The New South Wales Court of Appeal has handed down its decision in P & S Kauter Investments Pty Ltd v Arch Underwriting at Lloyds Ltd [2021]. The decision allowed an insurer to avoid responding to a professional indemnity claim made by the plaintiff, as the insured had fraudulently misrepresented and failed to disclose relevant information.
This case sets down the guidelines in relation to the required standard of proof for fraudulent misrepresentation and non-disclosure under section 28(2) of the Insurance Contacts Act 1984 (ICA), as well as what “facts” are capable of being construed as notification under section 40(3) of ICA.
Background
Between 2006 and 2012, Moyland Retirement Solutions Pty Ltd (MRS) and its principal, Christopher Moylan, provided financial advice to the plaintiff. Based on Mr Moylan’s advice, the plaintiff made various investments in which Mr Moylan held financial interest in. Additionally, Mr Moylan arranged transfers of the plaintiff’s funds without authorisation.
MRS held a policy for professional indemnity insurance from Lloyds Underwriters for two relevant insurance policy periods, being 2012/2013 and 2013/2014.
The 2012/2013 insurance policy required that “the insured shall notify [the insurer] of any claim for loss as soon as practicable and within the insurance period”.
In relation to the renewal of the insurance policy for the 2013/2014 period, Mr Moylan provided an Appendix with a Notification form, which noted:
“A small number of clients have invested/lent funds to property investments and/or companies that have to date been unable to repay those funds in total.
At the time of the investment all appropriate disclosures were made and clients invested/lent funds with full knowledge of the circumstances at the time.
At this stage no loss has been crystallised and no claim or complaint has been formally lodged.
We wish to advise the insurance company that there is a chance of a claim against Moylan Retirement Solutions in relation to any loss that may be incurred.”
Around August 2014, MRS was deregistered.
The plaintiff commenced proceedings against the insurer under section 601AG of the Corporations Act 2001, seeking to recover their losses suffered because of Mr Moylan’s advice and his actions. The plaintiff alleged that MRS’ negligent financial advice, breach of fiduciary duty, and misleading and deceptive conduct resulted in it suffering losses.
Supreme Court Decision
The insurer of MRS defended the matter on the following grounds:
The primary judge held that 2012/2013 did not respond because there was no valid notification in January 2013; it was not a notification of “facts” but of “bare possibilities”. This meant that section 40(3) of the ICA did not assist.
His Honour held that MRS made fraudulent misrepresentations and non-disclosures in relation to its 2013/2014 policy, when it sought to renew its policy, which allowed the insurer to avoid the policy pursuant to section 28(2) of the ICA.
Court of Appeal
The Court unanimously dismissed the plaintiff’s appeal and upheld the finding of the primary judge, Justice Slattery.
Notification – section 40(3) of ICA
Meagher JA, with whom Bathurst CJ and Bell P agreed, held that it is an objective assessment of a fact that “might give rise to a claim”. It was held that MRS, during its renewal process, did not give a realistic possibility of a claim. The notification did not include relevant facts in relation to the losses suffered by the plaintiffs, which was more than just a possibility. Therefore, section 40(3) of the ICA did not assist.
Fraudulent non-disclosure or misrepresentation – section 28(2) of ICA
The Court held that Mr Moylan withheld information from his insurer because he believed that he would not obtain another insurance policy if proper disclosure was made to the insurer. This fact was highly relevant to the decision of the insurer as to whether they were willing to accept this risk.
The Court held that if Moylan did disclose that it had misapplied the plaintiff’s funds, the underwriters would have declined to issue the policy of insurance. Further, the Court noted that Mr Moylan did not make an accidental misstatement in relation to the factual circumstances. This meant that the insurer was able to void the insurance policy.
Implications of this decision
For section 40(3) of the ICA, this case reminds insureds that they should give detailed and precise particulars of factual circumstances in relation to any potential claim(s) that could be made against them. This means that the insured should note the facts surrounding the claim and not just a belief or opinion in relation to possibility of a claim that could be made against them.
The notification must provide an insurer an opportunity to calculate the appropriate premium and assess their risk exposure, to which a blanket notification fails to assist them in understanding their risks.
As for insurers, the case acts as a reminder that if they receive vague and/or ambiguous information about a potential claim(s), they should consider pressing their insured for further information.
