The 1978 Trust Deed
7By Deed dated 2 March 1978 six of the seven beneficiaries under the 1977 Deed purported to constitute a charitable trust known as the Homeland Foundation Centre of Light (the Foundation). It was clearly expected that the seventh beneficiary, Bruce Hosken, would be a party to this Deed as the deed before execution showed him as a party but his name is crossed out and he did not execute it. There is some evidence that he did not agree with all the rules and regulations annexed to the Deed, particularly rule 8, which provided that resolutions of the Committee of Management "shall be preferably a unanimous decision but shall be deemed to be duly carried if it is passed by majority of the members present".
8The 1978 Deed of Trust recited first the 1977 Trust and then proceeded as follows:
AND WHEREAS the parties hereto are desirous of establishing a Trust to be known as The Homeland Foundation Centre of Light at Thora aforesaid or such other place or places which from time to time or at any time the parties hereto may select for the purposes of making available to all persons suitable facilities for living according to and studying the natural laws of God as applicable to the earth and its inhabitants and for teaching and propounding those laws in order to promote the physical mental and spiritual well being of and to provide guidance and support for those in need of help and assistance to attain a spiritual way of life NOW THIS DEED WITNESSETH that the parties hereto (hereinafter referred to as the Trustees) in accordance with their desire stated above DO HEREBY DECLARE as follows:-
1. There shall be and there is hereby constituted a charitable Trust known as The Homeland Foundation Centre of Light of which the Trustees shall be Trustees thereof in accordance with the terms contained and implied herein.
2. The property of the Trust shall comprise the lands and hereditaments more particularly described in the Schedule hereto and the business names "The Homeland Foundation Centre of Light", "Homecoming", "Simply Open", "Sweet Earth" and "Sweet Earth Enterprises", together with such other real and personal property as shall from time to time hereafter be created acquired or received by the Trustees as such Trustees by way of purchase, gift, bequest, donation or otherwise (including copyrights patents or other original materials protected by law) and such property of the Trust aforesaid together with the income from same shall be held by the Trustees for the purpose of furthering the objects of the aforesaid Trust and for no other purpose and shall be dealt with by us in accordance with these presents as amended from time to time.
3. The objects of the aforesaid Trust are:-
(a) the advancement of religion and religious studies and practice in any part of the world by teaching, example and demonstration of the validity of the essential truths of all religions and spiritual teachings and by such means to encourage and help those who sincerely seek by the increase of their knowledge and the development of their being to achieve a greater understanding of the purpose and meaning of life and its relationship to God's universal plan;
(b) for the foregoing purposes to maintain at Thora New South Wales aforesaid or elsewhere and as and when expedient to establish elsewhere in any part of the world a college or other teaching centre and to provide residential accommodation for persons attending such college or other teaching centre;
(c) to promote the objects of the Trust by lectures, talks, group discussions and other teaching techniques, by practical demonstration and by the provision of facilities and not only for study and meditation, but for all such activities as shall help in any way to forward the foregoing purposes;
(d) to publish or promote the publication and circulation of literature, films, recordings or other methods from time to time available for the dissemination of information;
(e) to promote research into religious and spiritual studies not necessarily restricted to Christianity and in the discretion of the Trustees to make grants of money for the purpose of assisting any person or persons to pursue at universities, colleges or elsewhere such studies or research.
9The Deed went on to set out certain powers of the trustees to be exercised in pursuance of the objects which I have already set out. Among other things the Deed provided that no trustee would be entitled to receive any remuneration for his or her services as trustee. This may have some bearing on the matter if it becomes necessary to consider the appointment of a new trustee at a later stage. It also provided that the Trust could be wound up by resolution of the trustees if they considered the objects of the Trust could no longer be achieved in which case there was a power to transfer the Trust to another Trust having among its objects the advancement and encouragement of religion and religious and spiritual studies provided that any such trust or institution must be established for charitable purposes only. Clause 12 gave power to the trustees to vary or modify the purposes "but so that no provision of this Trust Deed or any Supplementary Trust Deed shall be varied or modified so as to cause the Trust hereby constituted to be a Trust for purposes which are not solely charitable or cause the Trust hereby constituted to cease to be recognised as a charitable trust by the relevant government department or departments controlling the same of the State of New South Wales and of the Commonwealth of Australia." The land in the schedule to the Deed was the Thora land.
10It is clear that, subject to the question of parties, this 1978 Deed constituted a valid charitable trust. It was not contended otherwise. Clause 8 of the Deed provided that there should not be less than three nor more than nine trustees.
Retirement and Appointment of Trustees and Amendments to the 1978 trust Deed
11The parties to this 1978 Deed, who comprised the trustees and beneficiaries under the original Declaration of Trust apart from Mr Hosken, were the trustees of the charitable trust. From time to time trustees resigned and additional trustees were appointed. Mr Dunston, an original trustee, resigned by deed dated 21 March 1983 which resignation was stated to take effect on 3 October 1982. On 11 May 1983 Treenie Roads, Mark Davis and Phyl Hosken were appointed additional trustees. Mrs Hosken was the wife of Mr Bruce Hosken. They lived together as part of the Homeland Community. They have both since died.
