RCL Henley Downs Limited v Hanson [2018] NZHC 2714 (19 October 2018)

Last Updated: 22 March 2019

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-002014 [2018] NZHC 2714

UNDER	Part 7 of the High Court Rules and sections 316 and 317 of the Property Law Act 2007
IN THE MATTER	Of an application for an order modifying land covenants
BETWEEN	RCL HENLEY DOWNS LIMITED Applicant
AND	EMMA KELSEY HANSON and OTHERS First Respondents
AND	CONEBURN WATER LAND LIMITED and JACK’S POINT RESIDENTS & OWNERS ASSOCIATION INCORPORATED Second Respondents
AND	QUEENSTOWN LAKES DISTRICT COUNCIL Third Respondent

Hearing:	18 October 2018 (Determined on the papers)
Counsel:	P J Wright and L Green for Applicant
Judgment:	19 October 2018

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1] The applicant, RCL Henley Downs Limited (Henley) is the owner of a large area of land between Lake Wakatipu and The Remarkables mountain range, south of Frankton. Henley is in the process of undertaking a multi-stage residential

RCL HENLEY DOWNS LTD v HANSON and OTHERS [2018] NZHC 2714 [19 October 2018]

development of this land which will ultimately produce approximately 1,500 residential sections. Sections at each stage are being released for sale prior to deposit of development plans and issue of titles. The first stage was a development of a large part of one of four allotments intended for development, and 88 residential allotments together with attendant reserves, roadways and services for a residential area have been built. All 88 sections have been sold, titles have been issued, and the first respondents are the persons who have bought these sections. They have settled their purchases and received title.

[2] On the deposit of that plan certain allotments within this stage of the development vested in the third respondent, the Queenstown Lakes District Council as reserves. That plan also shows areas of roadway.

[3] A further stage of development is now at a point where the plan is ready to be lodged with Land Information New Zealand (LINZ). This will create a further 20 sections, all of which are sold. There will also be a drainage reserve, and roads. All these, along with the roads in the first stage, are to vest in the QLDC. This will also be the position with further stages as they are progressively developed.

[4] There is a land covenant registered against all the land which Henley is to develop, including the areas in the first and second stages, together with two other titles which Henley does not own. These are owned by the second respondents, respectively. Summarised, the covenant provides that properties developed on land which is subject to the covenant will not use potable water other than in accordance with a private water scheme. The covenant cannot remain on titles which are to vest in QLDC as roads and reserves. It could be extinguished by documents signed by every registered proprietor of each title over which it is registered, the number of which has now significantly increased by the issue of titles for the first stage.

[5] The drafters of the covenant in question foresaw a possible need for it to be amended or discharged if it became obsolete and provided a mechanism within it to facilitate such a process. I am satisfied that this provision applies in the circumstances of the present case where eventual extinguishment of the covenant is required over land which will vest in the local authority for reserves of one sort or another, or roads.
The provision in the covenant records agreement between the grantor and the grantee that where the instrument has become obsolete because land within it is required for such uses, the owner of such land is entitled to a discharge of the instrument from the relevant titles. In substance, the grantor is appointed as the attorney of the grantee to sign all documents and do such other things as may be necessary in order to effect the surrender of the easement in respect of titles to which it should no longer apply.

[6] The problem with simply applying that mechanism now is that the covenant has been registered against multiple titles and power of attorney has not been granted by the owners of these titles. Rather, it was granted by the owner prior to subdivision.

[7] Henley therefore proposes that the Court make orders varying the present covenant in ways which in its view will facilitate extinguishment of the covenant from titles required to vest in QLDC. I return to the form of the orders sought later in this judgment.

[8] Given the nature of the covenant, which I have referred to above at [4], it is in my view quite unnecessary for the covenant to remain on titles which vest in the local authority as reserves of one form or another, or roads. Issues relating to the provision of potable water simply do not apply to land used for those purposes. In my opinion it is clearly established that the covenant can properly be extinguished from those titles and indeed it is also clear that it must be extinguished from those titles if the plan of subdivision for the second stage is to be deposited, and if areas of land set aside for road on the first stage plan are to vest in the QLDC, as they must. The covenant will remain registered on the titles for residential use issued on stage one, and will be brought down from parent titles onto the titles to issue on stage two and subsequent stages, so the effect of the covenant will not be altered in any material respect if it is extinguished from titles to vest in QLDC.

