Eumeralla Estate Pty Ltd v Chen [2022] VSCA 78

EVIDENCE - Burden of proof - Trial judge referred to one aspect of competing accounts as 'wildly improbable' - Whether trial judge felt actual persuasion as to respondents' account - Reasons considered in context demonstrated that trial judge was satisfied on balance of probabilities - Rhesa Shipping Co SA v Edmunds [1985] 2 All ER 712, discussed.

1 The second applicant, Chi Yung Chang (known as 'Jeff'), and his wife, Bo Xuan ('Bo'), are in a dispute with the respondents, Zhiying Chen (known as 'Jessica') and her brother in law, Xiufeng Chen (known as 'Lance'). The facts giving rise to the dispute are complex, and are set out in more detail below. In short, the trial judge held that Jessica and Lance had entered into a joint venture with Bo and Jeff to purchase a property in Templestowe and then develop the property. His Honour rejected Bo and Jeff's claim that they had entered into an 'on-sale' arrangement, whereby Bo would purchase the property and then sell it to Jessica.

2 Bo had entered into a contract to purchase the property, and she paid $39,000 by way of deposit. Jessica and Lance paid $120,000 towards the deposit. Legal title to the property was to be held by the first applicant, Eumeralla Estate Pty Ltd ('Eumeralla'), which was incorporated for that purpose. Jeff was the sole director of Eumeralla and its sole shareholder was another company owned by Jeff.

3 All parties accepted at trial that Jessica and Lance had paid $430,000[1] into Eumeralla's bank account, for the future development of the property. Ultimately, the sale did not proceed. The trial judge held that the money Jessica and Lance had paid to Eumeralla was held by Eumeralla on trust for them. However, that money was transferred out of Eumeralla's account by Jeff - by cash withdrawals and by transfers into accounts held or controlled by Jeff. Subsequently, Jeff purchased a property in Kooyong. The trial judge held that the funds were transferred out of Eumeralla's account in breach of trust, and that Jeff had knowingly participated in Eumeralla's breach of trust and had knowingly received trust property. Finally, the trial judge held that a portion of the funds could be traced into the purchase of the Kooyong property, and that Jessica and Lance were entitled to a share of the ownership of that property.

4 The applicants have sought leave to appeal from the trial judge's decision. They advanced five proposed grounds of appeal:

Ground One: The trial judge erred in finding that the Respondents satisfied their onus of proof on the balance of probabilities as to the existence of the joint venture agreement.

Ground Two: The trial judge erred in finding that Eumeralla held the money paid to it by Jessica and Lance on trust.

Ground Three: The trial judge erred in finding that Eumeralla had withdrawn money in breach of trust.

Ground Four: The trial judge erred in finding that Bo and Jeff had knowingly participated in Eumeralla's breach of trust.

Ground Five: The trial judge erred in finding that Jessica and Lance could trace into the Kooyong Property.

5 It is apparent from the parties' submissions that grounds 3, 4 and 5 turn on the proposition that the trial judge erred in concluding that there was a trust over the money transferred to Eumeralla, which is the issue identified under ground 2. Thus, as the applicants accepted in oral argument, grounds 3, 4 and 5 raise consequences of the success of ground 2; but if ground 2 fails, then none of grounds 3, 4 or 5 can succeed.

6 We have concluded that neither ground 1 or ground 2 can succeed. In summary, our reasons for so concluding are as follows:

(a) As to ground 1, it was put on the basis that the trial judge had reasoned in an impermissible manner, by asking which of the two competing accounts was true, rather than asking whether Jessica and Lance had discharged their onus of proof. The applicants argued that his Honour did not 'feel actual persuasion' of the existence of the joint venture agreement alleged by Jessica and Lance. After careful consideration of his Honour's reasons, we have concluded that his Honour did not err in the manner alleged. It is plain from his Honour's reasons that he did feel actual persuasion that the arrangement between the parties was, as Jessica and Lance alleged, a joint venture agreement.

(b) As to ground 2, after consideration of the evidence and the unchallenged facts concerning Jessica's and Lance's payment of the $430,000 to Eumeralla, we consider that that the trial judge was correct to conclude that that sum was paid to Eumeralla for the exclusive purpose of purchasing and developing the Templestowe property, such that it was held on trust by Eumeralla for that purpose, and was to be re-paid to Jessica and Lance should the purpose fail. There was no error in the trial judge's conclusion on that issue.

7 It follows from our conclusion on ground 2 that none of grounds 3, 4 and 5 can succeed. We would grant leave to appeal but dismiss the appeal.

8 Although, as the trial judge observed, almost every fact was disputed at trial,[2] before this Court the parties agreed on some of the key facts, as follows.

9 On 1 September 2017, Bo entered into a contract to purchase 4 Eumeralla Avenue, Templestowe ('Templestowe Property'). The purchase price of the contract was $3.18 million, with a deposit of $159,000 being payable. As to that deposit, Bo paid $3,000 at the time of entering the contract.

10 On 8 September 2017, the balance of the deposit (being $156,000) was paid, as follows:

(a) by Jessica and Lance, who paid $120,000; and

(b) by Bo, who paid the remaining $36,000.

11 On 27 October 2017, Eumeralla was incorporated. At all times, Jeff was the sole director of Eumeralla and its shares were held by JBMB Investments Pty Ltd, a company whose sole shareholder was Jeff.

12 On 20 December 2017, Eumeralla was nominated to take title to the Templestowe Property on settlement of the contract of sale.

13 Also on 20 December 2017, Jessica and Lance made the first of a series of deposits amounting to $430,000 into Eumeralla's bank account. The $430,000 remained in Eumeralla's account until March 2018, at which time it began to be withdrawn, as explained further below.

14 On 21 February 2018, the vendors issued a notice of default and rescission and terminated the contract of sale for the Templestowe Property. Eumeralla never took title to the Templestowe Property.

15 On 19 March 2018, Jeff withdrew $100,000 in cash from Eumeralla's bank account.

16 On 3 May 2018, Bo entered into a contract to purchase 695 Toorak Road, Kooyong ('Kooyong Property'). On 15 May 2018, Bo nominated Jeff as purchaser under that contract.

17 On 20 July 2018, $300,000 was withdrawn from Eumeralla's bank account by Jeff as follows:

(a) $150,000 was withdrawn and paid into a Bankwest account held by Jeff; and

(b) $150,000 was withdrawn and paid into an account held by a company known as 'White Knight' (which was controlled by Jeff).

18 Although not an agreed fact before this Court, also on 20 July 2018, $100,000 was paid from White Knight's account into Jeff's account. At trial, Jeff denied that the $100,000 had come from the $150,000 that Eumeralla had paid to White Knight, saying that he had $200,000-$300,000 in the White Knight account at that time.[3]

19 On 2 August 2018, $5,000 was withdrawn in cash from Eumeralla's bank account. On 9 August 2018, a further $23,999 was transferred from Eumeralla's bank account to Jeff's Bankwest account.

20 The basis upon which Jeff withdrew the amounts referred to at paragraphs 15, 17 and 18[4] above was contentious at trial.4 However, that issue does not arise on the application for leave to appeal and therefore need not be addressed further.

21 On 14 August 2018, Jeff withdrew $348,000 from his bank account and paid it into a solicitor's account for the purpose of settling his purchase of the Kooyong Property. On 15 August 2018, Jeff's purchase of the Kooyong Property settled.

