subject of the condition consents, and waives his/her right to freedom of expression, the condition cannot be said to breach the New Zealand Bill of Rights Act 1990.

[51]  In response, the defendant, submits that Christchurch International Airport does not support the plaintiff’s case in that the Court was “not for the present concerned with reasonableness or the power to impose such a condition and Covenant for resource management purposes” and only considered whether the condition breached s 14 of the New Zealand Bill of Rights Act 1990 (per Tipping J at

584).

[52]  The defendant also noted Mr Davidson’s doubts in his Reverse Sensitivity Covenants article (as expressed at 223) as to whether the Covenant in Christchurch International Airport would be considered reasonable in any event. However, it is clear that Mr Davidson was referring to the specific type of condition in that case – namely, a condition that the resource consent would be automatically withdrawn if the “no complaints” Covenant was breached. As Mr Davidson notes, this could disentitle a complainant from living in their own home and could also affect other persons such as other building owners covered by the resource consent or any lessee of the building. The Covenant here is not such a Covenant and therefore I do not need to consider this submission further.

[53]     Ports of Auckland is also cited by both the plaintiff and defendant. The plaintiff says that this case is authority for the proposition that persons may waive their rights under the RMA and that “no complaints” conditions in resource consents have been found to be valid and enforceable. Conversely, the defendant submits that the Court in that case held that, although a party may surrender personal rights, this does not include rights to complain about unlawful activity. In support of this, the defendant quotes Baragwanath J (at 612) that “[n]o condition may be imposed which would abrogate the rights conferred by statute” and that “the principle that a citizen is not lightly to be deprived of access to justice is deep-seated”.

[54]  However, in my view, this quote does not catch the whole of the learned

Judge’s view, as is apparent from this longer passage (at 612-613):

“I am of the view that while a Full Court has decided that a party may surrender personal rights (see Christchurch International Airport Ltd v Christchurch City Council [1997] 1 NZLR 573 at pp 584 – 585), neither a council nor this Court may order an unwilling party to surrender,  as  a condition under s 108, the right as affected party to receive notice of an application under s 93(1)(e), to make submissions under s 96, and to appeal under s 120. Pointers to this conclusion are first that the statute is to be read as a whole, and its provisions as consistent with one another. No condition may be imposed which would abrogate the rights conferred by the statute. Secondly, the principle that a citizen is not lightly to be deprived of access to justice is deep-seated. In R v Lord Chancellor, ex parte Witham [1998] QB

575, the Divisional Court struck down as being unconstitutional and ultra vires fees increased by the Lord Chancellor with the concurrence of the Lord Chief Justice, the Master of the Rolls, the President of the Family Division and the Vice-Chancellor which infringed the fundamental right of access to Courts. That principle applies equally in New Zealand. There is no jurisdiction under the guise of a condition to protect the port company in that fashion …

I therefore do not accept the proposal by … that such a Covenant might be employed, at least without the consent of the applicant which has not been forthcoming.” (my emphasis)

[55]  It must be acknowledged that public participation is a major idea underlying the RMA: Murray Whakatane District Council [1997] NZRMA 433 and Re Vivid Holdings Limited [1999] RMA 467 at 478. Moreover, I am persuaded that Ports of Auckland (at 612) is authority for the proposition that people cannot be compelled to give up their rights under this Act.

[56]  However, I am not of the view that the rights of persons to participate under the RMA cannot be waived by a person who freely contracts to do so. This is apparent from both the case law and as a matter of principle.

[57]  In Christchurch International Airport, the stated issue was, whether a “no complaints” condition breached s 14 of the New Zealand Bill of Rights Act 1990. There, Tipping J commented (at 583-585) on this in the following terms:

“The Bill of Rights gives individual citizens particular rights and freedoms. It would seem somewhat contradictory to say that such rights and freedoms may not be given up for what the person concerned regards as valid reasons. The concept of freedom presupposes not only that you are free to enforce your right but that you are free not to enforce it and to waive it, if you choose to do so. For example the right to legal advice under s 23(1)(b) may be waived. There seems to me to be something inherently unsound in saying that a person's rights have been breached when that person has voluntarily indicated that he/she does not wish pro tanto to assert them. Why should those concerned be deprived of their freedom to express themselves in that way?

…

I am of the view that if the person, the subject of the condition/Covenant is prepared to consent thereto, it cannot be said that the condition/Covenant falls foul of the Bill of Rights Act. The simple reason is that the person concerned has voluntarily given up pro tanto the relevant rights affirmed under the Bill of Rights Act and such rights are not, in my view, rights which should be regarded as incapable of surrender for reasons of public policy. I can see no reason of public policy why someone should not surrender pro tanto his/her rights under s 14 in return for what is considered to be a sufficient advantage to make it appropriate to do so.

