Orhan and Ors v Han and Anor
[2020] VCC 1096
•29 July 2020
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
EXPEDITED LIST
Case No. CI-18-02232
| DEVRIM ORHAN | First Plaintiff |
| And | |
| KWAI WAH FAI | Second Plaintiff |
| And | |
| LOK SHUM | Third Plaintiff |
| V | |
| SHAN HAN | First Defendant |
| And | |
| THE REGISTRAR OF TITLES | Second Defendant |
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JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 25, 26, 27 and 28 November and 13 December 2019 | |
DATE OF JUDGMENT: | 29 July 2020 | |
CASE MAY BE CITED AS: | Orhan & Ors v Han & Anor | |
MEDIUM NEUTRAL CITATION: | [2020] VCC 1096 | |
REASONS FOR JUDGMENT
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Subject: EQUITY & TRUSTS
Catchwords: Legal and beneficial title in property held by the first defendant – financial contributions made by the plaintiffs towards purchase and maintenance of the property – whether first defendant’s interest subject to a constructive or resulting trust in favour of the plaintiffs – whether first defendant acted unconscionably – remedial principle of minimum relief in equity.
Cases Cited:Muschinski v Dodds (1985) 160 CLR 583; Sobey v Sobey [2014] VSC 373; Clementi v Rossi [2019] VSC 725; Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413; Zekry v Zekry [2020] VSC 221; Baumgartner v Baumgartner (1987)164 CLR 137; Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460; Sivritas v Sivritas [2008] VSC 374; Hohol v Hohol (1981) VR 221; McDonald v Dunscombe [2018] VSC 283; Nagi v Hussein [2020] VSC 401; Buffrey v Buffrey (2006) 12 BPR 23; Vlahos Pty Ltd v Vlahos [2017] VSCA 166; John Alexander’s Clubs Pty Ltd v White City Tennis Club Pty Ltd (2010) 241 CLR 1; Chickabo Pty Ltd v Zphere Pty Ltd (No 2) [2019] VSC 580; Boyd v Thorn [2017] NSWCA 210; Wilkins v Wilkins [2007] VSC 100; Sirtes v Pryer [2005] NSWSC 1082
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr A P Dickenson | Bediaga Xavier & Ramon |
| For the First Defendant | Mr B Fry | McDonald Lawyers |
| For the Second Defendant | No appearance | - |
Table of Contents
Introduction and summary
Procedural history
Background
Plaintiffs’ submissions
Defendants’ submissions
Applicable principles
Constructive trusts
Joint endeavour constructive trusts
Common intention constructive trusts
Resulting trusts
The remedial principle of minimum equity
Consideration
Conclusions
HER HONOUR:
Introduction and summary
1 The first defendant, Shan Han (“Han”) is the registered proprietor of 16 Gibson Street, Box Hill (“the property”).
2 The first plaintiff, Devrim Orhan (“Orhan”), is a registered builder and the sole director and shareholder of Pacific Constructions Vic Pty Ltd (“Pacific”). The second plaintiff, Kwai Wah Fai (“Fai”), is the third plaintiff’s mother. The third plaintiff, Lok Shum (“Shum”) is Han’s former husband.
3 The plaintiffs claim Han holds the property as trustee on their behalf as parties to a joint venture to purchase and develop the property. Han denies the plaintiffs have any interest in the property and maintains she holds the legal and beneficial interest in the property absolutely. The plaintiffs contend Han’s denial of their interest in the property is unconscionable. In those circumstances, they claim equitable relief primarily by way of a constructive trust or in the alternative, a resulting trust.
4 For the following reasons, I was not persuaded Han is entitled to hold the property beneficially in her own name without any regard to the claims made by the plaintiffs. It is clear on the evidence that Orhan and Fai did contribute financially towards the purchase and maintenance of the property in keeping with a joint venture to buy and redevelop the property and were to take a beneficial interest. Shum managed the project. A small financial contribution was also made by Han after purchase, with the assistance of her father. Han was well aware of the contributions made by Orhan and Fai, despite her steadfast denial. By maintaining her denial of Orhan and Fai’s beneficial interests in the property, Han has acted unconscionably. Consequently, equity should intervene and grant equitable relief in their favour.
5 The issue then is what is the appropriate form of relief bearing in mind the court should not grant equitable relief beyond the necessities of the case. A court cannot order a constructive trust be imposed, or an equitable charge, where it would be injurious to the interests of third parties who are not before the court and whose security may be adversely affected.[1] The plaintiffs knew of a caveat lodged over the property by a Mr Wong claiming an equitable interest under an unregistered mortgage. In circumstances where the plaintiffs did not join Mr Wong as a party to the proceeding, the proprietary remedies of constructive trust or an equitable charge are unavailable. But I find Orhan and Fai are entitled to an order for payment of equitable compensation as a personal remedy against Han. The compensation payable represents the amounts they have spent towards the purchase and maintenance of the property.
[1]John Alexander’s Clubs v White City Tennis Club Pty Ltd (2010) 241 CLR 1 at 45.
Procedural history
6 The proceeding was commenced by originating motion in May 2018. By order made on 28 June 2018, the proceeding was treated as if it had been commenced by writ. Shum was joined as an additional plaintiff on 16 September 2019.
7 The matter was listed for a hearing on 29 October 2018. A compromise was reached, and orders were made disposing of the matter on 31 October 2018. Regrettably, the parties did not adhere to the terms of settlement. The terms of settlement were in the Court Book. No objection was made to their inclusion by any of the parties during the trial. Under the terms, Han was to retain the ownership of the property subject to her making payments to the first and third plaintiffs. Han later sought to “terminate the terms” and resiled from the agreement reached. Han alleged there had been a relevant misrepresentation made to her concerning the availability of some funds held in a bank account. She claimed that in breach of this representation, she had been induced to sign terms of settlement which she would otherwise not have signed. For reasons that were unexplained, the plaintiffs did not seek to enforce the terms of settlement. The proceeding was subsequently reinstated and various procedural orders were made by Judge Marks made on 11 December 2018.
8 The current counterclaim was filed on behalf of Han on 4 October 2019. It included a claim that Orhan had conducted building works on the property in a defective fashion, pursuant to a building contract entered into between his company, Pacific and Han.
9 An issue was raised at the commencement of the hearing about whether the counterclaim was capable of being heard. There was a discussion about whether the County Court was the appropriate forum given the counterclaim appeared to relate to a domestic building matter and as such, could be amenable to the jurisdiction of VCAT. Counsel for the plaintiffs also noted that no expert evidence had been filed and given this omission, the counterclaim could not proceed. These matters were ultimately not agitated any further as counsel for the parties both agreed the hearing of the counterclaim should be stayed pending the hearing and determination of the plaintiffs’ claim.[2]
[2]See Transcript (“T”) T62 and T334.
