Zuecker v Bruggmann

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - where the plaintiff and the defendant alleged various contracts between them concerning the ownership, maintenance and development of a parcel of land - whether any of the alleged contracts were formed - whether the plaintiff or the defendant is entitled to relief for breach of contract

RESTITUTION - CLAIMS ARISING OUT OF INEFFECTIVE CONTRACTS - GENERALLY - TOTAL FAILURE OF CONSIDERATION OR AGREED RETURN - where the plaintiff, in the alternative to her contractual claims, seeks restitution of a payment of $750,000 from the defendant on the basis that the consideration for the payment has totally failed - whether the plaintiff is entitled to restitution of the payment - whether the plaintiff is entitled to a constructive trust or an equitable lien in aid of any restitutionary right

Civil Proceedings Act 2011 (Qld)

Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344, cited

Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567, cited

Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137, cited

Break Fast Investments Pty Ltd v Perikles Giannopoulos (also known as Perry Giannopoulos) (No 5) [2011] NSWSC 1508, cited

David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353, cited

Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498, cited

Heydon v NRMA [2001] NSWCA 445, cited

In the matter of Wan Ze Property Development (Aust) Pty Ltd [2012] NSWSC 722; (2012) 90 ACSR 593, cited

King Tide Company Pty Ltd v Arawak Holdings Pty Ltd [2017] QCA 251, cited

Leasing Centre (Aust) Pty Ltd v Shepard [2011] FCA 443, cited

Lexane Pty Limited v Highfern Pty Ltd [1985] 1 Qd R 446, cited

Lombardo v Bahnan [2014] VSC 410, cited

Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583, cited

QNI Resources Pty Ltd v Park [2016] QSC 222, cited

Re Day [2017] HCA 2; (2017) 91 ALJR 262, cited

Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516, cited

Wambo Coal Pty Ltd v Stuart Karim Ariff [2007] NSWSC 589, cited

The defendant appeared on her own behalf on 2 November 2015 - 5 November 2015

R J Clutterbuck for the defendant on 17 October 2016 - 20 October 2016 and 11 November 2016

The defendant appeared on her own behalf on 2 November 2015 - 5 November 2015

Turnbull Mylne for the defendant on 17 October 2016 - 20 October 2016 and 11 November 2016

[1] The defendant was Swiss-born but as at 2005 was an Australian citizen and resident. She was the registered proprietor of an estate in fee simple of a property at 199 Little Nerang Road, Mudgeeraba (the Property)[1]. She had taken steps towards developing the Property, but had not completed the project and had decided to try to sell the Property "as is".

[2] Having unsuccessfully marketed the Property in Australia at a price of $2.2 million, she travelled to Switzerland in late 2005 with a view to marketing the Property in that country. It was there that she met the plaintiff, who was a Swiss citizen and a journalist based at the United Nations' European headquarters in Geneva.

[3] In August 2006, the plaintiff travelled to Australia on a tourist visa and stayed with the defendant at the Property. In September 2006, they entered into contractual arrangements in relation to the Property. The dispute between them concerns the nature and consequences of those arrangements.

[4] The plaintiff's case[2] was that she and the defendant entered into two written agreements, and one agreement which was party oral and partly to be inferred from conduct.

[5] First, the plaintiff alleged a written contract of 20 September 2016 (which I will refer to as the purchase contract)[3] pursuant to which the defendant as the sole registered proprietor of an estate in fee simple of the Property agreed to transfer the Property to herself and the plaintiff for a contract price of $450,000, so that they both became registered proprietors as joint tenants of the estate in fee simple of the Property.

[6] Second, the plaintiff alleged a further written "Private, Personal Agreement" (which I will refer to as the private personal agreement) entered into on or after 20 September 2006, pursuant to which the parties:

• (a) recorded their agreement as to how and when the plaintiff would pay the monies by which she would become joint tenant with the defendant of the Property; and
• (b) recorded certain obligations which each would owe the other in relation to how they would deal with the Property once they became joint tenants.

Preliminary observations as to the plaintiff and the defendant

[11] As a general proposition, I did not regard either the plaintiff or the defendant to be a credit-worthy or reliable witness. On issues which they must have considered important to the controversy between them, I would only accept their evidence if it was corroborated by contemporaneous documents, their own contemporaneous conduct, or the evidence of other, reliable, witnesses.

[12] The defendant insisted upon her version of the central narrative of her deal with the plaintiff, namely that from on or about 6 September 2006 there was an oral agreement for the sale of the entirety of the Property for $2.2 million, and any money she received was in partial discharge of that agreement. She did so even though, as will become obvious,[6] that proposition was inconsistent with contemporaneous documents and the contemporaneous conduct of herself and others, including instructions which she provided to her own solicitors. She did so even though she entered into two written contracts within weeks of 6 September 2006 which were consistent with previous documents, conduct and instructions but antithetical to the suggested oral sale agreement. She did so even though she did not contend that the written agreements should be rectified. And she did so even though the proposition that there was an oral sale agreement was inconsistent with her own subsequent conduct, including written instructions which she had given her own lawyers in early 2007.[7] She had no adequate explanation for the inconsistencies. I reject her evidence of the oral sale agreement and find that her insistence on it in the face of overwhelming evidence to the contrary justified a strong adverse view of her credit and reliability.

[13] But the plaintiff was no better and was, in some respects, worse.

[14] She told and would not be moved from an implausible story of physical and verbal abuse and unconscionable overbearing conduct by the defendant and others associated with the defendant (including the defendant's solicitor, Mr Baldwin). She cast herself as the victim, alone and vulnerable in a foreign country in the language of which she was not yet fluent. She signed documents, she says, because she was forced to sign them (including by Mr Baldwin physically preventing her from leaving his office). And she paid the monies referred to in the documents which she was forced to sign only because she "realized" what the documents required.

[18] In my view, the only reliable way through the morass of conflict between the evidence of the plaintiff and that of the defendant is to make chronological findings based on contemporaneous documents, contemporaneous conduct, and the evidence of other reliable witnesses, while having regard to the evidence of the plaintiff and the defendant only in the way I have explained.[14] I do so below.

Circumstances in which the plaintiff and the defendant first met

[19] The defendant was born in Switzerland but migrated to Australia in 1980 and became an Australian citizen in 1983.[15]

[20] In 2005 she was the sole registered proprietor of an estate in fee simple in the Property. She had acquired the Property many years before.[16]

[21] The Property was a 2.09 hectare rural parcel which had as improvements a two level chalet-style dwelling with an attached flat, and two detached cabins. It was situated in an elevated position at Mudgeeraba on the central western Gold Coast.

[22] It had council approval to be used as an art/meditation and teaching centre. The conditions for such use included:

• (a) accommodation for up to 12 persons in 6 cabins;
• (b) the cabins could only be used in association with meditation or art teaching;
• (c) the cabins could have a maximum area of less than 70m2; and
• (d) access had to be upgraded.

[23] The two detached cabins had been constructed by the defendant as part of steps which she had taken towards developing the Property in accordance with the council approval. However the development was incomplete. The defendant decided to try to sell the Property "as is".[17]

[24] She advertised the Property for sale in Australia for $2.2 million, but had no success. She decided to try to sell it in Switzerland and to that end travelled to Switzerland in late 2005.[18]

[25] The plaintiff and the defendant met for the first time in Switzerland in late 2005 or early 2006.[19]

[26] The evidence of the plaintiff and the defendant differed markedly about the exact circumstances of their interaction within Switzerland and, in particular, insofar as it related to their interaction concerning the Property, the story the plaintiff told was antithetical to the notion that she was at that time contemplating buying property in Australia.

[27] It suffices to say that I accept as reliable the evidence of Anton Meier, a Swiss financial and emigration consultant, insofar as Mr Meier describes what he saw of the interaction. The plaintiff and the defendant attended at his office in Switzerland and discussed with him the possibility of the plaintiff buying the Property from the defendant. Mr Meier explained to the plaintiff that she would not be able to buy a residential property if she was travelling on a tourist visa but that if she had a business visa she might be able to buy the Property because it was a commercial property. He gave some advice about structuring a transaction between them as a loan transaction. In an email he wrote to the defendant's solicitors in 2009 he described the plaintiff and the defendant as then being "in the initial stages on their idea of a future business relationship". I find that that was an accurate description of the situation.