12By Deed of Variation of Trust dated 18 July 1983 the Deed was amended to insert clause 8A which provided that additional trustees could be appointed by nomination of an existing trustee on being confirmed by unanimous decision of the trustees with such appointment to be evidenced in writing and taking effect from its being recorded in the minutes. A similar amendment, in the form of clause 9A, was made as to recording of retirements. Why that was done is not explained but it may have been intended to overcome any need for a registered deed under s 6(1) of the Trustee Act 1925. By registered transfer dated 24 February 1984 Messrs Plowright and Davis transferred the Thora land into the names of the then trustees namely Messrs Plowright and Davis, Mr Michael Joseph Roads, Ms Yvonne Siems (also known elsewhere as Yvonne Vietch), Mr Anatole Kononewsky, Ms Treenie Roads, Mr Mark Davis and Mrs Phyl Hosken. The transfer is expressed to be made pursuant to the original 1977 Declaration of Trust as varied by the Homeland Centre of Light Trust Deed made on 2 March 1978, the Supplementary Deed thereto of 18 July 1983 and the various Deeds of Appointment of additional trustees, and the registration (sic) of Roger Dunston made on 21 March 1983 "and the transferees being all sui juris have requested the vesting of the trust property in them". The transfer was registered on 18 April 1984.
13There appear to have been mistakes in dates in this document and clearly the word "resignation" should be substituted for the word "registration" in connection with Mr Dunston.
14The Homeland Foundation appears to have operated pursuant to the 1978 Trust Deed and the rules and regulations from 1978. A procedure was put in place for accepting new members whose entry into membership required approval of the majority of members. Guests did not require approval. They paid to stay and still do.
15Mr Plowright left Thora in 1980. He remained a trustee under the 1978 Deed. He returned for a short visit in 1981 but did not live there again. He remained in touch with some of the trustees. He signed the various Deeds of Retirement and Appointment of Trustees and any variation of trust and he signed the 1984 Memorandum of Transfer. Over time, all the original trustees other than Yvonne Veitch left the community.
The 1987 Agreement
16There was some conflict between the trustees and the members in around 1983 and 1984, regarding the use of Homeland and use of illicit drugs. The Centre was closed in June 1983. Thereafter there was continuing discussion between the trustees and the members which seems to have resulted in some sort of mediation over a weekend in 1987 as a result of which an agreement in writing was reached as to future conduct. As the first defendant relies on that Agreement it is necessary to set it out in full with the exception of the execution pages:
THIS AGREEMENT is made the day of 1987
BETWEEN TERRANCE KIPPAX PLOWRIGHT, BRUCE DAVIS, ANATOLE KONONEWSKY, MARIE EVELYN MACKINTOSH, MARK DAVIS, of the First Part (hereinafter called the Trustees) AND TERRENCE JOHN CONROY, SUSAN MARY CONROY, ANTHONY DUDGEON, LINDA MARY DUDGEON, LYN GUIHENNEC, MARK CHODKIEWICZ, AND IAN GORDON SLORACH of the Second Part (hereinafter called the Members) WHEREAS the Trustees are shown as the registered proprietors of certain parcels of land as set out in the Schedule hereto marked "1" AND WHEREAS the Members have contributed financially and erected improvements thereon and have maintained the lands AND WHEREAS the parties have reached certain agreements.
NOW THIS AGREEMENT WITNESSES:-
1. The Trustees agree in consideration of the Members paying all outstanding accounts properly incurred in the administration of the Trust and Trust lands as set out in the Schedule hereto and marked "1" and in consideration of the members forming a Company Limited by Guarantee not having a share capital at their own expense to transfer the assets of the Homeland Foundation Centre of Light to the Company to be formed.
2. The Members agree to take all steps necessary and do all things to form a Company Limited by Guarantee not having a share capital and to obtain the Company named Homeland Foundation Limited.
3. The Trustees agree to do all things and sign all consents necessary to release the name Homeland Foundation to the members.
4. The Memorandum of Company shall contain objects substantially similar to the Trust and of the nature as set out in the draft Memorandum of Association annexed hereto and marked "2" but subject to minor variations as may be agreed between the parties.
5. The Articles of Memorandum of Association shall contain a provision that in the event of the winding up of the Company after payment of its just debts and obligations any surplus shall be gifted to a charity or organisation of a like nature having similar aims and objectives to the Company.
6. During the first year of the incorporation it is agreed between the parties that in addition to the Members as set out herein the following shall be appointed Honorary Members for a term of one year and shall be eligible for election to the Board of Directions, namely ANATOLE KONONEWSKY, MARK DAVIS.
7. It is further agreed that at the time of incorporation the land comprised in Certificate of Titles Volume 4598 Folio 177 shall be transferred to the Chrysalis School for Rudolph Steiner Education Ltd for a consideration of $10,000.00 (ten thousand dollars) payable in four (4) annual instalments of $2,500.00 (two thousand five hundred dollars) per annum plus the transferors legal costs in consideration thereof shall be paid to the Company Ltd by Guarantee to be formed in accordance with this agreement.
8. The Members acknowledge and confirm that they agree to maintain and nurture the original essence of "Homeland" as stated in the prayer of manifestation as set out in the annexure hereto and this shall be an ongoing commitment for all members and shall be expressed and protected by the structure of the Memorandum of Articles of the proposed Company Limited by Guarantee.
