Varinya Pty Ltd v Pedersen - [2007] NSWSC 794

CITATION: Varinya Pty Ltd v Pedersen [2007] NSWSC 794

HEARING DATE(S): 09/07/07

JURISDICTION: Equity Division

JUDGMENT OF: Young CJ in Eq

EX TEMPORE JUDGMENT DATE: 9 July 2007

DECISION: Order that caveats be removed.

CATCHWORDS: CONVEYANCING [134]- Torrens title- Caveats- Plaintiff real estate agent purchases property from defendant- Defendant claims property purchased at under value in breach of fiduciary duty- Defendant lodges caveat- Held no caveatable interest. EQUITY [102]- Trusts and trustees- Constructive trusts- Whether plaintiff holds profits from resale of property on constructive trust for defendant- Original sale at under value not sufficient in itself to establish unconscionability- Trust not imposed- Order for equitable compensation more appropriate.

LEGISLATION CITED: Property, Stock and Business Agents Act 2002, s 49

CASES CITED: Bathurst City Council v PWC Properties Pty Ltd (1988) 195 CLR 566
Guimelli v Guimelli (1999) 196 CLR 101
Tracy v Bifield (1988) 23 Fam LR 260

PARTIES: Varinya Pty Ltd (P)
Melville Roy Pedersen (D)

FILE NUMBER(S): SC 3473/07

COUNSEL: M A Bradford (P)
G P McNally (D)

SOLICITORS: Booth Brown Samuels & Olney (P)
Matthews Dooley & Gibson (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Monday 9 July 2007

3473/07 – VARINYA PTY LTD v PEDERSEN

JUDGMENT

1 HIS HONOUR: This is a summons brought by the registered proprietor of a property at Manly for an order that the defendant withdraw a caveat over that land. The plaintiff purchased the subject land from the defendant in the middle of 2006 for $880,200. The principal of the plaintiff is a real estate agent practising at Manly. The person's name is Mark Larcombe, but he practices under some business or corporate name.

2 Mr Larcombe has, for some years, been managing the property. In 2006 he had some discussions with the defendant regarding the need for general repairs to the property and the defendant, Mr Pedersen, indicated that it may be best to dispose of the property and put his investment moneys elsewhere. Mr Larcombe asked the defendant whether he wanted to sell the property and, according to Mr Larcombe, the defendant said he would give it some serious consideration. Mr Larcombe said that he thought a developer would pay somewhere in the range of $800,000 and pointed out that that would allow the developer to make some profit after extensive renovations. He then said to the defendant, "Would you like me to contact a couple of developers to get a better idea of what price they would pay?" The defendant replied, "Yes." Mr Larcombe says that he later approached two developers and ascertained that the best price he could get was $850,000, with a six month delayed settlement period.

3 Mr Larcombe told Mr Pedersen that and told him also that he, Larcombe, would be prepared to pay $900,000 for the property. As a result of this, in due course the contract was made out for $880,200, being $900,000 less commission of 2.2% that the defendant would otherwise have to…

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 Varinya Pty Ltd v Pedersen

Details

AGLC: Varinya Pty Ltd v Pedersen [2007] NSWSC 794
Case: [2007] NSWSC 794
Decision Date: 9 July 2007

CaseChat Overview and Summary

Varinya Pty Ltd sued Pedersen, their former property, for allegedly buying a property from them at an undervalue, breaching a fiduciary duty. The plaintiff, a real estate agent, purchased the property from the defendant and then resold it. The defendant lodged a caveat against the property, asserting that the sale was at an undervalue. The central issues were whether the defendant had a caveatable interest and whether a constructive trust should be imposed over the profits from the resale of the property.

The court found that the defendant did not have a caveatable interest as they failed to establish that they had a substantial equitable interest in the property. The court examined the nature of the relationship between the parties and concluded that the mere fact of the original sale at an undervalue was not enough to establish unconscionability. The court further held that a constructive trust was not appropriate as it would not address the underlying issue of the undervalue sale effectively. Instead, the court found that an order for equitable compensation was more suitable to address the defendant's loss.

The court ruled in favour of the plaintiff, dismissing the defendant's claim for a constructive trust over the profits from the resale of the property. Instead, the court ordered that the plaintiff compensate the defendant for the loss suffered due to the undervalue sale, reflecting the appropriate remedy for the circumstances of the case.

Orders