Kaimai Properties Limited v Queen Elizabeth the Second National Trust [2021] NZCA 10 (15 February 2021)

Last Updated: 24 February 2021

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA370/2019 [2021] NZCA 10

	BETWEEN	KAIMAI PROPERTIES LIMITED Appellant
	AND	QUEEN ELIZABETH THE SECOND NATIONAL TRUST Respondent

Hearing:	29 October 2020
Court:	Kós P, Cooper and Gilbert JJ
Counsel:	A R Galbraith QC and K E Cornegé for Appellant R J B Fowler QC and F B Q Collins for Respondent
Judgment:	15 February 2021 at 9 am

JUDGMENT OF THE COURT

1. The appeal is dismissed.
2. The appellant must pay costs to the respondent for a standard appeal on a band A basis, with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Kós P)

• [1] This appeal is about two blocks of land in the Kaimai Ranges. The landowner entered open space covenants over parts of the land with the Queen Elizabeth the Second National Trust.^[1] At the time one of the blocks was subject to a licence enabling a third party to quarry that land. The landowner did not consult the quarry operator. It now seems one of the covenanted areas may restrict expansion of the quarry. The quarry operator then sought to purchase the two blocks from the landowner. During negotiations it discovered the covenants, but proceeded with the purchase notwithstanding. It later applied to the High Court for declarations that the terms of the covenants permitted expansion of the quarry into the covenanted areas. Alternatively, it sought rectification of the covenants.
• [2] Edwards J dismissed the claim.^[2] The quarry operator, now also owner of the land, appeals.

Background

• [3] The two blocks of relevant land are adjoining titles in the Kaimai Ranges. Bartons Kaimai Farm Ltd operated a quarry on the main block from 1973 and then purchased that block in June 1979. In March 1982 it sold it to Hiona Heights Ltd, owned by a Mr Ian Diprose. Mr Diprose already owned the smaller block. In September 1982 Bartons and Hiona entered an agreement giving Bartons the right to operate the quarry in a defined area for a 40-year term commencing 21 December 1981.^[3] During that term no royalties were payable on rock mined.
• [4] In 1983, Hiona entered a Land Improvement Agreement (LIA) with the Hauraki Catchment Board, whereby Hiona agreed that 100 ha of the mainly southern parts of the main block would be held as a reserve and protected from stock grazing.
• [5] In 1986, the Swap family purchased Bartons. The appellant, Kaimai Properties Ltd, is part of a group of companies owned by the Swaps.
• [6] In 1993, Hiona and Bartons reached an agreement under which Bartons retained its entitlement to operate the quarry within a defined quarry area until 2021 with no payment of royalties to Hiona.^[4] The 1993 agreement provided for a right of renewal for a further 40 years at a royalty rate to be agreed. It also contemplated the expansion of the quarry beyond the south eastern boundary. Clause 6 provided expansion outside of the quarry area, if necessary, would be subject to further negotiations between Hiona and Bartons, as would the question of any additional royalty payments.
• [7] We record the Judge below found the boundary of the quarry area in the 1982 and 1993 agreements did not change.^[5] Though both agreements record the quarry area as 39.4242 ha, the relevant plans in fact show the quarry area was extended to the east to a feature marked on a plan as the “point on crag”.
• [8] In April 1998 the Matamata-Piako District Council granted a certificate of compliance for the quarry operation. This confirmed existing land use rights. Relevantly these provided for expansion of the quarry to the east.
• [9] In 2003, Hiona reached an agreement with the Matamata-Piako District Council regarding the proposed establishment of a green belt. A Development Concept Plan (DCP) was developed and agreed in April 2003. The plan allowed quarrying, as well as conservation and commercial forestry, in the quarry area. The proposed expansion of the quarry, at least for that 10-year timeframe, was to the east.
• [10] In November 2004, Mr Diprose began looking for ways to reduce his rates burden and get some fencing assistance. The Waikato Regional Council suggested he place parts of the land under covenant and put him in contact with Mr Hamish Dean of the Trust.
• [11] In February 2005, Mr Diprose met with Mr Dean and Mr Rien van de Weteringh of the Waikato Regional Council at the blocks to discuss the possibility of covenanting the land. Messrs Diprose and Dean met several times subsequently.
• [12] Exactly what was said between Messrs Diprose and Dean at those meetings is disputed and central to the claim for rectification. Both Messrs Diprose and Dean accepted they cannot recall exactly what was said. The contested nature of the content of the meetings can be summarised.
• [13] Mr Diprose believes he made it clear to Mr Dean that flexibility would be needed to allow the quarry to expand. Mr Diprose’s belief that flexibility would be provided for in the covenant was to a degree corroborated by Mr Taris, the surveyor we refer to below. In cross-examination, Mr Diprose accepted he may not have stated the quarry would need to expand into the covenanted areas “in direct terms”, but that reality would have been obvious to Mr Dean from his site visits.
• [14] Mr Dean on the other hand stated he would remember if Mr Diprose had said expansion was to be into the covenanted areas. If it had been said, Mr Dean said he would have explained it would not be possible. When cross-examined, Mr Dean stated he believed from the DCP the quarry would expand to the east; he did not recall any mention by Mr Diprose of expansion to the south. He said he was depending on Mr Diprose to advise him of any issue of conflict:

