Todd v Jingalong [2014] NSWSC 362

The owner of land agreed to sell his land to a developer on the basis that one of the lots would be re-conveyed to him. The developer entered into a joint venture with someone else on this basis and the owner’s interest was protected by a caveat. The project ran into trouble and the entire land was sold to the joint venturer, who requested the original owner to withdraw his caveat. Once withdrawn, the joint venturer denied the interest of the owner and claimed indefeasibility.

The court found the fraud exception to indefeasibility established by either:

  1. the assurances given by the joint venturer to the owner; or
  2. the acknowledgements in the joint venture agreement.

The court said that looking at the matter objectively the assurances given by the joint venturer could only be understood as being intended to convey that notwithstanding the sale, the owner’s entitlement would continue unaffected. The circumstance of the assurances when combined with the joint venturer’s subsequent indication to the owner that the joint venturer did not regard itself as having any obligation to the owner was sufficient to give the joint venturer’s conduct the necessary character of dishonesty or moral turpitude so as to engage the fraud exception in section 42 of the Real Property Act 1900. and to create a personal equity as between the joint venturer and the owner.

The Court found that because of the owner’s prior equitable interest, the joint venturer held the lot on constructive trust for the owner and the owner also had a right in personam against the joint venturer enabling him to compel the transfer of the lot.

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