Attorney General of New South Wales v Homeland Community Ltd [2015] NSWCA 15 | Case summary

Attorney General of New South Wales v Homeland Community Ltd [2015] NSWCA 15 | Case summary | Zoe

[3]

HEADNOTE [This headnote is not to be read as part of the judgment] In 1975 Mr Terrance Plowright founded the "Awareness Centre", based in Chatswood in Sydney, to conduct "a series of workshops and lectures on scientific, philosophical, psychological, religious and spiritual understandings and the potential of the human spirit". The following year he, Mr Bruce Davis and Mr Michael Roads raised money to enable the purchase of a property near Bellingen for the purposes of establishing a community, which they called "Homeland", to give effect to the principles upon which the Awareness Centre was based. The property was purchased by Mr Plowright and Mr Davis in 1977. It comprises 124 hectares of land adjacent to the Bellingen River. Later in the same year, Mr Plowright and Mr Davis executed a deed declaring that they held the property on trust for seven named individuals, including Mr Bruce Hosken (the "1977 Deed"). On 2 March 1978 those individuals, other than Mr Hosken, executed a deed purporting to constitute a charitable trust in respect of the property (the "1978 Deed"). The trust was expressed to be for religious purposes consistent with those for which the Homeland community had been established. Thereafter there were changes to the trustees of the charitable trust and variations to its terms. Following disagreements between the trustees and the residents as to the future of the community, a mediation took place in 1987. This led to the parties entering into a written agreement (the "1987 Agreement") and the eventual transfer of the property to a newly incorporated company, the respondent (the "Company"). In 2012 the appellant, the Attorney General of New South Wales, commenced the present proceedings in his capacity as protector of charities seeking a declaration that the Company holds the property upon a charitable trust for the purposes identified in the 1978 Deed. Following a five day hearing, Windeyer AJ, by judgment of 27 November 2013, rejected the Attorney General's contention and dismissed his proceedings. The Attorney General appealed against that judgment. Held, dismissing the appeal (per Macfarlan JA; Meagher JA and Sackville AJA agreeing): 1. The primary judge did not err in permitting the Company to withdraw its concession that it did not contest the validity of the charitable trust and to amend its defence so as to withdraw an admission that it was bound by a trust. 2. A finding that the Company was bound by the alleged trust at least required a finding that it took the transfer to it with notice that the trustees intended it to hold the property on that trust. The primary judge did not err in declining to make such a finding. 3. The appellant's application to adduce further evidence on appeal should be refused because there was no significant prospect that, if the proposed further evidence formed part of the evidence at first instance, a different outcome would have ensued. 4. The Attorney General's claim that the Company holds the property on trust was founded on the assumption that the 1978 Deed created a charitable trust. Because that claim failed for the other reasons above, the validity of the 1978 Deed need not be determined. In fact, it would be inappropriate to determine the issue because, due to the absence of joinder of all interested parties, the Attorney General's suit is improperly constituted. Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; 241 CLR 1, referred. 1. While the Attorney General's claim in these proceedings has failed, a question remains as to whether the Attorney General can in other proceedings enforce the promises arguably made by the Company (through its incorporators) in the 1987 Agreement.

[4]

Judgment

MACFARLAN JA: In 1975 Mr Terrance Plowright founded the "Awareness Centre", based in Chatswood in Sydney, to conduct "a series of workshops and lectures on scientific, philosophical, psychological, religious and spiritual understandings and the potential of the human spirit". The following year he, Mr Bruce Davis and Mr Michael Roads raised money to enable the purchase of a property near Bellingen for the purposes of establishing a community, which they called "Homeland", to give effect to the principles upon which the Awareness Centre was based. The property was purchased by Mr Plowright and Mr Davis in 1977. It comprises 124 hectares of land adjacent to the Bellingen River. Later that year, Mr Plowright and Mr Davis executed a deed declaring that they held the property on trust for seven named individuals, including Mr Bruce Hosken (the "1977 Deed").
On 2 March 1978 those individuals, other than Mr Hosken, executed a deed purporting to constitute a charitable trust in respect of the property (the "1978 Deed"). The trust was expressed to be for religious purposes consistent with those for which the Homeland community had been established. Thereafter there were changes to the trustees of the charitable trust and variations to its terms. Following disagreements between the trustees and the residents as to the future of the community, a mediation took place in 1987. This eventually led to the transfer of the property to a newly incorporated company, the respondent (referred to below as "the Company"), in early 1990.
In 2012 the appellant, the Attorney General of New South Wales, commenced the present proceedings in his capacity as protector of charities seeking a declaration that the Company holds the property upon a charitable trust for the purposes identified in the 1978 Deed. Following a five day hearing, Windeyer AJ, by judgment of 27 November 2013, rejected the Attorney General's contention and dismissed his proceedings: Attorney General for New South Wales v Homeland Community Ltd [2013] NSWSC 1748. The Attorney General has appealed against that judgment. For reasons given below, that appeal should be dismissed.

[6]

The 1978 Deed

By deed dated 2 March 1978 the individuals named as beneficiaries in the 1977 Deed, other than Mr Hosken, purported to constitute a charitable trust known as "The Homeland Foundation Centre of Light" in respect of the property.
The primary object of the trust was expressed to be: "… 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".
The deed provided for the establishment of a Committee of Management, to be regulated by rules to be made by the trustees. There was evidence at trial that the content of the proposed rules was the primary reason for Mr Hosken not executing the deed. His name appeared in the typed form of the deed, both at its commencement and where the parties' signatures were to be placed, but it was crossed out in both places, with the deletions initialled by the parties who did sign the deed.
The deed included the following clause: "11. The Trust may be wound up by a Resolution of the Trustees to that effect if in their absolute discretion the Trustees are at any time of opinion that the objects of the Trust can no longer be achieved by the continuance of the Trust or can more usefully be achieved in some other manner or that the asset of the Trust can be otherwise used with greater advantage to achieve the objects of the Trust. If the Trust shall be wound up as aforesaid the Trustee shall have power to transfer the Trust to any other trust, institution or body which in the opinion of the Trustees shall have or include among its objects the study, advancement and encouragement of religion and religious and spiritual studies and practices provided that such trust, institution or body shall be established for charitable purposes only and shall be so recognised by the relevant governmental department or departments controlling the same of the Commonwealth of Australia and of the domicile of the aforesaid trust; institution or body".
As noted earlier, in subsequent years some trustees of the purported charitable trust resigned and additional trustees were appointed, and some variations were made to its terms (pursuant to a power contained in the deed). The trustees from time to time became the registered proprietors of the property.

