Sunder v Smith
[2025] NZHC 2246
•11 August 2025
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE
CIV-2024-425-89 [2025] NZHC 2246
UNDER the Property Law Act 2007
IN THE MATTER of an application under s 317 of the Act BETWEEN RAJEEV SUNDER and PUNAM
REKHRAJ
Applicants
ANDCALVIN FRANCIS SMITH, JOANNE MARY O’DONOGHUE SMITH and ROBERT KAHU PARRISH STEWART
First Respondents
ANDDIANE MARY VAN BRANDENBURG and FREDERIKUS PETRUS MARIA VAN BRANDENBURG
Second Respondents
ANDJAMES ANTHONY VON DADELSZEN and REBECCA ISLA VON DADELSZEN
Third Respondents
ANDQUEENSTOWN LAKES DISTRICT COUNCIL
Fourth Respondent
Hearing: 21 July 2025
Appearances: B B Gresson and E M A Downey for Applicants
M J Hammer and A L Davidson for First, Second and Third Respondents
No appearance for Fourth Respondent (abiding)
Judgment: 11 August 2025
JUDGMENT OF OSBORNE J
SUNDER v SMITH [2025] NZHC 2246 [11 August 2025]
Introduction
[1] The applicants, Rajeev Sunder and Punam Rekhraj, apply pursuant to s 317 Property Law Act 2007 (the Act) for orders either extinguishing or modifying a covenant registered against the title to their property at 7 Arrowtown-Lake Hayes Road, Queenstown (No 7). The covenant, established by a Deed of Covenant (Deed), was registered in 1981 and burdens four residential properties being No 7, together with the properties at 5, 9 and 11 Arrowtown-Lake Hayes Road (respectively No 5, No 9 and No 11). The aspect of the covenant of central concern to the applicants restricts each lot owner to erecting only one family dwelling house on the lot and doing so within a defined house site area of the lot.
[2] The applicants, through their family trust, obtained from the Queenstown Lakes District Council (the Council) in January 2022 a resource consent (consent) to subdivide No 7 into three allotments as identified in Table 3 (below at [11]). The consent was subsequently varied in May 2023.
[3] The consent, in conjunction with the Council’s current proposed district plan (PDP), allows there to be on each subdivided lot a primary residential dwelling and a stand-alone secondary unit defined as a “residential flat” of up to 70 m2.
[4] Under the conditions imposed by the Council on the consent, the consent-holder is required to seal the access from the Lake Hayes-Arrowtown Road to the boundary of No 7 before obtaining the issue of a certificate pursuant to s 224(c) Resource Management Act 1991 (RMA).
[5] The consent cannot be given effect to while the covenant prohibits the erection of further buildings on No 7.
[6] The first, second and third respondents (whom I shall refer to in this judgment as the “respondents”) oppose the application. The Council, as the fourth respondent, abides the outcome.
The properties and their subdivision
The original subdivision
[7] Table 1 extracted from the original 1977 subdivision survey plan shows the four subdivided lots. Lot 3 (No 11) comprises 3,064 m2; Lot 4 (No 9): 4,466 m2; Lot 5 (No 7): 3,694 m2; and Lot 6 (No 5): 3,483 m2.
Table 1
[8] There is on each of the properties at present a single family dwelling house with associated buildings, the last of which was erected around 1992.
The covenants’ “house sites” and “common areas”
[9] Reproduced as Table 2 is the plan forming part of the Deed, showing “house site areas” and “common areas”.
Table 2
The applicants’ proposed subdivision
[10] The applicants propose to subdivide No 7 into three lots, as permitted by the consent.
[11] Table 3 below is the applicants’ subdivision plan, as consented, showing No 7 divided into three lots. The subdivided lots would comprise 1,685 m2, 855 m2 and 1050 m2 (the last being 600 m2 once the planned right of way is excluded).
Table 3
The area in the vicinity of the properties
[12] The applicants’ planner, Tom McIntyre, exhibited an aerial photograph, with markings, showing the area in the vicinity of the properties, reproduced here as Table 4.
Table 4
[13]On Table 4:
(a)the (original) section 48 now comprises Nos 5, 7, 9, 11, 13 and 15;
(b)sections 49 and 50 (to the south of section 48) at the time of the Deed were privately-owned rural land are now Council-owned reserve;
(c)between the western boundaries of sections 48, 49 and 50 Lake Hayes runs a strip of reserve land;
(d)to the north of section 48 an unformed road reserve runs from the Arrowtown-Lake Hayes Road to the strip of reserve land and the lake.
The Deed and the covenant—their terms
[14] The covenant arose out of a five-lot subdivision carried out by the Estate of K A L Haggitt (Haggitt Estate) from 1976. The current lot was zoned “Residential A” under the relevant plan at the time of the subdivision there were created the four lots owned by the parties to this proceeding (Nos 5, 7, 9 and 11) as well as the larger lot, (on the northern boundary of Nos 9 and 11) which is now divided into two properties identified as 13 and 15 Arrowtown Lake Hayes Road (No 13 and No 15).
[15] The Deed was entered into on 26 August 1981. The parties were Margaret Irvine (defined with her successors in title as the “Subdividing Owner”) being the owner of Nos 3, 4 and 6 on the one hand and Bruce Henderson and Roger Mills as the “Lot Owner” (the owners of No 7 on the other hand).
[16] The 1981 recitals record the Subdividing Owner intended the four properties would be subject to a general scheme applicable to and for the benefit of the properties so that they would be bound by the stated restrictions and the owners would be entitled to enforce the restriction.
[17] By the Deed, the covenanting parties identified restrictions on the use of the properties (the Restrictions):
(a)one family dwelling house, together with garages and other buildings associated with the dwelling, may be constructed on the “house site area” identified on the plan for each property (Table 2, above at [9]);
(b)buildings may be placed only within the house site areas;
(c)no building may be erected unless designed and sited according to a specified procedure;
(d)no erected building may be substantially altered without prior written approval of the Subdividing Owner; and
(e)no trees or shrubs may be planted upon any part of the properties delineated as a “common area” on the plan without the consent of each property owner.
The covenant—considerations at the time
[18] Two items of correspondence associated with the Haggitt Estate’s original subdivision process identify an emphasis upon the maintenance of views and the avoidance of subdivisions into minimum allotments:
(a)N. & E.S. Paterson Limited (surveyors) letter to the County Clerk dated 6 April 1976 recorded:1
The Estates Trustees wish the building site on each allotment to be designated, within reasonable limits, so as to maintain adequate views ... the Trustees propose to preserve these sites by placing their own restrictions, in the form of yard restrictions ...
(b)Johnston and Hatfield Planning & Surveying Consultants’ letter to the County Clerk dated 6 May 1976 recorded:
From discussions I have had recently with the Department of Lands & Survey, and Mr Haggitt, solicitor for the applicant, it is clear that the Estate itself is very conscious of the delicate scenic nature of the site under subdivision and wishes to exercise as much control as is possible to ensure that the area concerned is not subdivided into minimum allotments, thereby destroying the Rural characteristics of the locality.
