Whittaker v Jericevich - [2012] NZHC 1545

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

CIV-2012-441-000186 [2012] NZHC 1545

BETWEEN JEFFREY WILLIAM WHITTAKER Appellant

ANDANTONY MIROSLAV JERICEVICH AND MARIA KATHRYN JERICEVICH Respondents

Hearing: 20 June 2012

Counsel: M B Lawson for appellant
B W Gilmour and M Nicol for respondents

Judgment: 2 July 2012

RESERVED JUDGMENT OF DOBSON J

[1] The parties to these proceedings are both owners of properties in a relatively recent residential subdivision promoted as “Eskridge Farm Park” (the development). The respondents (the Jericevichs) have had designed and built a single storey dwelling house, with the intention of operating it as a bed and breakfast as well as it being their own residence. Their home complies with all relevant resource management and building code requirements, but the appellant (Mr Whittaker) complains that a bed and breakfast operation run from a property in the development is prohibited because of a restrictive covenant that was placed on the titles of all the sections in the development by the developer. That provision provides:

The transferee (being the owner) shall ... (b) not permit the placement or erection on the lot [of] any building other than a one single storey residential dwelling together with not more than two single storey accessory buildings...

[2] Mr Whittaker pursued a claim in the Napier District Court to prevent the conduct of a bed and breakfast business on the basis that such operation was
prohibited by the terms of this provision in the restrictive covenant. In a reserved

WHITTAKER v JERICEVICH HC NAP CIV-2012-441-000186 [2 July 2012]

decision on 19 March 2012, Judge B Mackintosh refused relief on the basis that the terms of the covenant did not prohibit the activity of a bed and breakfast operation within the Jericevichs’ home. Mr Whittaker has appealed that decision.

[3] The issue in the appeal is whether the scope of the restrictive covenant is to be interpreted so as to prohibit the operation of the bed and breakfast business. Before reviewing the factual background in which the covenant now appears on the titles to both properties, there is an issue of law as to whether the approach to interpretation of the terms of a restrictive covenant permits any account to be taken of the context in which the relevant provision appears.

[4] Authority in the High Court of Australia has given pause for thought on the appropriateness of admitting evidence of context as an aid to interpreting the terms of a restrictive covenant.[1] The rationale for disregarding extrinsic evidence was that a third party searching the title could not be expected to look for extrinsic evidence as to the circumstances existing at the time the dealing was registered against the title. In the particular case, the provision was an easement, but the same approach
would apply to restrictive covenants such as the one registered here.

[1] Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 239 ALR 75 (HCA).

[5] That approach to interpretation was considered by the Court of Appeal in Big…

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 Whittaker v Jericevich

Details

AGLC: Whittaker v Jericevich [2012] NZHC 1545
Case: [2012] NZHC 1545
Decision Date: 2 July 2012

CaseChat Overview and Summary

The appeal in Whittaker v Jericevich was heard by the High Court of New Zealand and concerns a dispute over the interpretation of a restrictive covenant in a residential subdivision. The appellant, Mr. Whittaker, sought to prevent the respondents, the Jericevichs, from operating a bed and breakfast business from their home in the subdivision, arguing that the covenant prohibiting buildings other than single storey residential dwellings prevented such an operation. The District Court had previously ruled in favor of the Jericevichs, and Mr. Whittaker appealed that decision.

The legal issue before the court was whether the restrictive covenant's scope should be interpreted to prohibit the operation of a bed and breakfast business. The court also considered whether the interpretation of the covenant should take into account the context in which the relevant provision appeared. The court reviewed the approach to interpreting restrictive covenants, noting that the appropriate method is to ascertain the meaning the parties would have intended, taking into account the background knowledge that would have been reasonably available to them at the time of the contract.

Upon examining the context of the covenant, the court found that the developer intended to promote a high-standard farm park by imposing constraints on the appearance and use of structures on the lots. The court rejected the appellant's argument that the covenant required the exclusivity of the character of a building as a residential dwelling. Instead, the court held that the covenant should be interpreted as making reasonable accommodations for adjuncts to what would strictly be found in a residential dwelling, as long as they did not deprive the structure of its essential character as a residential dwelling.

The court also dismissed the argument that the covenant implicitly constrained the use to which owners could put their buildings. The court held that a clear signal would be required to imply such a limitation on use, and that the developer would have explicitly stated any such constraints if they intended to impose them.

Ultimately, the court found that the appeal must be dismissed, and the respondents were entitled to costs. The court's reasoning demonstrates the importance of interpreting restrictive covenants in light of the context in which they were created and the intentions of the parties involved.

Orders