High Court Rules 2016 – Property Law Act 2007, ss 316-317– Resource Management Act, ss 224 and 239 – originating application – deposit of survey plan – vesting of land – restrictive covenants – Synlait Milk Limited v New Zealand Industrial Park Limited  NZSC 157,  1 NZLR 657
Fairview Estate Investment Limited  NZHC 2874.
A successful originating application by property developer Fairview Estate Investment Ltd to extinguish a restrictive land covenant over two lots of its land.
Fairview owned a block of land (the burdened land) subject to a covenant restricting the property developer and future land owners from objecting to the subdivision of nearby land (the benefitted land) owned by Stanley and Raymond Ulyate. After the covenant was registered, the Ulyates subdivided their land into 28 lots. Fairview was subdividing its land into 18 lots. It lodged the survey plan and accompanying documents with Land Information New Zealand (LINZ) to deposit for the titles to issue.
Two lots to be created by Fairview’s subdivision were to vest in the council as reserves (the reserve lots). LINZ rejected the survey plan and documents and required the covenantees (the 28 owners of the subdivided Ulyate land) to consent to the deposit of the plan. As a party with an interest in the land, all the covenantees’ mortgagees would also have had to consent. Arranging this would have taken considerable time and Fairview was under pressure. Its sale contracts had a sunset date of 1 November 2023, enabling the purchasers to cancel the contracts if titles were not issued by then. Fairview decided to apply to have the covenants extinguished in respect of the reserve lots under ss 316 and 317 of the Property Law Act 2007.
Sections 239 and 224 of the Resource Management Act 1991 were the cause of Fairview’s problem. Section 239(1)(a) states any interests in the land to vest in a territorial authority will be removed on deposit of the plan without the need to register a release. However, s 224(b)(i) requires all parties with a registered interest in land to be vested in a territorial authority must consent before the plan deposits.
While it was accepted that the purpose of the covenant was to prevent objections to the Ulyates’ subdivision and they had completed their subdivision, so its purpose was fulfilled, the covenant wording did not limit it to a single subdivision. Further, there were two lots within the subdivision that had subdivision potential.
Fairview’s solicitor wrote to, and served, all the benefitted owners by a process server, asking if they had any objections to the application for the covenant to be extinguished over the reserve lots and whether they wished to be served with the proceedings. Only Raymond Ulyate responded, stating that neither he nor Shelley Ulyate, director of another company landowner, objected to the covenant being removed from the reserve lots.
Fairview claimed there had been a change in nature or use of the benefitted land: it had changed from a single title to 28. Further, 16 of the new lots would still be subject to the covenant so the benefited owners would not be disadvantaged.
Applicable principles: whether s 317(1)(a) had been met – whether change impacts benefit or burden of covenant – whether s 317(1)(d) is met – whether extinguishment would substantially injure beneficial owners – whether court should exercise discretion – whether expropriation of property rights justified – whether sanctity of contract relevant – whether facts justify exercise of court’s discretion.
Held: The covenant is extinguished over the reserve lots, but the drafting of the covenant meant s 317(1)(a) did not apply.
However, s 317(1)(d) applied because the Fairview landowners would not be prejudiced, and the beneficial owners would not be substantially injured.
After 14 years as general counsel for a local authority, Andrea Hilton is now a sole practitioner, practising local government law.