... if somebody had said that to me it would have been a simple matter of making the covenant boundary back to where it needed to be. [There] ... was no drive to have it right next to the quarry so ... if that discussion had taken place ... it would have been dealt with.

• [15] Mr Dean compiled a report following these visits. That report mentioned three special conditions which were carried through into sch 3 of the covenants (outlined at [20] below). The report does not mention expansion of the quarry.
• [16] The Trust board approved two open space covenants over 151.2 ha of land in the blocks on 18 May 2005. The approval documents contained indicative boundaries. The proposed covenants were sent to Mr Diprose and his wife in June 2005. The Diproses signed the covenants in September 2005.
• [17] The covenanted land was described by area and by reference to an attached aerial plan. This plan was not however attached until 2007, following a survey undertaken by Mr Taris. Mr Diprose showed Mr Taris around the land and subsequently made several changes to the indicative boundaries during the survey. One of those changes was to the boundary of the main block covenant to allow an area for overburden from the quarry to be deposited. Mr Diprose deposed Mr Dean agreed to the alteration and commented “it’s better to change now as it will be difficult to change later”.
• [18] The covenants, featuring the now-agreed boundaries depicted in aerial plans, were registered over the blocks on 15 October 2007. The economic benefits of the covenants to Mr Diprose were modest: a sum of approximately $11,000 from the Trust for surveying, fencing and planting, and approximately $7,000 from the Regional Council for the latter two, together with a modest annual rates remission in respect of the land (which was less than $150).
• [19] The most relevant clauses of the covenants are cls 2.1, 2.2(g) and 4.1 of sch 2. Clause 2.1 provides:

2.1 No act or thing shall be done or placed or permitted to be done or remain upon the Land which in the opinion of the Board materially alters the actual appearance or condition of the Land or is prejudicial to the Land as an area of open space as defined in the Act.

Clause 2.2(g) provides the owner agrees not to “[c]arry out any ... quarrying of any minerals ... or other substance” without the prior written consent of the Trust. Clause 4.1 provides:

4.1 If notified by any authority, body or person of an intention to erect any structure or carry out any other work on the Land, the Owner agrees:

(a) to inform the authority, body or person of this Deed;

(b) to inform the Trust as soon as possible; and

(c) not to consent to the work being done without consulting the Trust.

• [20] Schedule 3 of the covenants recorded special conditions relating to the use of the land. Both covenants allowed the continued use of farm tracks and water for farming purposes, and cl 3 of sch 3 of the main block covenant allowed the continued use and expansion of communications and radar facilities located in the south-east corner of the main block. There is no special condition allowing expansion of the quarry into the covenant areas.
• [21] In 2009 Hiona (and Mr Diprose) agreed to sell both blocks to Kaimai. During negotiations, the Swaps first became aware of the open space covenants. Following legal advice, the sale proceeded in September 2009 with ownership of the blocks transferring to Kaimai.
• [22] In 2012, the Swaps determined the quarry would soon need to expand south, thereby affecting 40 ha of the covenanted area. Following a formal proposal by its sister company, Bartons, to expand the quarry, Kaimai advised the Trust of the request in October 2015. Kaimai took the position that cl 4.1 only obliged it to consult with the Trust, but the Trust had no right of veto over the expansion.
• [23] In November 2015, the Trust advised it considered it had a veto right and did not consent to the expansion.
• [24] Kaimai commenced this proceeding in 2017.

