PAIHIA PROPERTY HOLDINGS CORPORATE TRUSTEE LIMITED v BODY CORPORATE 190356 [2022] NZSC 12

PAIHIA PROPERTY HOLDINGS CORPORATE TRUSTEE LIMITED v BODY CORPORATE 190356[2022] NZSC 12 [24 February 2022]IN THE SUPREME COURT OF NEW ZEALANDI TE KŌTI MANA NUISC 117/2021[2022] NZSC 12BETWEEN PAIHIA PROPERTY HOLDINGSCORPORATE TRUSTEE LIMITEDApplicantAND BODY CORPORATE 190356First RespondentCHIN YUN HOLDINGS LIMITEDSecond RespondentCourt: William Young, Glazebrook and Ellen France JJCounsel: J R Billington QC, L M Van and R A Idoine for ApplicantD K Wilson for RespondentsJudgment: 24 February 2022JUDGMENT OF THE COURTA The application for an extension of time to apply for leaveto appeal is granted.B The application for leave to appeal is dismissed.C The applicant must pay one set of costs of $2,500 to the firstand second respondents.____________________________________________________________________REASONSIntroduction[1] The applicant, Paihia Property Holdings Corporate Trustee Ltd (PaihiaProperty) seeks leave to appeal against a decision of the Court of Appeal allowing anappeal by the first and second respondents, Body Corporate 190356 and Chin YunHoldings Ltd1 from a decision of the High Court.2 The High Court was satisfied interms of s 317(1)(d) of the Property Law Act 2007 that the modification of theeasements proposed by Paihia Property would "not substantially injure" therespondents.3Background[2] The second respondent owns and operates the Paihia Beach Resort & Spa onMarsden Road, a unit title development comprising 28 principal units. The firstrespondent is the body corporate that owns the common property and the land onwhich the resort operates. They are collectively referred to as the Resort. PaihiaProperty owns the property next door to the Resort. In broad terms, the right of wayeasements in issue run from the far corner of Paihia Property's land on the frontage ofMarsden Road, across this land to the boundary with the Resort's land.4 The modifiedright of way would start on the near corner of Paihia Property's land on the frontageof Marsden Road and would run down the boundary with the Resort's land.5 Whenthe right of way was created the two parcels of land were jointly owned.The High Court judgment[3] In the High Court, Downs J (after a site visit) did not accept the modificationof the right of way would make access to the Resort troublesome, compromise itsparking and an existing resource consent, or increase noise. While the Judgeacknowledged the "Resort's real concern" may be that "it cannot know what may bebuilt next door", this was described as "beyond [the Court's] purview".6 TheHigh Court accordingly made the order sought by Paihia Property modifying theeasements.1 Body Corporate 193056 v Paihia Property Holdings Corporate Trustee Ltd [2021] NZCA 411(Gilbert, Mander and Hinton JJ) [CA judgment].2 Paihia Property Holdings Corporate Trustee Ltd v Body Corporate 190356 [2020] NZHC 2462,(2020) 21 NZCPR 385 (Downs J) [HC judgment].3 HC judgment, above n 2, at [45].4 See the diagram in CA judgment, above n 1, Appendix 1.5 See the diagram in CA judgment, above n 1, Appendix 2.6 HC judgment, above n 2, at [46].The Court of Appeal judgment[4] The Court of Appeal agreed with the High Court on matters such as the effectson parking, noise and so on. However, in allowing the Resort's appeal, the Court sawthe more significant questions as those relating to the future development of PaihiaProperty's land and the submission as to the likelihood there would be a building closeto the boundary if the right of way was relocated. The submission was that the "luxuryresort" would be left with access by way of "a mean looking alleyway between twobuildings".7 The Court said Downs J was wrong to see the concern as to futuredevelopment as beyond the Court's purview.[5] The Court stated it was properly conceded by Paihia Property as a matter oflaw that future development was within the Court's purview.8 Rather, Paihia Propertyargued it was a question of fact and evidence and there was none.[6] The Court of Appeal next addressed the meaning of "substantially injure" ins 317(1)(d), citing this Court's judgment in Synlait Milk Ltd v New Zealand IndustrialPark Ltd.9 The Court noted Paihia Property had not offered any evidence as to likelydevelopment on its property if the right of way was modified. The Court did not seethe lack of evidence as counting against the Resort because the onus was on PaihiaProperty.