RODNEY DISTRICT COUNCIL V FISHERTON LIMITED & ANZANI PAKIRI LIMITED CA CA182/04

RODNEY DISTRICT COUNCIL V FISHERTON LIMITED & ANZANI PAKIRI LIMITED CA CA182/04 29 June 2005IN THE COURT OF APPEAL OF NEW ZEALAND CA182/04UNDER the Resource Management Act 1991 IN THE MATTER OF an Appeal pursuant to leave granted under Section 144 Summary Proceedings Act 1957 BETWEEN RODNEY DISTRICT COUNCIL Appellant AND FISHERTON LIMITED & ANZANI PAKIRI LIMITED Respondents Hearing: 23 June 2003 Court: Glazebrook, Hammond and Robertson JJ Counsel: R B Enright, J F Verry and G R Milner-White for Appellant R B Brabant for Respondents Judgment: 29 June 2005JUDGMENT OF THE COURT A The question posed for this Court is answered as follows: The specific terms of the registered bond relating to replacement bonds apply and the respondents cannot rely on the resource consent conditions relating to the substitution of existing bonds. B The appeal is accordingly allowed and the declarations made by the High Court are set aside. C Costs of $6,000 plus usual disbursements, including travel and accommodation costs of two counsel, are awarded to the appellant. ____________________________________________________________________REASONS(Given by Glazebrook J)Table of ContentsPara NoIntroduction [1]Background [3]The Environment Court decision [6]Venning J's decision [8]Leave to appeal [14]The Council's submissions [19]Submissions of respondents [21]The relevant statutory provisions [24]Discussion [26]Conclusion, result and costs [30]Introduction[1] The Environment Court granted consent to the subdivision of coastal land at Pakiri Beach, north of Auckland, on 15 October 1999. Among the conditions of consent, which were eventually finalised on 6 July 2002, was the provision of a bond to secure obligations relating to the planting and maintenance of native vegetation. Under those consent conditions, the bond could either be a cash bond or one guaranteed by a trading bank. In the event, the then owners provided a cash bond. [2] The respondents, having purchased the land in question, wish to replace the cash bond with a trading bank bond. The Council's position is that the terms of the bond registered against the land prevail over the consent conditions and that it is entitled therefore to insist on a cash bond. On 28 June 2004, Venning J found against the Council. It now appeals against that decision.Background[3] The Environment Court granted a subdivision consent on 15 October 1999 for a 14 lot subdivision of coastal land at Pakiri Beach. On 6 July 2002, the Court issued its final decision, imposing a range of subdivision consent conditions including the planting and maintenance of native vegetation. The Court determined that a bond of $1.6 million was required to ensure that this work would be undertaken. Condition 3 dealt with the maintenance and replanting of revegetation areas. It provided, in relevant part, as follows:(k) (surety) Pursuant to section 108(2)(b) of the Resource Management Act 1991, the maintenance of the revegetated areas shall be secured by way of a bond totalling $1,600,000.00 including GST. The amount of the bond in respect of each of the Lots 1-7, 9, 10 and 12-16 shall be as set out in a table to be approved by the Rodney District Council. The amount shown for each lot in the table as the amount of the bond shall include GST. The bond shall be prepared at the applicant's expense and to the satisfaction of the Council's solicitor and shall include the following terms (without in any way limiting the other terms which may be included, or the conditions of this consent):• Performance of the bond shall be guaranteed by a guarantor acceptable to the Council.• A recognised bank trading in New Zealand shall be deemed to be an acceptable guarantor.• A guarantor of a bond may be substituted with a cash bond. The consent holder or its successor in title shall be released from its or their obligations under the bond: (i) as to 60% of the value of the bond for each lot as set out in the table in this condition, when the three years of plantings have been completed at the density specified in Clause 3(c), and a certificate has been provided as to the following matters:• the required plant density has been achieved;• the plants are healthy and have been planted in accordance with the replanting programme referred to in Clause 3(c); Compliance with these requirements shall be satisfied by the production of a certificate from a suitably qualified professional (not being a person responsible for the supervision of plantingor maintenance) engaged by the consent holder or its successor in title at its or their expense. (ii) The remaining 40% of the bond in respect of each lot on completion of the maintenance work programme specified in Condition 3(g), and following submission to the Council of a report upon the maintenance work programme that a 75% canopy closure has been achieved, and the Council having monitored the planting and maintenance of the revegetation and being satisfied that a 75% canopy closure has been achieved as required by Condition 3(c). (l) Upon satisfactory proof of transfer of the title by the applicant to a new owner of a proposed lot the Council shall accept from the new registered proprietor a bond in substitution of the existing bond prepared at that new registered proprietor's expense and to the reasonable satisfaction of the Council's solicitor which shall include the same terms and conditions as are included in the bond presently securing performance of the revegetation programme for the subject lot, except that the amount of bond shall be adjusted appropriately to recognise the extent to which the revegetation programme has been completed.