IN WITNESS WHEREOF the parties have hereunto signed their seals at on the day and in the year first hereinbefore written.
17A copy of this Agreement, not the original, is in evidence. It has not been stamped. The required undertaking under s 29 of the Stamp Duties Act 1920 has been given. The parties liable for stamp duty were probably the members but I am not deciding that to be the case. All the named parties signed the document.
18The draft Memorandum of Association referred to in clause 4 is not in evidence. The Prayer of Manifestation referred to in clause 8 is not in evidence. However there is no doubt what it is as it was included in many Homeland documents from 1977 and is as follows:
The Prayer of Manifestation
'We are gathered together Father in your presence to ask for a Light Centre.
We wish to invoke your energies to work through us in the manifestation of this Light Centre.
We ask for and affirm our belief that we will receive the money to acquire, or that in the way of the Holy Spirit, we will receive what is needed for a Light Centre. If it is God's will, we ask for an area near the East Coast in the south of Queensland with sufficient acres of fertile soil;
that it is also a power centre, filled with a life force waiting to be released through the kingdoms of humanity, nature, God, in a blend of Oneness and attunement.
We ask for an abundance of fresh, pure water.
A supply that will never fail us through any adversities.
We acknowledge the vast untapped spiritual quality of water, and express our desire to draw closer in understanding the water kingdom and its infinite wisdom, as a link and sharing of life through God.
We ask that there shall be an abundance of trees of many varieties on this sacred piece of land. We affirm our love of trees and our contact with the intelligence of trees. We wish for attunement to the greatest degree possible through this kingdom so that with perfect attunement we will reach a perfection that is God.
We ask for a large home with outbuildings on this land, so that we have shelter while we build our family homes. We ask that the home will serve as a community centre, as our Light Centre unfolds under your loving guidance.
We ask for hills and valleys within our special area. We ask for the beauty and support of the mountains to be close by.
We ask that the incredible vibration of the ocean shall be near enough that we will benefit from its spiritual presence.
We ask Father for these things to be manifested through your Holy Will. We bow before your infinite plan. We come before you in love using our rights as creators to create a Centre of Harmony to demonstrate the Limitless Love and Truth of a new age.
We ask for all this to be manifested by the 1st April 1977, when we will leave here putting ourselves in your guidance towards this your Light Centre.
We thank you Father.'
The Constitution of Homeland Community Limited
19Homeland Community Limited, the first defendant, was incorporated and registered as a company limited by guarantee on 18 November 1988. The Memorandum of Association was signed on 30 June 1988. The principal objects of the company on incorporation were set out in clauses 2(a) to 2(f) of the Memorandum of Association as follows:
2 The objects for which the Company is established are:-
(a) To take over the present unincorporated association known as the Homeland Foundation including its activities, real property, funds and other assets and liabilities.
(b) To create an environment to encourage and help those who seek a greater understanding of the purpose and meaning of life and in particular to :-
(i) maintain that environment for all people to explore and share their spiritual, religious, social and personal values.
(ii) promote natural wholeness and healthy living.
(iii) provide facilities principally for group education, therapy, learning, sharing or for any other educational purpose relating directly to the principal objects of the Company.
(c) To further the vision of a free and loving network of people throughout the planet dedicated to the realisation of the harmony within all creation.
(d) To promote by example and in other ways:-
(i) the principles and methods of permaculture, bio-dynamics and other natural approaches to agriculture and horticulture.
(ii) the use of renewable resources and natural energy systems.
(iii) regional self-sufficiency.
(iv) rural re-settlement by hamlet or village clusters according to guidelines which protect the environment.
(v) rural employment in socially and environmentally useful work.
(e) To provide services which will promote the personal, social, educational, spiritual, recreational and economic interests of members and their children.
(f) To co-operate with other communities and organisations sharing similar concerns, and to promote closer co-operative relationships among such communities and organisations.
20After subclause (f) there followed some paragraphs under 2(g) which were stated to be solely for the purpose of carrying out the "aforesaid" objects. Those include:
...
(ix) To invest and deal with the money of the Company, not immediately required, in such manner as the Co-ordinators may think fit, provided that the powers of investment are limited to those allowed to Trusts in New South Wales.
21Clauses 5 and 6 of the Memorandum were as follows:
5. Every member of the Company undertakes to contribute to the property of the Company in the event of the same being wound up while a member, or within one year after ceasing to be a member, for payment of the debts and liabilities of the Company (contracted before ceasing to be a member) and of the costs, charges and expenses of winding up and for the adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding twenty dollars ($20).
6. If upon the winding up or dissolution of the Company there remains, after satisfaction of all its debts and liabilities, any property whatsoever, the same shall not be paid to or distributed among the members of the Company, but shall be given or transferred to some other charity or charities registered or exempted under the Charitable Collections Act, 1934, having objects similar to the objects of the Company and whose Memorandum of Association or constitution shall prohibit the distribution of its or their income and property among its or their members under or by virtue of this clause three hereof, such charity or charities to be determined by the members of the Company at or before the time of the dissolution and in default thereof by application to the Supreme Court for determination.
It should be noted clause 6 refers to some other charity.
