Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd

In the New South Wales Court of Appeal, McColl, Ward and Gleeson JJA considered appeals arising from a dispute concerning a conditional call option granted by Linfield Developments Pty Ltd (Linfield) to Australia Capital Financial Management Pty Ltd (ACFM). The core of the dispute involved competing equitable interests in land, specifically whether ACFM acquired an equitable interest in the land before Linfield completed its own purchase of that land.

The court was required to determine several key legal issues. These included the nature of an optionee's interest under a conditional call option, particularly when the option is granted before the optionor has acquired legal title to the land. The court also had to consider the principles governing priority between competing equitable interests in land, including the test for resolving such disputes and whether conduct, even if not leading to the creation of a later equitable interest, could disentitle an earlier interest holder if it represented a failure to protect existing contractual rights. Furthermore, the court examined whether findings of surreptitious or sharp practice by a primary judge amounted to a denial of procedural fairness, and whether equitable relief against penalties or forfeiture was warranted in the circumstances.

The Court of Appeal allowed ACFM's appeal in part. It set aside certain orders made by the primary judge and, in lieu, declared that Linfield was entitled to receive a transfer of the land upon payment of $20,000,000, free from encumbrances other than Linfield's caveat. The court also ordered Linfield to pay ACFM a sum of $360,364.14 plus interest and costs related to land tax, insurance, and utility charges. In a separate appeal concerning the Guan matter, the appeal was dismissed with costs.