Law v Mayall Property Group Limited [2018] NZHC 3389 (18 December 2018)

Last Updated: 12 February 2019

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

CIV-2018-404-1668 [2018] NZHC 3389

BETWEEN	MEI WO MICHAEL LAW First Applicant IN MAN MANDY LAW LEE Second Applicant
AND	MAYALL PROPERTY GROUP LIMITED First Respondent AUCKLAND COUNCIL Second Respondent TOM KROON and ANTJE KROON Third Respondents .............................continued

Hearing:	On the papers
Counsel:	DK Wilson for applicants No appearance for or on behalf of respondents
Judgment:	18 December 2018

JUDGMENT OF FITZGERALD J

Solicitors: Alex Lee Lawyers Ltd, Auckland (A Lee)

Law v Mayall Property Group Limited [2018] NZHC 3389 [18 December 2018]

Respondents (continued)

HUADA INVESTMENTS LIMITED
Fourth Respondent

ESTUARY CHT LP
Fifth Respondent

TSAN FAI LO, CAN RONG LUO and WEI ZHU ZENG
Sixth Respondents

UMH GROUP LIMITED
Seventh Respondent

LIANSEN MAO
Eighth Respondent

ER XIA CAO, ER SHENG CAO and JUN WU
Ninth Respondents

WEIHONG HE
Tenth Respondent

LEADING DEVELOPMENTS LIMITED
Eleventh Respondent

XINHAO DEVELOPMENTS LIMITED
Twelfth Respondent

YING-TSUNG LIN and WEN-I LIN
Thirteenth Respondent

TSUNG KUANG CHUEH and HUI-HSIANG KAO
Fourteenth Respondent

DZL INVESTMENT COMPANY LIMITED
Fifteenth Respondent

CHIMBUSCO INTERNATIONAL LIMITED
Sixteenth Respondents

DLL TRADING LIMITED
Seventeenth Respondent

Introduction

[1] The applicants seek to extinguish covenants on land they own at 256 Flat Bush School Road (the Land) in Auckland.¹ The covenants are of two kinds, relating to lifestyle blocks (the first covenants), and to farming and fencing (the second covenants).

[2] There are 17 respondents. All have been served but none has participated in the proceedings. The applicants were content for their application to proceed on the papers and this judgment therefore determines whether the covenants should be extinguished.

Background

Background facts to first covenants

[3] According to its title, the Land was acquired by the applicants (and one other) in 2003 and was transferred to the applicants exclusively in 2014.

[4] The first covenants were registered against the title in 1973.² They referred to the “Land First Described”, being Lots 16 and 17 on Deposited Plan 54823 (which then formed a larger parcel of land than the Land this judgment is concerned with). The relevant covenants provide that the transferee (relevantly the applicants) will not:

(a) use the Land First Described or permit the same to be used for any trading or commercial purpose other than a farming or agricultural purpose which does not involve retail selling;

(b) keep or allow to be kept any pigs upon the Land First Described;

(c) keep or allow to be kept any poultry upon the Land ... except such as may be reasonable for the domestic use of those occupying the Land First Described;

(d) deposit or allow to be deposited or left on any part of the [L]and First Described any rubbish or waste or other unsightly material;

(e) erect or place or permit to be erected or placed upon the Land First Described any caravan hu rot shed to be used as a dwelling or

¹ The land is identified as NA 116A/567.

² Registered in transfer 226709.1 on the title to the Land.

temporary dwelling on the Land First Described nor any glasshouse except one not exceeding 200 square feet in area on each Lot into which the Land First Described may be subdivided;

(f) erect or permit to be erected or place or permit to be placed on the Land First Described any buildings other than in respect of each lot into which the Land First Described may be subdivided one family dwelling-house or alternatively two attached family/living units to the value in either case at the time of such erection or placing of at least

$12,000 together with, if required by the purchaser, a garage or such other outbuildings in permanent materials as would normally be appurtenant to such family dwelling-house or living units;

(g) without the prior consent in writing of Aylesbury Farms Limited use or permit to be used any previously used buildings and building materials for the purposes of any buildings or erections otherwise not prohibited from being erected or placed on the Land First Described[.]

[5] There are 14 dominant tenements to the first covenants.³ Eight of them have not been subdivided further. The remaining six, however, have been heavily subdivided. Mr Gareth Scourfield, a land transfer consultant, has provided an affidavit that lists nearly 450 separate titles, with some 430 owners, into which those lots were divided.

Service in relation to the first covenants

[6] Before making orders, the Court must be satisfied the application has been served in accordance with s 316 of the Property Law Act 2007 (PLA).⁴ That section provides, inter alia, that an application must be served on the territorial authority and “must be served on any other persons, and in any manner, the Court directs on an application for the purpose.”⁵

[7] Due to the number of subdivided sections potentially affected, the applicants sought detailed directions from the Court as to service. The question of service came before Jagose J on 3 August 2018. Directions as to service on the 17 respondents were made. The Judge did not, however, consider it appropriate to make an order at that time dispensing with service on the 430 owners of the residential lots, and sought further information.

³ Lots 1, 2, 3, 5, 6, 9, 10, 11, 12, 13, 14, 15, 16 and 17 on Deposited Plan 54823.

⁴ See Property Law Act 2007, s 317(1).

⁵ Section 316(3).

