Lin v Mayall Property Group Limited

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2018-404-2545

[2019] NZHC 912

BETWEEN
YING-TSUNG LIN and WEN-I LIN

First Applicants

AND

LIANSEN MAO

Second Applicant

GREEN LAND INVESTMENT LIMITED
Third Applicant

MAYALL PROPERTY GROUP LIMITED
First Respondent

AUCKLAND COUNCIL

Second Respondent

TOM KROON and ANTJE KROON
Third Respondents

HUADA INVESTMENT 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

MEI WO MICHAEL LAW and INMAN MANY LAW LEE

LIN & ORS v MAYALL PROPERTY GROUP LTD & ORS [2019] NZHC 912 [29 April 2019]

Tenth Respondents

LEADING DEVELOPMENTS LIMITED
Eleventh Respondent

XINHAO DEVELOPMENTS LIMITED
Twelth Respondent

WEIHONG HE
Thirteenth Respondent

TSUNG KUANG CHUEH and HUI- HSIANG KAO
Fourteenth Respondents

DZL INVESTMENT COMPANY LIMITED
Fifteenth Respondent

CHIMBUSCO INTERNATIONAL LIMITED
Sixteenth Respondent

Hearing: 6 March 2019

Counsel:

D K Wilson for applicants

No appearance for respondents

Judgment:

29 April 2019

JUDGMENT OF DUFFY J

This judgment was delivered by me on 29 April 2019 at 3.00 pm pursuant to
Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Solicitors:
Loo & Koo, Auckland
D K Wilson, Barrister, Auckland

[1] The first applicant, and second applicant through the third applicant (the applicants) apply for an order under s 317 of the Property Law Act 2007 (the PLA) for extinguishment of land covenants relating to land at 417 and 423 Ormiston Road, Flat Bush.

[2] There are 16 respondents. I am satisfied service has been completed in accordance with Whata J’s orders for all, as well as relevant mortgagees and caveators. None have filed a statement of defence. This is therefore an appropriate matter to proceed to a formal proof.

Analysis

[3] The covenants prevent the land from being used for trading or other non- agricultural purposes, prohibit the keeping of pigs or poultry and make restrictions regarding the sort of structures which may be constructed.

[4] The applications are advanced on the basis of s 317 Property Law Act 2007 which relevantly provides:

317 Court may modify or extinguish easement or covenant

(1) On application (made and served in accordance with section 316) for an order under this section, a court may, by order, modify or extinguish (wholly or in part) the easement or covenant to which the application relates (the easement or covenant) if satisfied that-

(a) the easement or 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

[5] The first and second applicants are entitled to make the application as they are the persons bound by the covenants. There is no opposition by any party to the orders sought.

[6]The applicants submit:

(a)At the date of the covenants, the land in the land had a rural zoning. The general zoning of the land is now residential, with some areas zoned for reserve;

(b)The character of the neighbourhood is now residential, with extensive development occurring in Flat Bush, particularly in the Ormiston Road area;

(c)The covenants themselves provide that none of the restrictions shall continue to have any force or effect after all the land on the plan has been zoned residential or otherwise by Manukau City Council or another body with authoring on that behalf. Relevantly, Auckland Council has now zoned the land residential;

(d)The applicants are wishing to carry out a residential subdivision of the land in a similar manner to parties with an interest in the covenants. A substantial number of the respondents are also subdividing their land into residential titles, and have had successful applications to extinguish similar covenants;

(e)If the applicants carry out residential subdivisions, some of the land after subdivision will form public roads or reserves, vested in Auckland Council. The Resource Management Act 1991 will therefore require the land be vested free of encumbrances; and

(f)The covenants relate to aspects of the neighbourhood which no longer exist, and maintaining them would frustrate subdivision, which the applicants submit is a reasonable use of the land.

[7] The applicants submit that these constitute a material change of circumstances making it appropriate to extinguish the covenants. In determining whether it is appropriate to extinguish the covenants, the focus must be on the impact of any alleged change, rather than the fact of the change itself.1 The change itself of course being the

1 Jansen v Mansor (1995) 3 NZ ConcC 192,111 (CA) at 192,115.

development and intensification of the Flat Bush area from a rural area to a residential one. In light of this change, I accept that covenants such as the ones here have become significantly more burdensome.

