(g) The financial contributions made by the plaintiff and payments made by him or by Constructions Metropolis and Jerico to sub-contractors does not, in itself, suggest that the plaintiff was a mere builder. The fact that such contributions and payments were made is consistent with the plaintiff having an interesting the development.
148 The evidence on analysis establishes, as a matter of probability, an arrangement between the plaintiff and the defendant in the terms claimed by the plaintiff. I have, accordingly, concluded that the plaintiff has discharged the onus of establishing such an arrangement which included the purchase of the property 31 Walker Street Merrylands in the name of the defendant with a view to its development into duplex units for the mutual benefit of the parties.
SUBMISSIONS AS TO THE INTEREST ACQUIRED
149 The plaintiff's claim, as formulated in the amended statement of claim, asserted an agreement between the parties for the acquisition and development of land referred to in paragraph 2 of the amended statement of claim as "the Arrangement". The plaintiff's contention (paragraph 7 of the amended statement of claim) was that the arrangement between the parties contemplated an interest in land, namely, the Walker Street property, it being agreed between the parties that it would be purchased in the defendant's name.
150 In the plaintiff's written outline of argument and in its final submissions, it was contended that the plaintiff's interest was as a beneficiary under a constructive trust, such trust being imposed on the land following and pursuant to the defendant's refusal to abide by what is referred to as the joint venture agreement to acquire and develop the subject property.
151 Counsel for the plaintiff stated that the trust contended for was based upon what has been referred to as the Pallant v. Morgan equity. Reliance in this respect was placed upon Pallant v. Morgan [1953] Ch. 43 as discussed and analysed in Banner Homes Group PLC v. Luff Developments Limited [2000] Ch. 372, 396-398.
152 In the final written submissions on behalf of the plaintiff, it was contended that equity would impose a trust in the circumstances of this case whether or not that trust does in fact arise by reference to the Pallant v. Morgan equity or whether it arises by virtue of a partnership between the parties that gave rise to an interest in land or alternatively by reason of unconscientious conduct of one party arising from the acquisition of the beneficial ownership of the land in circumstances pleaded and where the plaintiff has relied upon the defendant who thereafter sought to assert and rely upon his legal title to the land.
153 In the outline of the defendant's written submissions, it was contended that the construction of the duplex at 31 Walker Street, Merrylands was undertaken by Constructions Metropolis Pty. Limited and that by reason of the fact that that company did not hold a builder's licence and the fact that it carried out the construction meant that there was a contravention of provisions of the Home Building Act 1989 (NSW). However, in the final submissions on behalf of the defendant, emphasis was not on this aspect but on the question as to whether or not the arrangement alleged existed and, if so, whether it gave rise to an interest in land. I will return to the latter point below.
154 It was, as seen above, fundamental to the defendant's submissions that there had been no arrangement or agreement for a joint venture or profit sharing arrangement as pleaded. Alternatively, it was submitted that if there was an arrangement as claimed, it was not one which gave rise to an interest in land and that the plaintiff's only entitlement was to the proceeds of sale and not to the land itself. Reliance was placed upon the decision of Gowans, J. in Epple v. Wilson [1972] VR 440 and upon the decision of Hodgson, J. in Davies v. Uratoriu; Davies v. Residential Tenancies Tribunal & Anor (1995) 6 BPR 13,917.
155 Accordingly, in final oral submissions on behalf of the defendant, counsel put as a principal submission, that the evidence in the case, at its highest and most favourable to the plaintiff, would support a declaration sought in paragraph 3 in the amended statement of claim, but that did not support any order for the appointment of trustees "as it does not sustain anything other than a claim for a share of proceeds" (t.237). The question, it was submitted, was whether or not there was an agreement as to the land itself and, in this respect, attention needed to be given to the nature of any joint venture established.
156 The final oral submissions on behalf of the defendant also took issue with the assertion of the Pallant v. Morgan equity as a basis for the plaintiff's claimed entitlement. The remaining submissions focused on the factual matrix and as to why the defendant's version as to the facts should be accepted over that of the plaintiff.