[8] On 3 September 2018, after the Court had received further information from the applicants’ counsel, Muir J observed that each of the (now subdivided) residential lots had originally been part of (larger) lots which were themselves subject to the same covenants. In order to subdivide the (larger) lots into the smaller residential lots, the covenants had been extinguished from those lots and orders made dispensing with service on the owners of the residential lots. Given this, Muir J was content that service was not required on each owner of the residential lots. The Judge further observed that even if service were strictly required, he was prepared to make orders dispensing with service given:

(a) the general zoning of the relevant land is now residential (albeit with some areas zoned for reserve); this is relevant because the covenants are stated to cease to have effect once all the land in the relevant plan has been zoned residential;

(b) the purpose of the covenants was to protect larger lifestyle blocks which in the case of the subdivided titles no longer applies; and

(c) as noted above, the subdivided titles were themselves subject to the same covenants which have since been extinguished.

[9] I have reviewed the affidavits of service in relation to the first covenants. Having done so, I am satisfied the requirements for service in relation to them (namely service on the first 16 respondents) have been met. The applicants have shown that those parties have indeed been served.⁶

Background facts to second covenants

[10] The second covenants were registered in 1998.⁷ They provide:

1. During such time as the Transferor herein named (or any one or more of them) shall continue to be registered as proprietors of the land first described the Transferee will farm the land secondly described in a good

6. The applicants provided affidavits from three process servers and one solicitor that, taken together, demonstrate service had been affected on all 17 respondents, including relevant mortgagees and caveators, in accordance with the Court’s earlier directions as to service.

⁷ Registered as “Fencing Covenant in Transfer D310531.3” on the title to the Land.

and husband-like manner and shall not construct any building thereon nor remove any trees situate thereon and shall conserve all areas of bush situate thereon;

3388Not to permit or suffer any rubbish to accumulate or be placed upon the land secondly described nor permit any excessive growth of grass thereon so that the same exceeds 150 mm in height or otherwise becomes unsightly unless the Transferee intends to make hay therefrom and proceeds to make hay in accordance with usual farming practise;

2. Not to permit or suffer any removal of soil from the land secondly described;

100. The Transferor shall not be liable to pay for or contribute towards the expense or construction or maintenance of any fence between the land secondly described and the land first described but this proviso shall not enure for the benefit of any subsequent purchaser or proprietor of the land first described[.]

[11] The “land first described” above (the dominant tenement) is now registered to the 17th respondent, DLL Trading Ltd. The “land second described” is the Land in question, belonging to the applicants.

Service in relation to the second covenants

[12] Having reviewed the affidavits of service, I am satisfied that service has been effected on the 17th respondent.

Discussion

Approach

[13] The application is brought as an originating application under s 317 of the PLA. That section provides that a court may modify or extinguish (wholly or in part) a covenant where, for example, there has been a change in the “nature or extent of the use being made of the benefited land” or “the character of the neighbourhood”.⁸ The Court may also, for example, extinguish a covenant that is impeding “the reasonable use of the burdened land in a different way ... from that which could reasonably have been foreseen” when it was registered.⁹

⁸ Section 317(1)(a).

⁹ Section 317(1)(b).

Should the first covenants be extinguished?

[14] Mr Law, one of the applicants, has provided an affidavit setting out the factual matters relied on to remove the covenants. In summary, for removal of the first covenants, Mr Law says:

(a) When the first covenants were registered, the area had a rural zoning. The area is now generally zoned residential, though some titles have been set aside for reserves.

(b) The neighbourhood character is residential.

(c) The applicants wish to carry out a residential subdivision of the Land. Other respondents have done so and were successful in having the same land covenants extinguished for that purpose.¹⁰

(d) The covenants themselves provide that they shall not continue in effect after residential rezoning.

(e) When the Land is subdivided, part of it will vest in the Council for a public road or reserve, and it must vest free of encumbrances.

(f) The covenants are obsolete and would impede the subdivision if they continue in force.

[15] Having reviewed the affidavits in support of the application, I am satisfied the above reasons are a proper basis upon which to extinguish the first covenants. The nature and use of the land has changed considerably since the covenants were registered.¹¹ The character of the neighbourhood, too, has changed.¹² It is also clear from the terms of the first covenants that they are no longer relevant to the titles encumbered by them. In fact, the terms of the first covenants provide that they are to cease to have effect when all the relevant land is rezoned residential. That has now

10. See Green Land Investment Ltd v GR International Ltd [2016] NZHC 213 and Chimbusco International Ltd v Mayall Property Group Ltd [2017] NZHC 2278.

¹¹ Property Law Act 2007, s 317(1)(a)(i).

¹² Section 317(1)(a)(ii).

occurred, though some of the land has not been rezoned residential, but is set aside for reserves. This reinforces that it is appropriate the covenants are now extinguished.

[16] Accordingly, in light of the above, and that the first to 16th respondents were served but did not oppose the application, I am satisfied extinguishment of the first covenants is appropriate.

Should the second covenants be extinguished?

[17] In relation to the second covenants, Mr Law says:

(a) These covenants applied over a limited time, which has now expired. The registered proprietors of the dominant tenement listed in Covenant A have since ceased to own the property. Several transfers have vested the land in the current owner, the 17th respondent.

(b) The fencing covenant, on its terms, was not to enure for the benefit of subsequent purchasers of the dominant tenement.

(c) The covenants would interfere with residential subdivision of the applicants’ land.

[18] I am likewise satisfied that the second covenants should be removed. The terms of the second covenants render them effectively redundant. And, like the first covenants, they reflect a period where the Land was in a significantly different state and zone to the present.

Conclusion and orders

[19] I therefore make orders under s 317 of the PLA:

(a) extinguishing land covenants created by Transfer 226709.1 registered against the title to land at 256 Flat Bush School Road, Flatbush, Auckland, Identifier NA 116A/567 (North Auckland Land Registry); and
(b) extinguishing covenants in Transfer D310531.3 registered against the title to land at 256 Flat Bush School Road, Flatbush, Auckland, Identifier NA 116A/567 (North Auckland Land Registry).

[20] I make no orders as to costs.

















Fitzgerald J