[7]

The 1987 Agreement

The Homeland community was closed by the trustees in about 1983 due to disagreements about the use of the property and the use of illicit drugs by residents. Following continuing discussions, an informal mediation took place in 1987 between the trustees and residents of Homeland and a written agreement (the "1987 Agreement") was subsequently entered into. The form of the Agreement was prepared in 1987 but its signing was not completed until 1989.
The 1987 Agreement was entered into between the then trustees (who included Mr Plowright and Mr Davis) and seven other persons described as the "Members". None of the Members was registered as a proprietor of the property. The 1987 Agreement recited that the Members "have contributed financially and erected improvements [on the property] and have maintained the lands" and included the following provisions: "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. … 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. … 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".
There was not, as contemplated by clause 4, a draft Memorandum of Association annexed to the copy of the Agreement in evidence.

[8]

The 1988 documents

As noted above, execution of the 1987 Agreement was not completed until 1989. The following documents were however signed or prepared in 1988.
First, there was in evidence a brochure issued by the residents of the Homeland community in about March 1988 stating: "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. … 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".
A draft of Memorandum and Articles of Association of the Company bearing a handwritten date of 3 June 1988 was also in evidence. The first object of the Company was stated to be to "take over the present unincorporated association known as the Homeland Foundation including its activities, real property, funds and other assets and liabilities". The objects were stated in different terms to those specified in the 1978 Deed. The Memorandum stated that the income and property of the Company was to be applied exclusively to promotion of the objects of the Company with no distribution to be made to the members. The following also appeared in it: "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".
In a Statutory Declaration dated 23 December 1988 (but asserted by the Company to be misdated), the trustees of the Foundation recorded their resignation as trustees "on the 31st December, 1988" and the appointment of the Company (which was incorporated on 18 November 1988) as the new trustee. The Declaration also stated that the property was transferred to the Company as trustee of the Foundation and that "no consideration has passed between ourselves and the said Incorporated body".
The incorporators of the Company were Mr Tony Dudgeon, Mrs Linda Dudgeon, Mr Terry Conroy, Mrs Susan Conroy and Ms Jennifer Wilson. All but Ms Wilson were parties to the 1987 Agreement as "Members". None of them were named as trustees in that Agreement. At the hearing before Windeyer AJ, both sides accepted that the "Members" referred to in the 1987 Agreement acted as agents for the company that the Agreement contemplated would be incorporated and that was in fact incorporated as Homeland Community Ltd.
A minute of a meeting of the members of the Company stated to have been held on 23 December 1988 recorded a statement by Mr Dudgeon that "Doug Perry [of Perry & Smith Solicitors] arranged land/name transfer to cost $1.00 - stamp duty only. His total fees $250". This nominal amount of stamp duty is the amount appropriate for a transfer of property that does not involve a change in the beneficial interest, such as a transfer from one trustee to another. The primary judge was puzzled by the fact (see at [21] below) that not even that nominal amount was charged for the transfer (Judgment [29]).
A minute of a meeting of trustees stated to have been held on 30 December 1988 recorded resolutions to accept the resignations of the current trustees and to appoint the Company as the new trustee. The minute was signed by Anatole Kononoewsky as chairman. As well, the trustees signed a deed dated 30 December 1988 appointing the Company as "a" trustee of the Foundation (the "Deed of Appointment"). The Deed was prepared by Mr Perry's firm. The primary judge found that the document was not executed by the Company and that there was no evidence that any director of the Company saw this document at any relevant time (Judgment [24]).
On 12 December 1989 the Company was registered under the provisions of the Charitable Collections Act 1934 (NSW).

[9]

Subsequent events

By transfer dated 20 November 1989 and registered under the Real Property Act 1900 (NSW) on 1 February 1990, the then trustees of the Foundation transferred the property to the Company for the stated consideration of $1. Mr Perry witnessed the signatures of the transferor trustees. The Company executed the transfer under its common seal with Mrs Dudgeon signing as director and Mr Dudgeon signing as secretary. The transfer bears a stamp of the Office of State Revenue stating that no stamp duty was payable.
On 9 July 2001, Mr Perry wrote to Mr Martin Watson at the "Homeland Community" about a number of corporate matters. In doing so, he referred to the Company as a trustee of the "Homelands Trust" and as "bound by the objectives and aims of that trust. It is not merely a company that owns the land with no other complications". As recorded by the primary judge, Mr Watson, the then secretary of the Company, said that his receipt of this letter was the first time he became aware of "any suggestion that a trust was still in existence" and "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" (Judgment [33]).
On 18 June 2009, in responding to enquiries from the Crown Solicitor's Office (which acted on behalf of the Attorney General) Mr Watson referred to the Homeland trust being "still extant with Homeland Community Limited as the sole trustee". The primary judge noted that Mr Watson's letter (incorrectly described as dated 2 June 2009 in Judgment [34]) 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 partner when that firm ceased to practice and returned documents it held on behalf of the company to it" (Judgment [34]).
In a letter of 9 July 2010 to the directors of the Company, the Crown Solicitor's Office asserted that there had been a number of apparent breaches of the "Homeland Trust" and sought an explanation. Mr Watson responded on behalf of the Company in a letter of 19 July 2010, denying the alleged breaches. He appeared to acknowledge that the Company was trustee of the trust but asserted that, by reason of the transfer of the Bellingen property to it, the property was no longer subject to the trust but was owned by the Company beneficially.
In June 2012 the Company amended its Memorandum and Articles of Association to include a recognition that it was the trustee "in respect of the trust deed of 1978 (as amended) establishing the Homeland Foundation Centre of Light" and released a Plan of Management containing a statement to the same effect.
In response to the Attorney General's Statement of Claim filed on 11 October 2012 commencing the present proceedings, the Company filed a defence denying the existence of the alleged charitable trust and, in the alternative, denying that the Bellingen property was subject to the trust. Those denials were repeated in amended and further amended defences filed on 13 February and 29 April 2013 respectively, although in the latter the Company admitted to being the trustee of another trust, apparently that created by the 1977 Deed.
Although the Company applied to the Court for judicial advice under s 63 of the Trustee Act 1925 (NSW), it maintained its denial of the existence of the charitable trust, as is recorded in [27] of Ball J's judgment refusing that application ([2013] NSWSC 723).
On 13 June 2013 the Company wrote to the Chief Judge of the Equity Division stating that "after receiving Judicial Advice [presumably a reference to Ball J's 21 page judgment declining to provide such advice] we now understand the issues and we are not contesting the [Charitable Trust] issue". The Company was then unrepresented.

