//
[2025] NSWSC 1554
General information, not legal advice.
Supreme Court of NSW
2025-12-15
Parker J
Original judgment source is linked above.
Zoe will write a short plain-English brief of this judgment and email it to you: what it was about, what the court decided and why. It can take up to a minute.
General information, not legal advice.
Or create a free account to save it and ask Zoe follow-up questions.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Espiritu v Espiritu; Espiritu v Espiritu [2025] NSWSC 1554
Hearing dates: 5, 8, 11 and 12 December 2025
Date of orders: 15 December 2025
Decision date: 15 December 2025
Jurisdiction: Equity - Expedition List
Before: Parker J
Decision: See [47]-[50]
Catchwords: LEASES AND TENANCIES — Residential Tenancies Act 2010 (NSW) — Sale of premises – Termination by Landlord – Where landlords and tenants both contributed to the purchase of the property – Whether the landlord holds a portion of interest in the property on trust for the tenant
LEASES AND TENANCIES — Residential Tenancies Act 2010 (NSW) — NSW Civil and Administrative Tribunal — Jurisdiction and power – Whether the Supreme Court has jurisdiction to direct NCAT to order the termination of a lease
Legislation Cited: Residential Tenancies Act (2010); ss 81, 119
Cases Cited: Baumgartner v Baumgartner [1987] HCA 59, 164 CLR 137
Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 944
Makaritis v Makaritis [2022] NSWSC 468
Makaritis v Makaritis (No 2) [2022] NSWSC 1690
Makaritis v Makaritis (No 3) [2023] NSWSC 409
Makaritis v Makaritis (No 3) [2023] NSWSC 409
McKinlay v Woods [2024] NSWCA 122
Muschinski v Dodds [1985] HCA 78, 160 CLR 583
Woods v McKinlay (No 2) [2021] NSWSC 1510
Category: Principal judgment
Parties: 2025/470764 proceedings
Rolando Espiritu (First Plaintiff)
Julie Espiritu (Second Plaintiff)
Amor Espiritu (First Defendants)
Iris Espiritu (Second Defendant)
Cross-Claim
Amor Espiritu (First Cross-claimant)
Iris Espiritu (Second Cross-claimant)
Rolando Espiritu (First Cross-defendant)
Julie Espiritu (Second Cross-defendant)
2025/481260 proceedings
Amor Espiritu (First Plaintiff)
Iris Espiritu (Second Plaintiff)
Rolando Espiritu (First Defendant)
Julie Espiritu (Second Defendant)
Representation: Counsel:
2025/470764 proceedings
D Green (solicitor) (Plaintiffs/Cross-defendants)
J Stephens (Defendants/Cross-claimant)
2025/481260 proceedings
J Stephens (Plaintiffs)
D Green (solicitor) (Defendants)
Solicitors:
2025/470764 proceedings
Green & Associates (Plaintiffs/Cross-defendants)
Peterson Haines (Defendants/Cross-claimants)
2025/481260 proceedings
Peterson Haines (Plaintiffs)
Green & Associates (Defendants)
File Number(s): 2025/470764; 2025/481260
Publication restriction: Nil
On 15 December I made procedural orders in this case, which involves property dealings between members of a family. This judgment sets out the reasons for my orders.
The litigation between the parties concerns principally a residential property in Moore Street, Hurstville. The property is occupied by a married couple, Amor and Iris Espiritu. Originally, they were the owners of the property. In 2009 they transferred it to Rolando and Julie Espiritu, who leased the property back to them under a Residential Tenancy Agreement (“RTA”).
Rolando Espiritu is the son of Amor and Iris Espiritu. Julie Espiritu is his wife. In this judgment I will refer to them as the “Owners”. Amor and Iris Espiritu will be referred to as the “Tenants”.
The 2009 purchase was effected by means of formal written contract. The purchase price was $735,000. On settlement, the Tenants’ pre-existing mortgage (presumably resulting from the original purchase of the property by them) was discharged ($459,000). The sum of $145,000 was paid back by the Tenants to the Owners, apparently as a deposit by the Owners on the purchase of their matrimonial home. The purchase was funded with loan finance secured by mortgage on the Moore Street property. The Owners were the borrowers under the loan and are the parties liable under the mortgage.
There are in fact two RTAs which were entered into. The first commenced on 18 December 2009 for a rent of $350 per week. The second commenced in December 2021 at $500 per week. Although this RTA was expressed to have a 12-month term, it has continued in force since December 2022.