[7] In comparing the position as it is with that following modification, the Courtconsidered the concern at being left with "a mean looking alleyway" was justified.Further, depending on the nature of the development, there may be other loss ofamenity. The Court also accepted the Resort's submission that the easements werecreated when the land was in common ownership and there was freedom of choice andthat location was retained when the land was sold. The Court said the inference is thatthe then owners of the resort saw it as the preferred location. The High Court decisionordering modification of the easements was set aside.7 CA judgment, above n 1, at [44].8 In this context, at [52], the Court discussed Tujilo Pty Ltd v Watts [2005] NSWSC 209, (2005)12 BPR 23,257.9 Synlait Milk Ltd v New Zealand Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657.The proposed appeal[8] The first proposed ground of appeal is whether consideration of "incidentalbenefits/effects" is part of New Zealand law. This is a reference to the Court ofAppeal's discussion of the judgment of the Supreme Court of New South Wales inTujilo Pty Ltd v Watts which dealt with a section in essentially the same terms ass 317(1)(d).10 Paihia Property says that this idea imbues an easement with restrictivecovenants and this is inconsistent with the Property Law Act which treats thoseinterests in land differently.11 Paihia Property also says this approach expandspotential grounds the burdened owner will have to anticipate and deal with.[9] The second proposed ground is whether reliance on such benefits/effects in thiscase breached principles of natural justice. The argument is that apart from the"mean alleyway" remark made during the site visit, the risk of development did notfeature in argument until raised as part of the Court of Appeal submissions so PaihiaProperty had no opportunity to prepare evidence or make submissions on it.[10] Finally, Paihia Property wishes to argue that the Court of Appeal was wrong todraw an inference the previous owners and operators of the benefited land consideredthe current location of the easements as optimal. Paihia Property says the "sale" wasin fact a forced sale of both parcels by separate mortgagees.Our assessment[11] We do not consider any of the proposed grounds of appeal raise questions ofgeneral or public importance or of general commercial significance.12 Rather, theproposed appeal would require consideration of the Court of Appeal's application ofthis Court's recent discussion in Synlait of s 317 to the particular facts. Contrary tothe submission for Paihia Property, the discussion of Tujilo was not central to thereasoning of the Court of Appeal.10 The submission is that in Tujilo, above n 8, "incidental effects" are referred to as "those activitiesor uses of the burdened land 'which [are]inconsistent with the occurrence of the types of activitiesor events which the easement expressly allows to happen on the servient tenement.'. The'incidental effect' at issue in Tujilo was preventing development of the burdened land due to thepresence of various recreational easements."11 Citing ss 275–318C.12 Senior Courts Act 2016, s 74(2)(a).[12] Nor do we see any appearance of a miscarriage of justice in the civil sense.13While it appears the argument changed somewhat in the Court of Appeal, the issue offuture development was referred to in the High Court.14 It is relevant in this respectthat the matter proceeded by way of an originating application so there was nostatement of claim. We understand that the site visit was the only "hearing" and therewas neither cross-examination nor discovery. In any event, Paihia Property had theonus. Finally, any error in the factual inference challenged by the applicant is notmaterial.[13] The application for leave is out of time but the delay is explained and therespondents consent to an extension of time.Result[14] The application for an extension of time to apply for leave to appeal is granted.The application for leave to appeal is dismissed.[15] The applicant must pay one set of costs of $2,500 to the first and secondrespondents.Solicitors:Anthony Harper, Auckland for ApplicantLoo & Koo, Auckland for Respondents13 Senior Courts Act, s 74(2)(b). See also Junior Farms Ltd v Hampton Securities Ltd (in liq) [2006]NZSC 60, [2006] 19 PRNZ 369 at [5].14 CA judgment, above n 1, at [50].