10 During the course of the hearing, the plaintiffs amended their statement of claim to seek an order for relief that the property be sold. The relief sought was also amended to specifically plead a constructive trust and, in the alternative, a resulting trust. The previous version of the pleading had not identified the form of trust sought. An earlier order seeking a declaration that the unregistered mortgage held by Mr Wong was void was abandoned when the Court pointed out during the plaintiffs’ opening that such an order could not be made in his absence.
11 Consequently, the hearing was confined to the issues raised in the plaintiffs’ further amended statement of claim filed on 26 November 2019 and Han’s defence.
Background
12 Han and Shum married on 29 May 2011. Following their marriage, Han and Shum lived with Fai at the latter’s home at 36 David Street, Box Hill. Fai decided to build a unit at the rear of her home with the intention of living in it and renting out the existing house at the front. The builder engaged to build the unit went bankrupt. On behalf of his mother, Shum engaged Orhan to complete the construction of the unit at the rear of Fai’s property. Orhan frequently attended the home at David Street, Box Hill thereafter and became a family friend. Orhan and Shum had various business dealings with each other, including a joint venture project in Glenroy.
13 Prior to the acquisition of the property, Fai had previously purchased an investment property, being a unit in Mitcham (“the Mitcham property”). The price of the unit was $280,800. The Mitcham property was registered in Han’s name. Shum gave evidence that the property was placed in Han’s name because neither he nor his mother were able to obtain credit at the time and, accordingly, that was why Han’s name was used for the purposes of a loan application. A loan was taken out in Han’s name for $224,000. Fai gave evidence she paid the deposit of $27,580 and a further sum of $33,000 on settlement of the Mitcham property. The investment was handled by Shum on her behalf. Fai has limited English and entrusted her son to look after her financial affairs, including her banking. Han took a contrary stance and maintained the Mitcham property was an investment property belonging to her and Shum.
14 The Mitcham property was renovated and subsequently sold in August 2014. The renovations were paid for by Fai in the sum of nearly $30,000. The balance of the sale proceeds of $146,088 was paid initially into an account held in Han’s and Shum’s names and then transferred into an account in Shum’s name. Han’s evidence was that she and Shum then started looking to buy a matrimonial home. She said the proceeds from the Mitcham property were transferred into Shum’s bank account for the purpose of him being able to provide a bank cheque at auction when they purchased a home.
15 On 18 October 2014, Shum attended the auction of the property with Orhan. Orhan made bids, as did Shum, and Orhan’s bid was successful. The purchase price was $930,000. The deposit of $93,000 was paid by cheque drawn against the account of Orhan’s building company, Pacific. Orhan gave evidence that the payment of $93,000 was recorded as a loan to him in Pacific’s company records.[3] Han said she had queried the payment of the deposit by Orhan with her husband. She said he explained to her Orhan had offered to fund the deposit by way of a loan because Shum did not have a cheque available at the auction.
[3]See Exhibit P2 – Pacific’s annual financial statements for the year ended 30 June 2015 disclosed a director’s loan of $93,000.
16 The parties disagree about the purpose for which the property was purchased. Han’s evidence was that she was told by her husband that he had found the property to buy as their matrimonial home. Han said she had inspected the property with her husband, and they agreed to buy it.
17 The evidence of Orhan, Fai and Shum was to the effect that it had been decided initially the property would be purchased and developed by them as an investment by way of a joint venture, together with a further person, Yuchuan Zhu, known as “Max”. The case pleaded was that Orhan and Max would have a third share each and the remaining third share was split between Fai and Shum.
18 Approximately one month after settlement, Orhan nominated Han as the purchaser of the property. By this stage, Max had withdrawn from the proposed joint venture. The case pleaded is that the joint venture continued on with Orhan having a half share and the remaining half share split between Fai and Shum. Han attended with Orhan at the offices of MJ Conveyancing, where they signed a nomination form dated 27 May 2014. Han said that Shum had asked her to go to MJ Conveyancing to sign the form. The evidence of Orhan, Shum and Fai was that they had agreed to Han being nominated as purchaser because neither of them were in a position to obtain finance. Shum had a poor credit rating and therefore, was unlikely to be able to obtain a loan. Fai already had borrowings over other properties and Orhan did not wish to borrow funds. Shum asked Han to go on title and said she agreed to do so, providing she would be paid the sum of $10,000 for taking on the responsibility of the loan. Han denies this conversation took place. She did agree to go on title, however, because she understood the property was being purchased as their matrimonial home.
19 Han applied for a loan from the National Australia Bank (“NAB”). Shum asked Angela Wu, a mortgage broker, to help assist with the finance. He kept track of the progress of the loan application. Shum said he was not involved in filling in the application but accepted he organised it. The NAB agreed to advance the sum of $774,000 to Han.
20 The NAB loan funds were used to settle the purchase of the property, together with $146,000, being the proceeds received from the sale of the Mitcham property. This sum had been transferred from Shum’s account into an account in Fai’s name. Those funds together with an extra sum of $4,000 to bring it up to $150,000 were withdrawn from Fai’s account and applied towards the settlement of the purchase of the property. Fai’s evidence was that she transferred the funds to Han because Han required the money for “mortgage purpose”. Settlement of the property occurred on 12 January 2015 and Han was registered as proprietor. The various loan expenses such as stamp duty and other fees were paid from the funds advanced by the NAB.
21 After settlement, Han received $41,942 from her father in China which she deposited into a bank account in Fai’s name. She had sought to borrow funds from her father to complete the settlement, but the moneys were received afterwards. The defence filed on behalf of Han pleaded that this sum was transferred to Fai as part of the repayment of the deposit made by Orhan. Orhan denied he ever been repaid the deposit or part of it.
22 The interest repayments under the NAB loan were met with the rent received from the tenants occupying the property under a lease with Han as lessor.
23 In September 2015, the property was subdivided with a view to building two townhouses on the property. It was agreed by the plaintiffs that this would occur as part of the development of the property. Han was made aware of the subdivision by Shum. Han’s evidence was that she understood she and her family would live in one unit and the other would be sold off.
24 In October 2015, an application was made in Han’s name for a construction loan with Westpac in the sum of $1,424,000 (“the Westpac facility”). The purpose of the loan was to discharge the NAB facility and to fund the proposed building works.
25 The loan application form discloses, amongst other things, that Han was paid a salary of $303,270, per annum before tax. Her employer is listed as Sichuan Book of Rites Trading Company in China. Han’s position is listed as Overseas Sales Manager and employed in that capacity from 1 April 2015. The contact given for her employer is Max, being the former joint venture party who had dropped out before settlement of the property. Han agreed in her evidence in chief that the information about her employment in the loan application form was incorrect. As at October 2015, Han was caring for her infant daughter and was not working.