Early August 2006: the plaintiff's arrival and residence in Australia

[28] The plaintiff arrived in Australia on 6 August 2006[22] on a tourist visa.[23]

[29] From the outset of the plaintiff's arrival she resided in the main residence and the defendant resided in one of the cabins.[24]

Interaction with a solicitor before 20 September 2006

[30] At some time prior to 4 September 2006,[25] a meeting took place between:

• (a) the defendant's solicitor, Mr Baldwin of Turnbull & Co; and
• (b) the plaintiff and the defendant,

at which the plaintiff and the defendant discussed with Mr Baldwin the possibility of entering into an agreement in relation to the Property by which the plaintiff could obtain a half interest in the Property.

[31] The defendant provided Mr Baldwin with instructions by way of an information sheet (the first information sheet). Although the matter is not entirely clear, it is likely that the terms of the first information sheet were those set out in exhibit 53.

[32] In substance, the instructions so provided to Mr Baldwin were as follows:

• (a) The instructions contemplated the preparation of three documents: a "purchase agreement / joint venture"; an annexure to the "purchase agreement", and a "private, personal agreement".
• (b) As to the first document:
  • (i) The "purchase agreement / joint venture" would lead to joint ownership of the Property by the plaintiff and the defendant. In order to become a joint owner, the plaintiff would pay an amount to the defendant.
  • (ii) The amount the plaintiff would pay was not clearly specified but the information sheet stated that the joint venture was based on two specified 2005 bank valuations at $1,150,000 and $1,100,000 respectively. Those figures were said to reflect current selling prices of similar specified properties.
• (c) As to the second document:
  • (i) An annexure to the "purchase agreement" was contemplated.
  • (ii) It would identify how the plaintiff and the defendant proposed to divide up the Property between themselves, by reference to colour markings on a survey plan prepared in accordance with instructions from the plaintiff and the defendant.
  • (iii) The annexure would be "only for [the plaintiff and the defendant]".
• (d) As to the third document:
  • (i) A "private, personal agreement" was contemplated.
  • (ii) It would contain terms governing how the plaintiff and the defendant would hold their interests in the Property, including how each could sell their share of the Property, and how certain expenses would be paid. It seemed to have been contemplated that each would have a first option if the other wished to sell.
• (e) The first information sheet evinced a concern to keep certain information hidden from the Department of Natural Resources, lest the agreement between the two parties be construed as an agreement to subdivide the Property.

I think that it does provide some support for that contention. However, the information sheets and to a greater extent the contracts which the parties subsequently executed are more secure foundations for that conclusion.

The two contracts governing the terms on which the plaintiff became a joint tenant

[38] Ultimately, instead of the three documents referred to in the first and second information sheets, the parties actually entered into two written contracts, namely the purchase contract and the private personal agreement.

[39] On 20 September 2006, the plaintiff and the defendant entered into the purchase contract, pursuant to which the defendant as the sole registered proprietor of an estate in fee simple of the Property agreed to transfer the Property to herself and the plaintiff so that they both became registered proprietors as joint tenants of the estate in fee simple of the Property.

[40] The purchase contract took the form of an ordinary conveyancing contract in the standard REIQ form, naming the defendant as the seller and the plaintiff and the defendant as the buyer.[39] It is uncontroversial that the parties signed that contract and the associated transfer in registrable form on 20 September 2006 at a meeting with Mr Baldwin. Mr Baldwin witnessed their signatures.

[41] The 5 October 2006 invoice from the defendant's solicitors to which I have earlier referred also sought payment for work done in drafting the purchase contract, transfer and ancillary documentation, and attending to stamping and registration of the transfer.[40] One can infer from the fact of payment previously mentioned that both parties were content with this course.

[42] The consideration recorded on the face of the purchase contract was $450,000. I observe:

• (a) Mathematically, the amount was 50% of the $900,000 Herron Todd White valuation dated 29 August 2006[41] referred to in the second information sheet.
• (b) However, that was not explained to the plaintiff. Her affidavit suggested that it was at the second meeting with Mr Baldwin that the $900,000 valuation was discussed in her presence,[42] but that was in the context of the story that the defendant and Mr Baldwin forced her to sign the contact on 20 September 2006, which I reject.
• (c) Mr Baldwin could not remember whether he saw the valuation on the occasion of the second meeting. But if he did, I think it is likely that that occurred in the absence of the plaintiff, given Mr Baldwin's evidence that he asked her to leave the second meeting. The plaintiff herself said that the first time she saw the valuation was when she found it in April 2007.

Sale and Purchase: [The plaintiff] agrees to purchase and [the defendant] agrees to sell fifty percent of the Property. As a first payment [the plaintiff] agrees to release [the defendant's] Mortgage and Title of 244,281.22 AUD by 20/9/2006 at Westpac Bank.

Upon execution of the property settlement and this agreement [the plaintiff] will pay the rest of the purchase sum to [the defendant].

(c) Rates and taxes were to be shared equally by the plaintiff and the defendant.

(d) Terms touching upon the subject matter which the two information sheets had contemplated would be dealt with in an annexure to the purchase contract, namely how the plaintiff and the defendant:

• (i) proposed to divide up the Property between themselves;
• (ii) would pay certain specified costs,

by reference to colour markings and other matters depicted on "the surveyors plan of ..9.2006". Unlike the agreement that rates and taxes would be shared equally, the parties agreed that each of them would "pay the costs and maintenance of her own buildings, landscaping, gardens." (I note that a surveyor's plan dated 14 September 2006 which the plaintiff marked up in colour was tendered,[52] but the evidence did not connect it up with the private personal agreement in such a way as would permit of the conclusion that it must have been the document referred to in the private personal agreement.

(e) By the final two clauses in the operative part:

Sale of Share or part thereof is possible if [the defendant or the plaintiff] or their successors or assigns decide to sell their share in the Estate, according to the following procedure:

The party wishing to sell their share or part of thereof must give the other party a Notice of Intention to Sell Share. Such notice must give the Offeree 180 days of share first option. The price shall be determined by the market value.

Sale of the entire Property if [the defendant and the plaintiff] both agree to the sale, then the Profit from the sale of the estate shall be distributed according to the market value of each share.

[47] I observe that although it was the private personal agreement not the purchase contract which provided for the timing of the payments to be made by the plaintiff to the defendant, that document did not identify the amount which would be "the rest of the purchase sum".

[48] The purchase contract and the private personal agreement were performed by the parties, although not strictly in accordance with their terms. I note:

• (a) On 20 September 2006 the defendant's Westpac mortgage statement had debited to it interest to that day enabling a calculation of the amount required to discharge the mortgage in the sum of $244,281.22.[53] On the same day, the plaintiff paid to the defendant's Westpac mortgage account the sum of $244,289.22.[54] The difference of $8 is unexplained. However, the fact that the amount paid to discharge was only precisely calculated on that day, is the fact that suggests that the private personal agreement must have been prepared on or after 20 September 2006.[55] That was accepted by the defendant.[56]
• (b) The plaintiff and the defendant executed a General Authority to Complete Transfer in favour of Turnbull & Co dated 6 October 2006.[57]
• (c) On 5 October 2006, Mr Baldwin's firm sent an invoice for, amongst other things, work done in drafting the contract and attending to transfer and registration.[58]
• (d) On 10 October 2006 the defendant's solicitors, Turnbull & Co, wrote confirming the purchase contract and transfer had been stamped in readiness for registration and indicating that upon receipt of payment of their professional fees they would attend to registration to enable the matter to be finalised.[59]
• (e) On 12 October 2006, according to the plaintiff's handwritten note on the Turnbull & Co invoice, the plaintiff attended to payment of Mr Baldwin's fee.[60] She was reimbursed for 50% of the amount by the defendant.[61]
• (f) On 13 October 2006, the transfer into the names of the plaintiff and the defendant as joint tenants was registered.

[49] On 2 November 2006, the plaintiff paid to the defendant the sum of $750,000 by bank transfer from her UBS account in Switzerland to the defendant's UBS account in Switzerland. That payment is reflected in the plaintiff's bank statement[64] and the defendant's bank statement.[65]

[50] I will return to the question of the purpose of this payment and whether it was the subject of any contractual or other arrangement explaining its purpose.