[10]

THE JUDGMENT AT FIRST INSTANCE

At a directions hearing before Bergin CJ in Eq on 26 July 2013, counsel representing the Company indicated that he had instructions to seek to withdraw the Company's concession that it no longer contested the validity of the charitable trust. It subsequently served a notice of motion to withdraw the concession. This was heard on 11 November 2013, at the commencement of the substantive hearing of the proceedings. By an ex tempore judgment of that day, Windeyer AJ permitted the Company to withdraw the concession made in its letter of 13 June 2013 to the Chief Judge, and to amend its defence so as to withdraw an admission that it was bound by a trust. His Honour attributed significance to the fact that the Company had previously acted without legal advice. His Honour indicated that, as the hearing was fixed to commence immediately, he would not allow any additional evidence to be adduced in support of the Company's amended position beyond that which had already been filed.
The hearing that commenced on 11 November 2013 was initially confined to determination of the following questions: "(a) did the deed of trust dated 2 March 1978 entitled 'The Homeland Foundation Centre of Light Incorporating Rules of Committee of Management' and executed by Terrance Kippax Plowright, Bruce Davis, Michael Joseph Roads, Yvonne Siems, Roger Dunston and Anatole Kononewsky bring into existence a valid charitable trust and, if so, is the first defendant the current trustee of that charitable trust? (b) has there been a breach of the charitable trust? (c) if there is a valid charitable trust and the first defendant is its trustee, should the first defendant be removed as trustee?" (Judgment [2]).
The primary judge recorded the following as matters not in dispute (Judgment [3]): "1. It is accepted that if the deed of 2 March 1978 took effect then it created a valid charitable trust for the advancement of religion and the advancement of education. 2. It is accepted that if Homeland holds the land on trust then it holds it on charitable trust. 3. It is accepted that if it does hold the land on the charitable trust alleged then there is a breach of that trust."
Ultimately his Honour answered question (a) "No", with the consequence that the other questions did not arise and the Attorney General's proceedings were dismissed.
The only parties to the proceedings, apart from the Attorney General and the Company, were the second and third respondents who were proposed alternate trustees, to be appointed in the event of the Attorney General's success in the proceedings. Their proposed appointment did not fall within the ambit of the issues to be determined at the November hearing.
None of the beneficiaries named in the 1977 Deed were parties to the proceedings. In particular, the estate of the by then deceased Mr Bruce Hosken, who did not sign the 1978 Deed purporting to create the charitable trust, was not a party. At the hearing, the Attorney General contended that Mr Hosken was estopped from denying the existence of the charitable trust, but the primary judge pointed out to counsel on two occasions that the Court could not so find because Mr Hosken was not a party to the proceedings and was therefore denied the opportunity of responding to that contention.

[11]

The transfer pursuant to the 1987 Agreement

The primary judge dealt first with the Company's argument that, even if the 1978 Deed created a valid charitable trust upon which the successor trustees who purported to transfer the property to the Company held the property, the Company did not receive the property subject to that trust. In support of this contention, the Company claimed that it had no notice of its purported appointment as trustee and that in any event it acquired an indefeasible title under s 42 of the Real Property Act because its title was not obtained by fraud and no personal equity bound it to hold the property on the terms of any trust.
On the question of the Company's knowledge of its purported appointment as trustee, the primary judge referred to the conflicting evidence of Mr Mark Davis, who said that Mr Dudgeon (a director of the Company) was aware of the appointment at the time of the transfer, and the evidence of Mr Dudgeon denying that to have been the case (Judgment [52]). His Honour did not accept Mr Davis' evidence and declined to draw any inference adverse to the Company from its failure to call any of the other directors to give evidence.
The primary judge did not consider that the Company's concession in its letter to the Chief Judge in Equity of 13 June 2013 that it was not contesting the validity of the charitable trust assisted the Attorney General. As noted earlier, he regarded it as significant that the concession was made without the benefit of legal advice (Judgment [60]). His Honour similarly disregarded the application under s 63 of the Trustee Act for judicial advice, it having been made at the suggestion of the Crown Solicitor (Judgment [38]). In any event, as Ball J recorded (see [27] above), the Company's position that it was not bound by the trust was maintained in that application.
The primary judge also rejected the Attorney General's contention that the terms of the 1987 Agreement assisted his claim that, at the time of the transfer of the subject property to it, the Company was aware of its appointment as trustee of the charitable trust and after the transfer held the property in accordance with the terms of the 1978 Deed. Instead, he accepted the Company's submission that the property was transferred to it pursuant to the 1987 Agreement, which his Honour noted had come about as a result of "a meeting, sometimes called a mediation, between the trustees and the residents to endeavour to resolve their differences" (Judgment [58]).
His Honour rejected the Attorney General's submission that the marking of the transfer as not liable to stamp duty by the Office of State Revenue indicated that the transfer was made to appoint the Company as the new trustee under the 1987 Agreement. He concluded that the obtaining of that stamp duty ruling (which resulted in stamping more akin to stamping as a transfer changing trustees than as a transfer of the full legal and beneficial interest) was "not the action of Homeland". His Honour found that Mr Dudgeon did not know anything about the submission of the transfer for stamping and that there was no evidence that any of the other directors of the Company did so (Judgment [61]).
It followed from this reasoning that the Company had not taken the transfer of the property to it with notice of the charitable trust and was therefore not bound by it, with the result that the Attorney General's proceedings required dismissal. A fortiori, there was no fraud on the part of the Company, nor was it bound by any personal equity that would preclude it from asserting the indefeasibility of the title to the property that it took.