[9] Equally, it is clear that for the covenant to be extinguished by way of execution of documentation, which of course it could be, cooperation and action would be required from the registered proprietors of all land on which the covenant is registered, which now includes the 88 title holders from stage one of the subdivision. In my opinion Henley is correct in its view that this would be time-consuming and very
expensive, and would certainly delay progress with the subdivision (and in short order availability of titles for stage two). Further, I accept that there is a real risk of one owner failing to cooperate or being difficult to locate.¹ So far as the sections within the subdivision are concerned, both developed or intended in the future, I am satisfied that the correct course is for the Court to make an order which will have the effect of allowing the covenant to be extinguished from titles which are required to vest in QLDC.

[10] I also note the evidence given on behalf of Henley that as part of an agreement it has reached with QLDC, it is constructing a water connection pipe at its own cost for the benefit of the entire development. That pipe will connect the Henley Downs development to the Council town supply in Frankton some five kilometres away. It is expected this will be completed within the next two months, and once that has occurred the covenant will become redundant because there will be no need for owners of sections which have been developed to connect to the private water scheme, that being the concept protected by the covenant. For this reason, also, I do not see any detriment or prejudice to any of the parties affected, whether they be present or future owners of titles within the Henley subdivision or whether they are the second respondents. Plainly the third respondent, QLDC, is to benefit from the orders now proposed so it is not detrimentally affected.

[11] This introduces two procedural issues which need to be decided. The first is whether leave should be granted for this application to be brought by way of originating application, as the rules to which this procedure applies, in the High Court Rules, do not expressly provide for an application of this kind. The Court has found on previous occasions that this is the appropriate procedure for an application of this nature and I confirm that to be the position. Leave is granted accordingly.²

[12] The second procedural point relates to service. Henley asks for an order that no other party be served. Given the circumstances which I have outlined and the views I have formed, as recorded above, in relation to the proposals now being made by Henley, I am satisfied that there is no need for any of the respondents to be served with

¹ An example of this is recorded in the judgment in Southern Lifestyle Ltd [2018] NZHC 2469.

² Southern Lifestyle Ltd, above n 1; Springrove Land Ltd [2016] NZHC 2109.

this application. I am unable to discern any basis upon which any of the parties to this case can be adversely affected by the proposals now before the Court.

[13] I turn to consider the orders that should be made in order to permit the extinguishment of the covenant as required. On this, the Court received additional input from counsel, after I referred to him certain issues in relation to the substance of the orders initially sought.

[14] In the application, Henley seeks an amendment to annexure Schedule 2 of the covenant, which comprises two registered easement instruments, to include a new clause 4(A). The effect of this is to provide for the grantee under the covenant (here, all the title holders referred to), to consent to deposit of a plan which has the effect of dedicating all or any part of the land to which the covenant applies as road or reserve in any local authority. It further records agreement that the covenants in the instrument will cease to apply in respect of any land which vests in that way. Finally, it provides that the clause will be deemed to be the written consent of the grantee to those plans.

[15] The form of an order in these terms differs materially from the orders sought in the two cases referred to above.³ There, orders were sought and made simply extinguishing the easements in question from land to vest as road and reserves. I therefore raised with counsel whether this was not a more appropriate form of order, and the response on behalf of Henley was to request orders in terms of the application, as I have summarised, together with further orders thus:

1. The land covenants created by Registered Easement No 8800261.4 as varied by Instrument no 10272777.3 be extinguished from that part of the land comprising lot 913 on Deposited Plan 505055 and contained in Identifier 812924 shown as lot 8 on land transfer plan 522854.

2. The Registrar-General of Lands shall note against all relevant titles that the said covenants have been extinguished in those terms by order of this Court.

3. Leave is reserved to apply by interlocutory application on the present proceeding for further such defined orders following finalisation of the title plans for subsequent stages.

³ Southern Lifestyle Ltd, above n 1; Springrove Land Ltd [2016] NZHC 2109.

[16] These orders reflect more closely the orders made in the two cases referred to above. I agree that they are appropriate in the circumstances of this case. The third of these orders provides for a simple and cost-effective procedure for Henley to seek extinguishment of the covenant from reserve or roadway allotments in future stages, which are not presently defined.

[17] The remaining orders sought by Henley in the application are a direction to the Registrar General of Lands to note the modification of the covenant, and a reservation of leave to Henley to apply by interlocutory application on this proceeding for further orders should there be any technical or administrative difficulties in perfecting the matter. Orders in these terms are plainly necessary to ensure that the substantive orders are carried into effect.

[18] In the circumstances of this case I am satisfied that all the orders now sought are appropriate. Accordingly, I make the following orders:

(a) Granting leave for this application to be brought by way of originating application.

(b) That the application is properly made without notice and service is not required.

(c) In terms of paragraph 1(a) of the originating application dated 20 September 2018.

(d) As recorded in paragraph [15].

[19] There are no issues as to costs.






J G Matthews Associate Judge

Solicitors:

Burton Partners, Auckland

Counsel: P J Wright, Barrister