[51] This period was notable for two parallel courses of conduct. At least the first is a rich source of evidence against which the competing stories now advanced by the parties may be measured.

[52] First, the parties sought and obtained legal advice, and communicated with each other in relation to possible ways in which:

• (a) the defendant could sell to the plaintiff a greater part of her interest in the Property than that she already had; and
• (b) they could document their relationship in relation to the further development of the Property.

[53] Second, steps were actually taken by the parties towards the further development of the Property, even though there had been no formal documentation of their relationship in relation to that further development.

Communications in relation to possible further agreements

[54] On 24 January 2007, the defendant forwarded an email to Mr Baldwin.[66] That email stated (emphasis added):

I need to find out what is involved to sell more of my property portion to [the plaintiff]. She is holding 50% and I don't see a mention on the title. However the details are mentioned on the [joint tenancy contract], and we paid stamp duty on the half share.

[55] Mr Baldwin had a recollection of being contacted by the defendant sometime after the initial sale of a one half interest wanting to sell more of the Property to the plaintiff.[67] The email chain reveals that he responded with advice to the effect that joint tenants could only hold in equal shares and her request could not be achieved.

[56] It will be immediately apparent that the defendant's conduct is inconsistent her case that there was an oral sale agreement for the whole Property in September 2006. As will appear, the inconsistencies multiply.

[57] On 3 February 2007, the defendant asked Mr Baldwin whether her goal of having the plaintiff acquire more of the Property could be achieved by making a private agreement altering the private personal agreement by changing the extent to which each was entitled to the exclusive use of the Property and whether the money payment for that course could be in the form of a private loan never to be paid back.[68] The email chain reveals that Mr Baldwin responded with advice to the effect that "as we previously advised" there could be a loan to the defendant supported by a registered mortgage which would protect the plaintiff's interest and which would, by agreement, achieve the desired outcome.

[58] On 7 February 2007, the defendant asked Mr Baldwin questions concerning his last advice. She wanted to know whether it could be done without registration of a mortgage and, if so, how she could "be protected and have no obligations to repay the money back to [the plaintiff] since this whole exerzice [sic] is a way for [the plaintiff] to own and use the property (almost all of it, except my little house pad)".[69] The email chain reveals that Mr Baldwin responded with advice to the effect that the arrangement could be a loan, that the mortgage did not need to be registered, and a condition of the mortgage could be that in the event of the plaintiff's death the mortgage was forgiven.

[59] On 8 March 2007, the defendant sent an email to Mr Baldwin in these terms (emphasis added):

The situation with [the plaintiff] is deteriorating in quite an unpleasant way and I would like to secure my 50% share. In case of my death before her, she will automatically inherit my part which I want to avoid. To do so, I will take a loan from a family member and have it registered with the title office as a first mortgage. This will allow me to include my property share in my will and distribute the money according to my directions. If [the plaintiff] then does not want to buy my share, at least it stays within my family interests. When you have a free minute, I would like to visit you at your office and finalize things."[70]

[60] On 2 April 2007, the plaintiff, by her solicitors WF Yau Lawyers, made a Foreign Investment Review Board application to purchase residential real estate.[71] I make the following observations about the application:

• (a) The covering letter from her solicitors stated that she was one of the joint tenants of the Property, she intended to acquire the whole of the land and redevelop it into a resort, and she intended to commence demolition and construction work in mid-April 2007.
• (b) The letter enclosed a FIRB application which had been signed on behalf of the plaintiff by her solicitors. Amongst other things, the form stated that the estimated development costs were $1 million.
• (c) The first page of the form set out a document checklist which required the plaintiff to provide the FIRB with, amongst other things, a copy of the identification page of her passport and a copy of the information page of the contract of sale including details of the vendor and of the consideration. The former document was provided with the covering letter, but the latter was not. However, the plaintiff's lawyers did separately provide the FIRB with a document which her lawyers described at the development proposal. [72] The document was one of the sales brochures which the defendant had prepared when she had been marketing the Property for $2.2 million in 2005 and still contained the reference to that price.
• (d) On 30 April 2007, the FIRB wrote to the plaintiff's lawyers,[73] described her application as a "proposal ... to acquire an accommodation facility ... for a consideration of $2.2 million" and advised that there were no objections to that proposal. The approval appeared to reflect an understandable misunderstanding of the application.

[61] By 3 April 2007, the plaintiff had engaged a further firm of solicitors - Michael Lynn of McLaughlins Lawyers - to act on her behalf, and Mr Lynn had made contact with Mr Baldwin.[74]

[62] On 7 April 2007, the defendant's solicitors sent an email to the plaintiff's solicitors, stating the defendant's position and threatening the possibility of an application seeking the appointment of trustees for sale. The email stated (emphasis added):

My instructions are that our client will agree to a $1 million sale price for the remaining 50% of the property as previously advertised. Unless there is agreement to that effect please convey to your client that our client will provide us with instructions to consent to the appointment of a Trustee to allow the property to be sold; the sale proceeds placed in trust and the matter litigated to a result if that is necessary and agreement as to distribution of sale proceeds cannot be reached.

There is no agreement in respect of joint expenditure, please convey to your client that unless our client agrees on expenditure, which has not been the case to date, that our client will not be responsible for that expenditure.

Please also be advised that we have instructions to issue a Notice to Vacate in respect of Mandy and David Black to vacate Cabin 2 being our clients [sic] property.[75]

[63] The contention made on behalf of the defendant in the second last paragraph of the email is plainly inconsistent with the bargain which the plaintiff alleges was made in relation to the $750,000 payment made on 2 November 2006.[76] If the plaintiff had in fact made that bargain, then one would have expected a prompt and immediate rebuttal of the contention, by reference to the terms of the bargain already struck. However there is no evidence that that happened.

[64] On 11 April 2007:

• (a) the plaintiff requested the defendant in a handwritten note to have her instruct her solicitor "to prepare the document/the agreement on the basis of your wishes" and have him send it to the plaintiff's solicitors;[77] and
• (b) the plaintiff's solicitors wrote to the defendant's solicitors referring to their recent telephone conversation and stating (emphasis added):[78]

We refer to our recent telephone conversations concerning the matter and confirm that we act for Irene Nicoletta Zucker.

As you are aware, our respective clients are joint tenants in the above property and your client has in principle agreed to sell her interest in the property to our client on terms to be agreed.

We are instructed that your client has provided instructions to you to draw the necessary documents, and we would be pleased if you would forward such documentation to us at the earliest opportunity.

We are also instructed that our client attended your office in the company of Ruth Bruggmann to sign the contract and Transfer dated 20 September 2006, and the authority to complete transfer dated 6 October 2006.

To clarify the position and to avoid any misunderstanding, would you please confirm that you were not acting for our client, or provide advice to her, in relation to that transaction and/or the proposed joint venture to develop the property, or any other matter of and concerning the property.[79]

[65] I observe that either of these communications would have been an occasion for the rebuttal of the defendant's proposition advanced on 7 April 2007 that there was no extant agreement in respect of joint expenditure. If if the plaintiff had (i) in fact made the bargain she alleges in relation to the $750,000 payment made on 2 November 2006, or (ii) paid the $750,000 substantially for the purpose that it (whether alone or with some other monies) would be spent on the development, it would have been important to do this. However, that did not happen.

[66] On 12 April 2007, there was an email exchange between the two sets of lawyers revealing, on the one hand, that the defendant was interested in pursuing the loan option which she had discussed with her lawyers and, on the other hand, that the plaintiff was interested in buying from the defendant the defendant's interest in the Property at a price to be agreed.[80]

• (a) The defendant's solicitor Mr Baldwin wrote to the plaintiff's solicitor Mr Lynn in the following terms:

Reference is made to your facsimile of 11 April 2007.

We have never provided advise [sic] to Ms. Zucker and have made it very clear when she attended this office that we did not act for her in any respect whatsoever.

My instructions are that your client will loan my client $1 million secured by my clients [sic] half of the subject property. Such loan to be at an interest of $1/year for a term of 20 years with a further option of 20 years. Does that accord with your instructions ??