22 In addition to the agreed facts, it is relevant to note certain other facts and contentions.

23 First, Jessica and Lance contended that the joint venture arrangement on which they relied was partly oral and partly in writing, and that the written part was a document that had been retained by Bo. No such document was ever produced at the trial. Thus the trial judge was confronted principally with the affidavit and oral evidence of the parties, rather than having documentary evidence of the arrangements.[5]

24 Second, the parties were in dispute over whether a meeting occurred between Jessica, Bo and Jeff on 21 February 2018, after the receipt of the notice of termination of the contract of sale for the Templestowe property. Bo and Jeff claimed that a meeting had occurred, at which Jessica agreed that certain amounts could be disbursed from Eumeralla's bank account.[6] This was recorded in a document that purported to be minutes of a meeting of Eumeralla, as follows:

[Jessica] agreed $100,000 from the Eumerallas' [sic] bank account to use as below:

$25,000 as service charge to Bo to carry on the purchase with the vendor and pre-project management fees

$25,000 as management fees to Jeff remain the position as director in the company

$20,000 estimated legal fees to Bo if apply

$30,000 estimated cost for carry on the process of the permit which includes architecture cost, building permit, planning permit and finance application cost etc[7]

25 The document also recorded that 'all agreed to transfer the funds into other operating business account'. The document was signed by Jeff.

26 In contrast, Jessica said that no such meeting occurred. She said that she was at Bo and Jeff's house that evening to babysit their children, while they were out. Jessica produced We Chat[8] messages between her and Bo that supported her version of events.[9]

27 The judge held that no such meeting had occurred and that the document was 'bogus'.[10]

28 Jessica and Lance commenced the proceeding below in the County Court against Eumeralla, Bo and Jeff. The relief sought by Jessica and Lance against Eumeralla was an award of damages or equitable compensation in the sum of $430,000 plus interest.[11] The relief sought against Jeff was:

(a) damages or equitable compensation in the sum of $430,000 plus interest;

(b) tracing the sum of $273,999 into the Kooyong Property; and

(c) further damages of $40,000.

29 Jessica and Lance claimed that Bo and Jeff had entered into an agreement with them in relation to the acquisition and development of the Templestowe Property.[12] The essence of the agreement claimed was that it provided for a 'joint venture' between Jessica, Lance, Bo and Jeff such that:

(a) 80 per cent of the costs of acquiring and developing the Templestowe Property would be met by debt funding from a bank; and

(b) the remaining 20 per cent of the costs of acquiring and developing the Templestowe Property would be contributed by Jessica and Lance, as to one-third, and Bo and Jeff as to the remaining two-thirds.[13]

30 Jessica and Lance claimed that Jessica had paid a total of $550,000 pursuant to the joint venture agreement that they pleaded, with such payment comprising:

(a) $120,000 that was paid to First National Real Estate in September 2017 as a contribution to the deposit on the contract for the Templestowe property; and

(b) $430,000 that was paid to Eumeralla in December 2017, on the basis of discussions that they alleged occurred with Bo to the effect that that sum totalled one-third of 20 per cent of the estimated un-financed development and acquisition costs totalling $1.65 million.[14]

31 Jessica and Lance further claimed that Eumeralla held the money paid to it on trust, the trust arising on the failure of the purpose for which the money had been paid[15] (ie the purchase of the Templestowe Property), which had been intended by Jessica as agreed by her and Bo.[16]

32 Jessica and Lance claimed that Eumeralla had withdrawn money from its bank account in breach of trust. They claimed that each of Bo and Jeff had knowingly participated in Eumeralla's breach of trust. Jessica and Lance also claimed that Jeff had knowingly received the money that was withdrawn from Eumeralla's bank account. They sought to trace an amount of $273,999 into the Kooyong property (being $173,999 paid by Eumeralla into Jeff's bank account, and $100,000 paid by Eumeralla to White Knight (a company controlled by Jeff) which, they said, was then paid by White Knight to Jeff).[17]

33 In contrast, at trial the case for Eumeralla, Bo and Jeff was that the payments made by Jessica and Lance were made pursuant to an 'on-sale' agreement, which would be effected by Jessica and Lance buying Eumeralla's shares for $3.6 million, once Eumeralla had acquired the Templestowe Property for the sum of $3.18 million. They claimed that there was no trust, in which case there could have been no breach of trust and no tracing of funds into the Kooyong property.

34 As noted earlier, the trial judge upheld Jessica and Lance's claims against Eumeralla and Jeff. His Honour found that Bo had no liability in relation to the alleged claim of knowing participation, but held that she was liable to return part of the deposit that had been recovered for the purchase of the Templestowe Property.[18]

35 His Honour's reasons addressed eighteen substantive matters. For the purpose of this appeal only the following six matters are relevant:

(a) whether there was a joint venture agreement;

(b) whether Eumeralla held money paid to it by Jessica and Lance on trust;

(c) whether Eumeralla's withdrawal of money paid to it by Jessica and Lance was a breach of trust;

(d) whether Jeff knowingly participated in Eumeralla's breach of trust;

(e) whether Jeff had knowingly received money paid to him by Eumeralla in breach of trust; and

(f) whether Jessica and Lance were entitled to trace money received by Jeff in breach of trust into the Kooyong Property.

36 His Honour's reasons began with a consideration of the competing versions of what had occurred: Jessica and Lance's account that there was a joint venture agreement and Eumeralla, Bo and Jeff's account of an on-sale agreement. As we have noted, his Honour held that there was a joint venture agreement.[19] We will set out his Honour's reasons in greater detail when we consider ground 1, below.

37 The trial judge also held that, the primary purpose for the advance of money by Jessica and Lance having failed, Eumeralla held that money on a resulting trust for Jessica and Lance.[20]

38 His Honour rejected the evidence of Eumeralla, Bo and Jeff that the money withdrawn from Eumeralla's account was applied in accordance with arrangements agreed with Jessica and Lance. His Honour accepted the evidence of Jessica and Lance that they did not know of or approve those withdrawals. The judge concluded that those withdrawals were in breach of trust.[21]

39 The trial judge held that the evidence established that Jeff had effected each withdrawal.[22] His Honour concluded that Jeff had knowingly participated in, and was thus liable for, Eumeralla's breaches of trust, having rejected Jeff's evidence that he believed he was authorised to deal with that money.[23] The trial judge also found that the money that was withdrawn from Eumeralla's account in cash by Jeff, or paid into his account by Eumeralla, was money that Jeff knowingly received in breach of trust.[24] In summary, the trial judge concluded as follows:

Jeff was a knowing participant. His was the hand and the mind that misappropriated the plaintiffs' money. For reasons explained, he did this knowing that he was involved in misappropriation. He is therefore liable as a knowing assistor under the second limb of Barnes v Addy. He is also liable as having knowingly received $173,999 and the $100,000 cash withdrawal.[25]

40 Finally, the trial judge held that $173,999 of the total amount withdrawn from Eumeralla's account could be traced into the Kooyong Property.[26] In relation to that matter, it was conceded by Eumeralla, Bo and Jeff that this amount had been paid into Jeff's bank account and that $348,000 was paid from that account to Jeff's solicitors toward the purchase price of the Kooyong Property.[27] His Honour did not accept Jessica's and Lance's claim that the additional amount of $100,000 paid by White Knight into Jeff's account could so be traced.[28]

41 In light of his findings, the trial judge made the following relevant orders:

(a) a declaration that Jeff held the Kooyong Property on trust for Jessica and Lance as to an interest of 11 per cent;

(b) judgment for Jessica and Lance against Eumeralla and Jeff for $255,592[29] plus interest;

(c) judgment for Jessica and Lance against Bo and Jeff for $3,773.58 plus interest;

(d) an order that Eumeralla and Jeff pay Jessica and Lance's costs on a 'party-party' basis to 7 December 2020 and thereafter on an indemnity basis;

(e) an order that Jeff pay Bo's costs on a 'party-party' basis; and

(f) orders for the sale of the Kooyong Property and application of the sale proceeds.