There is nothing inherently inimical in surrendering pro tanto one's freedom of expression. Commercial documents and settlements of litigation frequently contain clauses whereby each party pro tanto surrenders his/her freedom of expression. They do so because the parties regard it as commercially advantageous  or  appropriate  for  other  reasons  to  do  so.  It  would  be  a bizarre conclusion to hold that a confidentiality agreement of this kind was unenforceable because it fell foul of s 14 of the Bill of Rights Act. I can see no difference in principle between a pro tanto surrender of one's rights in the context of a confidentiality agreement and a pro tanto surrender of one's rights for the purpose of securing a resource management consent. It would be unduly paternalistic and precious to say that this is a kind of right which people should not be allowed to surrender for what they see as their own advantage.” (my emphasis)

[58]  In my view, this case provides clear authority for the proposition that persons can waive their rights and enter into “no complaints” covenants provided that the rights are  not  “rights  which  should  be  regarded  as  incapable  of  surrender  for reasons of public policy”.

[59]  In Rowell v Tasman District Council [2001] NZRMA 202, a quarry company opposed a resource consent application seeking consent to subdivide a nearby property on the basis that it would give rise to a potential conflict between the residents and the legitimate activities of the quarry. The quarry company and the property owner, a Mr Nurse, agreed that an easement would be granted over Mr Nurse’s property giving the company the right to emit noise and dust and to allow such emissions to escape onto Mr Nurse’s property, and preventing Mr Nurse (and his successors) from complaining about the quarry. The Council granted the resource consent on this condition. Other property owners (who also wanted to subdivide) objected to the condition.

[60]  Speaking in the context of an argument that s 14 of the New Zealand Bill of Rights Act 1990 had been breached, the Court said (at 254) it had no doubt that the applicant, who had “freely consented on an informed basis” to the imposition of the easement, was entitled to give up his rights of public participation under the RMA. Neazor J also commented (at 255) on an argument that the condition was contrary to the principle of public participation under the RMA in the following way:

“… it was alleged that the decision was unreasonable because it was in conflict with the principles and objectives of the Resource Management Act, in particular in discouraging public participation in resource management matters  and  taking  away  the  rights  of  neighbours  to  oppose  the  quarry and/or encouraging or facilitating misuse of the Resource Management Act by the quarry.

As to the very last of those propositions, there is not a scintilla of evidence to suggest   that   the   quarry   company   has   or   will   misuse   the   Resource Management Act. Nor is there anything to suggest that the council pressed Mr Nurse as the neighbour involved to give up his rights or otherwise took them from him. Mr Nurse wanted a concession under the Scheme in respect of  which  his  interests  conflicted  with  the  existing  interests  of  another

landowner, and giving the easement and accepting its consequences was the price he was prepared to pay. There is nothing in that inconsistent with the Resource Management Act, a good deal of the activity relating to which, as Mr Beatson submitted, involves balancing the interests of various resource users. …”  (Emphasis added)

[61]  I am likewise satisfied that reverse sensitivity covenants like the Covenant in this case do not contravene the principles or provisions of the RMA. In my view, the rights to public participation in the RMA can be waived by an individual giving free and informed consent – as, clearly, the defendant here did.

[62]  On an individual level, a person can benefit directly from being able to waive such rights in order to obtain consent to develop their land as they so desire.  That happened  in  Rowell  as  Neazor  J  noted.    And  in  the  present  case,  indeed,  the defendant benefited from entering into the Covenant by persuading the plaintiff, as a result, to consent to the defendant being able to obtain the resource consent for its half-built residential dwelling which otherwise would have been withheld. I consider that it would be “unduly paternalistic and precious” to prohibit an individual from surrendering his/her rights of public participation in return for what he/she sees as being  a  “sufficient  advantage  to  make  it  appropriate  to  do  so”  (paraphrasing Tipping J in Christchurch International Airport above).

[63] Therefore, the question becomes whether these are rights that cannot be surrendered on the  grounds  of  public  policy.  The  Covenant  does  not  allow  the plaintiff to contravene the RMA or remove the possibility of RMA duties being enforced. It only precludes the defendant – and its successors in title – from so complaining. If the plaintiff contravenes the RMA, any other person can still apply for an enforcement order and/or the local authority’s enforcement officer can issue an abatement notice.

[64]  I acknowledge that there is a possibility that reverse sensitivity covenants may have the effect of allowing unreasonable adverse environmental effects to continue unimpeded.  This  is  because  the  persons  covenanting  not  to  complain  might otherwise have been the first or most likely people to complain about such effects

(Davidson at 233-234). However, for the following reasons, I am not persuaded that this is enough to render it against public policy to enter into such a Covenant.

