JOIE DE VIVRE CANTERBURY LIMITED v CHRISTCHURCH INTERNATIONAL AIRPORT LIMITED [2015] NZHC 1580

JOIE DE VIVRE CANTERBURY LIMITED v CHRISTCHURCH INTERNATIONAL AIRPORT LIMITED [2015] NZHC 1580 [7 July 2015]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV-2015-409-000237[2015] NZHC 1580UNDER the Land Transfer Act 1952IN THE MATTER of an application for an order pursuant toSection 145A of the Act that the caveat notlapseBETWEEN JOIE DE VIVRE CANTERBURYLIMITEDApplicantAND CHRISTCHURCH INTERNATIONALAIRPORT LIMITEDRespondentHearing: 3 July 2015Appearances: S D Munro and A L Davidson for ApplicantO D Peers and M J Thomson for RespondentJudgment: 7 July 2015JUDGMENT OF ASSOCIATE JUDGE MATTHEWS[1] Joie De Vivre Canterbury Limited (JDVC) applies by originating application for an order that Caveat 9932135.1 (the caveat) not lapse under s 145A of the Land Transfer Act 1952. Christchurch International Airport Limited (CIAL) opposes the application.Background[2] JDVC owns 7.6173 hectares of land at 321-361 Russley Road, Christchurch, close to Christchurch International Airport. It has lodged the caveat against Certificates of Title 526290 and 526294 which are owned by CIAL. The caveat was lodged under s 137 Land Transfer Act 1952. Section 137(1) provides:Any person may lodge with the Registrar a caveat in the prescribed form against dealings in any land or estate or interest under this Act if the person –(a) claims to be entitled to, or to be beneficially interested in, the land or estate or interest by virtue of any unregistered agreement or other instrument or transmission, or of any trust expressed or implied, or otherwise; or(b) ...[3] By s 137(2) the caveat must contain certain information, including "thenature of the land or estate or interest claimed by the caveator, which must be stated with sufficient certainty".1[4] The estate or interest claimed by JDVC is stated in the caveat in the following terms:An interest pursuant to the Land Covenant in Easement Instrument 9632714.17 in which the registered proprietor, Christchurch International Airport Limited, agreed to grant an easement of right of way over the land in Certificates of Title 526290 and 526294 in favour of the land in Certificate of Title 526291 the registered proprietor of which is Joie De Vivre Canterbury Limited.[5] Easement Instrument 9632714.17 is in Form B in sch 2 of the Land Transfer Act 1952, and is said to be created pursuant to ss 90A and 90F of the Land Transfer Act 1952. Section 90A(2) provides for the use of a document described as an easement instrument as a method to create an easement which might, until this section became law, have been created by a transfer under s 90 of the Land Transfer Act. Section 90F(1)(a) provides that any covenant that may be contained in an instrument to which s 307 of the Property Law Act 2007 applies may also be created in the same way as an easement may be created under s 90A.[6] The land covenant in Easement Instrument 9632714.17 which is cited in the caveat registered by JDVC is a land covenant to which s 307 of the Property Law Act 2007 applies, so is a covenant which can be registered under ss 90A and 90F.1 Land Transfer Act 1952, s 137(2)(b).[7] The Easement Instrument describes the covenant in the following terms (I have inserted the acronyms of the parties):2The Grantor [CIAL] being the registered proprietor of the servient tenement(s) set out in Schedule A grants to the Grantee [JDVC] (and, if so stated, in gross) the easement(s) or profits(s) à prendre set out in Schedule A, or creates the covenant(s) set out in Schedule A, with the rights and powers or provisions set out in the Annexure Schedule(s).[8] Section 307(3)(a) of the Property Law Act 2007 provides that the Registrar- General may enter in the register (as defined in s 2 of the Land Transfer Act 1952) relating to the burdened land, the benefitted land or both, a notification of a covenant to which that section applies. Section 307(4) provides that a covenant notified under subs (3) is an interest notified on the register relating to the burdened land for the purposes of s 62 of the Land Transfer Act 1952. The effect of this provision is to give to the covenant the rights of priority and indefeasibility created by s 62 of the Land Transfer Act 1952.[9] Annexure Schedule 1 of the registered land covenant sets out the covenants which bind CIAL and which JDVC is concerned to enforce. They relate to vehicle access to and from Russley Road, which is adjacent to the east side of the areas of land owned by JDVC and CIAL. Russley Road is a state highway, and a limited access road. The purpose of the land covenant is to ensure that JDVC has specified rights of way and other easements over a portion of Lot 9 DP 433014, which is owned by CIAL, described as Area Z. Alternatively, if CIAL elects not to form and create those easements in the exact locations described as Area Z, it may instead form and create them in alternative locations, provided that any alternative location will provide good legal access to a legal road vested in the Christchurch City Council, or to Russley Road.[10] JDVC has lodged a caveat over the lots owned by CIAL of which Area Z forms part, because it maintains that it is now entitled to creation of the easements. This is because a slip road has been built on the west side of Russley Road which2 In the Easement Instrument the grantee is Calder Stewart Industries Limited (Calder Stewart). JDVC and Calder Stewart were partners in a joint venture relating to a larger area of land which included the land now owned by JDVC. They later agreed to end the joint venture with Calder Stewart transferring part of the property to JDVC. JDVC is therefore the grantee, now, under the Easement Instrument.gives north bound vehicles on Russley Road left turn access into CIAL's land,though no other access between Russley Road and that land. JDVC says this has triggered an obligation on CIAL to create the easement over Area Z to which it maintains it is entitled. CIAL says that this is not sufficient to trigger JDVC's rightsunder the land covenant.[11] Area Z is a small trapezoidal shaped piece of land, with an eastern boundary adjacent to Russley Road and a western boundary adjacent to an area of CIAL land which is to become a public road known as Syd Bradley Road. Evidently, although as Mr Munro pointed out, the shape of area Z appears to suggest that a road over it would have left turning capacity and right turning capacity onto Russley Road, it is not now intended this will be the case. Mr Munro told me that the arrangements which were recorded in the land covenant were made some years ago.