The parties fell into dispute a few months ago. The Owners wish to sell the Moore Street property. Apparently, this is because they are under some financial pressure as a result of other property dealings. They were prepared to have the Tenants come and live with them at Macquarie Street. Negotiations took place between the Owners and the Tenants about the terms on which the Tenants were to vacate the property. Those negotiations appear to have taken place, at least in part through other members of the family as intermediaries.
According to the Owners, agreement was reached for the Tenants to surrender the RTA, for them to be provided with accommodation at Macquarie Street; for renovation works to be carried out there; and for the Owners to pay the Tenants $270,000 out of the sale of the Moore Street property.
Acting, they say, on the assumption that an agreement had been concluded, the Owners on 25 October 2025 entered into a contract for sale of the property to a third party. The sale price is $2,006,000. The completion date was 6 December 2025.
But the agreement between the Owners and the Tenants, if there was one, broke down. Solicitors became involved. On 27 October, the Tenants ceased paying rent. Mr Dominic Green, the Tenants’ solicitor, asserted on their behalf that they were the “owners” of the property and that the RTAs had been a sham.
As already noted, the principal claim for relief in the equity claim is for the imposition of a constructive trust over the Moore Street property. I asked Mr Green to identify the doctrine or doctrines on which reliance was placed for the imposition of such a trust. The answer which emerged from what Mr Green said (and was confirmed in terms by Ms Sian) was a “failed joint endeavour” constructive trust under the principles in Muschinski v Dodds [1985] HCA 78, 160 CLR 583, Baumgartner v Baumgartner [1987] HCA 59, 164 CLR 137.
This makes sense. Informal family arrangements in which the title to property is registered in the name of one family member but another family member lives is intended to live in the property and may make a contribution to its purchase price or paying off the mortgage can be a prime case for the imposition of such a trust if the relationship between the family members later breaks down, in particular if it is unclear who is entitled to the equity in the property in that event. In the course of discussion, reference was made to my own decisions in Woods v McKinlay (Woods v McKinlay (No 2) [2021] NSWSC 1510; on appeal, McKinlay v Woods [2024] NSWCA 122) and Makaritis v Makaritis (Makaritis v Makaritis [2022] NSWSC 468; Makaritis v Makaritis (No 2) [2022] NSWSC 1690; Makaritis v Makaritis (No 3) [2023] NSWSC 409) which are examples of such cases.
As I understood Mr Green, the Tenants’ contention is that exactly that sort of informal arrangement was made in 2009 when the Owners purchased the Moore Street property from them. As some of the money from the purchase price was applied to the deposit on the Macquarie Street property, it is possible that the joint endeavour in the present case, and hence the imposition of a constructive trust, could extend to that property as well.
The Equity Claim is therefore squarely within orthodox principle. But the principle has important practical consequence for the Tenants’ claim for interlocutory relief.
If imposed by the Court in the present, the failed joint endeavour constructive trust would oblige the Owners to sell the Moore Street property and use the proceeds to discharge their existing mortgage, reimburse to the parties their respective contributions to the joint endeavour, and divide any surplus between them. That would be inconsistent with the Tenants retaining any continuing right of occupation. While it might support an injunction to restrain the Owners from disposing of the surplus, it could in no way justify interlocutory relief to maintain the Owners occupation pending the outcome of the proceedings: at [40]-[50].
It follows from what I have just said that the pendency of the Equity Claim is no answer to the Owners’ claim for possession. But no order for possession can be made while an RTA is in force.
It is at best paradoxical that tenants should cling to possession under the RTA while at the same time pursuing equitable relief which would require the property to be sold with vacant possession. Should the Court uphold the Tenants’ claim it would probably only grant relief on terms which required the Tenants to surrender their residential lease. But we are not yet at that point. The Tenants are entitled to maintain any legal right of possession which they have, no matter how short sighted that may be.
The context for the issues which arise is provided by s 81 of the Residential Tenancies Act (2010), which relevantly provide:
81 Circumstances of termination of residential tenancies
(1) Termination only as set out in Act A residential tenancy agreement terminates only in the circumstances set out in this Act.
(2) Termination by notice and vacant possession A residential tenancy agreement terminates if a landlord or tenant gives a termination notice in accordance with this Act and the tenant gives vacant possession of the residential premises.