22It is I think, clear that the company came into existence as a result of the provisions of the 1987 Agreement. The incorporators were Anthony Dudgeon, Linda Mary Dudgeon, Terrence John Conroy, Susan Mary Conroy and Jennifer Catherine Wilson.
The Transfer from the Trustees to Homeland Community Ltd
23On 30 December 1988 the then trustees Messrs Plowright, Bruce Davis, and Kononewsky, Mark Davis and Marie McIntosh by Deed of Amendment of the 1978 Trust Deed deleted clause 8 which related to the number of trustees.
24By Deed of Appointment of new trustee also dated 30 December 1988 the existing trustees appointed Homeland Community Limited as a trustee of the Homeland Foundation Centre of Light. This document was not executed by that company as a new trustee and therefore does not establish its acceptance of the Trust. There is no evidence that any director of Homeland saw this document at the time.
25Letters of resignation of the five trustees apart from Homeland were received it seems on 30 December 1988 as a minute of meeting of the trustees of that date includes a resolution to accept those resignations. Those letters are undated.
The Statutory Declaration
26The next important document is a Statutory Declaration of the five persons who were trustees prior to Homeland being appointed. This document is dated 23 December 1988. There is a problem with the date as paragraph 7 of the Declaration states:
We resigned as trustees on the 31st December, 1988.
27The obvious purpose of this declaration was to provide evidence to the Office of State Revenue to support a claim that the next document to which I will come should be charged only nominal duty pursuant to s 73 of the Stamp Duties Act 1920. The reason that is apparent is that paragraph 8 of the declaration is as follows:
8. The property referred to above and in the Transfer is transferred to the Homeland Community Limited aas (sic) Trustee for the Trust and no consideration has passed between ourselves and the said Incorporated body.
The date remains a mystery. It is possible it was signed on 23 December 1989 but against that possibility is a minute of a meeting of members of Homeland dated 23 December 1988 which records the following statement by Tony (Mr Dudgeon) "Doug Perry arranged land/name transfer to cost $1.00 stamp duty only. His total of fees $250."
28The Transfer referred to in the Statutory Declaration is not identified. However the only document to which it could refer is a transfer dated 20 November 1989 of the Thora land from the five trustees to Homeland Community Limited. Mr Douglas Perry, solicitor, is shown to be the witness to the signatures of all the transferors. It is unlikely that could in fact have been the position because as I understood the evidence of Mr Davis the trustees were not in Macksville (where Mr Perry had his office) or Bellingen when the Transfer was signed.
29The Transfer is executed by Homeland Community Limited as transferee under its common seal. Mr Anthony Dudgeon signed as secretary and his wife as director. The consideration is expressed to be $1. It does not state it is pursuant to the appointment of Homeland as new Trustee. It was marked as not liable to stamp duty by the Office of State Revenue, as was the Deed of Appointment of Homeland as trustee. On what basis the documents were not liable for nominal duty I do not understand. The Transfer was registered on 1 February 1990.
30Before Homeland was incorporated and before the transfer took effect a brochure had been issued, presumably by the residents, which under the heading of "Homeland Today" states the time of writing to be March 1988. The first paragraph under that heading reads:
Homeland is in the process of finalising a new legal structure involving the transfer of 'ownership' from the previous trustees to the new 'company' formed entirely of members living on the land.
At the commencement of this document under the heading of The Land appears the following:
Homeland was originally purchased by way of donations and weekly contributions made by all previous and current members, prospective members and guests.
In the legal sense, Homeland belongs to its resident members, who are responsible for its constitution, its environment and its future development.
The land is shared in common and no one member has title to any portion. The members, therefore, hold the land in trust for all future members and guests.
Members do not profit from any money made or gifted to Homeland. They are legally formed as a non profit company.
31The original directors of Homeland at least is shown by the 1990 annual return of the company were Anthony Dudgeon, William Anthony Ingarfield, Tina Marie Selleck, Ian Gordon Slorach and Jennifer Catherine Wilson. One of the first acts of the company was to apply for registration under the Charitable Collections Act 1934. The Chief Secretary's Department of New South Wales required certain amendments to be made to the memorandum:
1. Preventing amalgamation with any company not a registered or exempt charity.
2. Providing investments were restricted to trustee investments.
The amendments were made.
32In a letter to Mr Watson, the secretary of Homeland in 2001, Mr Perry of Messrs Perry & Smith solicitors of Macksville appears to have answered certain questions put to him about powers of the members and other matters. In that letter, among other things, Mr Perry said:
In 1993 the company was incorporated and Trust Deed varied to make Homeland Community Limited Trustee on replacement of National (scil natural) Persons Trustee (formerly named). It should always be remembered that Homeland Community Limited is a Trustee of the Homelands Trust and is bound by the objectives and aims of that trust. It is not merely a company that owns the land with no other complications.
33Mr Watson said this letter was the first time he had become aware of any suggestion that a trust was still in existence. Mr Dudgeon accepted he would have seen the letter but must have overlooked this paragraph as it was not in answer to questions asked of the solicitors.