[12]

Validity of the 1978 Deed

The primary judge then returned to the assumption that he had thus far made in favour of the Attorney General that the 1978 Deed created a valid charitable trust over the Bellingen property.
His Honour rejected the Attorney General's argument that it did create a valid charitable trust because, so his Honour reasoned, the trustees under the 1977 Deed had no power to resettle or vary the private trust created by that Deed in favour of the seven named beneficiaries, and not all of those seven beneficiaries (Mr Hosken being the exception) consented to the purported conversion by the 1978 Deed of that private trust into the subject charitable trust. He considered that even if all of the beneficiaries had joined in, the rule in Saunders v Vautier [1841] 41 ER 482 would not have enabled them to alter the trust in this fashion as the trust property consisted of real estate (Judgment [63]).
His Honour concluded that if (as he held to be the case) the 1978 charitable trust was not validly created, the private trust created by the 1977 Deed subsisted, although the Company took free of it as it had no notice thereof when the property was transferred to it (Judgment [67]). The primary judge used the term "resulting trust" in this context but it is apparent that he was referring to the express trust created by the 1977 Deed.
His Honour noted that the Attorney General did not contend that the Company's Memorandum and Articles of Association, whether in their form prior to the 2012 amendments or in the form they took after the amendments, gave rise to a charitable trust (Judgment [68]). Similarly, he noted that the Attorney General did not argue that the terms of the 1987 Agreement constituted the Company the trustee of the charitable trust or gave it notice of an intention on the part of the transferors that it assume that role (Judgment [55]).
Finally, the primary judge rejected the Attorney General's alternative claim that the Company held the property on a constructive trust. As framed, that contention depended upon proof of communication to the Company prior to or at the time of the transfer of the property to it of an intent on the part of the transferors that it hold as trustee of the charitable trust. As his Honour had earlier held, that communication was not proved.

[13]

LEAVE TO WITHDRAW CONCESSION

On appeal, the Attorney General challenged the primary judge's decision to permit the Company to withdraw the concession made in its letter of 13 June 2013 to the Chief Judge that it did not contest the validity of the charitable trust and to amend its defence so as to withdraw an admission that it was bound by a trust.
The defence subsisting at the time of the application clearly denied that the Company held the property on the charitable trust alleged by the Attorney General, although it did admit that it held the property on the "original Trust", which was presumably a reference to the trust created by the 1977 Deed. The primary judge gave the Company leave to amend its defence to withdraw that admission but that withdrawal was not of significance because, on the defence as it stood, the Attorney General's claim in the proceedings was denied.
The letter of 13 June 2013 (see [28] above) went further in stating that the Company no longer contested the allegation that it held the property on the alleged charitable trust. This concession was however only current for about six weeks, until the Company's counsel indicated at the directions hearing on 26 July 2013 that he had instructions to seek to withdraw it (see [29] above).
Strictly, the Company did not require leave to withdraw the concession because it was not made in a pleading or otherwise pursuant to the Uniform Civil Procedure Rules 2005 (NSW). Rather, the letter in which it was contained was liable to be tendered against the Company as an admission which provided some evidence of the existence of the charitable trust. Being addressed to the ultimate question of law, and not to the underlying facts, that admission would have been of little moment if, as transpired, the Company subsequently came to deny that it was bound by that trust. The admission would only have been of significance to the extent, if at all, that it shed light on the underlying facts that were relevant to the question of whether the Company was bound by the charitable trust. In these circumstances, I do not consider that there was any error in his Honour allowing the Company to "withdraw" the concession as it was in any event at best of limited significance.
Likewise, his Honour did not err in permitting the Company to amend its defence as the matter withdrawn (being the admission that the Company was bound by a trust other than the charitable trust propounded by the Attorney General) was, as I have indicated in [47] above, again of little significance. The charitable trust was at all times denied in the Company's defence.
Moreover, it was not demonstrated that his Honour erred in the manner in which he dealt with the admission of evidence in consequence of his Honour's grants of leave. His Honour's rulings concerned matters of practice and procedure made in the course of the hearing before him. No basis for this Court interfering with his Honour's exercises of discretion has been demonstrated (see In re the Will of Gilbert [1946] 46 SR (NSW) 318). Neither in relation to those rulings or the decisions referred to in [46] above did the Attorney General seek an adjournment of the hearing. This course should have been taken if it were considered that significant prejudice was suffered as a result of the rulings or decisions in question.

