The Resource Management Act 1991 presumes that land users may undertake any activity provided they do not generate adverse effects on the environment beyond the boundary of the land. In reality, many productive uses of land, including vineyards, generate effects beyond the farm gate that are not capable of being avoided, remedied or mitigated.
Vineyards are particularly susceptible to conflict between uses on adjoining properties. The romantic, idyllic imagery associated with the industry is a powerful marketing tool for prospective subdivision of rural land for rural residential lifestyle blocks. However, the reality of the working environment is often at odds with new residents’ perceptions. Planning mechanisms such as “no complaints covenants”, separation distances and buffer zones have been used to address this issue.
This article will consider the “no complaints covenant” in terms of its purpose, its enforceability and its application to subsequent purchasers of the land bound by the covenant.
A “no complaints covenant” is an agreement which prevents the owner or occupier of land nearby or neighbouring an effects-producing activity (the nearby owner) from complaining about the effects of that activity. Such an agreement will propose various restrictions upon the nearby owner, preventing them from taking action against the owner/occupier of the effects-producing site (the effects-producing owner). Such restrictions might involve preventing the nearby owner/occupier from:
suing for nuisance;
taking enforcement action under the Resource Management Act 1991;
opposing, or making a submission on an application by the effects-producing landowner for a resource consent to carry on existing effects-producing activities, or for new effects-producing activities; or
funding any of the above actions (Asher Davidson “Reverse Sensitivity: Are No Complaints Covenants the Solution?).
In order to ensure a no complaints covenant will be enforceable against a nearby owner, both the nearby owner and effects-producing landowner must freely consent to its terms – a no complaints covenant cannot be imposed unilaterally. The reason for this is that a no complaints covenant restricts the rights of a nearby owner under the Bill of Rights Act 1990 and the Resource Management Act 1991. Such nearby owners are entitled to waive their rights under both of these statutes. However, to do so, they must freely consent to the terms of the covenant and its restrictions on an informed basis Rowell v Tasman District Council  NZRMA 202). In essence, this will require the nearby owner to have understood the covenant’s terms, and have entered into the covenant voluntarily.
For winegrowers’ purposes, the most useful no complaints covenants are those covenants which bind subsequent purchasers of the nearby land. A covenant which binds these purchasers alleviates the need to renegotiate such covenants every time the land changes hands, and affords winegrowers more certainty in their operations.
A no complaints covenant will not automatically bind subsequent purchasers of the land. In fact, the legal presumption is that it will not; the law of contract generally provides that a contract between two parties cannot confer liability on a third party. However, this general principle can be overruled by specific behaviours.
The best method is to require, in an Agreement to covenant, that the covenant be registered on the title of the nearby land. Once registered, the covenant will bind all subsequent purchasers of that land (s 302 of the Property Law Act 2007). Such a clause will entitle the effects-producing landowner, is the nearby owner attempts to on-sell the land before the covenant is registered, to lodge a caveat on the title. A caveat will prevent the nearby owner from selling the land until the covenant is registered and subsequent purchasers are bound (s 141, Land Transfer Act 1952).
Another method is to give the subsequent purchaser notice of the covenant prior to sale (Tulk v Moxhay (1848) 41 ER 1143). “Notice” essentially requires that the subsequent purchaser’s attention is brought to the covenant and its terms. However, this route is more difficult, since practically notice is a matter for the nearby owner in the course of sale. Nearby owners have an incentive not to give notice, as the covenant may potentially affect the value of their land (both positively in that an existing productive activity may continue unabated, and negatively if it highlights potential sensitivities).
It is important to remember no complaints covenants will only go so far; they cannot restrict members of the public members of the public from taking enforcement action against the effects-producing landowner, making a complaint or submitting on an effects-producing resource consent application. However, they are a useful tool for winegrowers (and other landowners whose land houses effects-producing activities) to enable them to carry out their business without constant threat of complaint from neighbours.