In relation to section 28(2) of the ICA, the case confirms that the standard of proof required for fraudulent misrepresentation and non-disclosure is the civil standard. The Court noted that mere negligence is not sufficient to establish that the insured had fraudulently misrepresented information to the insurer. As such, the insurer will need to show that there was clear and unequivocal evidence that the insured committed fraud, for the Court to accept and draw those inferences.
If you have any questions or concerns please contact Chamberlains and talk to one of our insurance law experts today.
Background
Following amendments to the Fair Work Act 2009 (Cth) (‘Act’) on 27 March 2021[1], with the introduction of a definition of ‘casual employee’ and casual conversion requirements, the Fair Work Commission(‘FWC’) has commenced undertaking a two-part process to alter modern awards to eliminate any inconsistency or uncertainty caused by the amendments.
The Full Bench of FWC completed the first stage of its review on 16 July 2021 by reviewing relevant terms of an initial group of 6 modern awards[2] and ruled on the changes required in order to make sure the awards comply with the amendments to the Act.
Outcomes of the Casual Terms Review
The amendments define a “casual employee” as one who accepts an “offer of employment made by the employer… on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person”[3]. An employee’s status as a casual is “assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct of either party”.
In their ruling, the Full Bench maintained its view that definitions in the awards of “casual employee” or “casual employment” in the Awards are inconsistent with the new definition of a casual employee and this may give rise to “difficulties or uncertainty” as a result of different expressions of casual employees in s15A and in the awards.
Accordingly, the FWC has decided that replacing the existing definitions of casual employee in the Awards with either the definition in s15A, or by reference to this section, with the variations taking effect from 27 September 2021.
Finally, in relation to the National Employment Standard (‘NES’) casual conversion requirements the FWC held that the NES casual conversion entitlements were more beneficial than the model Award’s casual conversion clause and removed it, referencing the NES provisions in their place.
In the course of conducting the review, the FWC found that the Fire Fighting Award does not provide for casual employment and no amendments were required.
What happens now?
The FWC will now vary the initial awards by producing draft determinations to reflect the outcomes of their Casual Terms Review. This will them provide a guideline for changes to the remaining Awards in stage two of the Review, which must be finalised by the deadline of 27 September 2021.
Employers are urged to review all casual employment arrangements in their business in the lead up to the major changes to these clauses in the awards and also be mindful of the new definition which will require evidence of an employee being aware that there is no firm advance commitment to continuing work with an agreed pattern. This is best evidenced in writing by an appropriate and complaint employment agreement and contract
[1] Schedule 1 to the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth)
[2] General Retail Industry Award 2010 (Retail Award), Hospitality Industry (General) Award 2020 (Hospitality Award), Manufacturing and Associated Industries and Occupations Award 2020 (Manufacturing Award), Educational Services (Teachers) Award 2020 (Teachers Award), Pastoral Award 2020 (Pastoral Award) and Fire Fighting Industry Award 2020 (Fire Fighting Award).
[3] Section 15A of the Fair Work Amendment ( Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth)
Contact Chamberlains Law Firm for any questions and concerns, speak with our Workplace Law Team today.
On 18 June 2020, the Court of Appeal handed down it decision in the matter of Caron and Seidlitz v Jahani and McInerney in their capacity as liquidators of Courtenay House Pty Ltd (in liq) and Courtenay House Capital Trading Group Pty Ltd (in liq) (No 2) [2020] NSWCA 117. The Court of Appeal considered the most appropriate method for distributing funds in the winding up of two companies which had been operating a Ponzi Scheme.
Facts
By all outgoing appearances, Courtenay House Capital Trading Group Pty Ltd (in liquidation) and Courtenay House Pty Ltd (in liquidation) (collectively, Courtenay House) obtained funds from the public for the purpose of investing in foreign exchange trading. In fact, Courtenay House operated a Ponzi scheme using funds from later investors into provide returns to those who invested earlier.
To facilitate their business, Courtenay House held two bank accounts, one with National Australia Bank and the other with Westpac (Bank Accounts). On 21 April 2017, ASIC obtained ex parte freezing orders over Courtenay House’s assets including the Bank Accounts.
Despite freezing orders being made, investors continued to make deposits into the Westpac Account. On the day that the freezing orders came into effect, $60,000.00 was withdrawn from the Westpac account. This gave rise to two types of investors, investors who made deposits after the freezing order came into effect but before the $60,000 was withdrawn (the Court described this group as Category E Investors) and investors who made deposits after the freezing order came into effect and after the $60,000 was withdrawn (the Court described this group as Category F Investors).
