3 Apples Childcare Centre Pty Ltd v MMC Pacific International Pty Ltd [2023] VSC 21

3 Apples Childcare Centre Pty Ltd v MMC Pacific International Pty Ltd [2023] VSC 21 | Case summary | Zoe

[266]

228 The rival endeavours prompted an intense factual battle over the respective acts and omissions of Lucy and Peter dating from 1995 onwards in the case of MMC, 2005 onwards in the case of 3 Apples and 2011 onwards in the case of Lei Ming Investment. The evidence relied upon by both of them in relation to their respective contentions was, by and large, unsatisfactory. It was largely given by the self-interested protagonists Lucy and Peter, without reference to contemporaneous documentation but confidently nonetheless, notwithstanding that it related to discussions and events some 27 years ago in certain cases, and 11 to 17 years ago in others. Moreover, much of the factual disputes were about matters which were far from determinative as to one or the other of the rival endeavours. The points of controversy extended to matters such as how many hours work Lucy did in the Dalian sea port pre-1995 for MM Cables, whether Lucy or Peter came up with the name '3 Apples Childcare', whether Peter first thought of acquiring the Balwyn Road Property for the purpose of a unit development at the site and then came up with the idea of a childcare centre, whether Lucy and her husband first thought of acquiring a motel business before then deciding to work in a childcare business, how much Peter had to do with 3 Apples once the Childcare Centre had been constructed, how many hours Lucy in fact spent at the Childcare Centre, whether Lucy and Peter looked at other childcare centre locations prior to the acquisition of the Station Street Property and whether Lucy accompanied Peter to both the 1995 Balwyn Road Property auction and the 2013 Station Street Property auction. Aside from the fact finding challenge in resolving the disputes in the circumstances, the resolution of the controversies is of marginal probative value one way or the other. Lucy and Peter were brother and sister after all, and clearly had a close relationship at least until the events which prompted this proceeding.

[303]

256 The claim proceeded on the basis that it was sufficient to identify by reference to bank statements payments from a 3 Apples bank account into a Lucy bank account and then into a loan account in Lucy's name (the Balwyn Road Property Loan account) which reduced the secured debt over the Balwyn Road Property, thus enhancing MMC's equity in that property. I do not accept that this is at all sufficient. The remedial trust has application only where the contribution was made by one party to the joint endeavour to or for the benefit of the other party, in circumstances where, on failure of the joint endeavour, it would be unconscionable for the recipient party to retain the benefit. The unconscionability requires more than the mere failure of the joint endeavour; it is the disjunction between the retention of benefit and the circumstances in which the payment is made which is the essence of the unconscionability. If the circumstances in which the payment is made are such that it cannot be doubted that the recipient was intended to retain their benefit, regardless of the failure of the joint endeavour, equity's intervention will not be required. Thus, in the case of a joint endeavour of some kind between A and B, the payment by A of money in the form of rent to B does not result in the imposition of a remedial constructive trust over the property owned by B, because the joint endeavour later fails.[130] The payment was the subject of countervailing consideration and it could not be said that it was not intended that the recipient would not be able to retain such payment. Similarly, in the case of the same joint endeavour, moneys provided by A to B by way of loan and then used by B to acquire property do not give A a proprietary interest in the property or are not otherwise repayable except at law simply because the joint endeavour comes to an end. Nor is it the case that a recipient of moneys could be required to return the moneys (or that an asset acquired with those moneys would be held on a constructive trust for the payer) if the moneys were provided in consideration of services provided by the latter to the former (whether as wages, consultants fees or directors fees).

[337]

290 Notwithstanding Peter's ungenerous dismissal of the nature of the assistance that was provided by Lucy in assisting MM Cables with the clearance of goods through customs and at the Dalian seaport, I am satisfied that Lucy played a lesser, but important, role, at least in relation to the receipt of goods into that port. It is not in issue that Lucy provided some assistance, with the degree of assistance dependent upon what was required and when her work commitments as a doctor at the time allowed. I am also satisfied that in recognition of Lucy's efforts, Peter procured the payment to her of a payment by way of commission in the substantial amount of US$400,000,[150] and that Lucy agreed to lend that money to MMC, with the loan documented in the loan agreement dated 25 June 1995.[151] I reject Peter's evidence given in this proceeding, inconsistent with the thrust of evidence given in the Juliya Proceeding, that there was some element of sham about that arrangement, and that the money he transferred to Lucy was not in fact a 'commission'. Peter described it as such in the Juliya Proceeding and now eschews that description. For what it is worth, this does not mean that I reject Peter's evidence that he did not sign the document dated 28 September 2000.[152] Peter denies that he signed it and the signature has some visible differences to Peter's signature to the loan agreement, which he does admit signing.[153] John witnessed the contested signature and did not give evidence in this proceeding. To the extent it matters, I accept that Peter did not sign the document. Quite why this issue was of such controversy is unclear, because regardless of the description given to the nature of the payment, it is not in dispute that Peter transferred the money to Lucy nor that Lucy transferred it to MMC, with the transfer documented as a loan. It is also obvious that the whole timing of the various transactions was linked to Lucy's desire to emigrate to Australia, and that Peter's commercial success was integral in enabling Lucy to emigrate to Australia.

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