Colyton Investments Pty Ltd v McSorley

Colyton Investments Pty Ltd (the appellant) appealed to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute concerned the interpretation of a restrictive covenant contained in a Crown grant of land, which purported to restrict the use of the land to residential purposes only. The appellant, a developer, sought to develop the land for commercial purposes, arguing that the covenant was invalid.

The High Court was required to determine whether the restrictive covenant was valid and enforceable. Specifically, the court had to consider whether the covenant offended the rule against perpetuates or was otherwise void for uncertainty or as an unreasonable restraint on the use of land. The central question was whether the covenant, by its terms, created an indestructible fetter on the alienability of the land or on the freedom of the owner to use it.

The High Court, in a joint judgment, held that the covenant was valid and enforceable. The court reasoned that the covenant did not amount to a perpetual restriction on the use of the land in a way that would render it inalienable or prevent its use altogether. Instead, it was a restriction on the *mode* of user, which was permissible. The judges applied principles of contract law and property law, emphasizing that restrictive covenants are generally upheld unless they are found to be void for uncertainty, repugnant to the grant, or contrary to public policy. The court distinguished the present covenant from those that create indestructible fetters on the land.

The appeal was dismissed.