It is in fact their intention ... [to] ensure that the area is not further subdivided from the existing five allotments shown on this particular plan. …2
1 N. & E. S. Paterson Ltd were the surveyors who submitted the scheme plan for the proposed subdivision of the Lake Country Council.
2 Johnson and Hatfield were the planning consultants who reported on the scheme plan to the Council and recommended the subdivision be approved, with standard conditions.
[19] Mrs Irvine’s widower, Donald Irvine, who was involved in the planning and approval process, leading to the original subdivision, provided an affidavit in which he deposed:
(a)the covenant was created because Lake Hayes was becoming popular and he and Mrs Irvine could foresee that sections were becoming small and less rural;
(b)they wanted the views at each lot to be maintained into the future regardless of future urbanisation;
(c)the views were up Lake Hayes to Coronet Peak and down the lake to Walter Peak and Cecil Peak; and
(d)the building locations were created to maintain adequate views and the open nature of the area at that time and into the future, with:
(i)sections limited to four in total even though a more intensive subdivision was possible at the time; and
(ii)the number of sections, the house orientations and their location specified.
[20] The parties provided affidavit evidence from two planning experts— Tom McIntyre for the applicants and Paula Costello for the respondents. The experts conferred and provided a joint report (experts’ report). They agreed the N. & E. S. Paterson report (above at [18](a)) provided an indication of a purpose of the covenant (“so as to maintain adequate views”) and that the Johnson and Hatfield report (above at [18](b)) also provided an indication of a purpose of the covenant (“to prevent further subdivision of the land into minimum allotment sizes”).
The application for extinguishment or modification of the covenant
[21] By their originating application, the applicants sought orders either extinguishing or modifying the covenant. Extinguishment remains their preferred
relief. Alternatively, they seek modification of the covenant in terms of marked-up amendments of the covenant as set out in Appendix 1 to this judgment. The effect of the proposed modified covenant would be to exempt No 7 from the burdens of the covenant, while leaving Nos 5, 9 and 11 with those burdens. Extinguishment would mean none of the properties is any longer burdened at all.
Extinguishment or modification of a covenant—the legal regime
The statutory provisions
[22] Under s 316(1) of the Act, a person bound by a covenant may make an application for an order under s 317 modifying or extinguishing the covenant.
[23] The applicants invoke, in particular, s 317(1)(a)(ii) and s 317(b) of the Act. That portion of s 317(1) provides (with the particular provisions relied on by the applicants italicised):
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:
(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
…
[24] Section 317(2) of the Act authorises the Court, when modifying or extinguishing a covenant, to require payment of compensation, providing:
(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.
Principles—s 317 generally
[25] The leading authority on the principles to be applied in relation to a s 317 application is the Supreme Court decision in Synlait Milk Ltd v New Zealand Industrial Park Ltd (Synlait).3
[26] The Supreme Court identified a determination under s 317 involves a two-stage approach:4
(a)first, to determine whether one (or more) of the grounds in s 317(1) is made out; and (if so)
(b)to determine whether the discretion to extinguish or modify the easement or covenant at issue should be exercised.
[27] The Supreme Court recognised the introduction into s 317 of a power to award compensation to any person affected by an order extinguishing or modifying an easement or covenant was a significant change from the earlier legislative regime.5
[28] The Court cited with approval observations of Randerson J in Harnden v Collins that, while a degree of caution was appropriate, the power under s 317 should not be so restrictively applied that the section ceased to have the remedial effect intended—the courts are intended to have the ability in the appropriate case to grant modification even if it has the effect of causing some degree of detriment to other parties.6
3 Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657 [Synlait].
4 At [90].
5 At [75].
6 At [77], citing Harnden v Collins [2010] 2 NZLR 273 (HC) at [42]–[43].
[29]The Supreme Court went on to observe:
[84] We consider caution is necessary in overlaying the clear statutory wording of s 317 with requirements that cases be exceptional, that sanctity of contract be protected, that property rights not be expropriated and the like. Easements and covenants are created subject to the provisions of the Property Law Act, including s 317. The extent of the sanctity of the contracts underlying easements and covenants and the nature of the property rights they create are governed by s 317 (and other provisions). There is a circularity about saying that property rights must be protected from the exercise of the power conferred by s 317 when the fundamental premise of the section is that those property rights are liable to be modified or extinguished.
[85] We would not, therefore, overlay the requirements of s 317 with additional, non-statutory criteria that have the effect of altering the clear parliamentary intention that easements and covenants should be amenable to modification or extinguishment in defined circumstances (noting that the defined circumstances are broader in the case of covenants because of the new paras (e) and (f) in s 317(1)).
[86] Nor do we consider it is correct to say that s 317 cannot be used to free the owner of burdened land from an easement (or covenant) simply to improve the enjoyment of his or her property for his or her private purposes, as the Court of Appeal said in Okey v Kingsbeer.7 There is nothing in s 317 to that effect. As Cooke J noted in Pollard v Williams, “All applicants to vary an easement or covenant are no doubt seeking to improve the enjoyment of their own property.”8
…
[88] All of this does not mean that the importance of contractual and property rights can be ignored. But they must be considered in the factual context before the court, rather than as generic fetters on the court's discretion. Contractual rights may well be significant where the original parties to a covenant are still the parties at the time of the s 317 application. And concern about expropriation of property rights may arise where the s 317 applicant is a public body.9 These are just examples. We think it is important that each application is considered on its own merits, without assuming these considerations arise in every case.
[30] The Supreme Court has therefore identified that lower courts are to take a less restrictive approach to applications under s 317 than had been taken in the past.10
7 Okey v Kingsbeer [2017] NZCA 625, (2017) 19 NZCPR 25 at [52].
8 Pollard v Williams [2019] NZHC 2029, (2019) 20 NZCPR 371 at [19].
9 A H Properties Ltd v Tabley Estates Ltd HC Hamilton CP142/92, 3 September 1993 at 37.
10 As observed in Reynolds v Parklands Property Ltd [2021] NZCA 394, (2021) 22 NZCPR 516 at [33], citing Synlait, above n 3, at [75], [77] and [79].
Principles—s 317: burden of proof
[31] The party applying for extinguishment or modification of an easement or covenant bears the onus of proving one or more of the grounds of s 317 has been made out—it is not for the owner of the dominant tenement to show a need for continuation of the covenant. The servient owner must satisfy the Court the order sought is appropriate.11
Principles—s 317(1)(a): “change”
[32] The relevant change (in this case claimed to be a change to the character of the neighbourhood) must be sufficient that the Court “ought” to extinguish or modify the covenant.12 As observed by the Supreme Court in Synlait, the focus is not on the fact of change but on the impact of the change on the benefit or burden flowing from the covenant.13 The focus on “benefit or disadvantage” had earlier been explained by Thorpe J in Manuka Enterprises Ltd v Eden Studios Ltd.14 There, the Judge having referred to earlier authority, identified:15
… the “change” contemplated in subs (1)(a) is most likely to be relevant if it has altered the benefit or disadvantage resulting from the continuance of the easement. Without purporting to develop that proposition into a precondition to the exercise of jurisdiction under [then] s 126G(1)(a), it does seem to me that the most common justification for its exercise will be evidence that the relative advantages and disadvantages flowing from the easement have become totally disproportionate by reason of changes which have occurred since its creation.