42 Ground 1 is that the trial judge erred in finding that Jessica and Lance had satisfied their onus of proof on the balance of probabilities as to the existence of a joint venture. In light of the nature of ground 1, it is of assistance to set out a number of passages from his Honour's judgment verbatim:

The starting point in attempting to determine what transactions were entered into and what their legal effect might be, is to resolve the question as to the nature of the initial contractual arrangements between the parties relative to the Eumeralla Avenue property. As noted above, the plaintiffs say that there was an agreement whereby they and the defendants would enter into a joint venture. According to the defendants, the arrangement was a simple on‑sale or sub-sale by Bo to Jessica.

...

Mr Guzzo, for the defendants, in his written submissions, surveyed the competing evidence on this matter in close detail, noting the points of difference between the plaintiffs' evidence on the one hand and the defendants' evidence on the other. In answer to a query from me, he said he did not seek to enlarge upon this survey by offering any suggestions as to whether the one account of the 'deal' was more probable than the other.

There are a number of factors which bear upon the relative probability of the two accounts.

First, it must be thought to be somewhat improbable that Jessica would wish to enter into an arrangement which locked in, for Bo's benefit, a profit of some $420,000, representing the difference between $3.6m, the alleged price for which the 'on‑sale' from Bo to Jessica was to take place, as against the initial sale price of $3.18m, at which Jessica had agreed to purchase the Eumeralla Avenue property.

Secondly, there is the establishment of the first defendant company by Jeff ... . If Bo were simply intending to take her profit and disappear from the scene, why bother with the first defendant, Eumeralla Estate Pty Ltd? If there were to be a development scheme promoted by the plaintiffs, it would be for them to establish whatever corporate vehicle seemed appropriate ... .

To enter into a 'sub-sale' via the shares in Eumeralla Estate Pty Ltd would needlessly have incurred a second heavy impost of what used to be called 'stamp duty' under the terms of Chapter 3 Part 2 of the Duties Act 2000, though the possible ignorance of the parties as to the operation of these provisions might preclude the placing of too much weight on this consideration. It would seem plausible to suppose that the second defendant, Eumeralla Estate Pty Ltd, was incorporated as part of a joint venture agreement according to the same model as was envisaged relative to an abortive development proposal for a property near the Yarra River in Ivanhoe ... .

Again, the amounts outlaid by the plaintiffs are consistent with the 'deal' which they allege; $120,000 paid by them is one-third of a 10 per cent deposit on a purchase price of $3.6m, and the total contribution by them of $550,000 is one-third of a 20 per cent equity contribution representing the amount required by the venturers in such a proposal, assuming that 80 per cent of the cost of land and buildings could be borrowed from a bank.

The evidence as to what transpired at a meeting at the Westpac Bank branch at The Pines Shopping Centre on 28 December 2017 was, on any view, unsatisfactory. The parties were in debate as to the purpose for which loan funds were sought to be raised. According to the defendants, the purpose was to raise money to enable a sub-sale to the first defendant, Eumeralla, then under the control and ownership of the second and third defendants, with the expectation of a transfer of shares and change in directorship immediately following completion. It may well have been possible to identify the Westpac representative who attended the meeting. She is apparently known as 'Patricia', though of Chinese ethnicity. If that were thought unreasonably to protract proceedings, it would seem likely that some form of documentation would have been generated by the bank to record what transpired, and this documentation could have been the subject of a subpoena to produce. As it is, regrettably none of this was done.

According to Jeff, he brought Jessica and Lance, perhaps introducing them, but remained outside the meeting. If, as would seem likely, the borrowing vehicle for the proposed loan was Eumeralla, Jeff would seem to have been a necessary party as the then sole director. Even if it were accepted that at the time of advance of funds there would be an 'instanter change in ownership and directorship', it seems likely Jeff would have been expected to attend. To look at it another way, having taken the trouble to attend the branch, and having an interest in facilitating the raising of money so that the sub-sale or on‑sale could be completed, there is no reason why he would not have attended the meeting.

Whichever, as between the defendants' and the plaintiffs' accounts, one considers, the relevant account is wildly improbable, principally for the lack of any documentation at all relative to such a significant transaction. Beyond that, all of the improbabilities seem to stand against the defendants' account.

Additionally, Mr Paterson, on behalf of the plaintiffs, said there were numerous reasons why the defendants' evidence should not, based on credit considerations, be accepted on this or other issues. He said that Bo swore an affidavit in a pre-action discovery application denying payment of $430,000 into Eumeralla's account, where at trial this was ultimately admitted. He said Bo's explanation ... that her affidavit referred only to payments made by or on behalf of Jessica, and not Lance, was unconvincing. He mentioned various other matters which it is at this stage unnecessary to traverse.

Simply on the basis of the inherent probability of the plaintiffs' account and the improbability of the defendants' account, I conclude that the arrangement between the parties was as alleged by the plaintiffs: that is, a joint venture proposal, and not an 'on‑sale' or 'sub-sale' as alleged by the defendants.[30]

43 The applicants submitted that, having regard to these passages, the judge erred because his Honour had engaged in a weighing of the relative probability of a joint venture agreement, as alleged by Jessica and Lance, against the on-sale agreement, as alleged by Bo and Jeff. The applicants submitted that this approach, which they termed the 'relative weighing approach', meant that the trial judge had failed to 'feel an actual persuasion' as to the existence of the joint venture, as required.[31]

44 In particular, the applicants relied upon the decision of the House of Lords in Rhesa Shipping Co SA v Edmunds.[32] That case concerned a ship which had sunk. The owners claimed it had sunk as a result of 'the perils of the sea', against which they were insured. The particular peril of the sea on which they relied was a collision with a submarine, although no submarine had been sighted in the area. The insurers claimed the ship had sunk as a result of wear and tear on an unseaworthy vessel, against which the plaintiffs were not insured.

45 At trial, Bingham J set out seven considerations that militated against the plaintiffs' case.[33] His Honour held that the submarine claim, although not impossible, was 'so improbable' that it could only be accepted as the cause of the sinking if any other explanation was 'effectively ruled out'.[34] He then considered the defendants' case, and concluded as follows:

In the result, I find myself drawn to conclude that the defendants' wear and tear explanation must on the evidence be effectively ruled out. That leaves me with the choice between the owners' submarine hypothesis and the possibility that the casualty occurred as a result of wear and tear but by a mechanism which remains in doubt. ... My conclusion is that despite its inherent improbability, and despite the disbelief with which throughout I have been inclined to regard it, the owner's submarine hypothesis must be accepted ... .[35]

46 Bingham J thus found for the plaintiffs. His decision was upheld by the Court of Appeal. But both decisions were overturned by the House of Lords.

