IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA MĀWHERA ROHE

CIV-2018-418-000010 [2018] NZHC 2643

BETWEEN	PHILIP JAMES MCGOLDRICK AND
ALISON MOANA AITKEN Plaintiffs	

AND	
TIMOTHY LAWSON Defendant	

Hearing:	8 October 2018	

Appearances:	
GJC Carter and D J Pine for Plaintiffs
No Appearance for Defendant	

Judgment:	
11 October 2018	

JUDGMENT OF GENDALL J

Introduction

[1]       The  hearing  of  the  plaintiff’s  interlocutory  application  for  a  mandatory injunction in this proceeding took place in this Court at Greymouth on 8 October 2018. This hearing had been scheduled in a minute I issued on 31 August 2018 and it was again confirmed in a formal notice from the Court sent to the parties at their respective addresses for service on 26 September 2018.

[2]       At this hearing, Mr Carter and Mr Pine appeared as counsel for the plaintiffs. There was no appearance, however, by or for the defendant, Mr Lawson.

[3]       Notwithstanding this, the hearing before me proceeded on 8 October 2018 on the basis of all the material before the Court, including Mr Lawson’s Statement of Defence, Notice of Opposition, Affidavit in Support and his other communications
with the Court.

MCGOLDRICK v LAWSON [2018] NZHC 2643 [11 October 2018]

[4]       The plaintiffs are, respectively, trustees of the La Dolce Vita Family Trust and the Alison Aitken  Family  Trust  (the  Trusts).    The  Trusts  own  the  property  at
51 Beechwater Drive, Lake Brunner.   The defendant, Mr Lawson, owns a nearby property at 61B Beechwater Drive, Lake Brunner.  61B Beechwater Drive is subject to various restrictive covenants in favour of, among other properties, 51 Beechwater Drive.   The plaintiffs allege that Mr Lawson has erected several buildings on his property in breach of these covenants. They apply for a mandatory injunction ordering Mr Lawson to comply with his obligations under the covenants.

Background

[5]       In or around 2005, Arnold Valley Investments Ltd (AVI) subdivided the large block of land at Lake Brunner on which 51 and 61B Beechwater Drive and a number of other sections stand. The Subdivision of this land (the Subdivision) was undertaken, it is accepted, with a view to creating a high-end residential real estate “village” development.   Each title within the Subdivision is subject to identical covenants, which are registered to both exist in perpetuity and to be enforceable by other owners within the subdivision. They are set out in an extensive document which outlines the rights, abilities and obligations on all owners within the Subdivision for the use of their particular sites and construction of buildings (the Covenant Document).

[6]       Among other obligations, the Covenant Document sets out that the owner of any title within the Subdivision shall:

(a)       Not erect or cause to be erected on the servient land any dwellinghouse or other permitted building or other improvements including fencing, letterboxes and other structures unless the plans and specifications for the same (including site plans and elevations) have been first submitted to and have been approved in writing by the Grantor or its nominee. The approval of the Grantor or its nominee shall be final and binding on the Registered Proprietor and any other registered proprietor in the Subdivision.

(b)       Not permit any building on the Lot to be occupied or to use any building as a residence until it has been completed in accordance with an

approved landscape plan prepared by or approved in writing by the

Grantor or its nominee.

(c)       Not erect or place or cause to be erected or placed on the servient land any caravan, hut, garage or shed of any kind of temporary or permanent residential use other than in accordance with the written approval of the Grantor or its nominee in accordance with these covenants.

[7]     The Covenant Document also requires all buildings erected within the Subdivision to be designed in compliance with Development and Design Guidelines prepared by Common Ground Urban Design and Architecture (the Design Guidelines).

[8]       In April 2015, Mr Lawson purchased 61B Beechwater Drive. Between that time and January 2016, he erected four small pre-fabricated buildings on the site (the Buildings).  They were not designed in compliance with the Design Guidelines.  Nor did he seek the approval of the remaining title owners (as Grantors by succession) within the Subdivision before erecting the Buildings.

[9]       Around January 2016, the first-named plaintiff (Mr McGoldrick) wrote to

Mr Lawson on behalf of the Trusts, informing him that the Buildings were in breach of the covenant obligations set out in the Covenant Document. Mr Lawson responded, saying he did not believe he was in breach of his obligations.

[10]     Between December 2017 and March 2018, Mr McGoldrick, via the Trusts’ solicitors, sent two further letters to Mr Lawson, requesting he remove the Buildings. Mr  Lawson refused to do so.

