Parkview Qld Pty Ltd v Commonwealth Bank of Australia

Parkview Qld Pty Ltd (Parkview) appealed a decision concerning retention moneys held under a building and construction contract. The dispute arose between Parkview, the principal under the contract, and the Commonwealth Bank of Australia (the Bank), which had provided finance to the builder, Condev Pty Ltd (Condev). Parkview alleged that the Bank was liable for the misappropriation of retention moneys that were contractually required to be held on trust for Parkview. The appeal was heard by Meagher, Ward, and Leeming JJA of the Court of Appeal of New South Wales.

The central legal issues before the Court of Appeal were whether the Bank could be considered a constructive trustee of the retention moneys, or a trustee de son tort, in circumstances where Condev had failed to separately retain those moneys as required by the building contract. Parkview contended that the failure to set aside the retention moneys did not extinguish the equitable obligations or the trust assets, and that the Bank, as a financier, had become subject to these obligations.

The Court of Appeal reasoned that for a constructive trust to arise, there must be identifiable trust property. In this case, the retention moneys were not separately retained by Condev, meaning there were no specific funds that could be identified as trust property in the hands of Condev, let alone the Bank. The Court affirmed that the equitable maxim "equity regards as done that which ought be done" does not operate to create trust property where none exists. Without identifiable trust property, the Bank could not be held liable as a constructive trustee or a trustee de son tort.

The appeal was dismissed with costs.