26 The loan application form also disclosed that Han held significant assets including $700,000 in a bank account with the Bank of China. Han gave evidence that she did not have a bank account with this bank, nor did she have shares in the sum of $300,000, being another asset listed in the form.
27 Han acknowledged she had signed the loan application but said she did not read the document before signing it. The information concerning the level of Han’s income contained in the application form was completely untrue. So much was admitted by the first defendant’s counsel in his written submissions where he referred to the figures listed as being misleading on their face. The issue then is how did this come about? Shum said he referred the loan application to a broker, Angela Wu and sought to distance himself from having any involvement. Han said that she was told to sign the form by Shum and did not read the document. Han gave evidence that she can read English. She obtained a Bachelor of Accounting from Holmes College in 2009. She worked as a finance clerk at Best Corporation between 2010 and 2015, earning $40,000 per annum plus superannuation. Since December 2015, she has been employed as a conveyancing clerk at MJ Conveyancing. All this serves to show that Han is educated and has some knowledge and experience of commercial transactions.
28 For reasons that follow later, I did have concerns about Han’s credibility as a witness and therefore do not readily accept her answer that she did not read the form before signing it. But even if Han’s evidence is accepted that she did not read the application form, by signing the form she was complicit in putting forward information to Westpac which was patently false.
29 There is no evidence about the knowledge of the broker. Ms Wu may well have been relying upon the information given to her by Shum and/or Han in completing the loan application form. I regard Shum’s attempt to disassociate himself from the preparation of the loan application to be disingenuous. I find, as a matter of inference, that he did play a significant role in the preparation of the loan application given he was the person who was driving the investment and knew full well that he would have trouble getting credit elsewhere unless his wife was the named borrower. Further, he had organised Ms Wu to act as broker when the first loan was obtained from the NAB. Shum clearly would have been well aware of Han’s limited financial ability to service any loan. Such conduct, namely, the willingness to be a party in providing false information to Westpac also reflects very badly upon his credit as a witness.
30 In order to satisfy Westpac’s equity requirements for the refinance, the sum of $202,000 was transferred to Westpac from an account held in Fai’s name. Fai had previously drawn down a loan of $464,000 and the sum of $202,000 was applied from these borrowings. Fai said she transferred the funds to enable the refinance to occur.
31 A sum of $41,770.57 was remitted back to Fai’s account shortly after the Westpac facility was opened. The reason for this was the equity required by Westpac ended up being less than the sum of $202,000 which Fai had contributed. Han admitted receiving the sum of $202,000 from Fai but claimed these funds originated from moneys belonging to her and Shum. Other than her oral evidence, Han provided no documentary evidence to support this assertion.
32 The interest repayments under the Westpac facility were made by Fai with occasional top ups by Shum. Han did not make any interest repayments up until this dispute arose.
33 On 18 October 2015, Han and Pacific entered into a written standard form building contract for $880,000 (“the Pacific building contract”) to build two townhouses on the property. Before and after the execution of the Pacific building contract, a number of building related expenses were paid from funds held in either Pacific or Orhan’s accounts.
34 On 31 December 2015, $588,000 was drawn down upon the Westpac facility. Pacific commenced building in late 2016.
35 On 8 February 2016, Han sent a text message to Orhan providing him with her account details for the Westpac facility. Orhan paid the sum of $5,000 into Han’s home loan account on the following day. On 9 May 2016, she forwarded a text to Orhan and Shum containing a reminder sent to her by Westpac saying that $2,137.19 was due on her home loan account. Orhan replied, “OK, we’ll fix soon thanks”. A further reminder was sent by Han to Shum and Orhan on 6 September 2016 which noted that $2,051.77 was due on Han’s home loan. On this occasion, Shum replied, “OK, I’ll go and fix it”.[4]
[4]Exhibit “P-6”.
36 The following amounts were paid to Pacific from drawdowns on the Westpac facility:
(a)$88,000 on 23 August 2016;
(b)$132,000 on 22 December 2016; and
(c)$308,000 on 5 May 2017.
37 Although Pacific issued a receipt for a deposit of $44,000, which was submitted to Westpac as part of a loan application for the Westpac facility, Orhan’s evidence was this money was never paid.[5]
[5]T100, 29 November.
38 In September 2016, Han attended at Orhan’s office to sign a contract of sale for Unit 1 off the plan. She executed a contract of sale for Unit 1 for the price of $1,380,000. Han prepared the contract of sale as at this time she was working at MJ Conveyancing. This purchase did not ultimately proceed as the applicable sunset clause came into effect because the construction was not completed within time. Orhan said he had paid the sum of $13,750, being half of the commission to the real estate agent who had been engaged to conduct the sale on Han’s behalf as vendor. The remaining half was paid by Shum, according to the schedule of contributions upon which the plaintiffs relied and provided to the Court on 13 December 2019.
39 Orhan engaged a building surveyor to inspect the building works carried out by Pacific. The surveyor determined that the works were defective and a defective works building direction was issued to Pacific in around late February 2017.[6]
[6]T145-146, CB 457-458.
40 Han and Shum separated in around late February 2017.
41 Shum said he had discussed with Han the possibility of them residing in one of the townhouses for 12 months so as to save on capital gains tax. Han asked Orhan to attend a meeting with her accountant in Doncaster to discuss the issue of capital gains tax and possible GST implications of the development. This meeting took place on 24 March 2017.
42 Han claimed she learned for the first time of the existence of an alleged joint venture agreement and the interest in the property claimed by Orhan sometime after the marital relationship broke down.[7] It was around this time that Han and Orhan exchanged a number of text messages.[8] The contents of these texts sent in April and May 2017 are revealing as they show an awareness on the part of Han of Orhan’s interest in the property. Orhan was seeking confirmation of his interest from Han and asking her to get her lawyers to prepare a contract which showed his 50 percent share. Han agreed to do so and said she would protect his part. She then asked him to make a payment on the home loan. Significantly, on 10 April 2017, Han sent a text to Orhan as follows;
[7]T284.
[8]CB 92-106.
“Dear Devrim, just to let you know I have find lawyer and she will email to Sam soon. And I also mentioned about your part in Gibson and My lawyer will acknowledge your share in the agreement. Please don’t worry and trust me. I’m appreciate if you can help me until finish this matters. Thanks so much.”