[11]     The Trust then on 4 July 2018 brought this proceeding and applied to the Court on notice for a mandatory injunction ordering Mr Lawson to remove the Buildings from 61B Beechwater Drive.   It is that interlocutory application for a mandatory injunction which was the subject of the hearing before me on 8 October 2018.

Issues

[12]     The main issues that Mr Lawson advances in support of his opposition to the interlocutory application deal with:

(a)	Whether the covenants registered against the titles still run;

(b)	The  definition  of  certain  buildings  restricted  by  the  Covenant

Document; and

(c)	The impact (physical or otherwise) of the Buildings on the Trusts.

[13]     Mr Lawson also disputed the Trusts’ allegation that the toilet in one of the Buildings was unconsented. He submitted it is simply a removable mobile home toilet and this does not require council consent.  If this is the case, he may well be right on this point. But, I need go no further on that matter as it is not significant to my decision on enforcement of the covenants.

[14]     I turn now to address the other defence issues Mr Lawson raises.

Covenants running in perpetuity

[15]     In his opposition, Mr Lawson contends that the covenants no longer applied because:

(a)	The original subdivision company AVI is no longer involved in the

Subdivision;

(b)	It would be impractical to trace the owners of all properties in the

Subdivision, including the undeveloped lots;

(c)	The covenant is old so of no moment;

(d)	The Design Guidelines are no longer available online; and

(e)	The Subdivision has only 7 occupied lots.

[16]     These contentions, however, overlook the nature of a covenant. A covenant is binding in equity on every person who becomes the owner of the land burdened by that covenant for the benefit of the owner of the covenantee’s land.1  A covenant runs with the land. Moreover, a covenant is enforceable not only by the covenantee but by the covenantee’s successors in title.2  And the clear purpose of the covenants here was to maintain throughout the aesthetics and the style, value and look of the Subdivision for the benefit of all owners, including Mr Lawson.

[17]     Therefore, the covenants in the Covenant Document are able to be enforced by the Trusts (as the covenantee’s successors) against Mr Lawson, as the owner of the burdened land. It is irrelevant that the original covenantee, AVI, is no longer involved. The age of the covenant similarly does not remove the obligation on Mr Lawson. The covenants expressly exist in perpetuity.

[18]     Where a covenant is for the benefit of two or more covenantees, the covenantor

is also bound to perform the obligations under the covenant for the benefit of any one of those covenantees.3  Thus, the Trusts can enforce the covenants alone. There is no need to locate all the property owners within the Subdivision.

[19]     The number of developed lots is also not relevant to whether the covenant is binding.

[20]     Any   difficulty   locating   the   Design   Guidelines   prior   to   commencing construction does not alleviate the obligation to use them as a guide. Mr Lawson could have contacted other homeowners in the Subdivision or the legal advisors who acted on his behalf on the purchase to ask for a copy, but it appears he has not done this.  It is presumed that, in any event, Mr Lawson would have received from his conveyancing lawyers on his purchase of 61B Beechwater Drive a copy of the Design Guidelines as a normal purchase settlement requirement.

1	Property Law Act 2007, s 303.
2	Property Law Act 2007, s 301.
3	Property Law Act 2007, s 277.

[21]     The contentions raised by Mr Lawson are not sufficient to defeat the operation of the covenants.  He is bound to follow the requirements set out in the Covenant Document.  I will now turn to determine whether he has breached these obligations.

Definition of Buildings

[22]     In his opposition here Mr Lawson argues that the Buildings in question do not fall within the definition of a “shed”. He contends that a shed, as defined by the Oxford Dictionary, is an open-sided building, which the Buildings are not. He instead referred to the Buildings as ‘cabins’.

[23]     In Bonnar v Summerland Property Developments Ltd, Heath J considered that the wording of a restrictive covenant should be given a meaning consistent with the environment in which the document is intended to function.4   He stated:5

I approach the construction of the restrictive covenant by considering its intended purpose in the eyes of those who were parties to it (vis Summerland and the council) having regard to the benefits which were intended to be conferred by it on purchasers of residential sections within the subdivision. The interests of future purchasers of residential sections must plainly be taken into account as the whole purpose of the restrictive covenant was to provide a degree of comfort to those who buy within the subdivision that their capital investment would not be eroded through the erection of low-cost housing or the use of low-cost materials.

[24]     The same approach is appropriate here.  Similarly, the Covenant Document was intended to protect all owners including future purchasers and the value of properties within the Subdivision by ensuring that all buildings within it were of a certain standard.

