Kaimai Properties Ltd v Queen Elizabeth the Second National Trust

• Jurisdiction: New Zealand
• Judge: Edwards J
• Judgment Date: 10 July 2019
• Neutral Citation: [2019] NZHC 1591
• Court: High Court
• Docket Number: CIV-2017-419-000223
• Date: 10 July 2019

Between

Kaimai Properties Limited

Plaintiff

and

Queen Elizabeth the Second National Trust

Defendant

[2019] NZHC 1591

CIV-2017-419-000223

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

Environment — open space covenants — whether land owner was able to grant rights to a third party without consent of the defendant — rectification based on common intention or unilateral mistake

Counsel:

A R Galbraith QC, K E Cornegé and M K Brady for the Plaintiff

R J B Fowler QC and F B Q Collins for the Defendant

A R Galbraith QC, Auckland

R J B Fowler QC, Wellington

JUDGMENT OF Edwards J

This judgment was delivered by me on 10 July 2019 at 8.30 am/pm.

Registrar/Deputy Registrar

1 In 2005, the owners of two blocks of land in the Kaimai Ranges granted two open space covenants (covenants) over large tracts of that land in favour of the defendant, the Queen Elizabeth the Second National Trust (Trust).

2 The plaintiff, Kaimai Properties Ltd (Kaimai), is the current owner of both blocks of land. A related company operates an aggregate rock quarry on the land which has been there since 1956. Kaimai has consented to the expansion of the quarry into areas currently subject to the covenants. The Trust does not consent to that expansion and considers that any encroachment into the covenanted areas will be in breach of the terms of the covenants.

3 Kaimai has brought this proceeding to clarify its rights. It says cl 4.1 of the covenants allows it, as landowner, to permit the activities of third parties (specifically, the quarry) in the covenanted areas without the consent of the Trust. Alternatively, it seeks rectification of the covenants to reflect what it says was the common intention of the parties at the time, which was to allow for the future expansion of the quarry into the covenanted areas.

4 Further claims relating to the boundary of one of the covenanted areas have been resolved by agreement, and orders in relation to those claims are sought by consent. 1

The land and its history

5 The land at issue is located at Barton Road, Okauia, in the Kaimai Ranges. Ngati Hinerangi is mana whenua of the land, and a maunga on the land, Te Weraiti, has spiritual significance for that iwi.

6 The land at issue is in two titles. The larger of the two blocks comprises approximately 363 ha (Main Block). The smaller block adjoins the Main Block and is just under 67 ha (Smaller Block). The boundaries of both blocks are marked in blue on the aerial photograph attached to the judgment as Appendix A.

7 In the western corner of the Main Block is the crushing and stockpiling area for the quarry. The main excavation pit is the larger area towards the centre of the Main Block. To the east of the quarry, marked by a blue triangle on Appendix A, is Te Weraiti. A tributary of the Mangapiko stream runs across the southern boundary of the quarry, and the northern boundary of the covenant in this area. At the south-eastern boundary of the Main Block and marked by a star is an area where network utilities have erected communication towers. This is the highest point of the land and I am told that on a clear day you can see over to Tauranga and back to Matamata from this point.

8 The quarry was established on the Main Block in 1956. The rock being quarried is andesite rock, a type of volcanic rock formed by a series of eruptive lava flows in the area. The existing quarry operation is for a high-grade material known as blue rock. This blue rock is used in roads, railways and high-rise construction and is sold to the local Matamata market and throughout New Zealand.

9 From 1973 the quarry was operated by Barton's Kaimai Farms Ltd (BKFL). In 1979, BKFL purchased the Main Block, making it both the owner of this block of land, and the quarry operator.

10 The land is well known to Mr Ian Diprose who used to tramp and hunt deer on it in his youth. Mr Diprose and his wife used to own and farm the Smaller Block, which has been in Diprose family ownership since 1977. They also farmed another block of land adjacent to the Main Block. Mr Diprose and his family ran a dairy farm at that time, and also operated the Hiona Park Trust, a Christian place of rehabilitation for young people referred there by the Auckland District Court.

11 Despite large tracts of the Main Block being unsuitable for farming, Mr Diprose nevertheless wanted to own it because, in his words, “he loved the land”. He envisaged grazing his young stock on those parts of the block that were suitable. In 1982, BKFL agreed to sell the Main Block to Mr Diprose, and Hiona Heights Ltd (Hiona), a company owned by Mr Diprose and his late wife, purchased the property.

