No Complaints Covenants
Are you thinking of subdividing your property and selling a piece of land close to your orchard?
The use of no complaints covenants when subdividing and on-selling parcels of land is a good tool to protect the ability of the existing orchard activity to continue unimpeded by complaints about standard (and compliant) orchard activities.
This note sets out what no complaints covenants are and includes a template covenant that can be adapted for use by growers.
What are no complaints covenants?
No complaints covenants are a voluntary mechanism used to restrain new activities from complaining about the adverse effects of an existing activity.
More specifically, no complaints covenants prevent the person whose land has been covenanted (covenantor) from complaining about the adverse effects of a nearby activity.
Such covenants will often include a prohibition on the owner or occupier:
- suing for nuisance;
- taking any type of enforcement action under the Resource Management Act (RMA);
- making opposing submissions against an application by the effects-producing landowner to obtain new resource consents or renew existing ones; and
- funding or being otherwise involved in any of the above.
An applicant for a resource consent will often propose such a covenant to respond to the concerns of existing operators.
A covenant may be either agreed as a condition of the consent under s108 RMA, or by private agreement, and can be registered on the title of the receiving site under s109 RMA.
What should no complaints covenants provide for?
It is important that no complaints covenants are carefully drafted and should provide:
- an accurate description of the specific land as well as the rights provided; (that is the dominant who benefits from the covenant – in this case the orchard land, and servient – being the land that is sold and covenanted);
- an accurate description of the existing activity, e.g. the extent of current/future operations, hours of operation, noise levels legally allowed;
- an acknowledgement by the registered proprietor/s of the servient land that the described activity may have adverse effects on the servient land and that that activity is entitled to be carried out;
- a description of the activities that the proprietor/s of the servient land must, or must not, undertake e.g. covenant may include a prohibition on further residential or other noise sensitive development on the servient land; and
- a “no complaints” clause that extends to owners, lessees, tenants, visitors or other occupiers.
It must also prevent the owners etc from utilising the full extent of processes available to them to impose restrictions on the existing activity.
If a no complaints covenant is imposed as a condition of consent under section 108, it must meet the following tests:
- It must be for a resource management purpose;
- fairly and reasonably relate to the development authorised by the consent; and
- must not be unreasonable.
Examples of use of no complaints covenants
No complaints covenants have been successfully used in a variety of situations where incompatible activities are proposed. For example:
- the Auckland Unitary Plan provides that building for accommodation in nearby areas will be permitted activities where the site is subject to a no complaints covenant in favour of the nearby port.
- In a case in Selwyn District proposed restaurant operators covenanted not to complain about odour from an existing neighbouring piggery.
No complaints covenants are a valid tool
No complaints covenants have been considered by the courts in New Zealand and held to be valid.[1]
In one of the leading cases (see the footnote) the High Court held that:
…reverse sensitivity covenants like the Covenant in this case do not contravene the principles or provisions of the RMA. In my view, the rights to public participation in the RMA can be waived by an individual giving free and informed consent – as, clearly, the defendant here did. On an individual level, a person can benefit directly from being able to waive such rights in order to obtain consent to develop their land as they so desire.
Further, the Court held that such a covenant did now allow the covenantor to contravene the RMA or remove the possibility of RMA duties being enforced. Rather, it only precluded the covenantee and its successors in titles from complaining.
[1] South Pacific Tyres NZ Limited v Powerland(NZ) Limited (CIV 2008-485-427, unreported, 16 May 2008)
How do no complaints covenants bind the land
As no complaints covenants are usually registered against the title of the servient property, they will run with the land, and remedies for breach of covenant include: injunctions; specific performance; damages and enforcement proceedings under the RMA.
No complaints covenants are one of the tools to manage reverse sensitivity
No complaints covenants are in addition to ensuring that, at the local level, territorial authorities manage reverse sensitivity.
Councils can utilise strategic zoning, land use and subdivision provisions in planning documents to restrict inappropriate residential development in rural zones. This can be achieved by providing for minimum lot size, separation distances and buffer zones in district plans. Alternatively, special zoning can be used to protect a particular industry, for example, many plans include specific zoning provisions relating to quarrying, viticulture and in some cases other specific horticulture uses which recognises the importance of established activities and makes specific provision for the separation of the activity and rural residential development.
An example of a no complaints covenant is provided below. Given that these covenants will be implemented as part of a sale and purchase arrangement, growers must take advice from their own advisers based on their particular situation.