Wilkinson v Campbell
[2020] NZHC 159
•13 February 2020
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2019-485-319
[2020] NZHC 159
UNDER Sections 316 and 317 of the Property Law Act 2007 BETWEEN
WILLIAM TREVOR WILKINSON
Applicant
AND
DOUGLAS ROSS CAMPBELL AND CAROLYN JOAN O’MAHONY
First Respondents
ANDREW WILLIAM SPENCER, LINDA CAROL SPENCER-BROOME, RICHARD GRAHAM SPENCER AND STEPHEN
TURNER SPENCER
Second RespondentsPETER FRANCIS CLARK, FRANCES ELIZABETH CLARK AND KENNETH IAN MACKRELL
Third Respondents
SIMON OLIVER COOKE-WILLIS AND PRUDENCE LOUISE COOKE-WILLIS
Fourth RespondentsPAUL RICHARD WEBB AND SANDRA MARY WEBB
Fifth Respondents
KAREN CAMP AND TIMOTHY JOHN CAMP
Sixth Respondents
Hearing: 12 February 2020 Appearances:
P R W Chisnall and C L F Samson for Applicant
Judgment:
13 February 2020
WILKINSON v CAMPBELL AND O’MAHONY [2020] NZHC 159 [13 February 2020]
JUDGMENT OF CLARK J
Introduction
[1] The applicant seeks an order to modify a covenant (the covenant) under ss 316 and 317 of the Property Law Act 2007 (the Act).
[2] The covenant burdens the applicant's property at 17 Oratia Street, Waikanae Beach, Waikanae (more particularly described as Lot 64 on Deposited Plan 45393 and comprised in certificate of title WN23D/909) (the property).
[3] The covenant benefits lots 61, 70, 71, 72, 79, 80, 81 and 82 on Deposited Plan 45393 (the Lots). The Lots are owned by the respondents to this application.
[4] The proceeding has been served on each of the respondent groups. The proceeding has also been served on the Kapiti Coast District Council in accordance with s 316(3) of the Act.
[5] There is no opposition to the application which proceeded by way of formal proof.
Background
[6] The covenant limits any building on the property to a single storey not exceeding 17 feet (5.18m) above ground level.
[7] In 1997, the previous owner of the property extended the house on the property (the house) by adding a second storey to part of the house. The extension complied with all Kapiti Coast District Council rules and requirements but it did not comply with the covenant. The extension stands at 6.34m high at its highest point, 116cm taller than permitted by the covenant.
[8] The applicant purchased the property in January 2012, unaware the house exceeded the height permitted by the covenant. The applicant discovered this in
January 2016 when he attempted to sell the property. The contract was cancelled on the basis title was not approved as the house was in breach of the covenant.
[9] Seven of eight of the affected Lots were purchased after the house was extended, including two of the Lots that were purchased by the fifth respondents in March 2019, with knowledge the house exceeds the permitted height and that this application was on foot.
[10] The applicant is unlikely to be able to sell the property while the house is in breach of the covenant. He seeks to regularise the house with the covenant to allow the house to remain as it stands, and to avoid having to undertake disproportionately costly renovations to reduce the height of the house.
[11] To this end, the applicant has proposed wording for the modification of the covenant (proposed wording), which each of the respondents have seen and had an opportunity to comment upon.1
[12] The second to sixth respondents have consented to the proposed modification. The first respondents have taken no steps in the proceeding.
Position of respondents
[13] The second to sixth respondents have each filed a memorandum in which they record they:
(a)have read the documents filed in this proceeding, including the finalised proposed wording;
(b)have had the opportunity to take independent advice in relation to the application;
(c)understand the impact the proposed modification will have on the covenant;
1 The proposed modification is contained in the annexure to this judgment.
(d)do not consider the proposed modification will substantially injure them; and
(e)consent to the proposed modification of the covenant.
