New South Wales Supreme Court CITATION : Jones v McQuilkin [2006] NSWSC 628 HEARING DATE(S) : 16/06/06 JUDGMENT OF : Gzell J EX TEMPORE JUDGMENT DATE : 06/16/2006 DECISION : Upon the defendant filing a notice of motion, order extending caveat vacated, order made to remove caveat from title, and order made that plaintiff pay defendant's cost. CATCHWORDS : CONVEYANCING - Land Titles under the Torrens system - Caveats against dealings - Parties in de facto relationship decide to purchase and renovate a house as a joint venture - Contract in both names - Subsequent decision to purchase in the name of defendant alone - Plaintiff a builder - He carries out restoration work - He invoices defendant for work, mostly with a margin on cost, but a low one - Defendant pays invoices until she runs out of money - Plaintiff pays third parties $42,360 because of strong business relationship with them - Relationship breaks down - Plaintiff lodges caveat claiming equitable interest as "beneficial interest by way of contribution to acquisition and improvement of property" - Plaintiff made no contribution to acquisition of property - Order made extending caveat until further order - Whether caveat justified by way of estoppel in that plaintiff, upon assertion of joint venture, acted to his detriment by working for a low margin - Whether defendant received an "equitable windfall" - Whether property subject to a constructive trust - Whether plaintiff entitled to an equitable lien - Defendant filed no notice of motion Henderson v Miles (No 2) [2005] NSWSC 867 CASES CITED : Baumgartner v Baumgartner (1987) 164 CLR 137 Morris v Morris (1982) 1 NSWLR 61 PARTIES : Richard Mark Jones - Plaintiff Sarah Andrea McQuilkin - Defendant FILE NUMBER(S) : SC 1489/06 COUNSEL : Mr M W Sneddon Mr P Strasser SOLICITORS : DTA Lawyers Milne Berry & Berger Solicitors IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J FRIDAY 16 JUNE 2006 1489/06 RICHARD MARK JONES v SARAH ANDREA McQUILKIN EX TEMPORE JUDGMENT 1 Richard Mark Jones and Sarah Andrea McQuilkin, the parties to these proceedings, entered into a de facto relationship. Mr Jones was a builder. He discovered a property that was suitable for renovation. Ms McQuilkin thought it would be a good acquisition for their portfolio. The contract for sale was in the names of both as purchasers. 2 Subsequently, it was decided between the parties that the property should be acquired in the name of Ms McQuilkin alone, and so it was. 3 Mr Jones had little work at the time and provided his services in the renovation of the property. He rendered invoices to Ms McQuilkin for the work he did so as to provide a paper trail for amounts that had been spent on the project so that Ms McQuilkin might easily reconcile payments that had been made and, secondly, on the advice of Mr Jones' accountant to take advantage of the current position of his business. 4 A series of invoices were rendered, most of which included a margin, albeit that the margin was not a normal builder's margin, but a lesser one. The invoices were paid by Ms McQuilkin until she ran out of funds. Thereafter, Mr Jones paid a number of claims by third parties totalling $42,360.00 because of the strong business relationship he had with them. 5 The relationship between the parties broke down. A caveat was lodged over the property by Mr Jones in which he claimed an equitable interest being a "beneficial interest by way of contribution to acquisition and improvement of property". 6 In fact, Mr Jones made no contributions to the acquisition of the property and he was paid by Ms McQuilkin for the work he did, with the exception of the amounts that he paid to third parties with whom he had a strong business relationship. 7 It was said that the equitable interest in the property was based on a number of grounds. It was submitted that an equitable interest arose by way of estoppel in that Ms McQuilkin had agreed that the property would constitute a joint venture and Mr Jones acted to his detriment by carrying out the building work at a low margin. 8 In my view, that is insufficient to ground the continuation of the caveat. At the time Mr Jones had a limited amount of work available and he was paid for the costs incurred by him, with the exception of payments that were made to third parties with whom he had a special business relationship. In my view, the compensation to which he is entitled lies solely in contract and there is no basis upon which a sufficiently strong argument could be raised by way of estoppel for the beneficial interest stated in the caveat. 9 Secondly, it was argued that there was an equitable interest by way of "equitable windfall" as referred to by Young CJ in Eq in Henderson v Miles (No 2) [2005] NSWSC 867 at [13], where his Honour commented that where a family joint venture breaks down without attributable blame, it is unconscionable for one of the parties to retain a windfall which the parties never expected that party would receive. 10 The concept to which his Honour refers is based upon the notion of unconscionability and a windfall being gained by one of the partners. Neither of those elements is appropriate in this case, in my view. Ms McQuilkin paid for the property, she paid for the work done by Mr Jones. The only payments that she did not make were those to which I have referred for which Mr Jones will be properly compensated by a claim in contract. There was no windfall to Ms McQuilkin and there is no unconscionability in Ms McQuilkin maintaining the title to which she was registered. 11 It was further put that there was an arguable case of a constructive trust by reason of the proceedings. There are two arguments, in my view, against that proposition. First, the factual basis for the argument of unconscionability does not exist for the reasons I have indicated. Secondly, the constructive trust does not arise until an order of the Court is made: See Baumgartner v Baumgartner (1987) 164 CLR 137 at 148. 12 Finally, it was put in the alternative, that there ought to be an equitable charge on the property in light of the contributions made by Mr Jones to the improvements to it. In Morris v Morris (1982) 1 NSWLR 61 such a charge was made where a father contributed to the extension of a house owned by his son and daughter-in-law and it was held unconscionable for them to have the benefit of the extension without recompense to him for his costs. In those circumstances, a charge was held to be an appropriate remedy. 13 In the instant circumstances, as I have said, I see no basis for a claim of unconscionability as Ms McQuilkin paid the entirety of the purchase price of the property and recompensed Mr Jones for the work he did. 14 The application before the Court is by the defendant. She has not filed and served a notice of motion. 15 Upon the defendant filing a notice of motion seeking vacation of the order made by Hamilton J on 20 February 2006 that caveat numbered AB852910C dated 7 October 2005 be extended until further order, by no later than 4 pm on Monday 19 June 2006, I order that that order be vacated. 16 Through abundance of caution, because I do not know whether a lapsing notice issued which would have the effect that the caveat will come to an end if the order of Hamilton J is vacated, I make a further order that the caveat be removed from the title to the property. 17 I order the plaintiff to pay the defendant's costs. I stand the matter over before the Registrar at 9.30am on Friday 23 June 2006. 18 The exhibits should remain on the file until the proceedings are finalised. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.