[14]

THE 1987 AGREEMENT

It is convenient to deal with the remaining issues on appeal in the order that the primary judge adopted. Accordingly, it is appropriate to assume for the present that the 1978 Deed created a valid charitable trust over the Bellingen property according to the terms of the Deed, and then to consider whether, when the Company acquired the property, it was bound to hold it on the terms of that charitable trust.
As the parties recognised both at first instance and on appeal, an affirmative answer to that question at least required a finding that the Company took the transfer of the property with notice that the trustees intended it to hold the property on that trust. Leaving aside consideration of the effect of the Company's registration as proprietor under the Real Property Act, such notice would have been sufficient to deprive the Company of a defence that it was a bona fide purchaser for value without notice and would thus have subjected it to the trust. When account is taken however of the registration of the Company as proprietor of the property under the Real Property Act, more is required in order to establish that the Company was bound to hold the property on the terms of the trust. Either fraud would have to be proved (see s 43(1)) or the existence of a personal equity binding the Company (see Frazer v Walker [1967] 1 AC 569 at 580 and 585). This would be so even if, contrary to the Company's contention, the transfer to it was to be regarded as a voluntary transaction rather than one for valuable consideration (see Bogdanovic v Koteff [1988] 12 NSWLR 472; Gerard Cassegrain & Co Pty Limited v Felicity Cassegrain [2013] NSWCA 453 at [123]; Cassegrain v Gerard Cassegrain & Co Pty Ltd [2015] HCA 2).
One or both of these alternatives would have been satisfied if the Company had known of the transferors' intent that the Company take as charitable trustee and had accepted the transfer of the property on that basis (see Bahr v Nicolay (No 2) [1988] HCA 16; 164 CLR 604). Unless at least one of the alternatives was applicable, the Company's title was, and is, indefeasible. As both alternatives at least require the Company to have had relevant knowledge at the time of transfer, it is sufficient to defeat the Attorney General's case to conclude, as I do, that his challenge to the primary judge's finding that the Company had no such knowledge fails.
The Deed of Appointment of the Company as trustee of the charitable trust (see [19] above) was not signed by the Company. Nor, on the evidence, did the Company know of the terms of the Statutory Declaration referred to in [16] above or of the trustee meeting minutes referred to in [19] above. The Attorney General however submitted that there were other means by which a finding that the Company had the requisite knowledge should be reached. I address these as follows.

[15]

Whether Mr Perry was the Company's agent

On appeal, the Attorney General contended that in preparing the Deed of Appointment of the Company as trustee and the trustees' Statutory Declaration of 23 December 1988, Mr Perry was acting not only as agent for the trustees but also as agent for the Company. The Attorney General conceded that his case was not put on this basis in the pleadings or, at least expressly, in the written or oral submissions at first instance.
In response to this contention, the Company asserted that it would suffer prejudice if the point was allowed to be run for the first time on appeal, the prejudice being the loss to it of the opportunity of exploring, at least in cross-examination of the Attorney General's witnesses or by issue of subpoenas, the following matters:

The circumstances in which Mr Perry prepared the Deed of Appointment and Statutory Declaration;
The circumstances in which the letters referred to in [22] to [24] above were written; and
The circumstances in which the transfer to the Company was submitted for stamping.

In answer, the Attorney General pointed to the Company's concession in its letter to the Chief Judge in Equity as to the existence of the charitable trust (see [28] above) as a reason for his case not being formulated as fully and carefully as might otherwise have been the case. However the effect of this letter was only transitory as the Company made it clear to the Court and to the Attorney General at the directions hearing which took place about six weeks later that it wished to withdraw the concession. This occurred some three and half months before the commencement of the final hearing. Prior to the letter to the Chief Judge being written, the validity of the charitable trust had been put in issue by the Company's defences (see [26] above).
In my view the Attorney General should not be permitted to put his new point on appeal. As the Company asserted, it is possible that evidence that might have been adduced or elicited by the Company might have prevented the Attorney General's argument from succeeding. It is therefore not permissible for that argument to be raised for the first time on appeal (see Suttor v Gundowda Pty Ltd [1950] HCA 35; 81 CLR 418 at 438).
Even if the point were allowed to be advanced on appeal, in my view it would fail on the existing evidence because the Attorney General did not establish that Mr Perry acted as agent for the Company in relation to the arrangements for transfer of the property to it. Whilst Mr Perry acted for the Company on at least some occasions, there was no firm evidence to establish that he did so in respect of the relevant transaction.
The high point of the Attorney General's argument was that Mr Perry organised for no stamp duty to be paid on the transfer. Presumably he achieved this upon the basis that the transfer gave effect to a change of trustees but it is not apparent why no duty, rather than the nominal duty applicable to such a transfer, was charged. Although this might, on its face, suggest that Mr Perry was acting as the Company's agent, because under the Stamp Duties Act 1920 (NSW) the transferee is liable to pay applicable stamp duty, that inference cannot be drawn as, at least on one view, the 1987 Agreement provided for the trustees to transfer the property to the Company at their own expense.
The Company submitted that this was the effect of clause 1 of the 1987 Agreement (see [11] above) which, so it argued, provided for the trustees to transfer the property (and other assets of the trust) to the Company "at their own expense". Whether or not that is the correct construction of the provision, the fact that it is arguable prevents the Court from inferring that Mr Perry must have been acting for the transferee Company in relation to the stamping because Mr Perry might well (perhaps mistakenly) have undertaken the stamping of the document on behalf of the transferors in the belief that they were liable, as between the transferors and transferee, to pay any applicable stamp duty.

