Woodcocks Property Limited v Auckland Council
[2021] NZHC 1600
•30 June 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1003
[2021] NZHC 1600
UNDER the Property Law Act 2007 IN THE MATTER
of an application under sections 316 and 317 of the Property Law Act 2007 to extinguish or modify covenant
BETWEEN
WOODCOCKS PROPERTY LIMITED
Applicant
AND
AUCKLAND COUNCIL
First respondent
RODNEY RESIDENTIAL LIMITED & OTHERS
Second respondents
Date of hearing: 30 June 2021 Appearances:
D J Chisholm QC and J D Ryan for the applicant
Date of judgment:
30 June 2021
JUDGMENT OF JAGOSE J
This judgment was delivered by me on 30 June 2021 at 4.30pm.
Pursuant to Rule 11.5 of the High Court Rules.
………………………… Registrar/Deputy Registrar
Counsel/Solicitors:
D J Chisholm QC, Auckland
Claymore Partners Limited, Auckland
Auckland Council – Legal Services, Auckland
WOODCOCKS PROPERTY LTD v AUCKLAND COUNCIL [2021] NZHC 1600 [30 June 2021]
[1] As duty judge, I have Woodcocks Property Limited’s (“Woodcocks”) originating application for an order to extinguish or modify a covenant over its land “not to permit any house which has previously been lived in and is more than five years old to be moved on to the land”. Venning J granted leave for such to be sought by originating application, and dispensed with service on the second respondents.1 The first respondent, Auckland Council, abides my decision.
Background
[2] In 2009, Woodcocks acquired six hectares of rural land in Warkworth for subsequent development into a staged residential subdivision. In 2014, it acquired a neighbouring nine hectares on a registered title for Lot 3, DP 150976, subject to the covenant in favour of the adjoining Lots 2 and 4–8. The whole of the original six- hectare acquisition, and about one-third of the subsequent nine-hectare acquisition, since has been subdivided and sold (including to Auckland Council for road and reserve public works). The second respondents purchased individual titles in that one-third.
[3] Auckland Council previously obtained land within the subdivision for roading and reserve under s 17(2) of the Public Works Act 1981. Woodcocks’ Gregory Molloy says the Director-General of Land recently “has indicated that [such] dedication … is no longer an appropriate mechanism for vesting land in a local authority”. Woodcocks intends also to subdivide the other two-thirds, including by vesting land in Auckland Council for roads and reserves. Sections 238 and 239 of the Resource Management Act 1991 require land for vesting in a local authority as roads and reserves to be “free from all interests in land including any encumbrances”.
[4] The covenant is such an encumbrance. Woodcocks now seeks the covenant either be extinguished or modified so far as its burden lies on the other two-thirds of the land of which it remains registered proprietor. In support of the covenant’s extinguishment, it proposes to register separate covenants over each new title, for the mutual benefit of all those new titles, in terms including as to the design, appearance and utility of any improvement to be erected on the subject land. Alternatively it
1 Minute of 10 June 2021.
proposes modification to make it plain the covenant does not apply to, and is deemed to be discharged and of no effect on registration of, any transfer to a local authority under a subdivision consent in terms of the Resource Management Act 1991.
The law
[5] Under s 317(1) of the Property Law Act 2007, I may modify or extinguish a covenant only if satisfied:
(a) the … 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 … 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 … covenant at the time of its creation; or
(c) every person entitled who is of full age and capacity—
(i)has agreed that the … 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 … covenant, wholly or in part; or
(d) the proposed modification or extinguishment will not substantially injure any person entitled; or
(e) in the case of a covenant, the covenant is contrary to public policy or to any enactment or rule of law; or
(f) in the case of a covenant, for any other reason it is just and equitable to modify or extinguish the covenant, wholly or partly.
[6] Woodcocks must show grounds for the orders sought exist;2 it then is an issue if I should exercise my discretion.3 Section 317 cannot be used to relieve it of the
2 New Zealand Industrial Park Ltd v Stonehill Trustee Ltd [2019] NZCA 147 at [72], citing Manuka Enterprises Ltd v Eden Studios Ltd [1995] 3 NZLR 230 (HC) at 233; Waikauri Bay Reserve Ltd v Jamieson HC Auckland CP1981/87, 12 February 1990; and Rental Space Ltd v March (1999) 4 NZ ConvC 192,873 (HC) at 192,887.
3 Jansen v Mansor CA331/91, 16 October 1992 at 5.
covenant “simply to improve the enjoyment of [its] property for [its] private purposes”.4
[7] In reliance in particular on s 371(1)(b), Woodcocks says the covenant in its present form impedes the reasonable use of the burdened land differently from that which could reasonably have been foreseen by the original parties to the covenant. At the date of its creation the covenant over the land was for the benefit of the adjoining Lots 2 and 4–8 “not to permit any house which has previously been lived in and is more than five years old to be moved on to the land”. But the rural land then now is “a hub for residential development in accordance with the Auckland Unitary Plan”.
[8] For Woodcocks, David Chisholm QC argues such intensive subdivision now could not then reasonably have been foreseen. The covenant does not prohibit (further) subdivision, for which internal roads and reserves are required to be vested in Auckland Council, and has no relevance to such vesting. Given the covenants to maintain building standards on the new titles, he says the original covenant no longer serves any practical purpose. Therefore extinguishing or modifying the original covenant will not substantially injure any person entitled to its benefit.
[9] However the new covenants only are for the benefit of each other new title in the two-thirds’ balance of the subsequent acquisition. The original covenant was for the benefit of strangers to that acquisition (that is, the registered proprietors of Lots 2 and 4–8). Its extinguishment may well be to their substantial injury; I do not know. It may have been a misreading of the covenant to think it benefited any successor in title to Lot 3; they only may bear its burden. Its beneficiaries subsist. After discussion with Mr Chisholm in this morning’s list, he is content for the covenant to be modified as sought.
[10] I am satisfied both continuation of the covenant would impede subdivision of the land to the extent of roads and reserves to be vested in Auckland Council in terms of ss 238 and 239 of the Resource Management Act 1991, such intensive subdivision being a reasonable use of the subject land to a different extent from that which could
4 New Zealand Industrial Park Ltd v Stonehill Trustee Ltd, above n 2, at [73].
reasonably have been foreseen at the time of the covenant’s making; and its modification as sought will not substantially injure any person entitled to its benefit.
[11] I therefore order in terms of subparagraphs (d)–(f) inclusive of paragraph 1 of Woodcocks’ originating application dated 21 May 2021.
—Jagose J
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