[8] This Court has already granted similar applications in relation to properties within this area.2 I find compelling and adopt the analysis set out by Woolford J, also adopted by Muir J:3

[7] Having carefully considered the application and supporting documentation, I am satisfied that the application should be granted. The covenants have by charge of circumstances become obsolete and ought to be removed from the servient titles. In particular, I note the following:

(a)In 1973, at the time that the covenants were put in place, the land in the plan mentioned in the covenants had a rural zoning. The general zoning of this land is now residential, but there are some areas of some titles which the Council has zoned for reserve.

(b)The character of the neighbourhood is now residential. The plaintiff is carrying out a residential subdivision of its land. Other defendants are also subdividing their land. The sixth defendant applied to this Court in CIV-2015-404-1993 for extinguishment of the same covenants, and its application was granted.

(c)The covenants themselves provide in each case that none of the restrictions in the covenants shall continue to have any force or effect at any time after all the land in the plan has been zoned residential or otherwise by the Manukau City Council or other body having authority in that behalf. Auckland Council has the relevant authority, and has zoned virtually all of the land residential.

(d)As already noted, the plaintiff seeks to carry out a residential subdivision of its land. As part of this development, some of the land after subdivision will form public road or reserve vested in Auckland Council. Sections 238 and 239 of the Resource Management Act 1991 require that where land is so vested in a Council for a road or reserve it must be vested free of any encumbrances.

(e)The covenants have become obsolete in that they relate to aspects of a neighbourhood which no longer exist. If they continued in force they would impede the reasonable use of the burdened land.

(f)The extinguishment will not substantially injure any person entitled to the benefit of them.

[9]There is no opposition by any party to the orders sought.

2 Green Land Investment Ltd v G F International Ltd [2016] NZHC 213, Leading Developments Ltd v Blair [2016] NZHC 2428.
3 Green Land Investment Ltd v G F International Ltd [2016] NZHC 213.

[10] I am satisfied there have been sufficient changes relating to the relevant land since the creation of the covenants, justifying extinguishment of those covenants. I therefore make the following orders:

(a)The land covenant created by transfer 226707.2 from the title to land at 417 Ormiston Rd, Flat Bush, Auckland, identifier 106D/77 (North Auckland Registry) is extinguished.

(b)The land covenant created by transfer 226706.1 from the title to land at
423 Ormiston Rd, Flat Bush, Auckland, identifier 482726 (North Auckland Registry) is extinguished.

Duffy J

The case of Lin v Mayall Property Group Limited involved a High Court application seeking to extinguish certain land covenants affecting properties located at 417 and 423 Ormiston Road in Flat Bush. The applicants, Ying-Tsung Lin, Wen-I Lin, Liansen Mao, and Green Land Investment Limited, sought the extinguishment of covenants that restricted the use of the land for trading or non-agricultural purposes, prohibited the keeping of pigs or poultry, and imposed restrictions on the types of structures that could be built. The application was brought under section 317 of the Property Law Act 2007, which allows for the modification or extinguishment of easements or covenants if there has been a material change in circumstances since the covenants were created. The applicants argued that the change in zoning from rural to residential, the residential character of the neighbourhood, and the need to comply with the Resource Management Act 1991 justified the extinguishment of the covenants. The court accepted that the covenants had become obsolete due to the significant changes in the area and granted the application.

The primary legal issue before the court was whether the substantial changes in the area since the covenants were created justified their extinguishment under section 317 of the Property Law Act 2007. The applicants needed to demonstrate that the covenants had become obsolete and burdensome, and that their extinguishment would not substantially injure any person entitled to the benefit of them. The court considered the arguments presented by the applicants and the lack of opposition from the respondents. It noted that the area had transformed from a rural to a residential one, and the covenants were now more burdensome. The court also found that the covenants were intended to cease once the land was zoned residential, which had now occurred. The court was satisfied that the extinguishment of the covenants would not substantially injure any of the respondents, as many of them were also seeking to extinguish similar covenants in their own subdivisions.

The High Court, presided over by Justice Duffy, found that there had been sufficient changes in the circumstances since the creation of the covenants to justify their extinguishment. The court accepted the applicants' arguments that the covenants had become obsolete and more burdensome due to the significant residential development in the area. The court also noted that the extinguishment would not substantially injure any of the respondents and would allow the applicants to proceed with their residential subdivision plans. The court granted the applicants' application and extinguished the covenants affecting the properties at 417 and 423 Ormiston Road. The decision was consistent with previous cases in which similar applications had been granted, highlighting the court's willingness to address the obsolescence of covenants in the face of significant changes in the surrounding area.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established