(3) Termination by order of Tribunal A residential tenancy agreement terminates if the Tribunal makes an order terminating the agreement under this Act.
(4) Other legal reasons for termination A residential tenancy agreement terminates if any of the following occurs—
(a) a person having superior title (such as a head landlord) to that of the landlord becomes entitled to possession of the residential premises,
(b) a mortgagee of the residential premises becomes entitled to possession of the premises to the exclusion of the tenant,
(c) a person who succeeds to the title of the landlord becomes entitled to possession of the residential premises to the exclusion of the tenant,
(d) the tenant abandons the residential premises,
(e) the tenant gives up possession of the residential premises with the landlord’s consent, whether or not that consent is subsequently withdrawn,
(f) the interests of the landlord and tenant become vested in the one person (merger),
(g) disclaimer occurs (such as when the tenant’s repudiation of the tenancy is accepted by the landlord).
The starting point is that, unless the lease has come to an end automatically on one of the grounds in s 81(4), or has been surrendered under s 81(2), it can only be brought to an end by an order of the Tribunal under s 81(3). The effect of s 81(1) is to make the jurisdiction to make an order for termination exclusive to the Tribunal. There is also a prohibition on seeking an order for possession outside the Tribunal: s 119.
Mr Stephens submitted that there was nothing in the statutory scheme to prevent the Court from proceeding, on an expedited basis, with the determination of the Equity Cross-Claim. If satisfied that the Tenants had agreed, for valuable consideration, to vacate the property (and, Mr Stephens submitted, there appeared to be no dispute that this was so) the Court could make an order in the nature of specific performance requiring them to give vacant possession to the Owners, thus bringing the RTA to an end under s 82. An alternative possibility, canvassed by me and adopted by Mr Stephens in the course of argument, was that even if there were no binding contract the same result could be achieved by way of promissory estoppel.
In the course of argument, Mr Stephens advanced another contention which did not rely upon a termination order being made. This contention rested on the conduct of the Tenants since the dispute arose in ceasing to pay rent and asserting in correspondence, that they were somehow owners of the property and that the RTA was a sham. In advance of the hearing on 11 December, a formal letter was sent from the Owners’ solicitors to the Tenants asserting that, by that conduct, the Tenants had repudiated their obligations under the lease and purporting to accept that repudiation. Mr Stephens submitted that the result was that the RTA had thereby come to an end, again without the need for any termination order.
Mr Green questioned whether the Court would have jurisdiction to make these orders, in view of the terms of s 119. More importantly for the purposes of expedition, he raised factual issues, or potential factual issues, about the availability of such relief. He said that, given that the negotiations which resulted in the alleged agreement to vacate had involved intermediaries, questions of what the Tenants’ actual intent was, and whether their representatives had authority, arose, at least potentially. He also submitted that it would be necessary to go into the original dealings between the parties which resulted in the 2009 purchase.
In these circumstances, it was clearly not practicable for the Court to conduct an expedited hearing of the Owners’ claims before the end of term. The prayers for relief in the Owners’ cross-summons did not encompass all of the claims articulated by Mr Stephens at the hearings before me. And given the potential for factual dispute, it would be necessary, at least for those claims to be formally pleaded, and probably for evidence to be filed.
The orders of the Court, made on 15 December in the Equity Claim and Cross-Claim were:
Prayers 5, 6, 7 and 8 of the Plaintiffs’ summons be dismissed.
The proceedings are to continue on pleadings.
The Plaintiffs are to file and serve a Statement of Claim by 14 January 2025.
The Defendants and Cross Claimants are to file and serve their Defence to the Plaintiffs’ Statement of Claim and a Statement of Cross Claim by 28 January 2025.
The Cross Claimants are to file and serve all affidavit evidence that they rely upon in support of the relief sought in their Statement of Cross Claim by 28 January 2025.
The Cross Defendants are to file and serve their Cross Defence to the Statement of Cross Claim by 4 February 2026.
The Cross Defendants are to file and serve all affidavit evidence that they rely upon in respect of the Statement of Cross Claim by 4 February 2026.
Matter be listed for directions on 6 February 2025.
The orders made by the Court in the Tribunal claim on 15 December were:
Order the proceedings be transferred to NSW Civil and Administrative Tribunal.
**********
[10] grammatical error. [36], [37], [40], [41], [44], [45], [48] change 'RLA' to 'RTA' per defined term in [2].