Han again acknowledged Orhan’s interest in the property in a further text sent on 19 May 2017 when she wrote:
“…. And also my lawyer may not listen to me about the percentage of the share you in, the lawyer will do all the search and calculate by himself. Therefore, the best way is Sam give up Gibson and Car and we will be much easier to fix and get you profit…”
43 On 18 October 2017, Han issued a notice to remedy upon Pacific.
44 On 30 October 2017, Orhan, via his solicitors, issued a notice of intention to suspend work on the basis that Han had failed to pay the initial deposit of $44,000 and a variation invoice dated 8 February 2017 for $22,000.
45 On 31 October 2017, Han forwarded an email saying that she rejected Orhan’s notice suspending works. Han served a notice of termination on Pacific on 1 November 2017.
46 Jonathon Wong lodged a caveat over the property on 2 February 2018 claiming an interest under an unregistered mortgage dated 3 July 2017. The terms of this mortgage were not disclosed in evidence.
47 On 21 March 2018, Han entered into a second building contract with WS Energy Pty Ltd to complete the development and paid a deposit of $20,250. However, that contract was later terminated by Han. Han subsequently engaged a further builder and the estimated date for completion of the development given at trial was January 2020.[9] Han deposed in an affidavit sworn by her on 27 June 2018 that she borrowed $120,000 from her father and another person to assist with the completion of the project.
[9]T292.
Plaintiffs’ submissions
48 The plaintiffs acknowledged that each of the parties made contributions to the purchase and development of the property. However, Han’s assertion that she should retain the benefit of her legal title to the property without regard to the contributions by the other parties is unconscionable, and the plaintiffs seek a remedy that recognises at least their contributions.
49 The plaintiffs contend that initially there was an agreement to develop the property between Orhan as to 33 percent, Max as to 33 percent, and Fai and Shum jointly as to 33 percent. The terms of the joint venture were said to be:
(a)The joint venture parties would purchase a property at the auction scheduled for 18 October 2014;
(b)The joint venture parties would contribute their own funds and also borrow from a bank funds for the purchase and development of the property;
(c)The joint venture parties would engage Pacific to build on the property;
(d)The property as developed would be sold;
(e)The joint venture parties would be repaid their respective out-of-pocket contributions to the purchase and development of the property;
(f)The profit would be shared between the joint venture parties in the agreed proportions.
50 It was accepted the deposit of $93,000 for the property was paid by Orhan in the sum of $93,000. Max subsequently withdrew from the joint venture, so it then continued on between Orhan as to 50 percent and Fai and Shum jointly as to 50 percent. The joint venture parties through Shum asked Han to become the registered proprietor of the property and to hold it on behalf of the joint venture parties. It was said that neither of the parties turned their minds as to the legal nature of the registration of Han as registered proprietor of the property. This arrangement was consistent with an earlier arrangement made by the parties concerning the Mitcham property.
51 As at October 2014, being the date of purchase of the property, Han was caring for her five-month-old daughter and was not working. Shum was working for a real estate agency. His gross income in the financial years ending 30 June 2013 was $40,204.26 and $85,868.51 in 2014. Neither Shum nor Han had access to any significant funds or the ability to obtain or make repayments on a loan to buy a property in the sum of $930,000. The evidence of the plaintiffs should be preferred in circumstances where neither Han nor Shum were able to buy the property, given their limited financial resources. Their evidence was confirmed by the independent evidence of Max. Han adduced no independent evidence to support her contention that she was buying the property for her family home.
52 As to the contributions to the purchase price of the property, the plaintiffs contend:
(a)Fai contributed the sum of $150,000 deposited into Han’s bank account on 16 December 2014;
(b)Alternatively, Fai contributed the sum of her contributions to the purchase price of the Mitcham property, being a total of $60,850, and her contribution to the cost of renovation of the Mitcham property of $20,000, which sums were included in the $150,000 deposited into Han’s bank account on 16 December 2014;
(c)The payment by Han to Fai of $41,942 was not a contribution to the purchase of the property as such, because it was made two days after settlement, namely 18 December 2014, but it is a relevant contribution to the joint venture;
(d)The balance of the purchase price was applied from the funds advanced by the NAB loan.
53 The plaintiffs noted the repayments on the NAB loan were made from rent paid by a tenant of the property who had been organised by Shum, and occasional top-up payments were made by Fai.
54 In support of the remedy sought of a constructive trust, the plaintiffs rely upon the principle described by Deane J in Muschinski v Dodds (1985) 160 CLR 583 at 620.
55 In this case, the plaintiffs contend the court should impose a constructive trust by restoring contributions made in relation to the property when it was not intended that the other party should enjoy them: Sobey v Sobey [2014] VSC 373. The fact that the parties did not have an intention, either actual or presumed, to create a trust, does not prevent the court imposing a constructive trust: Clementi v Rossi [2019] VSC 725 at [277]. The plaintiffs rely upon this case for the proposition that even if the court were to accept Han’s evidence that she did not intend to hold the land on trust for the plaintiffs, the court can still nevertheless impose a constructive trust to do justice between the parties.
56 The plaintiffs submit that the court should make findings as to the parties’ respective contributions in accordance with a schedule of contributions provided and make orders that will have the effect of restoring the contributions made by the plaintiffs. Relevant contributions include contributions to the purchase, maintenance and improvement of the property. However, it is said that the calculation of Han’s contribution should not include funds borrowed from a bank, or, if it did, then the whole loan and all interest payments need to be set off against her contribution. In terms of the relief sought, the plaintiffs’ positions would be protected by declarations and orders to the effect that:
(a)Han holds her legal title to the property on constructive trust for the plaintiffs, or alternatively for the plaintiffs and Han;
(b)The land be sold;
(c)The parties’ contributions be repaid;
(d)Any profit be shared in the proportions found by the court to have been agreed between the joint venture parties;
(e)Alternatively, if the court finds there was no joint venture agreement, then any profits shared in the proportions of the parties’ contributions to the purchase and development of the land.
57 Alternatively, if the court did not make a declaration as to a constructive trust, then the court should find that the payments made were made pursuant to a resulting trust. That would include the payment of the deposit by Orhan of $93,000, the payment of $150,000 by Fai to complete the purchase, and that Han is indebted to Fai in the sum of $202,000 paid by Fai to Han’s account on 9 December 2015, being the funds which were applied to satisfy the equity requirements pursuant to the Westpac facility.
Defendants’ submissions
58 The main defence argued by Han is that the property was purchased as a matrimonial home for herself and Shum. She denies that there were any conversations in respect of which it was agreed that she would take legal title to the property as trustee only. Her case is that she only became aware of the involvement of Orhan and his claim to an interest in the property after she and her husband separated in late February 2017.