[4] At about the time the decision settling the conditions was delivered, the original owner of the land transferred its interest in the subdivision to Kitchener Homes Limited (Kitchener). Kitchener provided a cash bond of $1.6 million (including GST) to the Council in satisfaction of condition 3 (the Kitchener bond). The bond was registered against the titles of all 14 lots. The terms of the cash bond, in relevant part, are as follows:BackgroundA. The Council has granted the Consent under the Act to the Owner to carry out and complete the subdivision of the Land. B. It is a condition of the Consent that the Owner must carry out the Works to the satisfaction of the Council. C. The Council has agreed to issue a completion certificate under section 222 of the Act for the Works on condition that the Owner enters into this Bond and deposits the Bond Sum with the Council as security for carrying out and completing the Works and to be held and applied by the Council in the circumstances set out in this Deed.Covenants 1. InterpretationIn this deed unless the context indicates otherwise:1.1 Definitions: "Bond Sum" means the sum of One Million Six Hundred Thousand Dollars ($1,600,000.00) including GST (if any) apportioned as to the Lots comprising the Land in the sums set out in Table 1 in Schedule 5; "Consent" means the subdivision consent granted by the Council in the form attached to Decision No. A145/2002 of the Environment Court dated 5 July 2002, as varied by the Council under delegated authority pursuant to section 127 of the Act file reference R34250 dated 13 February 2003 copies of which are attached marked "A" as Schedule 1. ...2. BondThe Owner shall pay the Bond Sum to the Council in cleared funds on the signing of this Deed, being and in any event prior to the issue by the Council of the Council's certificate under section 224 of the Act for the Subdivision.3. ConditionThis Bond will be void if the Owner carries out and completes the Works to the Council's satisfaction by the Required Date as a consequence of which the Council will refund to the Owner the Bond Sum or so much of the Bond Sum not expended by the Council under clause 4 but otherwise this Bond will remain in full force and effect6. Application of Bond Sum6.1 The Council will apply the Bond Sum solely for the purposes of carrying out and completing the Works and will refund to the Owner in the manner provided in Schedule 4 of this Bond any balance of the Bond Sum not paid and applied by the Council in and towards the carrying out and completion of the Works and any costs incurred by the Council in doing so. The term costs includes, without limitation, any GST paid or payable by the Council in relation to the Council carrying out and completing the Works or such part or parts of the Works as applicable. 6.2 The Owner is not entitled to interest on the Bond Sum or such part of the Bond Sum not expended by the Council received by the Council for the period the Bond Sum or such part of the Bond Sum not expended by the Council is held by the Council as security for the Owner's obligations under this Bond. 6.3 In the event of a sale or transfer by the Owner of any Lot comprising the Land as described in Schedule 2 and the registration under the Land Transfer Act 1952 of both the transfer of any one Lot comprising the Land to a subsequent owner, and a replacement bond as described in clause 10.1 as to the Lot so transferred the Owner agrees and acknowledges that:a. so much of the Bond Sum which relates to the Lot sold or transferred paid to and held by the Council as provided in clause 2 of this Bond shall continue to be held by the Council pursuant to such replacement bond to secure the obligations of the subsequent owner under such replacement bond; and b. the Council shall record in the Council's records that so much of the Bond Sum which relates to the Lot sold or transferred paid to and held by the Council as provided in clause 2 of this Bond shall continue to be held by the Council pursuant to such replacement bond to secure the obligations of the subsequent owner under the replacement bond10. Sale of any Lot comprising the Land10.1 In the event of a sale or transfer by the Owner of any Lot comprising the Land as described in Schedule 2, then contingent on: a. the registration under the Land Transfer Act 1952 of the transfer of title of any Lot to a subsequent owner; and b such subsequent owner providing to the Council a replacement Bond pursuant to, for