[14] Via its Principal Resource Consents Planner, the Kapiti Coast District Council advised it does not have an interest in the application as the total height of the house is compliant with current District Plan provisions.
Legal principles
[15] Section 316 of the Act provides that a person bound by a restrictive covenant may make an application to a Court for an order under s 317 modifying or extinguishing that covenant.
[16]Section 317 of the 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:
(iii) any other circumstance the court considers relevant; or
(b)the continuation in force of the easement or covenant in its existing form would impede the reasonable use of the burdened land in a different way, or to a different extent, from that which could reasonably have been foreseen by the original parties to the easement or covenant at the time of its creation; or
(c)every person entitled who is of full age and capacity—
(i) has agreed that the easement or covenant should be modified or extinguished (wholly or in part); or
(ii) may reasonably be considered, by his or her or its acts or omissions, to have abandoned, or waived the right to, the easement or covenant, wholly or in part; or
(d)the proposed modification or extinguishment will not substantially injure any person entitled; or
…
(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.
[17] As filed the application relies on s 317(1)(d) but, at the hearing, the application was advanced also on the grounds in subs (1)(c)(i) and (ii).
[18] If the Court is satisfied that one or more of the pre-requisites for an order under s 317 is met it must then consider whether it is an appropriate case for the exercise of its discretion.2 In Re Barfilon Investment Ltd Gault J observed:3
… there has been a progressive broadening of the scope of the provision empowering the Courts to modify or extinguish easements and covenants as well as a relaxation of the approach the Courts have adopted to the exercise of discretion.
[19] Even so, the applicant must show good grounds to satisfy the Court that a modification is appropriate in the circumstances.4
Analysis
[20] As mentioned, the second to sixth respondents agree to the proposed modification of the covenant, thus satisfying s 317(1)(c)(i).
[21] In relation to the first respondents, for the following reasons I am satisfied the threshold in s 317(1)(c)(ii) is met and that they may reasonably be considered to have waived the right to the covenant:
(a)The first respondents purchased their property in June 2009 when the
2 North Holdings Development Ltd v WGB Investments Ltd [2014] NZHC 670 at [55].
3 Re Barfilon Investment Ltd [2019] NZHC 780 at [22].
4 At [23], applying Waikauri Bay Reserve Ltd v Jamieson HC Auckland CPI 981/87, 12 February 1990, which concerned an easement, and finding the same applies to a covenant.
house had stood in its current form for 12 years.
(b)Since at least December 2016 when the applicant first raised the breach with the first respondents, they have been aware the house exceeds the height permitted by the covenant but have taken no steps to enforce the covenant.5
(c)The evidence shows the first respondents have been served with the application and have been given opportunities to oppose it, or request amendments to the proposed wording, but have done neither and have taken no step in the proceeding.
[22] Under s 317(1)(d) the Court must be satisfied the proposed modification “will not substantially injure any person entitled”. Substantial “is to be read as meaning real, considerable, significant, as against insignificant, unreal, or trifling”.6
[23] In assessing whether an injury is substantial or not, the Court is not only to have regard to individual circumstances but also to the effect of those individual circumstances cumulatively.7 The second to sixth respondents have confirmed they do not consider they will suffer substantial injury and, despite being given ample opportunity to do so, the first respondent has raised no objection to the application.
[24]The High Court (on appeal) held in Pollard v Williams:8
[21] It is first important to identify what the purpose of the covenant is. Only then can the Court assess whether removal or modification will “substantially injure” any entitled person.
[25] The purpose of the covenant is to prevent obstruction of the views of the respondent groups' properties. Modification of the covenant in the limited terms proposed does not defeat this purpose:
5 See letter to the first respondents dated 23 December 2016.
6 Plato v Ashton [1984] 2 NZPR 191 (CA) at 194 per McMullin J.
7 North Holdings Development Ltd v WGB Investments Ltd citing Potter v Petersen [1993) DCR 1021 at 1030.
8 Pollard v Williams [2019] NZHC 2029, (2019) 20 NZCPR 371.
(a)The house exceeds the height permitted to a limited extent only and does not significantly impact the outlook from any of the respondents’ properties.
