Southbucks Limited v Auckland Council

[2024] NZHC 1541

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-001211

[2024] NZHC 1541

IN THE MATTER

of the Property Law Act 2007, s 316.

BETWEEN

SOUTHBUCKS LIMITED

Applicant

AND

AUCKLAND COUNCIL

First Respondent

LONG RIVER INVESTMENTS CORPORATION LIMITED

Second Respondent

Hearing:

12 June 2024

Appearances:

D K Wilson for Applicant

No appearance for Respondents

Judgment:

12 June 2024

JUDGMENT OF VENNING J

This judgment was delivered by me on 12 June 2024 at 3.45 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Law NZ, Auckland
Counsel:            D K Wilson, Auckland

SOUTHBUCKS LIMITED v AUCKLAND COUNCIL [2024] NZHC 1541 [12 June 2024]

Application

[1]        Southbucks Limited, the applicant, seeks orders extinguishing three land covenants from land that is to be vested in the Auckland Council (the Council) as roads, accessway and reserve, together with related and ancillary orders.

Service

[2]        On 29 May 2024 the Court made orders directing the proceedings be served on the Council and Long River Investments Corporation Limited (Long River) only. The Council is the relevant territorial authority. Long River is the sole dominant party in respect of the first covenant.

[3]        The second and third covenants have 106 dominant owners being the owners of titles formed in a neighbouring subdivision to which the covenants relate. The Court was satisfied that the application was limited in nature and that the covenants remain fully in effect and will only be removed from land which is to be vested in the Council for road reserve and accessway. The extinguishment of the covenants would accordingly not impact on the owners of the nearby subdivision.

[4]        The proceedings have been served on the parties directed to be served. Neither has taken any steps to oppose the application.

Background

[5]        The applicant owns the land affected by the covenants. It has, by stages, been subdividing its land into 124 residential lots.

[6]        The first covenant maintains standards for housing around the golf course land owned by Long River. One of the remaining covenants imposes a limit of 137 sections in any subdivision on the servient land and the other requires aspects of co-operation in the subdivision of the dominant land which was a similar type of property being developed by the dominant party (the dominant and servient owners at the time being the same entity).

[7]        The extinguishment sought is partial only as the covenants are to remain fully in effect on all new residential titles but because of the provisions of ss 238 and 239 of the Resource Management Act 1991 the covenants cannot be on areas of land that is to vest in the Council for roads and reserve. Land to be vested in the Council must be vested free of encumbrances. In the past, vesting of roads in a Council has sometimes occurred by dedication (as occurred in the first stage of the applicant’s subdivision in this case). However, that process is now not accepted by the Registrar- General of Land.

[8]        The application is supported by the affirmation of Ye Zhao and the affidavit of Gareth Scourfield.

[9]        Their evidence establishes that the terms of the three covenants anticipated the applicant’s land would be subdivided for residential use. The building standards in the first covenant will continue except in relation to the road and reserve. The second and third covenants include a limit on the number of subdivided titles. The subdivision plan annexed to Mr Zhao’s affirmation shows compliance with that limit. The third covenant concerns co-operation in the subdivision of the dominant land. The affidavits confirm that subdivision has been completed and the purpose of the third covenant has effectively been fulfilled.

Jurisdiction

[10]      The application is made under s 316 of the Property Law Act 2007 (PLA). Section 317 of the PLA sets out the circumstances in which the Court may order modification or extinguishment of a covenant:

Court may modify or extinguish easement or covenant

(1)On an application (made and served in accordance with section 316) for an order under this section, a court may, by order, modify or extinguish (wholly or in part) the easement or covenant to which the application relates (the easement or covenant) if satisfied that—

(a)the easement or covenant ought to be modified or extinguished (wholly or in part) because of a change since its creation in all or any of the following:

(i)the nature or extent of the use being made of the benefited land, the burdened land, or both:

(ii)the character of the neighbourhood:

(iii)any other circumstance the court considers relevant; or

(b)the continuation in force of the easement or covenant in its existing form would impede the reasonable use of the burdened land in a different way, or to a different extent, from that which could reasonably have been foreseen by the original parties to the easement or covenant at the time of its creation; or

(c)every person entitled who is of full age and capacity—

(i)has agreed that the easement or covenant should be modified or extinguished (wholly or in part); or

(ii)may reasonably be considered, by his or her or its acts or omissions, to have abandoned, or waived the right to, the easement or covenant, wholly or in part; or

(d)the proposed modification or extinguishment will not substantially injure any person entitled; or

(e)in the case of a covenant, the covenant is contrary to public policy or to any enactment or rule of law; or

(f)in the case of a covenant, for any other reason it is just and equitable to modify or extinguish the covenant, wholly or partly.

(2)An order under this section modifying or extinguishing the easement or covenant may require any person who made an application for the order to pay to any person specified in the order reasonable compensation as determined by the court.

Analysis

[11]      In Synlait Milk Limited v NZ Industrial Park Limited the Supreme Court noted the correct approach:1

[90] To conclude on this point, s 317 requires a two-stage approach. The court's first task is to determine whether one or more of the grounds in s 317(1) is made out. If so, the second task is to determine whether the discretion to extinguish or modify the easement or covenant at issue should be exercised (and, if so, to determine whether compensation should be payable). The exercise of the discretion to modify or extinguish the easement or covenant requires consideration of all relevant factors (including the power to award compensation). We do not see any intent that any one factor should be disqualifying.

1      Synlait Milk Limited v NZ Industrial Park Limited [2020] 1 NZLR 657.

[12]      In the present case the applicant relies on s 317(1)(d) and (f). The applicant does not suggest that since the covenants were created there have been changes to the nature and use of the land in question or the character of the neighbourhood. The covenant anticipated the residential subdivision of the servient land that is to happen.

[13]      In light of the evidence contained in the affirmation of Mr Zhao and the affidavit of Mr Scourfield, the Court is satisfied that the proposed extinguishment will not substantially injure any person, and further it is just and equitable to extinguish the covenant in part to enable the land to be vested in the Council as roads, accessway and reserve. Further, the application for partial extinguishment is only for the removal of the covenants from the four areas of land which are to vest in the Council. In all other respects all covenants and provisions will continue to bind the servient land. Also, the covenants recognised and anticipated by their terms that the servient tenement and part of the land of the applicant would be subdivided for residential use but omitted to deal with the issue of roadways, accessways and reserve.

[14]      I note that a similar application was approved by the Court in Round v Palmerston North City Council.2

Result

[15]Accordingly, the Court makes the following orders:

(a)The three land covenants listed below be extinguished from that part of the land, presently contained in Identifier 935700 being Lot 300 Deposited Plan 547733, North Auckland Land Registration District that is to be vested in the first respondent as roads, accessway and reserve, such land being shown on a plan of subdivision of Identifier 935700 as Lots 202, 203, 204, and 205. The three land covenants are:

(i)Land Covenant in Transfer D601604.4.

(ii)Land Covenant in Easement Instrument 7045516.3.

2      Round v Palmerston North City Council [2022] NZHC 302.

(iii)Land Covenant in Easement Instrument 7045516.4.

(b)On the deposit of the subdivision plan mentioned above in the land registry, the Registrar-General of Land shall note against all relevant titles that the three covenants mentioned above are extinguished by order of this Court.

(c)Reserving leave to the applicant to apply by Interlocutory Application in the present proceeding for such further orders as may be necessary to give effect to the above two orders.

Venning J