The dispute resulted in litigation on several fronts. First, on 28 October the Owners issued a formal notice of termination of the RTA which required the Tenants to vacate by 28 November. The Tenants declined to do so. On 31 October, the Owners commenced proceedings in the NSW Civil and Administrative Tribunal (“NCAT”). They sought an order terminating the current RTA and then an order for possession of the Moore Street property. I will refer to this as the “Tribunal Claim”.
The Tribunal Claim was resisted by the Tenants. An application was made to have the proceedings expedited. One of the grounds for the application was that the completion date under the contract of sale of the Moore Street property was imminent. If the Tenants continued to occupy the property, the Owners would be in breach and ran the risk of the purchasers terminating. The application was however refused. The proceedings were fixed for hearing in January.
Meanwhile, Mr Green lodged a caveat on behalf of the Tenants over the Moore Street property. The interest claimed under the caveat was an “equitable fee simple” by virtue of an “agreement” between the parties (otherwise unparticularised).
Notice was given on behalf of the Owners for the caveat to lapse. On 4 December, just before the caveat was due to expire, Mr Green filed a summons in this Court on behalf of the Tenants. I will refer to this as the “Equity Claim”.
The principal final relief claimed in the Equity Claim was a declaration that the defendants held the Moore Street property on “constructive trust, in full or part, with such proportion to be determined by the Court” (prayer 12). Alternatively, a declaration was sought that the property was “charged in favour of the plaintiffs in a sum to be determined by the Court” (prayer 11). Further alternative claims were made for equitable compensation or damages, each “in a sum to be determined by the Court” (prayers 13 and 14). An order was sought for an account “in respect of the [Owners’] acquisition of the property, and any profit and/or gain derived from the use of it, in order to “determine the Plaintiffs’ equitable entitlements for the purpose of prayers 11, 12, 13 and/or 14” (prayer 15).
The Summons also sought, by way of interim relief:
orders that the lapsing notice be set aside or the caveat be extended until further order of the Court (prayers 5 and 6);
an injunction against the Owners from selling, further encumbering or otherwise dealing with the Moore Street property (prayer 7); and
an order requiring the Owners to produce (by 10am on the following day) a very large range of documents concerning the Moore Street properties, together with a third property which is apparently held by the Owners as an investment at Downey Street (prayer 8).
On the same day as Mr Green filed the Summons in the Equity Claim, he made an urgent application for interlocutory relief in which he sought an order extending the caveat. This was contested by the Owners.
The Owners had apparently been preparing their own proceedings, and at the hearing they were granted leave to file a summons, to operate as a cross-summons. This summons sought orders in the nature of specific performance to enforce the agreement concerning vacation of the Moore Street property, on the ground that it was a specifically enforceable contract. In particular, an order was sought requiring the Tenants to surrender possession of the property to the Owners pursuant to their notice. I will refer to this as the “Equity Cross-Claim”.
The application to extend the caveat came before Hmelnitsky J (on 4 December, as mentioned) in the Duty List. The caveat was plainly defective and his Honour declined to extend it. The Court was later informed that, following its expiry, the caveat was removed from the title.
The Owners’ cross-summons sought by way of interlocutory relief, an order for expedition. Hmelnitsky J referred the proceedings to me as the Expedition Judge. Five hearings then took place over the following eight days.
The first hearing was before me in the Expedition List on 5 December. The proceedings were adjourned, and a further hearing took place the following Monday 8 December. In both hearings the Owners were represented by counsel, Mr Stephens. The Tenants were represented by Mr Green.
In the course of the Monday hearing, it emerged that both parties agreed that the Tribunal Claim should be transferred to this Court. The proceedings were further adjourned on to 2 pm on Thursday 11 December.
At the Monday hearing the parties had contemplated that they would file consents which would automatically result in the proceedings being transferred to this Court. For some reason that did not happen, but an order was made by the Tribunal on Thursday transferring the proceedings, and the file was brought to Court, and allocated a matter number in this Court, later in the afternoon.
Mr Green, however, did not attend the hearing at 2pm on 11 December. He was said to be engaged at the District Court. Instead, the Tenants were represented by a solicitor from his office, Ms Sian.
Ms Sian had been given very limited instructions. She was able, in the course of an adjournment, to speak to Mr Green by telephone, but the situation was unsatisfactory. Eventually I stood the matter down to 4:30pm for Mr Green to attend. The hearing then went almost until about 6pm. Then I adjourned proceedings to the expedition list the following day.
