Re Fairview Estate Investment Limited [2023] NZHC 2874
This case relates to an application made by a developer to extinguish a covenant registered over two of its lots preventing subdivision of the burdened land
Fairview Estate Investment Limited (Fairview) is a property developer that was undertaking a subdivision of a property in Auckland (Property). The subdivision would result in 18 lots, 16 of which would be residential and two would be vested in Auckland Council as local purpose reserves (Reserve Lots). Fairview’s subdivision was rejected by LINZ as it did not obtain consent from the owners of land that benefitted from a covenant registered against the Property’s title. The covenant was for the benefit of land that borders the Property (Neighbouring Land) and required the owners of the Property not to object to any subdivision or development of the Neighbouring Land. The issue was that the Neighbouring Land had since been subdivided multiple times meaning that 28 lots benefitted from this covenant.
Fairview applied to have the covenant removed from the titles for the two Reserve Lots under section 317 of the Property Law Act. Fairview first argued that the covenant should be extinguished as the nature of the use being made of the land had changed. This argument was made on the basis that the covenant’s original purpose was to prevent objections being made relating to the subdivision of the Neighbouring Land. The Court was not prepared to extinguish the covenant on this basis as the terms of the covenant was quite broad and the no objection provisions also extended to development on the Neighbouring Land.
Fairview’s second argument to have the covenant extinguished was made on the basis that the covenant no longer serves a useful purpose, and if it does, the benefit is retained by the fact that the 16 residential lots would remain bound. The Court extinguished the covenant over the Reserve Lots on this basis stating that the extinguishment of the covenant will not substantially injure any person that would have otherwise benefitted from the covenant remaining on the Reserve Lots. The Court pointed out that Council had no interest in the Reserve Lots or any future development of the benefitting land, other than in its capacity as a territorial authority. Therefore, any further development of the land would be approached by Council wearing its “local authority hat”, exercising the controls and discretions it already has.
Key Takeaways:
- A no objections covenant could be removed from a title that is vested in Council due to the fact that Council are unlikely to have interest in objecting to any developments in their capacity as a “landowner”.
- While there have been many successful extinguishments of these types of covenants in recent years, not every application will succeed and much will depend on the particular circumstances of the claim.
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