the purposes of, and having the meaning and effect and powers as provided in sections 109 and 222 of the Act and other applicable statutory rights and powers, prepared at the subsequent owner's expense executed by the subsequent owner and registered under the Land Transfer Act 1952 in substitution for this Bond as to the Lot so transferred, which replacement bond includes to the Council's satisfaction the same terms and conditions as are included in this Bond and secures performance of the Works in respect of the Lot so transferred, the Council will provide the Owner with a variation of this Bond by excluding the Lot so transferred.11. Owner Not Released11.1 The Owner will not be released from any liability under this Bond by any delay, extension of time, forbearance or waiver by the Council, or by failure or neglect by the Council to enforce the obligation to carry out any of the Works. 11.2 Neither this Bond, nor a replacement Bond described in clause 10.1 b, nor a release of either this Bond or any such replacement Bond shall be construed as a discharge or waiver of the primary obligation on the holder of the Consent to comply with the conditions of the Consent.[5] In September 2003 Kitchener agreed to sell its interest to the respondents. On purchasing the property from Kitchener, the respondents sought to provide the Council with a trading bank bond to guarantee performance of the vegetation and maintenance conditions in substitution for the cash bond. The Council declined to accept the change.The Environment Court decision[6] The respondents applied to the Environment Court for declarations that the Council was required to accept the bank bond. On 18 December 2003 Judge Newhook refused their application. He held that the critical words in condition 3(1) of the resource consent were as follows:shall include the same terms and conditions as are included in the bond presently securing performance of the revegetation programme[7] The Judge considered that these words applied to all of the terms of the bond and meant that the respondents did not have the right to require the Council to accept a bank guarantee in place of the existing cash bond.Venning J's decision[8] The respondents appealed to the High Court on the basis that the Environment Court had erred in concluding that "the critical phrase" in condition 3(l) does not allow a bond guaranteed by a recognised bank trading in New Zealand to be substituted for the cash bond upon transfer of title. They also maintained that it erred in concluding that the phrase "shall include the same terms and conditions as are included in the bond" refers to whether the bond is a cash bond or a bond guaranteed by a recognised trading bank. [9] The Council supported the Environment Court decision and sought to cross-appeal, if necessary, to support the decision on different grounds. It submitted that the position is governed solely by the registered bond, as the bond, which was imposed under s 222 of the Resource Management Act 1991 (RMA), replaces conditions 3(k) and 3(l) of the resource consent. It also argued that condition 3(k) had been satisfied by registration of the bond and that the position was now covered by condition 3(l) and the bond. [10] Venning J rejected the submission that the position was governed solely by the bond and that conditions 3(k) and 3(l) of the resource consent had no bearing on the interpretation of the bond. He said that the Kitchener bond itself contemplatessubstitution by a replacement bond. In his view that replacement bond must be on the terms set out in resource consent condition 3, "as that is the basis for the bond". The Judge drew further support for that proposition from s 134 of the RMA which provides that land use and subdivision consents attach to the land and may be enjoyed by the owners of the land for the time being. The respondents, as owners of the land were, in the Judge's view, entitled to rely on the conditions of the subdivision consent, including the conditions providing for substitution of the bond. [11] Venning J interpreted the reference to the "same terms and conditions" in condition 3(l) of the resource consent as a reference to the terms and conditions regarding the performance of the revegetation programme. In his view, it incorporates the obligations relating to the revegetation and the obligation to pay up to $1.6 million in default. The sole issue in his view then was whether there was sufficient security for the obligation assumed under the proposed replacement bond. The Judge held that that issue had already been determined when the Environment Court had accepted that security for the obligations could be provided either by a cash deposit or by an acceptable bank guarantee. [12] The Judge also rejected the submission that condition 3(k) was at an end when it was fulfilled by registration of the bond. He did not consider that there is any justification in reading condition 3(k) down so that it has that effect. The purpose of condition 3 is to ensure the revegetation programme is completed. Condition 3(k) requires a bond