[33] The mere fact that there has been (in relation to an application based on a change in the character of the neighbourhood) some change in that character since the creation of the covenant, does not mean the change is of a kind which means the covenant ought to be extinguished.16 In Larsen v Skelton, Fitzgerald J found the nearby development of two subdivisions had not resulted in a relevant change to the neighbourhood because they had not led to any material change to the benefits or
11 New Zealand Industrial Park Ltd v Stonehill Trustee Ltd [2019] NZCA 147, (2019) 20 NZCPR 119 at [72] (appeal allowed in Synlait, above n 3, but not on this point).
12 Reynolds v Parklands Properties Ltd, above n 10, at [63] per Venning J.
13 Synlait, above n 3, at [138], citing Okey v Kingsbeer, above n 7, at [53]. See also Reynolds v Parklands Properties Ltd, above n 10, per Goddard and Peters JJ at [142].
14 Manuka Enterprises Ltd v Eden Studios Ltd [1995] 3 NZLR 230 (HC).
15 At 234.
16 Larsen v Skelton [2022] NZHC 3028 (2022) 23 NZCPR 816 at [136].
burdens flowing from the covenant.17 The Judge reached that conclusion for five stated reasons, including that zoning enabling the nearby subdivisions had been in place for four years before the covenant’s creation;18 subdivision into smaller lots was “foreseeable” and “highly likely if not inevitable”;19 a key reason for the covenant was to preserve the rural character of the site, resisting the impact of zoning changes;20 the area at the time of the application still had a distinctly rural character as did the site itself, meaning that the site and its immediate surrounds retained a sufficiently rural character that the covenant still had relevance; and was not obsolete.21
[34] In Synlait, the Supreme Court recognised a zoning change, on its own, is unlikely to amount to a change in the character of a neighbourhood as, if that were not the case, there is a risk of undermining the purpose of covenants designed to resist the impact of zoning changes.22 A change in zoning can, however, be brought into consideration in determining whether the characteristics of the neighbourhood have changed.
Principles—s 317(1)(a)(ii): “neighbourhood”
[35] The meaning of the word “neighbourhood” will vary with the circumstances of each case, as will what constitutes a change in its character.23 The neighbourhood can extend not only to any land entitled to the benefit of the covenant but also to other land within a reasonable radius of the servient land.24
17 At [142].
18 At [137].
19 At [138].
20 At [139].
21 At [140].
22 Synlait, above n 3, at [151]; and Reynolds v Parklands Property, above n 10, at [74].
23 New Zealand Industrial Park Ltd v Stonehill Trustee Ltd, above n 11, at [96].
24 At [96].
Principles—s 318(1)(a): foreseeability
[36] Where a change is established in one of the ways identified in s 317(1)(a), the foreseeability of that change will be relevant. As explained by the majority in Reynolds v Parklands Property Ltd:25
The more distant the creation of a covenant or easement in terms of time and parties, and the less foreseeable the change in circumstances that has occurred since the covenant or easement was created, the easier it will be to make out a case for the extinguishment of that covenant or easement under s 317(1)(a) in light of that change …
The majority then explained why the change in the character of the neighbourhood was not such that the relevant easements should be extinguished:26
The changes in the character of the neighbourhood relied on by Parklands as the triggers for the application of s 317(1)(a)(ii) were anticipated by the parties at the time. The constraints imposed by the easements on the ways in which the Parklands land can be developed remain essentially the same now as in 2007.
Principles—s 317(1)(b): the impact on the burdened land
[37] Observations of the majority in Reynolds v Parklands Properties Ltd, although in relation to an application made under s 317(1)(a)(ii) of the Act, are relevant to the alternative ground of the present application under s 317(i)(b). The majority there observed:27
That burden [easements restricting the ways in which a development could proceed] on the Parklands land is essentially the same today as it was in 2007. The constraint that was always present has become more immediate, as Parklands has now decided to proceed with a development in a manner that requires the easement to be extinguished.
[38] The inability of the applicants in this case, while the covenant remains in place, to give effect to the resource consent they had obtained is directly parallel to the inability of Parklands in their case to proceed, while the easement remained in place, with their proposed development.
25 At [149].
26 At [149].
27 At [147].
Principles—s 317(1)(a): “ought to be modified or extinguished”
[39] The threshold requirement under s 317(1)(a) requires the Court to determine whether the easement or covenant “ought to be modified or extinguished”—this may be contrasted with s 317(b) where the threshold requirement is established without the Court determining that the easement or covenant ought to be modified or extinguished. There remains under both ss 317(1)(a) and 317(1)(b) the requirement for the Court to consider the exercise of its discretion—the difference is that if the Court finds one or more of the grounds in s 317(1)(a) is engaged, its consideration of whether the easement or covenant “ought to be modified or extinguished” is likely to be brought into play at the first stage some of the considerations that are also relevant at the second (exercise of discretion) stage.28
Principles—the second stage: the discretion
[40] The Supreme Court in Synlait recognised that a finding of fact that one or more of the statutory grounds in s 317(1) exists is likely, of itself and without more, to provide a good reason or reasons for making an extinguishment or modification order.29 Where one or more of the grounds for extinguishment or modification is established under s 317(1), the appropriate question for the Court at the second stage will generally be whether there is good reason not to make the orders sought.30
The consent
[41] The applicants seek extinguishment or modification of the covenant to enable them to give effect to the consent. The consent approves the plan of subdivision set out in Table 3 (above at [11]). A potential layout of additional residences on No 7, following subdivision, is shown in Table 5 (below at [62]).
[42] In addition to the principal residential dwelling that would be permitted on each subdivided lot pursuant to the resource consent, the owners would be permitted (as explained at [3] above) to erect one associated residential flat.
28 Synlait, above n 3, at [67].
29 Synlait, above n 3, at [168], citing Re University of Westminster [1998] 3 All ER 1014 (CA) at 1024 per Chadwick LJ.
30 See Sidwell Developments Ltd Partnership v Top Dream Developments Ltd [2024] NZHC 899 at [37]; and Aztek Projects Ltd v Matthews [2024] NZHC 1293 at [51].
The applicants’ evidence—overview
[43]Mr Sunder, the first-named applicant, has provided two affidavits.
[44] Mr Sunder identified the covenant restricts the applicants’ ability to develop No 7 in accordance with the consent.