My instructions are that your client wishes to sell her interest in the property to my client at a consideration to be agreed ($million [sic] has been mentioned). My client is unaware of any loan proposal as set out in your email and instructs me that all of her discussions with your client have been with the object of purchasing your clients [sic] interest.

Would you please ascertain from your client whether she wishes to sell her interest to my client and if so, on what terms. Alternatively, if your client does not wish to sell, what is proposed re the joint venture to develop the property?

[67] I observe that the request made in the last sentence by the plaintiff's lawyer is again a curious one, given the fact that if the plaintiff had in fact made the bargain she alleges in relation to the $750,000 payment made on 2 November 2006, there was already an agreement in place in relation to the joint venture to develop the Property and one would have expected that to be said. It is also a little hard to reconcile this request with the notion that the $750,000 had been paid substantially for the purpose that it (whether alone or with some other monies) would be spent on the development. If that had been the position, given the size of the payment one would have expected the email to reference what was proposed to occur in relation to the $750,000 which the plaintiff had already provided to the defendant for that purpose. On the other hand, perhaps the author contemplated that phrasing the enquiry in non-combative terms might be more conducive to the contemplated negotiation.

[68] On 13 April 2007, the defendant sent written instructions to her solicitors to proceed to prepare an agreement documenting a loan transaction along the lines of that previously discussed between them.[81] Her instructions suggested that she had that day discussed the matter with the plaintiff and that building activities on site were on hold.

[69] On 23 April 2007, the defendant's solicitors emailed[82] the plaintiff's solicitors with draft documentation (including a Joint Venture Agreement and Mortgage) broadly to the effect which the defendant had requested. Mr Baldwin thought that his actions accorded with his instructions.[83] The enclosed Joint Venture Agreement provided for:

• (a) a condition precedent of a loan of $1 million by plaintiff to defendant secured by first registered mortgage over the Property;
• (b) 5 exclusive use areas (A to E) and common property;
• (c) the plaintiff to provide all funds to complete the Project;
• (d) each of the plaintiff's and defendant's interest in the Property to benefit their estates in the event of death notwithstanding that it was held as joint tenants.

[70] On 27 April 2007, the defendant's solicitors emailed the plaintiff's solicitors stating "my client ... does not want to sell her half of the Property to your client at this stage".

[72] The only objective evidence of what transpired at that meeting is contained in Mr Baldwin's diary note dated 2 May 2007, which reads as follows (emphasis added):

Attendance at a meeting at the offices of McLaughlins Lawyers, the attendees were myself and our client Ruth Bruggmann, Michael Lynne [sic] of McLaughlins Lawyers and his client Zucker.

The purpose for the meeting was the settlement of the contract for Zucker to acquire our client's remaining 50% of the interest of the property at 199 Little Nerang Road, Mudgeeraba. The meeting opened on a without prejudice basis at the request of Michael Lynne [sic] and accepted by myself. The first issue raised was the continuing occupancy of our client Bruggmann on the property post settlement, Zucker objected to that and demanded that Bruggmann no longer reside on the property, I consulted our client and she agreed and we consented to that request.

Michael Lynne [sic] indicated that the $750,000.00 paid by Zucker to the Swiss bank account of Bruggmann was in fact a gift and needs to be returned prior to settlement of the acquisition of the second 50%, that is the remainder of the property. I consulted with our client, our client understandably objected to the $750,000.00 being classified as a gift confirming that in fact it was part of the acquisition of the first 50% of the property in a total of $1.2million comprising of $450,000.00 disclosed on the face of the Transfer and $750,000.00 paid to Switzerland. This raises issues associated with my obligation to disclose same to the Office of State Revenue, however whilst the classification of the $750,000.00 (first disclosed to me at this meeting) remains in issue I am not of the view that I have a duty to disclose to the Office of State Revenue unless and until it is somewhat clearer what in fact the $750,000.00 was for. Our client objected profusely to the classification of the $750,000.00 as a gift, there was no further discussion and the meeting closed some 10 minutes after the meeting commenced.[85]

[73] Mr Baldwin's oral evidence confirmed that the first time he learned of the payment of $750,000 was at this meeting.[86]

[74] On 5 May 2007, the defendant departed Australia and did not return for over two years.[87]

[75] On 7 June 2007, the plaintiff sent an email to the defendant outlining options to resolve their dispute:[88]

I have found myself a new property that I want to buy.

Here are the options (Michael advised you and Steve on the 2nd May 2007):

1. You can buy back my half of the property for $1.2 Million (plus interest) since 20th September, 2006, nearly nine months ago. Plus I need to be reimbursed for all the setup costs to date, 100% of everything I paid concerning the property. I will then go off the Title and leave the property.

I have already paid you $1.2 Million, which is actually $300.000 more than the valuation of $900.000 for the entire property, that you organised yourself from Herron Todd and White on the 29/8/06.

Therefore, you return the $300.000 and sign over your half of the property to me without any conditions.

As I no longer wish to proceed in the property development of "Stage 2" with you, you need to return my payment of $750.000.

If this matter can not be discussed in an adult manner and settled immediately, I am ready to go to court, if that is what you want. I have a very strong case with all the evidence to back up my story and what has transpired with you here at 199 since my arrival on the 6th August, 2006.

Among other things I intend to request an audit, including all transactions relating to 199 for the past years in order to come to a fair financial settlement. As you are well aware and if you are perfectly honest with yourself, you know that I have already paid you way over your valuation at $1.2million. I have made enquiries with reference to the current value.

Ruth, think about it. It has gone on for us both for far too long and needs a solution now. Get in touch with me ASAP.

[76] As to this email, I observe:

• (a) The email presented options for settlement.
• (b) First, it presented an option in which the defendant would effectively buy back from the plaintiff what they regarded as her half of the Property for the amounts which had been paid by the plaintiff.
• (c) Second, it presented an option in which the plaintiff would obtain from the defendant the defendant's half of the Property. It would involve the defendant paying the plaintiff money and not vice versa, because the plaintiff asserted the view that she had already paid more than the value of the whole Property, having regard to the valuation referred to.
• (d) However, I think that the email should be taken to have presented a third option, namely that the parties remain as joint tenants, but the defendant return the $750,000 because the joint venture was no longer to proceed. I acknowledge that regarding this as a third option is inconsistent with the numeration and the capitalized use of the word "OR", but the repayment of the $750,000 has no logic if viewed as part of either of the first or second options.
• (e) Obviously by this time the plaintiff must be taken to be aware that there was a serious dispute between her and the defendant. The letter is therefore less reliable than earlier communications as a basis from which to infer the truth of events which happened the previous year. I would regard it as less reliable a basis to infer what happened on the 2 May 2007 meeting than Mr Baldwin's diary note.
• (f) The email is the first occasion on which the plaintiff asserts a position (namely the third option) which has some consistency with the case she advanced before me. On the other hand, the first and second options are consistent with the notion that the $750,000 was to be regarded as part of the consideration for the acquisition of an interest in the Property.

[77] After about 18 June 2007 (the date is uncertain but there is an internal reference to an email of 18 June), the plaintiff sent an email to the defendant saying that she had ignored her earlier email and asking if she was prepared to give back the $750,000 plus interest.[89]

[78] On 4 July 2007, the defendant's solicitor Mr Baldwin sent an email to the plaintiff's solicitor Mr Lynn advising that the defendant "will agree to a $1 million sale price for the remaining 50% of the property". The email stated:

My instructions are that our client will agree to a $1 million sale price for the remaining 50% of the property as previously advised. Unless there is agreement to that effect please convey to your client that our client will provide us with instructions to consent to the appointment of a Trustee to allow the property to be sold, the sale proceeds placed in trust and the matter litigated to a result if that is necessary and agreement as to distribution of sale proceeds cannot be reached.

There is no agreement in respect of joint expenditure, please convey to your client that unless our client agrees on expenditure, which has not been the case to date, that our client will not be responsible for that expenditure.

Please be advised that we have instructions to issue a Notice to Vacate in respect of Mandy and David Black to vacate Cabin 2 being our clients [sic] property.

[79] On 27 July 2007, the defendant sent an email to the plaintiff after speaking with her solicitor, Mr Baldwin, and which stated:[91]

I have had a tel conference with Steve Baldwin this morning.