to satisfy that obligation. However, condition 3 taken as a whole and condition 3(l) contemplate that there will be replacement bonds substituted from time to time. In the Judge's view, condition 3(k) governs the terms of the bond, including substitute bonds. [13] In the result, the Judge made the following declarations: (a) Condition 3(1) of the resource consent granted by the Environment Court in decision number A145/2002 allows a bond guaranteed by a recognised bank trading in New Zealand to be substituted for a cash bond upon transfer of title;(b) The words in condition 3(1) of the resource consent granted by the Environment Court in decision number A145/2002 "shall include the same terms and conditions as are included in the bond" do not refer to whether the bond is a cash bond or a bond guaranteed by a recognised trading bank in New Zealand; and (c) The words in condition 3(1) of the resource consent granted by the Environment Court in decision number A145/2002 "to the reasonable satisfaction of the Council's solicitor" do not enable the Council or the Council's solicitor to reject a replacement bond because it is a bond guaranteed by a recognised trading bank in New Zealand rather than a cash bond.Leave to appeal[14] The Council sought leave to appeal against Venning J's decision on a number of grounds. By judgment of 29 July 2004, Venning J said that he was satisfied that there was one general question of law at the heart of the issue and of sufficient general importance to warrant the granting of leave – see at [17] below. He asked counsel to file a joint memorandum suggesting any further refinement of the question upon which leave was to be granted. [15] The Judge refused leave on a number of other issues. Three of these are of some significance for this appeal. The Council had sought leave to appeal against Venning J's interpretation of the resource consent conditions. Leave was refused and thus it must be accepted by the Council that conditions 3(k) and 3(l), on their proper construction, allow the respondents, as a successor in title, to substitute a bank guarantee bond for the cash bond. [16] The Council had also sought leave to appeal in relation to an observation made by the High Court that Kitchener could and should have entered the bond providing for the replanting and maintenance work required by condition 3 in accordance with ss 108 and 109 of the RMA and not pursuant to s 222. The Judge refused leave on the basis that the observation made did not mean that the Courtconsidered that the bond was improper or to be ignored. The judgment had recognised that, for their own reasons, Kitchener and the Council had not completed the bond in that manner. The other question identified by the Council was whether a consent holder can voluntarily agree to provide a bond which may have more onerous terms than those contained in the underlying consent conditions. In refusing leave on that question, the Judge said that the answer was not in issue in the case as it has always been accepted that Kitchener voluntarily entered into such a bond. [17] By judgment of 9 August 2004, after counsel had been given an opportunity to comment, leave to appeal was granted on the following question of law (which was the same as the one identified in the course of his 29 July judgment):Whether the specific terms of a bond made between a Council and applicant landowner provided to secure performance of subdivision consent conditions and registered against title to the land in issue prevents a subsequent landowner from relying on the express provisions of the subdivision resource consent conditions where the subdivision resource consent conditions are more favourable to the landowner than particular express provisions of the bond.[18] Although the question is phrased in general terms, it must of course be related to the particular bond and resource consent at issue in this case and also related to the particular question between the parties, ie the terms of any replacement bond. We will answer it in those terms.The Council's submissions[19] In Mr Enright's submission, this appeal involves a single issue: whether the provisions of a bond, when registered against the title of land and deemed to be a covenant under the Land Transfer Act 1952 (LTA), prevail over the consent conditions in a subdivision consent. He submitted that, once registered, a bond runs with the land and binds future successors in title, as if it were a covenant – see s 109(1)(a) and (b) of the RMA. In his submission, this accords with the indefeasibility regime for registered interests under the LTA. The RMA is intended to be, and should be, read as consistent with the LTA regime.