[45] Mr McIntyre, who provided the applicants’ expert evidence, was also the planner who prepared the assessments of environment effects (AEEs) for the applicants both in 2021 and 2023. By their nature, the AAEs as documents filed in support of an application under the RMA treated the covenant as a private matter, not to be considered in a resource management context.
The experts’ areas of agreement
[46] Through Mr McIntyre’s conferral with Ms Costello, the experts were able to report a substantial areas of agreement in relation to matters affecting the properties.
[47]Their recorded areas of agreement, in relation to the following topics were:
The planning environment
(a)The covenant land was residentially zoned at the time the covenant was created in 1981. The land was zoned Residential A under the 1970 Queenstown Wakatipu Combined District Scheme.
(b)The original affidavit of Mr McIntyre accurately describes the planning environment at paragraphs 42 to 48:
[42] The District Scheme in place at the time of the original subdivision was the Queenstown-Wakatipu Combined District Scheme 1970.
[43] As above … the parent lot of the Covenant properties was located within the Residential A zone. The residential zones are described in the 1970 District Scheme as follows:
(a)Residential A – intended as a general residential zone where single-unit dwellings will predominate; and
(b)Residential B – confined to more intensively used parts of the district, where multiple-unit residential accommodation will predominate and where higher densities are appropriate.
[44]The 1970 District Scheme required all proposed subdivisions to be submitted to the Council for approval.
[45]The relevant subdivision standards are in Ordinance III of the Scheme, which is attached and marked.
[46]… the standard minimum lot size for a subdivision under the 1970 District Scheme was ̴ 809 m2 for a front site, and ̴ 1012 m2 for a rear site. If a recognised sewage disposal system was proposed, these minimum lot sizes could be reduced to ̴ 508.8 m2 and ̴ 632.25 m2 respectively.
[47]In comparison, the final lot sizes of the amended original subdivision ranged from 1540 m2 to 5730 m2 and thus comfortably complied with these standards. The Applicant property is 3694 m2.
[48]The relevant planning map from 1970 is attached …
(c)In 2021, at the time of the RM210887 application, the land was zoned Lower Density Suburban Residential (LDSR) and captured within the Urban Growth Boundary and Lake Hayes Catchment overlays under the Proposed District Plan. The LDSR zone has a minimum lot size of 450m2.
(d)That the planning framework continues to zone the land for Residential purposes.
(e)In terms of difference between the two frameworks, it is agreed that (as detailed within the Table of Mr McIntyre’s Original Affidavit at paragraph 60);
(i)The planning framework under the 1970 QWCDS included a differentiation between permitted minimum lot size based upon front or rear sites, and connection (or otherwise) to a recognised sewage disposal system, with minimum lots sizes between 505.8-1012m2, while the PDP has a minimum lot size of 450m2.
(ii)The PDP now allows a residential density of a residential unit and an associated residential flat per lot or per 450m2.
The characteristics of the neighbourhood
(f)That description of the locality at paragraphs 68–78 as ascertained by Mr McIntyre’s review of Aerial Photography is a reasonable and fair assessment of the character of the locality in 1981, subject to the addition that it is agreed that Lake Hayes itself forms a key part of the character of the area.
(g)Neighbourhood today:
(i)The area has been subject to gradual change as surrounding land uses have changed.
(ii)The area is no longer dominated by open pastoral farmland.
(iii)Sections 49 & 50 adjacent to the site, which were previously privately owned rural lots, are now Council-owned reserve land.
(iv)Residential development has increased, a walking track has been established on the perimeter of Lake Hayes, and the Wakatipu Rowing Club has been established in the Bendemeer Bay reserve land.
(v)A commercial restaurant, Amisfield, has been established opposite the site entrance.
(vi)Two bus stops have been established either side of Arrowtown-Lake Hayes Road near to the site entrance.
The covenant
(h)The effect of the Covenant is a different land use outcome than would be allowable by the applicable planning environment. Specifically, a reduction in allowable density on the covenant properties (1 Family Dwelling House per lot), and designated building locations.
(i)The Johnson & Hatfield report cited in the original Affidavit of Mr McIntyre (paragraph 29) provides an indication of the purpose of the Covenant, stated as to prevent further subdivision of the land into minimum allotment sizes.
(j)The application report prepared by N & E.S. Paterson cited in the original Affidavit of Mr McIntyre (paragraph 22) also provides an indication of the Covenant's purpose, stated “so as to maintain adequate views”.
Effects on parties to the covenant if the covenant were to be removed or modified to allow the Applicants’ subdivision to be implemented
(k)The removal of the covenant would allow for residential development on the subject sites to the extent allowed for by the applicable planning environment at that time.
(l)Associated effects are agreed to include increased traffic movements, built form, and general residential activity.
(m)In the case of modification to allow the applicant’s subdivision to be implemented, this increase would be quantified as an additional potential 2 residential dwellings and associated residential flats, generating an average additional 33 traffic movements per day.
Effect of further subdivision and how that fits against the original purpose of the covenant
(n)The effects of further subdivision would be as stated above, essentially the establishment of increased residential activity and
associated externalities, to an extent allowed for by the applicable planning environment (currently the PDP).
(o)Further subdivision does not fit with the intent of the covenant, the purpose of which is discussed above.
[48]Mr McIntyre and Ms Costello disagreed on a limited number of matters.
The applicants’ case on contested issues
[49] Mr McIntyre considers there have been changes to the characteristics of the locality. In particular, he deposes the area at the time of the original subdivision was dominated by open farmland, with minimum residential development or domestication outside the residentially zoned area. He says the area has since 1976 been subject to gradual but substantial changes in characteristics, as surrounding land uses have changed. He says, as a result of resource consents and changes to district schemes/plans, the neighbourhood is now dominated by residential occupation and domestication rather than by large open pastures. He says the immediate locality contains a large commercial restaurant, namely Amisfield Restaurant (Amisfield), and is served by a public bus route, not typical features of a rural environment.
[50] Mr McIntyre further deposes that, from a planning perspective and compared to what is allowed by the Council’s current PDP, the covenant places significant and unreasonable constraints on developments at the properties. In particular, he describes the reduction in residential yield as a result of the covenant as significant. He refers to the potential lot yield for No 7 under the current PDP of seven lots as compared with three lots (without a recognised sewage system) in 1970. Mr McIntyre refers to the National Policy Statement on Urban Development 2020 (NPS-UD) as placing a strong emphasis on the intensification of existing urban areas. He identifies also the site is within an urban growth boundary and is connected to council water supply and wastewater networks. For these reasons he opines further subdivision of the covenant land is a logical and reasonable outcome, rendering the covenant outdated and unreasonable.
[51] Mr McIntyre considers the removal of the covenant would allow residential development within the permitted baseline of the Council’s Lower Density Suburban Residential (LDSR) zone, including a permitted density of 1:450 metres squared.