Investigation by the Plaintiff
34In the year 2008 there was correspondence between the company and the Crown Solicitor's Office on behalf of the Attorney General as a result, it seems, of some complaint being made that the company was acting in breach of trust. Mr Watson in a letter to a solicitor employed by the Crown Solicitor of 2 June 2009 appeared to have acknowledged that the Trust was still in existence. However it is fair to say that the letter he wrote was based on documents which had come to his notice since his appointment as the secretary including documents in a box which was delivered to the company in 2004 by the firm of solicitors of which Mr Perry had been a party when that firm ceased to practice and returned documents it held on behalf of the company to it. In the letter Mr Watson said that, to the best of the knowledge of the company, the Trust of 1978 was never wound up "and is still extant with Homeland Community Limited as the sole trustee".
35There was continuing correspondence between Homeland and the Crown Solicitor. In a letter dated 19 July 2010 signed by Mr Watson as secretary he asserted, perhaps for the first time, that Homeland took under the 1987 agreement and owned the land in its own right and not as trustee.
36In 2012 the Memorandum of Association of the company was amended so as to delete the then clause 2(a) and replace it with a new clause as follows:
"To take over the present unincorporated association known as the Homeland Foundation Centre of Light including its activities, real property, funds and other assets and liabilities and, in particular, to:
(i) act in accordance with the role and responsibilities of the Company as the Trustee, in respect of the trust deed of 1978 (as amended) establishing the Homeland Foundation Centre of Light;
(ii) maintain an ongoing commitment to maintain and nurture the original essence of "Homeland";
(iii) invoke the highest sources of spiritual energies to work through us, the members and residents, in the manifestation of Homeland as a Light Centre; and,
(iv) work towards the creation of a Centre of Harmony to demonstrate the Limitless Love and Truth of a new age."
37All the matters which I have just set out under the heading "Facts" are really uncontested. The area where there is a contest relates to the effect of the resettlement in 1978, the construction of the 1987 Deed, and the question of whether or not Homeland Community Limited ever accepted appointment as a trustee. It is however necessary to set out the issues which arise on the pleadings.
38Before doing that however it is important to note that (a) Homeland applied for judicial advice as to whether it could expend trust funds in defending this action to which the answer was "no"; and (b) in a letter to the Chief Judge in Equity dated 13 June 2013 Homeland said it would not claim that the Trust was not a charitable trust. That letter remains in evidence (Ex X). Up to day one of the hearing there was also an admission on the pleadings that Homeland was a trustee but not that it was a charitable trust. I allowed that admission to be withdrawn and an Amended Defence filed. The application under s 63 of the Trustee Act 1925 was made on the suggestion of the Crown Solicitor. I do not think anything turns on it.
Pleadings
39The course of pleadings has been somewhat complicated by amendments made during the hearing or, in one case, after the hearing concluded. The final documents are: (a) Further Amended Statement of Claim filed on 15 November 2013; (b) First Defendant's Defence to Further Amended Statement of Claim filed 19 November 2013; (c) Reply dated 12 November 2013; (d) Cross Claim filed on 12 November 2013. There has been no Defence to the Cross Claim filed but the matter proceeded on the basis that was not necessary as the Cross Claim to a substantial extent merely relies on the Defence. The Further Amended Statement of Claim raised a claim of constructive trust. As this was filed on the final date of hearing leave was given to file an Amended Defence dealing with the constructive trust claim. It is fair to say that it was the successful application of the defendant to file the Amended Defence which brought about this flurry of documents. No problems arise from the amended pleadings. The trial to date was conducted on the basis of the pleadings listed above.
Further Amended Statement of Claim
40By this document the plaintiff seeks a declaration that the Thora land and all other property of Homeland is held upon charitable trust by it on the terms of the 1978 Deed. Orders are sought for the removal of Homeland as trustee and the appointment of a new trustee. In the alternative, if the trust objects have failed, relief by way of a cy-près scheme is sought.
41The pleaded claim, although it states that the document of 2 March 1978 "purported to constitute a charitable trust", proceeds on the basis it was thereby created. There are then pleaded the various changes of trustee, the appointment of Homeland as trustee, and the transfer to Homeland. By the final amended pleading it is alleged that if there were not an express charitable trust, or if Homeland disclaimed the trust, then the property of Homeland is held by that company on constructive trust on terms identical with the charitable trust pleaded. This constructive trust is said to arise because: (a) the transferors under the 20 November 1989 Transfer executed it with the intention or expectation that the transferee company would hold the property on charitable trust; (b) one or more of the transferors communicated this to the first defendant or to one or more of the persons described as parties to the 1987 Agreement as agents for the first defendant; (c) that the first defendant agreed or acquiesced to hold the property upon the terms of the trust and accordingly it would be unconscionable to deny this fact.
42The Further Amended Statement of Claim then pleads various matters and events relating to the Thora property and various claimed breaches of trust namely: (a) not using the trust property for trust purposes; (b) intermingling of trust monies and other monies; (c) the lending of trust funds to members; and (d) the donation of trust funds contrary to the trust provisions.
43I should add here that it is clear that the property has not been used for the main object of the advancement of religion. If there were a charitable trust, there is a clear breach of it. The fact that the defendant has denied the trust would of course in itself be sufficient to justify its removal if it holds as trustee.