[16]

Whether there was relevant informal communication by Mr Perry to the incorporators

The Attorney General argued that the Court should infer that, at least informally, Mr Perry informed the incorporators of the Company that the trustees intended the Company to hold the Bellingen property on the charitable trust established by the 1978 Deed.
Mr Dudgeon was the principal representative of the incorporators at all relevant times and the primary judge accepted his evidence that he was not told by anyone of that intent. This conclusion was reached as a result of his Honour's resolution of a conflict between the evidence of Mr Davis and that of Mr Dudgeon (see [36] above). The conclusion therefore embodied a finding as to credit and a challenge to it could only succeed if the Attorney General demonstrated that the conclusion was contrary to "incontrovertible facts or uncontested testimony", "glaringly improbable" or "contrary to compelling inferences" (Fox v Percy [2003] HCA 22; 214 CLR 118 at [28]-[29]). For the following reasons, I do not consider that any of these epithets are applicable to the primary judge's conclusion.
The Attorney General's challenge to the conclusion focused on the following matters.
First, he referred to the negotiations between the trustees and residents of Homeland that culminated in a mediation and the 1987 Agreement. However the well-known comments of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; 149 CLR 337 at 352 in relation to prior negotiations are applicable in this context. Such negotiations may reveal the arrangement "which the parties intended or hoped to make" but are "superseded by, and merged in" their subsequent agreement (ibid). This was a point to which the primary judge implicitly referred at Judgment [58] (see [38] above). As a result, the evidence of the prior negotiations does not assist the Attorney General's case as the 1987 Agreement represented and recorded the culmination of those negotiations.
Secondly, the Attorney General relied upon the letter dated 9 July 2001 written by Mr Perry (see [22] above). That letter however revealed a lack of clarity in Mr Perry's thinking, similar to that evident in the 1987 Agreement which he drafted (as to which see [76] below). In any event, at best for the Attorney General, the letter evidences a general belief on the part of Mr Perry in 2001 that the Company was bound by the charitable trust. It does not however provide any firm evidence as to the relevant, more particular, issue of whether the Company was aware of and accepted the trust before or at the time of the transfer of the property to it and, if that was so, how it came about.
Thirdly, the Attorney General relied upon the statements of Mr Watson in his letters of 18 June 2009 and 19 July 2010 (see [23] - [24] above). These also were not of any significant assistance to the Attorney General as they were concerned with an ultimate question of law (as to whether the Company was bound by the purported charitable trust), rather than the underlying facts, and were written by someone (Mr Watson) who was not involved in the relevant events of some years earlier but who relied upon documents created by others. They did not therefore shed any significant light upon the facts so as to form a basis for the Court's decision as to whether the Company was bound by the trust.
Fourthly, the Attorney General relied upon the fact that after Mr Perry's firm ceased to practice, his former partner, Mr Smith, sent the documents in Mr Perry's file relating to the Homeland community to the Company. However this action was equivocal as by the time that that occurred (many years after the transfer of the Bellingen property to the Company) there would not have been any other obvious recipient of those documents because, at least in a loose sense, the Company was the successor to those for whom Mr Perry had been acting.
Fifthly, the Attorney General submitted that it made little sense that, after the trustees and their representatives had spent so much time over a period of years "to secure the future of the Homeland Foundation", "they would suddenly agree to gift the Land free of trust obligations to the very people whom they had been in dispute with for years" (written submissions, [77]). However, as I point out below, the 1987 Agreement did not involve an abandonment of the objectives of Homeland. Rather, it contemplated that they would be pursued by a different means than the charitable trust purportedly established by the 1978 Deed. As I also point out, in drafting the 1987 Agreement, Mr Perry may well have believed that that Agreement and the transfer pursuant to it were consistent with clause 11 of the 1978 Deed (see [80] below) and thus consistent with the legal proposition that a charitable trust may not be brought to an end otherwise than in accordance with its terms or a Court order.
The Attorney General's further submission was that the trustees would not have executed documents referring to the appointment of the Company as trustee unless they had intended that after its transfer the property would remain subject to the trust (ibid). This does not however contradict the primary judge's conclusion that the Company was not notified of that intention.
Sixthly, in the absence of evidence of communication to a director other than Mr Dudgeon that the trustees intended the Company to hold the property on charitable trust, no inference should be drawn that such a communication occurred as Mr Dudgeon was the principal representative of the Company. Even if Mr Dudgeon had merely been one of a number of representatives, the fact that he was not informed of the relevant intention would be a basis for declining, in the absence of specific evidence, to draw the inference that other directors were informed of the trustees' asserted intention.
Finally, the Attorney General submitted that a Jones v Dunkel inference (Jones v Dunkel [1959] HCA 8; 101 CLR 298) should have been drawn against the Company as a result of its failure to call a number of witnesses said to be "in its camp" (written submissions, [81]). The primary judge stated that he did not draw such an inference because "in view of the time lapse and the fact that most have moved from the land [he did] not consider they were obvious witnesses for the defendant any more than they could have supported the plaintiff" (Judgment [52]).
It is sufficient to answer the Attorney General's submission by concluding, as I do, that the drawing of a Jones v Dunkel inference would not have assisted his case. Jones v Dunkel "permits an inference, not that evidence not called by a party would have been adverse to the party, but that it would not have assisted the party" (Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 243 CLR 361 at [64]). It is quite possible that the putative witnesses were not parties to any relevant conversations or, if they were, that the passage of time has destroyed their recollection of them. The principle in Jones v Dunkel cannot be used in such a situation to permit the Court to draw an inference that the witnesses would, if called, have given evidence of being parties to relevant conversations in or about 1988 in which statements were made contrary to the Company's present interests.

