Scott v Medley Close Pty Ltd - [2004] VSC 395

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST

No. 4254 of 2004

DAVID JOHN SCOTT	Plaintiff
v
MEDLEY CLOSE PTY LTD (ACN 007 135 186) and TIMOTHY KEITH MAXWELL	Defendants

AND BETWEEN

MEDLEY CLOSE PTY LTD (ACN 007 135 186) and TIMOTHY KEITH MAXWELL	Plaintiffs by counterclaim
v
DAVID JOHN SCOTT	Defendant by counterclaim

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JUDGE:	HABERSBERGER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	22-25, 29 MARCH 2004
DATE OF JUDGMENT:	14 OCTOBER 2004
CASE MAY BE CITED AS:	SCOTT v MEDLEY CLOSE PTY LTD
MEDIUM NEUTRAL CITATION:	[2004] VSC 395

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Contract – Terms of agreement concerning share of profits of property development – Whether losses also to be shared – Whether agreement terminated – Whether there was an honest belief based on reasonable grounds for the lodging of caveat – Section 118 of the Transfer of Land Act 1958.

Contract – Whether property purchased in joint names was to be held in equal shares – Terms of agreement – Whether terms breached – Order for sale of the property in lieu of partition – Whether valuation should be ordered, one party having undertaken to purchase the other party's interest at valuation – Sections 221 to 225 of the Property Law Act 1958.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C.R. Northrop	Harwood Andrews Laywers
For the Defendants	Mr M.D.G. Heaton QC with Mr J.B. Nunns	Maddens Lawyers

HIS HONOUR:

The Issues in the Proceeding

This proceeding is a continuation of the protracted and bitter dispute between Mr David Scott and Mr Timothy Maxwell and their corporate entities arising out of their relationship as purported property developers. The particular question raised by this proceeding is precisely what that relationship was in respect of the proposed developments of the properties at 48 Queens Park Road, Newtown ("the QPR property/project/development") and at the two lots both known as Lot 2, LaTrobe Boulevard, Geelong ("the LTB property/project/development"). A similar question arose in respect of a third development at Allenby Road, Hillside which led to earlier litigation between the parties ("the Allenby Road proceeding").[1]
[1]Maxwell v Moorabool Developments Pty Ltd [2004] VSC 392

The plaintiff, David John Scott, commenced this proceeding against the first defendant, Medley Close Pty Ltd ("Medley Close"), the registered proprietor of the QPR property, and the second defendant, Timothy Keith Maxwell, following the withdrawal of a caveat lodged by him over the three lots now comprising the QPR property. The three town houses which had been built by Medley Close on the QPR property had been sold and the caveat had to be removed in order to allow the sales of the townhouses to settle. After paying out the first mortgagee and prior caveators, the net proceeds of the three sales are being jointly held by the parties' solicitors pending the outcome of this proceeding.

Mr Scott's caveat claimed, and his claim in this proceeding is, that the QPR property was held on trust by Medley Close for itself…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Scott v Medley Close Pty Ltd

Details

AGLC: Scott v Medley Close Pty Ltd [2004] VSC 395
Case: [2004] VSC 395
Decision Date: 14 October 2004

CaseChat Overview and Summary

Scott and Medley Close Pty Ltd brought an action in the Supreme Court of Victoria concerning the terms of a property development agreement. The dispute arose out of an arrangement whereby the plaintiff contributed to the purchase of a property with the defendant company, intending to develop it for profit. The crux of the disagreement was whether the losses incurred during the development phase were to be shared equally between the parties, as well as the interpretation of certain clauses in their agreement regarding the termination of their partnership and the sharing of profits.

The court was tasked with interpreting the terms of the agreement to determine the parties' obligations. Specifically, the court had to ascertain whether the property was to be held in equal shares, whether there was a breach of the terms, and whether the property should be sold in lieu of partition. Additionally, the court examined whether the defendant's belief that there was a breach of the agreement was honest and based on reasonable grounds, entitling them to lodge a caveat under section 118 of the Transfer of Land Act 1958.

In its decision, the court found that the terms of the agreement did not mandate the sharing of losses, but only the sharing of profits. The court ruled that the agreement was not terminated and that the defendant's belief in a breach was not honest or based on reasonable grounds, leading to an improper caveat. Regarding the property, the court ordered its sale in lieu of partition and directed that the valuation should proceed as the plaintiff had agreed to purchase the other party's interest at the valuation. The court's interpretation of the property law statutes led to this comprehensive ruling, ensuring that both parties' rights and obligations were clearly delineated.

Orders