A recent Court of Appeal decision has clarified the rights of cross-lease property owners when one owner wants to alter or extend their home.
The case, Liow v Martelli [2026] NZCA 101, involved two neighbouring properties in Remuera held under the same cross-lease title. The owners of one property wanted to substantially
alter their home by increasing the floor area from about 114.5m² to 169m², bringing part of the house much closer to the boundary with the neighbouring cross-lease property. The proposal also included a new in-ground swimming pool, new decking connecting the house to the pool, and removal of a separate garage.
The neighbouring owners refused consent. Their concerns included the increased bulk of the building, the change in how the outdoor area would be used, possible loss of privacy, noise,
visual impact, effect on property value, and the impact on their own future development options.
The dispute went to arbitration. Applying the older legal test in the 1991 High Court case, Smallfield v Brown, the arbitrator found that the refusal was not unreasonable because the
detriment to the neighbours could not be dismissed as merely “trifling”.
The Court of Appeal has now confirmed that this was the wrong legal test.
A neighbour does not have an automatic veto simply because a proposed alteration may have some more than minor impact. Instead, the proper question is whether a reasonable cross-lease owner, having regard to the interests of all owners and the context of the cross-lease, could withhold consent.
That does not mean consent can be ignored. The Court recognised that genuine concerns may still justify refusal, including effects on light, privacy, noise, visual intrusion, amenity, value, or future development. However, those concerns must be assessed reasonably and in context.
For homeowners, the decision is important because cross-lease properties are common throughout New Zealand. Many owners wish to modernise older homes by extending living areas, adding decks, enclosing outdoor spaces, converting garages or reworking layouts. Those changes can still require consent under the cross-lease, but a neighbour’s refusal must now be assessed on a more balanced basis.
The risks of getting it wrong remain significant. Carrying out alterations without proper consent or without updating the flats plan can create a defective title, causing problems when the
property is sold, refinanced or insured. Rectifying title defects can involve lawyers, surveyors, council and Land Information New Zealand, often at considerable cost.
The practical message is simple. If you own a cross-lease property and are planning alterations, get advice before starting work. If you are asked to consent to a neighbour’s proposed alterations, you should also take advice before refusing. The law now requires cooperation, reasonableness and a proper assessment of everyone’s interests — not simply a blanket “no”.