He says it is no problem at all to convert the joint tenant into a tenant in common title.

The cost will be minimal only the legal work has to be paid.

Re: My offer to you to purchase my share is until the end of this month of July for the extra 600,000 dollar. This is for sure a very generous offer and you could be the sole owner of this very wonderful estate.

I hope that this gives you a satisfactory choice and I hope that you can finally come to a decision.

Nicoletta, I would appreciate a answer from you, either way is OK with me.

[80] On 31 July 2007, Plass Lawyers on behalf of the plaintiff sent a letter of demand to Turnbull & Co which stated (emphasis added):[92]

We have assumed the conduct of this file from McLaughlins Lawyers and refer to previous correspondence between your respective firms. We have taken our client's instructions in relation to the amount paid by our client for the one-half share in the subject property.

As you are aware there are allegations by our client as to the manner in which your client and her former husband Fred Remmele induced our client to purchase an interest in the property.

As your client is aware, our client alleges that substantial pressure was brought to bear by both your client and her former husband to induce our client to purchase a half share in a property for $1.2 million when according to the valuation of HTW the entire property was valued at $900,000.00.

As we understand your client's position, she denies that our client paid more than what she had agreed to for a half interest in the property. This has been the position adopted by your client throughout the dispute to date.

However, recently our client has provided to us copies of certain documents prepared by Mr Fred Remmele at the direction of your client, which supports our client's allegations.

As you are aware, our client and your client met on three occasions in your office, the first on or about 24 August 2006, the second on or about 20 September 2006 and the third occasion being 8 October 2006. Whilst you have previously advised that you neither acted for our client nor provided any advice to her, our evidence and instructions are to the contrary.

As your client and Ms Zuecker apparently attend jointly during the three (3) conferences mentioned above, if there was any legal professional privilege it would not apply, if our client was at the relevant time, your client. If not a client, then any privilege has been waived by your client in allowing our client to attend a joint conference with you.

It is our client's instructions that the sum of $750,000.00 paid to your client on or about 3 November 2006, was paid as a contribution towards the development/infrastructure costs of the stage 2 development approval.

We have a document from your client's former husband which purports to be an informal agreement between our client and your client, whereby after stage 2 was completed the estimate value of the property would have been $2.2 million. It is clear that your client has determined the value of the property on the basis that stage 2 of the development was completed not what the property was worth in September 2006, when our client signed the contract.

By the same document, the approximate cost of completing stage 2 was $1.5 million of which our client has already paid half. There is no dispute that your client has received the funds as the transfer was carried out by inter account transfers at the same Swiss bank where our respective clients hold accounts.

As our client no longer wishes to carry out the development work, our client demands the repayment of the sum of $750,000.00 together with interest at a commercial rate. Your client has not made any attempt to contribute a like amount to the development costs, and the recent course of correspondence between our respective firms and between our respective clients indicate a complete reluctance, if not refusal, on your client's part to meet any of the stage 2 development infrastructure costs.

We are instructed that it was agreed at the meeting of our respective clients and their legal representatives on 2 May 2007 that each party would pay equally the ongoing property and development costs. Our client has paid all costs to date and requires reimbursement from your client of 50% of all monies paid directly by our client in addition to the $750,000.00 paid to your client.

Further, your client persists in classifying the property as "her part and Nicoletta's part". The property is held as joint tenants and you as you are aware both our respective clients are entitled to an undivided one-half share of the whole. The property is not held as tenants in common and your client cannot unilaterally designate a part of the property to which she is entitled on a sole and exclusive basis.

With respect, your client's basic misunderstanding as to the manner in which the title is held, have led to series of acrimonious and unnecessary emails between our respective clients where the question of separate occupation was an issue.

Our client has no intention of severing the joint tenancy and wishes to maintain the present holding until such time as the property is sold and our client's claim for a return of the abovementioned amount is determined.

Accordingly, would you please advise us of your client's instructions in relation to the return of the sum of $750,000.00, interest and the ongoing property and development costs. Should we not hear from you within the next 14 days, we shall assume your client does not intend to repay the monies to our client who will take such action as she may be advised.

[81] The reference to the document which had been prepared by the defendant's former husband is probably a reference to exhibit 6, which was an unsigned document which was in these terms:[93]

This agreement covers and protects the vendor and buyer in case of malicious questions or attacks from evil people, the tax office or council. Do not show this form to ANYBODY !

This declaration forms an integral part of the purchase contract for 199 Little Nerang Road, Mudgeeraba between Ruth and Nicoletta.

The council classified this block (10) as rural commercial and issued further permits to build additional dwellings. The cost of the required additional infrastructure has been quoted for 1.1 million A$. (2 additional chalets, 1 small office building, design of construction of access roads to all approved buildings, reshaping and landscaping of ground, planting of 140 mature palm trees, road paving, storm water channels, underground installation of Energex power supply cables, ADSL phone lines to all dwellings, extensive outdoor and garden lighting, planting of trees, bushes, construction of billabongs and walkways, purchase of machinery and tools to maintain property, installation of commercial grade waste water treatment plants, swimming pool and pumps, solar heating.

Once this stage 2 extension is completed, the property will have a market value of 2.2 million $ (starting from year 2006).

To maintain the agreed tenancy in common status, Nicoletta will give Ruth an additional payment of $ 550.000 as her 50 % share when signing the purchase contract. (In addition to the agreed half share of $ 550.00 as half share of the purchase price of 1.1 million which will be registered at the title office and the stamp duty office.

[82] I observe that the solicitor's letter is less reliable than earlier communications as a basis from which to infer the truth of events which happened the previous year. I would regard it as less reliable a basis to infer what happened at the 2 May 2007 meeting than Mr Baldwin's diary note. It is, however, notable that the letter is consistent with the proposition that the plaintiff's then instructions attributed a dual purpose to the payment of the $750,000, namely (i) as part of the consideration which the plaintiff was induced to pay in order to acquire her interest as joint tenant, and (ii) as a contribution towards the costs of further development of the Property. That has some consistency with exhibit 6. I will return to the significance of that document.

[83] While the defendant denied[94] proceeding with the development of the Property after the plaintiff and the defendant became joint tenants, contemporaneous documents established the contrary.

[84] On 9 November 2006, the defendant completed a document the purpose of which was to obtain advice in relation to proposed new construction for development of the site, although it is unclear whether that retainer went ahead.[95]

[85] On 11 November 2006, the plaintiff departed Australia.[96]

[86] Prior to 19 December 2006, the defendant commissioned a soils report which the Gold Coast City Council required to be submitted as part of the works to complete the development and that report was obtained in the form of a written report addressed to both the plaintiff and the defendant dated 19 December 2006.[97]

[87] On 25 December 2006, the plaintiff returned to Australia.[98]

[88] On 8 March 2007, the defendant engaged Nimmel Partnership to conduct a bushfire hazard assessment and to prepare a fire management plan in respect of the Property.[99] This was done for the purpose of submission to the council.[100]

[89] I infer from the invoices dated 11 March 2007, 29 March 2007 and 2 May 2007 addressed to both the plaintiff and the defendant from Mr Jess, Peter Jess & Partners for engineering work done in respect of a site visit and preparation of a design for four cabins at the Property, that they had engaged the engineer for that purpose.[101]

[90] The plaintiff and the defendant engaged Matthew Jones Architects to amend the cabin plans in respect of the development and to that end site meetings occurred in November 2006, work was done in December 2006 to March 2007, and the work was invoiced in April 2007.[102]

[91] On 11 May 2007, the plaintiff and the defendant obtained approval in respect of the development application which they had submitted in relation to cabins they proposed to construct at the Property.[103] The date the application to council was made is not apparent, however the approval referred to the approved plans being contained in the following submitted documents:

The plaintiff's claim in relation to the $750,000 paid to the defendant

[93] As has been mentioned, the plaintiff advances her claim to the $750,000 in contract and in restitution.

[94] The claim in contract requires a determination of whether there was a relevant contract. In this regard, the defendant says that there was an oral sale agreement for the sale of the whole property for $2.2 million and the $750,000 was part payment of the total price. On the other hand, the plaintiff says that there was an agreement which was made party orally and partly by conduct that the $750,000 was paid as the plaintiff's half of the contemplated further development costs, as referred to in more detail at [7] above.