[25]     The relevant section of the Covenant Document, as I note at [6] above, provides that the covenantor shall:

Not erect or place or cause to be erected or placed on the servient land any caravan, hut, garage or shed of any kind of temporary or permanent residential use other than in accordance with the written approval of the Grantor or its nominee in accordance with these covenants.

4	Bonnar v Summerland Property Developments Ltd [2002] BCL 790.
5	At [37].

[26]     I accept the Trusts’ submission that the list has purposely been widely drafted.

[27]     The definition of “hut” in the Concise Oxford English Dictionary6 is:

A small, simple, single-storey house or shelter.

[28]     The definition there of the word “shed” is:

A simple roofed structure, typically of wood and used for storage or to shelter animals. A larger structure, typically with one or more sides open, for storing vehicles or machinery. A building for shearing sheep or milking cattle.

[29]     Having considered photographs of the Buildings erected by Mr Lawson which are before the Court, I find the Buildings clearly fall within the definition of a hut or shed.  Moreover, given Mr Lawson has acknowledged that they are from time to time occupied and intended for residential purposes, I agree that they are buildings of a type that the Covenant Document intended to preclude.  This is essentially to protect the aesthetic of the Subdivision.  They are not in keeping with the intended nature of this residential development which has been described as a high-end one.

[30]     By erecting the Buildings on his property, to be occupied for residential purposes Mr Lawson has breached his obligations under the Covenant Document.

Damage to the Trusts

[31]     Mr Lawson also raises the issue of whether the Buildings have caused damage of any kind to the Trusts, which he disputes.  In particular, as best as I can tell, he argues that the Buildings cannot be seen from the roadside and that the issue of damage (if any) can be based only on a future estimate of real estate value.

[32]     In response, Mr McGoldrick disputes this contention and argues in his affidavit that the buildings   can  be viewed from the roadside.   Counsel for the Trusts  also submitted before me that, in any event, the Covenant Document does not contemplate the visibility of buildings as an exception to the restriction.  Mr Carter argued that, given the purpose of the covenants, there is no reason why such an exception would be  created.     The  presence  of  low-cost  buildings  being  used   for  residential

6	Concise Oxford English Dictionary, 11th Ed, Oxford University Press, 2004.

accommodation risks undermining the capital value of properties in the Subdivision regardless of where they are.  He maintains that the purpose of the restrictive covenant was expressed by Heath J as being to provide a “degree of comfort” to owners.   The risk alone is enough to establish damage to the Trust and other owners within the Subdivision.

[33]     There is no need to prove damage to enforce a covenant, so Mr Lawson’s submissions on this point have no weight.  Damage is only relevant to an award of damages in equity.   For that, actual damage is required.7    Moreover, damages are usually only awarded instead of an injunction, rather than alongside.8

[34]     Here, the Trusts in their Statement of Claim have sought $50,000 in damages, but this was not a matter before me.  There is no indication, in any event, that the Trusts have suffered any actual loss.  A mandatory injunction is sufficient to remedy
Mr Lawson’s breach here, and that is all the Trusts seek in their present application.

Court’s power to enforce covenants

[35]     Section 313 Property Law Act 2007 (PLA) codifies the Court’s equitable jurisdiction to determine a dispute concerning a covenant.  It sets out a number of relevant orders the Court can make.  Orders can be made, among other things, that address:

(a)       the existence of an easement, positive covenant, or restrictive covenant benefiting or burdening land;

(b)       the enforceability of an easement, positive covenant, or restrictive covenant by or against any person, and whether under the Act or otherwise; and

(c)       the question whether any work is work required to be done under the terms  of  an  easement,  positive  covenant,  or  restrictive  covenant

7	Surrey County Council v Bredero Homes Ltd [1993] 3 All ER 705 at 713.
8	Hinde, McMorland and Sim Land Law in New Zealand (online looseleaf ed, LexisNexis) at
[17.045].

(required work) and, if so, the nature and extent of any required work at the time in question.

[36]     A mandatory injunction is typically sought where the consequences of a breach of a negative covenant need to be undone.9  The learned authors of Hinde McMorland and Sim Land Law in New Zealand go on to provide by way of example that such a mandatory injunction may be sought for the modification or demolition of a building which has been erected in breach of a negative covenant.

[37]     Here, Mr Lawson purchased the title to 61B Beechwater Drive, that title being subject to the restrictive covenants in question which existed for the benefit of the remaining owners within the subdivision.  Mr Lawson himself also had the benefit of identical restrictive covenants registered against the titles to all the other properties in the subdivision.

