IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE	
CIV-2022-425-67
[2023] NZHC 2141	

UNDER	Parts 7 and 19 High Court Rules 2016 and
sections 316 and 317 Property Law Act 2007	
IN THE MATTER	of an application or an order modifying land covenant	
BETWEEN	AGD TRUSTEE LIMITED,
J W TRUSTEES (WSL) LIMITED and
WAYNE SYDNEY LEACH as trustee of the W S FAMILY TRUST
Applicants	
AND	MILLBROOK COUNTRY CLUB LIMITED
First Respondent	
AND	JOHN SCOTT FAIRCLOUGH AND OTHERS
Second Respondents	
AND	QUEENSTOWN LAKES DISTRICT COUNCIL
Third Respondent	

Hearing:	25 July 2023	
Appearances:	T Nelson for Applicants	
Judgment:	10 August 2023	

JUDGMENT OF DUNNINGHAM J

This judgment was delivered by me on 10 August 2023 at 3 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

AGD TRUSTEE LIMITED, v MILLBROOK COUNTRY CLUB LIMITED [2023] NZHC 2141 [10 August 2023]

The application

[1]	The applicants are the registered owners of a property at Mill Vista Lane, being Lots 2 and 3 Deposited Plan (DP) 481724 and comprised in records of title 676274 and 676275 (Otago Registry) (the Property). The Property is on the southern boundary of the Millbrook Resort development in Arrowtown, Queenstown.

[2]	The applicants apply, by way of originating application, for orders under ss 316 and 317 of the Property Law Act 2007 (PLA) to modify the covenant in instrument 6205027.7 (the Covenant) which is registered against the property.

[3]	The application has proceeded by way of formal proof. This is because:

(a)	the application is brought further to an agreement with the first respondent Millbrook Country Club Ltd, and its director has filed an affidavit in support;

(b)	the second respondents are the owners of the rest of the dominant land. They have all been served with the application. Only one set of owners filed in opposition, being the 79th to 81st named second respondents. That opposition has subsequently been withdrawn on agreed terms.

(c)	The third respondent is the Queenstown Lakes District Council and it has confirmed that it will abide the decision of the Court.

Background

[4]	The applicants bought the Property from the former owners in 2021. The Property was previously part of a larger piece of land, held by the former owners, who sold part of their land in 2004 to be developed as part of the Millbrook Resort. As part of that transaction, they agreed to the covenant on the land they retained.

[5]	The Millbrook Resort development is a five star golf and lifestyle resort, which offers a number of facilities, including two 18-hole golf courses along with a high end

residential development. All property owners must be members of the Millbrook Country Club and must comply with Millbrook’s property design guidelines.

[6]	Under the Covenant, there are a number of matters which require the approval of the “Grantee” regarding the use of the Property, as the servient land. For example, any construction or alteration of a building requires the approval of the Grantee, as does any landscaping.

[7]	The original Grantee was the first respondent, Millbrook Country Club Ltd (Millbrook). However, since the Covenant’s creation, the dominant land has been subdivided and  developed.  It  now  entails  around  40  titles  with  approximately 91 owners, all of whom have the benefit of the Covenant.

[8]	The applicants have plans to build on the Property in a way that is visually integrated with the surrounding “Millbrook Resort Zone” land. The current building on the Property is not in keeping with the Millbrook design guidelines. Any new dwelling on the property is intended to comply with them.

[9]	The problem identified by the applicants is that the Covenant now requires them to obtain the approval of all those owners to build on the Property or to undertake other related works. That requirement is unduly expensive and time consuming.

[10]	The applicants’ proposed solution is to seek the modification of the Covenant so that any requirement for approval only requires that of Millbrook. The proposed modification would remove the burden of the approval requirement, while, in the applicants’ submission, protecting the dominant owners’ interests in consistency of development of the Millbrook Resort.

The legal basis for the application

[11]	The applicant relies on the following grounds for modification in s 317 of the PLA. These are:

(a)	the proposed modification of the Covenant will not substantially injure any person entitled (s 317(1)(d));

(b)	the Covenant ought to be modified because of a change since its creation in the nature and extent of the use made of the dominant land (s 317(1)(a)(i));

(c)	the Covenant ought to be modified because of a change since its creation in the character of the neighbourhood (s 37(1)(a)(ii)); and

(d)	it is otherwise just and equitable to modify the Covenant (s 37(1)(f)).

[12]	The basis for advancing the first ground, being that the owners would not suffer any injury, relies on the fact that the applicants would still need to obtain Millbrook’s approval. That body represents the owners and has a vested interest in ensuring the owners’ underlying interests in the consistency of development remain protected.

[13]	Common facts are relied on to support the second to fourth grounds identified above. When the Covenant was registered, the dominant land was undeveloped and had a single owner. It has since been subdivided and developed into approximately 40 titles with around 91 individual owners. The process of obtaining approval of the Grantees has  become significantly  more  costly,  arduous  and  time consuming  as  a result.