59 In respect of a common intention that might give rise to a joint endeavour, the defendant noted that Han was never a party to the joint venture agreement. It was clear on the evidence that she did not participate in discussions between the joint venturers. Further, it was said that none of the plaintiffs have contributed anything close to 50 percent of the cost and expenses of their alleged joint venture. It was said that the plaintiffs had never put their case on the basis that Orhan, Shum, Fai and Han were all participants in a joint relationship in which expenditure was shared for a common benefit, but which failed without attributable blame. Consequently, on that basis the first defendant contends that there could be no basis to impose a constructive trust pursuant to notions of a failed joint endeavour.
60 In respect of a common intention, the defendant submitted that it was clear on the evidence that Orhan and Fai agreed that they had never discussed their alleged interest in the property or in a joint venture agreement generally with Han. Shum’s evidence was that he had spoken to Han about it, whereby she had agreed to go on title to the property as trustee in exchange for her request to be paid $10,000 after the property was developed and sold. By contrast, Han denied that she ever had a conversation of this sort with her former husband about taking title to the property as trustee only. On the topic of this important discussion regarding the agreement to act as trustee, the defendant submitted that Han’s evidence should be preferred to that of Shum.
61 In support of the submission that Han’s case should be accepted that the property was to be acquired as a home for herself, her husband and their young daughter, Han relies upon the following matters:
(a)Han’s evidence that the property was to be acquired as a home in circumstances where she and Shum had a young daughter and Han was paying in part the expenses associated with supporting her family;
(b)Han’s evidence of extensive conversations with Shum and their calculations as to their borrowing ability;
(c)Han’s evidence of her conversations with Shum where he explained to her why Orhan bid at auction and was the original purchaser;
(d)The fact that the Pacific building contract was a for-profit contract;
(e)The fact that the WeChat messages were sent in February 2016, whereas the property was acquired in December 2014;
(f)Han’s evidence that at all times she held a legitimate belief that Shum was paying the interest due on the NAB loan and subsequently the Westpac facility; and
(g)The fact that the later text messages were sent between April and June 2016, whereas the property was acquired in December 2014.
62 It was submitted that the evidence relied upon by the plaintiffs fell well short of establishing by inference a common intention in the terms as pleaded.
63 If the Court were to find for the plaintiffs, the first defendant referred to the remedial principle of the minimum relief in equity to do justice and submitted an equitable charge could be imposed instead of a constructive trust.
64 The first defendant also made submissions regarding the alternative relief sought of a resulting trust. It was said that the plaintiffs were not entitled to pursue this claim as they had disavowed it at trial and no material facts in support were pleaded. But if the Court were minded granting relief, then the only sums referrable were the contributions made by Fai and the payment of the deposit by Orhan.
Applicable principles
Constructive trusts
65 In Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413, McMillian J helpfully described the remedy of constructive trusts as follows:
“The term constructive trust is used in various manners to identify a remedy provided by a court of equity. Some variations of constructive trusts create proprietary interests while some merely impose a personal liability. The chief motivation of the courts of equity in imposing a constructive trust over property is to ensure that, ‘when property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee’.
The imposition of a constructive trust over property is a serious measure. A court will consider whether there is an appropriate equitable remedy that falls short of the imposition of a constructive trust. Although the catalyst for the imposition of a constructive trust may be unconscionability by a party in the assertion of a legal interest free of equitable encumbrance, the construction of such a remedy must be determined by reference to established equitable principles and not a vague notions of fairness or justice. In particular, mere unjust enrichment is not a sufficient basis for the award of a constructive trust.
There are a variety of recognised categories of constructive trusts. These categories are not closed.”[10]
[citations omitted]
[10][2018] VSC 413 at [396]-[398].
66 The categories of constructive trusts relied upon in this case are joint endeavour constructive trusts and common intention constructive trusts. The applicable principles for these categories are set out below. There is a doctrinal debate about whether the doctrine of joint endeavour constructive trusts should assimilate the role of common intention constructive trusts.[11]
Joint endeavour constructive trusts (also referred to as an unconscionability constructive trust[12])
[11]Per McMillan J in Zekry v Zekry [2020] VSC 22 at [84].
[12]Ibid at [80].
67 The plaintiffs rely upon Deane J’s articulation of what is considered a joint endeavour constructive trust in Muschinski v Dodds.[13] His Honour stated:
“…the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis of and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him to do so…”[14]
[13](1985) 160 CLR 583.
[14]Ibid at 620. Adopted by Mason CJ, Wilson and Deane JJ in Baumgartner v Baumgartner (1987) 164 CLR 137 at 148. [See plaintiffs’ submissions page 11, para 27].
68 Deane J went on to caution that a constructive trust would not be imposed merely on the grounds of idiosyncratic notions of fairness and justice but only on the proper application and enforcement of the principles of the law of equity.[15]
[15]Muschinski v Dodds (1985) 160 CLR 583 at [615].
69 Counsel for the plaintiffs submitted the court has jurisdiction in these circumstances to ‘impose a constructive trust by restoring the contributions made in relation to the property where it was not intended that the other party enjoy them.’[16] When determining how these contributions should be restored, Mason CJ, Wilson and Deane JJ in Baumgartner v Baumgartner stated:
“The court should, where possible, strive to give effect to the notion of practical equality, rather than pursue complicated factual enquiries which will result in relatively insignificant differences in contributions and consequential beneficial interest.”[17]
[16]Per Almond J in Sobey v Sobey [2014] VSC 373 at [47].
[17](1987) 164 CLR 137 at 150.
70 In his submissions, counsel for the plaintiffs noted that the court may impose a constructive trust on the parties ‘regardless of the actual or presumed intention to create a trust.’[18]
[18]Per McMillan J in Clementi v Rossi [2019] VSC 725 at [277].
71 The approach for construing a joint venture constructive trust was set out by Ward J in Australian Building & Technical Solutions Pty Ltd v Boumelhem:
“First, it is necessary that there both be a joint relationship or endeavour, in which expenditure is shared for the common benefit in the course of and for the purposes of which an asset is acquired…
Secondly, the substratum of that joint relationship or endeavour, must have been removed or the joint endeavour prematurely terminated ‘without attributable blame’.
Thirdly, there must be the requisite element of unconscionability – it would be unconscionable for the benefit of those monetary and non-monetary contributions to be retained by the other party to the joint venture.”[19]
[19][2009] NSWSC 460 at [51]-[53] (Ward J).
72 The Court will take into account the contributions made by the parties to the purchase, maintenance and improvement of the property as well contributions beyond financial contributions.[20]
[20]Clementi v Rossi [2019] VSC 725 at [278].