Some observations on the evidence

• [25] We turn from this summary to make three observations on the evidence.
• [26] First, Mr Diprose plainly made a series of errors. It was certainly an error not to consult with the licensee quarry-operator about the proposed covenants. It was probably an error not to obtain legal advice. It is possible Mr Diprose also made a mistake as to the meaning of the covenants, although he plainly appreciated that the covenants would affect flexibility in development, to some extent. In fact, cls 2.1 and 2.2 could hardly be clearer. That is why he made boundary changes in 2007 at the time of the survey, and had the discussion with Mr Dean about it being better to fix it now rather than later. But he cannot sensibly have imagined that cl 4 had the effect he claimed in evidence: it would have meant he did not need to reorder the boundaries in the way he had done in 2007 when finalising the covenants for registration.
• [27] Secondly, the appellant has not demonstrated on the evidence Mr Dean had any apprehension of a mistaken understanding by Mr Diprose about the effect of the covenants. Quite the contrary; Mr Dean did remind Mr Diprose of the restrictive effects of the covenants generally and was quite willing to alter the boundaries — as evidenced by his actions in 2007 and the evidence noted at [14]. In any case, it was not the Trust’s responsibility to provide legal advice on the effect of the covenants to applicants.
• [28] Thirdly, Kaimai of course bought the land with its eyes open. The sale agreement expressly recorded the issue:

24.0 The parties hereto acknowledge that there may be difficulties with the QEII National Trust in relation to the Open Space Covenant on the land. The director of the Vendor, Ian Bruce Diprose, will assist the Purchaser in resolving the difficulties with the Trust. The parties will review the situation in relation to the negotiations with the Trust on or before 24 September 2009. In the event that satisfactory progress has not been made the parties agree to revisit either the price or the settlement date. It is not anticipated that there will be a problem with the boundary adjustment with the QEII National Trust.

• [29] The last sentence proved optimistic. Kaimai’s solicitor conferred with the Trust’s lawyer before settling. The Trust advised him that any proposal for adjustment to the extent of the covenanted land would require careful consideration and a unanimous decision by the Trust board. Further, that if any loss of protected areas was proposed, that loss might well need to be compensated by formal protection of other areas in the locality. Ultimately the issue has not been resolved by agreement. At least, not yet.

Issues

• [30] Counsel for the appellant identified six issues for our consideration. We are satisfied these can be decanted into two more general issues:

(a) Did the Judge err in construing the covenants?

(b) Did the Judge err in refusing to rectify the covenants?

Did the Judge err in construing the covenants?

• [31] The Judge began by setting out the approach to the construction of instruments creating interests in land.^[6] The Judge noted the approach to the admissibility of extrinsic evidence taken by William Young and O’Regan JJ in Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust.^[7] She did not need however to address the question of extrinsic evidence because the Judge considered the meaning of cl 4.1 to be plain on its text.^[8]
• [32] The Judge first rejected Kaimai’s construction giving the owner a power to consent to works in the covenanted area as inconsistent with cl 2.1, which focusses on the nature of activity rather than who does the activity and reserves decision‑making power to the Trust board.^[9]
• [33] Secondly, the Judge found such a construction would also be at odds with cl 2.2, which provides the owner will not carry out the specific listed activities in paras (a)–(j) except with written consent of the Trust (or as provided for in sch 3).^[10] Kaimai’s interpretation would allow the owner to circumvent cl 2.2 by permitting third parties to carry out the activity the owner had by covenant agreed not to.^[11]
• [34] Thirdly, the Judge also found Kaimai’s construction would be inconsistent with cl 2.3, which provides the board will not unreasonably withhold consent to requests under cl 2.2. The Judge considered this meant control over activities in the covenanted land rests with the Trust and the owner’s rights were severely curtailed.^[12]
• [35] Fourthly, the Judge also considered a broad discretion for the owner to consent to activities would be inconsistent with the “carefully delineated carve-outs” of the listed activities in sch 3 which were permitted in the covenant boundaries.^[13]
• [36] Finally, the Judge considered Kaimai’s construction would be inconsistent with the purposes of the covenants — to protect the environmental value of the land in perpetuity by preserving the natural character of the land — interpreted in light of the Queen Elizabeth the Second National Trust Act 1977.^[14]
• [37] Recourse to extrinsic evidence or the contra proferentem rule was unnecessary as the meaning of cl 4.1 was clear on its terms. In any respect, and for the reasons discussed when considering rectification, the Judge found extrinsic material did not favour the construction Kaimai advanced.^[15]