[12] It seems events have moved on. Now, it is intended that Syd Bradley Road will be lowered as it approaches Russley Road, and pass under Russley Road, thus by a roadway loop allowing ingress and egress for south bound traffic on Russley Road. Ingress and egress for north bound traffic will occur a short distance to the south, at the juncture of George Bellew Road and Russley Road. This arrangement is known as the southern airport access. As a result of the southern airport access, area Z will become part of the lowered roadway, and vest in the Council. Any right of way JDVC may have over it will have to be surrendered in accordance with the obligation on JDVC to do so under clause 2.8 of the land covenant.[13] Whilst there may appear to be an element of futility, therefore, in a right of way being created which will certainly not now be needed, JDVC maintains that it has a legal right to this easement and will have a right to compensation from Transit when it has to be surrendered. Whether that is so would appear to be at least moot, given an obligation already on JDVC to surrender the land without compensation, but a decision on that point is beyond the scope of this judgment. I refer to it now because the theorem on which JDVC's case is constructed is that, because of events that have occurred, it is now entitled to creation of the easements and for the above reasons, it wishes to receive them.[14] The greater part of counsel's submissions for both JDVC and CIAL werefocused on their opposing positions on this proposition. In fact though, the first issue is whether JDVC has an interest by virtue of an unregistered agreement, as required by s 137. If it does not, the above issues fall away on this application. This point will direct the correct outcome of this application.Did JDVC have a right to lodge a caveat against CIAL's title?[15] Mr Munro accepts that the entire agreement between JDVC and CIAL in relation to the easements in question is recorded in the registered land covenant. Recognising that s 137 only allows the lodgement of a caveat to protect an estate or interest in land by virtue of any unregistered agreement or other instrument or transmission,3 it was necessary for him to explain how JDVC might establish anyother interest in CIAL's land which is not held by virtue of the land covenant.[16] Mr Munro argued first that the land covenant contemplates that there will be a further document in registrable form which will need to be registered in order to create the rights of way to which JDVC is entitled by virtue of the agreement recorded in the covenant. He says that once the conditions specified in the covenantfor any of JDVC's rights to arise have been satisfied, there will then be a right to aright of way (and other easements) which have arisen out of, but are not part of, the land covenant. The rights recorded in the next easement document will be new rights or, put in terms of s 137(1)(a), will set out a new interest which JDVC will have, which is not an interest arising from the registered land covenant. He says the caveat protects the rights that arise from the registered easement to which his client is entitled and will thus receive.[17] I accept that a caveat would protect the rights arising from a registered easement to which his client might be entitled. But even leaving aside the question of whether a conditional agreement to grant an easement creates an interest in land sufficient for the purposes of s 137(1)(a), Mr Munro's argument is fundamentally flawed. Any rights that might exist under an easement which is ultimately registered are derived solely and entirely from the only existing source of those rights, the3 See Re Haupiri Courts (No 2) App [1969] NZLR 353 for discussion of this phrase.registered land covenant. The registered easement document will not grant to JDVCany greater interest in CIAL's land than JDVC now has under the registered land covenant. There is no other source for any interest in CIAL's land.[18] The second point made by Mr Munro is based on the wording of the land covenant. Whilst the principal premise in the covenant is that in certain circumstances CIAL will grant to JDVC the specified rights by way of easement over area Z, the covenant also provides:2.5 The Grantee acknowledges that the Grantor may elect not to form and create the easements contemplated by clauses 2.2, 2.3 and 2.4 in the exact locations of Area Z, the southern ROW and Area N. Instead, the Grantor shall be entitled to form and create those easements in alternative locations provided that any alternative location will provide good legal access to a legal road vested in the Christchurch City Council or to Russley Road being a state highway.[19] Mr Munro says that this means that if CIAL decides not to utilise area Z as contemplated, JDVC will have different and new rights to an easement in an alternative location. Mr Munro says the caveat protects this right.[20] This argument is subject to the same flaw as the previous argument. Any right which JDVC may have to an easement in an alternative location is derived from the registered land covenant only. Again, there is no other source.[21] It follows that the caveat lodged by JDVC against CIAL's land is not withinthe terms of s 137(1)(a) of the Land Transfer Act, and must be removed from the title. This application by JDVC cannot succeed.Other arguments presented by JDVC[22] Mr Munro presented a comprehensive argument to the effect that JDVC'sright to easements under the land covenant is now unconditional because of events which have recently occurred. Mr Peers presented comprehensive argument to the contrary. In essence, the argument for JDVC comes down to its contention that, as its right to easements is now unconditional and the easements have not been granted, CIAL is in breach of the land covenant. If, having considered both the evidence and the argument presented for CIAL, JDVC still thinks this argument has merit, thecourse open to it is to issue a proceeding against CIAL for breach of contract. Because of the decision that I have reached on this application, any finding I might make on whether JDVC now has an unconditional right to creation of the easements specified in the land covenant would necessarily be obiter and, in my opinion, would be unhelpful.Outcome[23] The application is dismissed. The interim order that the caveat not lapse until further order of the Court is revoked.[24] Costs are reserved. If counsel are unable to agree costs, CIAL may file and serve a memorandum within five working days, and JDVC may then file and serve a memorandum in response within a further five working days. No reply by CIAL will be filed unless requested. I will then determine costs on the papers._______________________J G MatthewsAssociate JudgeSolicitors:Anderson Lloyd, Christchurch.Buddle Findlay, Christchurch.