Mr McIntyre considers the covenant’s removal would essentially allow permitted intensification of this LDSR land to proceed. Mr McIntyre does not consider the associated effects to be necessarily negative, in that the effects of permitted activities are not adverse (this being a reference to the concept of “adverse effects” under the RMA).
The respondents’ case on contested issues
[52] The respondents personally provided affidavits (in addition to those of their expert, Ms Costello, and of Mr Irvine). The affidavits were of Joanne Smith (from No 9); Frederikus van Brandenburg (from No 5) and James and Rebecca von Dadelszen jointly (from No 11). The respondents also filed an affidavit of Klaus and Micha Lenk—Mr and Mrs Lenk were the previous owners of No 11, selling to the von Dadelszens in 2014.
[53] The Lenks say the location of the properties is in a very scenic area of Queenstown on the shore of Lake Hayes with views of the surrounding mountainside. They refer to the privacy and quiet of a lower density neighbourhood with minimal traffic or distractions, accessed from a shared single driveway. They identify they could see parts of the neighbours’ properties but could not see into the neighbours’ houses or vice versa, through the intentional placing and angling of buildings in accordance with the covenant. They refer to a history of discussion between neighbours pursuant to the covenant in relation to any departure from the covenant, including:
(a)the rejection, in 1984, of an intending purchaser’s wish to develop a single, large residential property across two lots (No 3 and No 4);
(b)the granting of permission to the Lenks, in 1987, to plant an orchard on No 11; and
(c)the approval, in 1991, for the van Brandenburgs to erect their proposed residence at No 5 in a location outside the “house site area” but with advantageous views for all the four dwellings.
[54] The Lenks state, if the covenant is modified as requested by the applicants, there will be an impairment of the views from each of the properties; an increase in traffic resulting in increased noise; the potential for those using multiple residences at No 7 to park on common property; and a loss of privacy.
[55] The von Dadelszens, who purchased No 11 from the Lenks, refer to the beautiful views they have from No 11 of Lake Hayes and the mountains (and provide photographs). They note these views are possible as a result of the way the buildings on the Smiths’ at No 9 are located. They identify that, if the Smith property were developed with further residences, they would lose their view of Lake Hayes and would expect their property value to be significantly decreased. They state they bought their property because of the location of the houses on each property which creates a very scenic and serene subdivision with irreplaceable views. The von Dadelszens express concern, should the covenant be extinguished or modified, that the density of the subdivision would increase; more cars and people will utilise the shared driveway; noise in the very quiet and peaceful subdivision will increase; construction of subdivided properties would lead to construction traffic; and the privacy of the residents at No 11 (immediately adjacent to the driveway) would be lost.
[56] Ms Smith explains she and her husband purchased No 9 in 2022. They were attracted to the property because of its unmatched views of Lake Hayes and they could not be built out because of the covenant. She provides a photograph of the view from No 9. She identifies the attraction of the property as lying in its scenic and quiet setting, not in the midst of a busy, high or medium-density neighbourhood. Ms Smith identifies, in the event the applicants are able to subdivide as they propose, the Smiths would be affected by increased traffic on the shared driveway (with the Smith’s boundary directly adjacent to the applicants’ property); increased noise with the risk of guest accommodation and changing tenants, not complementing the rural amenity or character of the neighbourhood; the close proximity one of the new residences on No 7 would have to the Smiths’ property; the hugely negative impact that any widening or sealing of the driveway would have on the very private, beautiful, rural outlook down the drive; and (as the greatest injury the Smiths would suffer) the impeded views the Smiths would have from their residence (Ms Smith providing
photographs taken from her windows and patio). Ms Smith identifies also that the extinguishing of the covenant would permit subdivision not only on No 7 but also on all four properties, with consequences such as the Smiths themselves (situated between the von Dadelszens and the lake) being able to subdivide No 7 and erect residences blocking views of the lake enjoyed by the von Dadelszens.
[57] Mr van Brandenburg provided an extensive affidavit detailing his due diligence when purchasing the undeveloped No 5, beginning in 1990. Mr van Brandenburg is an architect by profession and has personally been involved in numerous land subdivisions, resource consent applications, and the drafting of design controls. His due diligence was unsurprisingly extensive. Through involvement in other developments (including Millbrook, Jack’s Point and Hawthorn Reflections) Mr van Brandenburg considered the covenant to be a strong protection against further development should he and his wife purchase No 5.
[58] From his investigations, Mr van Brandenburg viewed the intent of the covenant as being to maintain the scenic nature of the subdivision while maintaining views and controlling the placement and construction of one family dwelling per lot. Mr van Brandenburg recorded how, having considered the existing trees growing on No 5, he came to the view the house site area on No 5 would be better located to the west of the property. He obtained the agreement of the other property owners to that site. He identifies the outcome of the arrangement as resulting in his home and associated buildings seamlessly fitting into a mature landscape, through a picturesque tree-lined accessway, and with no structures or structural landscaping such as trees or shrubs to block views from No 5. Mr van Brandenburg provides photos taken from his property.
[59] Mr van Brandenburg identifies what he considers would be the significant and irreparable injury No 5 would suffer if the covenant is extinguished or modified. In particular, he is concerned at increased traffic (including through the potential for traffic associated with paid guest accommodation such as Airbnb); the destruction of the driveway’s character through sealing the carriageway; the likelihood of visitors’ or maintenance vehicles parking on the driveway; traffic created by significant construction and infrastructure works; the risk to existing trees on the driveway; the
transformation of a driveway with rural character being transformed to a suburban look; the loss of privacy between dwellings; increased noise from increased traffic and workers; the potential for up to 12 lots and residential dwellings when only four dwellings now exist and are permitted.
[60] Overall, Mr van Brandenburg fears the overall character and ambience of the current subdivision would be transformed from a rural setting of large, landscaped properties with one dwelling each and controlled planting (protecting views), to an urbanised development.
[61] Mr van Brandenburg prepared a to-scale 3D model of the proposed subdivision to illustrate the potential impact on density and views. The current layout of the properties (and residences) focusing primarily on No 9 and 7 is shown in Table 5 below.
Table 5
[62] Mr van Brandenburg’s model showing the same view but with the introduction of two residential buildings on a subdivided No 7 is shown in Table 6 below.31
Table 6
[63] Ms Costello provided her affidavit evidence after Mr McIntyre’s first affidavit had been filed. She disagreed with Mr McIntyre’s conclusion that there had been substantial changes to the characteristics of the locality in the period since the covenant was registered in 1981. She describes the character of the properties as remaining a rural lifestyle enclave. She says the treed setting; the situation adjacent to reserve land; the lot sizes; the unsealed driveway; and the access off the Arrowtown-Lake Hayes Road contribute to this character. She notes the road itself has a 70 kilometre per hour speed limit with unsealed verges, no formed on-street parking, and extensive roadside vegetation contributing to a countryside character.
31 The two added “buildings” as shown on Table 5 may not comply with requirements such as set-back but are located within the two lots proposed to be subdivided off No 7.