At the time of liquidators’ appointment, there was $21 million held in the Westpac account (Westpac Funds). The liquidators applied for orders and directions as to the manner in which they were to distribute the Westpac Funds to the Category E and Category F Investors.
Issues
At the first instance, his Honour concluded that it was impractical to distinguish between the two classes of investors and ordered that the Westpac Funds be applied pari passu.
The question before the Court of Appeal was whether Black J erred in applying that simple pari passu method.
The Court of Appeal considered three possible methods of distribution:
Decision
The Court of Appeal held that Black J erred in his finding that the Westpac Funds be distributed pari passu.
They found that where a bank account is mixed with the funds of multiple investors at different points in time and the bank account fluctuated, the Court should characterise the equitable charge as a “rolling charge” the value of which is proportionate to the amount of the remaining investment.
Where the individual charges are inadequate security or where the co-mingled fund has been depleted by earlier withdrawals/distributions, it will be necessary to calculate any distribution rateably by reference to the interest identified. In an insolvency context this is a common occurrence where liquidators legitimately expend part of the fund.
The Court of Appeal ordered:
Comment
This matter demonstrates the nuances of distributing co-mingled funds to creditors and that the most appropriate method for distributing funds in the winding up is closely tied to the circumstances of the matter.
If you have any questions or concerns please contact Chamberlains and talk to one of our insolvency lawyers today.
When a company is in danger of becoming insolvent or has entered voluntary administration, a Deed of Company Arrangement (DOCA) may be put into place. A DOCA is a binding agreement between a company and its creditors setting out how the affairs and assets of the company will be dealt with.
However, if the DOCA is subsequently terminated or the company enters liquidation, can a payment made during the course of a DOCA be recovered as an unfair preference?
Justice Middleton considered this question in Yeo, in the matter of Ready Kit Cabinets Pty Ltd (in liq) v Deputy Commissioner of Taxation [2020] FCA 632.
Background
On 11 December 2013 a DOCA was entered into by Ready Kit Cabinets Pty Ltd (Company).
The DOCA included:
Between 28 February 2014 and 16 June 2017, payments were made by the Company to the Deputy Commissioner of Taxation (the DCT), totalling $304,77.15 in discharge of the tax liabilities of the Company (Payments).
Between 11 December 2013 and 5 July 2017, the Company was return to the management and control of the Director and continued to trade.
The DOCA was terminated on 5 July 2017 and the Company entered liquidation.
Issue
Whether the requirements of subsection 588FE(2B)(d) of the Corporations Act have been satisfied, more specifically, whether the Payments were made on behalf of the Company ‘under the authority’ of the Deed Administrators.
Decision
Justice Middleton held that section 588FE(2B) should be limited to apply to transactions actually carried out by a deed administrator or by a third party under an authority given to the deed administrator. He was satisfied that this section could not and should not extend to all transactions contemplated or required by a DOCA as subsection (d) specifies that the provision only applies to transactions ‘by or under the authority’ of the Deed Administrator.
In order for a transaction to be carried out by or under the Deed Administrator’s authority, they must have been given the power to do so in the DOCA. As identified above the DOCA clearly articulated the Deed Administrator’s powers and obligations. In this matter, the terms of the DOCA did not empower the Deed Administrators to conduct the managerial affairs of the Company such as the making of the Payments. Justice Middleton confirmed that the DOCA expressly returned the managerial conduct of the Company to the Director. Accordingly, he found that the payments made by Company were under the authority of the Director pursuant to powers conferred by the Corporations Act and Company Constitution and not by the Deed Administrators. Therefore, the payments were to the DCT were voidable as unfair preferences under s588FE and s588FA.
Comment
When a DOCA requires transactions be entered into on the behalf of a company by a director without the involvement of the Deed Administrators, a Court may hold these transactions to be voidable.
Noting that actions taken by a company under a DOCA may come under the scrutiny of a liquidator, it is crucial that the terms included in DOCA’s are drafted to ensure that actions taken by a company under the DOCA are so by, or with, the clear authority of the Deed Administrators.
If you have any questions or concerns please contact Chamberlains and talk to one of our insolvency lawyers today.
In the recent litigation involving Henclo Investments Pty Ltd (Henclo), the VIC Supreme Court confirmed that non-payment of a debt cannot be relied upon as evidence of insolvency if a winding-up application is filed on grounds other than failure to comply with a creditor’s statutory demand.