(b)The modification sought is of limited scope — to allow the house to stand as it has for 23 years, and allowing no further development that may obstruct the respondent groups’ views.
(c)The evidence shows the majority of the respondent groups’ properties are not directly proximate to the house and that the house would impact their views to a minimal extent.
(d)Seven of the eight Lots were purchased after the extension had been built so the outlook of those properties has not changed to any extent for the owners of those Lots.
[26] In Feng Family Investments Ltd, the applicant had erected a two-storey building on the land, and sought to modify a covenant that restricted the height of any building on the land to a single storey.9 As in this case, the applicant did not know of the covenant until an agreement to sell the property came to an end and the breach of covenant was then identified.
[27] The Court held the modification would not substantially injure any person entitled, despite some modest restriction of outlook.10 It held “the absence of objection by any party features prominently in that conclusion.”11 In the present case, no party has objected and the majority have consented to the modification.
[28] Further, the modification sought by this application is narrower than that granted in Feng. The covenant in Feng was modified to allow a building of no more than two storeys. The effect was to permit demolition of the existing building and construction of a two-storey building. In the present case the modification provides
9 Feng Family Investments Limited v Whitelaw [2017] NZHC 2297.
10 At [29].
11 At [30].
that if the house were demolished or the extension significantly renovated, the height restriction in the covenant would again apply to the house.
[29] On the foregoing basis, the ground in s 317(1)(d) is met. I am satisfied modification of the covenant will not substantially injure any person entitled, as is demonstrated by the lack of objection to the application.
Exercise of Court’s discretion
[30] There is no basis for exercising the Court’s discretion against the grant of the application particularly where no party has objected to the modification.12
[31] The applicant had no knowledge of the breach, did not create the breach, and the modification sought will simply regularise the position that has existed for 23 years. This combination of circumstances is unlikely to repeat itself. On this basis the modification of the covenant will not set a materially adverse precedent allowing other properties bound by the covenant to seek the same modification.13
Compensation
[32] An order modifying a covenant may require the applicant to pay to any person specified in the order reasonable compensation as determined by the Court.14 Mr Chisnall submitted that once s 317(1) is established, the Court should consider whether there is likely to be a loss or disadvantage to any person. If a loss or disadvantage seems likely, the Court may determine an award of reasonable compensation under s 317(2).
[33] In the present case, there is no loss or disadvantage to the respondents. No party has opposed the application or sought compensation or costs. In these circumstances, no order for compensation is warranted.
12 Re Lewis [1959] NZLR 1040 at 1041 per Hutchinson ACJ.
13 Pollard v Williams, above n 8, at [35].
14 Property Law Act 2007, s 317(2).
Summary
[34] I am satisfied the grounds in ss 317(1)(c) and (d) of the Act are established. The entitled parties have either consented to the application, or waived the right to the covenant, to the extent the house is able to remain as it has stood for 23 years. In any case, the modification will not substantially injure any entitled party.
[35] The applicant is not at fault for the breach of the covenant and seeks only to regularise the position. The modification is of limited scope and does not permit the applicant to further breach the covenant.
[36] No loss will be suffered or burden imposed on the respondents’ land by the making of the order for which the applicant applies. No party has opposed or sought compensation in relation to the application. The payment of compensation is not appropriate in this case.
[37] The respondents are to be commended for their constructive and helpful response to the application, as is counsel for the respondents for his considerable industry.
Result
[38] The covenant set out in the second schedule to Memorandum of Transfer (217917.1) applying to Lot 64 on Deposited Plan 45393 comprised in certificate of title WN23D/909, is deleted and substituted with a modified covenant in the terms set out in the order annexed to this judgment.
