JOHNS and JOHNS v WU and CHENG [2019] NZHC 12

JOHNS and JOHNS v WU and CHENG [2019] NZHC 12

The court held that the covenant remains enforceable in respect of design and materials but is not enforceable as to the minimum build cost in sub-clause (c)(ii) because the Modal Housing Cost Index was discontinued and there is no single, reliable, objectively ascertainable substitute mechanism of general application; additionally the minimum build cost requirement does not apply to a secondary/minor dwelling (it was intended to secure at least one principal dwelling meeting the minimum), and on the facts the Council acted appropriately and no negligence or loss to plaintiffs was established, so plaintiffs' claims were dismissed.

Citation
[2019] NZHC 12
Parties
Plaintiffs: Leslie Roy Johns and Leonie Mary Johns; First Defendants: Yun Feng Wu and Xiao Wei Cheng; Second Defendant: Auckland Council
Court
High Court
Jurisdiction
New Zealand
Judgment Date
17 January 2019
Procedural Posture
Civil Restrictive Covenant (injunctive Relief), Negligence and Judicial Review / Trial Judgment (high Court, Judgment Delivered 17 January 2019)
Outcome
Judgment for first defendants (Wu and Cheng) and second defendant (Auckland Council). Plaintiffs' claims dismissed in full.
Legal Topics
Restrictive Covenant Interpretation, Enforceability of Contractual Mechanisms, Implied Terms and Rectification, Judicial Review of Administrative Acts, Duty of Care and Negligence, Valuation and Build Cost Indexing
Property Law Contract Law Equity Public Law (judicial Review) Tort (negligence) Planning and Local Government Restrictive Covenant Interpretation Enforceability of Contractual Mechanisms +4 more

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Parties

Leslie Roy Johns and Leonie Mary Johns

Plaintiffs

Yun Feng Wu and Xiao Wei Cheng

First Defendants

Auckland Council

Second Defendant

Procedural Posture

Civil Restrictive Covenant (injunctive Relief), Negligence and Judicial Review / Trial Judgment (high Court, Judgment Delivered 17 January 2019)

Legal Issues

  1. 1 Whether the restrictive covenant's minimum build cost provision (cl (c)(ii)) remains enforceable given discontinuance of the New Zealand Institute of Valuers' Modal Housing Cost Index
  2. 2 Whether the covenant's minimum build cost applies to secondary/minor dwellings or only the principal dwelling
  3. 3 Whether the Court can imply a substitute mechanism or rectify the covenant to replace the discontinued Index

Ratio Decidendi

The court held that the covenant remains enforceable in respect of design and materials but is not enforceable as to the minimum build cost in sub-clause (c)(ii) because the Modal Housing Cost Index was discontinued and there is no single, reliable, objectively ascertainable substitute mechanism of general application; additionally the minimum build cost requirement does not apply to a secondary/minor dwelling (it was intended to secure at least one principal dwelling meeting the minimum), and on the facts the Council acted appropriately and no negligence or loss to plaintiffs was established, so plaintiffs' claims were dismissed.

Court Disposition

Judgment for first defendants (Wu and Cheng) and second defendant (Auckland Council). Plaintiffs' claims dismissed in full.

Orders

  • The Covenant remains enforceable except for sub-clause (c)(ii) (minimum build cost) which is unenforceable for lack of an ascertainable successor to the discontinued Modal Housing Cost Index
  • Covenant does not apply as to minimum build cost to the secondary (minor) dwelling; other covenant obligations (design and materials restrictions) remain in force