Submissions

• [38] Kaimai makes three submissions on the construction of cl 4.1. First, Kaimai submits the Judge failed to consider the differences in experience and sophistication between Mr Diprose and the Trust when considering what meaning an objective observer would take them to have intended.
• [39] Secondly, Kaimai submits the construction the Judge adopted is inconsistent with the admissible background context. It argues, applying Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust, the admissible extrinsic evidence should include those facts a reasonable reader of the covenants could be expected to be aware of, including facts necessary to avoid a perverse outcome.^[16]
• [40] Kaimai submits the following extrinsic evidence is admissible as a starting point: the location of the quarry proximate to the covenanted areas; the inevitable expansion of the quarry; publicly available documents showing the quarry was expected to expand into covenanted areas; and the likelihood the landowner would receive financial benefits from the operation of the quarry.
• [41] The following further extrinsic evidence is also said to also be admissible by reason of Kaimai’s historical involvement in the area: Mr Diprose’s reliance on Mr Dean to reflect his needs in a bespoke clause; the comparatively small financial benefits to Mr Diprose of covenanting; Mr Diprose’s communicated expectation he would receive royalties when the quarry expanded over the stream to the south; the flexible approach to adjusting quarry boundaries between Mr Diprose and the Swaps; the terms of the covenant being put forward on a take it or leave it basis; Mr Dean’s reassurance Mr Diprose would remain the owner of the land; and Mr Diprose’s relative lack of legal sophistication (relevant to its first submission set out at [38] above).
• [42] Third, Kaimai submits cl 4.1 is silent as to who may consent to third party requests and this ambiguity should be resolved by application of the contra proferentem rule given the differing expertise of Messrs Diprose and Dean, and the former’s reliance on the latter.

Discussion

• [43] We do not think the Judge’s construction of the covenants can be faulted. We identify no error in the five reasons given by the Judge for rejecting Kaimai’s construction, summarised at [32] to [36] above.
• [44] In Firm PI 1 Ltd v Zurich Australian Insurance Ltd the Supreme Court identified three fundamental aspects of the construction of contracts: the objectivity of the interpretation exercise, the primacy of the text, and the relevance of third parties to the scope of the exercise.^[17] In particular, in New Zealand the aim of contract interpretation is to ascertain the meaning the contract would convey to a reasonable person, having the background knowledge reasonably available to the parties in the situation they were in at the time of the contract.^[18] The greater the extent of potential third party dependence (such as in long-term utility contracts or covenants that are registrable), the less receptive the common law is to receipt of extrinsic evidence to “explain”, or to controvert, the objective meaning found by the method described in the preceding sentence.
• [45] In Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust William Young and O’Regan JJ (joined on this specific point by Glazebrook J) postulated that, generally, registered documents should be construed without regard to extrinsic evidence which is particular to the original parties and is not apparent on the face of the register.^[19] That was subject to this qualification: that “facts which a reasonable future reader of the document could be expected to be aware of and would recognise as relevant and which they have access to, such as the configuration of land, any physical features to which the document relates or refers and any material referred to in the document” would be admissible. ^[20]
• [46] In this appeal the extrinsic evidence really does not take Kaimai far. That is for two reasons. First, because, as the Supreme Court also held in Lakes International Golf Management Ltd v Vincent, the objective meaning of the provisions here are crystal clear.^[21] In this respect we agree entirely with the Judge’s conclusions summarised at [32] to [37] above. Secondly, because nothing in the extrinsic evidence advanced justifies departure from that clear meaning. A more insightful landowner might have been more careful in fixing the boundaries of the covenanted areas, but Mr Diprose did not exercise that caution here, despite two opportunities. There is nothing in the extrinsic evidence to suggest an objective common intention as between Mr Diprose and the Trust to qualify the covenant boundaries, to enable southward expansion of the quarry into covenanted land. Rather, this was a clearly drafted agreement, the objective effect of which was readily apparent in 2005. It was then given certainty by the subsequent inclusion in 2007 of the aerial plans, which themselves incorporated specific agreed changes. At the end of the day it is simply a bargain Mr Diprose repents making.
• [47] It is unnecessary for us to say more on that subject. The Judge did not err in construing the covenants.

Did the Judge err in refusing to rectify the covenants?