[65]  As I see it “no complaints” covenants can be used in fact to advance the public interest in other respects – for example to achieve both of the otherwise conflicting public  interests  in  protecting  the  continued  existence  of  a  necessary  effects- producing activity (such  as  tyre manufacturing)  and  enabling needed  residential development to proceed. Indeed, as noted by Mr Davidson (at 231) and implicit in Tipping J’s remarks in Christchurch International Airport (at 585, ll 16-24), the effect of such covenants can be understood as relegating private property rights – to, for example, sue or object under the RMA – in favour of these two public interests.

[66]  I note also that there is no duty on land-owners like the defendant here to complain under the RMA. As such, it is understandable that the promotion of the RMA’s objectives does not depend on land-owners doing so – there are alternative ways, such as an abatement notice being issued, that can be utilised. The covenant does not, therefore, give the plaintiff license to contravene the RMA – and, indeed, in the words of Neazor J in Rowell, there is not a “scintilla of evidence” in the present case to indicate that the plaintiff has or will attempt to use the covenant to do so.

[67]  I am thus of the view that it is not contrary to public policy that the defendant can  waive  its  rights  of  public  participation  under  the  RMA.  As  such,  in  my judgment, the defendant does not have an arguable defence that the covenant is illegal on the grounds that it ousts the jurisdiction of the Court.

Illegal under s 5 of the ICA?

[68]  In the alternative, the defendant submits that the purposes of the RMA clearly require that a contract be illegal if its performance would breach ss 16 and 17, and thus the covenant is illegal pursuant to s 5 of the ICA.

[69]  From the above discussion, it will be apparent that I am of the clear view that the Covenant does not breach the RMA. As such, this alternative argument also fails. However, for the sake of completeness, I will briefly consider the issue.

[70]  In support of its argument here, the defendant cites Burrows Finn & Todd (at para 13.5.2) to the effect that a statute may imply such a requirement in one of three contexts:

(1)  The Act may prohibit a certain kind of contract, without providing for any particular consequences on entering such a contract – eg. the Human Rights Act 1993 prohibits contracts which discriminate on the prohibited grounds;

(2)  The Act may set out a standard or process which must be followed, without providing for any particular consequences of failing to do so – see Lower Hutt City Council v Martin [1987] 1 NZLR 321; and

(3)  The Act may establish a criminal offence without explicitly providing for contracts entered into in the course of the criminal conduct – eg. the Sale of Liquor Act 1989 and the Misuse of Drugs Act 1978.

[71]  On my understanding, the defendant concedes that these examples do not bear directly on the present case.  It is submitted, however, that the second context may be persuasive here “the more so because remedies are and should be made available on health and safety concerns”.

[72]  The defendant accepts in principle the possibility that persons can enter into reverse sensitivity covenants – that they may give up their rights to, for example, complain about noise: Christchurch International Airport. But, the defendant says that the position is different when the Covenant breaches the RMA duties.

[73]  The defendant contends that there is an overarching public interest in territorial authorities administering the RMA and especially activities that may be described as a nuisance. The defendant says that the Environment Court in Auckland Regional Council v Auckland City Council [1997] NZRMA 205, 214 did not accept that people should be left to “judge their own locational needs”, nor the suggestion that they did not need “protecting …from their own folly”.   The Court held that for a territorial authority to take such  a hands-off approach  when devising rules in  a district plan would be to fail to perform its functions. The defendant contends that this highlights the importance of access to the Environment Court in respect of

covenants that restrict access to the duty provisions. As such, the defendant says that the objects of the RMA clearly requires this to be so.

[74]  Conversely, the plaintiff submits that even if the Covenant did breach the RMA (which it refutes), the objects of the RMA are not such as to clearly require the Covenant to be illegal. The plaintiff again observes that any other person or the local authority would still be entitled to take enforcement action. The plaintiff submits that it is  outside  the  power  of  the  defendant  to  bestow  on  the  plaintiff  an  absolute entitlement to breach ss 16 and 17 (or any other RMA duty), and that the Covenant simply does not have this effect. Therefore the objects of the RMA are upheld.

[75]  Again, I am persuaded here by the plaintiff’s arguments. I do not consider that the defendant’s inability to complain under s 316 will have such an effect on the objectives of the RMA that the RMA clearly requires it to be illegal. The Covenant does not allow the plaintiff to contravene the RMA and there are alternative methods of enforcing the plaintiff’s duties. Moreover, the RMA does not prescribe a process that must be followed – for example the defendant has no duty to complain. The position of the defendant is very different to that of a local authority which has responsibilities to promote and enforce the RMA. Moreover, any health and safety concerns can be met by the alternative enforcement methods.