Defence
44The first defendant:
1. denies any valid enforceable trust was created by the 1978 Deed as not all beneficiaries under the 1977 trust were parties to the purported settlement or resettlement;
2. says that the Deeds of Variation of Trust and the appointment of Homeland as trustee were not communicated to it and were contrary to the 1987 Agreement and says in the alternative the appointment was disclaimed by conduct;
3. relies upon the 1987 Agreement and says it is the beneficial owner of the property;
4. denies the constructive trust claim as there was no unconscionable conduct by the first defendant;
5. relies on s 42 of the Real Property Act 1900 to say that it took the land free of trust;
6. claims absolute entitlement to the property under the 1987 Deed.
Reply
45The plaintiff in reply alleges that the defendant accepted or acquiesced in its appointment as trustee of the charitable trust and conducted itself on that basis.
46Second, in response to the claim that the 1978 settlement was ineffective through the absence of Mr Hosken as a party, the plaintiff says that he disclaimed or surrendered his interest, or if there were a breach of the original trust, then Mr Hosken has waived any such breach. Not much attention was paid to this. I do not understand how these assertions could be made in the absence of Mr Hosken or his legal representatives as a party to this suit. The same findings apply to the allegations that Mr Hosken gave consent to the resettlement or disclaimed or surrendered his interest. On any basis these claims could not succeed because of a lack of writing. An estoppel claim was not pressed.
47Finally the Reply seeks an order pursuant to s 81 of the Trustee Act conferring power on the original 1977 trustees to resettle the Trust as a charitable trust on the terms of the 1978 Deed with resettlement being dated back to 1978. I do not understand how s 81 could be enlisted in aid of what is sought in an application by the Attorney General and certainly without all original and proposed parties being joined. This was discussed in final submissions but the problem was not overcome. It could not be correct that the Attorney General alone could apply for a s 81 order nor could the operation of any order be backdated. Reliance was placed on Stein v Sybmore Holdings Pty Ltd (2006) ATC 4,741 but that could not assist.
Cross Claim
48Homeland as cross claimant seeks: (a) a declaration that the property described in the 1978 Trust Deed remains subject to the 1977 Trust; (b) a declaration that the Deed of Appointment of new trustee of 30 December 1988 was ineffective; (c) in the alternative, a declaration that the legal and beneficial interest in the Thora property was transferred pursuant to the 1987 agreement between the then trustees of the 1978 Deed and the agents of the cross claimant; (d) in the alternative to (c), a declaration as to there being an enforceable agreement under the 1987 Agreement and an order for specific performance of that agreement.
49I do not understand how an order for specific performance could be made in the absence of those persons referred to as trustees under the 1987 Agreement. Counsel could not explain how this was possible.
Claims of Homeland
50The case for the defendant really relies on two important claims. First it is said that Homeland took under the 1987 agreement; the company was formed pursuant to that agreement; and the assets of the trust were transferred to the company pursuant to that agreement but not as trustee. Homeland claims that it was not aware of the purported appointment of it as a trustee of the 1978 Trust; that its objects are set out in its Memorandum of Association and unless clause 2(a) of the Memorandum makes it a trustee then it is not one. It claims to have an indefeasible title to the land as the title was not obtained by fraud and there is no personal equity involved to defeat its title, as it did not undertake to hold the property on the terms of any trust: Bahr v Nicolay (No 2) (1988) 164 CLR 604.
51The second argument is that the 1978 Deed was not effective to create a trust. That is because it related to real estate and all beneficiaries were not parties to it, therefore the trust upon which the Attorney General relies was never constituted.
Further Facts
52The evidence adduced for Homeland is that it was not aware until 2004 of the document appointing it as trustee nor that the transfer to it was or might have been a transfer pursuant to such appointment. There is conflicting evidence about this knowledge. Mr Mark Davis in an affidavit of 26 April 2013 said he was appointed a Trustee in 1979. While the then trustees did resolve to appoint him, in fact this did not happen until 1983. Nevertheless I am satisfied he was active in the affairs of the community and remained a trustee until the purported appointment of Homeland. He said that Mr Dudgeon was aware of Homeland's appointment as Trustee. Mr Dudgeon denies this. I thought his evidence was quite convincing to the best of his recollection. The evidence of Mr Davis was not quite so convincing as he changed aspects of if from time to time, nevertheless I thought he was endeavouring to be accurate. Although he said that there were communications with Mr Dudgeon and others as to the trust he was not able to produce any such communication. None of the other directors at the time of the proposed appointment of Homeland as trustee gave evidence. Counsel for the Attorney General suggested I should draw an inference that their evidence would not have assisted the defendant. The absence of some of them is explained although not necessarily justified by an affidavit of Mr Martin of counsel sworn 14 November 2013 but in any event in view of the time lapse and the fact that most have moved from the land I do not consider they were obvious witnesses for the defendant any more than they could have supported the plaintiff. Whether that is correct or not, the evidence of Mr Davis, when taken against that of Mr Dudgeon, does not convince me that Homeland knew of the purported appointment as trustee. Mr Plowright very honestly said he did not know.
53There was a considerable body of evidence led of extrinsic circumstances surrounding the 1987 Agreement. This was admitted on the basis that it would only be relevant if there were some ambiguity in the 1987 Agreement. I do not consider there is any ambiguity so that parol evidence is not admissible to construe that document. The document can however be considered in the context in which it came into existence namely that there was ongoing disagreement between the trustees and the residents or members and the purpose of the deed was to resolve that conflict.