[95] The relevant legal principles which inform the approach which should be taken in determining whether there was any contract as alleged are those identified in my judgment in King Tide Company Pty Ltd v Arawak Holdings Pty Ltd [2017] QCA 251:

[19] First, where the question of contract formation involves determining whether acceptance of an offer can be inferred in the absence of express consent, acceptance of the offer may be inferred if an objective bystander would conclude from the offeree's conduct, including its silence, that the offeree has accepted the offer and has signalled that acceptance to the offeror.

[20] Second, a similar objective approach is to be taken where the question of contract formation involves determining whether a contract may be inferred from conduct, even where no distinct offer and distinct acceptance can be identified. An enforceable contract may be inferred when the manifest intention of the parties, objectively ascertained, evinces a tacit agreement with sufficiently clear terms.

[21] Third, in both cases, care must be taken to ensure that the objective assessment of the relevant conduct in all the circumstances unequivocally points to the existence of the contract in the terms alleged by the party seeking to prove the contract. It is not enough that the conduct is merely consistent with the terms of the alleged binding agreement, the evidence must positively indicate that both parties considered themselves bound by that agreement.[105]

[96] It remains to observe that the approach I will take in this judgment to the question of whether I should draw inferences is that described by Gordon J in Re Day [2017] HCA 2; (2017) 91 ALJR 262 at [18] (citations omitted):

The tribunal must feel an actual persuasion of the occurrence or existence of a fact before it can be found. Where direct proof is not available and satisfaction of the civil standard depends on inference, "there must be something more than mere conjecture, guesswork or surmise" - there must be more than "conflicting inferences of equal degrees of probability so that the choice between them is [a] mere matter of conjecture". An inference will be no more than conjecture unless some fact is found which positively suggests, or provides a reason in the circumstances particular to the case, that a specific event happened or a specific state of affairs existed.

[97] I have already explained why I reject the defendant's evidence of the oral sale agreement: see at [12] above.

[98] There is a hint of support for the contention in the terms of the response to the plaintiff's FIRB application, but I think the explanation for that is a misunderstanding of the plaintiff's application by the FIRB: see at [60] above.

[99] Absent acceptance of the defendant's evidence on this point, there is no basis to support a finding of the oral sale agreement.

[100] I find that there was no oral sale agreement as alleged by the defendant. That finding also disposes of the defendant's counterclaim.

[101] The plaintiff's contention was that the $750,000 was paid pursuant to a contract as referred to in more detail at [7] above.

[102] But there are insurmountable hurdles to such a finding.

[103] First, the plaintiff's case is not justified by the application of a classical offer and acceptance analysis, because I do not accept her evidence of the conduct which would have to be regarded as the offer which, ex hypothesi, she accepted when she made the $750,000 payment. And even if I were prepared to accept her evidence, it is impossible to see how I could find an intention to be legally bound, given that, on her evidence, her consent had been coerced.

[104] Second, there are serious inconsistencies between the plaintiff's conduct (including that of lawyers on her behalf) and the proposition that any such binding bargain had been struck. I observe:

• (a) The defendant's 7 April 2007 contention made in the second last paragraph of the email referred to at [62] above was plainly inconsistent with the bargain which the plaintiff alleges was made in relation to the $750,000 payment made on 2 November 2006.
• (b) Instead of a prompt and immediate rebuttal, the responses emanating from the plaintiff's camp varied between
  • (i) saying nothing on 11 April: see [64](b) above;
  • (ii) on 12 April, merely enquiring what is proposed in relation to the joint venture to develop the Property: see [66](b) above; and
  • (iii) on 2 May, contending that the $750,000 payment had been a gift: see [72] above.
• (c) It was not until after negotiations on 2 May had broken down that the plaintiff advanced an assertion consistent with the notion that the defendant could not retain the $750,000 if the development was not proceeding: see [75] above. But even then, no mention was made on behalf of the plaintiff that there was an extant contract already regulating the position in relation to the $750,000 payment.

[107] If there is no relevant enforceable contract pursuant to which the $750,000 was paid, the plaintiff contends that the $750,000 is recoverable because there has been a total failure of consideration. Traditionally, the cause of action would be regarded as a common money count for money had and received to the use of the plaintiff.[106] In modern parlance, failure of consideration is a "qualifying or vitiating" factor which can operate to render the retention of a benefit by a defendant unjust, which then gives rise, by operation of law, to a "prima facie obligation to make restitution".[107]

[108] In this area of discourse, the word 'consideration' does not necessarily bear the same meaning as it does in a contractual context. The High Court has on numerous occasions described failure of consideration in the terms set out by Professor Birks (emphasis added):

Failure of the consideration for a payment ... means that the state of affairs contemplated as the basis or reason for the payment has failed to materialise or, if it did exist, has failed to sustain itself.[108]

[109] The law does recognize some amelioration to the proposition that there must be a "total" failure of consideration before there can be recovery. In David Securities Pty Ltd v Commonwealth Bank [1992] HCA 48; (1992) 175 CLR 353 at 382-383, the plurality held (italicized emphasis in original, bold emphasis added):

So, in the context of failure of consideration, the failure is judged from the perspective of the payer. In Rover International Ltd. v. Cannon Film Ltd, Kerr LJ. stated:

"The question whether there has been a total failure of consideration is not answered by considering whether there was any consideration sufficient to support a contract or purported contract. The test is whether or not the party claiming total failure of consideration has in fact received any part of the benefit bargained for under the contract or purported contract."

On the other hand, there has been an insistence that the failure of consideration be total. The law has traditionally not allowed recovery of money if the person who made the payment has received any part of the "benefit" provided for in the contract. However, as the passage already quoted from Rover International Ltd demonstrates, the notion of total failure of consideration now looks to the benefit bargained for by the plaintiff rather than any benefit which might have been received in fact. Thus, in Rowland v. Divall, the plaintiff succeeded in an action for repayment of the purchase price of a car he had bought from the defendant, unaware that the car had been stolen before it came into the defendant's possession. The defendant resisted the claim with the argument that the plaintiff could not prove total failure of consideration because he had used the car for several months. The Court of Appeal, however, dismissed this argument on the ground that the plaintiff had not received "any part of that which he contracted to receive - namely, the property and right to possession".

Similarly, in Rover International Ltd itself, the plaintiff succeeded in its claim for restitution of payments made to the defendant even though the defendant had performed some of its obligations under the contract. The plaintiff was to dub and distribute films provided to it by the defendant and receive a share of the box office receipts as its payment. The plaintiff was also required to make substantial payments to the defendant in advance of recovering its share of the receipts. The defendant supplied the films to the plaintiff and the plaintiff made the pre-payments before breaching the contract. The plaintiff was then able to recover the pre-payments on the basis that the delivery and possession of the films were not what the plaintiff had bargained for; the "relevant bargain" was the opportunity to earn a substantial share of the gross receipts.

In cases where consideration can be apportioned or where counter-restitution is relatively simple, insistence on total failure of consideration can be misleading or confusing. In the present case, for instance, it is relatively simple to relate the additional amounts paid by the appellants to the supposed obligation under cl.8(b) of the loan agreements. The appellants were told that they were required to pay withholding tax and the payments that they made were predicated on the fact that, by so doing, they were discharging their obligation. Such an approach is no different in effect from the cases under the old statutes of usury whereby a borrower could recover from the lender the excess interest which the lender was prohibited from stipulating or receiving.

In this case, the Bank must prove that the appellants are not entitled to restitution because they have received consideration for the payments which they seek to recover. It does not avail the Bank to argue that the appellants were provided with the loan moneys agreed. Indeed, the severability of the loan agreement into its relevant parts would seem to be accepted by the Bank for it submitted that the appellants' consideration for agreeing to pay the additional amounts under cl.8(b) was the Bank's agreement not to charge a higher interest rate. In circumstances where both parties have impliedly acknowledged that the consideration can be "broken up" or apportioned in this way, any rationale for adhering to the traditional rule requiring total failure of consideration disappears.

[110] To similar effect, in Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 at [24], Gleeson CJ and Gaudron and Hayne JJ said:

There having been a failure of a distinct and severable part of the consideration for the net total payments made by the appellants to the respondent, then, as between the parties to the payments, the respondent has no right to retain the amounts in question ...