Background
Henclo applied for the defendant company to be wound up after it failed to pay an outstanding debt. Henclo had sent a letter of demand in relation to the debt. However, it never issued a creditor’s statutory demand. Therefore, it could not rely on a presumption of insolvency and had to prove the defendant’s ‘actual insolvency’.
Court Finding
Matthews JR found that the financial records presented by Henclo were not persuasive on the basis that they merely demonstrated the assets of the defendant.
He found that the presence of an undisputed and unpaid debt was a factor that may be considered when assessing the solvency of a company, but its presence was not conclusive. He noted ASIC v Plymin (No 1) [2003] VSC 123 (Plymin) establishes other indicators of insolvency the courts may use.
Matthews JR reiterated that to prove ‘actual insolvency’ Henclo must show that the defendant cannot pay rather than will not pay. In this case, the defendant failed or refused to participate in the proceedings. The Court held that as there was uncertainty as to whether a company could pay its debts, the court could not declare it to be insolvent.
Effect in time of COVID-19
In the matter of Ryals Hotel Pty Ltd [2020] NSWSC 1906 where the applicant applied to wind up the defendant in insolvency. The defendant ran a hotel that experienced a shortfall in rent during 2020 which according to Black J was unsurprising in the midst of a pandemic. Undeterred by requirements in the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (Cth) and Coronavirus Economic Response Package Omnibus Act 2020 (Cth), the applicant sought to wind up the lessee without reliance on a creditor’s statutory demand.
Black J noted that the defendant never had the opportunity to respond to a creditor’s statutory demand and it appeared that the applicant was attempting to avoid the limitations which have been imposed by the COVID-related legislative reform. He found that the defendant’s temporary inability to pay its debts as they fell due was insufficient to establish that the company was insolvent.
Comment
Given the temporary changes made to statutory demands last year on account of the pandemic have ended, this matter most likely will not have a significant impact unless economic pressure brings back the types of temporary concessions that were in place between March and December 2020.
That being said, where issues relating to disputed debts arise, creditor’s interests will likely be better addressed by the statutory demand winding-up process. If a creditor’s statutory demand is not issued, it is crucial to show more than the mere existence of an undisputed unpaid debt to prove insolvency.
If you have any questions or concerns please contact Chamberlains and talk to one of our insolvency lawyers today.
1. Before using the Online Bankruptcy Portal
The consequences of bankruptcy are serious, and a bankruptcy cannot be cancelled if you change your mind.
Before filing any documentation with the Australian Financial Security Authority (AFSA), seek advice from an insolvency lawyer. An insolvency lawyer will be able to provide you advice on your rights and obligations throughout the bankruptcy process.
2. Create an Account
Once you have received legal advice, if you decide to declare bankruptcy, you must first create an Insolvency Services account via the Insolvency Services portal on the AFSA website.
3. Are you applying for bankruptcy?
If you have arranged for a registered trustee to manage your bankruptcy, ask your trustee to complete a Consent to Act Declaration. This will need to be filed this at the same time as the Bankruptcy Form.
If you do not have a trustee managing your bankruptcy, you can complete the Bankruptcy Form via the Insolvency Services portal on the AFSA website.
When using the Bankruptcy Form, you will be:
4. Have you been made bankrupt by a creditor?
You can lodge your Statement of Affairs via the Insolvency Services portal on the AFSA website.
5. What is Next?
Once AFSA receives your Bankruptcy Form they will either:
Once AFSA receives your Statement of Affairs, they will send a copy to you and your creditors.
If you have any questions or concerns please contact Chamberlains and talk to one of our insolvency lawyers today.
Suffering an injury at work can be a stressful and traumatic experience. You might be in pain and facing the prospect of loss of income and mounting medical expenses. The thought of seeing a lawyer and making a claim can be overwhelming, but it’s always a good idea to get help from an expert through the process.
Can I make a workers compensation claim?
If you’ve been injured at work, regardless of whether it was your fault, you are entitled to make a workers compensation claim.
What type of injuries are covered by workers compensation?
Workers compensation is not limited to physical injuries but also mental and emotional injuries, including bullying in the workplace
What does a workers compensation claim cover?
As a result of making a workers compensation claim you may be entitled to:
If your injury was caused as a result of your employers’ negligence you may be entitled to also make a common law claim which entitles you to a greater range of compensation.
How do I make a claim?