[20] Further, in his submission, a land owner is free to enter into a covenant that will bind future owners. The Court should not "go behind" the register and override the terms of a registered covenant once title has issued. In his submission, the provision in s 134 of the RMA that a subdivision consent is to "run with the land" must be viewed in this context. Section 134 does not operate to override the provisions of the bond, once registered. Nor does it override s 109(1)(a) and (b) of the RMA. In Mr Enright's submission, Venning J erred by his failure to consider, or give effect to, s 109(1)(a) and (b) of the RMA when interpreting s 134.Submissions of respondents[21] Mr Brabant, for the respondents, adopted Venning J's reasoning set out at [10] above. In his submission, the status of consent conditions is unchanged by the bond actually entered into by Kitchener, notwithstanding the registration of the bond. The Council is, in his submission, bound by the consent conditions. Such conditions require the Council to accept a replacement bond tendered by a subsequent purchaser on the terms set out in condition 3 of that resource consent. Mr Brabant submitted that this follows from the fact that the bond's very existence depends on the resource consent. In his submission, registration is merely to ensure compliance with those consent conditions and to give notice of what the obligations are. [22] The resource consent continues to have an independent existence recognised by s 134 of the RMA, upon which the respondents are entitled to rely. The ability to call for a replacement bond, in his submission, relies on the consent and must be accepted in terms of that consent. Mr Brabant thus submitted that the relevant consent conditions 3(k) and (l) prevail over the bond provisions in the Kitchener bond, given in purported reliance on s 222 of the RMA but in actuality given pursuant to s 108. In his submission, the Council's indefeasibility argument confuses the protection of an interest in land through registration under the LTA with the question of whether a replacement bond (permitted by condition 3 and accepted as possible by the Council) can have a different form of security (guarantee rather than cash). This does not diminish the protection of registration.[23] Mr Brabant accepted for the purposes of this appeal that the bond was validly registered. He also accepted that the bond's terms do not allow the substitution of a cash bond with one providing for a bank guarantee.The relevant statutory provisions[24] We set out the provisions of the RMA as they were prior to its amendment in 2003 which are relevant:108. Conditions of resource consents(1) Except as expressly provided in this section and subject to any regulations, a resource consent may be granted on any condition that the consent authority considers appropriate, including any condition of a kind referred to in subsection (2). (2) A resource consent may include any one or more of the following conditions: (b) A condition requiring that a bond be given in respect of the performance of any one or more conditions of the consent, including any condition relating to the alteration or the removal of structures on the expiry of the consent: 109. Special provisions in respect of bonds or covenants(1) Every bond given under section 108(2)(b) in respect of a land use consent or subdivision consent, and any other bond to which this subsection is applied as a condition of the consent, and every covenant given under section 108(2)(d), – (a) Shall be deemed to be an instrument creating an interest in the land within the meaning of section 62 of the Land Transfer Act 1952, and may be registered accordingly; and (b) When registered under the Land Transfer Act 1952, shall be a covenant running with the land and shall, notwithstanding anything to the contrary in section 105 of the Land Transfer Act 1952, bind all subsequent owners of the land (4) Where the holder fails, within the period prescribed by the resource consent (or within such further period as the consent authority may allow), to complete, to the satisfaction of the consent authority, any work in respect of which any bond is given - (a) The consent authority may enter on the land and complete the work and recover the cost thereof from the holder out of any money or securitiesdeposited with the consent authority or money paid by a guarantor, so far as the money or securities will extend; and (b) On completion of the work to the satisfaction of the consent authority, any money or securities remaining in the hands of the consent authority after payment of the cost of the works shall be returned to the holder or the guarantor, as the case may be. (5) Where the cost of any work done by the consent authority under subsection (4) exceeds the amount recovered by the consent authority under that subsection, the amount of that excess shall be a debt due to the consent authority by the holder, and shall thereupon be a charge on the land. (6) The provisions of Part 12 shall continue to apply notwithstanding the entry into or subsequent variation or cancellation of any such bond or covenant.134. Land use and subdivision consents attach to land(1) Except as provided in subsection (2), a land use consent and a subdivision consent shall attach to the land to which each relates and accordingly may be enjoyed by the owners and occupiers of the land for the time being, unless the consent expressly provides otherwise221. Territorial authority