Karen Clark J
Solicitors:
Hughes Robertson, Wellington for ApplicantGreig Gallagher & Co, Wellington for Second to Sixth Respondents
Order of the Court
The restrictive covenant applying to lot 64 on deposited plan 45393 created by
transfer 217917.1 (attached) as it relates to lots 61, 70, 71, 72, 79,80 and 81 and 82 on Deposited Plan 45393 is modified pursuant to sections 317(1)(c) and (d) of the Property Law Act 2007 by amending the second schedule of the transfer to read as follows:
Stipulations and Restrictions Applicable to: Lots 63 and 65 to 69 inclusive on Deposited Plan 45393 and for the benefit of Lots 61, 70, 71, 72, 79, 80,
81 and 82 on Deposited Plan 45393:
The Transferee will not erect or permit to be erected on the said piece of
land any building which is other than a single storey building having a roof height of less than seventeen (17) feet above the ground level at the centre- line of the driveway at the boundary of the said piece of land to Oratia
Street as shown on the said Deposited Plan.
Stipulations and Restrictions applicable to Lot 64 on Deposited Plan 45393 and for the benefit of Lots 61, 70, 71, 72, 79, 80, 81 and 82 on
Deposited Plan 45393:
The Transferee will not erect or permit to be erected on the said piece of
land any building which is other than a single storey building having a roof height of less than seventeen (17) feet above the ground level at the centre — line of the driveway at the boundary of the said piece of land to Oratia
Street as shown on the said Deposited Plan, except for:
i.the existing dwelling situated on the land as at the date of 1 May 2019 (Existing Dwelling); or
ii.any reconstruction, or repair of the second storey of the Existing Dwelling where the second storey of the Existing Dwelling is damaged by fire or natural disaster, demolished, dismantled or renovated externally (except for re-cladding) by an area of 40% or less (such percentage to be determined by an independent valuer and such decision of the independent valuer to be given to the registered proprietors of Lots 61, 70, 71, 72, 79, 80, 81 and 82 on Deposited Plan 45393 (postal delivery being sufficient notice)). The registered proprietors of Lots 61, 70, 71, 72, 79, 80, 81 and 82 on Deposited Plan 45393 may appoint their own independent valuer if they dispute such decision.
The Existing Dwelling, including any reconstruction, repair, renovation, demolition or dismantling carried out pursuant to paragraph (ii), (excluding residential chimneys, ventilator shafts, electricity transmission towers, masts, radio, television and telecommunication aerials) on the servient
tenement will not exceed a height of 6.45 metres above the ground level at the centre-line of the driveway at the boundary of the said piece of land to Oratia Street as shown on the said Deposited Plan.
The Transferee will not (excluding residential chimneys, and plumbing
vents) erect or permit to be erected any structures, make any additions or do any substantial alterations (excluding internal alterations, maintenance and recladding) to the second storey of the Existing Dwelling.
The Transferee will not erect or permit to be erected any new residential chimney or plumbing vent on the second storey of the Existing Dwelling except for residential
chimneys and plumbing vents that are erected in replacement of an existing residential chimney or plumbing vent and are the same height and size or as close as reasonably possible in height and size or smaller in height and size than the existing residential
chimney and plumbing vent.
AUX AND £Tt,' J.H. and JULIA DIJNN, [* . :. ” - ” '”
-‹
@g B2 oa De9oeit ad P 9
2hq beta her es wf ii not e>°.ct m• psrmi$ to be we c ted on the sa:ifi pt ee6 of land ang bi;i11fing Chi oh 1 a other Can a sfigk a
eI oreg b-u:iidlng haveg a to or tieI gm of be sa I.han s ayendeen (4 )
:feet above gr out d k eval beeng the averag o levek o•• The frontage
DeposJte‹1 Plan
smmAmQmsAnssxcmoNesWc *oat,z t 6gi=i= on
Eo G 6k on suoh Dep o m• ie d P2•n:
4
0