Subsequent Conduct
54Subsequent conduct cannot be used as an aid in construing a written contract: Agricultural and Rural Finance Pty Limited v Gardiner (2008) 238 CLR 570 at 582. It is however relevant here for a different purpose. The plaintiff says Homeland took as trustee under the Deed of Appointment of it as trustee and took the transfer to it as such trustee. The pleaded claim of the plaintiff made no mention of the 1987 Agreement until the amendment to include a claim of constructive trust was made after the evidence was concluded. In the new paragraph 20B the 1987 Agreement was given only as a particular of the claim that the transferors thereby communicated their intention that Homeland was to take the property on charitable trust. The defendant, in the Amended Defence I allowed to be filed, relied on the 1987 Agreement claiming it received the property under the agreement and denied knowledge of the appointment as trustee. The reply only deals with this by a statement at its commencement:
"The plaintiff traverses the first defendant's Further Amended Defence generally"
That is of little assistance but in any event there would presumably be a joinder of issue on the Defence pursuant to r 14.27 of the Uniform Civil Procedure Rules 2005.
55The point about this is to show that the claim of the Attorney General is that Homeland took under the appointment. The claim of Homeland is that it took under the 1987 Agreement. While it may be possible for the Attorney General to argue that Homeland is a trustee pursuant to the 1987 Agreement that is not its pleaded claim; certainly the primary claim is based on the appointment document and transfer claimed to be pursuant to it. To determine this question subsequent conduct of Homeland could be relevant to show under which documents it took.
Construction of the 1987 Deed
56I have come to the conclusion that the Deed is not ambiguous. Any ambiguity could only go to whether the transfer of the assets of the Trust was to be to the new company as trustee or to the new company as owner but as limited by guarantee with the powers given under its Memorandum of Association. I consider that the meaning of the document as a whole is that the new company would have objects similar to the Trust and would preserve its essence with the company to own the land with the members having no rights to the property of the company. I should add that whatever the position with the 1987 Agreement it does not really assist the Attorney General's claim. That claim was that the 1978 Trust remains. It might have been intended that the objects would be similar but it was never suggested that they would be the same.
57If I were wrong in this and resort to surrounding circumstances were permissible evidence of intention as given by Mr Davis is not admissible. The principal document upon which the plaintiff would rely is a document entitled "Report on the Homeland Foundation compiled in September 1984". Among other material in the report is a document with a heading "a total legal reappraisal". This gave a summary of the 1978 Trust, a summary of a new company structure, and apparently a draft Memorandum and Articles of Association. The document included what was described as a summary of legal structures which stated the trustees were setting up a new company limited by guarantee to take on the property of the Foundation, that it would be a non-profit company and it would maintain its charitable status.
58While Mr Davis said that this was the basis of discussions between 1984 and 1987 there did not appear to be any written documents to confirm this. In any event Mr Davis was quite clear that the draft Memorandum which was referred to in this document was not the one pursuant to which the company was incorporated. More important, I think, is the fact that the 1987 Agreement came about as a result of a meeting, sometimes called a mediation, between the trustees and the residents to endeavour to resolve their differences. I do not think that in the circumstances these events could assist in construction.
Conduct after Formation
59Here it is the conduct of Homeland which is relevant to determine whether it acted as trustee in accordance with the 1978 document and pursuant to the purported transfer to it as new trustee. If it were a trustee it was in breach of trust from the start. It transferred some of the trust property without any power, it used monies other than for trust purposes and it did not conduct any religious activities at least insofar as they would be for the benefit of the public. It is an agreed fact that the minute books of weekly meetings of Homeland during the period from 22 September 1987 to 1 December 1989 have no record of Homeland receiving any notification that it had been appointed as the trustee of the Homeland Trust. That first date may not be of much significance as Homeland was not then in existence.
60The subsequent conduct which might be thought to support the case of the plaintiff that Homeland took as trustee consists of the matters referred to in paragraphs [33] - [38] of this judgment. The application for judicial advice was made at the suggestion of the Crown Solicitor. So far as the letter to the Chief Judge in Equity of 13 June 2013 admitting that the Trust was a charitable trust is concerned, the Chief Judge directed that any application to withdraw that admission should be by Motion. I subsequently decided it was not an admission which could be withdrawn under the rules of Court. The admission was made without the benefit of legal advice and I do not consider it significant. As I will explain, it does not really matter. I find that Homeland was not aware of and did not accept the appointment as trustee. No question of disclaimer arises.
61If one looks at the 1987 Agreement the fact is that action has been taken as was intended under that Agreement. The only action which it might be thought was not taken pursuant to that Agreement was the apparent action to have the Transfer marked as not liable to stamp duty. This was not the action of Homeland. How it was achieved is a mystery. However I accept the evidence of Mr Dudgeon that he did not know anything about this and there is no evidence that any of the directors of Homeland or any of the members listed in the 1987 Agreement did. Thus it does not seem to me to establish that Homeland took the Thora property on Trust on terms of the charitable trust pleaded. Evidence of subsequent events is admissible to establish that the 1987 Agreement was in fact accepted by Homeland as binding and bore on subsequent dealings.
