A buyer of a  Mt Tamborine cottage has been ordered to pay his former wife’s personal trainer half its re-sale profit, under a renovation agreement that allowed the trainer three years rent-free accommodation while he performed extensions to the home.

The Court of Appeal last week upheld a July ruling that found owners John and Patrick Chung “were making up their evidence as they went along” and had unjustly denied Scottish immigrant James Dunn – with whom John had been friends since 1993 – his share of the project profit.

With nothing written down, it was up to the court to determine – from the different versions advanced on either side – what had in fact been agreed between them.

Dunn’s case was that John Chung had agreed to finance the purchase of the property in his brother’s name, pay for all materials and tradesmen and reimburse Dunn’s out-of-pocket expenses in return for the latter conducting the renovations while residing there rent-free free as caretaker. “Profit” – after pay back to Chung of the purchase price – was to be split 50/50.

Chung’s contention was that Dunn was merely allowed to live rent-free in exchange for his labour. However, in the words of the court, such assertion was “quite unrealistic and divorced from the preponderance of the evidence”.

The home was purchased in April 2002 and occupied by Dunn until – fully refurbished at January 2006 – it was rented out and in fact, is yet to be put to market. Its  value, for profit purposes, was taken to be that at the date of termination of the agreement in 2006, after the renovations were complete.

Dunn filed a lawsuit in the Southport District Court in 2007.

His schedule of losses incurred went “unchallenged” at the three-day trial. There appears for example, to have been no contest that finance holding costs were to be borne solely by Chung, rather than treated as a joint-venture expense to be taken up against “profit”.

On the other side of the ledger, the hard-working Scot – also a university student – was only on the tools part time, but that did not seem to feature in the calculations.

On appeal, the only item contested as regards “profit” in which Dunn claimed half share, was whether rent received since completion of the renovation should be added to the project income.

The court ruled against the fixer-upper on this point, reducing his profit share by $66,000, to $192,000 as “there was no good reason why a term should be implied to provide [Dunn] should share in the rent”.

The court ruled that Chung’s ownership of the property be “charged in favour of [Dunn] to secure payment of the $192,000 due”.

Chung v Dunn [2012] QCA 350 Brisbane Holmes and White JJA and Boddice J 11/12/2012


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