Gosling v Penrith City Council

Gosling was the owner of a property in Penrith, which was subject to a covenant restricting the number of residential dwellings that could be constructed on the property. Gosling sought to subdivide the property into multiple lots, intending to construct additional residential dwellings. Penrith City Council opposed the subdivision, arguing that it would breach the covenant. Gosling subsequently brought proceedings against the Council seeking a declaration that the covenant was invalid, unenforceable and had expired. The Council cross-claimed seeking a declaration that the covenant was valid and enforceable, and that Gosling's proposed subdivision would be in breach of the covenant. The parties cross-appealed from a decision of the Local Court which found the covenant to be valid, enforceable, and that Gosling's proposed subdivision would be in breach of the covenant. The Court of Appeal found in favour of Gosling, holding that the covenant was invalid and unenforceable. The Council's appeal was dismissed with costs.

The primary issue before the Court of Appeal was whether the covenant was invalid, unenforceable, and had expired. Gosling submitted that the covenant had expired pursuant to section 82AAA of the Conveyancing Act 1919 (NSW). The Council submitted that the covenant was valid and enforceable, and had not expired. The Court of Appeal held that the covenant was invalid and unenforceable. The Court found that the covenant was created as a condition of sale, which imposed an unreasonable restriction on the use of the land. The Court held that such unreasonable restrictions are void at common law, and the statutory presumption that covenants are for the benefit of land did not apply to unreasonable restrictions. The Court held that the covenant was therefore invalid and unenforceable. The Court found that the covenant had expired pursuant to section 82AAA of the Conveyancing Act 1919 (NSW) as it had not been exercised for over 20 years. The Court held that the covenant was therefore invalid and unenforceable, and Gosling's proposed subdivision would not be in breach of the covenant. The Court dismissed the Council's appeal and Gosling's cross-appeal with costs.