47 In the House of Lords, Lord Brandon of Oakbrook, with whom the other members of the House agreed, disapproved of a reasoning process to the effect that 'when you have eliminated the impossible, whatever remains, however improbable, must be the truth'.[36] His Lordship observed that there were three reasons for rejecting such an approach to the process of fact finding by a trial judge.[37]

(a) First, a judge is not required, in all cases, to make a positive finding one way or the other. If the evidence is unsatisfactory, the only just course may be to decide on the burden of proof.

(b) Second, an approach of that kind can only be applicable where all relevant acts are known so that all possible explanations, save for a single improbable one, can be eliminated. That did not exist in the Rhesa Shipping matter.

(c) Third, if a judge concludes, on cogent grounds, that the occurrence of an event is 'extremely improbable', then a finding that that event is more likely to have occurred than not does not accord with common sense. That is especially so, his Lordship observed, when it is open to the judge to say that the evidence leaves him in doubt whether the event occurred or not, such that the party with the burden of proving that the event occurred has failed to discharge that burden.

48 In relation to Bingham J's reasons, Lord Brandon of Oakbrook said as follows:

In my opinion Bingham J adopted an erroneous approach to this case by regarding himself as compelled to choose between two theories, both of which he regarded as extremely improbable, or one of which he regarded as extremely improbable and the other of which he regarded as virtually impossible. He should have borne in mind, and considered carefully in his judgment, the third alternative which was open to him, namely that the evidence left him in doubt as to the cause of the aperture in the ship's hull, and that, in these circumstances, the shipowners had failed to discharge the burden of proof which was on them.[38]

49 The applicants submitted that Rhesa Shipping has been followed in Australia by various appellate courts,[39] including the High Court[40] (but not this Court). They submitted that this Court ought to follow Rhesa Shipping.

50 Further, the applicants pointed to the passage emphasised in the quotation from the trial judge's reasons, above, where his Honour stated that each of the competing accounts was 'wildly improbable'. They submitted that, having found that the allegation of a joint venture agreement was 'wildly improbable', on cogent grounds, it was not then open for his Honour to find that the existence of a joint venture agreement had been proved on the balance of probabilities.

51 In contrast, Jessica and Lance submitted that the trial judge had found that the joint venture agreement as alleged by them was 'inherently probable'. They pointed to a number of circumstances that positively supported their account, and to circumstances that supported the trial judge's conclusion that Bo's and Jeff's version of events was improbable. They also pointed out that, although the trial judge had described both accounts as 'wildly improbable', only one reason was given for such a description of Jessica's and Lance's account, namely the lack of written evidence of the terms of the agreement.

52 We accept that Rhesa Shipping sets out the correct approach as to whether a party has discharged their burden of proof on the balance of probabilities. However, some caution is required in relation to the application of that judgment. It concerned a somewhat extraordinary set of facts, and a most unusual conclusion by the trial judge that both versions of events put before him were extremely improbable. It was in that context that the House of Lords held that the trial judge had erred in choosing one improbable version of events simply because he considered the other version so improbable that it was effectively excluded on the evidence.

53 There will be very few cases where the evidence before a trial judge is of that nature. Further, where a party to a proceeding goes into evidence and advances a version of events that is contrary to the version of events put by the party who bears the onus, the judge does not - and must not - ignore the evidence so advanced in determining whether the relevant onus has been satisfied. Rhesa Shipping does not undermine that proposition; nor do the Australian cases that have followed Rhesa Shipping.

54 It is of course true - by definition - that the party that bears the onus must discharge that onus. But, as Santamaria JA observed in Melbourne Orthopaedic Group Pty Ltd v Stamford Aus-Trade & Press Pty Ltd, it 'is proper for a judge to assess which of several competing hypotheses is to be preferred provided the court always keeps in mind upon whom the onus lies'.[41] In considering whether a party has discharged its onus, it will often be appropriate, or even necessary, for the judge to determine whether the alternative version of events put forward by the opposing party is to be accepted; for if that alternative version of events were to be positively accepted, then plainly the party that bore the onus would not have discharged it.

55 The real question in this case is whether the trial judge's reasoning reveals an error of the kind identified in Rhesa Shipping, such that it could not be said that his Honour had felt an 'actual persuasion' that Jessica and Lance had discharged their onus. In our opinion the trial judge did not err in that manner. It is quite clear from his Honour's reasons that he felt an actual persuasion about the existence of the joint venture agreement.

56 There are two aspects of the trial judge's reasons, in particular, that the applicants relied upon to suggest that the judge adopted the approach that was disapproved of by the House of Lords in Rhesa Shipping; those are the emphasised passages in the quotation above, namely his Honour's reference to the 'relative probability of the two accounts' and his statement that 'whichever, as between the defendants' and the plaintiffs' accounts, one considers, the relevant account is wildly improbable'.[42] These statements, the applicants submitted, stood in tension with the trial judge's conclusion later in his reasons that Jessica's and Lance's account was 'inherently probable'.[43]

57 Those remarks must, however, be considered in the context of the judgment as a whole. To put it in terms of s 140 of the Evidence Act 2008, the judge's reasons, considered as a whole, demonstrate that he was satisfied, on the balance of probabilities, that the arrangement between the parties in relation to the Templestowe property was a joint venture arrangement.

58 First, and most importantly, his Honour said as much in the paragraph with which he concluded his consideration of the competing versions:

Simply on the basis of the inherent probability of the plaintiffs' account and the improbability of the defendants' account, I conclude that the arrangement between the parties was as alleged by the plaintiffs: that is, a joint venture proposal, and not an 'on‑sale' or 'sub-sale' as alleged by the defendants.[44]

59 There is, in our view, only one way to read that paragraph: namely, that his Honour was there expressing an actual state of satisfaction, of 'actual persuasion', that there was a joint venture agreement as alleged by the plaintiffs. That reading is emphatically reinforced by his Honour's later reference to 'the finding I have made to the effect that the plaintiffs have given a true account of their agreement with the defendants'. [45]

60 Given how clear and definitive those statements were, this ground of appeal must be rejected. In deference, however, to the arguments advanced on behalf of the applicants, we add for completeness that we see nothing in the rest of the judgment which detracts from those statements.

61 In particular, we reject the contention that his Honour's references to the 'relative probability of the two accounts' and to the two accounts being 'wildly improbable' require a different conclusion. The paragraph containing the latter comment is ambiguous, in that it is not clear whether, when his Honour describes the parties' account as wildly improbable, he is referring to their accounts of the meeting with the Westpac Bank, which he has just addressed, or whether he is referring to the entirety of the parties' account of their arrangement.

62 The better reading, in our view, is the former. The meeting with the Bank was designed to obtain a loan of 80 per cent of the funds required for the purchase and development of the Templestowe Property, that is, a loan for around $6.6 million.[46] The judge had just observed that the evidence about the meeting was 'unsatisfactory'. He said that 'it would seem likely that some form of documentation would have been generated by the bank to record what transpired'. This documentation could have been subpoenaed, but was not.[47]

63 That is the context in which his Honour then observed that, whichever of the parties' accounts one considers, it is wildly improbable, 'principally for the lack of any documentation at all relative to such a significant transaction'. That reference to a lack of documentation can, and in our opinion should, be understood as a reference to the lack of documentation concerning the meeting at the Bank (to which his Honour had earlier referred), and the 'significant transaction' can, and should, be understood as a reference to the proposed borrowing of around $6.6 million. If that is so, then there is no inconsistency with the later description of Jessica's and Lance's account as inherently probable. On that basis, ground 1 would fail.

