A couple wanting to subdivide a picturesque lakeside section they own near Queenstown have run into trouble over a deed that was written decades earlier.

Rajeev Sunder and Punam Rekhraj wanted to divide their lot at a small subdivision in Lake Hayes into three sections.

But their plans attracted stiff opposition from the owners of neighbouring properties.

In January 2022, the couple, through their family trust, obtained resource consent from the Queenstown Lakes District Council.

The consent, in conjunction with the council’s current proposed district plan, allows for a primary residential dwelling and a standalone secondary unit of up to 70m on each subdivided lot.

But, while the consent granted them the right to subdivide, they first had to change, or get rid of, a long-standing covenant that was designed to protect the area characterised for its “delicate scenic nature”.

The covenant, or deed, was drafted in the early 1980s when the main subdivision was created from a large estate.

An emphasis was placed on the maintenance of views up Lake Hayes to Coronet Peak and down the lake to Walter Peak and Cecil Peak.

Land near Lake Hayes in the Queenstown-Lakes District features some of the country’s most expensive property. Photo / Brett Phibbs

It also sought to avoid subdivisions into smaller allotments, potentially destroying the rural characteristics of the location on Arrowtown-Lake Hayes Rd.

The area in the Queenstown-Lakes District is home to some of the country’s most expensive property. Average house values at June were just over $1.6 million, according to Infometrics.

Sunder and Rekhraj went to the High Court seeking orders to change the covenant so they could proceed with their subdivision.

Their preferred option was “extinguishing” the covenant or alternatively, having it modified.

Neighbours opposed both options while the council, which was named as the fourth respondent in the court case, chose an “abiding” approach.

Neighbours: Lost views, noise and privacy

Klaus and Micha Lenk, who owned one of the neighbouring sections until 2014, said in an affidavit that if the covenant was modifiedviews would be impaired from each of the properties, privacy would be lost and traffic and associated noise would increase.

There was also potential for those using multiple residences proposed in the newly subdivided lot to park on common property through the creation of a right-of-way as required.

James and Rebecca von Dadelszen, who purchased the property from the Lenks, said they bought it for the “very scenic and serene subdivision with irreplaceable views”.

Another neighbour, architect Fred van Brandenburg, who has been involved in numerous subdivisions, resource consent applications and the drafting of design controls, considered the covenant to be a strong protection against further development when he and his wife bought their property.

He feared the overall character and ambience of the subdivision would be transformed from a rural setting of large, landscaped properties with one dwelling each and controlled planting, to an urbanised development.

The area has changed

The couple’s planner Tom McIntyre provided expert evidence for the case. He argued there have been changes to the characteristics of the area since the original subdivision was built.

They included that the area was once dominated by open farmland but now has more residential occupation. There is a restaurant, bus stops, a walking track and rowing club nearby.

McIntyre added the covenant placed “significant and unreasonable constraints on developments at the properties”, in particular, a reduction in residential yield.

However, in a recently released decision, Justice Mark Osborne sided with the neighbours.

In dismissing the application, he said he had not been persuaded there had been a material change to the character of the neighbourhood at a level that called for the extinguishment or modification of the covenant.

What’s a covenant anyway?

A council spokesperson told NZME covenants were a matter for the title holders.

“This is a civil matter between the landholders,” a spokesperson said, before directing NZME to a site for registered users for background.

A resource management specialist said the difference between a consent and a covenant was that one was imposed by a consenting authority (such as a council) and the other by a developer.

Mark Lile of Nelson-based Landmark Lile said, for example, a resource consent issued for a subdivision might control where and how people build on each lot.

Whereas a land covenant was typically when a private developer imposed restrictions over a property in favour of a collective group, for example, when they wanted to make sure the subdivision occurred in a certain way so that everyone benefited.

“I guess where things get unstuck is when someone attempts to get rid of the covenant but then there are others who bought [property] relying on them,” Lile said.

He said there had to be good, solid grounds for wanting to have a covenant removed.

In certain cases removal could be justified and in others there was none.

“You just have to take the risk of going through the process that you need to go through,” he said.

A subdivision on the boundary of the Nelson Lakes National Park was created in 2009 with a list of 16 covenants, including that only one house per lot was allowed. Photo / Tracy Neal

St Arnaud subdivision

The Lake Hayes case is similar to another dispute triggered by planned intensification of a South Island lakeside subdivision, and which the High Court dismissed on appeal.

At the heart of that matter were two sites within the existing Beechnest subdivision in St Arnaud, each destined to have only one home but that suddenly had the potential to have 10 “Coronation Street-style” homes cheek by jowl, opponents said.

The subdivision near the Nelson Lakes National Park was created in 2009 with a list of 16 covenants, including that only one house per lot was allowed.

Beechnest (2014), owned by Nelson winegrowers the Seifried family, took over the remnants of the subdivision in 2017 when the project had gone into liquidation.

It was later granted consent by the Tasman District Council to allow further subdivision of the two large lots it owned into 10 sections.

It took hearings in the District Court and the High Court, plus a crack at an appeal in the Court of Appeal, for all to land back where they started.

The developers were left wondering why they could not do what they wanted with their own land, as consented, while those on the other side were left counting the cost of being called into battle to protect their existing property rights.

Tracy Neal is a Nelson-based Open Justice reporter at NZME. She was previously RNZ’s regional reporter in Nelson-Marlborough and has covered general news, including court and local government for the Nelson Mail.