John Alexander’s Clubs v White City Tennis Club

From Uni Study Guides
Jump to: navigation, search

Citation: John Alexander’s Clubs v White City Tennis Club (2010) 241 CLR 1

This information can be found in the Textbook: Evans, Equity and Trusts, 3rd edition, Lexis Nexis, 2012, pp. 132-3 [12.21]

Contents

Background Facts

  • The Plaintiff [WCT] and the Defendant [JAC] entered into a Memorandum of Understanding that the Defendant would acquire a portion of the plaintiff's land and sell it to a third party [Sydney Grammar], in return for an option to purchase part of it.
    • Under Cl 3.7 of the Understanding, the Defendant promised to exercise its option on behalf of White City Holdings (a new company formed by the Defendant after the Understanding) if White City granted a 99-year lease to JAWCC, another company to be formed by the Defendant after the Understanding.
    • The Plaintiff was to provide the capital for White City Holdings and other public shareholders.
  • After the Understanding, the Defendant, Sydney Grammar, White City Holdings and another party, Maccabi Tennis, entered into three agreements. In each of the agreements, the Defendant or its nominee (another party called Poplar) had an option to acquire part of the White City Land.
    • Only the third agreement mentioned the Understanding.
    • Clauses 42 and 43 of that agreement provided that the Understanding continued as it was, but in case of inconsistency between the Understanding and the third agreement, the third agreement should prevail.
  • On 12 April 2006, the Defendant terminated the Understanding, alleging that the Plaintiff had evinced an intention not to be bound by the Understanding.
  • On 27 June 2007, Poplar (Defendant's nominee) exercised its option under the third agreement.
  • The Plaintiff commenced proceedings on the basis that the Defendant owed the Plaintiff fiduciary obligations under the Understanding, and therefore Poplar, as the Defendant's nominee, only held rights in the land on trust for the Plaintiff.

Argument

  • The Plaintiff alleged that a fiduciary obligation was created by section 3.7 of the Understanding.

Legal issues

Judgment

  • Section 3.7 of the Understanding indeed prohibited what Poplar did, but it was also conditional on events that never ended up happening (therefore it never came into play).
  • Further, 3.7 was replaced by another scheme that was put into place in the series of agreements (including the third agreement) to which the Plaintiff was a consenting party.
    • The Plaintiff did not allege that its consent was brought about by any vitiating factors (ie mistake, misrepresentation, undue influence etc).
    • The Plaintiff's directors, who decided that the Plaintiff should consent, were experienced in business and legally advised.
    • This is strong proof against the existence of constructive trust[1] of the optioned land.
  • If the Defendant was in breach of its contract with the respondent, the Plaintiff had an ample array of contractual remedies at its disposal, which it chose not to pursue. The circumstances did not justify converting the relationship from contractual to fiduciary.

References

  1. A trust raised by equity to satisfy the demands of justice and good conscience and without reference to any presumed intention of the parties.
Personal tools
Namespaces

Variants
Actions
Navigation
Toolbox