Mr Cleary's subdivision company, previously known as Fox Rock and now called Big River Paradise, previously failed to obtain resource consent in the High Court in 2006 and the Court of Appeal in 2007.
The Irish-born rich-lister's proposal caught the Wanaka community unawares when it surfaced in 2004, initially attracting criticism it could ground Warbirds Over Wanaka, attract complaints about airport operations and exploited a planning loophole.
It was the first leased-land development proposal in the district and people questioned how it could be successful.
Although CivicCorp planners and independent Queenstown Lakes District Council commissioner Michael Parker said the development should have permission, three appeal courts have now preferred the arguments of landowners in the nearby Poplar Beach subdivision, Auckland businessman and former lawyer Robin Con-greve and others.
The decision by Supreme Court justices Tipping, McGrath and Wilson means the decision of the lower courts stand - Mr Cleary's 30-year leasehold proposal breaches the intention of a restrictive covenant limiting development on his land to no more than three dwellings.
Mr Cleary had proposed a subdivision into 52 leasehold interests, with each lessee having a term of less than 30 years and the right to construct a dwelling.
He argued that because the term was less than 35 years, the proposed development did not fall into the definition of "subdivision of land" under the Resource Management Act, and therefore the restrictive covenant did not apply.
"This argument failed in the courts below and . . . it cannot possibly be right," the justices said, giving three reasons why it failed: Mr Cleary's approach was contrary to the plain ordinary meaning of the covenant; it defeated the purpose of the covenant of protecting the neighbours' land from the consequences of subdivision; and when the covenant was created in 2001, the definition of "subdivision of land" included leases for more than 20 years.
The Otago Daily Times was not able to contact Mr Cleary for comment yesterday.
Mr Congreve said yesterday the decision was "a victory for common sense", as Mr Cleary bought the land subject to the covenant.
"It is not as though he did not know about it. The price he paid would have reflected the covenant. He had the bright idea subsequently he could do a development."
The covenant was created in 2001 by other landowners.
Mr Cleary bought his 190ha of land near the Luggate red bridge for $3 million in 2003.
Mr Congreve said the council ended up taking a neutral stance on the issue and had not "covered itself in glory".
He said his case had nothing to do with operations at Wanaka Airport but focused on protecting the interests he and other landowners had in not seeing a high density subdivision on the op-posite side of the Clutha River.
"It was expensive [more than $65,000 was spent] but we had no choice. It was a significant issue in relation to the properties we bought. It is a shame he was hell-bent on having his way in the face of the really obvious," Mr Congreve said.
Mr Congreve has also won several costs orders against Mr Cleary, including $15,000 in the Environment Court in 2006 and $2500 in the Supreme Court yesterday.
