Mr Wilson is a property developer. In 2008, he (through a company he controlled) purchased land in Franklin Street, Melbourne to develop in three stages. Stages one and two were to be residential units primarily marketed to overseas students for accommodation. Stage three was initially intended to be a hotel but was later altered to be further residential units for student accommodation.
Mr Caple is a property developer, a mortgage broker and a financier. Mr Caple had arranged finance for Mr Wilson and made loans for stage one and other developments of Mr Wilson and was a good friend of Mr Wilson.
Stage one was sold off the plan. The sales were so successful that Mr Wilson decided to commence stage two before stage one was completed. Bank finance would only become available after a certain number of the units had been sold off the plan. Mr Wilson needed further finance to commence stage two to get it to the point where bank finance could be arranged.
Mr Wilson invited Mr Caple to participate in stage two in exchange for Mr Caple providing finance. As a result, Mr Wilson and Mr Caple agreed that Mr Caple would lend up to $3m to provide the pre-bank finance for stage two and Mr Caple and Mr Wilson would split the profit made from stage two equally. They agreed that in calculating the profit of stage two, the land Mr Wilson contributed to stage two would be valued at $6m and that Mr Wilson could charge $800,000 for administering stage two. It was understood by them both that this could all be done through companies each controlled. Mr Wilson predicted that the profit on stage two would be about $14m.
Stage two was successfully completed. Bank finance was repaid. Mr Wilson told Mr Caple that stage two had only made $7m and not $14m as predicted. Mr Caple could not accept this and demanded Mr Wilson account to him properly. Mr Wilson, however, failed to account to Mr Caple for the profits made on stage two or how the profit was calculated. Eventually, after litigation was commenced by Mr Caple, Mr Wilson claimed that stage two made a loss. Mr Wilson also caused the company that managed the development and the company that owned the development to be wound up.
Mr Caple sues for his share of the profit on stage two and for repayment of loans made by his companies to companies controlled by Mr Wilson. Mr Caple alleges that the agreement he had with Mr Wilson was a joint venture agreement between each of them personally and that Mr Wilson is personally liable to pay Mr Caple his share of the profit on stage two.
The Court finds that the agreement between Mr Caple and Mr Wilson constituted a joint venture agreement between each of them personally. The Court finds that the profit on stage two was $14,933,000. The Court finds that Mr Wilson is indebted to Mr Caple for $7,466,500 being 50 per cent of the profit.
The Court orders Mr Wilson to pay Mr Caple $7,466,500 and interest. The Court orders the companies that borrowed moneys from Mr Caple's companies to repay the loans with interest.
NOTE: This summary is necessarily incomplete. The only authoritative pronouncement of the Court's reasons and conclusions is that contained in the published reasons for judgment.