Discussion

[14]	I accept that there is, on the applicants’ evidence, a close alignment of interest between Millbrook and the owners of the residential properties, such that the approval of Millbrook can be relied upon by the owners. This is because

(a)	reliance on Millbrook is a fundamental aspect of owning residential property within the development. Every property is subject to encumbrances in favour of Millbrook and the residents rely on Millbrook to ensure compliance. The present situation in respect of the Covenant is a departure from that general position.

(b)	There is a formal structure within Millbrook for policing encumbrance provisions, with input from the Millbrook Residents’ Committee, comprised of owners of residential properties within Millbrook.

(c)	Millbrook Resort is an established development in the area and is incorporated into local zoning restrictions, with the area being zoned “Millbrook Resort Zone”, so the development is established with some permanence.

[15]	In my view, the fact that no other respondents, other than the 79th to 81st respondents, engaged in the application is further evidence that amending the covenant so that approval is only required by Millbrook, sufficiently protects the individual owners’ interests in the restrictions of the Covenant being maintained.

[16]	I also accept that the subdivision and development of the dominant land so that it is now in multiple ownership is a circumstance supporting the amendment of the Covenant, although it does not render the purpose of the Covenant obsolete. Rather, it supports the rationalisation of the identity of the Grantee as long as that does not cause injury to any owner of the dominant land.

The 79th to 81st respondents’ position

[17]	The position of the 79th to 81st named second respondents (the opposing respondents) can be distinguished from that of the other owners. They opposed the application because they wanted to retain their personal right of approval over matters provided for in the Covenant. This is because the Property is in a position of visual prominence from the property jointly owned by the opposing respondents. Their property is situated to the north of the Property and has direct views over it, with the only land between being part of the Millbrook Resort golf course. For that reason, the opposing respondents stood to be uniquely affected by any development of the Property.

[18]	However, the applicants and the opposing respondents have entered into a confidential settlement deed which grants the opposing respondents a substitute covenant against the Property in favour of the land owned by the opposing

respondents. The applicants have also agreed not to give effect to any orders relating to the Covenant (including registering such orders with LINZ prior to the substitute covenant being registered) until this substituted Covenant is in place.

[19]	Accordingly, the applicants’ pursue their application on the terms sought, but subject to the following further terms:

(a)	the applicants shall not give effect to any orders regarding the modification of easement instrument 6205027.7 (including registering the same with Land Information New Zealand) which may be granted in this proceeding prior to the substitute covenant (on the terms which have been agreed between the applicants and the 79th to 81st named second respondents) being registered in favour of the land contained within record of title 788196 over the land contained within records of title 676274 and 676275 (all Otago Registry);

(b)	leave is reserved to either of the applicants or the 79th to 81st named second respondents to apply in the event that there are any difficulties giving effect to the foregoing direction; and

(c)	costs between the applicants and the 79th to 81st named second respondents, to date, are to lie where they fall.

[20]	The only other amendment to the orders sought is that the words “clauses 1-10” be replaced with the words “the instrument”. This means that order would read:

i.	replace all references to “Grantee” in the instrument with “Millbrook Country Club Limited”.

[21]	This is because the term “Grantee” is also used in the introductory wording to the relevant clauses and it is important that the amendments are made consistently throughout the document.

[22]	I am satisfied that this is a minor amendment which does not, in any way, alter the effect of the application. In the interests of avoiding any confusion or doubt, it should be made.

Conclusion

[23]	I am satisfied that the grounds for modification set out in s 317(1) PLA are made out and the discretionary factors weigh in favour of ordering the modifications sought.

[24]	Accordingly, I make the following orders:

1.1	The Covenant in easement instrument 6205027.7, registered against the Property comprising Lots 2 and 3 Deposited Plan 481724 (Records of Title 676274 and 676275, respectively), is modified to:

(i)	replace all references to “Grantee” in the instrument with “Millbrook Country Club Limited”; and

(ii)	insert the following text as clause 11: “For the avoidance of doubt, where this instrument requires the consent or approval of Millbrook Country Club Limited, that refers to the entity, not the registered proprietor(s) of the Dominant Tenement(s) for the time being.

1.2	The Registrar-General of Land shall note against all relevant titles that the Covenant has been modified in the terms of paragraph [24](1.1) by order of this Court.

1.3	Leave is granted to seek amendment to these orders, or further orders, if required.

1.4	The applicants shall not give effect to any orders regarding the modification of easement instrument 6205027.7 (including registering the same with Land Information New Zealand) which may be granted in this proceeding prior to the substitute covenant (on the terms which have been agreed between the applicants and the 79th to 81st named second respondents) being registered in favour of the land contained

within record of title 788196 over the land contained within records of title 676274 and 676275 (all Otago Registry).

1.5	Leave is reserved to either of the applicants or the 79th to 81st named second respondents to apply in the event that there are any difficulties giving effect to the foregoing direction.

1.6	Costs between the applicants and the 79th to 81st named second respondents, to date, are to lie where they fall.

Solicitors:
Webb Gould Law (D Gould), Hamilton Rhodes & Co., Christchurch