It started with a subdivison in a small alpine village. But, when one landowner and his family tried to subdivide it further, a protracted legal battle began which cost a lot of money and some long-time friendships. Tracy Neal looks into what went wrong.

In a pretty lakeside village, on the northern tip of the mighty Alpine Fault, the rumblings of a quiet war have been waged over a housing development.

The fight over the Beechnest subdivision in St Arnaud, the gateway town to the Nelson Lakes National Park, has caused a seismic rift in the neighbourhood that some say may never be healed.

At the heart of the matter were two sites within an existing subdivision, each destined to have only one home which suddenly had the potential to have 10 “Coronation Street-style” homes cheek by jowl.

The locals who bought into the area on the boundary of the park for the pristine, and sometimes wild, alpine environment were upset at the thought of losing the reason they lived there.

Today, the developers are still wondering what went wrong, while those on the other side are counting the cost of being called into battle to protect their existing property rights.

It’s taken hearings in the District Court and the High Court, plus a crack at an appeal in the Court of Appeal for the developer Beechnest (2014) Ltd to land back where it started.

The subdivision on the boundary of the Nelson Lakes National Park has views towards Mt Robert, the St Arnaud Range and Lake Rotoiti. Photo / Tracy Neal

“We didn’t want to go to court – we tried hard not to but we had no choice. We were taken to court, to maintain the status quo,” says opponent and St Arnaud property owner Gisela Purcell.

She and her partner Wayne Pool stood to be among those most affected by plans to further subdivide two large lots within an existing subdivision, to make way for higher-density housing.

Purcell, who works in the field of sustainable tourism, says they were faced with having their immediate environment, which includes wetlands protected by a covenant, destroyed by a row of 10 houses up to 7m-high, directly in front of them.

“This here is a beautiful piece of land, and having two houses in our line of sight [as permitted] would have been fine, but when the request came to modify the covenant and put 10 houses there that’s a very different conversation.”

She says the fight was as much about preventing a precedent as it was about protecting the area.

“People should be able to rely on the sales and purchase documents they sign when they buy land.

“If you can’t rely on these covenants that would set a huge precedent around the country.”

Seeds of unrest

The seeds of unrest were sown in 2017 when Beechnest, owned by Nelson winegrowers the Seifried family, took over the remnants of the subdivision that had gone into liquidation.

“We simply saw the ‘for sale’ sign when looking for a section and it was the whole lot or nothing,” says family patriarch Hermann Seifried.

The family was drawn to the area for the same reason as anyone else.

“St Arnaud has a lot going for it,” Seifried says in his Austrian accent that’s hardly faded in the half-century he’s been in this country.

“It’s a nice area. It’s close to Nelson, it’s close to the mountains, and hiking, boating, and skiing.

Nelson winemaker Hermann Seifried says lessons were learned from the court action. Photo / Tracy Neal

The subdivision was created in 2009 with a list of 16 covenants including that only one house per lot was allowed.

Buildings had to be developed in a way that maintained the character of the area, including materials and colours, and there were bans on types of planting and keeping pets.

In August 2017 Beechnest applied for a non-notified resource consent to further subdivide lots within the subdivision, which the Tasman District Council granted that December.

The consent allowed the subdivision of the larger of the two lots into seven sections, all about 1000sq m, with the smaller lot to be carved into three sections.

Few knew about the plan. The first clue lay with the trucks of dirt passing the office window of Alpine Lodge co-owner Alexandra Unterberger.

The lodge is a focal point of St Arnaud Village, which is on the southern apex of the Nelson, Tasman and Marlborough regions.

Historically, Māori from the region used the area as a transit zone while journeying between Canterbury and the West Coast to collect and trade in stone, including pounamu.

“I saw these trucks coming past as I was sitting in the office, but I didn’t think anything of it and then I found out they were developing more than the two lots,” Unterberger says.

She and her husband Leighton Marshall, who own two sites in the subdivision and have built a house on one, became the first respondents in the drawn-out legal case as trustees of the Portixol Family Trust.

There were 28 more groups and individuals listed as respondents, most of whom opposed the plan while others were neutral.

Some sided with Beechnest.

Coronation Street

The opponents argued that more sites and more housing would severely alter the natural, alpine characteristics of the area, which is cradled beneath mountains and bordered by snow tussock and wetlands.

Unterberger says the houses would have needed to be built side by side in a long chain otherwise they’d have encroached into fragile and important wetlands.

Marshall says the new sites allowed for building pads 13m by 15m in size and 6m apart.

“We would have been looking at Coronation Street which is not why we chose to be here.”

All bought there in the belief they were protected from any further development, which in some cases was a feature of the sales pitch by the real estate agent, who was later challenged in court and then by the industry disciplinary authority.

In the end, it came down to Purcell and Pool, Unterberger and Marshall, plus one more couple, Russell and Francesca McGuigan who picked up the lion’s share of the fight, and the cost. Francesca McGuigan, who had taken the stand in court while undergoing cancer treatment, died before the resolution.

“Fran’s death made us more determined to succeed,” Marshall says.

For Unterberger, whose parents were among the founders of the Alpine Lodge and from the same Austrian heritage as Seifried, the fight was more personal.

The families had arrived in the Nelson region at similar times and had shared experiences of the hard graft of creating new lives in a foreign country.

“Our families are very similar, very driven and we work hard.

“I remember seeing Hermann on the tractor, working from morning [until] night in the vineyard.

“Whenever they came here to go skiing or whatever, they’d always come to the lodge.”

