Sovereign Palms Limited - [2024] NZHC 535

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2024-409-115

[2024] NZHC 535

IN THE MATTER Of Part 19 of the High Court Rules 2016 and Sections 316 and 317 Property Law Act 2007

AND

IN THE MATTER

Of an application for an order by

BETWEEN

of an application for an order by SOVEREIGN PALMS LIMITED

extinguishing land covenant in transfer instrument 35085

Applicant

Hearing: (On the papers)

Counsel:

S A Segaran for Applicant

Judgment:

14 March 2024

JUDGMENT OF ASSOCIATE JUDGE LESTER

(application for leave to utilise originating application procedure and directions as to service)

RE SOVEREIGN PALMS LIMITED [2024] NZHC 535 [14 March 2024]

[1] In this proceeding, Sovereign Palms Limited (SPL) seeks an order under s 317 of the Property Law Act 2007 (the Act) extinguishing an historical covenant.

[2] An applicant seeking orders to extinguish a covenant is not entitled to use the originating application procedure as of right as s 317 of the Act is not one of the of the Acts listed in r 19.2(s) of the High Court Rules 2016 (the Rules).

[3] Accordingly, SPL seeks leave pursuant to r 19.5 of the Rules, to use the originating application procedure.

[4] The matters that have engaged the Court when considering applications under r 19.5 of the Rules were summarised by the Court in Solar Bright v Martin as follows:1

(i)whether the exchange of statements of claim and defence are needed to better define the issues between the parties;

(ii)whether interlocutory procedures are needed to resolve issues such as discovery;

(iii)whether the application is straightforward, such is the application of a statutory test, or whether it is likely to involve the application of common law principles or require expert evidence or cross-examination; and

(iv)whether the application involves multiple parties or may involve cross-claims.

[5] The above factors cannot be discussed in isolation from the other aspect of SPL’s application, which is an order that it need not serve its proceeding on those landowners who have the benefit of the covenant and that only the Christchurch City Council (the Council) be served.

1 Solar Bright v Martin [2019] NZHC 300 at [20]-[24].

The nature of the covenant

[6] The covenant is an old one having been created some 130 years ago and relates to an historic drain. Unusually, the transfer creating the covenant does not appear on the titles of the land with the benefit of the covenant. Counsel for SPL submits that in those circumstances it is unlikely the owners of titles that, at least on paper, benefit from the covenant, are even aware they enjoy that “paper right”.

[7] I refer to the right as being a “paper right” because the evidence is that the drain is not physically present on the land which is presently a block of rural land.

[8] The evidence is there is no obvious drain on the land burdened by the covenant,…

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.

Continue reading Sovereign Palms Limited

Details

AGLC: Sovereign Palms Limited [2024] NZHC 535
Case: [2024] NZHC 535
Decision Date: 14 March 2024

CaseChat Overview and Summary

Sovereign Palms Limited applied to the High Court of New Zealand, Christchurch Registry, for an order to extinguish a historical covenant concerning a drain on a parcel of rural land. The covenant, established approximately 130 years ago, does not appear on the titles of the 121 landowners who ostensibly benefit from it. The physical drain is no longer present, and there is no evidence of its existence on the land, although there is a low-lying area that collects water during heavy rains. Sovereign Palms Limited aims to develop a stormwater management system on the land, incorporating the historic drain's function within the new stormwater basins. The Council will own and maintain these basins.

The court had to determine whether Sovereign Palms Limited could use the originating application procedure to seek leave to extinguish the covenant and if it could limit service of the proceedings to the Christchurch City Council instead of the landowners who benefit from the covenant. The court considered factors such as the need for full pleadings, interlocutory procedures, the complexity of the application, and whether it involved multiple parties or cross-claims.

The court found that full pleadings were unnecessary because the application could be resolved on the basis of the statutory test and documentary evidence. The court also determined that serving the application only on the Christchurch City Council was appropriate, as the landowners were unlikely to be aware of the covenant and its extinguishment would not affect them. The court ruled that the application was straightforward and did not involve complex legal principles or require expert evidence.

The court granted Sovereign Palms Limited leave to use the originating application procedure and limited service to the Christchurch City Council. The court noted that an Associate Judge lacked the jurisdiction to make substantive orders regarding the extinguishment of the covenant, and the matter would be referred to a Justice for consideration if appropriate.

Orders