to issue a consent notice(1) Where a subdivision consent is granted subject to a condition to be complied with on a continuing basis by the subdividing owner and subsequent owners after the deposit of a survey plan (not being a condition in respect of which a bond is required to be entered into by the subdividing owner, or a completion certificate is capable of being or has been issued), the territorial authority shall, for the purposes of section 224, issue a consent notice specifying any such condition. (2) Every consent notice shall be authenticated by the territorial authority under section 252 of the Local Government Act 1974. (3) At any time after the deposit of the survey plan, any condition specified in a consent notice may be varied or cancelled by agreement between the owner for the time being and the territorial authority. (4) Every consent notice shall be deemed - (a) To be an instrument creating an interest in the land within the meaning of section 62 of the Land Transfer Act 1952, and may be registered accordingly; and (b) To be a covenant running with the land when registered under the Land Transfer Act 1952, and shall, notwithstanding anything to the contrary in section 105 of the Land Transfer Act 1952, bind all subsequent owners of the land. (5) Where a consent notice has been registered under the Land Transfer Act 1952 and any condition in that notice has been varied or cancelled by any agreement under subsection (3) or has expired, the District LandRegistrar shall, if he or she is satisfied that any condition in that notice has been so varied or cancelled or has expired, make an entry in the register and on any relevant instrument of title noting that the consent notice has been varied or cancelled or has expired, and the condition in the consent notice shall take effect as so varied or cease to have any effect, as the case may be.222. Completion certificates(1) Where under this Part, compliance with a condition of a subdivision consent is dependent on the completion by the owner of any work required by the territorial authority or on the making of a financial contribution (as defined in section 108(9)), the territorial authority may, for the purposes of section 224, issue a certificate to the effect that the owner has entered into a bond binding the owner to carry out and complete the work or make the financial contribution (as the case may be) to the satisfaction of the territorial authority within such period as the territorial authority may specify. (2) The territorial authority may from time to time extend any period specified by it under subsection (1), but any such extension shall not affect any security given for the performance of the bond. (3) The territorial authority may exercise all of the powers conferred upon a consent authority by section 108(6) as if the bond entered into under this section had been required as a condition of a subdivision consent. (4) The provisions of section 109 shall apply as if the bond entered into under this section had been required as a condition of a subdivision consent. (5) In this section, the term "work" includes anything, whether in the nature of works or otherwise, required by the territorial authority to be done by the owner as a condition of a subdivision consent; but does not include contributions of money or land (including esplanade reserves and esplanade strips) as a condition of a subdivision consent.224. Restrictions upon deposit of survey planNo survey plan shall be deposited under the Land Transfer Act 1952 or with the Registrar of Deeds for the purposes of section 11(1)(a) unless – (c) there is lodged with the District Land Registrar or the Registrar of Deeds, as the case may require, a certificate signed by the chief executive or other authorised officer of the territorial authority stating that, it has approved the survey plan under section 223 (which approval states the date of the approval), and all or any of the conditions of the subdivision consent have been complied with to the satisfaction of the territorial authority and that in respect of such conditions that have not been complied with – (i) a completion certificate has been issued in relation to such of the conditions to which section 222 applies: (ii) a consent notice has been issued in relation to such of the conditions to which section 221 applies:(iii) a bond has been entered into by the subdividing owner in compliance with any condition of a subdivision consent imposed under section 108(2)(b); and[25] The relevant provisions of the LTA are as follows:62. Estate of registered proprietor paramountNotwithstanding the existence in any other person of any estate or interest, whether derived by grant from the Crown or otherwise, which but for this Act might be held to be paramount or to have priority, but subject to the provisions of Part 1 of the Land Transfer Amendment Act 1963, the registered proprietor of land or of any estate or interest in land under the provisions of this Act shall, except in case of fraud, hold the same subject to such encumbrances, liens, estates, or