Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd

The High Court of Australia heard an appeal concerning the enforceability of a restrictive covenant burdened on land owned by the third respondent (Dalcross Properties Pty Ltd) for the benefit of land owned by the appellant (Cumerlong Holdings Pty Ltd). The dispute arose when Ku-ring-gai Local Environment Plan No 194 ("LEP 194") amended the Ku-ring-gai Planning Scheme Ordinance, purportedly rendering the restrictive covenant unenforceable to permit the development of a hospital.

The central legal issue before the High Court was whether LEP 194, by its effect on the Ordinance, operated to suspend the restrictive covenant within the meaning of section 28 of the *Environmental Planning and Assessment Act 1979* (NSW). Specifically, the court had to determine if LEP 194 "provided that" the restrictive covenant "shall not apply" and, if so, whether the failure to obtain the Governor's approval as required by section 28(3) rendered the covenant still enforceable.

The High Court reasoned that both the restrictive covenant and LEP 194 were "regulatory instruments" and "environmental planning instruments" respectively. It held that LEP 194, by its engagement with the Ordinance, did effectively provide for the suspension of the restrictive covenant to allow for hospital development. However, this suspension was ineffective because the necessary approval under section 28(3) of the Act had not been obtained. The court applied the principle that a legislative instrument can "provide" for a matter not by express statement but by necessary consequence, drawing an analogy with the interpretation of section 51(xxxvi) of the Commonwealth Constitution.

Consequently, the High Court allowed the appeal, set aside the orders of the Court of Appeal, and declared that LEP 194 did not suspend the restrictive covenant. The third respondent was restrained from using its land for hospital purposes contrary to the covenant, and orders regarding costs were made in favour of the appellant.