[76]  Therefore, for these reasons also, I am satisfied that the defendant has no defence to the plaintiff’s claim under s 5 of the ICA.

Section 7

[77]  On the basis of my findings above, it is not necessary to consider whether relief should be granted under s 7 of the ICA.

Orders sought

[78]  The Court retains a discretion as to whether to enter summary judgment even where, as here, the plaintiff has established that the defendant has no defence (r

136(1) of the High Court Rules). McGechan on Procedure at HR136.11 comments on this as follows:

“HR136.11 Court’s Discretion

Rule 136(1) provides that where ‘the plaintiff satisfies the Court that a defendant has no defence’ to the claim, the Court ‘may give judgment’. There have been a number of discussions as to whether the use of the word ‘may’ gives the Court a general discretion in deciding whether to enter summary judgment. …

Analysing the above authorities, the position appears to be as follows: (a)  The discretion implied by the use of the word ‘may’ in rule 136 is to

be restrictively applied. In a great majority of cases, once the Court is satisfied the defendant has no defence there is no room for the exercise of discretion.

(b)   The residual  discretion  may  be  invoked  to  avoid  oppression  or injustice to the defendant where:

(i)   The proceeding involves the actions or possible liability of a third party which is not before the Court;

(ii)  The proceedings are such that the opportunity should be given to allow discovery or other interlocutory applications to be included;

(iii) The circumstances of the case disclose very unusual features, the presence of which leads the Court to conclude that the entry of summary judgment would be oppressive or unjust; or

(iv) The combination of complex issues of fact and law justify the dismissal of the application for summary judgment, either as a matter of discretion or because the Court cannot be satisfied that the defendant has no defence.”

[79]  Here, the plaintiff seeks specific performance of the defendants’ obligation to register the Covenant against the certificate of title of the Powerland land.

[80]  The Court has the power, in an appropriate case, to grant specific performance on a summary judgment application: McGechan on Procedure at HR135.08. Moreover, in DSJ (PTE) Ltd v TPF Restaurants Ltd (Trading as “Burger King”) HC AK CP168/96 23 December 1997 Giles J emphasised at 107 that although specific

performance is a discretionary remedy, the “discretion is to be exercised on principled terms”. His Honour continued:

“It is all too easy, in my view, for a defaulting party seeking to avoid a freely negotiated contractual commitment, where negotiations were conducted between equals and with legal assistance, to take refuge in the Court’s discretionary powers. Essentially, what TPF urges upon the Court, in circumstances where it has been held liable pursuant to a binding contract, is that it be relieved of those obligations as a matter of judicial discretion, thereby enabling it to effectively buy its way out of the deal through the medium of damages in lieu.

I am not sympathetic to that submission on the facts of this case. The commercial world is entitled to a greater degree of certainty in respect of the enforceability of freely negotiated contracts than this approach would accord. Where, as here, there was no valid basis for cancellation or complaint, there is no reason in equity why the defendant should have the advantage of being relieved of its obligation when the terms of the contract are clear and certain. So to do is to transfer the burden back to the innocent party, the plaintiff in this case.”

[81]  Bearing these comments in mind, I am satisfied that, in all the circumstances of this case, summary judgment should be granted to the plaintiff and an order for specific performance in my view is warranted.

Conclusion

[82]  In conclusion the Covenant here records a type of arrangement that is now commonplace:   SPT gave consent to Powerland’s resource consent and in return Powerland agreed to do nothing that would inhibit SPT’s activities.  In my view the Covenant is both valid and enforceable.

[83]  Powerland has had the benefit of the Covenant since it was executed and must now fulfil its obligation by registering an instrument against its title that records the terms of the Covenant.

[84]  An order is now made by way of summary judgment that the defendant within fifteen working days of the date of this judgment is required to specifically perform an Agreement as to Reverse Sensitivity Covenant (“the Covenant”) dated 2 October

2002 by registering against the title for the defendant’s land, being Certificate of Title Volume 26D folio 355 (Wellington Registry) (Powerland’s Land) the Memorandum  of  Transfer  executed  by  the  plaintiff  and  defendant  on  or  about October 2002.

Caveat application

[85]  Because of my finding for the plaintiff on the summary judgment application, it is unnecessary to consider the application for an order that the Caveat does not lapse.  The Caveat will of course remain until the transfer to preserve the effect of the Covenant is registered.

Costs

[86]  As to costs, the plaintiff has been successful in this application and is entitled to an award of costs in the normal way. An order is now made that costs are payable by the defendants with respect to this application upon a Category 2B basis together with disbursements as fixed by the Registrar.

‘Associate Judge D.I. Gendall’