Eric & Valerie Coffey & Ors v Fernbank Management Pty Ltd & Anor [2001] NSWSC 192

Eric & Valerie Coffey & Ors v Fernbank Management Pty Ltd & Anor [2001] NSWSC 192

The prior findings of the Court of Appeal in Gillett v Halwood establish that the 'web' of agreements, including the Services Agreement and associated Power of Attorney and Charge, are unenforceable because the foundational Management Agreement was not validly executed. The subsequent New Agreement does not alter the impact of this unenforceability as it is materially different and does not retrospectively validate the old Services Agreements. The plaintiffs are not estopped by their conduct from denying enforceability because protest and challenge to the agreements occurred concurrently with receipt of services. The proper remedy on the cross claim is to require the plaintiffs to pay...

Parties
Plaintiff/cross Defendant: Eric Coffey & Valerie L Coffey (First Plaintiffs/First Cross Defendants as representatives of the Plaintiffs/Cross Defendants); Defendant/cross Claimant: Fernbank Management Pty Ltd (First Defendant/Cross Claimant); Defendant: Fernbank Developments Pty Ltd (Second Defendant)
Jurisdiction
Australia
Judgment Date
23 April 2001
Procedural Posture
Representative Action/cross Claim / Final Judgment
Outcome
Declarations in favour of the plaintiffs that the Services Agreement and related documentation are unenforceable; orders in favour of the cross-defendant on the cross-claim requiring payment to Management on a restitutionary basis applying the former Deferred Management Fee formula, with an option for present value...
Legal Topics
Unenforceable Contracts, Estoppel, Management Fee Disputes, Strata Title, Reasonable Remuneration
Contract Law Equity Restitution Unenforceable Contracts Estoppel Management Fee Disputes Strata Title Reasonable Remuneration

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Parties

Eric Coffey & Valerie L Coffey (First Plaintiffs/First Cross Defendants as representatives of the Plaintiffs/Cross Defendants)

Plaintiff/cross Defendant

Fernbank Management Pty Ltd (First Defendant/Cross Claimant)

Defendant/cross Claimant

Fernbank Developments Pty Ltd (Second Defendant)

Defendant

Procedural Posture

Representative Action/cross Claim / Final Judgment

Legal Issues

  1. 1 Whether the Services Agreement and associated management documentation are enforceable following prior Court of Appeal findings; whether the New Agreement operates to revive enforceability of the old agreements; whether plaintiffs are estopped from denying enforceability; whether restitution or reasonable remuneration is due and on what basis.

Ratio Decidendi

The prior findings of the Court of Appeal in Gillett v Halwood establish that the 'web' of agreements, including the Services Agreement and associated Power of Attorney and Charge, are unenforceable because the foundational Management Agreement was not validly executed. The subsequent New Agreement does not alter the impact of this unenforceability as it is materially different and does not retrospectively validate the old Services Agreements. The plaintiffs are not estopped by their conduct from denying enforceability because protest and challenge to the agreements occurred concurrently with receipt of services. The proper remedy on the cross claim is to require the plaintiffs to pay...

Court Disposition

Declarations in favour of the plaintiffs that the Services Agreement and related documentation are unenforceable; orders in favour of the cross-defendant on the cross-claim requiring payment to Management on a restitutionary basis applying the former Deferred Management Fee formula, with an option for present value...

Orders

  • Declarations that the Services Agreement, Power of Attorney, and Charge are not enforceable; Charges to remain until payment under the Cross Claim is made.
  • On the Cross Claim: Plaintiffs to pay Fernbank Management a reasonable remuneration—constituted by the Deferred Management Fee formula applicable in the unenforceable agreement (2.5% per annum of original purchase price capped at 25%, or 3.5% per annum of resale price capped at 35%, plus 20% of the appreciation, at...