At the hearing in the expedition list on 12 December, I outlined to the parties the preliminary views which I had formed the previous day and overnight as to the procedural course to take. Following some further debate, I laid out the procedural orders I would make in the Equity Claim, the Equity Cross-Claim, and the Tribunal claim. On 15 December the parties submitted agreed minutes of order and I made orders accordingly. What follows are my reasons for those orders.
It follows that the Tenants’ alleged equity provided no justification for the extension of the caveat, and still less for an order requiring the lapsing notice to be withdrawn. Nor did it justify the claim for an interlocutory injunction in the summons. In the end, Mr Green accepted this.
In passing, I should note that, while the facts may sustain a claim for the imposition of a failed joint endeavour constructive trust, the relevant prayers for relief in the summons are defective. Unfortunately, this is not an uncommon phenomenon the way such claims are litigated in this division.
The proper course for a plaintiff seeking the imposition of a failed joint endeavour contrastive trust is, like any other plaintiff, to specify the orders the Court will actually be asked to make. This means that the declaration must identify the nature and scope of the joint endeavour and the contributions to be reimbursed to the parties or a mechanism, usually of an accounting type (by which those contributions can be calculated). Provision should then be made for the division of any surplus between the parties. An example of such an order is found in Makaritis v Makaritis (No 3) [2023] NSWSC 409 at [7]-[57], [158].
For the reasons already given, my orders in the Equity Proceedings included an order dismissing those interlocutory claims in the summons. I also decided to dismiss the claim for an order for the production of documents. Depending upon the factual issues which ultimately arise, the Tenants may be entitled to discovery from the Owners in the ordinary course. But their alleged equity did not give them any right to the production of documents at this point.
It was also clear that, given the likelihood that there would be disputed issues of fact, that the proceedings should continue on pleadings. For reasons I have already given, the prayers for final relief in the summons were defective. I would have struck those prayers out, leaving them to be repleaded, if Mr Green had not told me that there was no need for this course because the statement of claim, when filed, will contain a replacement of prayers for relief which will be properly formulated.
This left the question whether the Owners could obtain an order terminating the RTA under the Act. Mr Stephens acknowledged that, despite appearances, the expiry of the RTA’s term was not such a ground, or at least not necessarily. Mr Stephens, however, did contend that two grounds were immediately available. One was a failure to pay rent (s 88), and the other was the entry into a contract to sell the subject property (s 87D). He submitted that both of these conditions were clearly satisfied.
Mr Stephens acknowledged that, on the face of it, the determination of these claims to terminate the RTA was a matter for the Tribunal. But relying on the decision of Stevenson J in Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 944, he submitted that once the proceedings had been transferred to this Court the Court could determine whether the Owners were entitled to an order for termination, and, if so, make a declaration accordingly and remit the proceedings to the Tribunal for the Tribunal to make the necessary order.
On the face of it, an expedited hearing on this basis might have been possible before the end of term. Mr Green opposed it, but I was not persuaded that any significant factual issue arose. There was no dispute that the rent has not been paid, and Mr Green’s submissions on this point only seemed to raise questions as to whether notice had been properly given, which would, on the face of it, simply raise questions of law. Mr Green did not articulate any defence to the s 87D ground at all.
Nevertheless, on reflection I concluded that an expedited hearing before the end of term, limited to these issues, would not be justified. Even if the Court were able to conduct the hearing and deliver judgment immediately, the proceedings would still need to be returned to the Tribunal for the making of an order, which presumably would not take place until January which was when the Tribunal, before the transfer, had indicated that the matter would be heard. Furthermore, there might well be arguments for a deferral of possession on hardship or other grounds. Whether such arguments would be likely to succeed is not to the point for present purposes. Clearly, the proceedings would not be sent back to this Court after a termination order was made; the question of possession would be a matter for the Tribunal.
For these reasons, I concluded that the best course was to leave the s 87D and s 88 grounds for termination to be determined by the Tribunal, hopefully in January. In the meantime, orders would be made for the Equity Cross-Claim to proceed by way of pleadings and for a timetable or pleadings and evidence. The proceedings would return to Court in the Expedition List at the beginning of the new term. If, by that stage, the question of termination of the RTA and delivery of possession had not been resolved by the Tribunal, the Court could consider expediting the cross-claim.