• [48] The Judge first set out the requirements for rectification of a common mistake.^[22] The Judge also considered rectification may be ordered where one party made a unilateral mistake and the other party actually knew of that mistake.^[23]
• [49] As to the former, the Judge noted much rested on the evidence of discussions between Messrs Diprose and Dean at the time. Both witnesses were said to be honest and candid, but there were issues of reliability given over 12 years has passed since the events in question.^[24] The Judge held though Messrs Diprose and Dean contemplated the quarry expanding, they shared no common intention the covenants would provide for a right for the quarry to expand into the covenanted areas.^[25]
• [50] First, in 2005 the quarry was intended to expand to the east and not south into the covenanted areas.^[26] There was no intention to expand the quarry into the area covered by the LIA at the time it was agreed. The quarry boundary did not change between the 1982 and 1993 agreements. The certificate of compliance granted in 1998 only covered existing quarry rights that extended to the east and not into the now covenanted areas. The DCP showed expansion was to be to the east. In the Judge’s view the DCP was significant — it involved Mr Diprose and the Swaps and could be taken to provide the best evidence of contemplated quarry expansion in 2005, as the DCP was agreed only two years prior and was appended by Mr Dean to his report. The conservation areas in the DCP generally corresponded with the covenant areas. The Judge found southward expansion was only contemplated in 2012 following consultation with local iwi, the Swaps having consulted Ngāti Hinerangi and better understanding the significance of Te Weraiti and the Mangapiko stream (both situated to the east) for that iwi.
• [51] Secondly, evidence of the discussions at the time the covenant boundaries were surveyed suggested expansion was to be provided for, if at all, by changing the covenant boundaries, rather than by giving Mr Diprose a right to consent to expansion into covenanted areas.^[27] The surveyor, Mr Taris, recorded Mr Diprose saying in 2007 that quarry operations “are not allowed to extend past or disrupt the stream”, which the Judge considered inconsistent with an expectation in 2005 that the quarry “would, in the future, do just that”. The evidence noted at [17] above was to same effect.
• [52] Thirdly, there was no outward expression of accord.^[28] Mr Diprose in evidence did not go as far as saying he told Mr Dean the covenants would allow expansion into the covenant areas. Neither could Mr Dean recall, nor did his contemporaneous report mention, Mr Diprose referring to southward expansion.
• [53] Having ruled out rectification of a common mistake by Messrs Diprose and Dean, the Judge also found the covenants could not be rectified to reflect Mr Diprose’s unilateral mistaken intention. First, Mr Diprose’s evidence he was mistaken as to the effect of cl 4 was corroborated to some extent by Mr Taris.^[29] But the Judge doubted the reliability of their 12-year-old recollections, particularly as expansion of the quarry into the covenanted areas was not intended in 2005. The Judge therefore doubted Mr Diprose was actually mistaken. Secondly, there was no evidence Mr Dean knew of any mistake by Mr Diprose.^[30] There was no direct evidence of discussion of the clauses. Clause 4 was a “boiler plate” clause and not specially drafted for Mr Diprose’s circumstances. There would be no indication from Mr Dean’s perspective, the Judge found, that Mr Diprose might have misinterpreted cl 4. Thirdly, the Judge dismissed Kaimai’s argument that Mr Diprose was discouraged from seeking legal advice by the Trust.^[31] A letter to Mr Diprose from the Trust dated 20 June 2005 stated Mr Diprose must pay for any independent legal advice. The Judge rejected that Mr Diprose’s decision to seek no legal advice could be attributed to the Trust on the basis of the letter. Regardless, the Judge considered the question of legal advice irrelevant to the issue of rectification — it showed no awareness by the Trust of Mr Diprose’s alleged mistake.

