New Zealanders are renowned for loving their “patch of grass” and, in both common law and statute, landowners have legal rights to the quiet enjoyment of their land without interference from a neighbour. Irrespective, neighbour horror stories abound where one neighbour may wrongly perceive his or her rights override those of their neighbour, resulting in clear demarcation and legal interference with an owner’s quiet enjoyment of their land.
Under the law, specifically the Property Law Act, there are many solutions for difficult neighbours, starting with court proceedings to obtain orders and, depending on the interference, significant awards of damages.
One particular neighbour problem involves owners of cross-lease properties who make renovations to the house, for example extensions, additional decks, or the conversion of carports into garages or conservatories, without obtaining the other cross-lease owners’ consent. This can create a defective title, either because the boundaries of the flats plan have been altered or because the other cross-lease owner(s) withheld their consent.
In Liow v Martelli, the New Zealand Court of Appeal recently re-examined the question of whether consent can be reasonably withheld by a neighbouring cross-lease owner. The upshot is that there is now far less scope for a cross-lease neighbour to frustrate development and/or remediation projects.
Smallfield v Brown, being until now the leading authority in this area of law, found that a neighbour who retrospectively withheld consent to the construction of a deck and access via French doors facing the other owner’s property did have an interest in the alterations, as they could affect light, air, view and appearance, and thus the enjoyment of their property. Consent is only reasonably withheld where the benefit to the party seeking change will be substantial and produces only a trifling detriment to the neighbour.
However, in the recent Liow case, a small uncovered deck and a larger covered deck were demolished to make way for an increase in the footprint and size of the house, adding a pool, new decking, and removal of a separate garage. The development was undertaken without the neighbour’s consent and, upon application to convert the title to freehold, consent was retrospectively refused by the neighbour.
As lease covenants require arbitration, the arbitrator applied the Smallfield test and found there was more than a trifling detriment to the neighbours, and thus consent was reasonably withheld. Following a hearing in the High Court, the matter was appealed to the Court of Appeal on a point of law. The Court agreed that the Smallfield test was wrong in law.
All cross-lease properties in New Zealand involve lease covenants, and many of these leases are for a term of 999 years. Inevitably, structures will require rebuilding a number of times over the term of the lease, and the Court held it cannot be right that the intention of the alterations covenant in the lease is to preserve structures in the same configuration as they were at the beginning of the cross-lease.
Similarly, planning laws and building controls will change over time, along with societal changes in how people live in and use residential properties. The starting point is therefore that cross-lease alterations will not only be desirable, but necessary over the term of the cross-lease.
Whether one owner can reasonably withhold consent is ultimately a question of fact, by asking whether a reasonable cross-lease owner, having regard to the interests of all cross-lease owners, can withhold consent. An individual owner viewing their interests as being harmed, even if reasonable, is not determinative, but is one factor to be weighed in considering whether consent can be reasonably withheld. This assessment should not be fettered by rigid rules.
The overriding approach is that there must be consideration of all cross-lease neighbours in a joint ownership capacity of the fee simple, rather than their individual rights. Regard must be given to each of their interests in order to preserve good relations between owners and recognise that alterations, and even rebuilds, will become necessary over the duration of a cross-lease.
In the words of the Court of Appeal, it is in everyone’s interest to be a good neighbour, give and take, and live and let live.
Got knucklehead neighbours? Reach out to our experienced Raglan property team. We are legal architects who design and construct legal solutions that fit perfectly and solve your problem. Phone us on (07) 242 0751 or email us via our website www.ginajansen.co.nz to chat.