12 The purchase was for the entire Main Block. It was agreed, however, that BKFL would continue to operate the quarry. In 1982, Hiona and BKFL entered into an agreement whereby BKFL was granted the right to quarry in a defined area for a 40-year term commencing 21 December 1981 (1982 Agreement). There were no royalties payable during this 40-year term.

13 Soon after that, in 1983, Hiona entered into a Land Improvement Agreement with the Hauraki Catchment Board (Land Improvement Agreement). Under the terms of that agreement, Hiona agreed that approximately 100 ha of the southern parts of the Main Block would be held as reserve and protected from stock grazing. In return, Hiona received assistance with the cost of fencing and planting in the area.

14 In 1986, BKFL was purchased by the Swap family interests. Kaimai is part of the Swap group of companies (referred to as Swaps in this judgment), a family owned group that has operated in Matamata for over 80 years. Following that sale, access to the quarry was improved and a second road for farming operations was developed. The quarry itself was extended over this time. Its gradual expansion from 1966 through to 2012 is shown in Appendix B.

15 By the early 1990s, the land was becoming popular with trampers, hunters, sightseers, hang gliders and paragliders. Mr Diprose was concerned about the public sharing the road with quarry vehicles and wanted improvements to the roading. This led to an agreement between Hiona and BKFL (by then owned by Swaps) in 1993. Although the agreement was not signed until 1995, I shall refer to it as the 1993 Agreement.

16 Under the 1993 Agreement, BKFL retained its entitlement to quarry in the quarry area until 2021 with no payment of royalties to Hiona. The quarry area is marked in yellow on Appendix B. Excavations were limited to the “quarry zone”, being the eastern most parcel of the yellow-bounded area unless otherwise agreed between the parties. Hiona retained the right to farm and graze in the parts of the quarry area not required as part of the quarrying operations. There was a right of renewal for a further 40 years at a royalty rate to be agreed.

17 Clause 6 of the 1993 Agreement was an acknowledgement by both parties that “benching” had to take place, taking the quarry beyond the south eastern peg. The clause further provided:

6. … The Grantor and the Grantee agree that if further expansion out of the said area in the quarry zone is necessary, such expansion shall be [the] subject of further negotiations between the Grantor and Grantee. Those negotiations may well include the question of a royalty for any rock quarried from any area outside the quarry zone or the said area as defined. The parties acknowledge that the reason for the concession is shifting the peg referred to in this clause is because of the Health and Safety in Employment Act 1992 and the extension and expansion of the road that was necessary to comply with that Act and in recognition of the costs incurred by the Grantee in the extension and expansion of the road.

18 Under clause 16 of the 1993 Agreement, BKFL was entitled to lodge a caveat to protect its interests. Clause 19 of the 1993 Agreement gave BKFL an option to purchase the whole farm or farms containing the quarry if the owner decided to sell.

19 On 27 April 1998, the Matamata-Piako District Council granted a certificate of compliance to BKFL confirming the existing land use rights at the existing quarry operation. Those existing land use rights are marked by the blue broken line on the map at Appendix B. Those existing rights provided for expansion to the east, within the blue dotted line.

20 In the early 2000s, as part of the District Plan review, the Matamata-Piako District Council proposed the establishment of a green belt (a Kaitiaki (Conservation) Zone) on the Kaimai ranges. Mr Diprose, and the Swaps, considered that such a proposal would pose serious restrictions on their farming and quarry operations. After an acrimonious and protracted dispute, the parties reached a settlement in April 2003 whereby the Council accepted that there were existing uses on various properties including the farming and quarry operations on the Main Block and Smaller Block.

21 Part of that settlement included agreement on a Development Concept Plan prepared for the property. A copy of that Plan is annexed as Appendix C. Under the Development Concept Plan, “mining, quarrying and mineral processing & associated operations in accordance with any resource consents approved prior to September 2001 within the quarry area” were permitted. Conservation forestry and production forestry (including harvesting) within the quarry area were also permitted.

22 The quarry area as shown on that Plan correlates with the orange marked area on Appendix B. As can be seen from Appendix B, the proposed expansion of the quarry at this time was out to the east. The Development Concept Plan also showed an area for the network utilities, and all other areas were designated Conservation areas. The parts of the Main Block to the south of the quarry correlate with the marked Conservation areas that eventually became subject to the...