[17]

Whether there was notification by the 1987 Agreement

The primary judge noted that the Attorney General did not argue before him that the 1987 Agreement itself constituted the Company a trustee of the purported charitable trust. At least on appeal, the Attorney General did however argue that the 1987 Agreement was a means by which the Company acquired notice of its appointment as trustee. (Although the Company was not a party to the 1987 Agreement and might not have been incorporated by the time of its execution, all but one of its incorporators were parties to the Agreement - see [17] above). Moreover, the Attorney General submitted on appeal that by the 1987 Agreement the trustees agreed to transfer the property to the Company on the basis that it held it as trustee of the putative charitable trust.
The 1987 Agreement does not contain any express, nor in my view any implied, assertion or recognition that the Company was to take its intended transfer of the property subject to the 1978 Deed (or any) trust. Certainly, there are manifestations in it of an intent that, through the Company, the objects of the Homeland community would continue to be pursued. However the Agreement was equivocal as to the means by which that was to be achieved.
The Agreement was framed as an agreement for identified consideration (see clause 1: [11] above), rather than as a simple transfer, without consideration, from one trustee to another. Moreover, the provision in clause 4 that the Memorandum of Association of the Company was to contain objects similar to those of the trust suggests that the purposes were intended to be achieved through the framework of the Company's constitution, rather than through its status as a trustee.
Clause 8, providing for the members' "ongoing commitment" to the "original essence of 'Homeland'" to be "expressed and protected by the structure of the Memorandum of Articles of the proposed Company Limited by Guarantee", suggests this also, as does clause 5 which provides for any surplus on winding up to be "gifted to a charity or organisation of a like nature having similar aims and objectives to the Company".
The question does not arise for determination in these proceedings as to whether the 1987 Agreement and the subsequent transfer to the Company resulted in the Company holding the property on trust for the objects identified in its constitution, rather than its acquisition of an asset to be dealt with as it saw fit (see Sir Moses Montefiore Jewish Home v Howell & Co (No 7) Pty Ltd [1984] 2 NSWLR 406 and, more recently, Overall v Family Voice Australia Incorporated [2014] NSWSC 736 at [42] and Re Coulson [2014] VSC 353 at [39]). Consideration of such a question is outside the ambit of these proceedings, which are confined to the question of whether the Company became the trustee of the charitable trust purported to be created by the 1978 Deed. Nonetheless, it cannot be assumed that the failure of the Attorney-General's application leaves the Company free of constraints in its dealing with the property.
In drafting the 1987 Agreement, Mr Perry may have had in mind the terms of clause 11 of the 1978 Deed (see [8] above) which enabled the trustees on the winding up of the trust "to transfer the Trust" to another body to be used for religious and spiritual purposes. Even if this provision were applicable, it would not assist the Attorney General's case as a transfer of property could be made thereunder not only to a new trustee of the property, but also to a charitable body, with the property to be held beneficially by the body or on trust for its purposes.
The Attorney General contended that the 1987 Agreement is ambiguous, referring in this respect particularly to the non-attachment of the draft Memorandum and Articles of Association (see clause 4). It may be that evidence could have been led as to what was intended to be attached, but the only evidence in this respect was of a draft Memorandum and Articles (see [15] above) that did not demonstrate an intent that, if put into effect, the Company would take over the trusteeship of the 1978 Deed of trust.
The Attorney General also sought in this context to rely upon the evidence of prior negotiations and subsequent admissions referred to in [66] to [69] above. Even if these were admissible, they did not, for the reasons there given, assist the Attorney General in establishing notice on the part of the Company of the existing trustees' postulated intent that the Company become the new trustee and accept the transfer of the property on that basis.

[18]

Application to adduce further evidence

On appeal, the Attorney General sought, pursuant to ss 75A(7) and (8) of the Supreme Court Act 1970 (NSW), to adduce evidence that was not before the primary judge, of Mr Terrence Conroy.
The evidence was contained in an affidavit of Mr Conroy sworn on 25 February 2014 in which the following appeared: "8. At one of the meetings between the trustees [in the period 1984 to 1987] and resident members at which I was present, Tony Dudgeon said words to the effect of: 'The members believe that the trustees are being negligent in their role because they are not living on the property. The members do not want the property to be sold and would invite the trustees to consider a compromise. The members propose that a Company be formed to take over the Homeland Foundation as trustee and to pursue the aims and objectives of the original trust' [emphasis added]. 9. I also recall that at one of the meetings between the trustees and the resident members, one of the members said words to the effect, 'we agree to form a company to take on the original Homeland trust'".
Mr Conroy also deposed that he was at a meeting during this period at which Mr Perry said "Legally, the trustees have to resign for the Company to become the trustee".
Mr Conroy was cross-examined, on the voir dire, in this Court. He said that he did not keep notes of any of the meetings to which his affidavit referred and that he had not, prior to his affidavit being prepared, been asked to recall what occurred at those meetings. His evidence was thus unaided recollection as to events that occurred over 25 years earlier.
His evidence in cross-examination included the following: "Q. Might what Mr Dudgeon said [be] that the members propose that a company be formed to take over Homeland and that this company have aims and objectives substantially similar to that of the trust? A. That's correct, yes. Q. That's what Mr Dudgeon said to you at this time wasn't it? A. Not said to me, no. That was-- Q. Said to the members and the trustees? A. Yes. Q. Do you also recall either Mr Dudgeon or the trustee saying that if the members paid all outstanding accounts of the trustees and if they formed a company limited by guarantee then the trust assets would be transferred to that company? A. That's correct, yes (Appeal Transcript p 103). … Q Might you have been told that Homeland Community was now responsible for everything? A. Homeland the company? Q. Yes. A. Had been incorporated and yes, that it had taken over the responsibility of the original Homeland trust. Q. Taken over the responsibility? A. Well had been given that responsibility. Q. Might the words that had been - were in fact used was [sic] that the Homeland company was now responsible for the property? A. That the company that had been formed had taken on the responsibility of the trust of the land and the community are [sic] the Homeland name. Community buildings and other companies associated with Homeland (Appeal Transcript p 105). … Q. Do you remember the words that were specifically said at the meeting about this topic? A. I believe the words were that Homeland had been handed over to the company and the actual words just at the moment, no, I cannot remember exactly" (Appeal Transcript pp 105-106).
In general, the following three conditions need to be fulfilled before further evidence will be admitted on appeal under ss 75(A)(7) and (8) of the Supreme Court Act: "(1) It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) The evidence must be such that there must be a high degree of probability that there would be a different verdict; (3) The evidence must be credible" (Akins v National Australia Bank (1994) 34 NSWLR 155 at 160).
It is appropriate to apply these conditions in the present case. For the following reasons, at least the second condition has not been satisfied.
Mr Conroy's evidence in cross-examination was consistent with the view I have expressed in [76] to [78] above as to the proper interpretation of the 1987 Agreement: he said that Mr Dudgeon referred to the Company being "formed to take over Homeland" and the Company having "aims and objectives substantially similar to [those] of the trust" (see [87] above). He later referred to being told that the trust assets would be transferred to the Company and that the Company had been formed to take "on the responsibility of the trust of the land … " (ibid).
The words "as trustee" that were contained in his affidavit (see [84] above) but not used in his oral evidence were more supportive of the Attorney General's case. But even those words, if accepted notwithstanding their omission in cross-examination, would not be decisive because they are arguably capable of covering a situation in which the Company would receive the property for the purposes for which it was formed (see [15] above).
Added to these considerations is the fact that the statements to which Mr Conroy deposed were made in the course of discussions and negotiations occurring prior to the execution of the 1987 Agreement which represented the culmination of those discussions and negotiations. As I have earlier said, they should be regarded as superseded by the terms of the 1987 Agreement (see [66] above).
The proposed further evidence is thus not compelling. There is no significant prospect that, if it had formed part of the evidence at first instance, a different outcome of the case would have ensued. The Attorney General's application should be rejected at least for that reason.

