Kiama Development Co & Anor v Wilcox & Ors

Gaudron and McHugh JJ of the High Court of Australia considered an appeal concerning the interpretation of a restrictive covenant affecting land at Kiama, New South Wales. The appellants, Kiama Development Co and another, sought to develop land for residential purposes, which the respondents, owners of adjoining land, argued would breach a restrictive covenant. The covenant, registered on the title, stipulated that the land could only be used for "residential purposes" and that no more than one dwelling house could be erected on each lot. The core of the dispute lay in whether the proposed development, involving the subdivision of lots and the erection of multiple dwelling houses on each, contravened this covenant.

The High Court was required to determine the proper construction of the restrictive covenant, specifically whether the phrase "one dwelling house" referred to a single building or a single residential unit. Further, the Court had to consider whether the covenant prohibited the subdivision of land into smaller lots, each intended to accommodate a dwelling house, or whether it merely limited the number of dwelling houses per original lot. The central legal question was whether the proposed development, which involved erecting multiple dwelling houses on subdivided lots, was permissible under the terms of the registered restrictive covenant.

Their Honours interpreted the covenant to mean that no more than one dwelling house could be erected on each lot as it existed at the time the covenant was imposed. They reasoned that the phrase "one dwelling house" referred to a single residential building, not a single residential unit within a larger structure. Consequently, the subdivision of the land into smaller lots, each intended to have its own dwelling house, was held to be a breach of the covenant. The Court applied established principles of restrictive covenant interpretation, emphasising that such covenants are to be construed according to the ordinary meaning of the words used, with any ambiguity generally resolved against the party seeking to enforce the restriction. The appeal was dismissed.