Alpine Lodge co-owner and subdivision opponent Alexandra Unterberger. Photo / Tracy Neal

The 10 new sites created by the subdivision of the two lots went on the market, but hidden in the small print which no one saw until the lawyer for a prospective buyer picked it up, was that all the sites remained subject to the same restrictive covenants as the parent title.

The newly created sites were “unsaleable”.

Unterberger and Marshall were among others who declined Beechnest’s request to sign a document to modify the covenant, that included a plan to lower the height restriction on new homes to no more than 6m on eight of the sites.

Purcell and Pool wouldn’t sign either.

‘Good and bad development’

Pool says their stance attracted some criticism from friends who called them “Nimbys” but the fight was always about maintaining fairness.

“This isn’t about not wanting lots of places near us.

“I designed our house and I strived to stay with the rules and guidelines of what can be built here.

“I mean, I’m a builder and if there’s no development I don’t have a job but it has to be good development and there’s a difference between good and bad development.”

When Beechnest couldn’t get the signatures it needed, it went to court to get the covenant removed or modified.

It was the beginning of a protracted and expensive process that involved two separate district court processes, Beechnest’s appeal to the High Court, and then its efforts to be heard by the Court of Appeal.

Unterberger says they’d not long recovered from the aftermath of the 2016 Kaikōura earthquake, and the disruption to the vast bulk of South Island road freight. General traffic was diverted through St Arnaud when Kaikōura was blocked by slips.

Then, Covid-19 and its associated lockdowns hit, which badly affected the country’s hospitality sector.

Unterberger recalls a moment when she felt like giving up.

“We’d finished our day in court and thought it went well so we had fish and chips afterwards to celebrate and then our phones went off with the lockdown warning.”

They were in Nelson, an hour from St Arnaud, so headed straight back, after joining queues in the supermarket to get essential supplies.

“We had six functions booked over nine days which was unusual for a winter. As we drove up over Kerrs Hill it began to snow, like $10 notes flying from the skies.”

Snow is gold to winter tourism operators, but it was in vain.

“We were heading into lockdown and I had to stop and get out of the car and just wanted to vomit.”

Unterberger spent the next eight days processing cancellations.

“I was really down, the second lockdown was the worst but for me, a problem becomes a project.

“I’ve learned to think outside the square and be grateful and we just fought our way through.

“Through all of it, our group stuck together but we lost Fran to cancer during all of this.”

Wayne Pool and Gisela Purcell stood to be most affected by the planned changes to the subdivision. Photo / Tracy Neal

‘Burden and benefit’

Judge Chris Tuohy declined the application to the district court. He said in his decision of May 2022 that the “burden and benefit” of the restrictive covenants affected all in the multi-lot subdivision, including those who had already built houses there.

He said modifying the covenants, which were an important factor in peoples’ decisions to purchase in the area, would have removed their property rights, including the protections provided by the covenants.

Judge Tuohy also said that the respondents stood to be affected by the loss of great views which might have been replaced by a “fairly close view of a line of houses” near the boundary and closely spaced.

Beechnest then appealed to the high court.

Unterberger says she wasn’t surprised.

“I allowed myself to have that ‘oh s**t’ moment but then I just swiped left, zoomed out and said to myself it would be fine.”

The High Court agreed with the lower court.

Justice Christine Grice said in her decision of March 2023 that modification stood to ruin the natural environment which was a strong reason why people had bought there.

She said that the district court judge had made no errors either in his determination in the first stage of assessment or in the exercise of his discretion under the second stage of that analysis.

“In particular, the judge was correct in his conclusion that he could not be satisfied that the respondents would not be substantially injured by the proposed extinguishment of the covenant.”

Now, three years later, it’s ended with Beechnest being declined leave to appeal to the Court of Appeal.

It has cost the respondents $176,000 in legal fees, but the pain has been diminished slightly by the $69,000 they received in cost awards.

Seifried says they have reached the end of the road for now and are also now counting the cost.

He says they’d spent close to $1 million on the project, including site development, and now legal fees.

He accepted it didn’t go their way but still wondered why. “We didn’t have the right to do what we wanted with our land.”

Unterberger says as difficult as it was going up against friends, she knows she and others did the right thing.

“There was a lot of learning and that’s just how I look at it.”

Purcell says the money spent by each side would have been better invested in enhancing the wetland and making it a great public space, but an unexpected benefit from what’s been a very difficult time was the closer bonds forged among the group.

“We had community meetings and we’ve all learned so much about the legal system and its flaws, but we were grateful for the outcome.”

‘A huge eye-opener’

Pool says it was a huge eye-opener for him.

“As someone who’s had little to do with the court system what shocked me was that something like this got a week in court.

“Courts are inundated and I just felt, this shouldn’t be happening. To me, the court should have said: ‘You’ve got one day – this is a covenant argument – deal with it,” Pool says.

Seifried is just as aggrieved, it seems.

“People think we’re big wealthy subdividers coming here and upsetting everyone.

“The annoying part for us is that people think money is not an issue for us but it’s not the case at all.

“The whole family is in this business to try and make it work,” Seifried says.

Today, the signs of what might have been lie dormant beneath dust and vegetation.

Seifried says he’s not sure what they’ll do with the land they still own, but he hinted at a possible tourist development, perhaps along the lines of glamping (high-end camping).

The idea was met with stunned silence among the respondents, who said the area is zoned as residential.

“He’d have to modify the covenant if he wanted to do something commercial there,” Purcell says.

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.