The Grange Park Limited

[2023] NZHC 396

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-280

[2023] NZHC 396

IN THE MATTER

of Part 19 High Court Rules 2016 and ss 316 and 317 of the Property Law Act 2007

AND IN THE MATTER

of an application to extinguish a covenant

BETWEEN

THE GRANGE PARK LIMITED

Applicant

Hearing:	On the papers
Appearances:	R O Parmenter for Applicant
Judgment:	3 March 2023

JUDGMENT OF WOOLFORD J

This judgment was delivered by me on Friday, 3 March 2023 at 3:30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:           Winston Wang & Associates, Auckland Counsel:  R O Parmenter, Auckland

THE GRANGE PARK LIMITED [2023] NZHC 396 [3 March 2023]

[1]The Grange Park Limited (Grange) applies without notice for:

(a)Leave to commence this proceeding by originating application; and

(b)An order that covenant 11728484.3 is extinguished under s 317(1)(d) of the Property Law Act 2007.

Factual background

[2]        The following factual background is taken largely from a helpful memorandum filed by counsel.

[3]        Grange is the developer of land formerly being the Grange Golf Club in Papatoetoe. It agreed to sell all 12 lots of Stage 1 of the development to New Dreamland Development Limited (Dreamland). Under the agreement to sell and a variation of that agreement, Grange agreed to build a road to service the rear of the Stage 1 lots.

[4]        Grange’s obligations to build the road were recorded in the covenant with Dreamland as the covenantee, which covenant burdens Grange’s residual lands. Essentially, the covenant required Grange to build the road and to vest it in Auckland Council.

[5]        While the road was being built, Dreamland subdivided its land further and sold some of the resulting lots. What that meant was that instead of Dreamland being the only benefitting party under the covenant, all these other purchasers (and their mortgagees) acquired the same benefit because the benefit of the covenant flowed down to the resulting titles.

[6]        Grange built the road. There was an argument with Dreamland about whether Grange’s obligation included the installation of a gas line, but that has been settled, so all that remains is for the road to be vested in Auckland Council by way of the deposit of plan LT: 554435 with Land Information New Zealand (LINZ). When the road is vested the effect of the covenant will be spent.

[7]        In settlement of a related dispute, Grange and Dreamland agreed that Grange would vest the road and Dreamland would assist with the removal of the covenant.

[8]        The vesting could not take place without taking into account the covenant. Options are:

(a)Either all the parties benefiting from covenant consented to the vesting/deposit of the plan (with appropriate documentation); or

(b)The covenant needed to be extinguished by the consent of all the parties benefitting; or

(c)By Court order.

[9]        Trying to get the benefitting parties’ consent to the vesting has been difficult and neither Grange nor Dreamland can see it happening within any reasonable timeframe. The main problem is that a number of on-purchasers are overseas and compliance with LINZ requirements is difficult enough for New Zealand residents.

[10]      The parties have reached a “Catch 22” situation; the vesting cannot take place without the removal of the covenant; Dreamland does not want the covenant removed unless the road is vested.

[11]      Accordingly, Grange and Dreamland have entered into a variation of a previous settlement agreement. Dreamland has agreed that provided the covenant will not be extinguished without the vesting of the road, Grange should make this application and Dreamland would consent (on the basis that if the road is vested, no one can have any proper interest in the continuance of the covenant).

[12]      The draft order to which Dreamland consents contains a condition requiring any order extinguishing to be the  same  dealing  as  the  vesting/deposit  of  plan  LT: 554435. What that means, from a conveyancing perspective, is as follows:

(a)Practitioners may lodge a number of documents with LINZ in one “dealing”. The most common combined dealing would be a discharge

of mortgage, a transfer of a title to a new owner and a mortgage from a new owner to their lender.

(b)However, if one document is rejected/requisitioned by LINZ, the whole dealing is returned.

(c)By having a condition that any order extinguishing the covenant must be in the same dealing as the vesting, it is not possible for the covenant to be extinguished while not having the road vested.

Discussion

[13]      Rule 19.5 of the High Court Rules allows the Court to permit a proceeding to be commenced by originating application.  The only criteria expressly referred to in  r 19 are the interests of justice. The interests of justice mean that the Court must secure the just, speedy and inexpensive determination of the proceeding in considering an application under r 19.5.1 Such a procedure has been specifically authorised previously to extinguish/modify land covenants under ss 316 and 317.

[14]      That the application proceeds with the consent of Dreamland, the original covenantee, demonstrates that the abbreviated process in Pt 19 is appropriate. I am therefore satisfied that it is in the interests of justice for this proceeding to be commenced by way of originating application. Order accordingly.

[15]      As to the orders sought relating to the extinguishment of the covenant, I am of the view that it is in the interests of justice to allow the application to proceed without notice. I am satisfied that in terms of r 7.46(3)(a) requiring Grange to proceed on notice to all of the benefitting parties would cause undue delay or prejudice to it. I am also satisfied, in terms of r 7.46(3)(e), that the interests of justice require the application to be determined without serving notice of the application since:

(a)Dreamland may be seen as a representative benefitting party and it has consented hereto; and

1      Solar Bright Ltd v Martin [2019] NZHC 300 at [18] and [26].

(b)Given that the covenant is spent, subject to orders hereon, with consequent vesting of the road, there is no harm to be occasioned to any party by its extinguishment.

[16]      I am also satisfied that the requirements of s 317(1)(d) of the Property Law Act 2007 are met in that the proposed modification or extinguishment will not substantially injure any person entitled, in the following circumstances:

(a)The benefit of the covenant is spent in that the road has been completed and is ready to be vested; and

(b)The benefitting parties can have no interest in the covenant or its continued existence; and

(c)Dreamland qua original sole benefitting party, consents to an order extinguishing the covenant on the condition that any order extinguishing the covenant will only be effective if it is immediately followed by registration of the vesting of the road.

Result

[17]      Leave is granted to commence the proceeding by way of originating application. Further, there will be an order:

(a)That covenant 11728484.3 is extinguished under s 317(1)(d) of the Property Law Act 2007; and

(b)This order is conditional upon its being registered with Land Information New Zealand in the same dealing as the deposit of the plan LT: 554435 and may not be registered otherwise to the intent that, should the deposit of the plan LT: 554435 be rejected or requisitioned for any reason whatsoever, this order shall not be registered; neither the deposit of plan LT: 554435 nor this order may be registered one without the other; and

(c)Costs lie where they fall.

Woolford J