interests as may be notified on the folium of the register constituted by the grant or certificate of title of the land, but absolutely free from all other encumbrances, liens, estates, or interests whatsoever,— (a) Except the estate or interest of a proprietor claiming the same land under a prior certificate of title or under a prior grant registered under the provisions of this Act; and (b) Except so far as regards the omission or misdescription of any right of way or other easement created in or existing upon any land; and (c) Except so far as regards any portion of land that may be erroneously included in the grant, certificate of title, lease, or other instrument evidencing the title of the registered proprietor by wrong description of parcels or of boundaries.105. Transfer by mortgageeUpon the registration of any transfer executed by a mortgagee for the purpose of any such sale as aforesaid, the estate or interest of the mortgagor therein expressed to be transferred shall pass to and vest in the purchaser, freed and discharged from all liability on account of the mortgage, or of any estate or interest except an estate or interest created by any instrument which has priority over the mortgage or which by reason of the consent of the mortgagee is binding on him.Discussion[26] For most forms of subdivision, including the present subdivision, s 224(c) requires the relevant territorial authority to certify, before a survey plan is deposited under the LTA, that all relevant consent conditions have been complied with or that they have been incorporated into a bond, consent notice or completion certificate. Paragraphs (a) and (b) of s 109(1) of the RMA provide that, where conditions areincorporated into bonds, such bonds are deemed to be instruments creating an interest in the land within the meaning of s 62 of the LTA and that they may be registered accordingly. Once registered, they are deemed to be a covenant running with the land and bind all subsequent owners of the land. They therefore have the protection of what is loosely called indefeasiblity of title – see Hinde, McMorland and Sim Land Law in New Zealand (Looseleaf) [9.001]-[9.056]. [27] Mr Brabant accepted that s 109(1)(a) and (b) apply to the Kitchener bond. It was also accepted that the terms of the Kitchener bond, in relation to replacement bonds, do not allow for the substitution of a cash bond with one secured by bank guarantee – see the terms set out at [4] above. There is no suggestion that the provisions of the Kitchener bond in relation to replacement bonds were of a kind that, while contained in a registered instrument, are not protected by the indefeasibility provisions of the LTA – see the discussion in Hinde, McMorland & Sim at [9.007]. [28] We conclude, therefore, that the Council is entitled to rely on the provisions in the registered Kitchener bond with regard to replacement bonds, which is a covenant running with the land. The resource consent conditions are outside of the registered instrument and cannot, in our view, alter or diminish the interest created by the registered bond. There is nothing in s 109 of the RMA that would suggest that the principle of indefeasibility was meant to be modified in any way or that the interest in land created was limited in some manner by the resource conditions. Indeed, it is obviously contemplated that all relevant resource conditions related to the bond would be incorporated in the bond – see s 224(c) discussed above at [26]. We accept Mr Enright's submission that s 134 of the RMA must be read in that context. We would have expected much more explicit and unambiguous language if the resource conditions were to override the registered instrument or modify the indefeasibility provisions of the LTA in relation to that instrument. [29] We have approached this appeal on the basis that the Kitchener bond is valid and properly registered. As indicated above at [16], leave to appeal was refused on the questions of whether the Council could require the bond to be given pursuant to s 222 and whether it could contain more onerous terms than the consent conditions.This is not to suggest that we have concluded that the bond was not valid and properly registered or that the result of the appeal would have been different had we come to that conclusion.Conclusion, result and costs[30] It follows that the question of law posed must be answered as follows. The specific terms of the Kitchener bond relating to replacement bonds apply and the respondents cannot rely on the resource consent conditions relating to the substitution of existing bonds, as they are inconsistent with those contained in the bond. As indicated above at [18], we answer the question in that narrow form as the wider question does not arise in this appeal. [31] Accordingly the appeal must be allowed and the declarations made by Venning J set aside. Costs of $6,000 plus usual disbursements (including travel and accommodation costs of two counsel) are awarded to the Council.Solicitors: Kensington Swan, Auckland for Appellant North Harbour Law, Auckland for Respondents