[38]     As best I can tell, Mr Lawson claims that the covenants were out of date or did not apply and he was led to believe this by the conveyancing solicitor he engaged at the time of his purchase of 61B Beechwater Drive.  On this aspect, it goes without saying that the consequences of any mistake that the conveyancing solicitor acting for Mr Lawson on his purchase may have made is not of relevance to other owners in the subdivision, nor should that be visited upon the Trusts or upon any other subdivision owners.

[39]     What is clear here is that this Court has a long established equitable and statutory jurisdiction to grant mandatory injunctions ordering compliance with covenants in cases like the present. That is what the Trusts seek here.

[40]     In a case not dissimilar to the present, Omaha Beach Residents Society Inc v Ocean Management Ltd, Lang J considered an application for a mandatory injunction preventing the continued construction of a building that was allegedly in breach of a restrictive covenant.10    The developer had not first sought approval of the building design as it was bound to. While Lang J considered the developer had already incurred

9	Hinde, McMorland and Sim, above n 8, at [17.045].
10	Omaha Beach Residents Society Inc v Ocean Management Ltd (2007) 8 NZCPR 796.

substantial cost for the commenced construction, he concluded that the developer had been the “author of its own misfortune” by failing to comply with its obligations.

[41]     Turning now to balance of convenience issues, I need to consider whether the Trusts are entitled to the injunctive relief that they seek and whether, in exercising my discretion, this relief should be granted. It has long been accepted that the granting of relief is a discretionary matter and this Court is entitled to take into account a wide range of factors in considering the exercise of its discretion, including the conduct of the parties.

[42]     A principal factor here weighing against injunctive relief obviously is the effect that such relief will have on Mr Lawson who had the Buildings on 61B Beechwater Drive built, no doubt at some expense, and he has occupied them from time to time as residential accommodation. Any injunctive relief granted here will require Mr Lawson to demolish or remove on a permanent basis the four buildings he has erected.  An obvious response to this contention, however, is that Mr Lawson has been the author of his own misfortune. His claim that this may have occurred through some degree of oversight on his part or the inadequacy of proper legal advice that allegedly he failed to receive on the purchase of the property does not really provide any proper explanation for what has occurred here.

[43]     I do not consider that any cost to Mr Lawson should prevent me making a mandatory injunction to enforce his covenant obligations. As I have noted, he has also been the author of his own misfortune by failing to comply.  Besides, any cost to Mr Lawson of making good his breaches here can be mitigated by his ability to relocate or sell the Buildings.

Result

[44]     For the reasons outlined above I find here:

(a)       That  Mr  Lawson,  as  the  owner  of  61B  Beechwater  Drive,  Lake Brunner, is subject to the restrictive covenants set out in the Covenant Document;

(b)       That he has breached these covenants by erecting the Buildings, which first, do not comply with the Design Guidelines, secondly, they were not submitted for approval to the registered proprietors of the remaining properties in the Subdivision, and thirdly, they constitute either huts or sheds currently being used for residential purposes, and thus in particular they infringe para 10 of Schedule B of the Covenant Document.

[45]     The interlocutory application by the Trust for a mandatory injunction generally succeeds in its entirety although with certain minor amendments to the specific orders sought in the application itself which I outline below.

Orders

[46]     I now make the following orders therefore:

(a)       Declaring that the defendant, Mr Lawson, is bound by the negative covenants    registered    against    the    title    to    his    property    at
61B Beechwater Drive, Lake Brunner;

(b)       Declaring that the four pre-fabricated buildings erected on the property at 61B Beechwater Drive were erected in breach of the covenants registered against the title to this property; and

(c)       Directing that the four pre-fabricated buildings erected on the property at 61B Beechwater Drive, Lake Brunner, be either permanently removed from the property or demolished, and such removal or demolition be completed and the property made good by no later than
5 p.m. on 11 November 2018.

[47]     A period of one month from the date of this judgment is being allowed for the removal of the buildings in question.   This is generally in line with the default provisions provided for under Schedule B of the Covenant Document (which allow one month for remedying any cause of default under the Covenant).

Costs

[48]     I consider that costs here should follow the event in the normal way. The Trusts having succeeded in their present application and generally obtained the injunctive relief sought, Mr Lawson is to pay to the Trusts costs on this proceeding on a category
2B scale basis together with disbursements, all as fixed by the Registrar.

...................................................
Gendall J

Solicitors:
Wynn Williams, Auckland

Copy to Defendant, Mr Lawson