[20]

VALIDITY OF THE 1978 DEED

The Attorney General's claim that the Company holds the Bellingen property on trust was founded upon the assumption that the 1978 Deed created a valid charitable trust. As that claim fails for the reasons that I have given above, the soundness of the assumption upon which it was based does not require determination. It is in fact inappropriate that it be determined because, due to the absence of joinder of all proper parties, the Attorney General's suit is improperly constituted and should, for that reason also, be dismissed.
In particular, Mr Hosken's estate (Mr Hosken being deceased) has a real interest in determination of the soundness of that assumption. However his estate is not a party to the proceedings. In these circumstances, if the questions were determined in his absence, he would be entitled to have any orders that adversely affected his interests set aside as of right (John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; 241 CLR 1 at [131]-[138]).
Together with the six other named persons, Mr Hosken acquired a beneficial interest in the Bellingen property under the 1977 Deed. He was not a party to the 1978 Deed which purported to constitute a charitable trust over the whole of the property and thus to affect his previously acquired beneficial interest. The Attorney General submitted that Mr Hosken was estopped or otherwise precluded by his conduct from asserting that he did not consent to the establishment of the charitable trust, but a finding that that was so could not be made in the absence of Mr Hosken's estate as a party to the proceedings. The primary judge made this point on two occasions on the hearing of the proceedings (Transcript pp 323 and 334) and in his Judgment (at [46]).
The problem with non-joinder was not confined to Mr Hosken, as his absence as a party to the 1978 Deed gave rise to an argument that would have been available to the other six beneficiaries of the 1977 Deed (who did sign the 1978 Deed) that the 1978 Deed was ineffective in the absence of the consent of all beneficiaries. Accordingly, they also were entitled to be joined as parties.
It is inappropriate in these circumstances to make any further comment about the validity of the 1978 Deed.
In conclusion on this topic, I add that the Attorney General's application to be given the opportunity to join Mr Hosken and any other necessary party should be rejected at least because the Attorney General's proceedings in any event fail for the reasons I gave in [52] to [94] above.

[22]

ORDERS

For the reasons above, the appeal should be dismissed with costs.
MEAGHER JA: I agree with the reasons and proposed orders of Macfarlan JA.
SACKVILLE AJA: I agree with the orders proposed by Macfarlan JA and with his Honour's reasons. I add one comment (using the same terminology as Macfarlan JA).
The Attorney General, as Macfarlan JA notes (at [75], submitted that by the 1987 Agreement the trustees agreed to transfer the property to the Company on the basis that it would hold the property as trustee of a charitable trust, in accordance with the terms of the 1978 Deed. The Attorney General contended that the 1987 Agreement is ambiguous and that the extrinsic circumstances support construing the Agreement as intended to create a charitable trust.
The primary Judge rejected (at [56]) the submission that the 1987 Agreement is ambiguous for these reasons: "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 agree.
Even if, contrary to my opinion, the 1987 Agreement is ambiguous and extrinsic circumstances can be taken into account, they do not support the Attorney General's construction. A key document is the "Report on the Homeland Foundation Village for Community, Youth and Education", dated September 1984. This report is said to have been: "initiated by the Board of Trustees to re-examine and evaluate the structure, administration, development and future role of the Homeland Foundation".
The report includes a section headed "A Total Legal Re-Appraisal". It states that in order to blend the "idealism" of the project into "realism", three independent solicitors and a consultant had recommended that the Homeland Foundation Trust incorporate a company limited by guarantee. The company was to: "be used to provide a clearer more effective and productive means of managing and administering the Homeland Foundation". The summary of the proposed legal structure identifies the classes of membership of the company and explains that all members would be eligible for election to the committee. It records that the: "committee shall have the responsibility of the overall management and administration of the Foundation in accordance with the objectives of the Foundation, though any rule, regulation or by-law of the company made by the committee may be disallowed by the company in a general meeting".
The 1987 Agreement is consistent with the strategy proposed in the 1984 Report. The objects of the Foundation were pursued by the formation of a company limited by guarantee, with objects similar to those set out in the 1978 Deed. When the Company was incorporated in 1988, the objects stated in cl 2 of the Memorandum of Association were similar, but not identical to those expressed in the 1978 Deed.
For better or worse, the objects of the Foundation were to be achieved through the mechanism of a company limited by guarantee, not a trust of which the Company was the trustee. This is what happened.

Attorney General of New South Wales v Homeland Community Ltd

At a glance

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Judgment (23 paragraphs)

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