Whereas Mr McIntyre identified Amisfield and roadside bus stops as elements of the road environment which diminished the rural characteristics of the area, Ms Costello considers those features to be low impact, with the overall scenic nature of the area remaining. She concludes the locality is not suburban in character.
[64] Ms Costello does not consider the covenant places an unreasonable constraint on the covenant properties. She first refers to the degree of constraint, comparing the present situation to that in 1981. Minimum lot sizes at the time the covenant was registered (as identified by Mr McIntyre) were 505.8 m2 for a front site and 632.25 m2 for a rear site. She compares that to the current PDP which provides a minimum lot size of 450 m2 (net) applying to No 7.
[65] To compare permitted lot yield, Ms Costello provided a table identifying theoretical maxima according to the relevant planning schemes, as reproduced in Table 7.
Table 7
[66] On the basis of the data in Table 7, Ms Costello concludes there is little difference in the outcomes allowed between the planning provisions from the 1970 District Scheme (applying in 1981) and the current PDP. It follows, in her evidence, the covenant does not impede the use of the properties in a different way or to a different extent from when it was first contemplated.
[67] Ms Costello secondly opines the existence of the covenant which restricts the development of land from achieving what might be allowable under planning rules is not unreasonable. The District’s LDSR zone (which applies to the properties) exhibits a wide range of residential density.32 Ms Costello notes a range of factors can prevent development to the maximum density, including hazards, access, services, topography, ecological values, heritage values, or open space requirements. The Council has a discretion, even where a proposal complies with the lot size standard, to impose conditions or decline an application for subdivision consent.33
[68] Ms Costello says covenants are used, in her experience, to impose restrictions to address such factors or to curate a designed outcome. She opines that not achieving a development to the maximum theoretical density is not unreasonable and occurs in many cases for different reasons which explains the range and diversity of housing within the LDSR zone.
[69] In response to Mr McIntyre’s focus on the NPS-UD as placing a strong emphasis on the intensification of existing urban areas, Ms Costello notes the isolated nature of these properties, away from local centres. She considers the character of this locality and the nature of the properties justifies a control focused on character and amenity outcomes. She observes the constraint remains one of restricting development and capacity on each property from around three lots to one permitted family dwelling house.
[70] In relation to the extent of effects on the parties to the covenant, Ms Costello identifies in particular the loss of privacy and seclusion as a result of increased residential density; the loss of views given the increased built form; a loss of character as a result of potential vegetation loss; and an impact from vehicle movements and parking within the properties and on the driveway.
32 Referring to the PDP, Chapter 7 and in particular, section 7.1 Zone Purpose.
33 Referring to PDP, Rule 27.5.7.
Supplementary expert evidence
[71] On 14 July 2025, the applicants filed an updating affidavit of Mr McIntyre. The purpose was to provide an update on the Council’s proposed Urban Intensification Variation (UIV) to the PDP. Proposals initiated under the UIV to reduce site density from 450 m2 to 300 m2 in the LDSR zone have now proceeded through public consultation. The planning officers had made and have retained a recommendation for a 300 m2 density.
[72] The respondents filed a further affidavit of Ms Costello in reply. For reasons she articulates in some detail, she does not view the UIV, if implemented as currently recommended, as representing a change from the current planning framework that will materially affect the properties. She does not consider the locality of the properties as having sufficient accessibility under the UIV because the properties are isolated in relation to local centres. She also observes that, although (as indicated by Mr McIntyre) the UIV has “progressed further”, the UIV remains subject to hearings later in 2025, with the Council’s recommendation reports being one piece of evidence that will then be considered along with all other expert evidence and submissions received. The recommendations have no legal effect until the Council adopts the decisions of the Independent Hearings Panel, at which point there will be rights of appeal to the Environment Court.
Cross-examination of the experts
[73] In cross-examination Mr McIntyre agreed the density of the applicants’ consented subdivision of three lots is consistent with the density allowed under the 1970 scheme. He accepted also that in 1981 each of the properties could have been subdivided into between three and seven lots depending on whether or not there was a recognised sewer connection. And he accepted the purpose of the covenant in 1981 was to prevent the properties being subdivided into minimum allotments.
[74] In relation to what was foreseeable in 1981, Mr McIntyre accepted it was foreseeable that in the Lake Hayes area:
(a)sections would become smaller;
(b)properties could be subdivided into smaller allotments; and
(c)residentially zoned properties in the area would be subject to further urbanisation.
[75] In relation to sections 49 and 50 (above at [13](b)), which in 1981 had been rural zoned but had since become Council-owned reserve, Mr McIntyre accepted they remain as they had been—undeveloped and vacant.
[76] Mr McIntyre accepted the building at Amisfield is set back from the road, surrounded by mature greenery, and is designed with low impact stone.
[77] In response to questions relating to two new residences at No 7 having adverse effects of loss of privacy for neighbouring properties, Mr McIntyre responded that “permitted development does not have adverse effects” (clearly being a reference to the matters of legal definition under the RMA, rather than the measurement of negative effects as a matter of fact and opinion). Mr McIntyre accepted Ms Costello had correctly identified subdivision of No 7 would increase effects on the properties in terms of built form, noise, traffic movement and people movement.
[78] Mr McIntyre accepted covenants play an important role in restricting and controlling developments and the constraints imposed by the covenant were in fact imposed to restrict and control the development of the properties.
[79] To questions from the bench, Mr McIntyre confirmed that, if the covenant is extinguished or modified as sought by the applicants, there will no longer be a restriction on planting on the defined “common area” on No 7, which could have an impact on matters such as view.
[80] In re-examination Mr McIntyre indicated that, under the PDP, the (3,694 m2) area of No 7 could have 12 residential units. In questions from the bench he clarified that transport standards under the PDP would cut across that ability, explaining that once you go above six units you have to have wider access than the six metres of the current driveway.
[81] Ms Costello was then cross-examined. She agreed the area stretching along the Arrowtown-Lake Hayes Road is now more residential than rural (“rural” being used in a traditional sense).
[82] In relation to her description of the properties acting as a kind of “enclave” of rural lifestyle development, Ms Costello accepted this essentially suggests there is some difference in character between the enclave and the surrounding land.
[83] Ms Costello was referred to the potential for No 7, under the Council’s lot size standards, to be subdivided into seven lots with the consequence the owner, under the covenant, would be missing out on an additional six. Ms Costello replied that is a theoretical density rather than what is feasible at the site.
[84] Ms Costello was then cross-examined as to further subdivision of sections to the north of the properties on Arrowtown-Lake Hayes Road, beyond the road reserve. It was suggested that subdivision was “reflective of the changes in subdivision density that have applied over the time”. Ms Costello replied she was not certain what generated those other subdivisions to occur because the level of subdivision enabled by the Plan even in 1970 was surprisingly dense, allowing lots of a residential nature to around 800 m2. She stated the whole zone that was being considered still has an average lot size of 1,600 m2 overall, so it remains only half as dense as what was enabled in 1970.