73 In Sivritas v Sivritas Kyrou J identified the various contributions a court can take into account, namely:
“a court can take into account direct financial contributions to the purchase price of the property and incidental costs such as stamp duty, registration fees, solicitors’ fees and bank fees… the pooling of financial resources, other financial contributions even in the absence of pooling, contributions of labour, and non-financial contributions or contributions in kind, such as homemaking and parenting contributions. Further, the inquiry into whether the assertion by a party of his or her legal rights would be unconscionable can encompass events that occurred after the property was initially acquired.”[21]
[21][2008] VSC 374 at [132].
Common intention constructive trusts
74 There are three elements that the plaintiffs must satisfy in order for the court to impose a common intention constructive trust, namely:
(i)there is a common intention between the parties as to the plaintiffs’ beneficial interest in the property;
(ii)the plaintiffs acted in reliance of this common intention to their detriment; and
(iii)it would be an equitable fraud on the plaintiffs for the first defendant to assert the plaintiffs hold no beneficial interest in the Gibson Street property.[22]
[22]Per O’Bryan J in Hohol v Hohol (1981) VR 221 at 225. See also Sobey v Sobey [2014] VSC 373 at [44] (Almond J); Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413 at 402 (McMillan J); Zekry v Zekry [2020] VSC 221 (McMillan J).
75 In determining the existence of a common intention, McMillan J set out in McDonald v Dunscombe:
“Whether there is a common intention that a party was to have a beneficial interest in a property is usually formed at the time of the transaction and may be derived from express agreement between the parties or from conduct of the parties that supports an inference of such a common intention. Evidence of any express statements or admissions creating that intention assists in establishing whether there was a joint relationship or endeavour, such that a beneficial interest… was created...”[23]
[23]Per McMillian J in McDonald v Dunscombe [2018] VSC 283 at [183].
76 The plaintiffs bear the onus of proof in asserting they hold a beneficial interest in the property. The Court must be satisfied on the balance of probabilities that they have made out their case on the evidence before making an order in their favour.[24]
[24]Nagi v Hussein [2020] VSC 401 at [44].
77 As stated by McMillan J in Nagi v Hussein,[25] the Court can have regard to various matters when determining whether there was the requisite common intention, namely:
“The common intention between the parties requires that the claimant should have been intended to have some form of beneficial interest in the property. Intention can be established through the parties’ express statement and conduct, such as financial contributions to acquiring property, payment of mortgages and comments regarding ownership of property. The intention will usually form at the commencement of the purchase of the property or transfer of it but can also arise after the acquisition of the property. The inquiry is one of fact; the Court is concerned with determining the actual intentions of the parties rather than imposing what might be considered fair.”
[citations omitted]
[25]Ibid at [45].
78 In order to establish a common intention between the parties, the plaintiffs have to prove the spoken words with a sufficient degree of precision to enable a court to be satisfied the allegation is made out.[26]
[26]Zekry v Zekry [2020] VSC 221 at [90].
79 When considering the award of a remedial constructive trust, the Court has to ensure that third parties with an interest in the property in dispute are not adversely affected by the award of a proprietary remedy.[27] In John Alexander’s Clubs Pty Ltd v White City Tennis Club Pty Ltd,[28] the High Court found that a finance company which held an unregistered mortgage over land should have been joined as a party to the proceedings since its interest in the property would be directly affected by the constructive trust claim. The High Court stated at 133:
“The relief claimed and granted — a constructive trust and a transfer of the land subject to the trust to the Club so as to make the interest transferred indefeasible on registration — directly affects the interests of any other person, like Walker Corporation, claiming an interest in the land, because orders in the Club’s favour would, to a corresponding extent, be detrimental to those other persons.”
[27]Ford and Lee, The Law of Trusts (Westlaw) at para [22080].
[28](2010) 241 CLR 1.
80 The High Court held it was incorrect of the Court of Appeal to have found that the rights of the unregistered mortgagee could have been dealt with in a separate proceeding involving consideration of the priorities of the different interests concerned. The High Court found that Walker was entitled as a right to have the declaration of constructive trust set aside.
81 Similar considerations were dealt with by Sifris J (as he then was) in Chickabo Pty Ltd v Zphere Pty Ltd (No 2).[29] After referring to the John Alexander case, his Honour noted at paragraph 47, that a non-party has no duty to seek to be joined and need not explain why it has not sought to do so. The non-parties knowledge or notice of the proceedings is totally irrelevant. His Honour stated the plaintiffs must properly constitute their suit and it is at their peril not to do so. His Honour noted this was the case in the John Alexander case, where the affected non-party knew about the proceeding, but simply thought it would fail. At paragraph 48, his Honour said as follows:
“A person who is directly affected by such orders in a proceeding, to which that person was not a party is entitled to have it set aside and to a new trial. While the order is not a nullity, that person is entitled to have the order set aside, as of right, rather than needing to seek the favourable exercise of a discretion from the court. This position does not depend either on the person being a party or on the rules of court, ‘it depends on matters of right affecting non-parties which rest on general law principles of natural justice.’”
[citations omitted]
[29][2019] VSC 580.
82 The position is comparable here. Mr Wong claims in his caveat an interest as an unregistered mortgagee. Given the plaintiff had earlier sought declarations against him in a previous statement of claim, self-evidently they were on notice of his claimed interest. As was the case in the John Alexander case, if the plaintiffs wished to persist with the remedy of a proprietary constructive trust, then they should have joined Wong as a party because such an order could have affected Wong’s interest as an equitable mortgagee. In those circumstances, he has a right to be heard. Consequently, the court is unable to grant relief which provides a proprietary remedy, such as a constructive trust or indeed an equitable charge, being the alternative relief suggested by the first defendant if the plaintiffs were to succeed.
83 It is accepted that some constructive trusts create or recognise no proprietary interest but instead a personal liability to account in the same manner as an express trust.[30] A constructive trust should not be imposed where there are other orders capable of doing full justice.[31]
[30]Boyd v Thorn [2017] NSWCA 210 at [92] per Leeming JA citing Giumelli v Giumelli (1999) 196 CLR 101.
[31]John Alexander’s Clubs v White City Tennis Club (2010) 241 CLR 1.
Resulting trusts
84 Where a person purchases property and places the property in the name of someone else, the law presumes that the person holds the property under a resulting trust for the purchaser who paid the acquisition costs of it.[32]
[32]Per Kaye J in Wilkins v Wilkins [2007] VSC 100 at [8].
85 Similarly, in Buffrey v Buffrey,[33] Palmer J said the following:
“(1) one begins with the presumption that the equitable title to the property is at home with the legal title but that presumption, like all evidentiary presumptions, gives way to facts showing the contrary;
(2) where property is held in joint names but the joint tenants have not contributed equally to the cost of acquisition, it is a presumption of equity, not lightly displaced, that the beneficial interests in the property are to be held between the parties upon a resulting trust in proportion to their respective contributions to the acquisition cost.”