[111] On the evidence before me, what was the status of affairs which the plaintiff as payer contemplated as the basis or reason for the payment of the $750,000 on 2 November 2006? What "benefit" did the plaintiff expect to receive in return for the payment?

[112] In my view, three possibilities exist.

[113] First, the plaintiff's sole basis or reason for the payment might have been that it would be the plaintiff's 50% contribution towards the costs of the further development of the Property. The benefit which the plaintiff expected to receive in return for the payment might have been that it would be used by the defendant (together with funds contributed by the defendant) in bringing about the further development of the Property. If that was so, then the state of affairs contemplated as the reason for the payment has failed to materialize, with the result that the plaintiff's restitutionary claim for recovery of the $750,000 should succeed.

[114] Second, there might have been some form of consensus along the lines of that outlined in exhibit 6, such that the plaintiff had a dual purpose for the payment, namely (i) as part of the payment made in order to acquire her interest as joint tenant, and (ii) as a contribution towards the costs of the further development of the Property. If that had been the consensus, there would be a good case to argue that the parties must be taken to have impliedly acknowledged that the $1.2 million consideration could be apportioned by allocating $450,000 to the purpose of becoming joint tenant, and $750,000 to the purpose of developing the Property. If that was so, then as with the first possibility, the state of affairs contemplated as the reason for the payment of the $750,000 has failed to materialize, with the result that the plaintiff's restitutionary claim for recovery of the $750,000 should succeed.

[115] Third, there might have been some overall agreement that the plaintiff would pay $1.2 million to become joint tenant, the purchase contract only recording $450,000 as part of an unlawful scheme to avoid stamp duty,[109] such that the plaintiff's sole purpose for the payment was to become joint tenant, there being no mention of any other purpose for the payment of $750,000. If that was so, then the plaintiff received the consideration for which she bargained, and her restitutionary claim for recovery of the $750,000 should fail.

[120] During closing submissions,[112] the plaintiff's counsel clarified that:

• (a) the plaintiff's principal claim was a restitutionary claim in respect of the $750,000 paid on 2 November 2006; and
• (b) in aid of that remedy the plaintiff sought either of two forms of proprietary relief:
  • (i) a declaration that the defendant held her half share in the Property[113] on a constructive trust for the plaintiff to secure payment of the judgment sum; or
  • (ii) a declaration that the defendant held her half share in the property subject to an equitable lien or charge securing payment of the $750,000.

[121] The plaintiff's argument was that she should obtain the proprietary remedy as an aid to recovery of the principal claim, given the defendant's concession that she had very limited funds and the fact that I had received valuation evidence which suggested the defendant's share in the Property was worth less than the amount of the claim.

[122] The existence and availability of the remedial constructive trust was accepted by Deane J (with whom Mason J agreed) in Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583. He said at 614 (emphasis added):

Viewed in its modern context, the constructive trust can properly be described as a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle.

[123] This was endorsed by the High Court generally in Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137. In that case, Mason CJ and Wilson and Deane JJ said at 148:

His Honour pointed out that the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention "to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle" (20): see also at p. 617. In rejecting the notion that a constructive trust will be imposed in accordance with idiosyncratic notions of what is just and fair his Honour acknowledged that general notions of fairness and justice are relevant to the traditional concept of unconscionable conduct, this being a concept which underlies fundamental equitable concepts and doctrines, including the constructive trust (21).

[124] There are cases which recognize the possibility of imposing a constructive trust where monies have been paid for a consideration which has totally failed, but they all involve circumstances which have permitted the Court to form the view that the retention of the monies paid could be regarded as contrary to equitable principle and a constructive trust should be recognized in relation to the monies paid.[114] But absent facts which justify such a conclusion, the plaintiff might be left with the ordinary personal right of recovery of monies.[115]

[125] The plaintiff has not identified (nor have I found) any cases which involve a court recognizing the legal personal right to payment of the monies concerned and in addition granting a constructive trust over some other property to secure payment of the legal personal right. The fact that monies were paid for a purpose which failed might suggest the possibility of a purpose trust along the lines of that recognized in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567. But that was not the plaintiff's case. In this case, the only basis on which the plaintiff contended she should have the proprietary remedy was her concern that the restitutionary remedy should be secured. That is not a sufficient basis to justify the remedy of constructive trust.

[126] The plaintiff also sought a declaration that the defendant held her interest in the property subject to an equitable lien or charge in favour of plaintiff, securing the payment of $750,000. The lien was said to be justified in the same way as the constructive trust, indeed on the basis that it was a lesser remedy which was sufficient to quell the controversy.

[127] I summarized the leading statements of principle regarding equitable liens in QNI Resources Pty Ltd v Park [2016] QSC 222 at [60]- [67]. The case asserted by the plaintiff does not fall within any of the recognized categories of cases in which an equitable lien or charge has arisen by operation of law. No doubt the list of categories of case in which an equitable lien or charge should be recognized is not closed. But a critical element of the recognition of a new category is that it would be unconscionable for the defendant to be permitted to dispose of the property without the consent of the plaintiff or without the liability for the payment of the $750,000 having been discharged.

[128] In this case, the findings I have made do not support any such conclusion. Nor do any of the arguments advanced by the plaintiff. There is nothing unconscionable in the plaintiff being left with only her legal right to recover payment of the $750,000 plus interest. There is no sufficient basis for the recognition of an equitable lien in aid of the plaintiff's restitutionary claim.

[129] The second claim made by the plaintiff against the defendant was to recover one half of the costs incurred by the plaintiff in maintenance, repair work and general upkeep of the Property.

[130] The quantum of the claim was $78,663.25 (one half of $157,326.51). The evidence supporting the claim was said to be:

• (a) the plaintiff's statement that she paid all of the maintenance costs of the Property since May 2007 and all the rates, apart from some rates notices which the defendant paid; and
• (b) documents which were said to verify this quantum which were set out in exhibit 35 (which had been tendered by consent).

[131] The documents in exhibit 35 suggest that the plaintiff incurred the following costs:

Maintenance costs (without invoices but evidenced by bank statements)

[132] There does not appear to be any contest that the plaintiff has met these costs in respect of the Property. I find that she did.

[133] During closing submissions, I pressed the plaintiff's counsel to clarify the juridical basis on which the claim was founded. In supplementary written submissions, the plaintiff submitted that the juridical basis for the claim was either the private personal agreement or the law of restitution. The latter basis can be dismissed because the private personal agreement was an extant contract which did regulate the basis on which the parties would incur expenditure of the nature claimed in relation to the Property.

[134] It will be recalled (see [46] above) that the terms of the joint venture contract included these terms:

• (a) rates and taxes were to be shared equally by the plaintiff and the defendant.
• (b) each of the plaintiff and the defendant "will pay the costs and maintenance of her own buildings, landscaping, gardens."

[135] The plaintiff is entitled to half of each of the payments which she has made for rates over the period covered by exhibit 35.

[136] However, she has not demonstrated any contractual entitlement under the private personal agreement to payment in respect of any part of the amounts she has paid for maintenance. I observe:

• (a) To the extent that some part of the maintenance costs were spent on "her own buildings, landscaping, gardens" those costs would not be recoverable because it had been agreed that she would bear those costs.
• (b) To the extent that some part of the maintenance costs were spent on "[the defendant's] own buildings, landscaping, gardens":
  • (i) Those costs would not be recoverable pursuant to the contract because it had been agreed that it was the defendant who would bear those costs.
  • (ii) If the costs were incurred because the defendant, in breach of contract, had failed to pay requisite maintenance costs, the costs could be recoverable as damages for breach of contract. But the plaintiff neither pleaded nor otherwise advanced a case that the costs were recoverable as damages for breach of contract.

[139] The third claim advanced by the plaintiff was to recover $40,736.91 on the basis that it was one half of $81,477.83 expended by the plaintiff for the proposed stage 2 development over and above the initial $750,000.

[140] The quantum of the claim was supported in the same way as was the quantum of the second claim.