The first step in making a claim is reporting your injury to your employer. You need to do this within 30 days of your injury otherwise your claim may be rejected.
It is important that you consult your doctor as soon as you are aware of your injuries. Your doctor will give you a certificate explaining your diagnosis and capacity for work. This certificate should be provided to your employer, along with a completed claim form.
The employer will then forward the forms to their insurer and they will contact you to let you know if your claim is accepted or rejected.
How can Chamberlains help?
If you have suffered a workplace injury it is important that you seek legal advice ASAP. There are time limits that apply which can affect your access to entitlements. If your claim is rejected, we can provide you with advice on your options, including whether a common law claim is appropriate. Remember, the insurer’s job is to pay you as little as possible so you need an experienced lawyer on your side.
At Chamberlains, our team of injury compensation lawyers can guide you through the entire process. From advising on your prospects, to lodging a claim, to handling disputes with your employer or insurer, we can get the job done.
I was abused as a child, is it too late to make a claim?
The previous time limits for making a claim for compensation have been removed, so survivors of abuse can now make a claim regardless of how long ago the abuse occurred.
The removal of the barrier of time constraints is an important step towards achieving justice for survivors who are quite often not ready to address what has happened to them until many years after the abuse has taken place.
Who is the claim brought against?
A claim is brought against the institution where your abuse took place and is handled by their insurer. It is helpful to note that it may still be possible to make a claim even if the institution no longer exists.
Can I still claim if I have already applied to the National Redress Scheme?
The National Redress Scheme was established in 2018 to provide compensation for victims of institutional sexual abuse, however it is not the only avenue for compensation. If you have already applied to the Scheme, you should still contact Chamberlains to discuss your options for making a further claim.
How much compensation could I receive?
Whilst nothing can remove the pain caused by the abuse, our experts may be able to assist you to recover compensation for what you have gone through. This compensation can include:
Each matter is unique and the total amounts in financial compensation will vary from case to case, but if you have a lawyer experienced in this area will help you achieve the maximum compensation possible for your circumstances.
How much will it cost to bring a legal case?
At Chamberlains, we are committed to achieving justice for all victims. We offer a free consultation and a no win no fee policy. Just as the compensation received differs from case to case, so do the legal costs, so ask one of our lawyers today about what your legal costs could look like if your claim is successful.
Is it an issue that I live far away from any of the Chamberlains’ offices?
The location you live is not a barrier in obtaining a great legal service from Chamberlains. Whether you live close or far away from one of our offices across Australia, we are equally committed to providing you with our expert advice and helping you obtain the compensation you deserve. We are able to accommodate the communication preferences of all clients – be it meeting in person, regular telephone calls or videocalls – so that we can help victims of abuse across the country.
How can Chamberlains assist me?
At Chamberlains, we are dedicated to assisting people impacted by institutional abuse across Australia. We specialise in a wide array of institutional abuse, for example education systems, religious establishments, sporting organisations or any other institutions in Australia. We can’t possibly say that we understand what have been through, but we can say that we are experienced in these matters and we promise to fight for you. Our aim is to will make the legal process as simple and stress free as possible.
How do I contact Chamberlains?
If you or a loved one has been the victim of sexual, physical or other abuse, please contact Alison McNamara alison.mcnamara@chamberlains.com.au or Jon May jon.may@chamberlains.com.au from our injury compensation team at Chamberlains Law Firm or call us on 02 6188 3600.
Carrying on a business of trading cryptocurrency is often a complicated question and there are very few easy answers. Simply trading crypto assets regularly is not enough to be seen as carrying on a business. The ATO is particularly wary of people who reclassify their activities from investor to professional trader and will likely be cracking down on investors who believe their gains are tax free or only taxable when cashed back into Australian dollars.
This article has been prepared to assist clients in understanding the difference between an investor and trader for tax purposes, with the tests applied.
Investor v Trader
Crypto investors typically buy, sell, or swap crypto assets for fiat currency or another crypto asset with the intention of holding the asset for long term capital growth.
Conversely, a trader has the intention of buying and selling crypto for short term profits. Traders will have a strategy as to when to buy or sell, plan their trading activities, keep extensive records and trade repeatedly and in volume. Those carrying on a business will also often invest significant capital into their trading activities, however a lack of capital is not necessarily a decisive factor. They may also have registered a business, hired office space, paid for professional research and analysis and have kept extensive and well-maintained records in the event that an ATO review will be conducted into their activities.