64 But even if that paragraph is read more broadly, as referring to the parties' accounts of the nature of the arrangement between them, no error is demonstrated, for the following reasons. First, it is important to note that, where the trial judge described both parties' accounts as 'wildly improbable', in the very same sentence his Honour qualified that statement by reference to 'the lack of any documentation at all relative to such a significant transaction'. Immediately thereafter, the judge said that 'beyond that, all the improbabilities seem to stand against the defendants' account'. In our opinion, the trial judge's comment concerning accounts being 'wildly improbable' should be understood as relating to the absence of documentation; beyond that, this paragraph suggests that his Honour was of the view that Jessica's and Lance's account was not improbable, but that Bo's and Jeff's was.

65 Second, although his Honour set out various improbabilities in relation to Bo's and Jeff's claim, he also set out various positive reasons why Jessica's and Lance's claim was to be accepted. These were as follows:

(a) that it was 'plausible' that Eumeralla was incorporated as part of a joint venture agreement;[48]

(b) that a previous, aborted property development proposal between the same parties had envisaged a joint venture agreement;[49] and

(c) that the particular amounts outlaid by the plaintiffs were consistent with the joint venture agreement that they alleged.[50]

66 In addition, in oral argument before this Court Jessica and Lance pointed to the trial judge's findings on credit, namely that Bo's and Jeff's evidence on crucial points was 'lacking in credibility and implausible'.[51] Although he made no express finding as to the credibility of Jessica and Lance, such a conclusion is implicit in his Honour's statement that he had found that they gave a true account of their agreement with Bo and Jeff.[52] These matters form an important part of the context in which the judge was evaluating whether he was satisfied that the arrangement between the parties was a joint venture agreement.

67 We observe for completeness that, in oral argument before us, counsel for the applicants accepted that, if the error they alleged was not made out, then ground 1 must fail. That is, although the ground as drafted appeared to challenge the correctness of the judge's substantive conclusion about the existence of the joint venture agreement, the complaint was about how the judge had arrived at his conclusion and not about its substantive correctness.

69 Ground 2 is that the trial judge erred in finding that Eumeralla held the $430,000 that Jessica and Lance had paid to it on trust. The relevant passages from his Honour's reasons were as follows:

My findings already made indicate that the funds held by Eumeralla deposited by the plaintiffs were held by Eumeralla for the purposes of completing the purchase of the property in Eumeralla Avenue and carrying out a redevelopment of that property. According to Mr Paterson, the purpose of the trust had failed and as a result the monies were held by Eumeralla on a bare trust for the plaintiffs. Eumeralla was liable to compensate the plaintiffs for the loss of those funds. ...

In Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567, the House of Lords (Lord Reid, Lord Morris of Borth‑Y‑Gest, Lord Guest, Lord Pearce and Lord Wilberforce) held that where funds had been advanced to a company, Rolls Razor Ltd, for the purpose of paying a dividend which payment was prevented by the company's going into voluntary liquidation, the funds were held on resulting trust for the lender. The present situation appears to be analogous to the one confronting the House in Rolls Razor. The primary purpose for the advance of funds by the plaintiffs having failed, Eumeralla held those funds on resulting trust for the plaintiffs.[53]

70 Later in the judgment, the trial judge said this:

Whilst little has been said as to the situation of the first defendant, Eumeralla, it was, for reasons explained, trustee of the monies deposited with it by the plaintiffs. The disbursement of those monies effected by its director Jeff constituted a breach of trust. Eumeralla, therefore, is liable for that breach of trust and subject to any appropriate remedies. Presumably, this is a matter of academic interest only, because there is nothing to suggest that Eumeralla itself has any assets.[54]

71 In their written submissions the applicants contended that the trial judge erred in two respects in finding that there was a 'Quistclose trust'.[55] The first respect was that such a finding was only open if there was a joint venture agreement; and because the trial judge had erred in finding such agreement, he also erred in finding a trust. Having concluded that his Honour did not err in finding a joint venture agreement, we need not address this argument further.

72 The second error was said to be that his Honour misapplied the law as to the circumstances in which a 'Quistclose trust' arises. The submission relied on the statement by Gibbs ACJ in Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq), as follows:

[Quistclose] is authority for the proposition that where money is advanced by A to B, with the mutual intention that it should not become part of the assets of B, but should be used exclusively for a specific purpose, there will be implied (at least in the absence of an indication of a contrary intention) a stipulation that if the purpose fails the money will be repaid, and the arrangement will give rise to a fiduciary character, or trust.[56]

73 The applicants challenged the judge's finding that the money paid to Eumeralla by Jessica and Lance was paid for the purposes of completing the purchase of the Templestowe property and carrying out a redevelopment, and held on a resulting trust if that purpose failed. This, they contended, was contrary to the reasons of this Court in Legal Services Commissioner v Brereton, where Tate JA observed as follows:

A court will not readily infer that funds provided to a company are to be impressed with a primary express trust for use exclusively for a specific purpose, the failure of which creates a secondary resulting trust for the benefit of those who provided the funds. It is not sufficient that funds are provided with an expectation that they will be used for a specific purpose. An expectation or general understanding falls short of the necessary mutual intention that funds have been provided on the express condition that they will be earmarked for use exclusively in accordance with an agreed purpose.[57]

74 Based on Brereton, the applicants submitted that Jessica and Lance were required to establish at trial that the ordinary requirements for the creation of an express trust were satisfied, namely that:

(a) they intended that the money they paid to Eumeralla was to be held on trust; and

(b) it was a mutually intended condition of the trust that, in the event the purpose for which the money was paid should fail (ie the purchase and development of the Templestowe Property), a secondary trust was created for the return of that money.

75 The applicants submitted that Jessica and Lance did not plead that they had such an intention.[58] Further, they submitted, Jessica and Lance did not plead that Eumeralla was a party to the joint venture agreement (nor could it be, given Eumeralla was incorporated after the alleged joint venture agreement was struck). And, they submitted, no evidence was adduced at trial that there was any express agreement that money paid to Eumeralla by Jessica and Lance would be held on trust should the joint venture agreement fail.

76 The applicants submitted that, critically, neither Jessica nor Lance gave evidence that, at any time, they had entered into an express agreement of the kind contemplated in Brereton. Further, the mere fact the money was paid did not establish that fact. Accordingly, it was not open for the trial judge to find that Eumeralla held the money paid to it by Jessica and Lance as a trustee and the trial judge erred in so finding.

77 In contrast, Jessica and Lance submitted that, although as this Court explained in Brereton, a court will not 'readily infer' that funds paid to a company are to be impressed with a trust for a specific purpose, that inference should be drawn in the present case given the evidence that:

(a) Eumeralla was incorporated for the specific purpose of the acquisition and development of the property[59] (which was common ground between the parties);

(b) there was no evidence that Eumeralla conducted any other business; and

(c) there was no evidence that Eumeralla was intended to take the funds advanced by Jessica and Lance beneficially, or that those funds were simply to become part of Eumeralla's assets.