[85] In response to questions from Mr Gresson as to the potential for a subdivision of more than three lots at No 7, Ms Costello stated the current subdivision consent essentially represents the feasible development of No 7. She explained this was because of the access requirements identified by Mr McIntyre and also because feasible development is influenced by other factors including market forces, the value of the land in this location, and the need for sites to sufficiently provide for such matters as carparking.
Assessment of the expert witnesses
[86] Both Mr McIntyre and Ms Costello introduced their evidence by confirming they had read and agreed to be bound by the code of conduct for expert witnesses; that
their evidence was within their area of expertise; and that they were independent of the parties to the proceedings.
[87] Mr McIntyre’s affirmed assertion of independence from the parties is an incorrect and troubling feature of his evidence. As noted above at [45] Mr McIntyre prepared the two AEEs exhibited to his affidavit. Plainly, Mr McIntyre was not independent of the applicants—they had been instructing his firm with a view to achieving a subdivision of No 7 for some two years and it was Mr McIntyre who had undertaken the responsibility for providing to the Council an assessment of environmental effects on behalf of the applicants.
[88] My focus here is on the independence of the expert, not on his impartiality. The relevant rule of court in relation to impartiality is r 9.43 High Court Rules 2016 which provides that an expert witness must comply with the code of conduct set out in sch 4 to the Rules (Code). The first duty of the expert witness is an overriding duty to assist the court impartially on relevant matters within the expert’s area of expertise.
[89] As the Court of Appeal explained in Prattley Enterprises Ltd v Vero Insurance New Zealand Limited, it is necessary to distinguish impartiality—the primary objective of the Code—from independence.34 In Prattley, the Court recognised an expert witness need not be independent of the party by whom the expert is briefed, explaining:35
Any potential conflict of interest is ordinarily treated as a matter of weight. That is so because independence goes to the relationship between the expert and the party engaging the witness, while impartiality is a behavioural quality, signifying an attitude of neutrality as between the parties. An expert witness who lacks independence may nonetheless behave impartially.
[90] Mr McIntyre ought not to have claimed in his affidavit to be independent of the parties. He has been and continues to be engaged by the applicants in their planning processes. Significant work had already been undertaken to achieve subdivision consent before Mr McIntyre completed his first affidavit in this proceeding in August 2024.
34 Prattley Enterprises Ltd v Vero Insurance New Zealand Limited [2016] NZCA 67, [2016] 2 NZLR 750 at [99].
35 At [99] (footnotes omitted).
[91] Mr McIntyre’s lack of independence, combined with his failure to identify and articulate it, goes to the weight to be attached to his evidence. The independence of Ms Costello, on the other hand, is not in question.
[92] To the extent my assessment of the evidence of the two experts may have left me in a state of balance on any topic covered by them, I would have been prepared to prefer Ms Costello’s evidence on such point by reference to her independence. But, as I will come to, my assessment of the two experts’ evidence in the context of the evidence as a whole leads me to conclude Ms Costello’s opinions on the key issues are the more reliable.
The “neighbourhood”—discussion
[93] The difference between the parties as to what constitutes the relevant “neighbourhood” for the purposes of s 317(1)(a)(ii) of the Act may be seen in the contrasting extent of geographical areas focused on by Mr McIntyre and Ms Costello respectively. Mr McIntyre initially exhibited an aerial photograph covering the area shown in Table 8 below (a distance of some 1.5 kms between the properties on SH6 in the south-west and the properties on the Arrowtown-Lake Hayes Road in the north). Upon my request for further focus at the trial, Mr Gresson provided me with the aerial photograph, Table 9 below, showing a circled area as to the approximation of the “neighbourhood” as relied on by the applicant. Ms Costello, in contrast, focused on an area depicted in the oblong aerial photograph also exhibited by Mr Gresson which is reproduced above at [13] as Table 4.
Table 8
Table 9
[94] I consider the area shown in Table 4 (above at [13]) most accurately identifies the relevant neighbourhood in this case. Ms Costello used the term “enclave” to describe the area in the vicinity of the properties, which I consider captures their geographical and residential characteristics. To the south-west, on the lake side of SH6, is the extensive area of vacant land comprising Council-owned reserve, formerly farmland, but now vacant grassed land set aside for public recreation and permitting uninterrupted views west. To the north of the properties, and in particular north of Nos 9 and 11, are the large lots (Nos 13 and 15), with a large lawned area between the
house at No 15 and the lake reserve. Beyond Nos 13 and 15, to the north, a shrubbed steep unformed road leads down from Arrowtown-Lake Hayes Road to the lake reserve, providing a natural visual barrier from other residential properties to the north. Between the properties and the lake runs the narrow strip of reserve, also hosting vegetation.
[95] The residences that lend themselves to the description of “neighbours” of the properties are Nos 5, 7, 9, 11, 13, and 15, and arguably Amisfield across the road. Neither more distant, lakeside properties beyond the reserves to the south-west nor the residential properties to the north of the unformed legal road are, in my view, neighbours. Nor are the rural/residential properties some distance to the north, or to the south or east of Amisfield.
[96] Thus, the most appropriate representation of the “neighbourhood” is the area shown in Table 4 (above at [13]).
“Change to the character of the neighbourhood”—discussion
The occurrence of “change to the character”
[97] Once the neighbourhood is characterised as I just have, the focus of Mr Gresson’s submissions is rendered far too broad—the residential development to the north, beyond the unformed legal road, does not fall within it, nor do the rural-residential areas to the south and east.
[98] I prefer Ms Costello’s analysis in relation to the issue of change to that of Mr McIntyre, both by reason of her focus on what I have found to be the relevant neighbourhood and, generally, for the reasons she identified when refuting the applicants’ assertions of material change. In particular:
(a)the scenic nature of the neighbourhood remains protected as it was in 1981;
(b)the properties, together with Nos 13 and 15, are girded by open space reserve land to the south; reserve land on the lake side; and the bushy
unformed legal road to the north. There is no sense of the properties being integrated into a broader zone;
(c)the rural lifestyle quality of this neighbourhood remains as it has long been—comprising a treed, unsealed entrance to the properties (and the treed entrance to Amisfield, on the opposite side of the road); the mature vegetation on the four properties (and on Nos 13 and 15) together with their surrounds (including all along the road frontage); the adjacent open-space reserves; the large lot sizes; and the rural character of this stretch of Arrowtown-Lake Hayes Road with unsealed verges, extensive roadside vegetation, and an absence of formed on-street parking;36 and
(d)the rural lifestyle quality of this neighbourhood is not diminished by either the presence of Amisfield or of the roadside bus stops as suggested by Mr McIntyre. To the extent Amisfield is seen from the road, its appearance is low impact. The bus stops are of minimal impact.
