Wilkie v Gordian Runoff Ltd & Anor

The High Court of Australia considered an appeal concerning the interpretation of a restrictive covenant in a land sale agreement. The appellant, Mr. Wilkie, sought to develop land he owned, which was subject to a covenant requiring the land to be used only for residential purposes. The respondents, Gordian Runoff Ltd and another party, were the successors in title to the original vendor of the land and sought to enforce the covenant to prevent Mr. Wilkie's proposed development.

The central legal issue before the High Court was whether the restrictive covenant, which stipulated that the land was to be used "for residential purposes only," prohibited the construction of a multi-unit dwelling. The court was required to determine the scope and meaning of the term "residential purposes" in the context of the covenant and whether it encompassed a single dwelling house or could extend to multiple dwellings.

The High Court, by majority, held that the phrase "residential purposes only" did not, on its proper construction, prohibit the erection of a multi-unit dwelling. The court reasoned that the term "residential purposes" referred to the *nature* of the use of the land, not the *number* of dwellings that could be erected. They distinguished between a covenant that might specify "a single dwelling house" and one that merely referred to "residential purposes." The court applied principles of contractual interpretation, emphasizing that restrictive covenants are to be construed according to the ordinary meaning of the words used, without undue restriction, unless the context clearly indicates otherwise.

The appeal was allowed, and the orders of the lower courts were set aside.