78 Thus, they submitted, Eumeralla was a 'mere vehicle' for the funds deposited into its account by Jessica and Lance (as the trial judge found).[60]

79 Jessica and Lance submitted that the position of the parties was more than a 'mere expectation' or 'general understanding' as to how the funds would be used. In that regard, they sought to distinguish both Brereton and Re Australian Elizabethan Theatre Trust,[61] where there may have been an expectation as to how particular funds would be used, but that expectation was not reflected in the legal arrangements into which the parties had entered.

(a) Regarding Brereton, Jessica and Lance noted that such an expectation was inconsistent with the trial judge's finding that the company in question was 'free to expend the funds invested on other development projects without seeking any authorisation from the investors'.[62] In addition, the investors in Brereton obtained a tax deduction of the entire estimated cost of the project that was 'probably dependent on them retaining no legal or equitable title to the funds'. Thus, as Tate JA observed, 'the investors had parted with their money in exchange for the benefit of the tax deduction obtained'.[63]

(b) Regarding Elizabethan Theatre Trust, Jessica and Lance pointed to the fact that the subject matter of the alleged trust was various donations to a charity, with a 'preference' expressed by the donors as to how those funds were to be used. Again, there was a taxation reason that supported the conclusion that the donors did not intend to retain a beneficial interest in the funds donated. For that reason, the donations were expressed as being given 'unconditionally'.[64]

80 Finally, Jessica and Lance submitted that, whichever of the alleged agreements was the true agreement, neither was or could be performed because the Templestowe Property did not come into the hands of any party. Thus, they submitted, whatever was the mutual purpose of the parties, that purpose had failed. Implicit in any mutual purpose, they submitted, was a stipulation that, if the purpose failed, a trust subsisted for the return of the funds to Jessica and Lance.

81 Jessica and Lance also observed that the trial judge had found that there had been no 're-purposing' of the funds by the alleged agreement of 21 February 2018 (as reflected in the 'minutes of meeting document'). That finding, they observed, is not challenged on the appeal.

82 In our opinion Jessica's and Lance's arguments are to be accepted. For the following reasons, we respectfully agree with his Honour's conclusion that the $430,000 was held by Eumeralla on a resulting trust for Jessica and Lance upon the failure of the purpose for which the funds were advanced.

83 In ascertaining whether a resulting trust[65] is established in a particular case, the following propositions are relevant.

(a) First, as Gummow J explained in Elizabethan Theatre Trust, a trust of the kind held to subsist in Quistclose is a species of express trust. As a consequence, the question of whether such a trust exists is to be answered by reference to intention.[66]

(b) Secondly, ordinarily the relevant intention is that of the alleged settlor, although there may be exceptions to that proposition.[67] Those exceptions are not presently relevant.

(c) Thirdly, a trust may be recognised in a commercial setting (including a loan) notwithstanding the absence of an express statement of intention to create a trust.[68] Neither writing nor formal words are necessary to create a trust.[69]

(d) Fourthly, whether it will be possible to infer an intention to create a trust in a particular case will depend upon a consideration of the language of the parties, construed in context, including the matrix of circumstances.[70]

(e) Fifthly, whether an intention to create a trust exists must be determined by reference to the 'outward manifestation' of such an intention, rather than to the subjective intention of the alleged settlor.[71] As Gummow and Hayne JJ observed in Byrnes, a settlor

must, of course, possess the necessary intention to create a trust, but his subjective intentions are irrelevant. If he enters into arrangements which have the effect of creating a trust, it is not necessary that he should appreciate that they do so; it is sufficient that he intends to enter into them.[72]

(f) This fifth proposition applies not only to an alleged express bilateral covenant to create a trust, but also to a unilateral declaration of an alleged trust and to an alleged trust that is not wholly in writing. In relation to an alleged trust that is not wholly in writing, the need to draw inferences from circumstances in construing the terms of conversations may in practice widen the extent of the inquiry, but it does not alter its nature.[73]

(g) Sixthly, trust obligations arise where equity operates on the conscience of the holder of the legal interest. A person cannot be a trustee of property if that person is ignorant of the facts alleged to affect their conscience. That is, unless the putative trustee is aware that they are intended to hold the property for the benefit of others, their conscience will not be affected in a relevant way.[74]

(h) Seventhly, where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested in B alone, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A. This is only a presumption, which presumption may be rebutted.[75]

(i) Eighthly, a payment (including a loan) for a specific purpose, where the recipient is not free to apply the money for any other purpose, gives rise to a trust. However, a trust does not necessarily arise merely because money is paid for a particular purpose.[76] The question in every case is whether the money was intended to be at the free disposal of the recipient or whether the person providing the funds intended to retain a beneficial interest in the funds.[77] A freedom to dispose of the money is necessarily excluded by an arrangement that the money shall be used exclusively for the stated purpose.[78] That is because a necessary consequence of a finding of an exclusive purpose must be that if, for any reason, the purpose could not be carried out, the money was to be returned.[79]

(j) Finally, a court will not readily infer that funds provided to a company will be impressed with a primary express trust for use exclusively for a specific purpose, the failure of which creates a secondary resulting trust in favour of the person who provided the funds. A mere 'expectation' or 'general understanding' or 'preference' that the funds are to be used for a specific purpose is insufficient. Rather, it is necessary to demonstrate an intention that the funds have been provided on the condition that they will be earmarked for use exclusively in accordance with an agreed purpose.[80]

84 As to Jessica's and Lance's intention in paying $430,000 to Eumeralla, his Honour appears to have reasoned that the moneys were advanced for a purpose; thus, when that purpose failed, Eumeralla held the funds on trust for Jessica and Lance. The authorities suggest that that would not be sufficient, alone, to impress the moneys with a trust (although these facts might create a presumption that they were so impressed).

85 However, we consider that his Honour was correct in his conclusion when regard is had to the totality of the circumstances in which the advance was made.

86 It is important to bear in mind that there was no written document that encapsulated the parties' joint venture agreement or the basis on which the $430,000 was paid to Eumeralla. As a consequence, it is necessary to widen the inquiry beyond the traditional consideration of the documents said to evidence the trust. That is, it is necessary to look to all the circumstances in which the arrangements between Jessica, Lance, Bo, Jeff and Eumeralla occurred in determining whether the payment of $430,000 was impressed with a trust. Relevantly, those circumstances include the following matters.

(a) There was no dispute that the $430,000 was paid into Eumeralla's account in December 2017 by Jessica and Lance. Nor was there any dispute that that money was so paid for a particular purpose, known to all parties, namely for the purchase and development of the Templestowe Property.

(b) There was no dispute that Eumeralla was incorporated in order to further the mutually agreed purpose, by being the corporate vehicle that would take title to the Templestowe Property. There was no evidence that Eumeralla conducted any other business; that is, it had only that single purpose.

(c) The $430,000 payment occurred pursuant to a joint venture agreement between Jessica, Lance, Bo and Jeff (which conclusion we have upheld in our consideration of ground 1).

(d) Bo and Jeff had alleged that a 'crisis meeting' occurred on 21 February 2018 at which Jessica (on her own behalf and as agent for Lance) agreed that $420,000 could be paid out of the Eumeralla bank account. Bo and Jeff produced a document purporting to evidence that agreement in relation to $100,000.[81] As the trial judge held, Jeff's signature on that document was intelligible only on the basis that 'he knew that the funds standing to the credit of Eumeralla could be moved and spent only with the authority' of Jessica and Lance.[82]

(e) The trial judge found that the alleged 21 February 2018 meeting had not in fact occurred as Bo and Jeff alleged, such that the $430,000 was not 're-purposed', and Jessica and Lance had not approved or authorised the withdrawals from Eumeralla's account. That finding was not challenged on the appeal.