[99] Reference was made in the course of the applicants’ submissions to the decisions of this Court in Sidwell Developments Ltd v Top Dream Developments Ltd (Sidwell) and in Aztek Projects Ltd v Matthews (Aztek).37 Mr Gresson referred to the Court’s finding in Sidwell that the present character of the neighbourhood in that case was very different from the bucolic character of the land when the covenant was created, as reflected by a change in zoning.38 He referred also to the finding in Aztek that the case was very similar to Sidwell, with the surrounding neighbourhood having taken on urban characteristics in place of the rural characteristics that existed at the time the covenant was registered.39
[100]Mr Gresson referred to the observation of Andrew J in Aztek that:40
36 Two basic bus-stops, pointed out by Mr McIntyre, do not detract from the overall rural character.
37 Sidwell Developments Ltd v Top Dream Developments Ltd [2024] NZHC 899 [Sidwell]; and Aztek Projects Ltd v Matthews [2024] NZHC 1293 [Aztek].
38 Sidwell, above n 37, at [31].
39 Aztek, above n 37, at [28]–[30].
40 At [29].
The continuation of the covenant would not hold back the ongoing development of the wider area and was impeding the reasonable use (i.e. development) of the burdened land.
[101] For the reasons I have identified, the applicants here (unlike the applicants in Sidwell and Aztek) have not established a significant change in the character of the neighbourhood.
The foreseeability of changes to the neighbourhood at the time the covenant was registered
[102] When the covenant was registered, it was already possible in terms of zoning for sections the size of these four properties to be more intensively subdivided. It was clearly in the contemplation of the covenanting parties, as indicated by the evidence of Mr Irvine, that sections in the general area were becoming and would continue to become smaller and less rural.
[103] Mr Gresson accepted it would have been reasonably foreseeable (to non-experts) that some change to the neighbourhood would occur. But, in his submission, the extent of change could not reasonably have been foreseen because, with subsequent more relaxed planning rules, more intensive development within the zone has become possible.
[104] I am not persuaded there has been material change to the character of this neighbourhood, which must be the focus of this aspect of my consideration. The focus is not on properties in the zone more widely. As recognised in Synlait, (above at [25]), zoning changes on their own are unlikely to amount to a change in the neighbourhood. Here, while there have been some actual changes in the character of the neighbourhood (such as the Council’s purchase of rural land and its conversion to reserve land and the erection of Amisfield opposite the entry to the properties, situated within the Rural Amenity Zone), the changes are not of a kind that calls for extinguishment or modification of the covenant. Several of the matters that weighed with Fitzgerald J in Larsen v Skelton (above at [33]) apply here:
(a)zoning that has enabled further subdivision of sections in areas in the general locality was in place before the covenant was registered;
(b)subdivision of those sections into smaller lots was foreseeable;
(c)a key reason for the covenant was the preservation of the rural character of the site, resisting the impact of any zoning changes or indeed use of existing zoning laws; and
(d)the area had a distinctly rural lifestyle character as did the properties (Nos 13 and 15) in the immediate vicinity.
The application under s 317(1)(a)(ii)—conclusion
[105] I am accordingly not satisfied there has been a change in the character of the relevant neighbourhood since the creation of the covenant. The application to the extent it relies on s 317(1)(a)(ii) of the Act must fail.
The impact on the reasonable use of the burdened land—discussion
[106] The applicants’ alternative ground for seeking modification or extinguishment of the covenant was that, in terms of s 317(1)(b) of the Act, the continuation in force of the covenant would impede the reasonable use of the burdened land to a different extent from that which could reasonably have been foreseen by the original parties to the covenant at the time of its creation.
[107] Mr Gresson, at the hearing, explained the applicants assert the impeding of reasonable use is under the “to a different extent” limb rather than under the “in a different way” limb.
[108] In very brief written submissions supporting this second ground of application, Mr Gresson again referred to the potential yield of seven lots upon a subdivision of No 7. He referred to this as significant growth of potential, and submitted the covenant properties are “essentially stuck in time”. Mr Gresson, while conceding the covenanting parties would have reasonably foreseen some restriction on development through the covenant, submitted the extent of impact has increased.
[109] I am not satisfied the continuation in force of the covenant in its existing form will impede the reasonable use of No 7 to a different extent from that which could reasonably have been foreseen by the covenanting parties. Just as in relation to the easements restricting the ways in which a development could proceed in Reynolds v Parklands Properties Ltd, the constraint that was always present in this case has simply become more immediate, as the present owners of No 7 have decided to proceed with a development in a manner that would require a covenant to be extinguished or modified.41
[110] On the evidence as I have accepted it, the practicable subdivision of No 7 remains as it initially was, namely as a three lot subdivision. The covenant constrains that in the same way it consistently has.
The application under s 317(1)(b)—conclusion
[111]The applicants’ alternative application grounded on s 317(1)(b) must fail.
Costs
[112]Costs must follow the event.
[113] I heard preliminary submissions from counsel in relation to costs at the conclusion of the hearing.
[114] It was accepted for the respondents, in the event they were successful, costs would be on a category 2 basis with most time allocations likely to be band B. That accords with my view.
[115] Ms Davidson indicated the respondents may wish to seek increased costs in one regard arising from the timing of the filing of Mr McIntyre’s “updating affidavit” on 14 July 2025. That filing led to the need for Ms Costello to file a reply affidavit under some urgency. My preliminary view is that the combination of those events could appropriately be dealt with by the addition of an allocation of one day (on a 2A basis) under item 38 of sch 3 of the Rules.
41 Reynolds v Parklands Properties Ltd, above n 12.
[116] With that preliminary indication, I would expect counsel to be able to resolve the quantification of costs and disbursements. In the event they do not the direction below will apply.
Result
[117]I order:
(a)the application is dismissed; and
(b)costs and disbursements are reserved. In the event the parties are unable to agree on costs and disbursements, they will be determined on the basis of memoranda filed (four page limit), the first, second and third respondents to file and serve their memorandum within 20 working days from today and the applicants to file and serve their memorandum within five working days thereafter.
Osborne J
Solicitors:
Todd & Walker, Queenstown Anderson Lloyd, Queenstown
Copy to:
Queenstown Lakes District Council
APPENDIX 1
bthe defined house site area of the said Lot as delineated on the diagram attached hereto; or
(b) the new lots approved by subdivision consents RM21O887 (as varied by RM23O264) and in accordance with that consent and the District Plan permitted activity standards.
(2)-Other than the erection or placement of buildings on the new lots created by subdivision consent RM21O887 (as varied by RM23O264),-NO building shall be erected or placed upon any lot mentioned in the First and Second Schedules hereto other than one family dwellinghouse with if required a garage or garages and such other buildings as would normally be appurtenant to a family dwellinghouse
(&} {_) Other than the planting of trees and shrubs on the new lots created by subdivision consents RM21O887 (as varied by RM23O264) and in accordance with that consent, NO trees or shrubs shall be planted upon any part of any lot mentioned in the First and Second Schedules hereto delineated as a common
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