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Avoid land use disputes

By Shoshona Goodall, Senior Solicitor

First published in The Rural News 19 May 2009

Many people have romantic notions of what it would be like to live in the country. However, dreams of life in a tranquil rural setting, away from the hustle and bustle of city living and the nuisance of neighbours, are not always the rural reality.

Indeed activities that occur in rural environments can result in unavoidable irritations such as noise, dust and odour emissions. When someone moves next door to an established activity this can result in complaints, sometimes forcing the existing activity to reduce or mitigate the adverse effects it creates. 

This impact on the existing activity, which is called “reverse sensitivity,” is a significant issue. In recent years, the Courts have recognised the “corrosive effect” that these continual complaints can have on a farmer’s confidence to carry on operating in an area.

One mechanism used to counter reverse sensitivity effects is a no complaints covenant.  This is registered on a title, preventing complaints and enforcement action against the established activity.  Once registered on the title it is binding on all future land owners and is often used as a tool in settlement negotiations for resource consents.  So if the new sensitive land use requires a resource consent, such as for a dwelling or a subdivision, then a no complaints covenant can be offered as a voluntary condition of a resource consent or by way of a side agreement. This approach is useful to counter any opposition and aims to achieve a “win win” solution. 

Until recently, the issue of enforceability of no complaints covenants was a grey area.  However, last year the High Court shed some light on this issue.  South Pacific Tyres N.Z. Limited v Powerland (NZ) Limited  involved a tyre manufacturing operation.  Powerland planned to develop the neighbouring land for residential purposes.  The Council was only prepared to grant consent if the tyre company agreed. 

The developer offered a covenant, which was to be registered against the title for its land, to prevent complaints about the noise and odour effects from the tyre manufacturer.  Immediately after the consent was granted the developer told the tyre company it intended to cancel the covenant. It later lodged a complaint with the Council about the noise.  

The tyre company took the matter to Court saying that the developer couldn’t complain about noise because of the covenant and that it was still legally binding.  But the developer argued that the covenant was illegal because it stopped them from being able to lay complaints under the Resource Management Act (RMA), about issues such as unreasonable noise.  The Court said that people could freely waive their rights under the RMA and that it would be “unduly paternalistic and precious” not to allow that.  The Court also considered that there was nothing in the Bill of Rights Act to stop individuals giving up their rights.

It said the covenant did not allow the tyre company to breach the RMA, nor did it stop its duties being enforced.  It only stops the developer, and its successors, from complaining.  The Environment Court could still issue an enforcement order to require compliance with the RMA, but the developer could not be the one that makes the application.

The Court held that the covenant was valid and enforceable.  As the developer had the benefit from offering the covenant it was required to fulfil its side of the bargain.

Not surprisingly, the High Court found in favour of the tyre company and held that the developer was required to register the covenant on its title. This decision confirms the use of no complaints covenants as an effective tool in situations where there is potential for incompatible land uses and, therefore, to resolve disputes that can arise during the resource consent process.