[33][2006] NSWSC 1349 at [14].
86 In Vlahos Pty Ltd v Vlahos[34], the Court of Appeal noted that where two or more parties make unequal contributions to the purchase price but the property is held in the name of only one of them, or in all their names, there is a presumption that the parties take a beneficial interest in the property as tenants in common in shares that are proportionate to their respective financial contributions to the purchase price.
[34][2017] VSCA 166 at [53]-[55].
The remedial principle of minimum equity
87 In the context of the need to do minimum equity, Halsbury’s Law of Australia [430-650] refers to the following alternatives to constructive trusteeship:
“Constructive trusteeship is not the only means courts have adopted to recognise beneficial interests in property arising from contributions to such property or the relationship within which the property is purchased or constructed. Informed by the basic equitable remedial principle of the minimum equity to do justice, other approaches include:
(1) the imposition of an equitable charge or lien representing the quantum of the relevant contribution (for example, where a person has expended money on property in the belief that they would be able to live on the property); or
(2) allowing a person to retain his or her interest in property on the condition that he or she pays specified compensation to the other party who made contributions in respect of the property.
It is open to the court to make a finding of equitable estoppel where a party has made a representation to another party that the latter either has (or will have) an interest in property, upon which the representee relies on his or her detriment in circumstances in which resiling from the representation is unconscionable, and either enforce the representation (which can be done via a constructive trust) or award compensation in lieu.”
[citations omitted]
88 The following extract from Burchett AJ in Sirtes v Pryer [2005] NSWSC 1082 is a helpful discussion of the principles surrounding minimum equity:
“[12] Before turning to the valuation evidence, it is convenient to dispose of the question whether the measure of the equitable charge or lien, the imposition of which is conceded, is the expenditure on the building works or the increase in the value of the property. Although the authorities reveal a general principle, what equity requires in a particular situation, or, as it is frequently put, what will, in the view of equity, assuage the conscience of the party subjected to an equitable charge or lien, may depend upon the basis on which that charge or lien is imposed. It seems to me the basis here is not estoppel, such as was found by Deane and Dawson JJ in The Commonwealth v Verwayen (1990) 170 CLR 394 which is analysed in Giumelli v Giumelli (1999) 196 CLR 101 at 122–125, a case that turned, in the view of all the judges of the High Court, upon estoppel. What is important for present purposes is the statement of Gleeson CJ, McHugh, Gummow and Callinan JJ in the latter case (at 125), that it was “necessary … to avoid relief which went beyond what was required for conscientious conduct by [the parties upon whose property a charge was imposed by the Court]”. This may be compared with the expression chosen by Brennan J in Verwayen (at 429) ”the minimum equity needed to avoid the relevant detriment” which had earlier been adopted by Scarman LJ in Crabb v Arun District Council {1976} Ch 179 at 198; by Cumming-Bruce LJ delivering the judgment of the Court of Appeal (Orr, Lawton and Cumming-Bruce L. JJ) in Pascoe v Turner [1979] 1 WLR 431 at 438; and by Mason CJ and Wilson J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 404. All these were cases of proprietary estoppel where, if a charge were to be imposed on the relevant property in consequence of expenditure or work done, the minimum equity would require it to be measured, as the majority held in Giumelli v Giumelli (at 126), by “the improvement to the value of the land … brought about” by the expenditure or work.
[13] But, as I have said, this is not a case of estoppel. Paula Sirtes did not encourage the expenditure in question by representations, whether express or implied, from which she later withdrew. On the contrary, the expenditure was incurred, and permitted by Paula Sirtes, on the basis that the substratum of the whole arrangement, the marriage of Kim Pryer and Gregory Sirtes, would continue. It is because both the transfer, in respect of which it is now conceded Paula Sirtes is entitled to relief in equity, and the expenditure had this substratum that equity requires the return of the 25% interest transferred to be subject to the imposition of the charge. The question then is whether the measure of the charge should be any different when it is traceable to the principle for which Muschinski v Dodds and Baumgartner v Baumgartner are cited than it would be if founded upon an estoppel. The authorities treat the general rule as being the same. Knox v Knox (Young J, unreported, 16 December 1994) was a case which was not resolved on the basis of proprietary estoppel but on the principle of the two High Court cases I have mentioned. Young J said:
Equity in the current situation, where it finds that it would be unconscionable for a person to take the whole beneficial ownership without recognising a contribution of some other party, only makes the minimal order that is necessary to relieve the conscience of the legal owner …
Ordinarily when there is an incontrovertible benefit provided by the person who seeks restitution against the owner of the property, the benefit is the lesser of the increase in value or the cost of providing the benefit.
His Honour’s approach was adopted by Beazley JA (with whom Mason P and Stein JA agreed) in Hogan v Baseden (1997) 8 BPR 15,723 at 15,726 when she described the former of the two passages I have quoted from the judgment of Young J as stating “a well established principle” and, after citing Muschinski v Dodds, Baumgartner v Baumgartner and other authorities, continued:
The principle which emerges from these cases is that the court’s approach to relief is flexible, concordantly with the principle that the court will give the minimum equity necessary to relieve the conscience of the legal owner.
Consideration
89 The arrangements between the parties were never reduced to writing and the findings depend on the oral evidence given. The evidence given by the plaintiffs about the parties to the joint venture was somewhat contradictory. Fai gave evidence that she considered the arrangement was that the property was to be purchased and developed by herself and Orhan in equal shares. Fai did not discuss the development with Han directly. Orhan did not speak to Han before the purchase and he dealt with Shum at all times. Orhan’s evidence was that he thought the owners would be Shum or his family, himself and Max. After Max left, he thought the deal was between himself and Shum and said, “maybe the Mum is a third one – I was not sure but my deal with Sam all the time.” He said right from the start that Han was aware that it was both himself and Shum for the property and said she overheard their conversations to that effect. Shum’s evidence was that it was a joint venture between himself and Orhan once Max left and that he had told Han of this arrangement. Max did not discuss the matter with Han. His evidence was that he was of the belief he was entering into a three-way arrangement with Orhan, Shum and himself to buy and develop the property.
90 The case pleaded was that it was a joint venture between Orhan as to 50 percent and the remaining half between Fai and Shum. Han’s evidence, referred to earlier, was that the purchase and development of the property was to be viewed as a matrimonial asset and she was unaware of the interest claimed by Orhan and Fai.
91 It is clear the parties intended to pool their resources with a view to buying and developing the property. Orhan was to take a half share and contributed the deposit. The other share was to be held by the Shum family interests. The evidence of Fai and Shum contradict each other as each claim they held the other half share with Orhan. Fai contributed financially towards the purchase and refinance. Whilst the better view is that the development was for an investment, it was not unreasonable for Han to assume that any interest that Shum held in the project was for their combined benefit as a married couple. The present difficulty arises in part because the parties never documented their arrangements or sought independent advice.
