Folari Pty Ltd v St Jude Property Investments Pty Ltd

Folari Pty Ltd (appellants) appealed to the Court of Appeal of New South Wales against orders made by the primary judge concerning a joint venture agreement with St Jude Property Investments Pty Ltd (respondents). The dispute centred on the proper accounting for profits arising from a joint venture established to obtain development consent for residential units with a view to their subsequent sale. The core of the disagreement involved the apportionment of profits, the extent to which expenses should be deducted from the net profit, and the calculation of the 'sale price' for accounting purposes.

The Court of Appeal was required to determine several key legal issues. These included whether the evidence supported the primary judge's apportionment of profit under the joint venture agreement. Furthermore, the court had to consider whether expenses deductible from the account of net profit extended beyond the point at which development consent was obtained, to encompass expenses related to the subsequent sale or disposition of the units. The court also had to determine whether expenses relating to the development consent included those that had accrued but remained unpaid, and whether the primary judge had erred in their calculation of the 'sale price' for the purpose of accounting for net profit. Finally, the court considered whether the orders made by the primary judge were justified.

In its reasoning, the Court of Appeal upheld the primary judge's findings. The court found that the evidence adequately supported the apportionment of profit as determined at first instance. Regarding the deductibility of expenses, the court concluded that the joint venture agreement contemplated the inclusion of expenses incurred up to and including the disposition of the developed property, not merely up to the point of obtaining development consent. The court also determined that accrued but unpaid expenses were properly included in the accounting. The primary judge's calculation of the 'sale price' was also found to be correct, reflecting the agreed terms of the joint venture. Consequently, the court found no error in the orders made by the primary judge.

The appeal was dismissed, and the appellants were ordered to pay the respondents' costs.