87 The matters set out above demonstrate, on the balance of probabilities, that Jessica and Lance advanced the $430,000 to Eumeralla with the intention, determined objectively, that that money should not become part of the assets of Eumeralla, to be used as Eumeralla wished, but that it should be used exclusively for the specific purpose of purchasing and developing the Templestowe property. Implied in the transaction was a stipulation that, if the purpose failed, the money would be repaid. That is, Jessica and Lance intended that they would retain a beneficial interest in the funds.

88 On the appeal, counsel for the applicants submitted that parties to a joint venture may advance moneys to the joint venture vehicle for a variety of purposes and in a variety of ways. They may, for example, make a contribution to share capital; or they may provide a loan to the joint venture operating company. In the present case, it was said, there was no clear evidence concerning the character of the advance of $430,000.

89 In our opinion, however, the particular commercial character of the advance of $430,000 is not determinative of whether that sum is subject to a resulting trust in the hands of Eumeralla. That is because Quistclose, and the subsequent authorities considered above, make clear that a resulting trust may arise in the context of a commercial transaction, such as a loan, so that legal and equitable remedies co-exist in relation to the amount in question. Thus, regardless of whether the payment of $430,000 is properly characterised as an 'advance', as a loan, as a contribution to share capital,[83] or as some other species of commercial transaction, the question nonetheless is whether the payment was made for the exclusive purpose of the purchase and development of the Templestowe property, such that it was impressed with a resulting trust and repayable if the purpose failed. For the reasons we have given, we have concluded that the answer to that question is 'yes'.

90 As the cases reveal, it is not necessary, in order to reach this conclusion, to find that Jessica and Lance subjectively knew that they were creating a trust, or subjectively intended to do so; it is sufficient that the transactions they entered into were such as to impress the receipt of the $430,000 with a trust and that they intended to enter those transactions. It was not necessary for Jessica or Lance to give evidence that they had entered into an express agreement concerning the use of the funds they transferred to Eumeralla.

91 The authorities suggest that it is not necessary to have regard to Eumeralla's intention to reach that conclusion. However, it is necessary that Eumeralla was aware that it was intended to hold the property for the benefit of others. Of course, being a corporation, Eumeralla had no knowledge or intention of its own. Rather, its knowledge (and, should it be relevant, its intention) must be ascertained by reference to

some person or persons so closely and relevantly connected with the company that the state of mind of that person or those persons can be treated as being identified with the company so that their state of mind can be treated as being the state of mind of the company.[84]

92 In the present case, it is appropriate to ascertain Eumeralla's state of mind by reference to the state of mind of Jeff, its sole director and controller of its sole shareholder. He was the 'directing mind and will'[85] of Eumeralla. We consider that Jeff, and hence Eumeralla, well understood that the $430,000 was not transferred by Jessica and Lance to Eumeralla for whatever purposes Eumeralla (or Jeff) might wish. In particular, Jeff's endeavours to show that Jessica (and Lance) had authorised the use of the funds for some different purpose reveals a consciousness of the condition on the use of the funds.

93 We accept Jessica's and Lance's submission that both Elizabethan Theatre Trust and Brereton can be distinguished. First, in contrast with those cases, where taxation considerations were significant, there was nothing about the payment of the $430,000 that supported the proposition that they must have intended to part with a beneficial interest in the money. Secondly, Jessica and Lance had more than an 'expectation' or a 'preference' that the $430,000 be applied for the purpose of purchasing the Templestowe property. Rather, that purpose was, we infer from the circumstances, a condition on the payment of the money, coupled with an implied stipulation that if the purpose failed the money would be returned to them. To use the language of Tate JA in Brereton, and even accepting the caution urged by her Honour, we are satisfied that Jessica and Lance provided the $430,000 to Eumeralla on the express (albeit implied) condition that those funds were earmarked for use exclusively in accordance with the mutually agreed purpose.

94 To the extent that the applicants now complain that Jessica and Lance did not sufficiently plead an intention to create a trust or the condition in relation to the failure of the mutual purpose, we reject that contention. The Minute of Proposed Further Amended Writ (Statement of Claim) stated that the trust alleged 'was a Quistclose trust, arising on the failure of the purpose intended by Jessica and agreed between the parties'. In our opinion that was sufficient, and so much was accepted in oral argument.

95 Thus we consider that there was a resulting trust over the $430,000, and the trial judge was correct to so hold.

97 It follows from our conclusion on proposed ground 2 that proposed grounds 3, 4 and 5 must also fail.

98 Given the complexity of the matters in issue, we would grant leave to appeal. However, for the reasons given we would dismiss the appeal.

[1] The precise amount was $429,521, but it is convenient to round that figure up to $430,000.

[2] Chen v Eumeralla Estate Pty Ltd [2021] VCC 453, [2] ('Reasons').

[4] Bo and Jeff asserted that the withdrawals, or some of them, were authorised by Jessica and Lance. Jessica and Lance disputed that.

[8] An application that enables messages to be sent between participants on a mobile phone, similar to SMS messages.

[15] The claimed trust was that described as a 'Quistclose trust'.

[29] This sum reflected the $430,000 less the 11 per cent interest declared in the Kooyong Property.

[30] Reasons, [130]-[141] (emphasis added).

[31] See, eg, NOM v Director of Public Prosecutions [2012] VSCA 198; (2012) 38 VR 618, 655-6 [124] (Redlich and Harper JJA and Curtain AJA); [2012] VSCA 198; Helton v Allen [1940] HCA 20; (1940) 63 CLR 691, 712 (Dixon, Evatt and McTiernan JJ); [1940] HCA 20; Rhesa Shipping Co SA v Edmunds [1985] 2 All ER 712, 717-18 (Lord Brandon of Oakbrook) ('Rhesa Shipping').

[32] [1985] 2 All ER 712.

[33] [1983] 2 Lloyd's Rep 235, 245-6.

[35] [1983] 2 Lloyd's Rep 235, 248 (emphasis added).

[36] Rhesa Shipping [1985] 2 All ER 712, 718, quoting Sherlock Holmes in Sir Arthur Conan Doyle, The Sign of Four (1890).

[37] Rhesa Shipping [1985] 2 All ER 712, 718.

[38] Rhesa Shipping [1985] 2 All ER 712, 718.

[39] Huntsman Chemical Company Australia Pty Ltd v Narellan Pools Pty Ltd [2011] FCAFC 7, [53] (Flick J); McLennan v Nominal Defendant [2014] NSWCA 332, [87] (Basten and Emmett JJA and Simpson J); Sukkhathammavong v Cook Freeze Pty Ltd [2003] QCA 248, [17] (Wilson J); Van Muyen v Nominal Defendant (Qld) [2003] QCA 243, [20] (Williams JA); Panegyres v Medical Board of Australia [2020] WASCA 58, [270] (Vaughan JA).

[40] Kuligowski v Metrobus [2004] HCA 34; (2004) 220 CLR 363, 385-6 [60] (Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ); [2004] HCA 34.

