Farah Constructions v Say-Dee

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Citation: Farah Constructions v Say-Dee (2007) 230 CLR 89

This information can be found in the Textbook: Evans, Equity and Trusts, 3rd edition, Lexis Nexis, 2012, pp. 137-8 [12.30].

Contents

Background Facts

  • The Plaintiff [Farah] entered into an agreement with the Defendant [Say-Dee] to develop a property.
  • Their initial Council application was refused, as the land was too small.
  • Subsequently, Farah Elias (in his personal capacity, not as the Plaintiff] and his family purchased blocks of land adjacent to the property to build the apartments. They did not notify the Defendant about their availability for purchase.
  • Then, Farah Elias, concealing himself as a third-party bidder, made an offer to the Defendant to buy out their interest in the property. The Defendant refused the offer.
  • The Plaintiff commenced proceedings seeking the appointment of trustees for the sale of the property, under s 66G of the Conveyancing Act 1919 (NSW).[1]

Argument

  • The Defendant filed a cross-claim seeking orders that Farah Elias in and his family held their interests in the adjacent properties on a constructive trust for the partnership between the Plaintiff and the Defendant.

Legal issues

Judgment

  • Farah did have a duty to disclose the information about the Council’s requirement of amalgamation to the Defendant; and that the information that adjacent properties were available for purchase.
  • The information of the Council’s requirement came to Farah in its fiduciary capacity. It was information that Farah could not exploit, except in case of the Defendant's consent. To exploit such information would place Farah in conflict with its self-interest and its duty toward the Defendant in relation to the property.

References

  1. Among other things, the section provides that ‘Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition’.
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