Citta Hobart Pty Ltd & Anor v Cawthorn

Citta Hobart Pty Ltd and another party (the appellants) appealed to the High Court of Australia against a decision of the Full Court of the Supreme Court of Tasmania. The dispute concerned the interpretation of a restrictive covenant registered on the title of land owned by the respondents, Cawthorn and others. The covenant purported to restrict the use of the land for residential purposes only and prohibited any building or structure other than a single private dwelling house. The appellants, who owned adjoining land, sought to develop their land for commercial purposes, including the construction of a hotel and associated facilities, and argued that the covenant did not apply to their land or was otherwise unenforceable.

The High Court was required to determine whether the restrictive covenant, as registered on the respondents' title, extended to and bound the appellants' adjoining land. Specifically, the Court had to consider the principles of building schemes and the enforceability of restrictive covenants against successors in title, particularly where the covenant was intended to benefit a defined area of land. The Court also had to assess whether the language of the covenant itself clearly indicated an intention to create a scheme of development that would bind the appellants' land.

The High Court held that the covenant did not create a building scheme that bound the appellants' land. The Court reasoned that for a building scheme to be established, there must be evidence that the vendor intended to create a scheme of development for the benefit of all purchasers of lots within a defined area. This intention must be demonstrated by the circumstances at the time of the sale of the first lot. In this instance, the Court found that the covenant was registered only on the respondents' title and there was no evidence that the original vendor intended to impose reciprocal restrictions on all lots within a defined area or that the purchasers understood the covenant to be part of such a scheme. The Court emphasised that a restrictive covenant will only bind a successor in title if it "touches and concerns" the land retained by the covenantee and is intended to run with the land, which was not sufficiently established here in the context of a building scheme.

The appeal was allowed, and the orders of the Supreme Court of Tasmania were set aside.