[41] [2015] VSCA 150, [109] (Ashley JA agreeing at [1], Digby AJA agreeing at [144]).

[46] Reasons, [22], where the judge records that under the joint venture agreement as alleged, the parties were to provide total contributions of $1.65 million (being 20 per cent of the cost of purchase and development), and the bank was to provide the remaining 80 per cent by way of a loan.

[55] See Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 ('Quistclose').

[56] Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) [1978] HCA 45; (1978) 141 CLR 335, 353; [1978] HCA 45.

[57] Legal Services Commissioner v Brereton [2011] VSCA 241; (2011) 33 VR 126, 150-1 [96] (Nettle JA agreeing at 128 [1], Ashley JA agreeing at 128 [2]); [2011] VSCA 241 (citations omitted) ('Brereton').

[58] The applicants submitted that, at the highest, Jessica and Lance pleaded only that there were terms of the joint venture agreement that they would contribute '...the remaining equity necessary to purchase and develop the property...' in shares.

[61] [1991] FCA 344; (1991) 30 FCR 491 ('Elizabethan Theatre Trust').

[62] Brereton [2011] VSCA 241; (2011) 33 VR 126, 153 [103]; [2011] VSCA 241.

[63] Brereton [2011] VSCA 241; (2011) 33 VR 126, 153 [104]; [2011] VSCA 241.

[64] Elizabethan Theatre Trust [1991] FCA 344; (1991) 30 FCR 491, 498 (Gummow J).

[65] The term 'Quistclose trust', while oft-used, has been deprecated on occasion: see, eg, Raulfs v Fishy Bite Pty Ltd [2012] NSWCA 135, [51] (Campbell JA); although Bell, Gageler and Keane JJ observed in Legal Services Board v Gillespie-Jones [2013] HCA 35; (2013) 249 CLR 493, 523 [112]; [2013] HCA 35 ('Gillespie-Jones') that that terminology 'is helpful as a reminder that legal and equitable remedies may co-exist', but unhelpful 'if taken to suggest the possibility apart from statute of a non-express trust for non-charitable purposes'. We do not, of course, suggest a trust of the latter kind.

[66] Elizabethan Theatre Trust [1991] FCA 344; (1991) 30 FCR 491, 502; Korda v Australian Executor Trustees (SA) Ltd [2015] HCA 6; (2015) 255 CLR 62, 69-70 [5], 71 [7]-[8] (French CJ); [2015] HCA 6 ('Korda').

[67] Elizabethan Theatre Trust [1991] FCA 344; (1991) 30 FCR 491, 502.

[68] Commissioner of State Revenue v Snowy Hydro Ltd [2012] VSCA 145; (2012) 43 VR 109, 130 [83] (Maxwell P, Redlich JA and Robson AJA); [2012] VSCA 145 ('Snowy Hydro').

[69] As to the proposition that formal words are not necessary, see Elizabethan Theatre Trust [1991] FCA 344; (1991) 30 FCR 491, 504-5 (Gummow J).

[70] Snowy Hydro [2012] VSCA 145; (2012) 43 VR 109, 130 [83] (Maxwell P, Redlich JA and Robson AJA); [2012] VSCA 145, quoting Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107, 121 (Mason CJ and Wilson J); [1988] HCA 44 ('Trident'), and citing Trident [1988] HCA 44; (1988) 165 CLR 107, 148 (Deane J); Walker v Corboy (1990) 19 NSWLR 382, 384-5 (Priestley JA), 387-9 (Clarke JA), 396-7 (Meagher JA); Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253, 277 [65] (Gummow and Hayne JJ, French CJ agreeing at 263), 288-9 [109]-[112] (Heydon and Crennan JJ); [2011] HCA 26 ('Byrnes'). See also Elizabethan Theatre Trust [1991] FCA 344; (1991) 30 FCR 491, 503 (Gummow J); Korda [2015] HCA 6; (2015) 255 CLR 62, 72-3 [10] (French CJ); [2015] HCA 6.

[71] Gillespie-Jones [2013] HCA 35; (2013) 249 CLR 493, 525 [119] (Bell, Gageler and Keane JJ); [2013] HCA 35.

[72] Byrnes [2011] HCA 26; (2011) 243 CLR 253, 274 [55]; [2011] HCA 26, quoting Twinsectra Ltd v Yardley [2002] UKHL 12; [2002] 2 AC 164, 185 [71] (Lord Millett) ('Twinsectra'). See also 290 [114] (Heydon and Crennan JJ).

[73] Byrnes [2011] HCA 26; (2011) 243 CLR 253, 290 [114] (Heydon and Crennan JJ); [2011] HCA 26.

[74] Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] UKHL 12; [1996] AC 669, 705 (Lord Browne-Wilkinson) ('Westdeutsche').

[75] Westdeutsche [1996] UKHL 12; [1996] AC 669, 708 (Lord Browne-Wilkinson). See also, in relation to circumstances where the purchase of the property is completed, rather than having failed, Napier v Public Trustee (WA) (1980) 55 ALJR 1, 3-4 (Aickin J), and Wirth v Wirth [1956] HCA 71; (1956) 98 CLR 228, 235 (Dixon CJ); [1956] HCA 71: 'Where a purchase was made in the name of a stranger who provided none of the purchase money the law was clear from a very early time that a resulting trust was presumed and the stranger could take beneficially only if he proved affirmatively that it was so intended.'

[76] Twinsectra [2002] UKHL 12; [2002] 2 AC 164, 185 [73] (Lord Millett); Brereton [2011] VSCA 241; (2011) 33 VR 126, 152, [99] (Tate JA); [2011] VSCA 241; Marriner v Australian Super Developments Pty Ltd [2012] VSCA 171; (2012) 46 VR 213, 231 [67] (Neave and Mandie JJA and Judd AJA); [2012] VSCA 171 ('Marriner').

[77] Marriner [2012] VSCA 171; (2012) 46 VR 213, 231 [67] (Neave and Mandie JJA and Judd AJA); [2012] VSCA 171.

[78] Twinsectra [2002] UKHL 12; [2002] 2 AC 164, 185-6 [74] (Lord Millett).

[79] Quistclose [1970] AC 567, 580 (Lord Wilberforce), quoted in Twinsectra [2002] UKHL 12; [2002] 2 AC 164, 185-6 [74] (Lord Millett).

[80] Brereton [2011] VSCA 241; (2011) 33 VR 126, 150-1 [96], 152-3 [102] (Tate JA); [2011] VSCA 241. See also Elizabethan Theatre Trust [1991] FCA 344; (1991) 30 FCR 491, 498, 505 (Gummow J).

[83] Which seems unlikely, since Jessica and Lance were not, at that stage, and never became, shareholders of Eumeralla.

[84] Brambles Holdings Ltd v Carey (1976) 15 SASR 270, 279 (Bright J), and see 275-276 (Bray CJ), 281-282 (Mitchell J), quoted with approval in Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 582-3 (Brennan, Deane, Gaudron and McHugh JJ); [1995] HCA 68. See also Australasian Annuities Pty Ltd (in liq) v Rowley Super Fund Pty Ltd [2015] VSCA 9, [262]-[266] (Garde AJA), and the authorities discussed therein ('Australasian Annuities').

[85] Australasian Annuities [2015] VSCA 9, [106]-[107] (Warren CJ), [261]-[262], [266]-[270], [279]-[281] (Garde AJA).