Sovereign Palms Limited

[2024] NZHC 1577

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2024-409-115

[2024] NZHC 1577

IN THE MATTER OF

Part 19 of the High Court Rules 2016 and ss 316 and 317 of the Property Law Act 2007

BETWEEN

SOVEREIGN PALMS LIMITED

Applicant

Hearing:	4 June 2024
Appearances:	C W J Fogarty and S A Segaran for the Applicant
Judgment:	14 June 2024

JUDGMENT OF HARLAND J

Introduction

[1]    Sovereign Palms Ltd (Sovereign Palms) applies by way of originating application to extinguish a land covenant to enable the further development of the Oakbridge subdivision in Christchurch. The application is accompanied by affidavits from:

(a)        Sean Daniel Monaghan, a development engineer employed by Suburban Estates Ltd;

(b)       Christopher Ian Glynn Wilson, the managing director of Suburban Estates Ltd and director of Sovereign Palms;

(c)        Ross Charles Jennings, a senior civil engineer employed by Davis Ogilvie and Partners; and

SOVEREIGN PALMS LTD [2024] NZHC 1577 [14 June 2024]

(d)       Robert Brian Norton, a senior stormwater planning engineer employed by the Christchurch City Council.

[2]    On 14 March 2024, Associate Judge Lester issued a judgment granting leave for the application to be advanced by way of an originating application and he determined it was not necessary to serve the application on the owners of the 121 certificates of title that benefit from the covenant in issue in these proceedings.

[3]    I have decided to grant the application. This judgment sets out my reasons for doing so.

Preliminary matters

[4]    Prior to the hearing, counsel for the applicant and Christchurch City Council (the Council) filed a joint memorandum responding to a minute I had issued on 24 May 2024 in which I requested that certain matters in relation to the affidavit of Mr Norton for the Council be addressed. In particular, I requested that it would be helpful for the Council to explain why its position was that the land covenant ought to be extinguished prior to the vesting of the stormwater land in the Council.

[5]    The joint memorandum of counsel advised that a supplementary affidavit for Mr Norton had been prepared but, due to various reasons, there would be difficulties arranging for it to be sworn prior to the hearing. I advised that this should not interfere with the case proceeding as scheduled and that, when it was possible, the Court would receive the duly sworn affidavit.

[6]    A draft of the supplementary affidavit was provided to the Court and, at the end of the hearing, I advised that I intended to make the orders sought but would await issuing my judgment and the reasons for it until after Mr Norton’s sworn affidavit had been received.

[7]    Mr Norton’s sworn supplementary affidavit has now been received and filed, and a further memorandum has been provided helpfully outlining the orders the applicant is seeking.

Factual background

[8]    The land covenant concerned is contained in Transfer Instrument 35085 as it relates to Lot 100 Deposited Plan 572650 (Record of Title 1040641). This instrument was registered in 1891, over 130 years ago. It effectively provides for a drain with the requirement that it be cleared of vegetation, soil or other substances twice a year to ensure the free course of water running through the land over which it is registered.

[9]    Sovereign Palms is the registered proprietor of over 51 hectares of land in Marshlands, Christchurch between Mills Road to the west, Hawkins Road to the east, Prestons Road to the south and Styx River to the north. The land is zoned as Residential New Neighbourhood under the Highfield Park (North) Outline Development Plan. Sovereign Palms is undertaking a residential development known at Oakbridge on this land. Stages one and two of the Oakbridge development have been completed.

[10]   In early 2020, Sovereign Palms identified that it would need to obtain additional land to accommodate the requirement for further stormwater management infrastructure for the next stages of the Oakbridge development.

[11]   The land identified for this purpose was at 709-710 Hawkins Road, Christchurch (being Lots 34 and 35 Deposited Plan 875). This land was directly across Hawkins Road, to the immediate east of Oakbridge. Sovereign Palms discussed the suitability of this land for use as a stormwater management reserve underpinning the further residential development of the Oakbridge subdivision with the Council prior to purchasing it. These discussions were favourable.

[12]   As a result, Sovereign Palms purchased the land referred to, less two house lots which were retained by the vendors. The remaining land, known as 706 Hawkins Road, comprises 4.7230 hectares and is described as Lot 100 Deposited Plan 572650 contained in Record of Title 1040641. I refer to this land as the “stormwater land” in this judgment. It comprises the drain which is subject to the land covenant in issue.

[13]   The affidavits filed in support of the originating application reveal that there is no obvious drain on the stormwater land. However, along the southern boundary there is a low point that holds water at times of heavy rain. It is considered that this is the

drain referred to in the land covenant. The affidavit of Mr Wilson notes that any water that accumulates in this drain does not actually drain away in one direction or another but, rather, remains stagnant.

[14]   Sovereign Palms contends that the drain is no longer serving the purpose for which it was originally intended over 130 years ago. The land around the area known as the Marshland Estate has been transferred and subdivided over the years, and the character of the neighbourhood has changed from its use as rural land to use for residential housing purposes. As a result, the land covenant potentially benefits a much larger number of properties than was the case when it operated to service rural activities. A list of the land that benefits from the land covenant in Transfer Instrument 35085 were listed and referenced by address, legal description, title reference and owners in exhibit H annexed to the affidavit of Mr Wilson. These are referred to in this judgment as the “benefited land”.