Submissions

• [54] Kaimai submits the Judge should have ordered rectification of Messrs Diprose and Dean’s common mistake. The Judge is said to have erred in requiring an outward expression of accord rather than simply requiring Messrs Diprose and Dean’s common intention be objectively apparent. Mr Diprose’s evidence as to his intentions and discussions with Mr Dean is said to not have been challenged. In concluding Messrs Diprose and Dean did not share the contended common continuing intention, the Judge is said to have relied on a number of factual findings that were in error: (1) that the quarry boundary did not change between the 1982 and 1993 agreements; (2) that there was no intention to expand the quarry into the area covered by the LIA: the existing quarry pit sat within the area covered by the agreement and it related to grazing, not quarrying; (3) in relying on the DCP, which was only intended to last 10 years whereas the quarry would operate far beyond: future expansion to the south may not have been shown on the plan; (4) in ignoring Bartons’ actions at the quarry which were intended to allow expansion to the south; and (5) in relying on Mr Dean’s report (described at [15] above) as corroborating his evidence, as it may have been incomplete.
• [55] In the alternative, Kaimai submits the Judge erred in not ordering rectification to give effect to Mr Diprose’s unilateral mistaken belief. Kaimai asks this Court to overturn its earlier decision in Tri-Star Customs and Forwarding Ltd v Denning in which it held rectification for unilateral mistake is no longer available.^[32] Kaimai argues the Judge was wrong to doubt Mr Diprose was actually mistaken. The Judge’s reasoning rested on her (allegedly) incorrect finding southward expansion of the quarry was not contemplated. Kaimai says rectification should be ordered as: (1) Mr Dean had actual knowledge of Mr Diprose’s mistake, knowing Mr Diprose wanted the quarry dealt with in the covenants and that it was not; (2) Mr Dean was wilfully blind to Mr Diprose’s mistake as he was eager to execute the covenants; or (3) the Trust effectively discouraged Mr Diprose from seeking legal advice creating an environment in which the relevant type of mistake could be made.

Discussion

• [56] At some point it will be necessary to reconsider whether an outward expression of accord is essential for rectification of a common mistake, or whether it should suffice that the common intention be objectively apparent, regardless of formal communication.^[33] Prevailing authority within this Court favours the former approach, relying in turn on English authority.^[34] But authority is divided: a 2014 judgment of this Court favoured Tipping J’s formulation in Westland Savings Bank v Hancock:^[35]

That while there need be no formal communication of the common intention by each party to the other or outward expression of accord, it must be objectively apparent from the words or actions of each party that each party held ... an intention on the point in question ...

• [57] Likewise, it will eventually be necessary to reconsider the authority of this Court’s decision in Tri-Star Customs and Forwarding Ltd v Denning. A powerful case has been made by academic critics for its reconsideration.^[36]
• [58] But this is not the case for either exercise. That is because, as we observed at the hearing, this aspect of the appeal fails in limine on the facts, regardless of the legal analysis.
• [59] First, as we noted at [46] above, there is nothing in the extrinsic evidence to suggest an objective intention as between Mr Diprose and the Trust to qualify the covenant boundaries, to enable southward expansion of the quarry into covenanted land. The same is true of a common subjective intention to the same effect. While Mr Tarris corroborates Mr Diprose’s evidence that he discussed expansion of the quarry with Mr Dean, publicly available documentation at the time showed the quarry would expand eastwards rather than southwards. Expansion was expressly dealt with in negotiating the aerial plans (in effect, renegotiating the covenants) in 2007. Mr Dean’s evidence, when cross-examined, was that he had no intention of shutting down the quarry. He understood it may need to expand, but considered southward expansion (if raised) would have been dealt with by setting the covenanted areas back from the quarry. As it was, his understanding was that the intended expansion lay eastward.
• [60] Arguable factual errors in the judgment regarding boundary changes between the 1982 and 1993 agreements and in finding the quarry was not intended to expand into the area covered by the LIA are all de minimis and beside the point. Similarly immaterial are the other points raised at [54] above. They take Kaimai nowhere in establishing a common intention at variance to the written covenants. Ultimately there is no proof here of the alleged common intention sufficient to overcome, on the balance of probabilities, the inherent likelihood the written covenants represent the parties’ intentions.^[37]
• [61] Secondly, while Mr Diprose may have been mistaken as to the effect of the covenants, there is no basis on the evidence to infer that Mr Dean was aware of that such that an equity might be raised against him.
• [62] We accept Mr Diprose may have been mistaken about the effect of the covenants, albeit (as we find) their objective meaning is actually crystal clear. While Kaimai points to Mr Dean’s knowledge Mr Diprose wanted the quarry dealt with by the covenants the evidence suggests Mr Dean considered the quarry was dealt with by the location of the covenants and the likely location of any expansion. The covenants themselves offered no flexibility. Hence Mr Dean’s advice (attested to by Mr Diprose) that “it’s better to change now as it will be difficult to change later”.^[38] Kaimai also fails to highlight any real evidence from which Mr Dean would (or could, in the sense of wilful blindness) have surmised Mr Diprose’s mistake. Kaimai focused instead on Mr Dean’s motives in encouraging execution of the covenants. But equity does not assail enthusiasm alone. Even if rectification for unilateral mistake were available here, what is missing is any conduct by Mr Dean on which equity might fasten. He neither led Mr Diprose to his misunderstanding, nor evidently was aware of it. Nor do we accept Kaimai’s allegation that the Trust discouraged Mr Diprose from obtaining legal advice, an allegation which lacks solid evidential foundation.