Validity of the 1978 Deed
62The rule that beneficiaries under a trust who are absolutely entitled and of age can call for a transfer of a trust property to them is not in doubt: Saunders v Vautier (1841) Cr and Ph 240; 41 ER 482.
63A beneficiary or beneficiaries, not being the only beneficiaries, and thus not entitled to the whole of the trust fund may call for transfer of their relevant proportionate share or shares unless the trust property consists of real estate. If the trust property consists of real estate then the rule does not apply: Re Horsnaill [1909] 1 Ch 631; Manfred v Maddrell (1950) 51 SR (NSW) 95.
64The 1978 Deed appears to be a resettlement of, among other things, the whole of the Thora land. The Trustees had no power to resettle under the 1977 Deed. Nor did they have a power to revoke or extinguish the trust. Thus it cannot be effective to create a charitable trust or the charitable trust which the Attorney General seeks to enforce: Bond v Pickford (1983) 57 TC 301 at 320-321 per Slade LJ; nor can it be effective to create a sub-trust over six sevenths of the land: Re Horsnaill. The deed is void or a nullity. There is no completely constituted trust. The 1978 Deed is not one whereby "an interest, right, or property passes, or an obligation binding on some person is created, or which is in affirmance of some act whereby an interest, right, or property has passed": R F Norton, R J A Morrison and H J Goolden, A Treatise on Deeds (1928, 2nd edn, Sweet & Maxwell) at 3. Therefore, it is not a deed.
65New trustees purported to be appointed to a 1978 Trust can take no better title than their predecessors. Thus when in 1984 the land was transferred by the trustees under the original Trust Deed of 1977 to those persons who were stated to be the then trustees of the 1978 Trust, while those persons took the legal estate it might have been difficult for them to contend they did not hold it on resulting trust for the original trustees had that claim been made.
66When in 1988 the then trustees purported to appoint Homeland as new trustee Homeland's position did not differ from that of the former trustees. In addition the appointment would depend upon Homeland accepting the trust and not disclaiming it. I have found it was not accepted. I should add that if it were appointed it disclaimed the trust by conduct which would revest the land in the previous trustees but that is not the position here.
67If the land was transferred to Homeland pursuant to the 1987 Agreement then Homeland took the legal estate and unless it took by fraud or with knowledge it was taking as trustee and agreed to take it as such it obtained an indefeasible title to the land. If the 1978 Trust was never constituted then if Homeland took subject to any trust it could only be a resulting trust in favour of the 1977 trustees but as it had no knowledge of this it took free of it.
68The objects of the company in its original memorandum were not themselves charitable, unless acquisition of the trust assets somehow meant that a new owner took those assets under the original - and void - 1978 Deed. In any event, if they were, that is not the claim made here. The same position applies after the 2012 amendments to the Memorandum, which were not relied upon, were made. I did raise that matter. The pleaded claim relies on there being a charitable trust created by the 1978 instrument not otherwise.
Constructive Trust Claim
69The claim as to a constructive trust raised by the last amendment to the Statement of Claim relies upon the allegation that the transfer to Homeland was executed by the transferors with an intention or expectation that Homeland would hold the land on a charitable trust under the 1978 Trust Deed; and that one or more of the transferors communicated that to one or more of the persons described as members under the 1987 Deed. The particulars of the communication alleged are stated to be the terms of the 1987 Agreement and by implications from those terms. It is claimed that Homeland agreed or acquiesced to hold subject to the terms of the 1978 Deed; that it would be unconscionable for it to deny that it holds the trust property on those trusts and the "Trust Property" should be impressed with a constructive trust for the purposes of the Deed. The intention and communication was acknowledged by counsel for the Attorney General as being restricted to the 1987 Deed and its terms.
70I do not consider the claim made out. It is I think contrary to the words in the Deed. It must be remembered that the 1987 Deed came about as a result of a meeting to settle conflict between the trustees and the residents. That is the context in which it must be considered.
Result and Costs
71The answer to question 1(a) is "no". The other questions thus do not arise. This has the result that the claim of the Attorney General must fail and should be dismissed.
72The Cross-Claim is probably unnecessary and unless anything is said to the contrary is dismissed with no order as to costs but I will hear submissions on this.
73The defence was completely changed on day one of the trial. The appropriate orders for costs may be that Homeland get the costs from the commencement of the hearing and there be no order as to costs of the second and third defendants. I will hear any submissions on this.
74Finally, it would have more simple to decide at the outset:
(1)Whether the 1978 deed is void and a nullity and therefore;
(2)That Homeland is registered proprietor in question;
(3)That Homeland did not take as trustee of any valid trust;
(4)That Homeland did not obtain its title by fraud and is not subject to any personal equity; and
(5)That Homeland holds an indefeasible title to the land.
I did not take this course given the attention devoted to factual matters at the trial.
Proposed Orders
75I propose to make the following orders:
(1)Order the Further Amended Statement of Claim be dismissed.
(2)Order the Cross Claim be dismissed with no order as to costs.
(3)No order as to costs of second and third defendants. Other costs (for submissions).
(4)The exhibits may be returned, to be retained by the solicitors for 28 days and returned to the Court in the event of an appeal.