157 I have reservations as to whether what has been termed the Pallant v. Morgan equity precisely applies to the pre-acquisition arrangement involved in this case. In this respect, I have had regard in particular to the analysis of Chadwick, LJ. in Banner Homes (supra) at 396-398. What is, of course, fundamental is the determination of the nature of the arrangement prior to the acquisition of the property and, in this respect, I have made the findings on the facts that are favourable to the plaintiff's claim. In general terms, of course, equity may intervene by declaring a constructive trust in circumstances where parties acquire a property upon the understanding or basis that the property and, subsequently, its post-acquisition development is acquired in the name of one but in relation to which both have agreed to contribute, as in this case, namely, the defendant's financial contributions and the plaintiff's work and effort associated with the re-development/construction of the property. In these proceedings such a declaration should be made.
158 It is unnecessary to consider in depth all of the cases that have considered partnership arrangements entered into for the purposes of acquiring a single property. The question is whether or not, findings having been made as to the nature of the arrangement, they provide the plaintiff with a basis for the relief claimed. In this respect, I bear in mind the distinction between a claim in contract under which parties agree to share the ultimate profits of a venture, on the one hand, and arrangements between parties to a joint enterprise or partnership whereby the parties acknowledge and agree that they will take an interest in the property itself.
159 In Davies v. Uratoriu (supra), the property was acquired in the name of the defendant and it was occupied by the plaintiff and his family. The plaintiff sought orders to secure to him a share in the proceeds of the sale of the property. In that case, as in the present, the plaintiff and defendant had been friends for several years. They entered into conversations concerning the proposed purchase of property at Rose Bay which was then in a very run-down condition. It was accepted for the purposes of the case that the property was to be purchased for a price and to be acquired in the name of the defendant with the defendant providing the purchase money. The plaintiff would agree to renovate the property at an estimated cost of $30,000 and live in the property whilst the work was carried out. It was also a part of the agreement that the plaintiff would pay an amount styled as rent to the defendant to cover interest on finance obtained by the defendant. Finally it was agreed that, following renovation, the property should be sold and the profits divided equally.
160 The property was acquired in 1986, the whole of the purchase price and the legal expenses being provided by the defendant who had borrowed the necessary funds from a company which he owned and which, in turn, obtained the finance from an overdraft facility available to the last mentioned company.
161 Prior to completion in that case, sketch plans for the proposed extensions and estimates of costs were provided to the defendant. Hodgson, J. (as he then was) made a finding that documentary evidence confirmed the arrangement was one whereby the plaintiff was to provide his own labour for the renovations, without charge to the venture.
162 The defendant had steadfastly maintained that the plaintiff had no interest in the property itself but only an interest in receiving half the ultimate profits of the venture and that, subject thereto, the defendant could do whatever he liked with the property without discussion or disclosure to the plaintiff.
163 In determining the nature of the arrangement in that case, Hodgson, J. concluded that the transaction between the parties amounted to a partnership in the venture, with mutual fiduciary obligations. In particular, the venture was one in which the plaintiff and the defendant were carrying on business in common with a view to profit.
164 That finding was supported by the six matters identified in the judgment. These included the fact that there had been an agreement between the parties to share the profits of the venture equally, the business nature of the venture and the absence of detail one would expect if it was merely a contractual arrangement between arms-length contracting parties. The fact that the business only involved a single venture, did not negative a partnership.
165 Based upon the findings made in the present case as in Davies v. Uratoriu (supra), the nature of the arrangement between the parties, in my opinion, provided the plaintiff with an interest in the developed property and a right to have it sold and to have the proceeds divided. In particular, it is important in this case, as in Davies v. Uratoriu, that the construction has, in fact, been undertaken and completed by the plaintiff just as the renovations in Davies v. Uratoriu were completed by the plaintiff in that case. There, that fact was important in providing the plaintiff a right which equity would enforce to have the property sold and the proceeds divided. Such constituted an interest in land.
166 I have had regard to the facts and circumstances and issues arising in other cases including Luxury Homes Pty. Limited v. Danieli [2005] NSWSC 375 (White, J.); Epple v. Wilson (supra); Go-Tell Nominees Pty. Limited v. Nichols (1997, Supreme Court of Victoria, unreported 3 March 1997, per Cummins, J.) and Simons v. David Benge Motors Pty. Limited (1974) VR 585. Having done so, I am of the opinion that the plaintiff is entitled to relief in terms as follows:-