Concluding observation

• [63] We observe that this is an unusual case, in that covenants appear to have been entered without complete understanding by the former owner. It also appears likely that, had the issue been raised in 2005 or 2007, the Trust would have accepted a smaller covenanted land area, accommodating potential quarry expansion to the south. As we noted at the hearing, these circumstances might be addressed in an application for variation under s 22A of the Act, should one be advanced.

Result

• [64] The appeal is dismissed.
• [65] The appellant must pay costs to the respondent for a standard appeal on a band A basis, with usual disbursements.

Solicitors:
Tompkins Wake, Hamilton for Appellant
Gibson Sheat, Wellington for Respondent

---

^[1] Under s 22 of the Queen Elizabeth the Second National Trust Act 1977.

^[2] Kaimai Properties Ltd v Queen Elizabeth the Second National Trust [2019] NZHC 1591 [High Court judgment].

^[3] The 1982 agreement.

^[4] The 1993 agreement. It was reached in 1993 but executed only in 1995.

^[5] High Court judgment, above n 2, at [68].

^[6] High Court judgment, above n 2, at [39]–[41].

^[7] At [41], quoting Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust [2018] NZSC 75, [2019] 1 NZLR 161 at [73]–[74].

^[8] At [42].

^[9] At [46]–[47].

^[10] At [48].

^[11] At [49].

^[12] At [50].

^[13] At [51].

^[14] At [52].

^[15] At [53].

^[16] Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust, above n 7, at [73]–[74] per William Young and O’Regan JJ.

^[17] Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60]–[63].

^[18] At [60]. See the further discussion of these principles in Bathurst Resources Ltd v L&M Coal Holdings Ltd [2020] NZCA 113 at [34]–[48].

^[19] Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust, above n 7, at [74(a)] per William Young and O’Regan JJ and [151], n 100 per Glazebrook J.

^[20] At [74(c)].

^[21] Lakes International Golf Management Ltd v Vincent [2017] NZSC 99, [2017] 1 NZLR 935 at [28].

^[22] High Court judgment, above n 2, at [57].

^[23] At [58], citing Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [29.2.6]; and David McLauchlan “The ‘Drastic’ Remedy of Rectification for Unilateral Mistake” (2008) 124 LQR 608.

^[24] At [59].

^[25] At [63].

^[26] At [64]–[74].

^[27] At [75]–[77].

^[28] At [78]–[81].

^[29] At [85]–[86].

^[30] At [87].

^[31] At [88]–[90].

^[32] Tri-Star Customs and Forwarding Ltd v Denning [1999] 1 NZLR 33 (CA).

^[33] See McLauchlan, above n 23, at 616–617; and Simon Connell “Is an ‘outward expression of accord’ required for rectification in New Zealand?” [2018] NZLJ 186 at 188–189.

^[34] Davey v Baker [2016] NZCA 313, [2016] 3 NZLR 776 at [37]; and Hanover Group Holdings Ltd v AIG Insurance New Zealand Ltd [2013] NZCA 442, (2013) 13 TCLR 702 at [30], citing Swainland Builders Ltd v Freehold Properties Ltd [2002] EWCA Civ 560 at [33]; and Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] AC 1101 at [48].

^[35] Robb v James [2014] NZCA 42 at [21]–[22], quoting Westland Savings Bank v Hancock [1987] 2 NZLR 21 (HC) at 30.

^[36] Jeremy Finn, Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (6th ed, LexisNexis, Wellington, 2018) at 356–357; Bridget McLay “Rectification for Unilateral Mistake: Time for a Conceptual Revision?” [2016] AukULawRw 11; (2016) 22 Auckland U L Rev 315; and David McLauchlan “Rectification for Unilateral Mistake” (1999) 18 NZULR 360.

^[37] Thomas Bates and Son Ltd v Wyndham’s (Lingerie) Ltd [1980] EWCA Civ 3; [1981] 1 WLR 505 (CA) at 521; and Westland Savings Bank v Hancock, above n 35, at 26–27.

^[38] See [17] above.