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Example Solicitor File Note
Torts (Laws1012)
University of Sydney
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100 BRIDGE ROAD, SYDNEY 2000 T ( 02) 9222 1111 U U NDERWOODELSWICK.COM
Underwood & Elswick Solicitors
INTERNAL MEMORANDUM
To: Sally Shepherd (Partner) From: Elizabeth David Date: 12 April 2018 Re: Woodstock Pty Ltd (in liq) – assets
Further to our meeting on Thursday with the directors of Woodstock, I have had two further discussions with the directors Mark Adams and Adrian Thomson. There are a number of issues arising in relation to their property development projects which give rise to the question of commencing proceedings with the potential to recover property or damages that would increase the asset pool of Woodstock. This memorandum addresses the issue with respect to the development of the Concord Road property.
Facts
We are instructed that the relevant facts are as follows. In July 2010,Woodstock and a company, Mahoney Machinery Pty Ltd (MM), agreed to develop a vacant block at 10 Concord Road, Concord, NSW. The plan was to build townhouses on the site. It was agreed that MM would purchase the block of land. Woodstock agreed to contribute three quarters of the development cost of the site. MM was to project manage the building. The plan was to sell the completed property in early 2012 and split the profits equally. The property was purchased in August 2010 as planned in the name of MM for $800,000. During 2011 and 2012, Woodstock made 4 contributions of $200,000 each which were paid to MM. However, the building works are still far from complete and the parties now cannot agree on how the building should be constructed. There are significant disputes which we are instructed have paralysed the building progress and cannot be resolved. MM is now refusing to proceed with the building and is also refusing to return Woodstock’s contributions.
Relevant Law
At law, the fact that the property was registered in MM’s name means that it holds unqualified legal title to the property. The consequence of this is that Woodstock’s financial contributions to the failed development are not recognized at law so that it has no legal entitlement to the property. However, in equity, where contributions have been made to a joint venture which fails without attributable blame, a party may be precluded from retaining the contributions made by another where it would be
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unconscionable to do so: Muschinski v Dodds (1985) 160 CLR 583, 620 per Deane J. The principle only applies in circumstances where there was no intention that in the event of such failure, the assets and liabilities should remain where they lie. In West v Mead, [2003] NSWSC 161 Campbell J (as his Honour then was) considered what was to be established before such a trust could be imposed. First, it is necessary that there be a joint venture or endeavour, in which expenditure is shared for the common benefit in the course of, and for the purposes of which, an asset is acquired. Secondly, the substratum of that joint venture or endeavour, must have been removed or the joint endeavour prematurely terminated “without attributable blame”. Thirdly, there must be the requisite element of unconscionability - that it would be unconscionable for the benefit of one party’s monetary or non- monetary contributions to be retained by the other party to the joint endeavour. Woodstock’s claim, if it is maintainable, is known as a ‘mere equity’ on the basis that there is no equitable proprietary interest it can presently enforce, however its claim if successful may lead to the recognition of an equitable proprietary interest: Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265.
( i) Was there a joint endeavour?
The first question to be addressed is whether there was a joint endeavour between the parties pursuant to which there has been expenditure for common benefit. On the facts as described, there was a clear plan for the development of the site. Whilst detail was lacking, the overall scheme proposed fits within the concept of a “joint venture” as has been found by the courts.
(ii) Failure of joint endeavour without attributable blame
It then needs to be considered whether the joint endeavour failed or was prematurely terminated “without attributable blame”. Whilst this concept is not entirely clear, the courts have made plain that it does not involve an inquiry into which of the parties was at greater fault for the breakdown of a joint venture: Henderson v Miles (No 2) [2005] NSWSC 867, [19]. Accordingly, the nature of the dispute between the parties as to the building vision and concept would not be relevant.
(iii) Unconscionable for one party to retain the benefit
The touchstone for the application of this principle is the fact that it would be unconscionable for one party to retain the benefit of the contributions of another in circumstances where such retention was not contemplated by the parties to the venture. We are instructed that there was no contemplation given to the fact that the venture might fail; (for example, due to disagreement between the parties). Therefore no consideration was given to the retention of contributions by either party if the venture were to fail. In these circumstances, MM’s current denial of any entitlement on Woodstock’s part to an
Example Solicitor File Note
Course: Torts (Laws1012)
University: University of Sydney
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