A property developer has won a court appeal against AIG’s decision to reject its claim for a loss from a land sale.

Sayers Property can claim under its policy after it incurred a liability to pay a legal settlement, the Victorian Supreme Court’s appeal judges found.

The dispute centred on the sale of land in the Melbourne suburb of Tarneit, where Sayers spent $5.3 million building a gaming venue.  

It had an option to buy the land, but when it exercised that option in 2015 the landowner, Di Dio Nominees, alleged its accountant had breached his fiduciary duties by failing to disclose he was also a director and shareholder in Sayers.

Di Dio sought an order setting aside the lease and sale contract, and demanded compensation.

The parties were ordered to mediation, which resulted in a settlement in 2019 in which Sayers would buy the land for $11 million instead of the previously agreed $8.9 million.

Sayers then claimed the difference of $1.9 million against its insurance policy. 

AIG rejected the claim, saying the matter was merely a renegotiation of the land price. 

Sayers sued AIG, arguing the developer was legally liable to pay the amount under the settlement terms.

It said the sum represented compensation to Di Dio and was not just a commercial renegotiation.

The appeal judges’ decision last month overturned a Supreme Court ruling in favour of AIG. It finds Dio’s claim for compensation was at the heart of the appeal.

Read the judgment here.