The central difference for tax purposes is whether a trader is carrying on a business, or they are just making short term capital gains.
What is carrying on a business?
If you ‘carry on a business’ of trading, your profits are taxable as ordinary income. There are no special criteria for trading of crypto assets, shares or others, but the general criteria for carrying on a business is below:
Each of these criteria as weighed differently depending on the circumstances. The ATO is especially wary of traders claiming they carry on a business only to realise losses to use against their other income.
Tax treatment for investors
If you hold cryptocurrency as an investor, capital gains tax (CGT) will usually apply when you dispose the asset.
CGT is most commonly calculated on the difference between the cost you paid for the crypto asset which may include transaction fees, and the proceeds when you eventually sell it. Most importantly, the 50% CGT discount may be available if you held the asset for at least 12 months before you sell it, and if it is owned by an individual or trust – or a 33 1/3 discount for a superfund.
CGT is not a tax, rather it seems the profits calculated above are added to your income This means that if you are in the top marginal tax bracket due to other investment or employment, you will pay tax on your capital gains at 45% plus the Medicare Levy.
Tax treatment for traders
If a trader is carrying on a business, they will not be subject to the CGT rules for crypto assets involved with the business. Instead, the trading stock rules should apply. Effectively, your tax consequences are:
The trading stock rules can be complicated and are beyond the scope of this article. There is a raft of tax benefits only available for businesses, including a crypto asset trading business:
Specialist advice is recommended before you conclude you are carrying on a business of trading activities or not.
Conclusion
Carrying on a business of trading crypto assets is very difficult to define, as it is for share trading activities. Many traders seek specialist advice or sometime ATO private binding rulings to ensure their activities are enough to constitute a business for tax purposes.
It is possible to hold some assets as an investor, and others as a trader. Further, there are some grey areas with DeFi activities such as yield farming and liquidity pool strategies, and staking. The same tests apply to carrying on a business and we expect further confusion in this area until confirmed by the ATO. Adequate records are needed for any of these activities to support how you treat them for tax purposes and CryptoTax Calculator are a useful tool to document what you do.
The benefits of carrying on your trading activities as a business are attractive for some client, but it is imperative that you seek professional advice to confirm whether you are an investor or a trader – depending on which one you would rather be.
If you have concerns or questions about Cryptocurrency Law or/and Tax Planning, contact Chamberlains Law Firm today.
In the recent decision of Fuller v Albert [2021] NSWCA 88, the New South Wales Court of Appeal considered an example of the perils that fellow shareholders can face when they disagree on what their company should be doing.
F and A were directors and (along with their families) 60/40 shareholders in a company. The company owned a block of land. F and A discussed an arrangement where each would get – for themselves – a small parcel of land subdivided from the company’s larger block without having to pay for it.
A’s parcel of land was subdivided and transferred to A with a price of $175,000.00 recorded on the sale contract, but with no actual money changing hands.
F applied to subdivide their block but was unsuccessful.
Years later, after a curious meeting with F and a private investigator engaged by F, A paid the $175,000.00 to the company.
F later commenced proceedings seeking (among other things) specific performance of the agreement. F lost, including because the primary judge found no binding obligation to cause the subdivision and distribute F’s block. F appealed.
On appeal, the Court found that there was indeed a binding obligation in those terms. The Court of Appeal noted that the payment of $175,000.00 was curious as it was never demanded and was made after A felt “intimidated and confused” following the private investigator meeting.
A argued that even if there was a binding contract, F repudiated it by causing the private investigator to behave as they did. However, because F had already performed their obligation to drive the company to transfer the land to A, there were no obligations left for F to evince an intention not to be bound by. F had already done everything they needed to for A to get their land. As such, F did not repudiate.
This means that the net effect of the binding obligation, and A acting on it while F did not, is that F received nothing from the arrangement and A received their land. (A may have a remedy to recover the $175,000.00, but that was not raised in these proceedings.)
The Court found A repudiated by purporting to accept F’s would-be repudiation, so A themself had evinced an invention not bound by the agreement. There were difficulties with the order for specific performance sought, including identifying the land that would be the subject of any order and any planning or zoning issues that might prevent subdivision. The matter was referred back to the primary judge to consider specific performance versus damages.
What this complex decision shows is that disputes between co-owners can become confusing and expensive if there is no clear and binding agreement in place at the outset.
If you have any legal questions about commercial and corporate law, reach out to our specialists at Chamberlains Law Firm!
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