[15]   Sovereign Palms has obtained a subdivision consent numbered 39630/350D from the Council for stages 3, 4 and 5 of the Oakbridge development. As part of its subdivision consent, Sovereign Palms is required to direct stormwater to a piped network and then to a stormwater management facility on the stormwater land.

[16]   Conditions 6.1 to 6.26 of the subdivision consent deal with the stormwater requirements for these stages of the Oakbridge development. Specifically, condition

6.5 provides:

Unless otherwise approved by the Council Stormwater Planning Engineer, stormwater generated from all roofs, roads and hardstanding areas within all allotments and any offsite contributing catchments shall be collected via channels, sumps, pipes or swales and discharged into a stormwater mitigation facility consisting of a First Flush Sedimentation Basin, Constructed Stormwater Wetland and Flood Attenuation Basin located within Lot 100, DP 572650 (being the Stormwater Land).

[17]   Sovereign Palms has engaged Davis Ogilvie and Partners Ltd to design stormwater retention basins on the stormwater land which will form part of the stormwater mitigation facility. The affidavit by Mr Jennings, a senior civil engineer with Davis Ogilvie outlines the proposed design details of the stormwater retention basins. They have been designed to accommodate the original drain so that any water that would have accumulated in it will instead drain into the stormwater basins.

[18]   The plan attached to the subdivision consent shows the stormwater land as Lot 2002 (4.7230 hectares) and records the requirement that it is to vest in Council as a Local Purpose (Stormwater) Reserve.

[19]   The Council requires the land covenant, registered on the stormwater land, to be removed. The reasons for this were outlined in the affidavits of Mr Norton. In his supplementary affidavit, Mr Norton explained the reason why the land covenant must be extinguished prior to the vesting of the stormwater land in the Council. He explained that it is the Council’s general policy not to accept the vesting of reserves with pre-existing encumbrances where they could affect the Council’s ability to operate, improve or maintain the land.

[20]   Because the land covenant in this case includes requirements to, among other things, remove soil which may obstruct the drain and at times keep the drains clear and in good working order, Mr Norton outlined that the Council could not accept this obligation given that the drain is being decommissioned and filled in. Although arguably correct, the approved design for the stormwater basins would render any obligation under the land covenant impossible. However, as a matter of principle, a Council should not accept any obligation it cannot fulfil.

[21]   It is accepted that the stormwater solution proposed is much more appropriate for the Oakbridge development and, further, that the stormwater management in the area, once under the ownership and control of the Council, will be beneficial to the owners of the benefited land because, after any maintenance period required by Sovereign Palms under the subdivision consent, the Council will assume the obligation for ongoing maintenance of the facilities and infrastructure on the stormwater land.

Discussion

[22]Section 317 of the Property Law Act 2007 (Act) provides:

317 Court may modify or extinguish easement or covenant

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

(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:

…

(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

…

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

…

[23]I am satisfied that grounds have been made out under ss 317(1)(a)(i), (ii) and

(b) of the Act to justify the covenant being wholly extinguished.

[24]   In relation to matters contained in s 317(1)(d), the Supreme Court in Synlait Milk Ltd v New Zealand Industrial Park Ltd determined that, for injury to be substantial, it must be “real, considerable, significant, as against insignificant, unreal or trifling” which is to say “the injury must be real and have present substance, rather than merely be theoretical or fanciful”.1 I am satisfied that the extinguishing of the covenant will not substantially injure any person who is entitled to benefit from it. This is because the improvements that are proposed by the development of the stormwater retention basins will improve the current situation and will have the benefit of the Council’s oversight and management once vesting occurs.

[25]   I record that, in its evidence, Sovereign Palms included the options for removal of the covenant to enable the stormwater land to vest in the Council. These were listed as:

1      JCL Henley Downs Ltd v JCL Jacks Point Ltd [2020] NZHC 3020 at [104]. Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157.

(a)        obtaining a surrender of the land covenant which would have required the approval of all owners and mortgagees of the benefited land;

(b)       obtaining the written consent of all owners and mortgagees of the benefited land to the vesting; or

(c)        obtaining a Court order pursuant to the current application.

[26]   I record my view that, given the large number of owners of the benefited land, the options to obtain a surrender of the land covenant or written consent to the vesting were both impractical. But, further, as I have outlined, it is clear that the new proposed stormwater retention basins will be of significantly more benefit to the owners and mortgagees of the benefited land.

Result

[27]   The originating application by Sovereign Palms is granted. I make the following orders:

(a)        the land covenant in Transfer instrument 35085 as it relates to Lot 100 Deposited Plan 572650 (Record of Title 1040641) be extinguished; and

(b)       within five working days of the applicant providing the Registrar General of Land with a copy of this order, the Registrar General of Land shall, pursuant to s 318 of the Property Law Act 2007, cause the above land covenant to be removed from Record of Title 1040641.

[28]   Leave is reserved to the applicant to apply for such further orders as may be required with respect to the implementation of the substantive orders.

[29]No orders for costs were sought and none are ordered.

Harland J

Solicitors:

Cameron & Co Lawyers, Christchurch.