92 I am of the view the arrangements struck here gives rise to a joint endeavour constructive trust, also referred to as an unconscionability constructive trust. The joint endeavour came to an end without any attributable blame following the breakup of Shum and Han’s marriage. I accept Orhan’s evidence that he was to take a half share in respect of the development of the property. It was for that reason that he paid the deposit of $93,000. I reject Han’s evidence that this was in effect a loan which was to be repaid or, indeed, that any part of it has been repaid. I also accept Orhan’s evidence that he has not been repaid the sum of $93,000.
93 As part of the loose arrangement, because of the difficulties in obtaining finance or, in the case of Orhan not wishing to borrow funds, Han was asked to go on title because the others were not in a position to do so or were unwilling. I find that Han was well aware of this and that was why she agreed to be registered as proprietor. She had done this before in respect of the Mitcham property.
94 The fact that Han was on notice of Orhan’s interest is demonstrated by the earlier text messages sent in 2016 asking him to make interest repayments and the texts exchanged in 2017 in which she expressly acknowledged Orhan’s share in the property.
95 I find that the initial contribution of $150,000 towards the purchase price came from moneys which rightfully belonged to Fai. The source of these funds as to $146,000 was the proceeds of sale of the Mitcham property which Fai had purchased and renovated. I was not persuaded by Han’s oral evidence that those moneys belonged to her and Shum. That being so, then it was a direct contribution made by Fai towards the purchase of the property. Further, if these moneys were not Fai’s, then the payment by Han of the money lent to her by her father into Fai’s bank account after settlement makes no sense. This repayment was consistent with Han knowing that Fai had advanced the sum of $150,000 to help with the purchase.
96 As for the second payment made by Fai of $202,000, being the contribution to equity needed upon the refinance with Westpac, the evidence shows that these funds were transferred from an account in Fai’s name. She had obtained these funds by way of borrowings in her name. It is clear the funds came from Fai’s account and were applied towards the refinance with Westpac. This is not, in fact, disputed by Han, although she claimed again that these funds represented moneys belonging to her and Shum. Han was unable to provide any documentary proof of this claim and her oral evidence on this point was unconvincing.
97 As I mentioned previously, I did have concerns regarding Han’s credibility. An example of this was her vehement denial in the witness box that she had authorised the lockdown payment to Orhan of $308,000 and denied that a form authorising this payment bore her signature. As was pointed out to her in cross-examination, in an earlier affidavit filed in the proceeding, she had stated quite clearly that she had authorised this payment. Her demeanour in the witness was at times argumentative and evasive. Overall, I did not find her to be a particularly reliable witness and in the absence of corroborating documentary evidence, placed little weight on her oral testimony.
98 Having regard to the principle in Muschinski v Dodds, equity should not permit Han to retain the benefit of the property to the extent it would be unconscionable for her to do so. The evidence reveals that it was never specifically intended or provided that Han should enjoy the benefit of the moneys advanced by Orhan and Fai. In the circumstances of this case, I find it would be unconscionable for Han to retain the benefit of the property without regard to the contributions made by Orhan and Fai.
99 As to the alternative form of common intention constructive trust, there was a paucity of evidence about there being a common intention between the parties given the discrepancy in the evidence which I have outlined. In those circumstances, the first element is not satisfied and therefore unnecessary to refer to the remaining two elements as identified in paragraph 74 above.
100 For the reasons already outlined, the remedies of a constructive trust or indeed an equitable charge are unavailable in circumstances where Mr Wong, the unregistered mortgagee, was not joined by the plaintiffs. But the intervention of equity is warranted so as to assuage Han’s conscience to the extent that is necessary by way of a personal remedy. Therefore, I will order that Han pay Orhan and Fai equitable compensation representing the contributions which they have made. In the case of Fai, this constitutes the sum of $150,000, less $41,492 to arrive at a net figure of $108,508. In addition, there is the payment of $202,000, from which $41,770 was repaid, to arrive at a net figure of $160,230. Taking those figures together, then the amount payable to Fai is $268,738.
101 Various sums were claimed on behalf of Orhan and were set out in the schedule of contributions, as provided by counsel for the plaintiff. I find that Orhan is entitled to be repaid:
(i) the deposit of $93,000;
(ii) the commission on the sale of unit 1 totalling $13,750;
(iii) interest repayments to Westpac of $5000 and $2,500; and
(iv) the holding costs listed in the schedule of contributions.
In addition, Orhan will be entitled to be repaid the contributions he has made towards the holding costs since the trial.
102 I was not satisfied that the remaining items claimed being costs of the project such as plans and permit costs should be allowed. This was because the evidence regarding who made these amounts was unclear as to whether the sums were paid by Orhan or by his company, Pacific. Further, there was a clause in Pacific’s building contract with Han that permit costs would be paid by the builder. Orhan admitted this but said in his evidence it had been agreed this would not apply. I was ultimately not persuaded on the evidence that these costs were properly recoverable by Orhan and therefore disallow them. Excluding these items, I have assessed the amount of equitable compensation payable to Orhan in the sum of $152,280. Before final orders are made, the further holding costs paid by Orhan since trial to date will need to be calculated.
103 The plaintiffs’ counsel described their claim as being a fair and square constructive trust case. Having succeeded on their primary cause of action, it is unnecessary to make any findings on the plaintiffs’ alternative claim of resulting trust.
Conclusions
104 Having regard to the foregoing, I am satisfied Han’s conscience in equity is affected such that Fai and Orhan are entitled to equitable relief in an appropriate form sufficient to assuage Han’s conscience. Given the need to do minimum equity and the fact there is an unregistered mortgagee who was not joined, and whose interests could be adversely affected if a proprietary remedy where ordered, I will order Han pay equitable compensation to Orhan and Fai. The compensation payable represents their contributions to the purchase and maintenance of the property, in accordance with the schedule of contributions relied upon by the plainitffs at trial. I assess the amount payable to Orhan at $152,280 together with the additional holding costs paid by him since the hearing which are to be calculated. I assess the amount payable to Fai at $268,738.
105 The parties are directed to confer and submit minutes of orders to give effect to these reasons. The requirement that Orhan should contribute to half the holding costs of the Westpac facility will cease upon final orders being made. The undertakings given under previous orders will need to be discharged and the injunctions in place dissolved.
106 As the plaintiffs have been successful, costs should follow the event. Subject to hearing from the parties, I propose ordering the first defendant pay the plaintiffs’ costs of the proceeding, including any reserved costs, to be taxed on the standard basis in default of agreement.
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