[141] I find that the plaintiff incurred the following costs in respect of the work that was done towards the stage 2 development of the Property:

Development costs (without invoices but evidenced by bank statements)

[142] During closing submissions, I pressed the plaintiff's counsel to clarify the juridical basis on which the claim was founded. In supplementary written submissions, the plaintiff submitted that the juridical basis for the claim was the contract referred to at [7] above. It is hard to see how the costs incurred could be recovered pursuant to that contract. However, in light of my conclusion that I am not prepared to find that the contract was ever formed, it is unnecessary to consider the claim further. It must be dismissed.

[143] I have found that the defendant's counterclaim should be dismissed because there was no oral sale agreement as alleged by the defendant.

[144] The plaintiff has succeeded in respect of the following claims:

• (a) the sum of $750,000 in respect of its restitutionary claim;
• (b) interest on that amount from 2 November 2006 until the date of this judgment at the rates mentioned in the applicable Supreme Court practice directions, which I calculate at $690,629.30;[117]
• (c) the claim for monies due and owing under the personal private agreement in respect of half of the payments made for rates over the period covered by exhibit 35, and interest on those payments.

[145] There should be judgment for the plaintiff against the defendant in the sum of $1,440,629.30. The parties have liberty to apply within 7 days of the date of this judgment in relation to the interest calculations forming part of that amount.

[146] There should be a further judgment for the plaintiff against the defendant in respect the amount claimed in respect of rates, together with interest thereon. The calculation of that amount poses the difficulties to which I have earlier adverted. In this regard, I direct the parties to bring in minutes of an order to be made consistent with these reasons for judgment in respect of the amount claimed by the plaintiff in respect of rates, together with interest thereon, within 14 days of the date of this judgment.

[147] I will hear the parties on the question of costs.

Amount payable (remaining debt + interest payable):

[1] The Property was more particularly described as lot 10 on RP138233 and was referred to as "lot 10" or "199" in some of the documentary evidence.

[2] In describing the plaintiff's case, I refer to her case as pleaded and as advanced by her counsel. As will appear, the plaintiff's evidence was, in important respects, inconsistent with that case.

[4] The plaintiff s pleading did not assert the claim as a claim for damages for breach of contract, but that was how the claim was framed in the plaintiff's written submissions before me.

[5] See [3](a) of the Fourth Amended Defence & Counterclaim and [1](a) of the Further & Better Particulars of the Defence.

[6] See [54]-[82] below.

[7] See [54]-[59] below.

[9] See the following exhibits which have the plaintiff's contemporaneous handwriting in English: 19, 36, 37 and 38. See also Mr Baldwin's evidence at [36](a) below.

[10] T1-41 at lines 25-45 (17 October 2016); T1-42 at lines 5-40 (17 October 2016); T1-43 at lines 14-15 and 25-30 (17 October 2016); T1-44 at lines 5-30 (17 October 2016); T1-68 at line 45 (17 October 2016); T1-69 at line 10 (17 October 2016); T1-70 at lines 12 and 40-45 (17 October 2016); T1-71 at lines 1-20 (17 October 2016). See also exhibit 65.

[12] See [51]-[92] below.

[13] T5-46 to T5-47 (11 November 2016).

[14] See at [11] above.

[20] See exhibit 74 at [2], [5], and [7]-[9]; T4-51 to T4-52 (20 October 2016).

[24] Exhibit 1 at [15]; T1-39 at line 40 to T1-40 at line 20 (17 October 2016); T1-53 at line 46 to T1-54 at line 2 and lines 7-8 (17 October 2016).

[25] This is an inference to be drawn from the terms of exhibits 51 and 53, which suggest that the former (which was sent on 4 September 2006) was a revision of the latter (which is undated). The plaintiff says the date of the meeting was 24 August 2006: see exhibit 1 at [18]-[21].

[26] Exhibit 51. See also exhibit 48 at [51] (last line on page 14).

[48] Exhibit 48 at [50]; T3-21 at line 43 to T3-24 at line 3 (19 October 2016).

[50] See [48](a) below.

[51] The execution clause stated that "This agreement was executed on the date indicated for each party. Execution was completed on the date set out at the commencement of this Agreement." Both the printed date set out at the commencement of the agreement and the date the parties wrote that they executed the document was 7 September 2006.

[55] T2-14 at lines 17-18 and 33-43 (18 October 2016).

[56] T3-20 at lines 43-45 (19 October 2016).

[62] See date stamp on exhibit 8 and see exhibit 33.

[67] T4-38 at lines 35-42 (20 October 2016).

[76] See [7] above.

[86] T4-46 at lines 1-3 (20 October 2016).

[87] T2-6 at line 45 to T2-7 at line 1 (18 October 2016); T2-20 at lines 24-25 (18 October 2016).

[94] T3-33 at lines 1-30 (19 October 2016).

[95] T3-34 at line 35 to T3-35 at line 13 (19 October 2016); Exhibit 55.

[97] Exhibit 56. See also T3-34 at lines 3-7 (19 October 2016); T3-40 at line 5 (19 October 2016).

[100] T3-36 at lines 40-41 (19 October 2016).

[104] Exhibit 35 was a bundle of invoices tendered by consent that relate to expenditure by the plaintiff on either development work or rates and maintenance of the Property.

[105] [2017] QCA 251 per Bond J at [19] to [21] citations omitted, Fraser JA generally agreeing (at [2]), and Gotterson JA agreeing (at [3]).

[106] Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344 per Mason CJ at 355.

[107] David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 per the plurality at 379; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 per the plurality at [150]; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 per French CJ, Crennan and Kiefel JJ at [30]-[31].

[108] Peter Birks, An Introduction to the Law of Restitution (Clarendon Press, revised ed, 1989) at 223. This was approved in David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 per the plurality at 382; Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344 per McHugh J at 389; Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 per Gleeson CJ and Gaudron and Hayne JJ at [16] and per Gummow J at [104]; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 per French CJ, Crennan and Kiefel JJ at [31].

[109] That is the implication which flows from the defendant's assertion at the without prejudice meeting on 2 May 2007: see [72] above. The possibility was obviously something which concerned the defendant's solicitor.

[110] T4-70 at lines 15-28 (20 October 2016). Counsel for the defendant repeated that concession during closing submissions: T5-19 at lines 23-35 (11 November 2016).

[111] Lexane Pty Limited v Highfern Pty Ltd [1985] 1 Qd R 446 per McPherson J at 461-462 and Heydon v NRMA [2001] NSWCA 445 per Mason P at [15].

[112] See T5-53 at lines 15-28 (11 November 2016) and the plaintiff's supplementary trial outline at [13]-[14].

[113] The plaintiff and the defendant's joint tenancy was converted to a tenancy in common in equal shares from 3 February 2010.

[114] See Wambo Coal Pty Ltd v Stuart Karim Ariff [2007] NSWSC 589 per White J at [40]-[43]; Break Fast Investments Pty Ltd v Perikles Giannopoulos (also known as Perry Giannopoulos) (No 5) [2011] NSWSC 1508 per Black J at [90]-[91]; In the matter of Wan Ze Property Development (Aust) Pty Ltd [2012] NSWSC 722; (2012) 90 ACSR 593 per Black J at [51]-[52].

[115] Cf Leasing Centre (Aust) Pty Ltd v Shepard [2011] FCA 443 per Robertson J at [25]-[32]; Lombardo v Bahnan [2014] VSC 410 per Warren CJ at [23].

[116] For example, the plaintiff claims $500.00 in respect of rates for the period of 1 January 2011 to 30 June 2011. The statement of rate account does not record any payment of $500.00 (or any payments totalling that amount) being made. Furthermore, the rates notice reveals that the rates amounted to more than $500.00, but that the account had an opening balance of $452.10. The plaintiff also claims $4,610.61 in respect of rates for the period of 1 July 2013 to 31 December 2013. The rates notice reveals that the rates amounted to more than that, but that the account had an opening balance which was higher than that amount. The rates notice stated that no payment was required, and that $4,610.71 was the current credit balance of the account. The evidence does not identify whether any part of the opening balance consisted of payments made by the plaintiff. There are also several instances where multiple rates payments of the same amount are claimed in respect of rates notices that appear to have been issued multiple times, in circumstances where the statement of rate account suggests that only one payment of that amount was made.

[117] Annexure A to this judgment sets out the calculation, using the simple interest calculator at http://www.courts.qld.gov.au/courts-calculator/calculator.