Ash Street Properties Pty Limited v Pollnow

Ash Street Properties Pty Limited (the appellant) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned the interpretation of a restrictive covenant contained within a deed of lease. The appellant, as the landlord, sought to restrain the respondent, the tenant, from conducting a business of selling and fitting out motor vehicles on the leased premises. The respondent contended that its proposed use of the premises was permitted under the terms of the lease.

The central legal issue before the Court of Appeal was whether the respondent's proposed business activities constituted a breach of the restrictive covenant. Specifically, the court had to determine the proper construction of the covenant, which prohibited the use of the premises for any purpose other than "a motor repair workshop". The appellant argued that this phrase was intended to encompass only the repair of motor vehicles, excluding the sale and fitting out of vehicles.

The Court of Appeal, in allowing the appeal, reasoned that the phrase "motor repair workshop" should be interpreted in its ordinary and natural sense. It held that the business of selling and fitting out motor vehicles was not encompassed by the term "motor repair workshop". The court applied the principle of construing restrictive covenants strictly against the party seeking to enforce them, and in favour of the party whose activities are restricted. The court found that the respondent's proposed use went beyond the scope of a mere repair workshop.

Consequently, the Court of Appeal ordered that the appeal be allowed, and the orders of the Supreme Court be set aside. The court granted an injunction restraining the respondent from conducting a business of selling and fitting out motor vehicles on the premises.